“Someone can always make me an offer.”
If there were six words I could erase from the murky bog of a seller’s mind, it would be these. Within this seemingly innocuous sentence lies a terrible sickness. A Bubonic Real Estate Plague, if you will. The black death of a home sale.
There is something to the thought that a target buyer exists for every property. That the pre-qualified needle in the haystack will know a property is “the one” upon first sight. It is another matter altogether to make the flying leap that said buyer will, in turn, disavow all semblance of self-preservation and dive onto the hand grenade that is an overpriced house.
The underlying root of the weed of denial that infests a stubborn seller’s mental garden is the unflinching notion that “the right person” will come along and “fall in love with the house” just as he or she once did. Of course, when this simplistic rube comes along and falls head over heels in love with the one of kind abode, he won’t be able to reach into his wallet fast enough to pay whatever outlandish premium is required. Never mind that you are competing directly with homes that are 1000 square feet larger. Never mind that your home has a deficiency in location or condition. You have a pantry.
“Priced grossly above recent comparable sales? 1368 days on the market? Where do I sign? I MUST HAVE this house!”
Here is the thing, gang. Yes, someone can always make you an offer. If they see your house. If you are priced so far above and beyond the current market value of your home, however, the “right” buyer will never even see you on that outrageously lofty perch. Oh sure, you may get some traffic, but those suitors will end up buying one of the larger, nicer competing properties. The buyers looking in your size and amenity range are looking at properties thousands below your asking price. Kind of hard to make an offer when they don’t even know you exist.
And you know what? Even if they stumble across your place, why would Mr & Mrs Right make an offer on a home priced at 500k when they can make a more realistic offer on a similar home priced at 400k? It’s more than just counter-intuitive. A buyer would have to have been huffing spray paint in a non-ventilated storage room for the past 72 hours to pursue yours. If the “right” buyer is defined by constant drooling and a complete lack of interest in the alphabet past the letter “j,” you might want to rethink your strategy. The idea is to cast as wide a net as possible to find a keeper, not to dangle the bait 50 yards above the surface of the water and wait for a fish on a pogo stick to jump right into the boat.
The wise seller rolls out the welcome mat for an army of potential suitors. The foolish seller gives the assembled masses the finger as eagle eyes scout for that one, perfect, dumb-as-a-ham sandwich buyer.
Yes, someone can always make you an offer. Here’s mine: Fish or cut bait.
If you are ready to do some serious bill fishing, I’ve got the boat fueled up and ready to go. Plenty of Dramamine, too. We’ll chum the waters with a competitive price and superior product to land the biggest damn shark the ocean will yield.
If that doesn’t sound like your kind of tea party … better to wait at the marina for the seas to change. In another decade or two, the tides will surely rise high enough to deposit the price you covet.
Picture a bowl of primordial soup. No, really picture it. What does it look like? I see a gelatinous, gray gumbo of sorts. The contents within completely impervious to the light of the sun underneath an opaque, spoon-devouring outer layer. I don’t need to make out the individual invertebrates that I sense roiling about the porcelain confines to intuit that a wayward finger would disappear into tiny, prehistoric mandibles within moments of straying into the land of the culinary lost.
Of course, I am talking about bank owned property sales. If the creepy crawlies in the walls don’t get you, the asset managers will.
About a year and a half ago, I, like many of my Real Estate brethren, was forced to take stock of the focus of my career. Having long relied on the nearly continuous repeat and referral business that I cultivated through years of diligent service, I was forced to ponder the unponderable when the Great Market Implosion of 2008 (c) threatened to sabotage my business model. If you could even call it a business model, that is. I subscribe to the notion that if you do right by the clients that you have now, you will never want for clients in the future. Good business practice begets good client retention.
And yet, there I was. Looking around for the vine upon which my new business had died amidst the economic crop dusting that was rendering entire markets fallow. My hedgerow bustled only with concern. So what to do? With credit markets drying up and loans increasingly difficult to come by, the resale market became a stagnant bog. The only sign of life would be Nessie popping her head above the surface of the foreclosure loch on occasion to swallow another hapless homeowner. Against this stark backdrop, many of my respected colleagues turned to the very institutions that led us down this path to housing oblivion for their salvation. Sensing that resale properties could not compete with the dirt cheap foreclosures, and that finding loans for buyers had become vastly more difficult than finding properties, I was tempted to follow suit.
The lure of pursuing bank-owned property listings was … gulp … quite tantalizing. I saw REO agents handling more properties at a given time than they ordinarily handled over the course of an entire year while I banged my head against the resale wall. Heeding the siren’s song, I went so far as to solicit lists of banks with whom I could apply to handle their overflowing inventories. Hat in hand, it struck me that this was the 21st century version of standing in line for hours on end amidst scores of other able-bodied candidates for a factory job circa 1930. A funny thing happened en route to the head of the line, however. An epiphany, if you will.
In the current market, we all work for the banks in one manner or another. You either list their houses, or you bring them buyers. Only one side of that equation will bring you repeat business down the line, however. I realized that I could not take on the workload that REO specialists enjoy tolerate without alienating the loyal client base that had propelled me to heights I had never really thought possible in my career. Knowing there are only so many hours in the day, I made the conscious decision to forgo the possibility of immediate gratification with the banks to continue to serve real people. It’s not an entirely altruistic choice either, but a pragmatic one. The foreclosure market will dry up eventually, leaving the few remaining morsels to the established denizens of the deep who have waded through that knee-deep filth for the last two decades. Those Johnny Come Latelys whose bank-owned property experience extends back a year or two will be in the unenviable position of having to redefine their expertise yet again. Their neglected mom and pop clients will have moved on.
I do not want to watch my business wash up on the rocks along with the myriad other souls aimlessly following the tide on a makeshift raft of sticks and desperation when the winds finally change. I’ll continue to take my chances with my own internal compass and weather-battered crew.
So, here you sit. Spoon in hand, ready to dive into that noxious looking soup. It may not be the most appetizing dish you have ever seen, but it’s the house special and the price is right. The maitre d’ has already slipped back into the kitchen, hurriedly gathering the same ladled gruel for the next table.
No fear, your royal tester is still here. Pass that gnarly bowl on over and I’ll help you determine its edibility.
I was sitting on your side of the table when we were eating steak and lobster, and I’m not looking for the check now that my dinner guests can only afford spam. It may bring a little indigestion on this particular evening, but there are plenty of four star evenings ahead.
If you are buying or selling a home in Scottsdale, Arizona, and you are not an amorphous, soul crushing financial institution, it would be my great privilege to represent you in your pursuits.
My wife has an affinity for collecting quotes. Whether humorous or inspirational, on fridge magnets or flowery stationary, she likes having the visible reminders nearby as a lifeline to help pull her out of whatever malaise she may happen to find herself mired in at a given moment. Truth be told, prone as I am to ridicule the sappy sentimentality, I kind of like having them around the house, too. Sitting here in the kitchen on a slowly unfolding Sunday morning, sipping my first cup of coffee and awaiting the incubating bounty of cranberry muffins that is teasing my nose and stomach, one particular wall hanging catches my eye. Emblazoned across its whitewashed, faux wooden surface in black scroll lettering is the following:
“Raising children is like trying to nail jello to a tree.”
Not the first time I have seen it, but it still draws a chuckle. Substitute the words “Selling Real Estate” for “Raising Children,” and you have this agent’s description of the arduous world of buying and selling property in 2009.
Case in point, one of my property listings is a short sale. My lone short sale listing. Now, and hopefully forever. Over the four months it has taken our buyer’s offer to gain full approval, only to have a needed extension to the closing date entail another two week period of review and authorization from the banks involved, the twists and turns of this transaction have been nothing short of spectacular. Fortunately, with a closing now on the horizon, we finally appear to have this bit of transactional jello firmly nailed to the mesquite in my backyard.
Apparently a glutton for punishment, I currently have two buyers with offers accepted by sellers and submitted to their respective banks for approval on short sales. One of those buyers deploys for Iraq at the end of this month. We will be lucky to have a loss mitigator assigned to the transaction by the time his boots touch the 130 degree foreign sands. The other buyer is a first time homeowner who has been looking with me for several months. In both instances, we’ve only grudgingly included short sale listings recently in our lists of properties to see. The time factor is brutal, but it is the uncertainty that has been the primary deterrent. It’s one thing to wait indefinitely for a foregone happy conclusion, but quite another to invest a month or six of your life into a transaction that may be doomed from the start. As such, for many, short sale properties have really turned into the “just-in-casers.” Throwing an offer at a bank as a contingency plan, buyers are well advised to continue shopping for a property in which the seller is in a position to provide a quicker response. If a resale or bank-owned property pops up while the short sale is still in limbo, the buyer is free to cancel that transaction (provided a standard AAR short sale addendum is included with the standard verbiage) with no loss of earnest money and pursue the new candidate. Lots of additional work for all parties involved, but you’ve got to get your fingers dirty in the current market if your seeds are to take root and grow into an actual sale.
Then there are the bank properties. Foreclosures, REOS or whatever other term you know them by, they differ from short sales in that the bank has already taken the property back from the defaulting homeowner. No interminable wait while the bank assesses value and the seller’s qualification for a short sale, but there are still a few wiggly characteristics with these properties. For starters, while infinitely quicker, you can still forget about an immediate response or any loyalty to the author of the first offer. You can attach a two page cover sheet with your offer outlining your love of the home, how the drapes match your furniture and for the first time in your life, you feel like you have really found “home,” but the asset manager at the bank will still sit on it for 3-5 business days to see if anyone will beat it by twenty five cents. Even if you offer full price or above. Trust me … been there, done that. Further, because everyone wants bank owned pricing, these properties are often highly competitive. The banks know it. Given this truth, the very best values that you are holding out for as a buyer are highly competitive. If you’ve seen 100 properties and think the latest one is a screaming deal, so do the thirty other buyers who have been looking at the very same houses. That awesome deal you see on a bank-owned price is often just the floor for the higher offers that pile up like clowns in a circus car.
Wiggle, wiggle, wiggle.
Of course, if transactions involving banks are akin to manipulations with an amorphous edible substance, selling a typical resale home at present remains more like nailing a pickup truck to a tree. By and large, resale properties continue to be drastically overpriced. Only the savvy sellers who price to compete with the banks stand a chance of actually unloading their homes. No matter how strong the marketing nail or stout the trunk of seller resolve, gravity continues to win that lopsided struggle. You can only prop up an unrealistic price for so long before it finally crashes back down to market value or the broken down rig gets towed right off the market. No buyer is going to shimmy up that tree, get behind the wheel and drive said truck straight into the ground.
Is buying and selling Real Estate in 2009 a tricky business? Hell yes! Up is down, down is up, and nobody knows when this crazy ride will end. But just like raising kids, the process is uniquely rewarding. So grab a helmet, buckle up and don’t be afraid to enter the scrum. As long as you know what to expect and bring an experienced chaperon, you’ll eventually get where you want to go.
Even if you end up with a few stains on your shirt along the way.