North Phoenix Agent Blog

The Fed cut the Fed funds rate by another 1/2 point today, for a total of 2.25 points since September. Now sitting at 3.0%, this is the rate that banks charge each other for short-term loans.

See the stock-centric review of the move at the Wall Street Journal.  Traders on the floor seem to expect another 1/4 point cut in March, and some say the Fed hasn’t gone far enough to bail the water out of America’s sinking economic boat.

For a little happier viewpoint, see the LA Times review of things.  I love this story simply because it includes the quote, “I think the Fed is bonkers.”

Bank of America and Countrywide Mortgage are still expected to trip happily down the merger aisle later this year. Even with speculation growing rampant in the last few days that the deal would fall apart, one of BofA’s big cheese types said this week that he’s still in love.

NEW YORK (MarketWatch) — Bank of America Corp.’s chief executive said Tuesday that despite significantly larger losses that reported earlier Tuesday, the bank will forge ahead with the acquisition, saying that the planned deal is still “a go.”

This heartens me. I think that BofA is playing the role of the typical savvy investor. The age-old maxim of “Buy low, sell high” sticks around because it’s true. BofA surely doesn’t intend to sell, but the “buy low” part still sticks. Acquiring Countrywide will make BofA the nation’s largest mortgage lender for the cost of about $4 billion. That’s not chump change, but for BofA it’s not pie in the sky either. They obviously see a long-term return in taking over Countrywide’s top lender spot.

I’m starting an ongoing feature of this blog, which is basically just a recounting of my daily schedule. It will always be called “Real Estate Agents Make Too Much Money” and it’ll always start with this little house made of 50’s.
 
Why? Because I’m tired of defending myself to people who think I earn tons of bucks for very little work. This? Is a myth. I work a few more hours than the average US white collar worker, and I make a few more bucks than the norm.
 
Case in point: I’m about to launch a listing program with a home seller. The project outline includes repairs, staging, marketing, coordinating showing feedback, negotiating the eventual purchase offer, negotiating all over again when the buyer’s inspections are done, shuttling paperwork back and forth between the seller, buyer, lender, title company, inspectors and appraiser, and finally! helping my seller move out of his old home.

The project timeline is 3 months from start to finish and I’ll be putting in an hour to four or six hours every day, on this home alone. Monday through Friday and weekends too. Holidays too, while we’re at it.
 
My expected gross pay for this deal? $7,800. That’s before taxes and expenses. I’m estimating 3 hours a day, 6 days a week, for 12 weeks. That’s 216 hours of work to get that home sold. Do the math - I’m making $36 an hour, gross. Is it a lot? Probably sounds like it. But wait, there’s more!

That $7,800 is mine only if the home sells. If it doesn’t, I get bupkis. Nada. Nothing. I spend my money marketing the home whether it sells or not (flyers, yard signs, MLS membership, ads sent to other Realtors, postcards sent to the neighbors, open houses & parties hosted in the home, etc., ad naseum). Then add in the typical overhead of cellphone, printers, toner, fax, Internet connection, website maintenance, car expenses & insurance. Then add in the IRS’s cut of my take home pay because on top of my regular income taxes, I pay 12.5% in to the Social Security system where regular employees only pay 6.25%. Don’t forget to add my insurance & liability expenses.

My expected take home pay on this deal is about $3,800. That pays my mortgage, food, pet care, and all the daily expenses of life. Compare that to 3 months worth of your own paychecks and get back to me on whether I make too much money. While you’re comparing, remember that you get paid for sick days and have a vacation package and a 401k too. I have none of those.

I’ve traded all that security for the luxury of arranging my schedule to suit me, and the fact that my potential for earnings is only limited by my own hard work. I don’t get up until 7am and don’t usually start “real” work until 10am. I deal with emergencies, emails and my little-used gym membership until about 10. But I work until 12:00 midnight or later. Some days I get a 3 hour lunch to eat & run errands. But some days are 13 hour marathons and I eat in the car on the run, out of my little cooler stocked with apples, trail mix, water and hand sanitizer. My first summer in the home selling biz was 2005, the year of our real estate boom. I survived on apples & trailmix for 6 weeks straight because I never put in fewer than 13 hours a day, 7 days a week in that time. That was the bad news. The good news? I lost 15 pounds in 6 weeks and helped 3 families realize the American Dream of home ownership.
 
Next installment of Real Estate Agents Make Too Much Money will have an actual schedule from my dayplanner for this deal. I’ll keep posting from time to time, and let readers decide whether Real Estate Agents Make Too Much Money or not.

Was blog browsing this evening and found this excellent video about recycling cell phones, and the environmental consequences of NOT recycling them. Did you know that recycling 200 cell phones produces enough gold to make a new ring? Shiny! <inside joke for any Firefly fans reading>

I’m out trying to make another set of buyers happy - not a lot of time to blog just now.

We’re looking at exciting stuff too, and these buyers seem like a really great couple to know. They know how to have fun!!!  They’re motorcycle riders and want - really want - to live in downtown Phoenix and utilize our future light rail.

Plus, these lovely folks didn’t even grumble when I locked my lockbox key inside a listing today! I’ve been in this biz almost 4 years now and I’ve never done that once. You can believe I was cursing a blue streak under my breath when I realized what I’d done. Lockbox key locked inside a home equals no more entry to homes for this gal. We’re left standing on the sidewalk in front of the condo, with no way to get in to any further homes. Double Yikes!

Luckily, as I mentioned, my ultra-cool-cat urban high-rise type buyers didn’t flinch. And just as luckily, we had an appointment at a new build site that requied no lockbox access. And, thirdly lucky, the local specialists there (RooPho Realty) bailed me out by walking from their chic little office at 610 E Roosevelt over to where I’d imprisoned my lockbox key a few units away and retrieved it for me.

Bless those boys! And thanks to my St. Louis buyers! We’ll find something terrrific tomorrow or die get tired trying.

Readers: want to see what we’re seeing? Click on over to my website at www.NorthPhoenixAgent.com and go to the properties section. Click to “Search the MLS” and look for 2 bedroom condos from $275,000 to $385,000, in ZIP 85003 and 85004.

This is a truly lazy post, just a reposting of an interesting idea I saw on CreditBloggers which I read regularly through my Google reader.

Apparently, Capital One has a build-your-own credit card. See http://www.creditbloggers.com/2008/01/capital-one-say.html

So in addition to having rampaging Vikings in their TeeVee ads, they have a really pretty hook-y idea for getting folks to sign up for a new credit card. Deviously clever!

A quick and easy recipe for household window cleaner, courtesy of Heloise.

12 to 16 ounces water
1/2 cup white or cider vinegar
1/4 cup rubbing alcohol (70% solution)
1 to 2 drops blue or green food coloring (optional)
1 to 2 drops of your favorite essential oil (optional)

Mix it all together in a marked spray bottle. Bonus: use newspapers to wipe with - no streaky windows and you’re recycling. Wipe one side of the window horizontally and the other side vertically so if you do get drip marks, you’ll know which side to re-do.

Thanks to my friend Shailesh over at The Arizona Mortgage Guru, I’ve been MeMe’d. I’m such a tech geek I had to go look up meme in Wikipedia.  Here are the rules: (1) list 7 things about yourself, (2) tag 7 people to do the meme on themselves including a link to their site.

1. I used to play with finger puppets and tell stories to children for a living.
2. I can only do math in my head when it’s money.
3. I only go to the gym regularly when I’ve met a new, interesting man (yes, I’m unmarried!)
4. I have 3 cats - which scares off any interesting men I meet in item #3
5. I once worked at a job that required me to help a young man find an escort service that accepted personal checks.
6. I nearly died from asthma attacks 3 times before my 1st birthday.
7. The new singer of the old band INXS asked me to dinner soon after he ‘won’ the band on reality TV.

I’m tagging:
Jay Thompson, Doug Ingersoll, Steve Belt, John Wake, The House Chick Kelly Koehler, Chris Butterworth and Kris Berg.  To the last 3 folks, whom I don’t know, please forgive my presumption at tagging you unknown! I read your blogs daily and feel like I know you.

In the only emergency rate cut since 2001 and the biggest cut since the 80’s, the Fed today cut it’s main interest rate (the federal funds rate) by a whopping 3/4 of a point to 3.50%.

The Fed’s standard cryptic statement said “Appreciable downside risks to growth remain,” and continued that the Fed would “act in a timely manner as needed to address those risks.” That’s Fedspeak for “things are getting worse and we’re cutting rates again in the future.”

With international stocks tumbling badly yesterday, and Wall Street opening today down sharply, the Fed’s emergency rate cut smacks of outright panic.  Either that or they know something’s coming in the near future that’s worse news than yesterday’s worldwide stock slump.

See additional news stories on the rate cut here, here and here.  Or see my friend Shailesh Ghimire’s comments. And for those of you actually home shopping right now, there’s a silver lining. See my fellow bloggers at The San Diego Mortgage Rates Report who give daily advice on locking or not locking your home loan rate.

Sometimes I run into buyers who have a friend who’s a lender, and they want to use that person for their loan. It’s rare that I try to talk a client into or out of anything, but this is one of those times. I’ll practically get down on my knees and beg the buyer not to use their friend the lender. Why?

Inevitably, the friend lender is a part time loan originator and doesn’t do that many deals. In the shifting sands that are our current lending world, a part timer just doesn’t have the expertise and experience necessary to get a deal closed.  Lending guidelines change daily. Every Realtor I encounter has one or more horror stories about the lender who held up escrow, or ‘forgot’ to tell their buyer about a huge extra fee, or at the last minute the lender’s underwriter decided the buyer wasn’t worthy of a loan after all, thank you very much, goodbye.

I have my own horror story of the buyer using a friend lender. It wasn’t even my buyer; I represented the seller. The buyer chose a friend for her loan. I suggested to the buyer’s agent that a backup loan approval would be a great idea and my Coldwell Banker Home Loans agent will guarantee they’ll close if they give you a pre-approval. The buyer and her agent didn’t think they’d need that backup, but thanks anyway.

The friend lender says, “oh no problem, we’ll close in 4 weeks, no worries.”  I set the closing date 6 weeks out, just for cushion, just in case. About 3 weeks in, I’m reading the day’s news headlines and I read that the buyer’s chosen loan program - AmeriDream - is likely to be cancelled within the next 2 weeks. In a mini-panic I call the lender. He says, “oh, I’m sure it’ll be fine. I never believe anything I read on the Internet anyway. Don’t worry!”

He treats me like a hysterical female. I email him a link to the Wall Street Journal story about AmeriDream’s cancellation. He doesn’t respond.

Our six-week out closing date comes. And goes. No loan. Week seven comes. And goes. No loan. The buyer starts calling me daily, in tears. I’m not even her agent!  She calls, crying, and says she’s convinced the loan will never fund. She just re-signed her apartment lease for another 6 months. At this point, my seller’s panicking too. He’s sure it’ll never close. He fired his movers and planned to refinance.

During the 8th week (2 weeks past close, and 4 weeks past the date the friend lender swore he could close) the friend lender threatens to stop answering my calls. Just a note here: line 68 of the purchase contract all Valley Realtors use requires the lender to talk to both agents. I’d been calling him daily for an update. Politely, mind you. I’m nothing if not polite; my Mama raised me right. Just a simple “hey, how are things? anything new? any idea when the underwriters will fund the loan?” After 4 days of my calls, he starts yelling at me and says it’s totally out of his hands and if I keep bugging him he’ll just stop taking my calls.

Thankfully, this story ends happily. The loan funded, the seller moved out and the buyer moved in. But the whole process was brutal because of the friend lender the buyer had chosen. The lender made his friend the buyer cry daily for a week. I actually cried at one point and I am not a crier.

Buyers - buying a house is hard enough. You gonna want to focus on packing and moving and buying new stuff and so forth. Don’t make it harder than it has to be by hiring a ‘friend’ for your loan. Hire someone based on good recommendations and make sure they’ve closed a loan just like yours in the past 1 or 2 months. Otherwise, you’re taking a huge chance that your so-called friend could make your life miserable.

Got stinky sponges in the kitchen sink? Use a wooden clothespin to clip the sponge to a top dishwasher rack. Run ‘er through a cycle and extend the life of that sink sponge.

Plastic coating on the dishwasher racks going a little thin? Coat them with a light layer of silicone caulk to extend their life and avoid rusting through.

Dear Home Sellers,

I’ll let you in on a little secret – your home is not the only one in the Valley of the Sun that has dropped a little in value in the past 18 months.

Too many sellers today list with a gleam in their eye over the memory of what the neighbor sold for in early ‘06, the hopes of extra-large profits in their bank account, and a too-high price in the MLS. Too many sellers also choose their Realtor based on which one agrees to the highest list price.

Sadly, if you don’t choose an experienced Realtor who helps you price your home right from the beginning, you’re likely to spend months and months chasing the market down. With prices slipping incrementally each month, you’ll net less money 3 months from now than you will if you price it to sell in 1 month or less.  The truth is in the MLS archives: overprice your home and you’ll eventually sell for less than you could have if you’d priced right from the beginning.

So, what’s “price it right” mean? In our current market, only 5 or 6 of every 100 homes for sale is actually selling. If you need to be one of those 5 or 6, you must:

• Be priced less than the last sold comp
• Be 1 of the 3 or 4 best priced homes of your type in the area
• Have all repairs and Honey Do’s done
• Be professionally staged
• Be on lockbox with no advance notice needed to show

If you can accomplish what I recommend above, congratulations! You’ve done a lot of prep work and you’ve got a fighting chance of being in the 5% to 6% of homes that actually get to hang a SOLD sign.

If you can’t do what I recommend above, you can compensate by discounting your price, or offering buyer’s incentives like closing costs paid, or a mortgage rate buy-down.

And if you could do the above, but just don’t feel like it, what are you doing For Sale in this market?!? Buyers have the upper hand and they know it. Spare yourself some misery and take down the yard sign.

Related Posts:

• What Pricing Your Home Has To Do With Buying A Car
• How to Handle an Insultingly Low Offer
• Steve Belt’s How To Be The Next Sold Home In Phoenix
• Jay Thompson on Ways to Set a List Price

3 posts ago, in The Temptation of Your Neighbor’s List Price I wrote, “our current strong buyer’s market will cause your neighbor to take significantly less than X, or take his home off the market.” Readers could assume I meant that homes that sell are selling for waaaaay under asking price. Not true.

Most homes that do sell, sell for close to their final list price (probably about 96% to 98% of the final list price). The thing is, that most sellers take months and months to find the “right” list price. The right price is of course, the price that makes buyers come running to look, and then whip out their checkbook.

More on the right price tomorrow.

Based strictly on my personal experience with recent buyer clients… Rates rock! Plus, a great personal credit rating pays off. My buyer 1 was quoted 5.8% and locked at 5.75%. Buyer 2 was quoted 5.70% and we’re waiting for him to lock that stupendous rate as we speak.

If you’ve been thinking, “I’m gonna wait for home prices to drop some more” I’m telling you, DON’T WAIT. If you’re going to keep your home for 3 to 5 years plus, and can really afford a mortgage payment right now, then don’t wait any longer.

Why? Because what we’ve got lately is the perfect storm of coincidences for hesitant buyers — anxious sellers dropping the price and hefty rate drops. Take your average loan of $250,000 at 6.25%. The monthly payment on that is $1539. Drop the price to $240,000 and the payment is $1477 a month. But if you also calculate in a rate drop ($240,000 at 5.7% instead of 6.25%) your payment is only $1392.

Hello my hesitant buyers! You’ve been waiting for price drops, and we’ve had ‘em. Now with the rate drops of the past few weeks, you’re saving $147 a month.

Garbage disposals get smelly from time to time. Whenever yours does, dump a tray of ice cubes and some chopped up lemon rinds down there. Turn on the water and run the disposal for a minute. The ice will help flush the smelly food bits down the drain, and the lemon rinds will deodorize the unit.