The Scottsdale Real Estate Files

My business partner is older than dirt. 

Seriously, he's so old that Metamucil takes him in the morning.

He's so old that when he takes his grandchildren on his knee and speaks of "The Great War," he is referring to The Crusades.

He's so old that it takes 4 hours for his life to flash before his eyes.

Okay, so my business partner is my father, and he's not really all that old.  Just old enough for some good paternal ribbing and to have more years invested into this industry than I do on the planet.  Aside from the advantages that attend living through every up and down market cycle that one masochist can hope to experience, you also tend to wind up with a file cabinet full of lost treasures. 

Let's see ... <sounds of rummaging> ... here's a signed photo of pops with a young Wyatt Earp at the Whiskey-A-Go-Go.  Here's what looks to be a rough draft of the Gadsden Purchase.  Who knew he brokered that one?  And here is the very first scorpion to ever be encased within amber and sold at a downtown Scottsdale tourist shop.  Beautiful mementos all, but not the antiquities I'm after on this day.

Ahh ... here's what I want.  Floor plans.  Old, forgotten floor plans.

Blowing the dust off these lovelies, I have committed to an undertaking that may very well end up with me being committed.  I am uploading all of these ancient gems to the Scottsdale Property Shop site as part of the community service I should have served for youthful transgressions too numerous to count from my formative years.  While many of our newer Scottsdale developments have readily available plans, it can be rather vexing to track down those from the original construction of the 1970s and '80s of such stalwart communities as McCormick Ranch, Scottsdale Ranch and the like.

For the remainder of the year, I will be hard at work augmenting community overviews with rare floor plans on our most excellent Scottsdale Real Estate site.  A project requiring Herculean effort, but we Slaybaughs are of hardy stock.  Did I mention the time my old man bested Hercules, himself, 2 out of 3 in armwrestling?  Just because Homer didn't write a poem about it, doesn't mean it didn't happen.

Whether you are shopping from afar, planning a remodel or simply a fan of 2 dimensional black and white renderings, add us to your bookmarks so you can check back in from time to time to see if my progress has reached the community you desire.  I will also update this post with links to the community pages for those that are up and running. 

Old guy with the goods + Young guy with penchant for usurping content = Victory for the consumer!

Here's where the endeavor stands right now:

• McCormick Ranch Home Floor Plans

• Scottsdale Mountain Home Floor Plans

• Scottsdale Ranch Home Floor Plans

More Scottsdale communities coming soon!

Start your Scottsdale Home Search today!

In many respects, the heralded Real Estate bargains to be had in Scottsdale and the greater Phoenix area should come with the disclosures that attend weight-loss product testimonials.

“Joe Homebuyer’s results not typical.”

“Always consult a physician before launching an intensive home search program.”

“Stretch thoroughly and lift with your legs when attempting bank-owned property heist.”

For the purposes of this piece, we are going to focus on the first caveat.  Every Valley resident has at least passing knowledge of some fortunate homebuyer who leveraged the current market to score a honey of a bank-owned deal.  As big a nobody-turned-celebrity as the 170 pound guy in a Nutrisystem commercial holding up a pair of orca sized slacks as evidence of his former girth, Bob from accounting is the new gold standard for idolatry after securing the housing buy that set the office abuzz.  Before following in Bob’s considerable footsteps, however, there are a few things you need to keep in mind.  His results may not only prove atypical, but in extreme cases, constitute patently misleading advertising.

The hidden “gotcha” to many bank owned purchases right now are property taxes.  While the institution that owns the property should pay off any back taxes as a condition of conveying clear title to the purchaser, many buyers fail to properly account for the bill they will be saddled with for the next couple of years (at a minimum).  Unlike other parts of the country, where taxes are based solely upon purchase price, Maricopa County taxes are based upon the assessed value of the property.  Many falsely assume that the home they are buying for $350,000 will reflect a tax basis commensurate with that value.  As our budget revolves around 2 year property evaluation schedules, odds are very good that your current tax basis will reflect a value closer to the $1.1 million that the home sold for back in 2007.

*Click here for information about Maricopa County property taxes

*Maricopa County residents are entitled to appeal all new evaluations from the county assessor (typically go out in early February), but must do so within 60 days of the date they were mailed.  Click to begin the Maricopa County property tax appeal process online.

Another thing to bear in mind is that while the assessed value of the property is likely to decline rather dramatically over the next several evaluation cycles, expect tax rates to rise in contrast.  You should see an overall reduction to your bill in the future, but our strapped municipalities aren’t going to let go of all that revenue without a fight.  Already firmly entrenched in the red, it is an almost foregone conclusion that the tax rates will be fully maxed out to legally allowable levels to offset as much of the lost potential revenue as possible.  Your friendly, cash-strapped local government at work.

Another hidden sniper to these bank-owned bargains are Homeowner Association expenses.  While monthly fees are typically disclosed upfront (or easily determined through a few well placed phone calls), former million dollar neighborhoods can be fodder for massive asset preservation and capital improvement fees/impounds.  You might well afford the $120 monthly fee, but the bulbous community enhancement fee that is due at the time of purchase could blow an unsuspecting buyer’s budget right out of the water.  Given the many amenities that some such high end subdivisions boast, it would also be wise to expect and budget for future special assessments involving their maintenance.

There really are some amazing deals floating around the market right now, just make sure you really can afford them.  You are looking for a home you can comfortably maintain over the years, not a fad purchase that will lead to a lifetime of yo-yo budgeting.  While you might give your left arm to find the same "bargain" that Bob did, let's see how he's doing one year from now.  Is he still the water cooler rock star, or is that turkey neck starting to get a slight case of the gobbles again?  If he didn't do his due diligence, those hidden costs will eat up his calorie deficit faster than a three day bender at Sizzler.

You don’t want to end up back in the fat pants.

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Classic risk aversion for the liability-phobic mandates that an agent make no actual referral to an auxiliary service provider in the course of a Real Estate transaction.  Need a lender?  Here are the names of three professionals.  Need a home inspector?  Sift through this stack of business cards and let me know who you choose to hire.  The very thought of shimmying out on a limb to recommend a capable practitioner sends shivers up the clenched backside of some in our ranks.  Cold anticipation of the potential commissionectomy that attends a referral gone bad trumps the tug of responsibility.

No businessman walks around looking for a financial colonic, but the very real potential for having his inner sanctum legally hollowed out exists in each and every transaction he undertakes.  As such, it has become customary for many to simply ward off as much exposure as possible by abstaining from any form of guidance that can later be labeled  malfeasance or conflict of interest.  Heaven knows, if the contractor you recommend for repairs screws the electrical pooch, any rabid attorney worth his salt will gleefully encourage the client to pursue the deep pocketed brokerage (and agent by proxy) as well as the contractor for damages.  Why put yourself on the line by recommending a home inspector when the potential for blow-back on a balky A/C unit can put you directly in the cross hairs?  For that matter, why even bother to attend the inspection if the due diligence can be misconstrued for interference?  Why attend closings if your review of the documents places increased responsibility upon your shoulders for their accuracy?

Because risk deflection is not my job. 

My job is to fulfill my fiduciary obligations to my clients to the very best of my ability.  That means recommending pros who have proven their worth to me countless times in the past, rather than crossing my fingers and hoping my clients receive competent service.  That means attending inspections to physically see any defects, so as to better advise my clients and argue their cases.  That means attending the closing to ensure that the settlement statement jives with the negotiated terms of the contract.

Doing the eeny-meeny-miney-mo thing with a referral does not serve the client, and neither does calling in “neutral” to the appointments that demand an ally.  Such laissez faire Real Estating is designed only to mitigate the agent‘s risk.  While it is understandable, given the litigious nature of our culture, it’s just not how I roll.  You need a lender, I give you the name of the best lender I know.  You need a home inspector, I give you the name of the most thorough one in the rolodex. 

I would argue that recusing oneself from the crucial junctures and decisions of a transaction is not only negligent, but self-defeating.   As the surest invitation for catastrophe is to stand aside and watch the transaction happen, the best defense is, and always will be, a good offense.  Fixing potential problems, rather than hiding from them, has kept my clients happy, and me out of legal hot water to date.  Active involvement serves the interests of all parties.

I wear my big boy pants to work every day.  I put them on with the knowledge that certain forces will always be beyond my control.  Secure in that understanding, I’d much rather stand behind the repercussions of my actions than my inactions.  Standing on the sideline, not attending inspections & closings, carefully avoiding opinions … seems to me that ascribing to the Caspar Milquetoast model of risk avoidance is, ironically, the surest route to the ruin that one would desparately scramble to avoid.  Decreasing the standard of care for the client is akin to an RSVP for trouble. 

And trouble never sends its regrets.

Need a Referral to a Local Professional?  Give me a ring.

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What is it about the rain that brings the mischievous out to play? 

Real Estate sales is the type of racket that leads one to bump bellies with all manner of folk.  Over my years in the industry to date, you might say I’ve been sheltered.  For all of the horror stories that float about a brokerage regarding the customer from hell, or the underhanded agent that shafts a fellow colleague out of a deserved paycheck, the instances in which I have encountered such REALTOR kryptonite have been few and far enough between to defy instant recollection.  Challenges and difficulties, to be sure, but no readily recounted tale of woe regarding a true American consumer psycho.  Either the good people of Scottsdale, AZ are simply of good stock, or my conscious decision not to hand out business cards at the dog track every Saturday afternoon as a central component of new client acquisition was prescient.

When the downturn in the market that first became evident in 2007 gave way to a full-fledged nosedive, however, a bunch of loose cargo in the back of our plane and overhead storage bins unloosed itself.  Ending up in the aisles and on the laps of well-behaved passengers, we find ourselves wading through the cretinous stowaways in attempt to pull the decent home buyers and sellers from the acrid wreckage.  Wouldn’t you know those oily ne’er do wells always seem to reach the emergency exits first; whooping it up as they slide to safety wearing a stolen oxygen mask.  Don’t worry about granny in seat 46C.  She can hold her breath for up to 18 seconds at a stretch.

To answer a few of the more “creative” questions I have fielded recently, I figured I’d simply draft a response to which all such future inquiries may be pointed.

No, I will not help you tie up a property with a straw buyer until such time that you can amass your down payment and/or financing.  It’s a fraudulent offer, and one made in bad faith.

No, I will not write offers on 15 short sale properties at once for the same buyer.  Short sales are frustrating, but it’s not just a numbers game.  I will not grease the wheels to a seller's foreclosure by tying their property up with an offer you have no real intention of seeing to fruition.

No, I will not give you a guestimate on how long you can live in your house rent-free before your mortgagor initiates foreclosure proceedings.  There are more than enough homeowners in need of  loan modification or short sale assistance.  I cannot in good conscience help you game the system and further bog the process down for those in true need of help. 

No, I will not help you buy a property as a primary residence if I know that you have no intention of ever occupying it.  There will be many dubious, and potentially fraudulent purchases made in the rush for the tax credit, but I won’t be a part of any of them.

No, I won’t secure a tenant for the property upon which you have stopped paying your mortgage.  That “free money” that goes in your pocket until the bank forecloses and boots the unsuspecting tenant out carries a steep price.

No, I will not be party to any side agreement pay-out in a Real Estate transaction that does not appear on the settlement statement. 

Rationalize such schemes all you like, but a treacherous climate does not excuse treachery.  Not only does potential harm fall on specific parties, but on the greater good as well.  Don't look to me to make my own biological contribution to the cesspool we’ve been forced to bathe in for many moons now.  Moral and ethical constraints aside, for no deal is it worth ruining a hard-earned reputation and future livelihood.  This is how I feed my family.

Your shenanigans are not worth my license. 

Now, if you would kindly hurry up and slide into the waiting arms of the authorities below, there are good people on this plane who need my help.

It’s a daunting task.  Settled in around the bargaining table, you see nothing but pros, chips stacked to the ceiling.  Looking down at your comparatively meager stack, you’re tired of getting bullied out of hands.  Offer after offer you submit, only to fold under the check-raises from predators with pockets the depth of the Mariana Trench sewn into their five thousand dollar suits.  You are being methodically ground out of the main event.

Welcome to the Scottsdale Real Estate Market / World Series of Poker that is 2010.  The buy-in may be cheaper, but the odds haven’t been longer since 2005.  Why’s that, you ask?  The players.  The allure of the investment windfall has brought all of the serious card sharks back into the mix.  Good for the overall health of the market, but not so good for your chances of sauntering into the saloon of your dreams and winning its title on the river with a ten dollar bluff.

The penny ante games haven’t left the Valley, but the table keeps getting more crowded with first-timers, new arrivals, second home buyers and … gulp … professional investors.  It’s that last class of gambler that is making things tough on the buyers out there who can scarcely put together a 3.5% down payment.  Throwing around cash offers like a rousing round of 52 card pickup, the investor has an annoying habit of taking a negotiation and spinning it upwards.  A great property listed at the bargain price $250,000 turns into $267,500 for the lucky bidder in a few frantic blinks of the eye.

When competing with these well-seeded makos, there are several critical mistakes that buyers need to avoid if they are to keep from busting out at the table early. 

For starters, stop reading the papers.  Despite the blanket generalizations you are inundated with on a daily basis, houses are selling.  Especially in the price range you are shopping.  In fact, that 250k range is hotter than John Goodman in a polyester hoody in the middle of July.  Below is a highly scientific composite breakdown of the various market segments.

>$1,000,000:  Harboring enough inventory to choke a disinterested goat for the next two 2 years, this price range is more lifeless than a Jim Jones after party.  With few jumbo loan options and even fewer buyers in a hurry to drop this kind of dough in a schizophrenic economy, the greatest larcenies are to be had here at present.

$750,000 - 1,000,000:  Mostly dead, ala the pirate Wesley in The Princess Bride.  Only the occasional act of a miracle-making Real Estate agent results in a consummated sale.  If you can afford to shop this range, "have fun storming the castle!"

$500,000 - 750,000:  Patient has a nasty hangover, but not incapable of stumbling through the house for a bottle of Vitamin Water.  Given a couple hours and a plate of pancakes, he will return to some semblance of himself.  This price range is seeing movement for homes that were worth twice as much a few short years ago, but still in a bit of a fog.

$250,000 - $500,000:  Now we’re talking.  Especially in the Northern reaches of Scottsdale, homes in this range have their boogie shoes on.  Fortunately for all but the homeliest of homes, there are plenty of willing partners out and about on the dance floor.  Some are even adept at avoiding toes as they clomp about the market in gimungous platform shoes.

< $250,000:  Sold before you have time to jump up and slap your mama.

When you hear the reports and/or anecdotes referring to the “standard” or “average” percentage you can expect to knock off a list price, you need to understand what a ridiculous notion that grotesque simplification proves to be.  In the upper reaches of the price scale, you might very well knock 20-25% off a list price due to the lack of competition.  In the frenzied segments that most cash-strapped buyers are trolling, however, writing offers at 80-90% of list price will acquaint you quite dearly with the following reaction:

“HA! HA! HA! HA! HA!”

Fending off a throng of potential rivals, you will have to push all in when, after sitting through hand after hand of garbage cards, you finally draw the ace that constitutes a genuine housing value.  No point encouraging others to remain in the hand by going in low.  As the short stack, your only leverage is to force the issue early and hope you can stop the bidding before it starts.  Don’t give the sharks time to congregate and subsequently frenzy.  By aggressively moving all of your chips to the center of the table right off the bat, you might just chase some away to pursue easier pickings.  Let the deep-pocketed players linger for the turn and it’s all but guaranteed they will ultimately own you and the house you covet.

Price considerations aside, your next best shot to beat out the better financed buyer lies in the terms.  Hubris can be a damning thing for the guy with all the bucks, and he often fails to seek the additional information that someone in a weaker position must exploit.  Closing date, choice of title company, etc are concerns that Doyle Brunson over there just might expect to force through on the power of his awe-inspiring cash.  If your price is relatively competitive, your financed offer still has a shot at beating him out if you can find the terms that are most advantageous to the seller and include them. 

As to the homes you chase, knowing which table to sit down at is as important as the poker skills you bring to bear.  Bank-owned properties are going to be the most difficult for the novice player to obtain.  Financial institutions will sit on your offer for 3-7 business days while additional offers pile up, and they won't give a fig about any terms other than the ones demanded by their associated addenda.  It's tempting to sit down at these REO tables, given the big payouts, but it's often a fool's errand for the guy just in town for the weekend with his buddies.  You'll have more success if you stick with the slightly less lucrative owner-occupied resales that blunt competition from the pros. 

It’s not easy out there, despite all that you’ve heard, so remember to act fast, act decisively and save the gamesmanship for the slots.  Everyone wants a deal, but you can’t secure a value without first securing the property.  At prices that have rolled back to levels not seen in six to seven years, there’s no need to get greedy.  The well-positioned homes have the value already built into the price.

If you want it, and it comps out, don’t talk yourself into spitting in the wind with an offer predicated on faulty logic.  The national economy and generic offer-to-list-price-percentage paradigms have nothing to do with this one house and those who would buy it out from under you.  Long metaphor short, don’t write a $200,000 offer on a home listed at $250,000 that is worth $300,000.  Only adds unneeded time and heartache to your quest.

See house.  Evaluate house.  Make best offer to purchase house.  Buy Paul expensive, celebratory steak dinner. 

Easy :)

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