What, you didn’t know this was a series?

Yeah, me either until about 10 minutes ago…

Here we’ll explore seven habits that highly effective real state agents practice. In an act of shameless self-promotion, we’ll throw in that if you are a Phoenix home buyer or seller, you need to only call Thompson’s Realty to find an agent that practices these seven habits (and more) in their daily routine.

Effective Habit #1: Understand the Real Estate Contract and Supporting Documents

It seems stunningly obvious. An effective real estate agent should understand the real estate contract and all the documents that surround and support it. In the state of Arizona, we have standardized purchase and sale documents that are pretty much the lifeblood of a real estate transaction. Yet nearly every day we are presented with evidence that there are agents out there with fundamental misunderstandings, or misconceptions, about what these documents include.

THAT’S CRAZY TALK!

Yeah, it should be crazy talk, but it’s actually reality talk. Agents need to understand every single line of the real estate sales contract. There are critical timelines in that document that must be followed to protect your client — be they buyer or seller.

Home buyers and sellers — you should review the standard contracts and other documents before you make or consider an offer on a home. ASK QUESTIONS. The docs are drawn up by legal types and are often worded in ways only those people can manage. A good agent should be able to explain every line of the contract to you in plain English. You need to understand these documents. And if your agent can’t explain them, well…

Effective Habit #2: Patience

“Patience is a virtue.” I don’t know who first said that, but they were right. (Actually, according to several sources, the saying is believed to have originated in “Psychomachia,” an epic poem written in the fifth century. Now you know.)

Real estate agents need patience. Patience in dealing with other agents, with lenders, with title companies, with inspectors, with appraisers, with banks, and yes, even with their clients. Let’s be honest, some of you client types are not the easiest people to work with.

The real estate sales process is long and arduous, and not for the feint of heart. Patience is required to navigate the often stormy waters of a real estate sales transaction. The patient real estate agent, one that can shrug off the inconsequential and zero in with laser focus on the crisis of the moment is the agent that closes those transactions that can slip away from the less patient.

Effective Habit #3: Understanding the Real Estate Market

Local knowledge of the real estate market is important in helping a home seller set a price, and a home buyer submit an offer. Local knowledge is important for helping a home buyer find that perfect home. MANY real estate buyers and sellers rely on an agents local knowledge, and as such, ya gotta have it. “Local knowledge” doesn’t just mean memorizing the number of homes listed for sale and the median sales price, it means understanding the schools, shopping, medical facilities, HOA rules and regulations and anything else a potential buyer may need to know in order to make educated decisions on where to buy. For sellers, understanding the real estate market is critical in being able to properly prepare and price a home for sale.

Effective Habit #4: Understanding the Client

Thanks to the human genome, every individual is different. You need to understand, and be able to extract when necessary, what your client’s needs, wants and desires are. What is their motivation for buying / selling? What do they HAVE to have in a home vs. what would “be nice” is crucial to undertand so you, and they, don’t have to wade through thousands of potential homes trying to find the right one.

Ask people what they most need out of their real estate agent, and I’ll bet you a significant number of people will tell you, “I want my agent to understand my needs and requirements.” That usually comes right after, “I want my agent to communicate with me…”

Effective Habit #5: Communication Skills

Most of what happens in a real estate transaction, if you really boil it down to the root, is communication. Communication between buyer and seller agent, agent and lender, and especially agent to client. Great communication skills are rarely genetic, it requires study and practice. I’m not saying you have to be a skilled orator on the level of say a Dr. Martin Luther King. It’s not “speaking skills” per se that are required, though it helps if you don’t bumble and stumble and sound like a buffoon. Communication involves speaking, writing and even listening skills. You must be able to communicate effectively — that means losing the acronyms and not speaking in real estate terms that people outside the real estate space may not understand. Timeliness of communication is critical as well. Sometimes, even if there is no change in the transaction, reaching 0ut to your client and letting them know that is just as importnat and talking to them when a big matter is at hand.

And for God’s sake, answer email’s and phone calls!

Effective Habit #6: Technological Skills

No, you don’t have to understand how to write computer programs or solder a component on a mother board. But in the year 2011, it is important for real estate agents to have at least some fundamental tech skills. Skills that go beyond just knowing which way to face the document in the fax machine. I’ve seen agents that can’t fumble their way through an MLS search, or fill out a contract electronically. How they survive is beyond me. Want to really serve the younger home buyer? You better learn to text. Want to work with out of state clients? Learn to use electronic signatures, and learn to fight the idiots that don’t accept them. Want to market a home on the Internet? Well then learn how to do that.

None of this stuff is really all that difficult to grasp. Go to Google (google.com. It’s a web site). Go to YouTube. Teach yourself some basic tech skills. If you can’t teach yourself, sign up for a class. There are a bazillion of them being sold for free.

Effective Habit #7: Be Likeable

I’ve said this numerous times in speaking engagements of all sorts — people pick a real estate agent because they like them. Perhaps that is oversimplification, and perhaps it seems odd to say this in an article about seven habits of highly effective real estate agents. But the bottom line is this: real estate sales is not rocket science. It doesn’t take years of formal education and training to be a good real estate agent. What separates any given agent from another is a razor-thin margin. There are only so many ways to complete a real estate contract. Marketing skills are important in selling a home, but the greatest marketer on the planet can’t sell an over-priced home, or a home in bad condition (unless that has been factored into the price). Put “Agent A” next to “Agent B” and you’ll be hard pressed to be able to quantify why one is superior to the other. Many times agent selection by a home buyer or seller boils down to whether or not they like you.

Yes you.

So don’t be an asshat. No, you don’t have to burry your nose into your clients posterior (that’s really not “likeable”, it’s ass kissing, which few people truly find likeable). No, you don’t have to be your clients BFF. No, you don’t have to be a “yes man” and agree with every word your client utters, nor do you have to tell them everything they want to hear. In fact, rarely will you be telling clients what they want to hear because a solid 9/10ths of real estate sales involves educating your clients and that usually means telling them what they don’t want to hear. Just be honest. Brutally so. While the truth in and of itself may not be likeable, your clients will ultimately like you for being honest.

Be yourself. Be true. Be real. That’s likeable. Leave fake smarmy sales guy at home. Or locked in a trunk somewhere. No one likes fake smarmy sales guy.

Bonus! Effective Habit #8: Reader Submission

What do YOU, oh avid reader, think is an effective habit of an effective real estate agent? If you are a home buyer or seller (or ever have been) what do you look for in an agent? If you are a real estate agent, what habits have you developed that helps separate you from the gaggle of other agents plying their wares? Let us know in the comments!

Photo Credit: Lincolnian (Brian) on Flickr. CC Licensed.

• The Immutable Laws of Buying and Selling Real Estate
• 7 Habits of Highly Effective Home Buyers
• 7 Habits of Highly Effective Home Sellers
• If You’re Going to Play the ‘Lawyer Card’ You Better Bring Your A Game…
• Honey check out this crown molding! And the baseboards!

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Buyer must pre-qualify for a loan through lender XYZ to submit an offer

In the 120 some-odd comments that followed, many agents expressed outrage at this practice. Some went on to offer the following arguments against it:

• It’s illegal (a Fair Housing violation) because it is Steering
• The seller has no right to dictate these terms
• The listing agent has no right to dictate these terms
• The listing agent is doing this without the seller’s permission
• It doesn’t matter what lender performs the buyer’s pre-qualification because all lenders in Arizona are licensed, and held to the same standards

Let’s examine each of these arguments…

Requiring a pre-qual from a specific lender is steering

Steering is illegal based on the Fair Housing Act. What is steering? Typically it is defined as:

The illegal funneling of home buyers to a particular area based on the desire to keep the makeup of that neighborhood the same or intentionally change it (source).

There are many definitions of steering out there, but this is the gist of it.

Requesting a buyer to be pre-qualified by a specific lender is hardly steering as a Fair Housing violation. Just because a buyer may feel “steered” toward using a specific lender, that doesn’t mean it qualifies as illegal steering.

The seller has no right to dictate these terms

Sure they do. It is their home, they can dictate pretty much whatever they feel like (within legal limits of course). A seller can dicate that they will accept only cash offers. Heck, they could dictate they will only accept a sack of nickels if they really wanted to. A seller can dictate that they will only accept a full price offer printed on pink paper. If a seller wants to dictate that a buyer must be pre-qualified with a specific lender, so be it. They aren’t specifying the buyer has to get a loan from the specific lender, only that they want the buyer pre-qualified by that lender.

The listing agent has no right to dictate these terms

This is probably correct. A listing agent could advise their client to restrict buyers to pre-qualifying with a specific lender, but they shouldn’t dictate that term. Personally I think that would be poor advice, more on that later…

The listing agent is doing this without the seller’s permission

Really? And you know this how? Unless the MLS states, “I the listing agent never got my seller’s permission to say this but…” then you are merely speculating that the agent hasn’t discussed this with their client. Speculating on other’s intents and actions is ill-advised. There’s no point in it. Just stop it.

It doesn’t matter what lender performs the buyer’s pre-qualification because all lenders in Arizona are licensed, and held to the same standards

This argument, simply put, is a load of hooey. It’s absurd to think that because lenders hold a state issued license that they are all equally competent. Agents that feel all lenders are the same because they are licensed apparently feel all real estate agents are the same too. After all, real estate agents must also be licensed by the state.

Some commenters on the post mentioned that because there is a standard pre-qual form, all pre-quals are the same.

Another load of bovine fecal matter.

Sure the form is standardized (in Arizona) but that doesn’t mean all pre-quals are created equal any more than all real estate purchase contracts are created equal.

The Bottom Line

The practice of forcing buyers to pre-qualify with a specific lender (or use a specific title company for that matter — something we see far more frequently) is not “steering” and it’s highly unlikely that it is illegal (hey, I’m not an attorney so I can’t say with 100% certainty that it is a legally allowable practice. I’ll go with 99.99% certainty, but not 100%).

Don’t get me wrong. I think it is a ridiculous practice. It’s annoying as hell. Making buyers jump through extra hoops to put on offer on your home is dumb. I know for a fact some buyers simply walk away from houses for sale where this demand is in place. How that benefits the seller is beyond me. I also know agents that will just roll over and accept the demand on their client’s behalf.

If you are an agent and your buyer client is opposed to getting pre-qual’ed with a certain lender, then submit your offer without that qualification. If the seller counters they want their lender to pre-qual your client, counter back with NO. Could your client “lose” the home? Sure, if the seller stands pat on their demand. That’s a decision and risk assessment your client will have to make.

But consider this — we’ve had at least three buyer’s that I can recall that said they weren’t wasting their time pre-qualifying with the sellers choice of lenders. And you know what? Turns out once the seller had that offer in their hand using their specified lender wasn’t so important after all…

 Photo Credit: kevin dooley on Flickr. CC Licensed.

• 7 Habits of Highly Effective Real Estate Agents
• 7 Habits of Highly Effective Home Buyers
• Why are there so many short sales in the Phoenix real estate market?
• If You’re Going to Play the ‘Lawyer Card’ You Better Bring Your A Game…
• The Immutable Laws of Buying and Selling Real Estate

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

This time I’ll try not to leave one of the seven habits out. Though by accidentally doing that with the seller’s habits post, we got some outstanding contributions from readers. Be sure to read the comments in that post for more insight.

Why seven habits of effective home buyers? Because over the years we’ve seen some traits (habits) the our successful buyer clients share. What is a “successful buyer client”? Let’s just define it as someone who finds the home they want, and gets through the often arduous home buying process without killing themselves, a loved one, the seller, our their real estate agent.

Effective Habit #1: Get pre-qualified (or pre-approved) for a loan

You can’t effectively search for homes if you don’t know how much home you can afford. In today’s lending environment, it is crucial to know BEFORE you begin a home search what type of mortgage, and how much of a mortgage you can get. In fact, in Arizona you can’t even submit an offer on a home without including a “Pre-Qualification Form” with your offer. Well, technically you can submit an offer without it, but I don’t recommend it. The vast majority of sellers are going to want to see some evidence that you can get a loan for the home. These days many homes listed for sale get multiple offers, why would you relegate your offer to the bottom of the pile because you didn’t bother to submit a pre-qual form?

It is crucial to work with a good lender throughout the home buying process. If you don’t know a lender, ask your agent for a few recommendations. Interview a couple of lenders and pick one and stick with them. Few things add more stress and headache to a real estate sales transaction than changing lenders mid-stream. Find a lender that won’t just tell you the maximum amount of a mortgage you can get, rather find one that understands that qualifying for a certain amount and being able to make the payments are two different things.

Here is an oldie but goodie for more info on getting pre-qualified/ pre-approved for a mortgage.

Effective Habit #2: Define your must haves, like to haves, and can not haves

Tell a Phoenix real estate agent, “I’m looking for a 3 bedroom, 2 bath house in the Phoenix area.” Your trusty agent goes into the Multiple Listing Service (MLS) and enters a search for said 3 bedroom 2 bath homes. They will swiftly see that there are 6,401 such homes currently listed for sale in Phoenix (4,058 if you eliminate homes that have offers submitted).

You can’t possibly look at 4,000 – 6,000 potential homes.

Tell your agent, “I’m looking for a 3 bedroom, 2 bath home between $200 – $225K. Single story, without a pool and at least a 3 car garage,” and there are 36 homes listed for sale that meet that criteria.

You CAN look at 36 homes. Add into your search criteria you want a home built after 2007 and you are down to 18 to choose from. Only interested in living in Gilbert? Now you are down to 3 houses to view. You can do that in a couple of hours, tops.

Determine what you MUST have in a home. Then determine what you would LIKE to have in a home. Talk to your agent about these things. Don’t forget to include what you CAN’T have in a home — that will often be more important than anything else.

Don’t know exactly what you must/like/can’t have in a home? That’s OK, it happens ALL the time. Your agent can help you by showing you different homes with different features to help you get a better understanding of what you’d like in a home.

But at some point you are going to have to make decisions and not wander aimlessly about, looking at any home that may possibly fit some undefined set of criteria. That would be a waste of your time, and the time of your agent, the home sellers, your lender and everyone else that is involved in a real estate transaction.

Effective Habit #3: Be realistic

You’ve read on the internet somewhere, or heard on a late-night infomercial that you can get bank-owned homes for pennies on the dollar in the Phoenix area. You want to be an investor! You can’t wait to but that $400,000 home for $130K and then rent it out for $2500 a month. You’ll be rich!

Now it’s time to wake up. You can’t buy homes in Phoenix for pennies on the dollar. Banks, no matter how evil you think they may be, aren’t stupid. They sell their inventory of bank-owned homes at pretty much market value. Why wouldn’t they? Would YOU sell your home for pennies on the dollar? Of course you wouldn’t. You’d let the market determine the value of your home (that may be oversimplified, but that’s basically how it works), as will a bank.

Maybe you’d like one of those $40,000 homes you’ve heard about. And you want it in north Scottsdale. On a golf course.

Well, you can’t have it. It simply doesn’t exist.

Both of the above are extreme examples of being realistic. Less obvious examples might be something like you want a home built in 2010 that isn’t in a Home Owners Association — probably doesn’t exist, unless you look way outside of the metro area. Or you want granite countertops in a home built before 1950. Probably does exist, but your choices are going to be limited.

Being realistic also applies to things besides the home itself. Buying a short sale and expecting the owner to make a bunch of repairs (or any repairs)? Good luck with that. Buying a home and thinking if the home inspector finds anything wrong with it, i’m not buying the house? Well you might as well stop right now because I can assure your there aren’t any homes where the inspector finds nothing to report. Get your brand new built to your order home constructed and an inspector will find some items to address (and yes, you should get a new build home inspected — more than once).

See, “Phoenix home buyers, are you being realistic?” for a more in-depth discussion on Habit #3.

Effective Habit #4: Be flexible

As a home buyer, it is important to be flexible. Unless you are having a home built to your exact specifications, it’s very unlikely that you will find the absolutely perfect home for you. Maybe you find a home that has everything except the perfect kind of flooring, colors, cabinets, whatever. If you have some flexibility built into your must haves and likes, you will find the entire process much less painful.

Understand that in most cases there is a living breathing human being involved in the other side of your transaction. Home sellers are people too. Nit-picking them to death in negotiations and repairs isn’t likely to do much good and could quite possibly do harm. This isn’t to say you should cave to every demand the sellers make. You should stand firm on things that really matter and be flexible where you can be in order to move the transaction along.

Effective Habit #5: Understand the home buying process

You don’t need to understand every nuance of the home buying process — that is your agent’s job. But the more you do understand, the less stressful and mystifying the process will be. Trust me, buying a home is a stressful event. Anything you can do to reduce that stress will go a long way not just toward saving your sanity but in helping ensure the transaction moves to closing.

One of the most important things to understand is your purchase contract. There are two parties to a real estate contract — you the buyer, and the seller. The seller will either be the person who owns the home in the cases of regular / traditional sales and short sales, or the lender in the case of bank-owned / foreclosure homes. Sometimes the “person” in a regular or short sale is actually an “entity” such as an LLC, partnership, or even a corporation. Regardless of exactly who/what owns the home you are buying, you are entering into a legally binding contract when you have your offer accepted, and there are obligations that contract binds you to do. There are timelines that must be complied with, and if they are not, you can suffer some pretty serious / expensive consequences. Your agent (or lawyer in states that involve lawyers in real estate transactions), your lender, your title company, the appraiser — all will work diligently to ensure a successful closing, but ultimately they are not parties to the contract. YOU need to (with advice from your agent and/or attorney) understand all the terms and conditions of your contract.

It is also helpful to understand the escrow, appraisal and lending processes. The successful completion of each of these are fundamental to your closing on your new home.

Do not be afraid to ask your agent questions. Lots of questions. Be advised that everyone in the process tends to toss about terms and acronyms that only those dealing with this stuf fon a daily basis understand. Sometimes we forget we’re speaking in a different language. Don’t be shy. If there’s a term you don’t understand, ask.

The lovely wife has contributed a total of five posts to this blog — and four of them compose a killer series on the home buying process.

Effective Habit #6: Be responsible

As a home buyer, you are going to have to work with a lot of different people in order to make sure your transaction progresses and ultimately closes. Yes, your agent will take on the burden of most of this, but you are still ultimately responsible for your actions.

You are (most likely) financing your new home. As such, it makes sense that you need to be responsible for maintaining your credit worthiness while your mortgage is being processed. Listen to your agent and lender and don’t go buying a car before your mortgage processing is done (yes, I’ve seen it happen). In fact, don’t buy anything on credit without speaking to your lender. And if you think you can quit your job a week before closing and still get that mortgage, think again (yep, seen that too).

When you are looking at potential homes, be responsible and respectful that you are in someone else’s home. It’s OK to look in their closets, to flip light switches, to turn on the stove. But be responsible and leave the home in exactly the same condition you found it in.

Much of this habit really boils down to two things: 1) use common sense; and 2) treat others how you expect to be treated.

Effective Habit #7: Have fun!

We already mentioned that buying a home is stressful. Take a look around at lists of “life’s most stressful events” and you’ll see things like taking on new debt, financial change, moving — that’s buying a house folks. You are about to enter into one of the singel largest financial transactions of your life. Stress is a given.

But buying a home is also an exciting time! There isn’t a law that requires you to mope around, dreading every moment. There’s nothing wrong with having fun during the process. Hopefully you’ve selected an agent that you enjoy working with. Ditto for your lender. That doesn’t mean you all need to participate in group hugs or go camping together and join hands around the campfire singing Kum Ba Ya. But it’s OK to laugh, to enjoy yourself, to have a little fun in the process.

The Bottom Line

Buying a home doesn’t have to be torture. If you understand the process, work with the right people and try to have a little fun along the way there is no question that you can find a great home and get the transaction closed. Think about the habits shown here, do a little online research (why you could start right here on Phoenix Real Estate Guy!), have open dialogs with your agent and lender and you too can make it through a home purchase.

And no, applying seven habits, or even one hundred habits is going to ensure you have a successful home buying experience. Nothing can guarantee that. But you can certainly increase the likelihood of a less stressful and successful transaction by applying some of the habits listed here.

For you, oh avid reader, let me know what I missed. Feel free to add a habit or thought in the comments!

Photo Credit: morberg on Flickr. CC Licensed.

• 7 Habits of Highly Effective Real Estate Agents
• The Immutable Laws of Buying and Selling Real Estate
• Specifying a Lender. Steering? Illegal? Or just Stupid?
• 7 Habits of Highly Effective Home Sellers
• Why are there so many short sales in the Phoenix real estate market?

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Much

Naturally everyone wants to get the most home they can for the least amount of money. Which is, of course, in opposition to the home seller, who wants the most money for their home. This inherent conflict is one of the things that makes real estate sales… challenging at times.

It has been my experience of late that home sellers in Phoenix are becoming much more realistic. While it used to be quite common to hear sellers say things like, “But my neighbors house sold for x dollars last year!”, sellers seem to be getting more realistic when it comes to their home’s value, as depressing as that may be.

Home buyers on the other hand almost seem to be losing their grip on reality.

Here are some examples of communication we have received lately:

• We’d like to offer $30K under list price…
• I want a single-family detached house in Scottsdale, on a golf course. I can spend up to $150K…
• I need a home less than three years old, NOT in a HOA…
• We just foreclosed last month and are looking to buy. I think our credit is horrible, and we don’t have any down payment money…
• I need a smoking deal on a bank owned home or short sale. I’m willing to pay 50% of list on multiple properties…
• I refuse to pay a dime over list price on a short sale or bank owned home…

I could go on and on.

The answer for all of those comments above is “you can’t do/get/buy that”.

Here’s the deal. Much of this type of thing comes from simply not understanding what is happening in the real estate market. And by “the real estate market” I am not talking about what you hear on CNN or even your local evening news / newspaper. You need to understand what the market is doing in the specific area you are interested in. “The market” is just too broad and real estate is hyper local.

As a home buyer, you can’t be expected to truly understand your local real estate market. Most people buy a home every 7 – 10 years. We are up to our necks in this stuff every single day. That doesn’t make real estate sales people better than you, or smarter. It’s just what we do for a living (and sometimes I ask myself why in the world I’m doing it…). Helping people determine the nuances of their local real estate market is what we get paid for (and why, to be brutally honest, it is very frustrating to have our data, attempts at education, and advice questioned repeatedly – or ignored).

An example:

At this moment in time, the average price of a home in the Phoenix Multiple Listing Service is $175,509. That number is for the entire Phoenix MLS area, which includes all of Maricopa County and a significant swath of Pinal county. That is a HUGE area – almost the size of the state of Massachusetts.

Listen to the mainstream media and you’ll often hear the average priced batted about – it’s rising, it’s falling, it’s hopeless, it’s recovering.

So what does an average home price in the Phoenix area of $175K mean?

Absolutely nothing.

You want a home in Phoenix proper? Average price is $132K

Scottsdale? Average price is $639K

Gilbert? Average price is $221K

El Mirage? Average price is $79K

You see, when you lump every type of home in a 10,000 square mile area into one number, it swiftly begins to become meaningless.

So let’s drill down a little bit. . .

$639K average home price in Scottsdale? What does that mean?

Only slightly more than absolutely nothing.

Right now I could sell you a condo in Scottsdale for $32,000 (but it’s not on a golf course). Or a (really) nice home for $15,000,000. About all the average price tells you is that generally, homes in Scottsdale cost more than say… homes in Gilbert, which are more, generally, than homes in El Mirage.

Here is where being a “realistic buyer” comes in to play

It is a waste of your time and your agent’s time to try to find homes that simply do not exist. That part is relatively easy to educate, and provide hard data to back up that education. Want a golf-course lot single-family home in Scottsdale? A quick trip to the MLS shows you have 323 options, and the five lowest priced ones are: $295K; $350K; $394K; $410K; and $424K. You simply can’t get one for $150K — it does not exist. Don’t waste your, mine and our time looking for one.

You want to “steal” a bank-owned home for 50% of list price? Consider this… In Feb 2010, there were 2,822 lender owned properties sold, at an average of 98.48% of list price. How many do you think were sold at 50% of list price? While I have not looked at all 2,822 sales, I’m quite confident in saying that number is zero. You can’t buy REO properties in Phoenix at 50% off list price. That’s not a realistic expectation.

That’s all hard data – you can’t argue with it (though many do).

Were it gets tough is on some of the more nebulous requests from buyers. You don’t want to offer a dime over list price on a short sale? Well, here is where you may have to rely on your agent’s expertise. I can tell you (and show you) that there are oodles of short sale listings in the Phoenix market priced woefully under market value. We could spend hours pouring over current listings and past sales to demonstrate this. But that’s not an effective use of your time (or mine). And it is still a difficult thing to prove. The problem is, there are listing agents out there with the nasty habit of grossly under pricing a short sale in an effort to generate an offer and/or bidding frenzy. Offer below list price on a home already priced lower than the bank will accept and you are looking at an exercise in futility.

When you are buying a home, you have to be realistic. You aren’t going to get everything a $500K home has to offer for $250K – it just doesn’t work that way. You’re not going to steal a home from a bank, no matter how much the banks annoy you or how much they got in bailout money. You aren’t going to live a Scottsdale lifestyle on an El Mirage budget.

Please please please, for the love of all things good and the little fluffy bunnies, don’t think for a moment that I’m saying all buyers are unrealistic, or that no one listens. Buyers are smart. Smarter than a lot of people, including many listing agents and sellers, give them credit for. Yes, it is frustrating when a buyer won’t listen, or doesn’t believe what we say. Given the general mistrust of real estate agents in the public’s eye, I understand that reluctance to believe. I understand we have to prove we know what we’re talking about. We have to earn your trust. Once that trust is earned however; take advantage of it! Believe what your agent is telling you. I can assure you that they want to sell you a home as badly as you want to buy one.

Think about what your expectations are, and work with your agent to see if they are realistic. It’s OK to ask for as much proof as your agent can provide. Realize though that some things are difficult to prove with hard factual / statistical data. Sometimes empirical data (based on observation and experience) is all you have to work with. Combine the two, work closely with your agent, build that trust and get out there and find that perfect home! 

Just be realistic. It will greatly reduce your stress level. And your agents. Remember, real estate agents are people too. (At least most are most of the time…)

• Why are there so many short sales in the Phoenix real estate market?
• What you can buy in Phoenix for $95,000 — A new BMW, or a house.
• Phoenix Short Sales Information
• Sunday Stats: Listing Success Rate
• On Suing Clients

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

In many private conversations I’ve had, the general consensus has been that this tax credit hasn’t had much impact, that people really don’t care, that first-time home buyers aren’t buying that many homes, even that people are not aware of the credit.

Personally, we have yet to have a potential home buyer say, “The only reason we are buying now because of this tax credit”. (And that’s a good thing, as it is a horrible reason to buy if that’s the only reason you are buying.)

But that doesn’t mean the tax credit is not a factor. Many of our buyers mention it as one of several reasons they are buying; including the tax credit with things like historically low interest rates, low home prices, “good deals”, and the age-old “I’m tired of renting”.

Are people aware of the tax credit? Is there interest in it?

I’ll let the statistics for this blog speak. You tell me. Here are the top 25 search terms people used to find this blog last week.

18 of the top 25 search terms used last week were related to the $15,000 home buyer tax credit (a total of 1,416 visits).  Granted, these top 25 searches only account for 1,730 of the 12,058 visits here last week, but the point is people are looking for information on the tax credit, and presumably some fraction of those are acting on that information. For how many the tax credit is a major factor in actually deciding to purchase a home is the big question that can’t really be answered.

For the statistically obsessed, there were 8,210 visits here last week from search engines – and 5,096 search terms were used. That’s a testament to the “Long Tail” of search. (And if you care, 7,229 of those 8,210 searches were done on Google – a testament to the fact that Google is taking over the world.)

A total of 2,975 visitors using a search term that included “tax credit” stopped by last week – that would be 24% of the visitors to this site.

Since the tax credits were first discussed back in February of this year 31,168 searchers using 11,637 different terms including the words “tax credit” have visited Phoenix Real Estate Guy.

True, 31,000 people isn’t a lot compared to the general home buying population of the U.S. But this is just one insignificant spot on the vast, world wide even, web. If there are 31,000 people looking for information here, how many more are looking elsewhere?

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

It’s also frequently provides insight into the minds of home buyers, sellers and real estate agents.

Here was a recent question from “Todd”, a “Home Buyer in Arizona”:

I am trying to buy a house from a FSBO and we have agreed on a price and agreed to buy as is. After an inspection, I don’t want to pay that much can I send an addendum to see if they will lower the price or should I cancel the contract and then send a new contract for the lower price taking into account the inspection items? Thanks.

It would appear Todd is an “unrepresented buyer” — meaning he has decided to not use the services of a real estate agent. And Todd is attempting to buy a home from an “unrepresented seller”, a “FSBO” — For Sale By Owner.

So we have both sides of a real estate transaction going it alone, both deciding for whatever reason that they do not need the services of a real estate professional.

I do find it curious that Todd, who ventured off on his own, is now seeking free advice from real estate professionals as he finds his real estate deal beginning to swirl down the drain.

The problem is, no matter how many agents think (for whatever bizarre reason) that they will somehow secure Todd’s business, no one can possibly answer his question.

Why? Because we haven’t seen the contract between these unrepresented parties.

Oh, several agents have answered assuming the standard Arizona Association of Realtors Residential Resale contract was used. An interesting assumption given that no Realtors are involved in the transaction. Even more interesting when one considers that anything in the AAR contract form can be modified.

Did Todd and Mr./Ms. FSBO take a quick trip to OfficeMax and pick up a “real estate contract”? Maybe they went online and found one. Maybe they wrote their own contract on the back of a napkin.

We don’t know what is in this contract. Therefore there is no possible way to give Todd the free advice he so desperately seeks.

There are a few things we can glean from Todd’s situation:

You agreed to buy a home in “as is” condition — now you are finding “as is” means “needs repairs”. This should not have been a surprise.

You are now considering re-negotiating, or possibly canceling a contract. Contracts are, well, they are contracts. They generally aren’t designed to just be canceled on a whim. Often you can’t “just cancel” a contract.

My favorite part of this question is, “…and then send a new contract for the lower price…” You can’t just send a new CONTRACT for a lower price. You can send a new OFFER, which Mr/Ms FSBO can then soundly reject (and likely would — why enter into a contract with the same guy who bailed on your previous contract?).

Todd is frustrated. He may even be concerned, asking himself, “What am I going to do? Am I going to be stuck in this thing and get a home I don’t want?”

I feel bad for Todd. I really do. Buying a home is a lengthy, involved process jam-packed with potential pitfalls. It’s not a process most people go through on anything close to a regular basis.

What I can’t understand is why Todd decided to go through the home buying process alone. Yeah, of course I am biased, I’m a real estate broker for Pete’s sake. But honestly, I see things like this all the time. People come through this very blog all the time, with questions, and with very valid and deep concerns. I know Realtors are a group that many love to hate. Part of that we’ve brought on ourselves. Some of that, not-so-much.

I’m not going to beg and grovel for your business. But I am going to plead with you to at least look into using the services of a real estate agent. The ramifications (in cost, time, stress, legalities and more) of not using an agent need to be explored. We are not all evil twisted devil-spawn. Yes, there some lousy agents out there. But there are some brilliant ones too. Interview a few, find one that you can work with and trust and they will work their butt off to make sure you aren’t relegated to asking unanswerable questions on an Internet message board.

• 7 Habits of Highly Effective Real Estate Agents
• Specifying a Lender. Steering? Illegal? Or just Stupid?
• 7 Habits of Highly Effective Home Buyers
• If You’re Going to Play the ‘Lawyer Card’ You Better Bring Your A Game…
• The Immutable Laws of Buying and Selling Real Estate

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

How to Buy Your First Home, 2E by Diana Brodman Summers covers a lot of ground in 174 pages (plus 113 additional pages including a glossary and several informative appendixes). 

The book is well written and broken into a logical sequence of sections that include:

Preliminaries
Searching for Your Home
Finances
The Buying Process
The Future

Each section includes several chapters written in easy to understand language. Scattered throughout the text are “Attorney Tip” boxes and “Click On This” sidebars with URLs for pertinent web sites —both of which should be helpful to first time home buyers.

The Glossary is extensive and very well done, almost worth the cost of the book on its own.

I’d be remiss in not pointing out one flaw in the book. Granted, I am a real estate broker and may be biased, but this statement by Summers struck me as being very poor advice:

Never let your real estate agent know that you are willing to go higher in an offer for a home. The higher the selling price, the more commission they make. While it is not ethical, your real estate agent may be tempted to tell the sellers that you are willing to pay more.

If you can’t trust your real estate agent, you are working with the wrong agent. To withhold any information from them out of fear they will utilize that to gain a few extra dollars is not a good idea. Better to do your due diligence up front in selecting the right agent, and work with your agent openly and honestly in all aspects of the transaction. The vast majority of agents have their clients best interests in mind. Given typical commissions and brokerage splits, your agent might make an extra $240 if you pay $10,000 more. The agent that sacrifices a potential future client (along with their family and friends) for that kind of money is the agent that likely won’t be in business very long. 

That aside, How To Buy Your First Home contains a great deal of sound information and advice for the first time home buyer.

See the Google Book Search for full table of contents, index, and samples from most chapters.

• 7 Habits of Highly Effective Real Estate Agents
• If You’re Going to Play the ‘Lawyer Card’ You Better Bring Your A Game…
• The Immutable Laws of Buying and Selling Real Estate
• Honey check out this crown molding! And the baseboards!
• Phoenix Short Sales Information

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

In the article – Saskatoon Residents Find Arizona Opportunity — Jason (a heck of a nice guy by the way) talked to people ranging from agents such as myself and Jonathan Dalton, to some Saskatoon residents who’d bought homes in Phoenix. 

For the record, I did not say we had, “found houses for scores of western Canadian buyers”. We have had many Canadian clients, but “scores” implies a number that lies between 40 and infinity. I’d say we’re closer to 0.75 score of Canadian clients this year. 

I did indeed however say, “if it wasn’t for Canadian buyers, we’d be starving.” That was a bit tongue-in-cheek (though if you’ve ever seen a 16 year old boy eat….). You’d think I’d have learned by now you can’t be tongue-in-cheek with mainstream media reporters. All food aside, we absolutely adore all our Canadian clients. Without exception they have all been super people to work with.

As Jonathan pointed out, the most disheartening part of the article was a quote from Glenn Williamson, CEO of the locally based Canada Arizona Business Council:

You can get brand-new houses here for nothing. Nice three-, four-bedroom places for $200,000. There is a real opportunity,” said Glenn Williamson, CEO of the Phoenix-based Canada Arizona Business Council.

Sigh. We fight this battle all the time with buyers from Canada, (and locally, and from across the US). Yes, there are some brand-new houses available in the 200K range — if you’re willing to live on the outskirts (or beyond) of the Phoenix metro area. And there is nothing wrong with buying in these areas, just do your due diligence and understand exactly what all that entails. One good idea is to make the commute (in rush hour) between where you’re looking for a home and where you will be working. It’s far better to discover before you purchase your home if the commute is something you can tolerate (and afford)

There are many opportunities for homes of all shapes and sizes across the Valley. But to imply we’re giving away new homes everywhere is simply incorrect.

• 7 Habits of Highly Effective Real Estate Agents
• Specifying a Lender. Steering? Illegal? Or just Stupid?
• 7 Habits of Highly Effective Home Buyers
• If You’re Going to Play the ‘Lawyer Card’ You Better Bring Your A Game…
• The Immutable Laws of Buying and Selling Real Estate

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Megan was excellent! She listened to my clients. She openly answered their questions without pushing for a sale. She took the time to work up a cost sheet including determining upgrade costs. There was no sales pitch. There was no push to upgrade. It made it so much easier for my clients to think about what they really wanted.

We returned to work with Megan at La Quintana on Friday. She patiently answered questions from my clients as well as from me. If she didn’t have the answer she told us she didn’t know but would be able to get the information by email within a few minutes – and she did! My clients are happy and I am happy for them. Megan Smith gets it and I have to believe that Shea Homes gets it too.

Megan was great, and was extremely helpful – by far the best builder’s rep I’ve worked with. If you are looking for a home in La Quintana, you should ask for her. But, as always, you really should ALSO have your own agent representing you if you are purchasing a new-build home!

Thinking about purchasing a Shea new build in the Phoenix area? There is a coupon available for $1000 in upgrades at Shea’s web site. It’s a little tricky to find (I can’t link to it directly). Go to this page, and click on this icon:

You must complete the information (including your accurate email address) to obtain the coupon.

Realtors: You can obtain a Realtor coupon by registering for the Shea Realtor Network.

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Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.

Escrow
When the buyer and seller have reached an agreement on the contract; the contract, counters and addendums are signed – its time to open escrow.  In the state of Arizona escrow is handled by a title company.  The title company should be indicated either in the offer or counter offer(s).  They will need *readable* copies of all the paper work, the earnest money, contact information for buyer, seller, and their agents.  An escrow number is assigned to the account and a receipt for the earnest money will be issued.  They will investigate the title of the property to ensure the seller can legally sell the property.  They also order payoff information on existing liens, order information from the homeowner association (if it has one),calculate and prorate taxes, liens, interest, rents and insurance policies; arrange for title insurance protection for the buyer and lender; pay costs and liens as agreed upon by the parties to the transaction; close the transaction after all instructions from buyer and seller have been satisfied; prepare a closing statement for the parties to the transaction, showing disposition of funds in the transaction; and arrange for recording of the conveyance documents and any other legal instruments necessary to transfer title to the property pursuant to the purchase agreement.  Escrow closes when the county recorder notifies title that the deed has been changed from the seller’s name to the buyer’s name.

Inspections
In the state of Arizona the inspection period is typically the first 10 days of the contract for dwellings and 15 days for bare land.  These time frames – as with just about anything else in the contract can be negotiated as part of the offer.  The inspection period begins at midnight after the contract (including addendums and counter offers) are signed and delivered.  The contract states that it is the buyer’s responsibility to inspect *everything* about the property.  This isn’t just the condition of the property.  Your inspections should include the schools, HOA, utilities, square footage, services, earth fissures, crime statistics and anything else that could affect your decision to purchase the property.  We occasionally have a buyer who does not want to pay for a home inspection. Their justification is that if it looks OK then they don’t need to pay the cost of a professional inspection.  Image if you decline the professional inspection and later find the property has some major structural issues – and you now own the home AND the problem?

Per the contract the seller should provide the buyer with two forms within the first five days of the contact:

1) A Clue Report; 2) and the Sellers Property Disclosure Statement or “SPuDS”. This is the statement of what the seller knows about the property.  If the seller has never lived in the property it can be difficult for them to have information about the property.  The buyer will be required to initial receipt of this document.  Initialing receipt does not mean that the buyer accepts what is in the SPuDS.  You should be aware that if there is an underlying problem that the seller has not yet discovered – it would be impossible for the seller to disclose it.  The buyer should use the SPuDS to aid their inspection process. (Here is a sample blank SPDS)

A professional inspection of the structure can take two to five hours depending on the size and age of the property. If possible, the buyer should plan to attend at least the last 30 minutes of the inspection (but this is not required).  Attending will give the inspector the opportunity to explain any issues noted in their report.  Due to liability issues the inspector is required to note every tiny thing that they find – no matter how minute or insignificant.  Keep in mind, sometimes things sound a lot worse than they are.  Meeting with the inspector at the end of the inspection to go over the issues they have noted will help you understand the inspection report and the condition of the property.  Most inspectors will be glad to answer your questions by phone as well.  You are paying for the service – so don’t be shy about asking questions and getting verification.

Be sure to complete your inspections by the last day of the inspection period.  There is a form that must be completed, signed by the buyer(s) and received by the seller’s agent no later than 11:59pm the last day of the inspection period (if the form isn’t received by that time your inspection automatically ends and you do not have the opportunity ask for repairs to be made.  You have to take the property “as is” or risk loosing your earnest money). The form is called the Buyer’s Inspection Notice and Seller’s Response (BINSR). The BINSR is *only* used to address inspection issues and cannot be used to negotiate the contract (it cannot be used for changes to the closing date, sales price, etc).  There are *not* a lot of negotiations available with the BINSR and you should discuss with your agent the importance of each item you wish to have repaired by the seller.  Is that item important enough to you that you are willing to cancel the contract and move on to another property if the seller refuses to fix it?  The seller is only obligated to repair a “warranted item” that is non-functional (such as the heater or air conditioner).  If it works – even if it doesn’t work well – they don’t have to fix it.

There are currently a lot of Phoenix properties being sold “As Is”.  This does not mean that you cannot have the property inspected – you should as you need to know what you are purchasing – it means that you may not ask for repairs.

The Arizona Department of Real Estate deems the inspection so important that they have attached an advisory to the front of the standard residential resale contract. 

Here’s an inspection situation we had with one of our buyers:

The inspection cost was difficult as they were first time buyers who had saved just enough to cover closing costs and moving expenses. They were very close to not getting an inspection, but they eventually decided to have it done. The inspector found that there had been a fire in the attic several years earlier. The tresses were weak and were starting to have issues holding the weight of the tile roof.  The home needed major repairs.  The current sellers had declined the home inspection when they purchased the property – they said they couldn’t afford it.  Now they are faced with thousands of dollars in repair costs from a fire that happened before they purchased the property.  Our clients cancelled the contract on this home and are now happily living in a property they love!

We recommend you should always, ALWAYS have a home professionally inspected (yes, even brand new homes).

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• 7 Habits of Highly Effective Real Estate Agents
• Specifying a Lender. Steering? Illegal? Or just Stupid?
• 7 Habits of Highly Effective Home Buyers
• If You’re Going to Play the ‘Lawyer Card’ You Better Bring Your A Game…
• The Immutable Laws of Buying and Selling Real Estate

Originally posted on Phoenix Real Estate Guy. If you are reading this anywhere but inside your RSS feed reader, the site you are on is guilty of stealing content.