The Scottsdale Real Estate Files

We REALTORS are a narcissistic bunch.  A revelation, I know.  From the bus stop advertising that depicts an attentive agent fielding calls on a pink cell phone to the glamor shot of an agent with his toy poodles on a "For Sale" sign in front of an overshadowed house, the marketing realm is littered with examples of self-promotional prowess.  No one sells self like a house peddler.

Enter the explosion of blogging and social media.

What other profession would employ the usage of such tools to the extent that we do?  What other professional would flog a keyboard on a semi-weekly basis secure in the knowledge that the consumptive public was hanging on every innermost, poorly conjugated thought?  

Yes, the posting of fresh content keeps the attention of the search engines, and drives more eyes to our websites.  Our respective blogrolls serve as a running commentary on how we approach business and market our properties: an ever-growing resume for prospective employers, if you will.  We provide handy tips and the latest market news from our primary coverage areas.  All sandwiched around odes to our pet bunny rabbits.  And journals of our kids' kindergarten adventures.  Speaking of sandwiches, don't forget our series devoted to the amateur critiquing of local eateries.

Where are the insurance agents?  Where are the divorce attorneys?  Where are all of the professionals that are not in some way affiliated with the Real Estate industry?

Consumers do not think about us except when they need something from us, and yet we continue to pour our hearts and souls into these virtual diaries under the quaint, misguided certainty that the public actually cares.  When someone needs a hammer, they shop for a hammer.  When someone needs a house, they shop for a house.  

The guy with the hammers is satisfied with the sale.  The guy with the houses seeks a relationship.  The self-indulgent assumption on the part of the latter is that the purchase of a home is such a momentous milestone in one's life that any old professional just won't do.  Surely, an eager home buyer won't just call the number in a random property ad, right?  He will want an experienced champion of unassailable virtue and expertise to don armor and joust with sellers on his behalf.  He will want to know what his fledgling hero thinks of the current state of the market.  He will want to know where his knight in Real Estate armor is ... eating lunch?

We kid ourselves into thinking the social media craze is some new manifest destiny.  It is merely an alternate route with the same potential for leading a wayward traveler away from perspective.  As we agents tend to sell the amalgamation of our entire being as much as an actual service, it follows that we continue to pioneer such avenues of conceit.

Yes, I sell houses, but Internet 2.0 protocol mandates that I don't simply advertise my wares.  You must know what I thought of the latest Harry Potter installment, and where to take the kids to cool down on those hot summer days.  Surely the general public will not do business with someone until they learn his political and religious leanings, just as no one would think to employ a member of the service industry before reading up on his family trip to the Poconos.

Don't think my commentary on the absurdity of it all precludes me from being a willing participant in the shared delusion.  I will continue to unravel my own personal onion until there is nothing left.  No mystery left to discover. No unique perspective left to impart.  Only through full assimilation into the collective virtual mainframe does one realize his true social media potential.  

Consider it Wikipedia for egomaniacs.

So while there are plenty of homes for sale on my website, I urge you, the reader, to keep following this blog. I have opinions about the career arc of Scott Baio that you need to know before determining whether I am the REALTOR for you.

Thanks, but no thanks.  Therein lie my in-depth sentiments regarding buyer agent bonus compensation.

It’s a tricky business, this whole trust-building endeavor.  From the initial consultation with a prospective client, to the signing of the closing documents and all stops in between, a certain rapport and mutual belief in the positive intentions of each party must be developed to produce the desired outcome: namely, the purchase of the most appropriate property at the most advantageous terms.  With ample opportunity for an agent to unintentionally spit the bit along the way, warding off the encroachment of countless variables that would undermine the health of the relationship is an undisclosed facet of the job.  And what, pray tell, is the swiftest and surest endangerment of one’s relationship with the client?  Money.  More specifically, the belief, whether founded or not, that the agent is twisting his fiduciary obligation by putting his financial interests before those of the client.  That’s a relationship killer.  Once any doubt creeps into the mind of the client as to the motivation of his representative, you might as well go ahead and split the sheets.

I don’t want a bonus to sell your listing.

If your listing fits my client’s criteria, and you are offering me fair compensation for services rendered, I will show the property.  If you are offering compensation that does not meet my minimum standards, I will show the property if my client agrees to make me whole. Mind you, that’s a terrible disincentive to buyers and buyer’s agents alike, but run your business however you see fit.  What I do not require is any kind of additional spiff over and above suitable compensation.  An extra percent if the transaction closes in the next 30 days, a co-broke that is double the normal range of compensation, a week aboard the listing agent’s yacht after the close of escrow … all such supposed motivators are liable to call my judgment into question.

Am I really pushing property “x” because it represents that best value proposition for the client, or am I mentally slathering SPF 15 over my epidermis in preparation of the promised week in the Bahamas?

I’m not real keen on trying to explain to my client why I am grossing 20k on a $200,000 transaction while we are sitting around the closing table.

So while I appreciate the extra incentive a listing agent and/or seller may try to stoke via a buyer’s agent bonus, it calls my credibility into question.  Matter of fact, I will typically apply any such bonus (if monetary value can be readily affixed) to my client’s closing costs.  I maintain my reputation and my client gets an unexpected perk.  In fact, I would be in breach of my personal ethics, if not my fiduciary obligation, if I didn’t carve out such extraneous allotments for my client’s benefit.  If I am being compensated fairly for my role in the transaction, it is my duty to corral any additional nickels that fall out of the seller’s pockets for the buyer.

Want to expedite your home sale?  Put the agent bonus back in your shorts. Repackage the offering as a reduced price or concession towards the buyer’s closing costs. Make the terms more appealing to my client and you will produce the desired result. The seller gets his fast sale, the buyer gets more attractive terms and both agents get happy, referral-prone clients. Everybody wins.

If I want to go play Dread Pirate Roberts in the Caymans, I’ll do it on my own dime.

 

The current market does not favor buyers.  I repeat, the current market does not favor buyers.

Allow me to explain.  For months, if not years, you have been told that the glut of housing inventory makes for a buyer’s market of epic proportions. Why, the ancient Greeks themselves would write songs about the opportunities that abound for any would-be hero with a hankering for a house.  The only problem with this suggestion?  It’s just not true.

What is a buyer’s market?  Most would define it as a preponderance of available supply and an accompanying dearth of demand.  Let’s take a look at both aspects of that equation.

In a perfect financial world, a buyer waits for the market stars to align in just such a manner before swooping in to claim a nest at a fraction of the “normal” cost.  It all works great in theory, but real world application necessitates that the prospective buyer be subjected to the same set of variables that has drawn down the pool of demand at large. It’s a buyer’s market when few have the wherewithal to actually buy.

Appraisal difficulties and tightened lending regulations are contributing to a somewhat artificial suppression of demand. The “want” is present in the market. Consumers want to buy houses. They want to take advantage of the greatly reduced pricing and sublimely low interest rates. Homeowners want to refinance their houses so that they can stay in them, thus contributing to the lowering of the overall supply.

Want has nothing to do with it. Without ability, all of the consumer confidence and desire does not translate to actionable demand.

So to clarify the lead-in to this post, the current Scottsdale Real Estate market does not favor ALL prospective buyers, as the “buyer’s market” connotation suggests.

Further, the favorable conditions for those who are in positions to purchase do not necessarily translate to negotiable strength. Well-heeled cash buyers, W2 employees with verifiable income, solid credit history/scores, etc will find that they do not call the shots to the extent that they were led to believe. The bargain bin of bank-owned foreclosures is incredibly crowded. You are elbow to elbow with competing consumers when a new shipment arrives. The mom & pop resellers, by and large, do not have the equitable flexibility to negotiate the 30-50% off of list price that many buyers envision. The short sale properties with the absurdly low price tags are, more often than not, pie-in-the-sky figments of the listing agent’s imagination. You submit an offer 10% off list price to the bank, which in turn proves to be 40% off the BPO (Broker’s Price Opinion) that is performed three months later. The bank tells you they will gladly approve the sale – for 75k more than you offered.

While the inflated inventory levels in the housing sector are cited often enough, it is not widely reported that the number of unencumbered properties available for purchase is far less.  In a market that is most assuredly not of the “see house, buy house” variety, the redaction of readily purchasable properties (due to competition in the low end, and lien encumbrances across the full pricing spectrum) tilts the negotiation playing field back towards center.  Neither party has a clear cut advantage when facing each other at the negotiating table.

The truth of the matter is that most of the savings that you can expect to uncover have already been factored into the asking price by the time a listing is brought to market. Sure, there will be those that require substantial negotiation, and plenty others still that simply fail to sell. Never underestimate one’s ability to overprice a house. These aren’t the homes you are most likely looking at, though. The ones that buyers are flocking to in droves are those that present the best value opportunities. And why not? Just be prepared for the competition that you did not think existed for said properties in this ballyhooed “buyer’s market.”

Trying to cobble “x” percent off the list price in circumstances in which others are offering “x” above the list price will only lead to frustration.  Don’t get greedy.  Do what it takes to lock up the lowest pricing the Valley has seen for seven to eight years (longer in some areas) while interest rates continue to hover around 5%, and you are well ahead of the game.

And lastly … smile.  You are the guy that so many lament not being right now.  You know, the hypothetical guy who spurs such proclamations at office parties and cocktail hours across the Valley:

“If I had two nickels to rub together right now, I’d buy every house on the block for less than I paid for my albatross back in ‘05.”

Originally posted at the Scottsdale Property Shop

 

“You mean, it’s ours? It’s really ours?”

They were so excited. Even after I handed them the keys, they were slow to believe that the modest Spanish bungalow was now in their adoptive custody. Over the course of four exasperating months, we must have seen and dismissed close to a hundred homes. This one needed too much work. That one had a poor kitchen layout. Yet another sat on the “t” of a subdivision’s entrance: bad feng shui, or so I was told. Before the market skies parted and yielded the seventeen hundred square foot, clay tile miracle that appeared to have met extinction in their price range, our flagging spirits were all but ready to pack it in. The fated mid-April discovery saved them from another year of apartment living. A challenge, at best, with a ten year old daughter in tow, let alone with a half-baked bun in the oven.

“Can we go in,” the wife asked in a small, cautious voice.

“Of course,” I responded. “It’s your house, Liz, you can do whatever you please.”

She ignored my extended hand and engulfed me in a fierce hug. Her husband clasped my shoulder in a vice grip which betrayed an adolescence spent laboring on the family farm in Iowa. His curt nod spoke volumes.

“You’re welcome, Mel,” I replied.

“Thank you both for hanging in there. I know it hasn’t been easy, and I can’t tell you how much I appreciate the patience and trust you’ve shown me. It’s been a tough slog, but I think we got it right.”

“Yes, we did,” Mel said, breaking his silence for the first and only time that morning.

“We would like to have you and your wife over as soon as we get settled,” Liz added.

“I’d like that,” I told her.

I meant it, too. I like just about every client I take on, but felt a special kinship with this couple for reasons that surpassed the extended time spent in each other’s company. After bidding the happy couple farewell, I glanced in the rear-view as I navigated my way down the tree-lined street. Instead of going inside, they remained rooted in place, holding hands and staring up at their new home.

I received a phone call from Liz this morning. Circumstances have it that Mel has been out of work for some time now.  Another casualty of economic war.  Unsure of what to do or where to go, their only readily apparent truth is that keeping the house is an impossibility at this point.  Perhaps they'll move back to the Midwest, where Mel can look for a position on the farm. See just how much life is left in those old, gnarled hands.

This evening, I'll grab some Tums and make the long, short drive to the pleasant abode with the placard beside the front door that reads "Heltzer Residence: Est. 2005."  I'll leave the reams of data indicating a value of 40% what they paid in the car.  No sense in beating a dead house.  We'll plant a sign in the front yard and add yet another chapter to the painful narration of the Greek tragedy that is post-bubble Phoenix Real Estate.

With an epilogue that is yet to be written, we soldier on.

 

*Names and specific circumstances altered for privacy purposes

 

 

On the Island of Oncewas, there lived but one scamp.

One strangely stoic, scoundrelous scamp.

There used to be more, there used to be four.

There used to be four and eight thousand four more on this shore.

So many scamps scamping are hard to ignore.

 

But there was no need for eight thousand and eight.

Scamps all sold houses, and Oncewas lacked real estate.

So ten left, then twenty.  Then a hundred and two.

Then three thousand and sixty, and their brothers, too.

Until all had gone except Scampy Magoo,

Who continued his scamping, though there was no scamping to do.

 

Letters rolled in each day with the tide,

Tales from ex-scamps in their travels far and wide.

One read, “Not enough kitchens, and too many cooks!”

Another, “Too many librarians to put away two books!”

“I used to scamp houses, now I can’t scamp my blood!”

“Why, they wouldn’t hire dirt and water to make mud!”

 

And what did he do, old Scampy Magoo?

He sent back his very own note or two.

“Act now, you scamps, the time has never been better!”

“The sun is brighter and the sea is wetter!”

“The ship is afloat, so come on back all you mice!”

And, “Buy your old plot for 2/5ths the price!”

 

He planted his sign and bided his time.

 

The scamps first returned in drabs and in drips.

One, two, then an armada of ships.

“Sign on the line,” said Scampy Magoo,

“No need to read it all the way through.”

“Just legal jargon that’s neither here nor there.”

“It’s the deal of a lifetime, I certainly swear.”

 

They took turns handing over their very last dimes,

Until at last Scampy reached the end of the line.

He tipped his hat, bowed deeply and thanked one and all,

And took his leave as there were more ports to call.

 

With a spring in his step and a twinkle in his eye,

His shrill voice once carried over the blood red sky.

 

“Oncewas is all over, I’m sorry to say,

But follow me to Willbe where a scamp can scamp and play.

The prices are low and the mangoes are sweet,

There’s a loan for every pulse ...

 

And an ass for every seat.”