North Phoenix Agent Blog

You love your house. But you must sell. You primp it, paint it, stage it, hire a brilliant Realtor and list it for sale at a price you think is fair. And then IT happens.

You receive an offer that’s SO LOW that you can’t remember the last time you felt so INSULTED!   (#$&*^%#!!!

Stop. The most important thing to remember in a strong buyer’s market like the Valley’s in right now is this — you MUST counter every offer received (if you can’t accept it outright.) Do NOT reject that insultingly lowball offer out of hand.

The second most important thing to remember is that your Realtor is bound by law to present every offer s/he receives on your behalf. Even the insulting ones. Do not shoot the messenger.

Whatever you need to do to get over being insulted, hurt and angry, go do it. Please! I’m begging you! Go beat up a tree. Scream into your pillow until your throat resembles roadkill. Run a marathon. Take Michael Flatley Lord of the Dance dancing lessons until you finally lose those last pesky 10 pounds. If you must scream at your Realtor, do it.

Whatever it takes, get over your anger. Then, sleep on it, and do what one of my teachers Michael Valenti calls “the head on the pillow” moment. When you lay down that night with your head on the pillow, and it’s just you and your conscience (or possibly a spouse or beloved pet) think about what number will actually give you peace of mind. The lowest number which you could look back on and feel good about 5 or 10 years from now. Imagine the number that will allow you to move on with your life, happily decamping to your new home. Because quality of life is infinitely more important than holding out for the last few dollars on your sale. And 10 or 20 years from now, you will not remember exactly how many dollars you held out for. You’ll only remember the miserable extra months you had to stay in a home which you no longer wanted.

One more important point while your head is on the pillow. STOP thinking about what your neighbor sold for. STOP thinking about what the other neighbor is now asking. STOP thinking about the advice well meaning friends and colleagues have given. STOP thinking about anybody but you and your family and what sale price would allow you to move on with your life and future plans. What your neighbors did or might do, and what your extended family, friends and coworkers think you should do are actually quite immaterial here. This is a moment for you and you alone. Relish the you-ness of it.

The next morning, call your Realtor and apologize for those names you called him/her. Then calmly take pen to paper and write out a counteroffer with the number you imagined last night.

This won’t work every time. Investors look at houses differently than most of us. They have zero emotion tied up in a purchase. Your counter will meet the investor’s bottom line or it won’t. Best case scenario - you’ve got a deal and can go begin the serene new life you imagined last night. Worst case scenario - well, it’s still OK. You’ve imagined the worst that could happen - accepting the lowest offer you can afford, and you still emerged on the other side with a happy image of moving on.

If there’s no deal — I suggest calling your Realtor again. Ask him/her to readjust your list price to a whole lot closer to your newly imagined bottom line. You’ll be calling the movers before you can say “negotiation”.

Don’t Get Old Trying to Save a Down Payment!

AmeriDream is a fantastic resource for first time buyers who are having trouble saving the downpayment on house. With price appreciation like we’ve seen in the past few years, even 3% of a home purchase price can be extraordinarily difficult for first timers to save.

(For those who like my writing style, read on. If you just want to cut to the chase, scroll down to below the smiley face.)

Three percent of the median home price in the metro Phoenix area is about $8,000. Plus buyers need another $2,000 to $4,000 for closing costs. It’s super important to have some savings leftover after the housewarming party for unforseen home emergencies, which pop up like those Whack A Mole games at the arcade. Then, it’d be nice to have some money to cover a few cosmetic upgrades once you’re in the house - like maybe switching out the lighting fixtures from 1973 - ’cause the median metro Phoenix price of $263,000 doesn’t buy granite counters and stainless steel appliances in this town. All in all, you’re gonna need about $10,000 or $15,000 grand to do it right. Sure, you could skate by with the bare minimum savings, but being house poor leads to lots of dinners based on ramen noodles.

How in the heck are first  timer homebuyers supposed to save up all this money?! You could do what my cousin in Pennsylvania did. He lived with his mother in law for 3 years while he (an architect) and his wife (a loan processor) saved pennies. They accumulated $40,000 at  the end of the three years. Bought a house and six months later my cousin saved his marriage by refinancing to pull out a little equity. He used it to “help” send his mother in law to far away Florida.

Or, you could rely on AmeriDream. Here’s how it works. Federal housing law allow 5 types of people/organizations to gift down payment money to a home buyer. Sellers are expressly banned from gifting down payment money to buyers. Group 1 is parents. Parents are allowed to gift money to kids. (There’s 4 other categories: government entity, religious organization, 1 I can never remember, and the 1 below).

There’s a lovely little loophole in federal law which allows a non profit agency to gift down payment money to buyers. Somewhere back in the 1990’s a couple of nonprofits appeared and did just that. Nehemiah Corp is the other one I’m aware of.

These nonprofits set up a neat little triangle, so to speak, between the seller, the buyer, and themselves. The seller agrees to make a “donation” to the nonprofit org in the amount of the buyer’s needed down payment, plus a small administrative fee that’s usually about $300. The nonprofit turns aroun and “gifts” the down payment (minus their admin fee) to the buyer. The title/escrow company coordinates it all after the Realtors write it all up in nice legalese. And it’s all totally legal, tested by dozens of lawsuits. Most recently, last October HUD sued AmeriDream and got their shirts handed to them in federal district court.

AmeriDream claims to have given out over $400 million in down payment assistance grants which translates into over $14 billion in housing. Nehemiah says they’ve given out over $999 million in grants. I love this country!

If you’re a buyer who wants to use a down payment assistance program, ask around until you find a Realtor and a lender who done these types of deals before. There’s only a little extra paperwork involved, but the deal goes a whole lot smoother if “your people” know how to explain it to the seller properly. Hmmm…. I’m a Realtor who’s done AmeriDream deals. Nehemiah Corp too. Hmmm….

When was the last time you heard anybody recommend that you ask a prospective Realtor how good they are at taking photographs?  Probably never. It’s not something that most people think about asking in the process of interviewing a couple of agents in order to choose a Realtor.

But, with nearly 90% of today’s consumers starting their home search online (and a whopping 24% actually buying a house they found online) it’s crucial that your home’s online presence be pretty near perfect.

You can check out a short and sweet post explaining the critical nature of photographs. Click here. It’s from the GeekEstate bloggers. I love those guys! Basically, this photograph is a problem. (I didn’t want to infringe on any copyrights, so you’ll have to click on it to see what I mean)  The front-of-home photo in that link will almost certainly make you instantly uncomfortable. The vertical lines of the house look crooked because the agent who took the original either had the caffeine shakes when s/he took it, and/or didn’t photoshop the image before posting online. 

Ooops, I’ve probably offended the Photoshop people by using their trademark as a verb. I’m a former trademark paralegal and I know that just makes TM lawyers gnash their teeth and tear at their clothes.

While you’re at it, ask your Realtor how many photos s/he posts online. The metro Phoenix MLS allows 6, and Realtor.com allows up to 25 pics!  NAR studies (from 2005 I believe) show that homes with multiple photos get 299% more views than those with only 1. Wow!

In the metro Phoenix area, potential online buyers clicking next because your photos aren’t gorgeous is a big problem. We’ve got over 55,000 homes for sale. It’s common for buyers to have 200, 300 or even 400 homes to choose from that suit their needs. It’s crucial that your online photos, virtual tour and written description capture as many interested parties as possible.

If you’ve hired a Realtor who posts subpar photos or only 1 photo, you’ve shot yourself in the foot before you begin. But hire a Realtor who takes time with her photos and online browsers will see this - the same house with crooked vertical lines all fixed up.  Ahh, much better.

Best way to unclog a clogged showerhead is to soak it in vinegar. You can do this without removing the showerhead. Use a heavyduty gallon sized zip top bag. Heat enough vinegar to fill the bag, then tie it around the showerhead. Leave it there for 8 hours or overnight. Voila!

Taken from the Yankee Magazine’s book Make It Last.

The Due Diligence Period in a home purchase contract is the time during which the buyer conducts any and all inspections of the home that she/he chooses.

The Due Diligence used to be called the Inspection Period. Most agents and home buyers/sellers still call it that. The AAR changed the terminology to Due Diligence when they overhauled the language in the purchase contract in May 2005.

Legally, buyers can pretty much take the house apart brick by brick and inspect it all, as long as they put it all back together again the same way it was. Practically speaking, most buyers get a general home inspection and often a termite inspection. Some add a roof inspection, a pool/spa inspection, a mold inspection, and maybe an inspection of the heating & cooling systems.

Buyers usually pay for their own inspections (although who pays is technically and legally negotiable). Almost all inspectors require payment up front. Termite inspectors are the one exception. I’ve worked with many termite inspection companies that take payment out of the escrow funds when the house closes.

Typically, the Due Diligence Period lasts for 10 calendar days, although buyer and seller may negotiate for more or less. It’s important to note that the Due Diligence Period — and all contract time periods — are counted on calendar days. Weekends count. Holidays count. The Due Diligence Period begins on the first full day after the contract is signed by both parties and delivered to both.

After the Due Diligence Period ends, the buyer and seller have a chance to negotiate again over which recommended and/or requested home repairs are completed.

RE/MAX 2000 broker Bob Kline shut the doors of his RE/MAX 2000 franchise offices this weekend, putting about 350 people out of work.

A Realtor formerly with RE/MAX 2000 was quoted in the AZ Republic saying that all the agents would be just fine and they’d find new brokers to hang their licenses with in no time. Which is true.

At least for the agents who were actually producing deals.

Apparently, it IS true that nobody NEGOTIATES home purchase contracts on Christmas Day.

Real estate is filled with pithy sayings, old legends, and rules of thumb. I’m sure most professions are the same. One of the old sayings in real estate is that “nobody buys a house during the holidays!”

BTW, I hope I didn’t upset any non-Christians with my title. It’s getting so hard these days not to upset somebody or another. It’s just that “At Christmas” fits better visually in my title bar than “During The Holidays”.  Nothing more.

So, is it true that nobody buys or sells real estate during the holidays? I hope some of my readers — espeically those who read but don’t comment regularly — will help me refute this “truth”.

I’ll start: today, Christmas Eve, I’m inking 2 deals. They’re smallish, so I’m not bragging here. Just trying to say that we should all take myths about real estate with a grain of salt.

Everybody else? Tell your story of buying or selling a home during the holidays.

A really common question I’m asked by buyer clients (especially first time buyers) is, “How much earnest money should I put up?”

Technically, I’m not supposed to tell you. I think this was a rule dreamed up by the legal eagles in our profession. They worry that if Realtors simply tell clients what to offer, how much to put down, how much earnest money to use, and so forth. . . . well, we’re essentially price fixing and could be sued later by disgruntled buyers who are having buyer’s remorse.  At least that’s what I remember from my rookie training classes. I used to be a paralegal and have lawyers in the family, so I’m pretty ultra-sensitive to the myriad of ways agents get themselves sued.

Since I like to keep on the right side of my company’s legal department, and since I haven’t got a brass farthing worth suing me over, I won’t state a ‘proper’ earnest money amount here. But I’ll explain what’s typical, and what earnest money is and does.

Earnest money is the amount of money a buyer submits with an offer to purchase a house. You actually write a check and send it (actually, usually it’s a xerox copy of the check) with the purchase offer sent to the home seller. Earnest money proves the buyer is ‘in earnest’, or serious about buying that house. If the seller accepts the offer, the earnest money is immediately deposited with the escrow/title office. It becomes part of the purchase price of the house.

For example: Buyer looks at a house with an asking price of $29,900. Buyer makes an offer of $25,000. That $25,000 is made up of — (1) $4,000 cash down payment, (2) $1,000 earnest money, and a promise to get a home loan for the remaining $20,000.

One rule of thumb about earnest money is, “put up as much earnest money as you can afford to risk.” The risk bit is important. Earnest money is forfeitable if the buyer breaches the contract. In plain English this means that if you, the buyer, back out of the purchase after your Due Diligence period, the seller has the right to keep your earnest money as compensation for the lost time on the market. I’ll write more tomorrow to explain Due Diligence - it’s essentially the timeframe for the buyer’s inspection(s).

Huge thanks to Agent21 who answered my in-post question on December 18, 2007 about how home builders make it on such tight profit margins. What a great busload of info you provided! I appreciate it. I’ll keep reading yours if you keep reading mine! 

I don’t have a crystal ball, but I’ve been keeping a running mental list of signs the market might be picking up.

I’ve got real buyers calling me suddenly. I could have moved to Phuket, Thailand from March to November 2007 and nobody would have missed me. But since mid-November I’ve got serious buyers calling. They want to buy a house in the next 1 to 3 months, have savings in the bank and a good credit score. Not every one pans out, of course. But having serious buyers call is a huge improvement over most of 2007, when buyers constantly whined, “I want to wait and see if prices are going to drop some more.” I actually stopped holding open houses for a while so I didn’t have to worry about going postal on the next person who whined that phrase at me.

Sellers have stopped fighting me on pricing. Not every one mind you, but by and large my seller clients are listening right from the start when I tell them, “No, drop $30,000 off that price and we need to spend $2,000 on staging before we list it.”

Homes Are Selling. I’ve almost sold all my listing inventory. Granted, I don’t quite run with the big dogs yet, but I had a healthy inventory of listings for a 3rd year agent. Most have sold and the few that remain show signs of going soon. Also, one of my buyer clients sent me a list on Thursday 12/13 of 7 homes she wanted to see. We went out on Sunday 12/17 and 3 of them went under contract since Thursday. That hasn’t happened to me in about a year and a half.

Numbers moving incrementally in the right direction. Number of homes for sale and number of houses actually sold are moving incrementally in the right direction. Inventory is slightly down and sales are slightly up. We’ve got a long way to go, but it’s good to see some progress being made toward a more ‘normal’ market.

Appraiser activity is up. Heard Jay Delich speak today. He’s a local appraiser who’s got 36 years in the business. He says his phones have been ringing off the hook for the past 3 weeks. Some of that work is for refi’s and relocations, but he made a special point of telling a roomful of 150+ Coldwell Banker agents that he’s busier than he expected to be.

Is this a trend or a fluke? Sadly, the only way to know is to see the December and January 2008 month-end stats. But I’m hopeful. ‘Cause even though Thailand is really pretty and really cheap to live in, I really don’t want to move there. I’d rather stay here and sell houses.

Realted Post : Home Sales Rise While Prices Dip

According to the National Association of Home Builders, when you buy a new home here’s the breakdown of where your money goes:

.

.

26% of purchase price - Finished Lot
51.7% - Construction
1.8% - Financing
5.8% - Overhead and General Expenses
1.9% - Marketing
3% - Sales Commissions
9.8% - Profit

This is interesting for a couple of reasons. First, it was published in early 2007 when the builders hadn’t woken up about the market changing 180 degrees from the boom days.  Back then, builders were militant - they wouldn’t pay a buyer’s agent a commission unless the agent accompanied the buyer on the first visit and offered a pint of blood to boot.

Nowadays, builders are offering silly-crazy incentives to lure buyers and the agents who represent them. Free pools, tens of thousands of bucks for spending in the builder’s design center, 4%, 6% or even 10% commission to the buyer’s agent. I’ll be watching for the 2007 numbers. Betcha builders commission expenses have gone waaay up now that it’s really stinking hard to sell a home.

Second, I’m surprised the builder’s profit margins are so narrow. I’d love to hear from any readers who have inside knowledge of the home building market. I’m just having trouble believing that builders are making so little.

Moto Sushi
6845 N 16th Street
Phoenix, AZ 85016
(602) 263-5444

Since I think I can get in trouble for posting a copy of Moto’s logo…
And since I haven’t had a spare minute to myself lately to visti Moto, order, and photograph my food…

I’ll just note here that Moto Sushi on the SE corner of 16th Street & Lincoln/Glendale is sublime. The decor is minimalist, as a sushi joint should be. The service is quick. Servers are usually dressed with a bit of style and quirkiness (my favorite is the 20-something girl who looks a bit like Janine Garofalo and does her hair and makeup a bit like Snow White).

Happy Hour from 3pm to 7pm weekdays with great specials on drinks and eats. They’ve got the usual assortment of sushi for beginners (i.e. California rolls) and for pro’s (i.e. sea urchin - which to my mind will never look like anything other than baby food - after it’s passed through the baby). They’ve also got a super Secret Squirrel menu that the owner and some waiters carry about in their pockets.

Anyplace you can order off a secret menu is just right by me.

Totally off topic, but I’m overwhelmed by the number of passwords and passcodes I’ve got to keep track of.  I’m sure I’m not alone. Modern life means we’re all walking around with multiple passwords in our memory banks. I just counted - I’ve got 46 passwords. How ’bout you? Anybody reading have a good idea for streamlining (or even just keeping track of) your passwords?

Sorry for the abrupt change in the look of this blog. Suddenly a couple of days ago the widgets in my sidebar fell off (that sounds painful, doesn’t it?). In English it means that my broker’s logo, the RSS feed button, the calendar & archive areas — they up and disappeared. I found them, finally, camping out waaaay at the bottom of the blog. Hiding, they were <Yoda voice>.

The quickest way I could figure out to fix it was to change the look of the blog. Hope y’all like it.