The Placeholder House

It wasn’t your first choice. It wasn’t your second either. In fact, the short sale you wrote the offer on was likely more a product of attrition than anything else.

Short sales take time. Like most astute 2012 home buyers, you are all too aware that the offer you submit on an upside-down property will likely take a minimum of 60 days for a response from the seller’s lender. You are also aware that the list price of the home is not necessarily reflective of the price that the lender will ultimately be willing to accept. If you are like many buyers I encounter, the cumulative uncertainty of a short sale transaction is likely what ultimately convinced you to first trawl the regular resale and/or foreclosure market for a home before turning your attention to short sale candidates. Fact is, unless you are an investor or in no hurry to move out of your month-to-month lease, you likely don’t have the luxury of waiting on an uncertain outcome.

With the pace that the good homes are selling in early 2012 due to a heightened demand and greatly reduced inventory (approximately 18,250 active property listings in the Arizona Regional MLS at the time of this post), it is also likely that you have either lost out on a property or five to competing buyers or become disenfranchised with the lack of choices.

Enter the Placeholder House.

Or not.

You see, in recent years it has become en vogue for buyers and their agents to tie up a short sale while continuing to look for a more expedient and/or desirable option. Utilizing a standard AAR (Arizona Association of Realtors) short sale addendum, you don’t have to deposit earnest funds, complete inspections, pay for an appraisal or otherwise commit yourself to the transaction until you get the yea or nay from the seller’s lender.

In essence, you get to tie the property up for free. If something better pops up while the bank is going through its laborious machinations, you can bounce at a moment’s notice. Sounds like the perfect backstop, right?

Not so fast, my friend.

Wising up to the ploy, short sale sellers and their capable agents have taken to adding penalties to such indiscriminate escrow hopping. The shrinking inventory means that there is more competition from your fellow buyers on short sale properties, too. No longer do the better opportunities lie all over the market, waiting for an indifferent buyer to pick them. They are sought after commodities. As such, you can expect to encounter terms such as non-refundable earnest money placed in escrow upon seller acceptance of your offer (before it is submitted to the bank for approval) for the first 60 days (or until bank response, whichever comes first). Some short sale list agents have taken to demanding that the inspection period begin upon seller acceptance as well.

These are measures undertaken to tie you into the deal; they provide you with a vested interest in sticking around for an approval rather than discarding them for the first best alternative that comes down the pike.

If you enter a short sale transaction in 2012, it’s best you leave the placeholder mentality where it belongs: 2010.

Time to abandon the contractual hedging of bets and get back to entering a purchase agreement with the intention of buying a house, lest you get stuck in a purchase you only sort of want to make.

Short sales: they aren’t just for Real Estate philanderers anymore.


Buying a Bank Owned Home in McCormick Ranch? Look up!

Buying a Bank Owned Home in McCormick Ranch? Look up!

Are you shopping in the distressed aisle for your McCormick Ranch home? Make sure to look up.

While the purchase of a bank owned home or a short sale tends to be fraught with a little more risk than a traditional resale transaction, it is important to note that buyers typically maintain inspection rights on distressed properties. While the various “As Is” clauses and addenda dictate that the seller is not responsible for making repairs on these properties, most purchases involving bank properties do allow for an inspection period (though the time frame may be shrunk from the typical 10 days allowed under the boilerplate of the standard Arizona Association of Realtors contract).

*In short, the bank won’t likely fix anything, but you are allowed to verify condition before deciding whether or not to continue with the transaction.

During the course of your inspections, it is always prudent to spend a little extra time on a bank property as there are no disclosures of prior defects. The institution that now owns the property never occupied it, and knows nothing about its history other than the pertinent fact that the previous owner defaulted on his/her deed of trust.

It’s all about the Benjamins to the bank.

The purpose of this lengthy preamble? To add a little context to the freak hail storm that struck large pockets across the Valley last (2010) fall. If you have been watching all of the new roofs going up over the past six months, you know that the McCormick Ranch area was hit hard. With insurance companies passing out full roof replacements like they were candy, it is not uncommon to see streets where virtually every home features a brand new roof. Foam and asphalt shingle roofs, in particular, took wicked beatings.

So while most owner-occupied properties in the area that sustained damage have been repaired or replaced, the bank-owned properties that have been sitting vacant for over a year are likely to leak like a sieve when the monsoons roll around this July. The price points of such properties are often attractive enough to offset the 10-20k many will need, but it can be tough to swallow when it is not an anticipated cost.

Before plunking down money on inspections and appraisals, I’d recommend having a professional walk the roof of that bank owned steal to help you determine the true out of pocket price of ownership.

Oh, and if you are buying a resale property in McCormick Ranch? Make sure to find out if the seller had any repair work performed in the aftermath of said storm. While one of our selling clients was able to obtain full roof replacement on a claim from that storm as recently as this past month, the likelihood of that happening on another property dwindles the further removed we get from the event. The insurance companies aren’t going to be in the roof replacement business much longer.

Happy hunting,

Ray & Paul


Buying or selling a home in the McCormick Ranch area? Give us a call. Online data and pictures can give you 90% of the picture. We’ll fill in the remaining 10%.

*Do not rely on any general statements herein as legal advice. We are not attorneys, nor do our statements pertain to a specific transaction. Rights and restrictions within a transaction vary depending upon the documents used, attendant verbiage, alterations, etc.  Long disclaimer short: I ain’t talking about your deal, homie.

Short Sale Confidential

The clandestine meeting took place at twelve thirty on a Thursday. Two men armed with black briefcases approached each other in the darkness, flanked by muscle-bound henchmen who busied themselves looking tough. The second-hand light refused to fully illuminate either faction.

“You were to come alone,” Drago admonished his older rival.

“As were you,” Arvloski retorted.

A mirthless chuckle escaped Drago’s thin lips, his face a collaboration of sharp angles and shadows.

“You know me too well, Niko,” he confessed. “As I know you.”

“Is that it,” Arvloski asked, pointing at the case with his dimpled chin.

“Niko, my old friend. What is your hurry,” Drago responded. “You seem nervous.”

“Not nervous, Comrade. What is the word … eager?”

“I have never known you not to ask of Katerina,” Drago pressed.

Arvloski swallowed hard before responding. His sallow pallor was made all the more evident by the pronounced puffiness beneath his sleepless blue eyes.

“And what of my dotchka?”

“She grows large with child,” Drago informed him, pausing before twisting the knife. “We think to call him Nicholas.”

Arvloski blanched, his jaundiced skin verging on translucence. He took half a step towards his smirking adversary with balled fists before catching himself. He didn’t feel his jagged fingernails digging into the meaty palms of his giant paws.

“There will be time enough for hugs later, Niko,” Drago taunted. “Let us first do this business that has you so … eager.”

“Open the case and hand it to Sergei,” Arvloski instructed, nodding at the behemoth in the black t-shirt that was no fewer than four sizes too small.

“Niet. You will open your case and hand it to Petr,” Drago countered. “Then I give you mine.”

The two men stared at each other, refusing to blink, before the distant warbling of a car alarm pierced the tense silence.

“We open cases at the same time,” Arvloski suggested, losing the battle of wills. “On count of three.”

Drago withdrew the gold cross he wore around his neck and rubbed it between a calloused thumb and finger as he considered the proposal. Coming to a decision, he tucked the well-worn charm back into the unruly thatch of chest hair that struggled against an overmatched v-neck sweater.

“Da, count of three,” he agreed.

“Adeen,” Arvloski led, unlatching the spring-loaded clasp on his case with a satisfying snap.

“Dva,” Drago followed, unlatching his case as well.

“It had better be in there, Comrade,” Arvloski warned.

“That is going for the both of us, Niko,” Drago replied.

The men nodded and finished the count in unison as their goons tensed for battle.


As the lids on both cases swung open, revealing the contents within, the group was suddenly bathed in blinding, white light.

“Politsii! Politsii,” Sergei bellowed.

The cases fell to the ground as panic-stricken men fumbled over one another in their haste to flee. A new voice called out above the ruckus, but Arvloski was too focused on the item lying on the ground next to one of the upended cases to notice. Blinking the sight back into his eyes, he reached for it.

“Arlen, just what the hell do you think you’re doing?”

Hearing his name jolted the loss mitigation specialist back to his senses. He looked across the break room at the disapproving female face staring down at him from the bank of switches that controlled the overhead lights.

“Is that my ahi,” Shelby from internal auditing demanded, pointing at the saran wrapped mass lying on the floor. She took in the melting ice that lined the open briefcase sitting next to it with a heavy sigh.

“Not the black market organ syndicate thing again? What is wrong with you people? And who smells like dijon,” she asked.

Arlen dabbed at the yellow streaks on his cheeks with one hand while fingering the spent packet of fancy mustard in his pocket.

“Nice touch. Let me guess, you’re a terminal liver patient this time,” Shelby posited. “Can’t you freaks at least use your own lunch?”

“Oh, relax, Shelby,” Drake said from off to Arlen’s left. He was fishing change out of his pocket as he surveyed the vending machine options. The second case lay open at his feet, a stock approval letter template resting within its felt lining. “Just having some fun. We didn’t hurt your precious tuna.”

“If you two paid as much attention to the poor excuses for files that end up on my desk as you do to these little diversions, maybe we wouldn’t have a six month logjam,” she countered, hands on hips, tapping the blood red nail of her index finger with each of the last four syllables.

“Get back to work,” she ordered the hulking security guards who were doing their best to blend in with the faux wood paneling on the walls.

“Yes, ma’am,” a neckless crew-cut answered, shooing his charges past the skeletal exec.

“The eight hundred line is fielding ten bomb threats an hour, and you morons are in here playing Cloak and Dagger,” she hissed.

“Won’t happen again, ma’am,” Crew-cut promised as he slunk out of the room.

“What’s it matter anyway,” Arlen wondered as he climbed to his feet. “I have seven hundred open files on my desk, for crissakes. Seven hundred.”

“Oh, cry me a river, Evita,” Drake retorted. “I’m sitting on nine fifty, easy. We’re pissing in the jet wash here, Shell. Where are our reinforcements?”

“Upper management is talking about bringing on new staff,” she answered.

Arlen guffawed.

“Yeah, they’ve been talking about that for the last fourteen months. Shoot, when I took this gig, I figured there was a putt putt in the conference room.”

“No kidding, right,” Drake echoed. “I couldn’t believe it when I found out we didn’t have video poker on our PCs. Couldn’t think of any other reason it would take eight months to process a file.”

“I know, I know,” Shelby admitted. “I thought we got off for company scuba trips to the Caymans between approvals.”

“Look,” she relented. “We’re all under a lot of pressure, but you can’t keep doing this stuff. The prank phone calls to non-delinquent account holders, the BPO dead pools, the contests to see which one of you can collect the most four letter words or longest hold times from Real Estate agents … ”

Arlen and Drake did their best not to smile as they shared a furtive glance.

“Yes, I know about all of it,” Shelby assured them. “There are real people out there depending on us to resolve these short sales, no matter how futile it may seem. It’s time you started taking your jobs seriously.”

“You’re absolutely right,” Arlen acknowledged.

“Straight and narrow from here on out,” Drake promised. “Scout’s honor.”

“Good,” Shelby replied. “Now clean up this mess and get back to your phones, would you?”

She turned on her three inch heel and strode towards the door, dousing the confined space in the oddly medicinal scent of hers that had long reminded Arlen of Vicks VapoRub.

“Let’s play pin the tail on the lien release tomorrow,” Drake whispered as he sidled up next to Arlen.

Arlen nodded and the conspirators bumped fists, splaying their fingers upon contact to mimic an explosion.

“Shell,” Arlen called after the retreating auditor.

“Yes,” she responded, turning back to face the grinning pair as she reached the hall.

“Don’t forget your fish.”

How Not To Draft Your Short Sale Hardship Letter

How Not To Draft Your Short Sale Hardship Letter

To whom it may concern,

I am drafting this explanation of hardship in attempt to effect a short sale of my property located at 88 W. Tantalus Lane, Scottsdale, AZ 85258.

When I purchased the property on 1/16/2005, I was under the impression that Real Estate values never declined. That’s what the guy doing the seminar behind the Benihana on 12th said, at least. Granted, I wasn’t thinking clearly because I skipped dinner and the aroma of szechuan beef was driving me half mad with hunger, but I decided right then and there that I was going to put all sixty two of my dollars into Real Estate investing. If he could buy 764 properties for no money down, why the hell couldn’t I?  Figured I could finally hang up my plunger for good.

Do you have any idea what it’s like to swab out a stall after the sponsored little league team comes through and crushes fifty happy meals in four minutes flat?

So I bought a place. And another. And another. Before long, I had both shift managers leasing houses from me. It was awesome. One time, Steve, the ball-buster who managed nights, told me I overcooked the fries. My shift ended two hours before his. I threw all his shit out in the front yard and changed the locks. Nobody complained about my fries after that.

Anywho, after my brother in law flew down from Sacramento and got his Real Estate license in like six minutes, he hooked me up with this appraiser guy. Got all the houses refi’ed for 200% of purchase price and bought this here spread for cash. I only put the mortgage on it with you guys so I could cash myself out to fund the hotel in Fiji.

Somewhere in the middle of all this, I lost my job. Got laid off right after telling the regional manager that his fat $%&^ of a wife better start watering my hibiscus or they’d be on the street faster than she could cram a number eight combo down that feed trough she called a throat.

Downsized, I couldn’t believe it. With values beginning to sag, the double whammy of losing the $5.75/hour and a solid tenant was the start of a downward spiral that I couldn’t escape.

The Internal Revenue Service started coming around about this time and asking stupid questions like, “Exactly how many primary residences do you have,” and “Did you really think you could complete a 1031 exchange into a Peruvian brothel?” They seized my liquid assets. Communists.

After I got out of prison, I spent 16 months in Tijuana clearing my head. I took some part time custodial work in the entertainment industry, but as fate would have it, the goddamn donkey got the drop on me one night. Kicked me right in the lower bicuspids as I was bending down to hose off the astroturf. As medical coverage wasn’t provided by this particular employer, I was pushed further into debt by the street vendor who fashioned my new teeth out of cardboard and chicklets. Now every time I smile, I provide free advertising for “Beto’s Baja Fish Tacos.”

Despondent, I returned home to find my brother in law (who had since given up on Real Estate and was now selling Tang on Craigslist full time) had let my properties go completely to pot. Broken windows, four foot high weeds in the yard, missing air conditioning units … all of my tenants were long gone. Except for the dead guy we found in a barcalounger at the Clarendon duplex (I think you have the loan on that one, too?). That episode put me in counseling for a year. That’s when the whole drug thing really got out of hand.

So anyway, do you really want this piece of &*%^ back or what? We smoked the drapes.


Hugh Joversite


The Foreclosure Moratorium: An Opportunity for Mom & Pop Home Sellers?

With the latest scuttlebutt in the housing industry centering around a rising political push for a large scale foreclosure moratorium by leading lending institutions, most are aware that Bank of America became the first to issue a temporary nationwide pause in foreclosures this past week. Though B of A is the first to stay their executions across all fifty states, JP Morgan Chase and GMAC agreed to halt foreclosures in the 23 states where foreclosure is a judicial process. The pressure to do so originated over procedural impropriety in several specific locales, and has snowballed into wholesale questioning of the internal processes of the major banks. Mounting concern over erroneous foreclosures spawned the voluntary cessation (expected to last several weeks). While Wells Fargo has spurned calls to do the same, it would not be surprising to see more institutions yield to the rising pressure and follow suit.

What does this mean? Plenty has already been written about this with homeowners facing foreclosure and prospective buyers in mind, so I won’t belabor those perspectives here. Suffice it to say that while any additional quality control that can prevent people from wrongly losing their homes to foreclosure would be a good thing, the upshot in terms of market reaction is likely to be a collective shrug of the shoulders. Not content to simply halt the actual act of foreclosure, B of A is temporarily taking their inventory off the market while the review is ongoing. It’s been posited that fewer listings will translate to a possible surge in prices, but this is pure mularky. The market simply does not react in a matter of a few weeks to any stimulus, as it takes time for consumers to make heads or tails out of new developments and how they translate to negotiable strength. On the contrary, I think this will make buyers who are already non-harried take even more of a wait and see approach. Rather than buying what is left, those who are not under a time crunch to get into a new house will probably just wait for the moratorium to end and for the withheld inventory to flood the market. In essence, we could be looking at an unintentional buying moratorium as well.

Though it would be foolish to anticipate a surge in values, the one segment of the consumptive spectrum that stands to gain from this turn of events is the non-distressed homeowner. With a small window opening for mom & pop home sellers to compete with significantly fewer bank homes for buyers, I would not be shocked at all to see a percentage gain of resale home sales while overall sales volume remains flat, or even declines slightly, in the coming weeks. I expect many buyers will choose to wait it out, but there are those who do not have the luxury of time. Be it a job relocation, family circumstances, etc, there are always buyers who need to buy now. With fewer distressed properties on the market, and likely buyer uncertainty over how this will translate to the short sale arena (will B of A process short sales while foreclosures are in limbo, or pause all such decisions? Will short sale sellers temporarily remove their homes from the market in anticipation of a reprieve?), this could be the traditional seller’s best opportunity to vie for buyers in quite some time.

Again, don’t misconstrue the knee-jerk hypothesis. The value of your home is not going to spike due to this temporary phenomenon, nor are you suddenly in the catbird’s seat. For those in an equitable position to sell, this window merely represents the best possibility to attract a buyer in months.

No screwing around – price your home right and get it sold while there are fewer alternatives for buyers. As a regular seller, with the tax credit gone as a buyer incentive and microscopically low interest rates and low prices not translating to appreciable gains in sales/values, you have to leverage every conceivable strength in this market to accomplish your goals.

Ready to sell your Scottsdale home? Contact us today to schedule a no-obligation consultation, but do it fast. When the moratorium ends and the holidays are fast approaching, it will be time to hunker down for another long, cold winter.


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