The Scottsdale Real Estate Files

I believe it was Confucius who said that he who hesitates gets flattened by an 18 wheeler laden with 10 tons of abject irony along life’s crooked highway.  Or was it something about those who dally within the confines of a centrifuge being at great peril of becoming centrifugal?  Regardless of the exact phrasing, the veracity of the axiom is never more resplendent in self evidence than in its pertinence to a Real Estate transaction.  Get in, get out, and for God’s sakes man, do it on the quick step.

Case in point: 

August 8^th, 2009.  The night was warm and dry.  Once again defying all logic, Phoenix did not burn up upon reentry into this late summer evening, and its denizens scurried out of air conditioned alcoves to forage for supplies as the sun dipped below the White Tank Mountains in the far Western sky.  Taking full advantage of the reprieve, I was amongst the throng vying to get sixty eight errands done in a three hour span.  That’s when the call came.

A little background.  A client of mine purchased a beautiful home in Queen Creek two years ago.  One job transfer and complete meltdown of Western civilization later, the home is unfortunately worth about 50% of its prior value.  So we attempted to hammer out a short sale.  Rife with frustration, incompetence, duplication and other multi-syllabic words, short sales are the very antithesis of expediency.  It takes forever and a day just to get a negotiator from the bank assigned to the transaction.  Once the negotiator is assigned, it can literally take weeks just to choke the direct phone number to the cave where they hide him out of a disinterested call center employee. 

It’s crazy.  It’s maddening.  It’s 2009.

The upshot is that 6 months and many stops and starts later, the deal we secured was approved by the bank and headed for closing.  Loan docs were in and we were set to put a ribbon on the whole shebang in two days.  It didn’t matter that the bank had screwed up the first approval by providing an unrealistic closing window.  It didn’t matter that it took an additional three weeks and a new set of BPOs (broker price opinions) to get the closing timeframe extended to a reasonable period of time to line up the buyer’s financing.  It didn’t matter that the buyer had nearly backed out several times during the interminable wait as concern mounted about the continued erosion in values.  Or that we had to sweat through an appraisal in August for a sale that was negotiated in February.  We were finally at the finish line.

And then the fateful call came.  Had the pool service not been performed?  Was there new damage to the property?  No, we had somehow managed to ride out the entire escrow without incurring any additional issues with the home itself. 

The buyer lost his job.

Called in over the weekend and informed that his services were no longer wanted, months of work went straight down the portal to Real Estate hell that opened up under our feet.  More pointedly, months of waiting went down said portal.  Had the lienholder acted with the expediency and urgency that actual Real Estate professionals understand is vital to the successful culmination of a transaction, the unfortunate eventuality would be somebody else’s problem.  Instead, the hot potato remains firmly in the bank’s seared hands.

Time kills deals. 

The glacial pace that most institutions operate with only serves to demonstrate why bankers should stick to banking.  The moral that the average consumer can take from this tale of woe is that you never take a Real Estate sale for granted.  Things can and will happen between contract acceptance and closing.  To limit those things that can sink your battleship, you want to get to the closing table as soon as humanly possible.  Death, job loss, a bad night in Vegas … any manner of variable can rear its red inked head to sabotage your sale. 

When you have the opportunity to close, close.  If that means you have to reschedule the movers and change the turn-off date on your utilities, so be it.  A little inconvenience is cheap insurance against catastrophe.

Flattened by the big rig and dizzy from centrifugal force, we limp back onto the market.  Nimble as we can be with a 500 pound gorilla in tow.

There is always opportunity in the margins.  Unfortunately, margins tend to attract the marginal.

The latest water cooler rumbling to emerge from a recent tour group meeting centered on a purported professional short sale negotiation company.  Here in the Valley, short sale negotiation has become its own cottage industry in the past year and a half, and for good reason.  Most Realtors had never encountered a short sale before the recent woes in the market.  You can include me among those ranks.  As such, there has been great demand recently for third party professionals who know the drill and have contacts within the various institutions for expediting the process.  While the skill-set required to negotiate with the bank is really little more than gumption, persistence and know-how, the learning curve can be steep, and the time commitment impractical.  Many agents would rather enlist the help of a specialist to handle this critical portion of the transaction than practice on their first few short sale clients.  The stakes are too high for an erstwhile, but bumbling rube to fumble it all away.  For many of us, it just makes good, practical sense for all parties involved.

Now comes the “but.”

Back to the recent tour meeting of which I mentioned, the latest scuttlebutt is that at least one major short sale negotiation company is the focus of an open investigation.  It seems there is some question as to whether this outfit was utilizing fraudulent measures to cash in on a much grander scale than the stated fee of their services.  Nothing has been proven, and no charges have been filed to my knowledge (hence the glaring omission of the company name here), but the concern is that this company might have engaged in the “double escrowing” of the short sales they were hired to negotiate.  Plainly stated, upon receiving an offer that both buyer and seller had executed and forwarded to the negotiator to submit to the bank for review/approval, this company is thought to have tabled said offer and worked to negotiate an even lower sale of their own with the bank.  Once accepted, they would orchestrate the virtual simultaneous closings in which they bought the property from the bank and turned around and sold it to the buyers at the higher price.  Neither the buyer nor seller would ever know that there were actually two transactions taking place concurrently.

Of course, if the negotiation with the bank failed, the buyer and seller would simply be informed that the offer had been rejected … eventually.  Even though the bank never saw it.  The buyer wouldn’t be overly thrilled to learn of this, of course, but the seller is the one who really stands to lose in such a scenario.  He is the one with the imminent foreclosure and interminable credit limbo on the line while the entity hired to negotiate on his behalf plays Russian roulette with his financial well being.

So while nothing is proven in this instance as of yet, it serves as a consumer alert.  While I was careful in the selection of the professional I have enlisted to negotiate with the various banks on my sellers’ behalf, some might mistakenly believe that any fly-by-night company that has branded itself as a “short sale negotiation specialist” is reputable.  Just as you would exercise diligence and perform your own investigations in the selection of your Realtor, don’t let your guard down when settling upon the service enlisted to actually talk to the bank.  Find out how long they have been in operation.  Are there any complaints lodged with the Better Business Bureau (though some may be such neophytes that they haven’t been around long enough to incur complaints)?  How long has your specific negotiator been involved in either the Real Estate or banking industry prior to their current position?

Maybe I’m just jumping at shadows, but I can’t help but wonder if this is a niche that won’t prove to be populated by failed Realtors, loan officers, car salesmen, financial advisers, taxidermists, Maytag men and arthritic slow-pitch softball umpires in hindsight.  There are some good ones out there who are absolutely invaluable to the busy Realtor and desperate seller alike, but I am under no illusion that there aren’t more than a few soulless chasms of dollars and teeth hiding behind the polished veneer of a snappy tagline as well.

When dealing with a property that you are trying desperately to sell before the bank forecloses, the stakes are elevated to financial Thunderdome proportions.  If your short sale survives the fight, you will walk away with a limp (credit damage, possible tax ramification, etc), but at least you walk away.  A foreclosure will effectively kill your aspirations of future home ownership for the next 5 years.

Choose your weapon wisely.

*Visit the Scottsdale Property Shop for the latest news in Scottsdale Real Estate*

If you are reading this post, I don't need to bring you up to speed on the power of online media.  You went to your search bar, whether Google, MSN, Yahoo, etc, and typed in a few keywords (Selling A Home In Scottsdale AZ, perhaps?) and here you are.  You likewise understand that today's home buyers perform thousands of similar searches every day with slightly different keywords (Homes in Scottsdale AZ, for example).  Gone are the days of waiting for the Sunday paper to clip the classified ads and open house listings to find a home.  Gone are the days of waiting for much of anything, as a matter of fact.  The internet provides 24/7 exposure for your home on the medium where the overwhelming majority of big game house hunters begin their quest.  That's where we come in.

I'll take ... that one!

With a reach that spans continents as well as states, the Real Estate blog that you are riveted to at present is viewed by buyers from around the world.  I'd have to check my visitor stats, but I believe the only locale from which we have not received an inquiry from a prospective home buyer is the planet of Zoltar, which lies within the fourth dimension of Saturn's largest moon (Titan, for all of you keeping score at home on earth). Zoltarians are notorious tire kickers anyway.

If there are buyers here, we'll find them!

So how do you harness this power for good (read: to sell your home)?  The answer is so rudimentary that you are already rolling your eyes at the condescending simplicity of the pitch.

List your Scottsdale, Phoenix or Paradise Valley home for sale with Ray & Paul Slaybaugh!

In addition to prominently displaying your property in front of an armada of prospective buyers, this Little Blog That Could ™ includes a subscription base of hundreds of Realtors from around the country and Canada.  That's what you call synergy, folks.  Every contact leads to an additional pool of previously unreachable buyers.  The more buyers that are exposed to our propaganda, the greater the likelihood of not only attracting a suitor for your home, but in maximizing the ultimate sales price.

Yes, your home will still be exposed to the market by traditional methods.  Flyers, virtual tours, broker tours, enough digital pictures to choke a small animal with mega-pixels and the invaluable face to face networking that makes an experienced agent a prerequisite to the home selling adventure.  Your home will also appear on all of those formerly cutting edge sites that aren't so cutting edge anymore (Realtor.com, etc).

When it comes to selling your home, the bottom line is not just what your agent does, but how he/she does it.  So scroll through my blog archives, see how we market our properties via the Web 2.0 medium and learn a little about us in the process.  Consumers have more information at their disposal than at any other point in the history of man.  They are an insatiable collective beast.  Hungry to buy, you nonetheless can't feed them until they have seen the menu.  Your home may represent the juicy filet mignon to your neighbor's greasy hamburger, but if your waiter never tells them about the specials ...

So call us today to see your Scottsdale home up in these virtual lights!

__________________________________________________________________________________________________________

Ray & Paul Slaybaugh

Realty Executives

(480) 220-2337

paul@rayandpaul.com

Selling Scottsdale Since 1974

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.

As I have for the past seven or eight years, I'm participating in a Fantasy Football league this fall.  Well, participating is a bit of a misnomer.  Between familial and business commitments, not to mention a recent move, my performance has been somewhat ... lackluster.  In fact, I have no idea who I even ran out there the first weekend.  Whoever it was, they were good for a forty point thrashing at the hands of some geek in Philadelphia.  When I finally bothered to check in a few days ago, I was surprised to see that the automated draft had actually produced a few big-name players for me.  Carson Palmer was slinging the rock.  LT was toting it.  Two of my three starting wide receivers are Pro-Bowlers (for you non football fans, that does not mean that they compete on the professional Rock'N Bowl circuit during the offseason).  My kicker had the requisite unpronounceable last name to ensure he was raised to boot an oblong piece of stuffed synthetic pigskin through two yellow poles.

The computer obviously thought enough of the statistical prowess of these players to assemble the motley crew that would come to be known as "Phunk U."

Funny thing about those computers and their data, though.  It's the very same mantra you hear from financial guys ad naseum:  Past performance does not necessarily dictate future performance.

All of those pretty stats from last season would have made a good starting point, but they are still a year old.  A professional athlete's performance may be affected by many things.  Health is first and foremost in the order of importance.  The stud running back who found the end zone fifteen times last year might have dinged himself up during the preseason and lost a bit from his peak ability.  Shoot, he could have hurt his pinky toe playing footsie for that matter.  There is also the matter of teammates.  Suppose that same running back was following a 275 pound fullback with a head the size of a Prius through the defense last year?  If Sir-Blocks-A-Lot took a free agent deal to play elsewhere this season, our boy is going to have to fight a lot harder for the yards that came so easily in the past.  Then there is the issue of his contract.  What if he was playing in the final year of his contract last season?  He played out of his gourd as a man only can when he smells a new deal.  Preferably one with more zeroes than you'd find in the Oval Office right now.

Once the man gets paid, he might have a hard time recapturing that lightning in a bottle.

So where is the rather flimsy analogy amidst Paul's Guide to Fantasy Football Futility?  Aside from the evident truth that Carson Palmer is about as worthless as sanity at Gary Busey's beach house, it is this simple message to sellers:

GET YOUR HEADS OUT OF 2005

Trust me, I know the house across the street went for $575,000 a couple of years ago.  I sold it.

I know what the house a couple blocks over fetched a year ago.  I sold it, too.

As difficult as it is to let go of the high water mark, let go of it we must.  Properties that sold six months ago, let alone two to three years ago, are obsolete.  Just as you wouldn't have accepted the premise of pulling sale comps from 2004 during the height of 2005, when the month to month appreciation rates were staggering, you simply cannot base your current market value on yesterday's statistics.

Trust me, I wish we could.

Every time values fall, we agents take a pay cut.  We don't like that.

So when I, or one of my esteemed colleagues, break out the recent data to discuss your home's present value, please be aware that we know all too well about the Carstons next door.  Same for the Richardsons down the street. Those sales aren't just stale, they're hockey pucks.  

I could nod my head and allow myself to be persuaded, but I'd be a lousy agent if I let my potential clients sell me on value.  This is what I do.  All day, every day.  In a difficult market, I will not waste your time, nor my own, inflating your head with a Disneyland expectation, only to produce state fair results. 

My pledge to you is complete and total honesty in not only providing a reality-based professional opinion of value, but in everything I do.  Seems odd to need to say that, but I wish more would. 

Time for me to go set my lineup for tomorrow's games now.  LaDainian Tomlinson is questionable with an injury, and just doesn't appear to be the same running back without Lorenzo Neal blocking for him. 

Hmm ... he did run, catch and throw for a touchdown in the same game back in 2005, though.  Tough call.