Update: This Home Has Sold! We Can Sell Yours, Too!
Just listed in the prime lake section of McCormick Ranch, this four bedroom Dix home boasts hardwood floors, new berber carpeting, new bathroom vanities with granite tops, wood-burning fireplace in family room, split master floor plan, heated pool & spa w/waterfall and drop dead gorgeous front and rear landscaping. Situated on an interior lot in the Cochise / Cocopah / Chaparral school districts, you are a quick stroll from the walking paths, lakes, golf, restaurants and parks that make McCormick Ranch THE premier in-town planned community in Scottsdale.
Priced for today’s market by sellers who actually plan to sell, not practice. That’s right, real people own this home and will respond in a timely and human fashion! People who have meticulously maintained and improved this quality home over the years and can actually provide disclosures and entertain reasonable repairs! I know, it’s crazy! They do exist! Check the comparables, even the dog-eared bank properties think we are underpriced.
Get the best of both worlds: The quality of a privately owned home for the price of a foreclosure!
You’ve been punched. You’ve been cajoled. You’ve been dismissed out of hand as a serious contender. Your corner wants to throw in the towel, but it’s time to look deep inside yourself for that fighting spirit. This is your Rocky moment, and I’m your Mick.
Tempting as it may be to utter “No mas,” in the face of a younger, stronger foe, you as a home seller have your own strengths. Yes, the bank properties have been hammering your rib cage and battering you with low blow after low blow for the last eleven rounds. Every time you regain your composure, another steel-fisted uppercut in the form of a new REO listing shatters the ineffective “pride of ownership” cup upon which you have been so dependant. The referee and the fight doctor are scrutinizing that nasty gash above your eye to determine if you are still able to intelligently defend yourself.
You’re seeing triple, you say? Buck up, Rock, and hit the guy in the middle.
Now that the free-fall in property values has seemingly arrested (much like the hearts of many homeowners this year) across several segments of the local Scottsdale Real Estate market, would-be sellers can take a deep breath and catch their second wind. Even if they are still leery of making the price jump from distressed properties to resale properties, buyers are back in the market. Several straight months of increasing home sales, decreasing inventory and even modest median price increases (really?) indicate this. That’s the good news. The bad news is that most of these buyers are still purchasing the goods on the ground floor (sporting goods, evening wear and foreclosed Real Estate) while the typical mom & pop seller continue to be priced on level four.
Before resale homes start selling at a higher rate, their prices still need to drift a little further South. This is not news. You’ve been pummeled with this unwelcome assertion for the past year. My intent is not to rabbit punch you with the obvious on this day. I’m offering a momentary reprieve from the infernal pessimism (which I have admittedly dispensed with impunity). No more defeatism from your corner, it’s time to talk strategy.
Yes, the bank-owned property on the far side of the ring is a fearsome opponent, but skill and guile can slay the relentless beast. You’ve been getting drubbed over the course of this bout because you are not offering your bigger foe any angles. You’re simply turtling up with that ridiculous price of yours and accepting a merciless beating. To change the tide in this lopsided affair, yes, you do need to get a bit more competitive with your price. Until you get inside the freakish reach advantage of the banks, you’re rope-a-dope tactics will just get you roped and doped.
This is not to imply that you need to match the price of the distressed properties, you simply need to vie for the same buyers. If the banks are on the ground floor, you need to get down to level two. If you can at least mitigate a portion of the huge price disadvantage you face, you have a puncher’s chance to sell your home. Here’s why:
The bank property across the street will convey to the buyer in “as is” condition. You have maintained your home over the years and will make any necessary repairs, within reason, to appease a buyer.
The bank property across the street will come with a grand total of zero disclosures. You will provide a potential buyer with a Seller Property Disclosure Statement, Insurance Loss History Report and any other appropriate documentation to give a certain level of comfort to the new owner.
The bank property across the street may not be able to be financed by a buyer due to its condition. Because you have listened to your Realtor and whipped your home into tip-top shape, you will face no such problem. Right?
The bank property across the street may require a buyer to order utilities turned on in their name (and pay any applicable deposits for said service) in order to inspect the working components of the home.
The bank property across the street may ultimately attract multiple offers at its supremely low price. This can benefit you in several ways. For starters, the ultimate sales price is often driven higher than the list price in such scenarios, thus making your case for higher neighborhood values. Secondly, there will be despondent losing bidders for that property that will look, perhaps to you, for alternatives. Lastly, some buyers will become disenfranchised with bank properties after having gone through this multiple offer scenario several times. Eager for less competition and an honest negotiation, some just might set their sights on the slightly higher priced property that can be negotiated downwards instead of upwards.
So there you go, champ. You are far from a hapless tomato can against the oversized Palooka who has been doing the Ali Shuffle all over your face. He’s a one-trick pony. Take away the huge price haymaker and the kid is a regular Glass Joe. If you have the moxie and the wherewithal to get your price just a bit closer to the bank’s, you have the arsenal to pull off a stunning upset and walk out of the joint with the title. The title of “former homeowner,” that is.
Now put your mouthpiece back in, get off that damn stool and get in there and fight!
By now, even the most procrastinating of first time home buyers understands that the end is nigh. The end of the $8000 first-time homebuyer tax credit, that is. While rumors abound about a possible extension past the current deadline, rumors also persist that man did not actually walk on the moon in 1969 (if you happen to believe the latter, you can moonwalk your way right out of my blog catalog). When it comes to our esteemed legislative bodies, I am not ready to take the leap of assumptive faith that they will do the logical thing. As things stand, you have received sufficient warning from every warm and cold blooded Realtor type in the land that you need to get on the stick immediately. With new appraisal regulations and loans which used to take 30 days now bogged down in underwriting quicksand, it is not a good idea to venture past mid October before pulling the trigger on that home you have been patiently watching for just one more price reduction. With a fleet of fellow procrastinators waiting until the absolute zero hour (closing prior to 12/1/09), there is also the added risk of running into title company soup. Think the end of the month is busy at your friendly title company and subsequently hectic in terms of getting your deal closed? My hunch is that typical happenstance will be a walk along a tranquil beach in comparison to the buyer tsunami that figures to crash upon every escrow office near you between 11/1 and 11/30.
But these are the things you already know. Just like you already know that the credit is not reserved solely for first time buyers, but also those who have not owned Real Estate within the past three calendar years. This information is so readily available that I haven’t even bothered to write about it before now. At great risk of being the guy who runs into the empty room to yell “Fire,” I do believe there is one more wrinkle that needs to be discussed. With the deadline steadfastly approaching (just because it looms closer, doesn’t mean the pace has suddenly morphed to earn “rapidly approaching” designation, now does it?), lost in the prodding for first-timers to buy now is any discussion as to the kinds of homes you should be considering. I shall rectify this egregious oversight now.
Earlier in the year, the Real Estate world was your oyster. REOs, short sales, HUD homes, auctions … bring them on. As long as you wrapped up your purchase prior to December, you were golden. Thus, you had the ability to trawl every last oceanic trench to scrape up your sunken treasure. It probably didn’t take long to realize that the biggest finds, those Titanics of the Real Estate deep, were teeming with sharp-elbowed and deep-pocketed prospectors. Basically, you with more purchasing power. Every time you made a play for a new bank property, you and your FHA-fueled dingy were left eating the wake of 50 foot conventional vessels and staring into the live canons of the scourge of the first timer’s sea: cash buyer pirates.
Resigned to the fact that your 3.5% down and government-backed loan vehicle is not a fair fight against the types of buyers that the best values attract, you most likely started looking at resale and short sale properties. Resales have been tricky because most sellers are not in a position to compete with the banks. Many that you would be interested in continue to be priced out of your affordability.
Now you may be thinking that short sales are the way to go. The bank wants to offload a property that is in default without incurring the expense of foreclosure. The seller just wants out and is not motivated by profit, thus creating a tantalizing asking price. Sure there are only a couple months left to close on a house to secure your credit, but this listing says they are using a “Certified Negotiating Specialist.” This other one says they have a 95% success rate! Another even says that they are near bank approval!
Don’t do it.
I know you have gotten your teeth kicked in on the bidding wars that erupt on the bank properties, and the resale market is still too pricey, but short sales are not the way. Not now. If you had submitted an offer on one several months ago, you would have a shot, but I am telling you right now that YOU WILL NOT RECEIVE YOUR $8000 TAX CREDIT IF YOU WRITE ON A NON-APPROVED SHORT SALE LISTING at this point. It is quite typical for the process to take 3-6 months, and the resolution is far from a sure thing.
Keep looking at the bank properties, but reset your sights a little. Great values are still out there. You can lock one up that isn’t priced so stupidly low that every buyer and his pet chimpanzee show up to vie for it, driving the price into the stratosphere. Some of the best buys made right now are actually the ones with list prices that aren’t necessarily the most attractive. When banks, just like typical sellers, miss that sweet spot, you have a better shot at negotiating the price lower versus bidding the stupid cheap one up.
This is also not a bad time to take another hard look at the resale market. Sellers of properties that will fit the budgets of first time buyers should be receiving advice from their agents right about now that they really need to get competitive if they are to capitalize on the last minute purchasing rush. Granted, many sellers simply are not in a financial position to lower their prices, I have noticed more and more resale listings working their way into my searches.
Finally, I would be remiss if I didn’t caution that the tax credit should not be the be all and end all for your purchasing decision. If you simply cannot find the property you want at a price you can afford, don’t get caught up in the frenzy. The worst decisions are often made in the face of such artificial pressure.
But if you are ready to take the plunge, find yourself a property in which the seller can give you a thumbs up or thumbs down within days instead of weeks. Walking the short sale plank with less than 90 days to get it closed will net you an $8000 cold shower.
You have a problem. Your family sees it. Your friends see it. At the eye of the storm, only you lack the perspective to clearly recognize the wake of wanton destruction spawned by your vice. Despite your feeble protestations to the contrary, you need help. Your addiction does not end with you. It touches the lives of those around you with dark, restless hands. Probing unsuspecting pockets and vulnerable throats.
The cycle of despair ends today. Your days as a perpetual Real Estate shopper are over.
House hunting can give you a rush like none other. No buyer quickly forgets the first time he steps through the front door to a new potential future. The magic. The exhilaration. The knowledge that one is virtually unfettered to choose his own adventure. Of course, once that initial euphoria grabs a hold of a buyer, he must experience it again. Houses 2-10 still hold some residual magic, but do not hold a candle to that very first experience. Houses 11-20 hold an air of disappointment. Soon enough, each successive property becomes a progressively greater assault on the sensibilities. Your friends and relatives grow weary of your constant trolling of Realtor.Com. Your erstwhile volunteers will no longer join you on the weekly Sunday home tour with your beleaguered Real Estate agent.
You don’t care. Despite all evidence to the contrary, your silver bullet is out there. You don’t need help, you just need more listings. Where are all the new listings, anyway? Everyone knows that banks are giving houses away for pennies on the dollar, so this simply must be the week that the 5000 square foot home on 4 acres hits the market. For $125,000.
Welcome to Detox. My name is Paul. I will be your cold dose of reality for the next 30 days.
The first step to recovery, of course, is admitting you have a problem. Trust me, you have a problem. Further, you must admit that you are powerless to the tug of your addiction. I offer as “Exhibit A” this August 9th, 2009 email sent to your agent regarding a property you found online. Time-stamped at 3:48 AM. “Exhibit B” is your agent’s cell phone records from 3:49 – 4:32 AM of the very same day.
Step two is to understand that a power greater than yourself can restore you to a sane existence. No, it’s not your brother’s mail carrier’s uncle who owns four rental properties. It’s your agent. Listen to him/her.
We’ll just skip step three because we all know that the realm of Real Estate is presided over by a supreme being in the guise of a braying, one-eyed donkey with cataracs. Pin the tail on him and you are as likely to get donkey kicked in the goods as you are to win the investment lotto. See step two for obtaining the services of one who knows how to best manipulate, if not outright tame, the fickle Real Estate beast.
You are now ready to move on to step four. This is where you take full and unflinching stock of your own morality. “Thou Shall Not Steal” is a typical shortcoming of many Real Estate shopping addicts. The thrill of the grift, after all, is one of the primary tarpits into which the saber-toothed buyer has fallen to become bogged down to such an irretrievable degree.
While admitting to yourself the wrongs you have committed is no picnic, neither is admitting those things to the higher power of your choice and a fellow non-home buying human. When you can do so, you have conquered Step five. Don’t even think about omitting the part where you burned 1897 hours and 16,789 gallons of your agent’s time and gasoline.
Step six is opening yourself up to the full removal of the defects in your character from a higher power. Once again, your agent will gladly fill this role in absentia and remove said defects via Paypal and/or rubber mallet.
If you can bring yourself to ask for said absolution, you have mastered step seven.
Step eight requires that you make a list of all those you have harmed and be willing to make amends. You can start with your spouse, co-workers and anyone you have pumped for advice and proceeded to dutifully ignore. Just make sure that your REALTOR is somewhere in the mix. No greater sin than trumping his/her decades of industry experience with the sage advice of your hairdresser and life insurance agent.
Step nine is actually making the aforementioned amends. A little wine and cuddling to soothe frayed nerves and egos is a good start, but cash money absolves all.
Step ten directs that you continue to take stock of your failings and immediately admit subsequent wrongs. You may be on the road to recovery, but that doesn’t mean you are immune to calling a listing agent directly to schedule an appointment after your agent has patiently educated you over the past year and a half. And yes by the way, that does make you a bad person.
Step eleven directs you to establish more direct contact with your agent. Email and the occasional phone call will suffice. He or she is tired of sending smoke signals in the direction of East Jabib to reach you. When the right property comes along, don’t make a search party necessary. Bloodhounds are pricey by the hour.
Step twelve is reserved for those Career Buyers who have had complete spiritual awakenings and will actively work to spread and promote these guiding principles to their brethren in shopping addiction. Praise the lord and pass the turnips, you are now ready to purchase a home! Go forth and proselytize!
Should you experience temptation to return to your former habits or worse, suffer a relapse, it is important that you understand three things:
It is not atypical for Real Estate agents to spurn rentals. Much to the chagrin of frustrated prospective renters, that is one voicemail that seldom gets returned. For an agent backlogged with more lucrative opportunities, he/she will often leave the red-headed stepchild of the industry to the property managers. You don’t get rich matching tenants and landlords, especially if it is not the main thrust of your business. Thus the rental stone is not merely left unturned by the high fliers, it is disregarded as a stone altogether. More like a pebble, the likes of which will find its way into your shoe and cause great discomfort to those who would tread too close.
Part of the problem with the rental market is that the compensation is a prohibiting factor. Realtors are hired guns. As independent contractors, we are always performing risk/reward analysis. For many, the potential reward of a rental transaction is not nearly lucrative enough to justify the risk of the effort not successfully culminating in a paycheck. To operate on straight commission, productivity must be maxed and the upside ridiculously high, otherwise, we would all opt for the safety of a salaried position. With compensation for rental properties drifting downwards in recent years, the opportunity cost has simply become too great for many in our ranks. Why shuttle around some schlub for two days in hopes of collecting a $150 paycheck when they might put a $500,000 buyer in the car instead? Of course, you also have a segment of agents who might simply find such menial work beneath their inflated sense of self, but you get those types in every field.
I can’t rightly attest to the motives of those who brush off rental prospects, but I can tell you why I do not. Any agent worth his or her salt looks not only at the present business horizon, but the future skyline as well. In my estimation, today’s tenant is tomorrow’s buyer. Whenever the financial and personal wherewithal comes to make that transition, I want to be the agent they remember that helped them when the others gave them the brush off. If my competitors want to slam the door on these apparently inconsequential house hunters, I will gladly use the opportunity to get my own foot in that very same door.
Anyone can sell someone a house. It takes diligence, empathy and yes, a little luck (hard to compete with Aunt Margaret when she gets bored and gets a Real Estate license) to sell a person every home he or she will ever own. I aspire to the latter. Performing a service that can be tantamount to pro bono work in some cases is one means of achieving that aim. It never ceases to amaze me how many advertising dollars some agents will spend to attract new clients while completely neglecting the opportunities that don’t cost a nickel (a little gas notwithstanding). For the chance to gain the trust of consumers while they are at either the infancy or nadir of their journey towards home ownership, I happily pick up that slack. Working rentals over the years whenever the opportunity has arisen, I have procured some of my very favorite and most loyal clients. They tend to stick with you on the way up when you were there for them at the bottom.
To all of my esteemed colleagues who neglect the rental market, I thank you.
To the frustrated renters out there who can’t get an agent to return a phone call, email or smoke signal, give me a buzz. I will gladly help you find temporary housing in the Scottsdale, NE Phoenix and Paradise Valley area.
And when you’re ready to buy … I wouldn’t be adverse to taking that call, too 😉