As I was filling up today ($62, thank you very much), this truck pulled into the lot…

The first thing that popped into my head was, “Wow, there is a niche market for anything”. (followed closely by, “Wonder what it would cost to put “PhoenixRealEstateGuy.com across that truck?”)

Real estate coaches, brokers and whatnot will frequently preach, “Find a niche! Find a niche!”

And they are right. When Francy and I started out in real estate, we tried to be the be-all-to-end-all agents for everyone, everywhere. We’d go anywhere, and try to sell anything.

We can’t do that. Phoenix is a big giant city. Some real estate transactions need specialized knowledge. We take listings now on the east side of the Valley — roughly defined as east of Central Avenue. With buyers we’re even more focused geographically. We don’t ignore requests on the west side. We’ve found some agents that work that part of town that we know and trust and refer to them.

(soon, we’ll have a little announcement about Thompson’s Realty expanding that will greatly increase our coverage area. But mums the word for now!)

We are constantly thinking through this business, which is evolving fast. How “niche” do you go? What niche? A niche market in real estate can be geographical, demographic, size/type/style/age/cost of home, and more.

Selling phone service to jails and prisons is an awfully focused niche. I have no idea if they are making money (but the “skin” on that truck was not cheap). But it begs the question — do we narrow our niche even more?  

Maybe. One of the beautiful things about opening our own brokerage is we can run our business however we see fit. And if we find a niche we’re not in that we think needs to be covered, we can recruit the right person to cover it.

That, is a beautiful thing.

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Mukesh and Nita Ambani are building a new home!

It will be 27 stories (550 feet) tall, and contain 400,000 square feet of interior space. But only 40,000 to 50,000 square feet will be dedicated to solely residential living space.

The “garage” consists of six floors, and will hold 150 - 175 cars.

The “house” will be located in Mumbai, India where the owners and guests can escape the sweltering summer heat in the “ice room” — complete with snow.

Ambani is currently listed by Forbes as the fifth richest man in the world, with an approximate net wealth of $43 billion. The cost of the home will approach $2 billion.

Brings a whole new meaning to “if you’ve got it, flaunt it”.

Forbes has the story, photos, and a video.

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I just don’t get it.

Agents talk about “How to Sell Your Home” all the time.

Pricing, curb appeal, condition, staging, marketing, declutter, blah blah blah. You can read real estate blogs for days and get great tips on how to sell your home.

But there seems to be a disturbing trend developing. Oh, it’s been going on since time immemorial, but recently it seems to be getting worse.

Dru Bloomfield up in Scottsdale mentioned it on Twitter yesterday.

I’ve written about it in the past

Yesterday Kris Berg, in typical Kris Berg brilliance, wrote about it. 

What is it?

It’s the simple fact that unless a home buyer can SEE your home, it’s highly unlikely they will try to purchase it.

This isn’t rocket science. It’s fundamental human nature. People tend to want to look at something they are going to spend hundreds of thousands of dollars on and take a significant portion of their lifetime to pay off.

Yesterday, in a scene reminiscent of The Exorcist, I watched my lovely bride’s head spin around backwards while she was trying to set up showings for a wonderful couple visiting from Canada.

Unanswered phone calls.
“No, tomorrow is not good, how about next week?”
“The house is a disaster.”
Unanswered phone calls
“I want to sleep in.”
“Only between 4:30 and 5:00.”
Unanswered phone calls
“We’re having a party, need to prepare for that.”

And on and on and on.

It’s insane. It makes no sense. We have a ready willing and able buyer who wants to see YOUR home that is for sale.

And either the seller and/or their agent makes viewing the home impossible.

I just don’t get it.

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Conversation overheard today in Starbucks:

Man on cell phone: “blah blah, yes the car is still available. Yep, that’s the correct address. The gate code is 4375 pound sign. OK, see you then.”

Man’s apparent wife: “You just gave a complete stranger the gate access code.”

Man: “So. Everyone from the pizza guy to the florist to all the friends of the insane teenager next door has it. Hell, 90% of the traffic in the neighborhood just follow someone else in.”

Apparent wife: “Yeah, that’s all true.”

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Write and negotiate an offer:  The Arizona Residential Resale Purchase Contract is the primary form used in residential sales.  There is a corresponding purchase contract used for vacant land sales.  The contract is between a buyer and a seller and establishes the terms and conditions of the sale of residential property. There is a lot of “boilerplate” language and items that can be modified by either party.  Keep in mind that just about everything can be negotiated. Your agent should be able to explain each item and any additional addendums required.  The property and type of sale will dictate which addendums are necessary (Home Owners Association, As Is addendum, Short Sale addendum, etc).
 
If you aren’t paying cash, the standard Arizona Residential Resale Purchase Contract requires a Loan Status Report (or LSR) be submitted with the offer.   In the Phoenix real estate market and in the current lending environment, it is critical to demonstrate to sellers that you are not only willing to purchase their property, but that you are able to. An LSR signed by your lender is in effect a statement of pre-qualification. It is not a guarantee that the loan can be obtained but it does show that you are a strong potential buyer. The LSR outlines the loan terms, down payment required and qualification amount. 

The most common question we get is, “How long does this process take?”  If you are obtaining a loan for a standard home purchase (not a short sale).  It’s usually best to plan on 30 to 45 days.  If you are paying cash it can be done in about 21 days (I’ve seen shorter time frames but it is very stressful and I don’t recommend it).  Short sale purchases can take significantly longer.

Probably the second most common question from first time home buyers is “What is earnest money and how much do I need?” Jay previously wrote a post about earnest money.  It’s a great post and I don’t really have anything to add.

The down payment is often indicated in the LSR and is typically discussed with your lender prior to locating a property. 

The buyer should determine the price offered for the property – not the agent.  Your Realtor can provide information (such as the latest comparable market analysis or “CMA” for the neighborhood) to help you with your decision.  Properties in the last few months sold (not those that are listed for sale or under contract) are usually a good indicator of current value.  Upgrades do not necessarily add value to the property but condition issues can reduce the current market value.  Your agent should be able to help you determine if any of the recent sales were foreclosure or short sale properties.  These “distressed” properties are often sold below market value.  Once you determine an approximate market value, ask yourself two questions:

1 – Is this property realistically priced?
2 – What am I willing to pay?

Successful negotiations begin with realistic expectations by both the buyer and the seller.  Buyers don’t want to pay too much for a property – sellers want to get the most from their investment.  If the property is priced significantly higher than the comparables the seller may be unrealistic and it could make negotiations difficult.  A higher than comparable price may also create a problem when the property is appraised for your loan.

A common negotiation mistake made by a buyer is to submit an unrealistically low offer with the expectation that the seller will counter the offer somewhere between the list price and the offer price.  This isn’t usually what ends up happening.  Many sellers have a difficult time seeing their property as an investment –they’ve made memories there.  They’ve made improvements. They are emotionally bonded with their home.  Extremely low offers tend to irritate the seller to the point that they don’t want anything to do with you or your offer.  It can be better to start with the amount you expect to pay (maybe just a little bit less) and be willing to walk away from the property if the seller asks for more.

Walking away is not easy, but it may be necessary so prepare yourself. It’s important not to fall in love with a home while you are in purchase negotiations! There will be plenty of time to make memories and fall in love with your home after you’ve moved in.

There is more to submitting an offer and negotiating the purchase of a home than just the price (though obviously that is the major factor). Other considerations are the amount of earnest money, the inspection period, items that the buyer and seller will pay, length of escrow period and even loan terms all come into play. Your offer is a combination of all these factors and each factor will be weighed differently by different sellers. Make sure you understand all of the purchase contract terms and conditions BEFORE you submit an offer. Work closely with your real estate agent and let them help guide you and educate you on the nuances of submitting and negotiating a purchase offer.

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