North Phoenix Agent Blog

This is the 4th in a series about buying metro Phoenix area short sales and lender owned homes.

 Photo credit to I Can Has Cheezburger

Many, many potential buyers in the Phoenix market lately want to look at “short sales”, “foreclosures” or “bank owned homes”. Often they’re not quite sure what these terms mean exactly, but they know the 10 o’clock news (or their brother’s cousin’s baker’s tailor) says short sales are a spanking good deal. 

See here for the differences between REOs, bank owned, short sales, foreclosures and preforeclosures.  Regardless of type, the secret to buying one of these homes is organization combined with an open mind and a lot of patience. 

ORGANIZATION - Getting the Deal Closed
Now you’ve got an accepted offer on the short sale or lender owned home of your dreams, what about closing the deal? Banks usually want you to close within 30 days of their acceptance. Sometimes they take their sweet time sending you the acceptance, thereby eating up some of your 30 days and some of your inspection period.

Get cracking! Are you working with a full time, professional Realtor who’s ‘got people’ and can get a home inspection, roof inspection, A/C inspection and mold inspection done inside of 4 business days if necessary? You’ve got no worries. Working with your sister in law’s cousin who does real estate on the side? Or working without a Realtor? You’ve got a challenge on your hands. Whatever you do, don’t miss the deadline for the end of the inspection period.

Most banks will do no repairs. Even if the pool is green and the front porch is falling off, you’re buying it as is. Over Fourth of July weekend I spoke with a loan processor who told me she had personally done a loan for a Buyer purchasing a short sale from HSBC bank. They’d done a bunch of repairs before the closing, and even did some repairs the Buyer didn’t specifically request. This is exceptionally rare. Inspect it till you drop and expect it to be as-is on closing day.

Most banks also make you sign an addendum that removes most of the Buyer protections in the contract, institutes some additional Seller (bank) protections, and generally tilts the contract heavily in their favor.

If you’re paying cash, you should know that your purchase funds must be immediately available on the closing day. Cashier’s checks are acceptable. Wire transfers in US funds are acceptable. Canadian funds and checks drawn on Canadian banks are not acceptable. We don’t discriminate against Canadians per se, because generally no foreign funds are acceptable.

Be aware that due to the USA Patriot Act and other federal regulations since September 11th, wire transfers take a long time to transit the federal wire system. I’ve seen wires take 8+ hours. Plan on having your wired funds arrive at the title office the day before closing. Expect a wire fee of about $25 to $75. Expect a currency exchange fee of about $15, if you’re using foreign currency. I’ve been told by a very trusted and experienced title officer that she can’t get anyone to tell her who collects that $15 fee and she has never had success at making that fee disappear.

Almost every bank imposes daily late fees if the Buyer holds up the closing. These are usually in the area of $100 per day. Getting a loan to buy the home? Make sure your lender has the loan documents at the title office at least a week or two in advance of the closing date. No sense taking chances and accruing hefty late fees. if you’re out of town when the closing occurs, there will be FedEx shipping transit time to consider, so get loan docs to title early. Also, now is not the time to help your sister’s kid who’s just got in to home mortgages. Send your nephew a gift card and use a mortgage pro.

Buyer Lessons

1. Play by the bank’s rules.
2. Conduct multiple inspections
3. Make sure loan documents arrive early
4. Send wire transfers early

 Related Posts:

• How to Buy Short Sales/Lender Owned Homes, Part 1
• How to Buy Short Sales/Lender Owned Homes, Part 2
• How to Buy Short Sales/Lender Owned Homes, Part 3
• I Got a Notice of Trustee’s Sale. Now What?

Photo credit to I Can Has Cheezburger

This is the 3rd in a series about buying metro Phoenix area short sale and lender owned homes.

Many, many potential buyers in the Phoenix market lately want to look at “short sales”, “foreclosures” or “bank owned homes”. Often they’re not quite sure what these terms mean exactly, but they know the 10 o’clock news (or their brother’s cousin’s baker’s tailor) says short sales are a spanking good deal. 

See here for the differences between REOs, bank owned, short sales, foreclosures and preforeclosures.  Regardless of type, the secret to buying one of these homes is organization combined with an open mind and a lot of patience. 

.

ORGANIZATION - Getting the Offer Accepted
Once a bank answers your offer, things start to happen fast. Very fast. Good organization can literally save a deal.

Just recently on one of my short sale listings, my Seller received multiple offers. After waiting 10 weeks for any answer, the bank gave me several answers all at once. In the space of a couple of hours, the bank’s loss mitigation rep rejected the 1st offer because it was too low, said our short sale was declined and started making keyboard clicking noises while he said, “I’m going to close this file.”

“Wait!” I shouted. “Closing the file” means (1) me and my Seller get at the end of the 10 week waiting line to have the bank’s rep look at another offer, and (2) the lender sends the Seller back to Collections and reinstitutes the threatening phone calls until Seller comes current on the mortgage.

I reminded the loss mitigation rep that we had a backup offer. He checked his file, clicked a few keys on the keyboard, and immediately accepted the 2nd offer since it was high enough to meet his lender guidelines for foreclosure deals. I still don’t know exactly who made the guidelines the loss mitigator clicked around in, but I know my Sellers are now happy campers.

Also, note that I, as Realtor, had absolutely no control over which offer was accepted by the bank. I usually like to counsel my Sellers to look at the entire package of an offer when deciding whether to accept it or not. The highest price isn’t always the best deal. A higher down payment is better than a lower one. A bigger earnest money check is better than a smaller one. Quicker closing date? Better, usually. And so on. But this one was totally out of my and the Seller’s hands.

To make matters more confusing, all this back-and-forth with the lender’s loss mitigation rep happened verbally with nothing but a letter changing hands between me and the lender. There was nothing documented in writing for the 2 waiting Buyers. The AAR Purchase Contract states very clearly that all negotiations between buyers and sellers must be in writing and verbal negotiation hold no legal water. But banks are neither buyer nor seller, strictly speaking, and don’t abide by the AAR Purchase Contract in any case.

A major factor that saved the deal for my seller client on the case noted above is that I had maintained a detailed Communications Log listing date & time, who called who, who said what, the documents exchanged, and the followup and outcome to each phone call and document submission. I knew I had sent the lender a really complete file and had the chutzpah to ask, “But we have a backup, can’t you just look at that now without any more waiting? Please? Pretty please?” His only superpower was organization, indeed!

Another short sale Buyer I encountered made a $75,000 offer on a cute little condo. The bank verbally told me (the listing agent) that they wouldn’t even look at any offers below $92,500. Often, banks won’t reply at all to offers they don’t accept. I told the potential Buyer this, but he insisted the Seller had to reply in writing to his $75,000 offer. Under normal circumstances, that’s true. But we’re still waiting 4 weeks later.

Buyer Lessons

1. Banks abide by The Golden Rule - he who has the gold, makes the rules. Don’t expect them to conform to any contract law you’re used to.

Related Posts:

• How to Buy Short Sales/Lender Owned Homes, Part 1
• How to Buy Short Sales/Lender Owned Homes, Part 2
• How to Buy Short Sales/Lender Owned Homes, Part 4
• I Got a Notice of Trustee’s Sale. Now What?

 photo credit to I Can Has Cheezburger

This is the 2nd in a series of articles about buying metro Phoenix area short sale or lender owned homes.

Many, many potential buyers in the Phoenix market lately want to look at “short sales”, “foreclosures” or “bank owned homes”. Often they’re not quite sure what these terms mean exactly, but they know the 10 o’clock news (or their brother’s cousin’s baker’s tailor) says short sales are a spanking good deal. 

See here for the differences between REOs, bank owned, short sales, foreclosures and preforeclosures.  Regardless of type, the secret to buying one of these homes is organization combined with an open mind and a lot of patience. 

PATIENCE
One of my buyer clients has been waiting a little over 7 weeks for the bank to answer our offer on their short sale property. One of my sellers waited 2 full months for the bank to answer a Buyer’s offer.

This sounds absurd, right? According to the media, banks are drowning in short sales and foreclosures, making write downs and taking losses like the Titanic took on water. Why in the name of all that’s green and holy would the banks take months to answer offers?!

Sadly, this is not unusual. I’ve heard horror stories of waiting 4 to 6 months for a bank to answer an offer, even if it’s a full price offer.  The media’s right - many banks are awash in properties. But they’re simply not equipped to list and sell homes. They’re equipped to make and service loans. I hear banks are scrambling to hire & train people who can handle their backlog.

I recently had a conversation with a local agent who interviewed for a position as a loss mitigator with a lender. Sadly, the loss mitigators are paid about $30,000 a year salary, and are expected to work between 12 and 14 hours days, 5 days a week, work every other weekend, and are given 4 days of training. Almost none of them have any experience in real estate or mortgages whatsoever. Many are fresh out of college and many last no longer than their first week after training.

One of the first loss mitigators I ever spoke with (in late 2007) told me flat-out, “Honey, my desk is piled high with over 400 files just like yours. The computer shows I got your offer yesterday, but I won’t be able to look at it for at least 6 weeks. Call me then.”  She wasn’t being rude, just truthful. We’ve become phone buddies and share polite chit-chat when I call her once a week to ask (ever so politely) if she’s got to our file yet. I think she’s very nice and I think she liked me, but she still didn’t look at our file for 8 weeks.

But the loss mitigator did verify for me on Day 1 that our file was complete and had all the documents she needed including:

• Tthe Listing Agreement,
• The MLS printout,
• The Authorization for me (the Realtor) to speak with the seller’s lender,
• The Seller’s hardship letter, 2 years of tax returns, 3 months of bank statements and 2 months of paystubs,
• The foreclosure notice from local authorities,
• A letter from me to the seller about marketing activities and recent comps in the area,
• The Purchase Offer,
• The HOA Addendum,
• The Short Sale Addendum, and
• The estimated HUD-1 Settlement Statement from the title officer.

If we hadn’t put all those documents together into 1 submission packet to the lender, we’d have gone to the back of the line. The 8-week waiting period was for sellers and Realtors who got it rightthe first time. Miss a form? You’re going to wait longer.

Buyer Lessons

1. Short sales, lender owned and foreclosure properties are not for you if you must move in by a certain date.
2. Shop short sales and lender owned homes only if you are OK with lengthy periods of uncertainty.
3. It pays to hire a Realtor who’s politely persistent.
4. Make sure your document package is complete from the beginning.

 Related Posts:

• How to Buy Short Sales/Lender Owned Homes, Part 1
• How to Buy Short Sales/Lender Owned Homes, Part 3
• How to Buy Short Sales/Lender Owned Homes, Part 4
• I Got a Notice of Trustee’s Sale. Now What?

 photo credit to I Can Has Cheezburger

This is the 1st in a series of articles about buying metro Phoenix area short sale or lender owned homes. Parts 2, 3 and 4 are coming in the next 3 days.

Many, many potential buyers in the Phoenix market lately want to look at “short sales”, “foreclosures” or “bank owned homes”. Often they’re not quite sure what these terms mean exactly, but they know the 10 o’clock news (or their brother’s cousin’s baker’s tailor) says short sales & foreclosures are a spanking good deal. 

See here for the differences between REOs, bank owned, short sales, foreclosures and preforeclosures.  Regardless of type, the secret to buying one of these homes is organization combined with an open mind and a lot of patience. 

.

HAVE AN OPEN MIND
I showed some vacation homes to Canadian investors recently. Like all buyers, they wanted to “be in a nice neighborhood.” Found and showed them a smoking deal on a lender owned home listed at $375,000. It needed serious work. The former owners took bathroom cabinets and countertops, all appliances, and even the bathroom mirrors with them on their way out the door.

Buyers and I reviewed the sold comps together and agreed that - when refurbished - the home was probably worth about $500,000 on the open market. We also ballparked the cost of needed repairs and agreed that it would cost about $40,000 to bring the home to its former standard.

$375,000 plus $40,000 equals well below market value of $500,000.

The Buyers told me they really wanted this home. I explained that bank sales aren’t like regular private sales. We’d be dealing with a bank clerk who’d rely on internal bank regulations and an independent appraisal to determine market value. We’d also be highly unlikely to get a counteroffer. The bank would either accept our offer or never reply at all. I encouraged the Buyers to consider their highest, best offer and call me in the morning so I could draw up their offer.

Next morning, the Buyers told me to offer $341,000 (91% of list) but privately told me they’d “go a little higher.” Again I tried to remind them to give it their best shot right out of the gate. They declined, saying, “we want to see if we can get it for less first.”

Miraculously, we got a counteroffer from the bank about 3 days later. They asked for full list price of $375,000 and intimated they had multiple offers on the way into their offices. Again, the Buyers and I reviewed the recent sold comps and we all agreed the place was worth about $440,000 to $460,000 in current condition and about $500,000 post-rehab.

Buyers instructed me to counter the bank’s counter at $352,000 (or 94% of list price). Within hours, the bank said we lost the bidding war. About a month later the MLS showed the home sold to buyers who paid $363,000 (97% of list price). Ouch.

Buyer Lessons

1. Listen with an open mind.
   Discuss sold comps with your Realtor until they make sense and you agree, then take them as gospel.
2. Don’t play chicken with the bank.
   Offer your highest and best right up front. You may not get the deal but you’ll know you tried. The buyers in this example might very well have secured the home if they’d offered their highest & best of $352,000 right away, before other Buyers had a chance to make offers and the bank had a chance to pit bidding Buyers against each other.
3. Trust your Realtor.
   If s/he has comps that seem trustworthy, and you agree with her estimates of repair costs, and no other red flags about the deal appear, trust your Realtor when she advises you that full list price is still a great deal.

 Related Posts:

• How to Buy Short Sales/Lender Owned Homes, Part 2
• How to Buy Short Sales/Lender Owned Homes, Part 3
• How to Buy Short Sales/Lender Owned Homes, Part 4
• I Got a Notice of Trustee’s Sale. Now What?

photo credit to yongzaho.en.alibaba.com

Sellers who use a Realtor to sell their metro Phoenix area home quickly become familiar with enough acronyms to make the Federal government proud (and confused). ER, SPDS, BINSR, CLUE. It’s enough to make any sane person wonder if their slightly daffy relation ran over a potato farm with the car and needs a ride to the hospital.

(That sentence is mildly smile-inducing inside my head; let me know if it evinces a grin in your neck of the woods.)

So, what’s a SPDS? And is it anything like the edible tuber that’s yummy when served with butter, sour cream and chives next to a big juicy Porterhouse? Read on, intrepid blog browser.

What Are SPDS?
Arizona law requires sellers disclose to buyers all known, material problems about properties they sell. The Seller’s Property Disclosure Statement (SPDS) document created by the Arizona Association of Realtors is a convenient form for doing this. Not working with a Realtor? You’re not exempt from disclosing what you know about the property. You’re just unlikely to have ready access to the nifty form.

Why Do I Need to Do This?
If you sell a property that has a material defect of which you were aware but didn’t tell the future Buyer, you could be liable to a lawsuit. Disclosing everything you know about the property you’re selling can protect you in the future.

What Should I Disclose?
The short answer is everything. The longer answer is that you should disclose everything that could influence a buyer’s decision to buy (or not buy) your property. This includes improvements you’ve made and problems you’ve had, as well as what you did to solve those problems. It also includes anything prior owners did to the property of which you are aware, or even things prior owners did that you suspect or only partially remember.

The bulk of the SPDS questions are phrased, “Are you aware of ….?”  If you aren’t aware, or don’t know the answer, you should answer “no”. Your Realtor is not allowed to fill out the SPDS for you, and is generally not supposed to tell you what to put on the SPDS.

On the last page of the SPDS form, you can add explanations. It’s OK to say things like -

• I think the prior owner replaced some of the PVC plumbing with copper but I only got verbal info on that.
• We had a tub leak in 2003. We repaired the leak and our insurance company replaced the drywall and carpeting.
• We converted the garage into a living room in 1999. We didn’t get permits or HOA permission but we had licensed contractors do the work.

Can I Disclose Too Much?
Don’t worry about ‘killing a deal’ by disclosing what you know about the property. If there’s something that’s so wrong with the property that it’s bad enough to be a potential deal-killer, you should be more worried about getting sued later for not disclosing it now. It’s better to be honest on the SPDS and discuss the property’s condition upfront with your Realtor. Then let your agent make recommendations about marketing the property so that it sells to a buyer who knows all about it and buys it anyway.

How Long Do I Have to do This? 
By contract, Sellers (through their Realtor if they have one) must provide the future Buyer with the completed Disclosure Statement within 5 days of contract acceptance. Buyers, be aware that you should receive this document promptly. Ask questions if you don’t understand the answers! Sellers, remember that honestly and completing filling out the SPDS form will take a little bit of time and some record pulling. So, the sooner you complete the document after listing the home for sale, the better. The last thing you want is to be scrambling to fill out a SPDS form at the 11th hour. It’s kind of like waiting to start your 1040 tax form until April 14.

You Can’t Eat It, But It Can Help You Sell
A complete and honest SPDS will help your property sell. Even if the property has problems, know that every property will sell . . . IF it’s priced right and marketed correctly. There is a buyer for every home. You just need to inform your Realtor and the buying public so the right buyer can find yours.

Related Posts at The North Phoenix Agent

1. Inspection Period
2. Home Inpsections Explained
3. Stuff About Your Neighborhood Your Realtor Can’t Tell People

Related Posts at the Butterhomes Blog - Selling A Home Full of Lizards

Related Posts at The Phoenix Real Estate Guy - Info You Get During the Inspection Period, How to Buy Your First Home and Do I Really Need a Home Inspection?

The home inpsection process explained, in plain English. Of course, this applies only in metro Phoenix where I work.

During the Due Diligence Period (usually the first 10 days after contract is signed by both parties and delivered to both parties), Buyer may do any and all inspections she wants. A general home inspection by a licensed professional is a great start. This gives the Buyer a once-over of all the home’s working systems: plumbing, electrical, A/C, roof, and so forth.

If the general inspection turns up anything odd, or if the Buyer has concerns about specific items, she can do additional inspections. Sometimes calling in a roofer, A/C contractor, electrician or plumber is a good idea. Please note that general home inspections usually do not include home entertainmnet sound systems, security systems, and the home automation systems that are all the rage in luxury homes these days, whereby you can monitor your home security system over the Internet while you vacation in Cannes.

During the inspection (or Due Diligence) process, the Buyer retains the absolute right to back out of the purchase for any reason and be refunded their Earnest Money.

Buyers, after your inspections are complete, you’ll have 3 options:

1. Accept the home As Is
2. Back out and take your Earnest Money with you
3. Give the Seller a list of repairs you require and give him a chance to fix them all

Sellers, you will now have 3 options:

1. Fix everything – Buyer is now legally bound to complete the purchase
2. Fix nothing – Buyer now decides whether to accept the property As Is or walk away with Earnest Money in hand
3. Fix some things – Buyer now has the choice to accept the property with the repairs Seller’s willing to make, or walk away with Earnest Money in hand

Please note that there is no step in here for re-negotiating the purchase price! The purchase price and the repairs are separate issues, negotiated separately, and are totally unrelated. Sometimes, some Sellers may choose to offer a credit to the Buyer in lieu of making some or all of the requested repairs. The Seller is not bound to offer a credit and Buyer may not ask for a credit in lieu of repairs, regardless of the inspection findings.  If a credit is offered, the amount is negotiable.

Please also note that there are time-sensitive deadlines involved in this process. First, Buyers’ requests for repairs must be submitted by 11:59 PM local time on the last day of the Due Diligence Period. You do this on a form called a BINSR (Buyer’s Inspection Notice and Seller’s Response). Buyer - missed your deadline? You just bought the house As Is.

Second, the Seller has 5 days to respond to the BINSR using the rest of the same form. Upon receipt of the Seller’s response, the Buyer will have 3 days in which to submit her reply about whether she’ll take the house with the repairs the Seller’s willing to make, if any.

What if the Seller doesn’t reply to the Buyer’s BINSR? The Buyer must assume the Seller intends to sell the home As Is. The Buyer has 3 days from the date the Seller’s response to her BINSR was originally due in which to decide whether to complete the purchase (which we now know will not have any repairs done on it) and submit that decision in writing to the Seller using the rest of the rest of the BINSR form.

Confused yet? This is a great example of why it’s SO critical to hire a professional, full-time Realtor. This isn’t rocket science, but it is the sort of situation where mistakes can be so monumentally costly that it’s best to hire someone who’s job it is to do this all day, every day, and carries insurance to protect you and themselves against mistakes. To err is human nature, to buy real estate without a professional Realtor is just silly.

Please see these related posts

1. Backing Out of a Purchase Might Be Costly
2. Due Diligence Period Defined
3. The Phoenix Real Estate Guy on Escrows and Home Inspections

I have a client looking for a deal on a home at The Boulders. But like so many potential buyers today, he’s been told by friends and the media that he can get a steal, so he’s half convinced he wants to offer 60% under asking price on a bunch of houses at once — the first seller to accept is the winner of his purchase.  Okayfine.

Being in the trenches daily, I’m here to tell you that 99.9% of sellers are not going to react well to an offer that’s 60% below their asking price. Buyers shouldn’t expect to buy houses at 40 cents on the dollar. Maybe you can do this on a few short sales but be prepared to wait 2 to 4 months for the bank to approve your offer, if they ever do.

So to help this buyer see what’s really going on, I created a spreadsheet for him of market data in the area. It shows home sales in the Boulders since Jan 1 2007, including the initial asking price, the final list price, the days on market and the list to sales price ratios.

Since I’ve been lax lately about blog posts, I’m making my work for that buyer into today’s post. Interested in prices at The Boulders? Look no further.  Homes for sale at The Boulders are here, or email me and I’ll add you to the list of folks who get this data pushed to them daily.

Sale price history at The Boulders is here > > >(click to enlarge, use ‘back’ button to return to this article).

Attention home buyers:  did you know that if you back out of a home purchase you could be risking more than just your Earnest Money?

The key to how much Buyers risk by backing out is the timing.

Most buyers know they can back out of a home purchase during the inspection (Due Diligence) period without penalty. You fill out a form stating why you’re walking, and you walk, Earnest Money in hand.

But what if the Buyers get cold feet at the last minute? What if they just don’t want to buy the house anymore? Let’s assume the Buyer’s loan was approved, the house appraised for at least the purchase price, and there’s nothing materially wrong with the home. The Buyers just felt a little icy about the toes. This is known as a breach of contract, and it can be quite expensive.

In that case, the Buyers could potentially lose a good deal more than just the Earnest Money. Lines 275 to 282 of the AAR Purchase Contract say: “In the event of a breach of Contract, the non-breaching party may cancel this Contract and/or proceed against the breaching party in any claim or remedy that the non-breaching party may have in law or equity….  In the case of the Seller, becasue it would be difficult to fix actual damages in the event of the Buyer’s breach, the Earnest Money may be deemed a reasonable estimate of daages and Seller may, at the Seller’s option, accept the Earnest Money as Seller’s sole right to damages….”

Read that carefully again: the Sellers may take Earnest Money in lieu of damages. But they might choose to ignore the Earnest Money and pursue the Buyers for actual damages.  Actual damages could involve mortgage payments, carrying costs like heating & cooling expenses, the increased marketing costs associated with putting the house back on the market, mediator or attorney fees, and the like. 

In today’s market where most Valley homes are depreciating at about 1/2% to 1% per month, the Seller’s loss could be quite high. If it took 3 months to find the Buyer who’s now backing out, it could take many more to find a new buyer. And the new buyer will likely pay less for the home because time has passed and the market has slipped a little further.

In our current correcting market, it’s not impossible to believe a Seller could get angry enough to consider mediation or a lawsuit. Buyers: make sure that any cold feet you get happen before the expiration of your inspection period!

I’ve been looking over my blog stats as part of my New Year’s resolution to reorganize and fine-tune what I do. It seems that my post comparing selling ice cream with selling your home is the most popular post by far.  Dunno if there’s a whole lotta people Googling for pictures of ice cream or what, but I’ll repost it here for everybody’s enjoyment. They are really purty pictures of ice cream, after all.

.

Most home sellers these days in the Valley are savvy enough to realize there’s a lot of competition out there. They know they’ve got to spruce up, clean up, organize, and stage their house so it stands out from the competition. The process of doing this is a whole other post that I’ll get to in the coming days.

Here, today, I want to talk about my Ice Cream Analogy. I whip this one out when I’m talking to sellers who are resistant to the idea of painting, carpeting, or snazzing up counter tops. The usual refrain I hear is, “We don’t want to waste money updating that when the buyer might not like the color or style anyway. Why bother? Just let them do it once they move in.”

Folks, that mind set is a cop-out. Why do I say that so bluntly? Here’s where the ice cream comes in.

Let’s imagine you & your neighbor both stand in your front yards offering free ice cream. Your neighbor offers vanilla ice cream. You’re offering almond nut crunch with chocolate sprinkles and caramel sauce.

Whose ice cream offering do you think will get more takers? Vanilla! More folks will choose the vanilla ice cream, every time, no matter how yummy the almond nut crunch looks and tastes. Why? You can dress up a vanilla scoop any way you like. Add chocolate sauce, rainbow jimmies, chopped peanuts, Oreo cookies, strawberry topping or anything else to make it all yours. But the almond nut crunch w/ toppings is an option which is hard to un-do. You can’t easily turn that confection into anything else. It would take time, patience and some creativity.

Time, patience and creativity are qualities most buyers are lacking or are unwilling to exercise, for a variety of reasons. Today more than ever, buyers want a blank canvas that they can just spend a little money & effort personalizing. Most are turned off by a home that needs a lot of “un-doing” before they can get to the personalizing stage.

Need to sell? Vanilla-ize your digs. It’s called “Real Estate Beige” for a reason - it sells real estate.

Related Posts -
Selling Home Like Dieting
Fido Helps Sell Home?
Selling Home? Think Used Cars
North Phoenix’s own Moto Sushi
North Phoenix’s own Dream Dinners

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….

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.

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.

For months now in the Valley of the Sun buyers have been telling themselves it’s a buyer’s market and they can take their sweet time looking at EVERY house out there before they make their purchasing decision.  Homes for sale are like paint chips at the hardware store - there’s always another one that looks intriguing.

Twice this very week I’ve shown homes to buyers who thought they had all the time in the world. They’d toured the house in question once or even twice before, and finally decided they really liked it. They might even want to make an offer. It’s just down to this one and one other….  Just one other….. Just show me this one other house…. I don’t want to miss anything.  The house’ll still be there tomorrow, because you know, ‘nothing’s selling’. Right?

Grab your Magic 8 Ball folks. The times, they are a-changin’. Ask it, “This house will be here tomorrow, right?” Turn it over and it’ll tell you, “Outlook not so good.” Try it again and it’ll scream, “Don’t count on it!”

So, off we jaunt to look at the house my buyers have spent all day imagining their stuff in, and BAM! the seller just received a contract an hour ago. I’m not making this up, it’s happened twice in the past 2 days.

Now we’re in a multiple offer situation. Remember the phrase “bidding war”? Remember offering more than full price? Remember when buyers had to pay all their own costs, and not dare ask sellers for a single bleeding thing? I’m not saying those days are back, not by a long shot. But don’t over-wait and risk missing out.

The old adage is old because it’s true: The house you looked at today and want to think about until tomorrow is the same house that another buyer looked at two days ago and is making an offer on today.