The Scottsdale Real Estate Files

There are dragons lurking in the dark recesses of your property listing.  Mean dragons. Mean, scaly, green dragons that might rise up out of their fiery lairs and go all Godzilla on your potential showings if left unchecked.

And by what name, pray tell, are these marauding reptiles known?

“REALTOR Remarks”

Ah yes, that hobgoblin of good intentions in the multiple listing service that provides for private communication amongst local Realtors.  It gives me a good shudder just to type the name of the foul beast.  Suburban legend has it that if you say it three times in front of the bathroom mirror with the lights off, you will doom yourself to a lonely stint on the market.  Why?  Because the private portion of the Arizona Regional Multiple Listing Service which is intended to impart “eyes only” information to the Real Estate sales force is home to some of the most spectacular lapses in judgment this side of New Coke.

“Do not approach cage, monkey will bite!”

“Disregard water damage in hall bathroom shower.”

“Bring me an offer, seller needs to sell NOW!!!”

From the laughable (“House is better than pictures make it look”) to the horrific breaching of client confidentiality (“Divorce situation: husband not cooperative”), one little notation in the private remarks of the listing can torpedo the price you command for your home, if not endanger the sale altogether.  Alarm codes, additional showing instructions, agent to agent disclosures – all are intended fodder for the REALTOR Remarks section.  The mistake that is often made, however, is that anything goes so long as it remains hidden from the prying eyes of the public.

The moral of the story?  Read the full property listing before your agent inputs it into the MLS. While you will most likely view a PUBLIC copy of the completed listing once it hits the system, you will not be able to see what is privately disclosed to other agents.  You will want to see a copy of the FULL listing to ensure that your best interests have not been compromised by a few careless words.

You priced the home well, staged it to look its best, had it professionally photographed, toured and dispersed to the far reaches of the Internet.  Don’t blow it now, kid.

Of course, if you want me to avoid your home like the plague, make sure your agent denotes that it “smells kind of funky, but no known presence of mold.”

In the mood to receive offers that are 50% below your list price?  Instruct your agent to notify fellow Realtors to “Bring me any offer and I’ll get it accepted!”

Unless the Stargate in the study presents a clear and present danger to those who would tour your home, best not to mention the possible credit for intergalactic species remediation.

Originally posted at the Scottsdale Property Shop

Oh, but that little house was turned out the day it landed on the multiple listing service! The hardwood floors all scrubbed and polished. The smell of freshly cut lawn and bougainvillea greeting new arrivals as they stepped out of Mazda Miatas and Chevy Tahoes and Ford Fusions.  The windows so crystal clear that the rogue speck of dirt eventually capitulated and moseyed along to a less lonesome locale.  Everything was just so as you wooed prospective new owners.

You sold your home that very first weekend.  Enchanted the buyers through your concerted efforts to distinguish a well-loved home from the abandoned dreams that haunt the competing bank-owned and short sale properties, you did.  Bent on purchasing the best bargain on the block when their plane touched down at Sky Harbor, the nice relocating couple from South Dakota instead rationalized the higher price tag of your owner-occupied home against the great unknowns that plagued the lower cost, distressed property options.  After several celebratory glasses of wine, they mentally recast the entire episode with your home starring as the greatest value proposition on the market.

It is now day 14 of the escrow period.  The home inspection, a week in the rearview, couldn’t have gone any better.  You were never all that concerned about it.  You change the A/C filters regularly and have the units serviced semi-annually.  You resealed the foam roof with elastomeric last May.  You even placed a home warranty policy on the property prior to hitting the market to fend off any unexpected eventualities, you clever fella, you.  Now, having agreed to correct the double tab at the main breaker box (damn landscapers), replace the faulty GFCI outlet at the pool equipment and fix the malfunctioning shower diverter valve in the hall bathroom, you let out a well-deserved sigh of relief.  Knowing that you have an honest to goodness sale firmly in place, you turn your attention to other pressing matters that had been relegated to the back burner.

And the lawn grows a little taller as the mower doesn’t make it out of the shed this week.  The carpet in the hall gets a little matted down from the higher than normal traffic and a missed date with the vacuum cleaner.  Aside from little Johnny’s peanut butter fingerprints on the lower third of the living room picture window and the fogged up corner of the breakfast nook window by the doggy door, the glass is still pretty passable.  The contents of your cabinets and drawers are strewn about the den and family room, but you have to break a few eggs to make a moving omelet, right?  Besides, you already found your buyer.  No more agents calling to pop in for a showing with ten minutes notice.

Thus begins the great unraveling of your sale.  You see, in 2010, you do not just stage your home for potential buyers.  Matter of fact, buyers don’t even possess the most discerning eyes that will take in your abode during the sale process.  Nope, those hawkish peepers belong to a black-hatted professional who holds the fate of your transaction in his number-crunching hands.

Once you strike a deal, you better keep the joint gussied up for the appraisal, Jack.

Besieged by stringent regulations and menaced by fire-breathing underwriters, appraisers are no longer encouraged to hunt for validation of the accord reached on the open market by a willing buyer and seller.  That’s so 2006.  These days, the poor SOBs have more incentive to impugn a home’s value than defend it.  This is not a knock on their collective competence, but an indictment of the constraints by which appraisers are currently bound.  You counter this institutional bias with the same measures you employed to overcome the price objections of your buyer.

You have to resell the house.

Do not discount the human element in a supposedly objective endeavor.  Consider the properties that most Real Estate appraisers spelunk on a daily basis.  Bank repo after bank repo, the job should come with a snorkel and a mobile decontamination unit.  Given the wide disparity in property condition in the market, the silver lining to cloudy times is an ability to add value to your home though no greater expense than meticulous housekeeping.  It’s your agent’s job the sell the objective proof (most viable comparable sales, list of upgrades / features, comparisons between the subject property and comps, etc), and it’s your job to sell the mom, baseball and apple pie.

Clean and “not-jacked-up” is the new granite counter tops and travertine floors.

There may not be an input column in a uniform residential appraisal report for “not infested with hobos,” but latitude is given for affixing additional value based on conditional comparisons to the properties selected for the analysis.  The dialed-in condition of your home will stand out in full bas relief against the tired housing din.  It is especially critical if you don’t have all of the snazzy upgrades.  You are relying on the impression of value for lack of more readily quantifiable measures.

Don’t give in to inertia prior to what has become the penultimate part of the escrow process.  Treat the appraisal as a showing appointment instead of the contractual procedure that it is and you give yourself considerably better odds at a soft landing at the closing table with the same purchase price with which you began.

Scented candles, they aren’t just for buyers and third dates anymore.

Originally posted at the Scottsdale Property Shop

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.

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