We got lender approval a couple of days ago on a short sale. It is one of my favorite clients - but not one of my favorite stories.
I met the seller, Richard, almost five years ago. I was waiting on his neighbor - my client - to come out of her house so we could go look at houses. (I'd recently listed her house and her buyer found us during open house. I love it when that happens. So we were ready to go out looking for what she was going to buy next.)
Anyway, while I was waiting on her, Richard came out of his house, introduced himself and asked me to come take a look at his place, said that he'd want me to sell it for him one of these days. Beautiful property - huge lot, dozens of trees, pool, Arizona room, updated kitchen, very well cared for - great for entertaining. And pretty. Great curb appeal.
He was as good as his word. Some months later Richard called, asked me to show his wife and him properties, that his wife was ready to move. We looked, found something, made an offer, got it accepted - and cancelled after home inspection revealed issues. So much for that.
More months passed. Another phone call. Richard's wife had died and he wanted to put his place on the market. His plan at that time was to move to Florida and live with one of his children who was building a big home. I listed the property, held several open houses - and we did not get offers. The market was declining every day - and while the property was still being cared for, it was priced too high to attract a buyer.
Rather than reduce the price, Richard found his own buyer - a friend - and I prepared a lease-purchase contact. The friend would rent the property to a family member, and at the end of four years, the amount paid for rent each month would apply to the down payment and she'd pay it off.
The contract was legal, but it was risky in the market that we found ourselves in. As the buyer got close to the end of contract term, the value of the property was about $100,000 less than she'd agreed to pay for it, her business was hurting, and she could not live up to the agreement. She and Richard shook hands, the tenant moved out, and gave back the keys to Richard along with the house, leaking pool, dried up lawn and dead fruit trees.
In the meantime, Richard had moved on with his life, purchased another property for cash - and was left with a no-longer-beautiful property that he couldn't pay for. He couldn't rent it because he was out of money and couldn't afford to repair the pool or address the rest of the maintenance issues remaining after buyer/tenant walked out.
So, I listed the property again, this time at a price reflecting the current market. We got a buyer within days - and a long line of prospective buyers in case the first one changed his mind. The sales price is very very low - it will take the buyer a little effort to do the repairs needed. But the basic beauty is still there.
Since lender approval a couple of days ago, we're in the 10-day inspection period. If all goes well, we should close by the middle of September. Richard's credit takes a hit, but at his age that's less important to him than closing this chapter of his life.
Sunday, August 7, 2011
Tuesday, August 2, 2011
Short Sale - How Broke Do You Have to Be?
Finally, ten weeks after submitting a short sale package, today I got a call through to our assigned negotiator. (I won't name which bank - you might like them and right now I don't). The negotiator assigned to my file, who twice before had not returned messages that I have left for him, answered on the first ring.
As we were on the phone, he looked at our file for the first time. I'd submitted it with our offer on May 26. The first thing he said - after a 30 second review - was that they couldn't approve it because the loan was current. My response was that the seller, a recent widow, was struggling to make the payments, even though she was selling her furniture to do it. It's been a point of honor with her.
His response was that if she was paying, she could afford to pay. So much for honor.
I told him that the offer we had was $5000 more than a property just like it that had recently sold. He asked me for comps - which I sent. There are at least six comps that support the offer price. In fact, the offer we have is likely HIGHER than an offer we'd get on it were we to submit another offer today.
While I was at it, I sent the negotiator the seller's revised hardship letter - in it she makes clear that she's at the end of her resources and the August payment can't be made.
Later in the afternoon the negotiator called to say that it looks like the bank will have to deny the short sale - the loan is current, and in reviewing bank statements from April and May, it appears the seller can afford the property.
The task is to make it clear to this file processor, who is following the guidelines that his lending institution sets before him, that a lot can happen to deplete a widow's resources over ten weeks, especially when she's continuing to make payments on a property she doesn't live in and will never be able to afford to live in again. At the end of our conversation, he agreed that if we'd send him her June and July bank statements - and updated financial worksheet that he'd review them.
On the one hand, if a seller defaults on her loan, she's in danger of losing the property to foreclosure. That's likely a four-year black mark on her credit.
On the other hand, if she continues to make payments - robbing Peter to pay Paul, so to speak - the short sale may be denied.
The bank's negotiator hasn't told the seller to stop making her payments, and neither have I. She'd come to that conclusion about the time her bank statement shrunk so low that making a payment isn't an option.
What we'll do is submit updated bank statements and financial worksheet and see what this lender is willing to do for a 65-year old widow (who is a former employee of this lender) who wants to avoid foreclosure. A widow who brought a buyer willing to pay at or above market price for a house in a state the widow doesn't live in, a house the widow continues to keep up even though she can't afford it. A widow who in the past few months has run through resources attempting to keep current on this property - resources that she needs to keep her afload in her retirement years. We're not talking about wealth - nor comfort - just necessities.
I know - for the bank, it's a business decision. But it is beyond comprehension how this widow's short sale request could be interpreted as anything other than a financial hardship.
Give me patience. And give the seller a negotiator who cares enough to discern the difference between a financial hardship and a strategic default.
As we were on the phone, he looked at our file for the first time. I'd submitted it with our offer on May 26. The first thing he said - after a 30 second review - was that they couldn't approve it because the loan was current. My response was that the seller, a recent widow, was struggling to make the payments, even though she was selling her furniture to do it. It's been a point of honor with her.
His response was that if she was paying, she could afford to pay. So much for honor.
I told him that the offer we had was $5000 more than a property just like it that had recently sold. He asked me for comps - which I sent. There are at least six comps that support the offer price. In fact, the offer we have is likely HIGHER than an offer we'd get on it were we to submit another offer today.
While I was at it, I sent the negotiator the seller's revised hardship letter - in it she makes clear that she's at the end of her resources and the August payment can't be made.
Later in the afternoon the negotiator called to say that it looks like the bank will have to deny the short sale - the loan is current, and in reviewing bank statements from April and May, it appears the seller can afford the property.
The task is to make it clear to this file processor, who is following the guidelines that his lending institution sets before him, that a lot can happen to deplete a widow's resources over ten weeks, especially when she's continuing to make payments on a property she doesn't live in and will never be able to afford to live in again. At the end of our conversation, he agreed that if we'd send him her June and July bank statements - and updated financial worksheet that he'd review them.
On the one hand, if a seller defaults on her loan, she's in danger of losing the property to foreclosure. That's likely a four-year black mark on her credit.
On the other hand, if she continues to make payments - robbing Peter to pay Paul, so to speak - the short sale may be denied.
The bank's negotiator hasn't told the seller to stop making her payments, and neither have I. She'd come to that conclusion about the time her bank statement shrunk so low that making a payment isn't an option.
What we'll do is submit updated bank statements and financial worksheet and see what this lender is willing to do for a 65-year old widow (who is a former employee of this lender) who wants to avoid foreclosure. A widow who brought a buyer willing to pay at or above market price for a house in a state the widow doesn't live in, a house the widow continues to keep up even though she can't afford it. A widow who in the past few months has run through resources attempting to keep current on this property - resources that she needs to keep her afload in her retirement years. We're not talking about wealth - nor comfort - just necessities.
I know - for the bank, it's a business decision. But it is beyond comprehension how this widow's short sale request could be interpreted as anything other than a financial hardship.
Give me patience. And give the seller a negotiator who cares enough to discern the difference between a financial hardship and a strategic default.
Thursday, July 28, 2011
Short Sale - Changing the Dream
I got a call before Christmas from someone I used to work with - before I made real estate my career. She is a talented, energetic person, married to a great guy who can do pretty much anything - and like zillions of others, they've been hurt by circumstances that they didn't see coming. He's experienced an injury that has created big medical bills and limited the type and amount of work he can do - which translates to big decrease in income.
They have a lovely home in a very desirable retirement community - and their goal had been to enjoy it, watch it increase in value and then downsize, take their equity and reinvest in something a little more modest so they'd have freedom to enjoy their retirement years. The increase in value didn't happen - instead, it decreased, thanks to circumstances outside our control. And with less income, and more expenses, their lovely home is something they can't afford any longer. New goal: make the house go away. And that's where I come in.
They have two loans. Long story as to why - with nothing good to say about how they came to get the second loan and what type of loan it turned out to be. Both loans together don't amount to much more than the value of their property, but enough that it creates a short sale condition.
We put the house on the market at Christmas, then had to drop the price a couple of times. Then we got an offer which reflects current value and is a good deal for the buyer. It took three and a half months, a lot of disclosure, a little negotiation, and we received bank approval of the short sale. Buyer completed inspection this week. Now if buyer's appraisal comes in at or above the sales price, in another month buyer will have a new home and sellers can get on with the next chapter of their lives - somewhere else.
Maybe it's too much to expect everybody to be happy with a sale like this one. It truly is a distress sale. Sellers are only a little upside down - but enough that a short sale is the best choice they can make. Their credit will suffer - at least for a couple of years. Their hearts hurt to leave their home. But their bank would not work with them, a bankruptcy is not in their best interests, and foreclosure is absolutely not what they want to do. So they are packing up and getting ready for the next chapter of their lives, and they are saddened. And so am I.
Sometimes dreams die hard.
They have a lovely home in a very desirable retirement community - and their goal had been to enjoy it, watch it increase in value and then downsize, take their equity and reinvest in something a little more modest so they'd have freedom to enjoy their retirement years. The increase in value didn't happen - instead, it decreased, thanks to circumstances outside our control. And with less income, and more expenses, their lovely home is something they can't afford any longer. New goal: make the house go away. And that's where I come in.
They have two loans. Long story as to why - with nothing good to say about how they came to get the second loan and what type of loan it turned out to be. Both loans together don't amount to much more than the value of their property, but enough that it creates a short sale condition.
We put the house on the market at Christmas, then had to drop the price a couple of times. Then we got an offer which reflects current value and is a good deal for the buyer. It took three and a half months, a lot of disclosure, a little negotiation, and we received bank approval of the short sale. Buyer completed inspection this week. Now if buyer's appraisal comes in at or above the sales price, in another month buyer will have a new home and sellers can get on with the next chapter of their lives - somewhere else.
Maybe it's too much to expect everybody to be happy with a sale like this one. It truly is a distress sale. Sellers are only a little upside down - but enough that a short sale is the best choice they can make. Their credit will suffer - at least for a couple of years. Their hearts hurt to leave their home. But their bank would not work with them, a bankruptcy is not in their best interests, and foreclosure is absolutely not what they want to do. So they are packing up and getting ready for the next chapter of their lives, and they are saddened. And so am I.
Sometimes dreams die hard.
Wednesday, July 27, 2011
Short Sale - New Job Out-of-State
In July 2010 I listed a home for sale in Tolleson. Cute little place - a little too small for the young family living there but they loved it. It was the couple's first home and their two babies were born there. This is a short sale - the economy has been rough on the couple. They went from two incomes to one, and then for awhile from one to none. Thank goodness for family - they kept thinking life would get better and during the bleakest period their parents helped financially.
After some months, husband landed a new job - in California. The little family packed up in a hurry, turned off the utilities and moved into a rental near his work. We got a buyer for the Tolleson house - offered what I'd listed it for. And after a couple of months, the bank decided it was worth another $10K.
Buyer was willing to increase the purchase price by $2K - but the market simply did not support the $10K the bank wanted. The buyer hit his limit, and the bank declined to budge.
So - back on the market it went. And time passed. And more time passed. Not only no offers, no lookers. Not one. Empty house. No power on. Prices in the neighborhood continue to decline.
In the spring, we got another offer - $13K lower than our original offer. I submitted it - and we waited and waited. And waited some more. About a month ago - that would be 11 months into the process - the bank countered asking for an additional $4K - which the buyer agreed to.
That means we have an agreement for $11K less than what had been offered a year ago. We're still waiting for the short sale approval letter.
If the approval letter comes before the buyer changes his mind, and if no deal-killers turn up at inspection, this old old transaction may have a happy ending yet. Great young family - it'll be good for them to get this experience behind them. And a good deal for the buyer too - he has resources to clean up and attend to the last year of neglect. I am hoping for a good outcome and we should know very soon. A year is a long time to wait.
After some months, husband landed a new job - in California. The little family packed up in a hurry, turned off the utilities and moved into a rental near his work. We got a buyer for the Tolleson house - offered what I'd listed it for. And after a couple of months, the bank decided it was worth another $10K.
Buyer was willing to increase the purchase price by $2K - but the market simply did not support the $10K the bank wanted. The buyer hit his limit, and the bank declined to budge.
So - back on the market it went. And time passed. And more time passed. Not only no offers, no lookers. Not one. Empty house. No power on. Prices in the neighborhood continue to decline.
In the spring, we got another offer - $13K lower than our original offer. I submitted it - and we waited and waited. And waited some more. About a month ago - that would be 11 months into the process - the bank countered asking for an additional $4K - which the buyer agreed to.
That means we have an agreement for $11K less than what had been offered a year ago. We're still waiting for the short sale approval letter.
If the approval letter comes before the buyer changes his mind, and if no deal-killers turn up at inspection, this old old transaction may have a happy ending yet. Great young family - it'll be good for them to get this experience behind them. And a good deal for the buyer too - he has resources to clean up and attend to the last year of neglect. I am hoping for a good outcome and we should know very soon. A year is a long time to wait.
Tuesday, July 5, 2011
Pricing It Right
I love working with a seller who becomes knowledgeable about the local market when pricing his property for sale.
It doesn't matter what a seller paid for the property. Or what he put into it. Or what his neighbor sold his house for a year ago. Or what he needs out of it.
What matters is what similar properties are selling for now. Two operative words: similar and now.
To set a price we need to find a property that is close in age and size and features. Usually in a subdivision, that's not difficult. Reaching outside the subdivision is more of a challenge - but not so much.
We're looking for what has sold within the past three months. What is distressing - no pun intended - is that most of what is selling are short sales and bank-owned foreclosures. Those are distressed properties. Sometimes the condition of a distressed property is very poor and the price reflects the condition. Sometimes not. Sometimes a bank-owned property has been painted and newly carpeted and spruced up. Sometimes a short sale has been occupied and maintained by the homeowner up until the time of the sale. But in either instance, the sales price reflects that it is a distress sale - meaning that if bank-owned, the bank needs to sell it and if a short sale, the seller's lender has agreed to sell it usually at a price some percentage lower than market value.
So what that means is that the seller, when pricing his property, must price it where the recently sold properties in his neighborhood have sold, whether those are distress sales or not.
What happens if he doesn't?
If he gets a cash buyer, great - if the cash buyer finds something about the property that appeals to him enough to ignore prices of recent solds in the neighborhood.
If he gets a buyer who is borrowing in order to purchase, the buyer's lender will require an appraisal - and the appraisal is determined by recent solds. Like it or not.
Or no buyer steps up at all because the price is higher than the neighborhood.
Sellers who are just hoping for a cash buyer to come along may be in for a big disappointment, even as the inventory shrinks. Buyers - either those with cash or those who are qualified to get a loan - are very seldom willing to make an offer that looks like they are paying too much.
It doesn't matter what a seller paid for the property. Or what he put into it. Or what his neighbor sold his house for a year ago. Or what he needs out of it.
What matters is what similar properties are selling for now. Two operative words: similar and now.
To set a price we need to find a property that is close in age and size and features. Usually in a subdivision, that's not difficult. Reaching outside the subdivision is more of a challenge - but not so much.
We're looking for what has sold within the past three months. What is distressing - no pun intended - is that most of what is selling are short sales and bank-owned foreclosures. Those are distressed properties. Sometimes the condition of a distressed property is very poor and the price reflects the condition. Sometimes not. Sometimes a bank-owned property has been painted and newly carpeted and spruced up. Sometimes a short sale has been occupied and maintained by the homeowner up until the time of the sale. But in either instance, the sales price reflects that it is a distress sale - meaning that if bank-owned, the bank needs to sell it and if a short sale, the seller's lender has agreed to sell it usually at a price some percentage lower than market value.
So what that means is that the seller, when pricing his property, must price it where the recently sold properties in his neighborhood have sold, whether those are distress sales or not.
What happens if he doesn't?
If he gets a cash buyer, great - if the cash buyer finds something about the property that appeals to him enough to ignore prices of recent solds in the neighborhood.
If he gets a buyer who is borrowing in order to purchase, the buyer's lender will require an appraisal - and the appraisal is determined by recent solds. Like it or not.
Or no buyer steps up at all because the price is higher than the neighborhood.
Sellers who are just hoping for a cash buyer to come along may be in for a big disappointment, even as the inventory shrinks. Buyers - either those with cash or those who are qualified to get a loan - are very seldom willing to make an offer that looks like they are paying too much.
Almost a For Sale By Owner
I was blessed with a transaction not long ago where the buyer found the house on his own - and the seller owned the property outright. Wow.
The buyer lives down the street - and had been watching as the seller went about doing some remodeling. The seller had bought the house at auction, took on the job of deferred maintenance, replaced tile and carpet, painted - and took a neglected property up a few levels.
Buyer wanted the property for a family member who was willing to do a little of the repair work himself.
Long story short, seller engaged the agent who had helped him find the house in the first place. I represented the buyer. We negotiated price down a little in exchange for seller not doing some of the work he'd planned to do - and closed. Seller made a little money. Buyer spent a little less than he'd planned in exchange for a property that more than met his requirements - within a block of where he lives.
Another happy ending - or beginning, depending on your point of view.
The buyer lives down the street - and had been watching as the seller went about doing some remodeling. The seller had bought the house at auction, took on the job of deferred maintenance, replaced tile and carpet, painted - and took a neglected property up a few levels.
Buyer wanted the property for a family member who was willing to do a little of the repair work himself.
Long story short, seller engaged the agent who had helped him find the house in the first place. I represented the buyer. We negotiated price down a little in exchange for seller not doing some of the work he'd planned to do - and closed. Seller made a little money. Buyer spent a little less than he'd planned in exchange for a property that more than met his requirements - within a block of where he lives.
Another happy ending - or beginning, depending on your point of view.
Your Call is Very Important to Us
Don't you think if it were true - that my call was really important to them - that they WOULD PICK UP THE PHONE!
Saying What You Mean
I recently worked with a great guy. Good job. Nice person. Soft-spoken. Nice house. But something came up, he couldn't afford to continue the payments or the upkeep of his home, and the value of his home was less than he owed on it. That spells short sale.
We got an offer quickly - for a good price. Willing buyer. Willing seller. And seller's lender said no - seller isn't behind on payments and without loan deficiency, it doesn't look like there is a hardship.
Lenders don't look favorably at "strategic short sales" - and while this wasn't one, we couldn't convince them of that. This was a seller who made his house payments but at the expense of paying his taxes. So who would you rather have mad at you - your lender or the federal government?
Seller continued to struggle to get bills paid - fell behind on house payments. Got an offer from another buyer - still a good price, but $15,000 less than first offer. We submit paperwork all over again, and seller's lender again says no - not a hardship. Was the hardship letter not clear? Would a foreclosure be better for anyone than approving a short sale?
Many phone calls and emails later - many, many - we got the seller's lender to take another look at the situation. This time, in addition to the hardship letter, we provided copies of demand letters from the IRS (which we should have provided earlier) - and eventually got short sale approval.
Seller is now out from under that obligation. Buyer has the house he wanted. And eventually the government will get theirs - I'm sure.
We got an offer quickly - for a good price. Willing buyer. Willing seller. And seller's lender said no - seller isn't behind on payments and without loan deficiency, it doesn't look like there is a hardship.
Lenders don't look favorably at "strategic short sales" - and while this wasn't one, we couldn't convince them of that. This was a seller who made his house payments but at the expense of paying his taxes. So who would you rather have mad at you - your lender or the federal government?
Seller continued to struggle to get bills paid - fell behind on house payments. Got an offer from another buyer - still a good price, but $15,000 less than first offer. We submit paperwork all over again, and seller's lender again says no - not a hardship. Was the hardship letter not clear? Would a foreclosure be better for anyone than approving a short sale?
Many phone calls and emails later - many, many - we got the seller's lender to take another look at the situation. This time, in addition to the hardship letter, we provided copies of demand letters from the IRS (which we should have provided earlier) - and eventually got short sale approval.
Seller is now out from under that obligation. Buyer has the house he wanted. And eventually the government will get theirs - I'm sure.
Golf Course Property
I love working with a buyer who knows what she wants yet keeps her mind open, knowing that she can't know everything. Even when it turns out she knows more than her realtor.
I had the privilege of working with a woman whose brother and his wife live in Sun City in a very nice condo that they have remodeled. Golf is important to them, and to her, so - even though she's not ready to retire yet, she decided to look for a property similar to theirs.
She lives on the East Coast and scheduled a buying trip. We looked at some properties on line before she got here. She gave herself a few days - building time into each day to enjoy herself playing golf and visiting with family and checking out the community. And we spent about three days - a couple of hours a day - looking as she narrowed down the possibilities.
On the last day before she got ready to go back home, we wrote an offer. The offer was for a very well cared for house, on a golf course - owned by a couple who still lived there. The house had been on the market only a few days, and she asked what I thought of the price. I told her - and suggested a lower number. Her offer was well below the number I suggested.
Seller countered - and buyer said forget it. Oh, well.
A few weeks later, seller's agent contacted me - would buyer still be interested at original offer price? Hey - how many times does that happen? What do you think buyer said?
No, she wasn't interested - but she might be for less. So - long story short - she bought her golf course house for a lot less than it was listed for. Furnished. Knew what she wanted. Knew what she was willing to pay. Read the seller's motivation. Got what she wanted.
I had the privilege of working with a woman whose brother and his wife live in Sun City in a very nice condo that they have remodeled. Golf is important to them, and to her, so - even though she's not ready to retire yet, she decided to look for a property similar to theirs.
She lives on the East Coast and scheduled a buying trip. We looked at some properties on line before she got here. She gave herself a few days - building time into each day to enjoy herself playing golf and visiting with family and checking out the community. And we spent about three days - a couple of hours a day - looking as she narrowed down the possibilities.
On the last day before she got ready to go back home, we wrote an offer. The offer was for a very well cared for house, on a golf course - owned by a couple who still lived there. The house had been on the market only a few days, and she asked what I thought of the price. I told her - and suggested a lower number. Her offer was well below the number I suggested.
Seller countered - and buyer said forget it. Oh, well.
A few weeks later, seller's agent contacted me - would buyer still be interested at original offer price? Hey - how many times does that happen? What do you think buyer said?
No, she wasn't interested - but she might be for less. So - long story short - she bought her golf course house for a lot less than it was listed for. Furnished. Knew what she wanted. Knew what she was willing to pay. Read the seller's motivation. Got what she wanted.
Love and the First-Time Buyer
It's a great experience, helping a first-time buyer find a "worthy" first-time home. My client and her finance knew what they wanted - sort of.
The first one we looked (and they saw possibilities) looked like a crime scene. I wasn't sure if what I was seeing on the floor (cement) was blood or paint.
Then we got a little more serious. Found a charming house - but it was a little too small. Found another prospect - but decided that the neighborhood might not be the best for them over time. Found another - but somebody got there before we did. And so on and so forth - again and again. A day late and a dollar short.
Then we found a bank-owned property - needed a little work but not much. Looked good. Went to see another in a different neighborhood before we made an offer - and liked the looks of that one too. While we were going back and forth, make an offer or don't - the PERFECT house came back on the market.
Great location. Great price. A short sale back on the market after losing buyer #1 - and one of those where you can plug in the next buyer and keep on moving forward (I love that kind). Absolutely charming home - good floorplan, all appliances included, nice paint colors, more for the money than anything else we'd seen. Sellers had taken great care of the property so any maintenance issues were minor. And no wait to speak of.
And we got it. Sweet couple - in love with each other and with their first home together. Took a little more elbow grease to clean up than it looked like at first - but that's typical. Happy beginning for young love.
The first one we looked (and they saw possibilities) looked like a crime scene. I wasn't sure if what I was seeing on the floor (cement) was blood or paint.
Then we got a little more serious. Found a charming house - but it was a little too small. Found another prospect - but decided that the neighborhood might not be the best for them over time. Found another - but somebody got there before we did. And so on and so forth - again and again. A day late and a dollar short.
Then we found a bank-owned property - needed a little work but not much. Looked good. Went to see another in a different neighborhood before we made an offer - and liked the looks of that one too. While we were going back and forth, make an offer or don't - the PERFECT house came back on the market.
Great location. Great price. A short sale back on the market after losing buyer #1 - and one of those where you can plug in the next buyer and keep on moving forward (I love that kind). Absolutely charming home - good floorplan, all appliances included, nice paint colors, more for the money than anything else we'd seen. Sellers had taken great care of the property so any maintenance issues were minor. And no wait to speak of.
And we got it. Sweet couple - in love with each other and with their first home together. Took a little more elbow grease to clean up than it looked like at first - but that's typical. Happy beginning for young love.
If You Can't Sell It, Lease It
I have a friend who has lived in Glendale for years - she and her husband raised their two now-grown children in their home. Plus assorted cats and turtles etc. It's a lovely home - and I mean home as compared to house. Clean. Freshly painted. In excellent repair. Beautifully manicured yard. Nice neighborhood. And, like many of us, even though they've lived there for a long, long time, there is a mortgage. And - the mortgage is greater than the market says the house is worth.
The time came for my friend to move - her husband had a great job opportunity in another AZ city. They tried to sell - pricing it where they'd not have to write a check to their lender. After awhile they understood that their price was unrealistic, that even if they found a buyer who loved it, it couldn't appraise high enough for the buyer to borrow what he needed to borrow to obtain financing.
So - I found them a tenant. Great tenant - but hard to place because she's a cat-lover. Where she goes, so do her cats. And while cats and landlords often are not a good mix, in this instance the cats (and their person) were most welcome.
Good solution for both parties (and the cats).
The time came for my friend to move - her husband had a great job opportunity in another AZ city. They tried to sell - pricing it where they'd not have to write a check to their lender. After awhile they understood that their price was unrealistic, that even if they found a buyer who loved it, it couldn't appraise high enough for the buyer to borrow what he needed to borrow to obtain financing.
So - I found them a tenant. Great tenant - but hard to place because she's a cat-lover. Where she goes, so do her cats. And while cats and landlords often are not a good mix, in this instance the cats (and their person) were most welcome.
Good solution for both parties (and the cats).
Thursday, March 31, 2011
Investment Property
Have you tried to find a rental property lately in Glendale or Peoria? There aren't a lot out there - 305 for all of Glendale and Peoria, no matter the size, age, type (house, condo, apartment) or features.
Guess how many short sales closed in the same cities between January 1 and today? 385. Hah! That doesn't count foreclosures.
Short sellers can't get financing for home purchases for awhile - two or three years maybe - but that doesn't mean they can't buy. If they can come up with cash from friends or family or cash in retirement portfolios, they can buy lower-priced properties for cash.
Or they rent. And lots more are renting than buying.
If there could be a better time for somebody - or somebodies - to pull together funding for investment property, I don't know what it would be. There are tenants who want them. The demand by tenants for rental property is real, and demand affects pricing.
Once the tax bill is paid, maybe it's time to see what funds are available to purchase investment properties. Goodness knows there are people who need places to live.
Rentals
I have been working with a young family to find a home for them for the next couple of years. We've seen several as they are educating themselves on "must haves" vs "nice to haves" - and they are adjusting to what's out there for what they can afford. This afternoon we thought we'd found it - good location, big enough, new enough, low maintenance interior, pool with pool upkeep included in the rent - not 100%, but then what is. (I'd given them my "there is no such thing as a perfect house" speech - "repeat after me, 'there is no such thing as a perfect house'")! Unfortunately, after one (count them, one) day on the market, somebody got an approved rental application in before us. Very disappointing. But the search continues - if it is out there, we will find it. We must!!!!
Sunday, March 27, 2011
"As Is"
What does "as is" mean when it comes to purchasing real property? It does NOT mean that a buyer must go ahead with the purchase if during inspection a "deal-breaker" turns up. No buyer should waive the right to inspection a property unless he has such a great deal that whatever should turn up is of no consequence. What an "as is" purchase does mean is that should a repair issue turn up during the buyer's inspection period, the seller won't make any corrections - not a drop in price, not a repair, nothing. No way, no how. Are there exceptions? There probably are exceptions to everything - at least almost everything. Let's say the seller did not know there were termites. The buyer found termites during inspection. Now the seller knows. Would it be smarter for the seller to pay for a termite inspection and keep the current buyer happy than it would be to refuse and find another buyer and run the risk of that buyer cancelling too? Sure. But smart does not always enter into the transaction - especially if the sales price already reflects discounts for repairs. So - most of the time - when a buyer signs an "as is addendum" at the time he extends the offer, he needs to understand that there may be issues at inspection and if so, he has choices. 1) He can proceed with the purchase; 2) he can cancel the contract. If he cancels within the inspection period, unless he has agreed to nonrefundable earnest money, he is entitled to a full refund of his earnest money.
The Smoke House
Off and on for the past year I've been working with a really nice woman in search of a home for her family. We met on a sign call - I had a listing in Oakdale - that's a Glendale subdivision with homes built in the mid-80s by Contingental. Nice community - no HOA. But that property was not quite right for her so I committed to trying to find something else. We looked at a few - got a feel for what she liked - and found a short sale that was nice. Unfortunately, it wasn't nice enough. It took a couple of months or so for the seller's lender to sort through the offer. Then the lender asked for more money. We countered their counter - but it really wasn't worth it to the buyer so we cancelled the contract. We lost touch for a little while - she still got my newsletter but the motivation to buy had sore of waned. Then we started looking again and boom - there it was. THE house. Nice neighborhood. Not too far from current house. Interesting floorplan (a bi-level, with the kitchen and main living area upstairs), nice yard. But the feature that made the buyer laugh out loud was a smoke house - not the kind that you smoke a pipe in, but where you smoke fish and meat. This is something the buyer has now and loves - so it made it an easy "yes" for her. Then, wouldn't you know - it is bank-owned and a multiple-offer situation. We made the best offer we could - a little over asking price - and the bank accepted. Hurray. Or so we thought. Next step is home inspection. We'd expected a few issues - assumed they'd be "cosmetic" - but were not expecting mold. Mold is a four-letter word when it comes to house purchases. I am not a mold expert. I do know that there are different types of mold - some no big deal, others not so good. This mold looked to be the not-so-good kind. The house had been vacant for some time. There had been leakage from the a/c air handler. The eaves were rotten in places. The patio cover was rotten in places. The list goes on. Anyway - we cancelled the contract. We continue to look. They know what they want. They're realistic as to what they can find for their price. All we have to do is find it and get our offer in before somebody else does. The inventory is shrinking so the search is not as easy as it once was. Hold a good thought.
Litchfield Park
I love it when a buyer knows just what she wants. Usually when I show properties to prospective buyers the maximum number of showings at any one time is six. That's because after seeing that many they all begin to blur - it's difficult to remember one from the other. But the other day I showed eleven. The buyer had identified the general area, had reviewed each of the listings I sent to her on line, and narrowed down to within a three mile radius, more or less. She was good at keeping within her budget. She could see the possibilities of pretty much each house (though neither she nor I were able to stay in the one smelly house long enough to try to make that one work). And she did a great job of making notes and ranking what she saw. When we came to "the one," she knew - she just knew. Corner lot. Quiet. Big enough. In fact the yard is a little too big - but she's okay with that. Is the floorplan perfect? Not quite - but she likes it anyway. Room sizes are good. Needs paint - but she knows painters. Carpet needs cleaned and one day she'll replace it, but for now she'll have it cleaned. She knows it'll work for her. It was a little over-priced - though we didn't know that when we first looked. It had been on the market for awhile and it compared very favorably to the other ten we'd seen that day. But in looking at similar properties in the neighborhood that had sold within the past three months, it was difficult to find something priced like that one. So we made an offer just a little lower - in an attempt to avoid issues with appraisal. We asked for the seller to pay the buyer's closing costs. The seller (Fannie Mae) countered with a little higher price. We countered back with same price but a little less by way of close cost assistance. And hurray - we have an accepted offer. Now it's time for home inspection. I'm guessing we'll have no issues during inspection - which is good, because with Fannie Mae properties, it is what it is so buyer either deals with imperfections or cancels. Then, assuming all goes well, buyer's lender will appraise. And if that goes well (please - let it go well), then buyer will have a new - okay not new, but new to her - house within a month. This buyer has been great to work with. She's realistic - she knows the area and she knows her budget and she knows that perfect is in the eye of the beholder. She's pleasant. She's polite. And she's really happy to have found something that works for her. Now - to keep fingers crossed that all goes well with inspection and appraisal ....
Friday, January 21, 2011
St Mary's Westside Food Bank
Today was a day to give back to the community - just a little.
A dozen Keller Williams Realty agents met at St Mary's Westside Food Bank late this morning to volunteer our services. This is not about real estate - but it is about people.
For three hours we sorted donated food, checking for expiration dates - putting the "good" stuff in like-type bins and pitching the items that are unsafe.
I sorted out my pantry not long ago and was surprised to find items more than five years old. The oldest I found today at the food bank was a donated item with an expiration code from 1998 - it went to the circular file. So did a lot of other out-of-code items.
When you donate - and it is a good thing to do - watch for expiration dates. They'll take canned goods that are up to year year past "best sale date" but dry food is acceptable only one month past expiration date.
The numbers fed thanks to donated foodstuffs is staggering - only one state topped Arizona last year in feeding hungry people. You can help. The food bank is on Elm Street, just east of Dysart and south of Bell in Surprise.
A dozen Keller Williams Realty agents met at St Mary's Westside Food Bank late this morning to volunteer our services. This is not about real estate - but it is about people.
For three hours we sorted donated food, checking for expiration dates - putting the "good" stuff in like-type bins and pitching the items that are unsafe.
I sorted out my pantry not long ago and was surprised to find items more than five years old. The oldest I found today at the food bank was a donated item with an expiration code from 1998 - it went to the circular file. So did a lot of other out-of-code items.
When you donate - and it is a good thing to do - watch for expiration dates. They'll take canned goods that are up to year year past "best sale date" but dry food is acceptable only one month past expiration date.
The numbers fed thanks to donated foodstuffs is staggering - only one state topped Arizona last year in feeding hungry people. You can help. The food bank is on Elm Street, just east of Dysart and south of Bell in Surprise.
Thursday, January 20, 2011
Phoenix Condo
Early in October I met a young man interested in seeing a condo - near Greenway and the 51. That's not my part of the valley, but he'd called the office and the agent of the day called me - and I had time, so I headed over there. Cute condo, very inexpensive, but there was already an offer in the works so that one got away.
I set him up on an automated search and it wasn't long until we found one that would work for him. Same part of town. Short sale. We made an offer, the seller accepted - and the wait began. And went on, and on, and on.
After 90 days, the young man - whose wife was expecting their first baby - asked to look at another condo. Same part of town. Same condition. Same price - more or less. Only this condo had no strings attached - no banks involved. While we (buyer, pregnant wife and I) were looking, around 10am, wife's contractions began - so that was a REALLY quick look. We made offer, seller accepted, (baby was born that evening!!), we did inspection the next day - seller agreed to correct the few minor issues. We cancelled the first contract - and his earnest money was returned.
And yesterday we closed! I met him at the property - along with his wife and the baby - and gave them the keys to their new home.
This is - except for rentals and referrals - the smallest commission check I've ever received. Yet it is one of the smoothest and most gratifying transactions in my career. Great seller's agent. No surprises. And happy buyer.
I set him up on an automated search and it wasn't long until we found one that would work for him. Same part of town. Short sale. We made an offer, the seller accepted - and the wait began. And went on, and on, and on.
After 90 days, the young man - whose wife was expecting their first baby - asked to look at another condo. Same part of town. Same condition. Same price - more or less. Only this condo had no strings attached - no banks involved. While we (buyer, pregnant wife and I) were looking, around 10am, wife's contractions began - so that was a REALLY quick look. We made offer, seller accepted, (baby was born that evening!!), we did inspection the next day - seller agreed to correct the few minor issues. We cancelled the first contract - and his earnest money was returned.
And yesterday we closed! I met him at the property - along with his wife and the baby - and gave them the keys to their new home.
This is - except for rentals and referrals - the smallest commission check I've ever received. Yet it is one of the smoothest and most gratifying transactions in my career. Great seller's agent. No surprises. And happy buyer.
Sunday, January 16, 2011
Housing Market - Finding the Value
I got a call yesterday from the owner of an older home in Phoenix asking how much their house might sell for. Until a couple of years ago, the property had been home to the couple for 20+ years. Over time they'd expanded it (more than doubled its size), updated the kitchen, decorated it to suit themselves, enjoyed the pool - it was home. Then, when their neighborhood had aged and the market dropped, came a great job opportunity in another city. They moved away, leased it out, the lease ends in February and now they have a decision to make. Find another tenant? Sell? Or ...?
Ideally, to determine list price I'd find two or three homes built within about five years of the house, similar in size and condition, with pools, in the same subdivision that have sold within the past three months. I can't make that work - so I'm working outside the subdivision but within a mile and a half radius of the property. What's been selling falls pretty much into two categories - distress sales, where the house - at least in pictures - looks pretty sadly neglected, and remodels - with gorgeous kitchens, updated bathrooms, new flooring and decorator touches.
I haven't seen their house for a couple of years, so the best I can do is give them a range. If it's looking pitiful, given its age and the neighborhood and how the tenants took care of it, it'll probably be in the mid to high $30s per square foot. If it is knock-your-sox off stunning, with no maintenance issues, it could be in the high $50s per square foot. Anyway you look at it, at least from a seller's standpoint, the figure is disappointing.
What complicates real estate transactions is - of course - purchase money. Someone who is paying cash wants to be sure he is not over-paying, but may be willing to over-pay if the property is everything he wants. However, someone who is borrowing from a lender will have an appraisal before the lender will close the transaction. The appraised value will dictate how much the lender will lend. Market value is really determined not by what a willing buyer will pay (unless he's a cash buyer) but by what a willing lender will lend.
Price it too high and a buyer won't look. Price it too low (bait) and you're in violation of the Real Estate Commissioner standards.
So what I'll end up telling the homeowners is that, depending upon condition, and depending on how quickly they need to sell, their initial list price falls somewhere between x and y - which in this case is a spread of about $30K. When a seller owes more than they expect a buyer to pay, the initial pricing decision is on the low end - and ultimately in a short sale the seller's lender will determine the sales price.
Someday, foreclosures and short sales may be just a memory - I hope. Until then, they are sure giving buyers a lot of bargain-priced properties to choose from.
Monday, January 10, 2011
Cholla
I am always looking for business. A couple of years ago or so I contacted a seller whose listing with another company had expired, just to see if he might still want to try to sell. Nice person - very courteous and willing to talk about what it might take to bring a buyer. His price was simply too high for the market, so we agreed that when the market improved, if he still wanted to sell, that he'd give me a call.
We talked a few times after that - and stayed in touch through my monthly newsletter.
I got a call from him in September. He'd been trying since the first of the year to get his bank to modify his loan, and they suggested that he short sale it. The house was getting a little too much for him to maintain, so he agreed that a short sale was the best solution for him - and he called me.
I listed it and showed it before we even got a sign in his yard. We had a buyer very quickly, and the seller's lender has a good reputation for efficiency, so I thought we'd have an acceptance in no time.
Well, not so much. If I'd been smarter, we might not have had the hiccups that we had. I knew from the beginning - and had told the seller's lender - that seller's income was limited to social security and a small pension and because of his income he had not filed tax returns for the last ten years. Weeks after submittion the offer and accompanying documents, seller's lender denied the short sale because the file was incomplete - incomplete because there were no pay stubs or tax returns.
It took a little doing, but upper management at the lender institution coached me as to what they were looking for by way of documentation (it's not all that intuitive as to how you demonstrate that you DO NOT do something - like file taxes) - and with only a little additional delay, we provided a complete file and the lender approved the short sale.
During the interim, the October 5th hail storm hammered the roof of the house - so the seller's insurance company got involved, and then the seller's lender had some additional requirements to be satisfied. (Nothing is easy).
But we did it - we closed before the end of December. Buyer is happy with their new investment property - and the tenant found to go with it. Tenant is happy to have a lovely home. Seller is happy to be in his new apartment, with less upkeep, and no more stress from a short sale. And once the vendors have completed the work they've committed to do in addressing the hail damage, this story will have a happy ending. Oh yeah - and I got paid.
Avondale - Gated Community
It was probably a year ago, maybe longer, that I met a lovely Colorado couple interested in buying a vacation home. When we first talked, they didn't know what part of the valley might work best for them. They got partially educated on line, as most people do, so when they came to Arizona for a visit, we drove around a bit to validate the conclusions they'd come to.
We found a property in Coyote Lakes in Surprise - and made an offer on it before they returned to Colorado. It was a short sale. And a long story. Eventually that property went from short sale into foreclosure. Not the plan that we'd had in mind. So the Colorado couple still did not have their Arizona vacation home.
Last fall, we started looking again - still long distance. This time we shifted location toward Avondale, and we made an offer on a lovely home in a gated community. Another short sale. Very very low price - about $40K less than the one that got away.
They made their offer from Colorado on the strength of pictures. Once the seller's lender approved the sale, they came out for visual inspection - and liked what they saw. (Whew!) Home inspection and appraisal went well - no issues - and we closed before the end of December.
Really nice people. They're in Arizona as I write - at the house - and starting the process of redecorating to put their own personality all over it. Another happy ending - or maybe new beginning ....
We found a property in Coyote Lakes in Surprise - and made an offer on it before they returned to Colorado. It was a short sale. And a long story. Eventually that property went from short sale into foreclosure. Not the plan that we'd had in mind. So the Colorado couple still did not have their Arizona vacation home.
Last fall, we started looking again - still long distance. This time we shifted location toward Avondale, and we made an offer on a lovely home in a gated community. Another short sale. Very very low price - about $40K less than the one that got away.
They made their offer from Colorado on the strength of pictures. Once the seller's lender approved the sale, they came out for visual inspection - and liked what they saw. (Whew!) Home inspection and appraisal went well - no issues - and we closed before the end of December.
Really nice people. They're in Arizona as I write - at the house - and starting the process of redecorating to put their own personality all over it. Another happy ending - or maybe new beginning ....
Arrowhead by the Lake
I love it when good things happen. On this transaction, I represented the seller - a very nice man whose job change required him to move out of state. With the market as it is - meaning it is a great market for buyers looking for bargains and a challenging market for sellers who need to get their money out of their property - the seller needed approval from his lender in order to do a short sale.
We had a couple of challenges along the way - a seller contribution toward closing that we couldn't handle, and an appraisal for the buyer that wasn't as high as the sales price.
But they turned out to be minor, and closing occurred a couple of days before Christmas.
Buyers now have the home they wanted, and seller can move on with the rest of his life. And I got a paycheck ....
Grace at 90
I went to a birthday celebration for a 90 year old friend last Saturday. There must have been 70 or more people there to honor her - family, friends from her career as a teacher, friends from her days as a WAC (Womens Army Corps), friends from church. Grace was touched that so many came, and that people were not bashful about taking the mic and telling how she had touched their lives.
And there was cake! I always like it when there is cake.
I guess I've known Grace for maybe the last five years. She and her daughter Joyce changed churches and started coming to Glendale Christian - that's where my husband and I have our membership. Grace is a magnet - she's tiny, she's friendly, she twinkles, she smiles and she exudes warmth. She doesn't see very well, but she gets around easily with the help of her daughter. She's at church when the doors open and is involved in Bible studies outside of Sunday morning. She's wise, and funny, and she doesn't take herself or her life too seriously though she is pretty darn serious when it comes to eternal values. I'd say she is a role model for a lot of us.
And there was cake! I always like it when there is cake.
I guess I've known Grace for maybe the last five years. She and her daughter Joyce changed churches and started coming to Glendale Christian - that's where my husband and I have our membership. Grace is a magnet - she's tiny, she's friendly, she twinkles, she smiles and she exudes warmth. She doesn't see very well, but she gets around easily with the help of her daughter. She's at church when the doors open and is involved in Bible studies outside of Sunday morning. She's wise, and funny, and she doesn't take herself or her life too seriously though she is pretty darn serious when it comes to eternal values. I'd say she is a role model for a lot of us.
One unanticipated benefit: I ran into a friend of Grace's that I had not seen for over 25 years! We'd worked together once, and she looks great - just as if it had been yesterday. Now there's a woman who takes good care of herself! And I had no idea that she was Grace's friend. Small world.
It's truly an honor for me to be counted among her many friends.
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