Standard Bank Addendum

Standard Addendum to Purchase Contract

Purchase Agreement for a First Bank of Asbestos (henceforth referred to as “Seller”) property is non-binding unless this addendum has been attached and fully executed by all parties. In the event of a dispute between the language of the Purchase Agreement (or subsequent addenda) and this addendum, the terms of this addendum shall prevail. Under no circumstances shall the terms of this addendum be altered by any party other than Mephistopheles himself.

Buyer, ______________________________, understands that the property located at _____________________________ in _______________________, _______ has been acquired through foreclosure (or similar jurisdictional process) by Seller. As such, Seller has no knowledge of the property’s history and makes no warranties, express or implied, as to its condition.

*Buyer acknowledges that Seller doesn’t know s&$% _________  (Buyer Initials)

In the unlikely event that Seller should learn anything about the condition or history of the property at any time during the course of the transaction, Seller still doesn’t know s&$%.

Buyer to include child’s pet bunny rabbit with all offers. Upon verbal notice of Seller’s acceptance of the Purchase Agreement, Buyer to deposit earnest funds in the amount of $1,000,000 in non-sequential bills in the offshore account of the Seller’s choosing. Should Buyer fail to deposit earnest funds within twenty four (24) hours of verbal acceptance, the rabbit dies.

Upon delivery of earnest funds, Buyer to be granted fifteen minutes to complete all desired physical inspections of the premises. Should Buyer require utilities to be turned on prior to inspection, Buyer may do so at his/her expense if he/she can properly name the tune of the Seller’s choosing in three notes. Should Buyer request any repairs be completed prior to Close of Escrow, Seller reserves the right to cancel this transaction, retain the earnest funds as damages and drop the Buyer off in the middle of the desert wearing a blindfold and bologna underwear.

*Buyer acknowledges that Seller won’t fix s&$% _________  (Buyer Initials)

In the event of a financed offer, Buyer to obtain full loan approval within ten seconds of execution of the Purchase Agreement. Close of Escrow to occur on a date convenient to Seller. Possibly next June. Maybe September. Seller to notify Buyer of the Close of Escrow Date on the day of closing. Should Buyer fail to perform, causing the closing to be delayed, Seller reserves the right to cancel this contract without further notice or grant an extension to the Buyer at a penalty of $100,000 per day. In the event that Buyer does not possess sufficient funds to meet these terms, Buyer may elect to name Seller in his/her Last Will and Testament and/or as sole beneficiary of the life insurance policy taken out in the amount owed.

*Buyer acknowledgement to “Watch your back, Jack.” ________  (Buyer Initials)

Upon successful Close of Escrow, Buyer agrees to be placed on the First Bank of Asbestos mailing list to learn about exciting new products and promotions before anyone else. Removal from our “Happy Homeowner Database” or enforcement of the provisions set forth in the National Do Not Call List Registry will result in Buyer missing out on special deals and helpful new homeowner tips, but participation is completely voluntary. Buyer is free to waive monthly subscription to “Understanding the Home We Told You We Know Nothing About” newsletter at any time.

*Buyer acknowledges that we still have the bunny.   _________  (Buyer Initials)

We thank you for selecting a First Bank of Asbestos home and look forward to denying your refinance application in the future on the grounds that there may or may not be a leaky underground missile silo on the premises that we don’t know s&$% about.

Buyer                                                                    Date

First Bank of Asbestos Representative                         Date

2010: The Year of the Niche in Scottsdale Real Estate

2010: The Year of the Niche in Scottsdale Real Estate

2010 is the Year of the Niche.

It’s true, feel free to consult the Chinese calendar to verify.  Scottsdale Real Estate practitioners, in self-defense, have turned to new and interesting means of keeping their businesses relevant in these inexplicable times.  Today’s homework assignment for a Real Estate adventurer?  Finding a profitable, niche specialty.  Thus, the members of the rank and file have been advised to choose a tunnel and follow it out of the malaise.  Two examples stand above the rest as the most popular paths to career CPR: bank-owned property sales and short sales.

Forever a fringe subset of the industry, the foreclosure market has become a predominant segment.  Virtually unheard of outside a counter-culture circle of practitioners a few short years ago, short sale specialization is another a bully of the current Real Estate pulpit.  Given the adapt or perish mantra that permeates a commission based existence, it is hard to fault an agent for migrating to either avenue in an effort to remain profitable.  It’s Survival 101.

I won’t pretend that I have not considered both routes as viable solutions to the systemic problems facing the current Real Estate market here in Scottsdale.  The smart money goes where the action is.  And yet, I have no particular affinity for the institutions that contributed to the implosion of my clients’ property values.  I have no burning desire to represent said institutions in transactions against the little guy whom they have summarily defrocked.  I’ll put my buyer in the car and go try to steal a property from the bank, but there aren’t enough deflated greenbacks in the US Treasury to convince me to sign on as the Devil’s listing advocate.

Short sale sellers deserve professional assistance.  Sadly, I fail to believe that an agent who would flee to “specialization” in this sector at this late stage would prove a legitimate source of the expertise that so many need (and so few actually have).  A weekend course and some moxie do not an expert make.  Perhaps the specialists that are being churned out at an alarming rate will boast the training and experience necessary to be of legitimate value during the next down cycle, but such “expert in training” zygotes are not the answer for those who need assistance NOW.   The stakes are too high to navigate the short sale obstacle course on a bike whose training wheels were only recently, and prematurely, removed.  A substantial incubation period is necessary before such a “specialist” fully morphs from a liability to an asset.

Beware the marketing Sirens who would lead a negative equity seller onto the rocks with good intentions.

So where does that leave a conscientious objector to the hordes of freshly minted “experts” with 6 months of experience in a chosen area of specialization?  Right back where I started: 100% loyal to real, live humans.

There is nothing wrong with diversifying one’s business practice to gird against shifts in the market, but I refuse to abandon a loyal client base for the new money of bank business.  Once you become beholden to the financial institutions, there is little time left in the day to service those who now constitute an under-represented segment of the Real Estate market.  Sure, the bank guy might take on a few moms and pops here and there, but can an overextended agent really provide a private seller the level of service required to do this job?  A dubious proposition in the best of times, let alone in the murkiness of 2010.  With a market that is still twenty thousand leagues beneath the sea, your agent’s periscope better be nimble and at the ready if you are to avoid the same shipwrecked fate that has befallen so many neighbors.  Unthinkable in an industry with more per capita agents than snakes on a plane, but I surmise that all of this nichefying has relegated the non-distressed homeowner to afterthought status.

Assuming you have no equity in your home, or will be unwilling to part with it at the market’s nadir if you do, the industry has given up on you as a viable source of business.  It has moved on.  And yet, there are a few straggling agents who aren’t quite ready to throw in that towel.

While it may seem that every agent and his recently licensed brother have gone to work for the banks, know that there are still a few of us diehards around who pledge allegiance to you.  Our phones aren’t always jammed with 8 bazillion calls about our 8 bazillion listings.  We won’t take a week to respond to your questions and concerns.  We have staked our careers to providing a certain level of service, and we will not compromise it.  Market conditions be damned.

Tempting though it may be to wear the “Certified Gastrointestinal Distress Expert” or “Short Sided Career Reinvention Specialist” hats, we stay away from the light and cement our enduring commitments to those left behind in the industry’s pursuit of the next big thing.

Our niche is you.

Should you require the hands on, fully attentive assistance of a couple of non-certified, non-distressed, non-toxic property experts, give us a call.  We’re not too busy panning for the bank’s gold to take it.

Losing Buyers to the Banks? Time to Work On Your Bolo Punch.

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!

Your Appraisal Is Wrong

Appraisals are typically regarded as the most accurate measure of a home’s value, and for good reason.  Licensed to perform one task and one task only, appraisers see and evaluate property all day, every day.  While some of us more egocentric Realtors feel that we put more time and effort into our own opinions of value, considering we will ultimately bear the responsibility of bringing the home to market and selling it, that bit of vanity is neither here nor there.  Appraisers, though many underwriters these days are loathe to admit it, are still considered the ultimate authority on worth outside of a willing buyer and seller.

Appraisers, however, are often hamstrung by their own guidelines in keeping pace with the current market.  This can be beneficial, such as when prices were artificially exploding between 2005-2006.  We agents lamented the stodgy appraisers who were too rooted in the past (closed sales) to acknowledge the present (upward trending prices) while values were exploding.  You couldn’t attend an office meeting without a colleague or six bemoaning the bozo appraiser who didn’t grasp the current market.  If only our industry at large had been so conservative.

Normally the protective ally of the bank and the buyer, I have noticed an interesting shift as of late, however. Appraisers have become a seller’s best friend. Before you toss me out on my heretical ear, hear me out.

Appraisers have begun to view the market in two distinct categories.  There is the general non-distressed resale home market, and then there is the foreclosure market.  When evaluating a property, most seem to have taken to lumping properties into one grouping or the other.  Their subsequent findings are based upon the homogeneous pairings:  bank-owned properties are comped against other bank-owned properties and standard resale homes are comped against other standard resale homes.

It sounds great in theory, but the problem with this new pattern is two-fold.  First, there is the matter of pure sales volume.  The action in our current market is more heavily dominated by foreclosure properties than any point in memory.  It’s undeniable.  The mini sales boom that has seen a steady increase in total closed and pending sales in each of the last several months here in the greater Phoenix area is due in large part to the allure of these lower priced options.  As such, it is just not feasible to ignore this growing segment of the market when trying to determine the value of a home.  The data is often quite scarce when trawling for non-distressed sales upon which to base an evaluation.  By and large, the higher priced resale homes just aren’t selling with a great enough frequency to provide adequate comparison data.

The other issue is the problematic assumption that a buyer cares.  If the home next to your own has been foreclosed upon and is listed at $200,000 less, do you honestly think the buyer will buy yours if all other things are equal?  Is a buyer really expected to see anything beyond the price and the condition?  The label of “bank-owned” versus “resale” is wholly irrelevant to what a buyer is willing to pay.  Shoot, I have seen quite a few remodeled bank-owned or short sale properties that put many dog-eared resale listings to shame.  And yet, they are somehow devalued or eliminated from the consideration of value for other homes in the neighborhood simply because of the conjured stigma.  Buyers may start their search with one particular market segment in mind (distressed property shoppers looking for a deal, resale shoppers looking for a well maintained home), but they will ultimately look at everything that fits their price and need requirements.  Labels be damned.

I sure like it when my appraisal tells me my home is worth more by ignoring completely the last four neighborhood comps, but I know the real score.  No buyer will pay me what my current appraisal tells me it’s worth.  No way.  I know better than to be the ostrich who thinks that the homes that are actually selling right now have no impact on my property value because they are “distressed.” Guess what, buckaroo, those sales are distressing the entire market.  There may be microcosms within the market at large, but they are amoebic.  The uneven boundaries protruding against each other as they occupy overlapping space.

So while there is still plenty of benefit in having your home evaluated by a neutral authority, just remember not to spend all of that anticipated equity before your buyer signs on the dotted line.  You just might be unpleasantly surprised when he doesn’t downgrade the competition or recent sales comps like your appraiser did.


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