It was a pleasure working with you recently. I enjoyed our conversations and our exciting games of phone tag. It was so much fun anticipating whether or not you would accept the offer that the Buyer brought to your bank. We had such spirited conversations as I tried to explain the values of the neighboring homes and how much repair work was needed for the home being sold.
If you remember, throughout our relationship I spent hours trying to satisfy your demands. I took photographs and sent them to you and filled out all the paperwork you requested. I even managed to get the buyer to come up $2500 on an offer that really was above market value to begin with. I bent over backwards trying to please you. I really thought we had something together, but in the end you rejected me.
"Not enough" were your exact words if I remember correctly. Market value is market value, Darling. I can't believe you don't see that!! I was on the MLS today and I saw that you've listed your home with another agent, and at a cheaper price. The offer I presented you with was $137,500, but you are now offering your wares to the public at $125,000. That is so sad. To think you could have had so much more with me!! You could have avoided foreclosure costs but you would have none of it. If you must be stubborn, then go ahead and pay the price.
Quite frankly, I too have moved on. I found another negotiator who works as a partner with me. He listens to what I say about market value and seems to have a good head on his shoulders. Does he give me everything I want? No, but he is kind and knows how to compromise. He is very reasonable too. In fact, we closed our first deal together today and you know what? We BOTH got paid. Isn't that how a good relationship is supposed to be?
I do wish you the best with your new agent. I know she won't get you as good a deal as I was offering, but then again, some guys don't know what they had until they lose it.
"We need an agent who can think outside of the box," the voice on the other end of the phone tells me. This sounds good at first. I love helping my clients get deals done by being creative. However, I soon discover that these are code words for, "We need an agent to help us with an underhanded deal (or two or three)."
Really! When did my real estate license go up for sale?!! Especially to the lowest common denominator. As a professional would it even make sense to risk my entire livelihood for a quick couple thousand dollars? Not in my opinion. Unlike the media portrayal of real estate agents, I am finding that I am very busy. A lot of people still need real estate agents, especially those who are actually able to make things happen as opposed to sitting around hoping for a windfall deal.
It seems that today's real estate market has bred not only a crop of competent, very professional agents, but has also produced alonside them a batch of scam artists looking to take advantage of not only the public but the banks (which hurts the public in the long run). Being on the Internet, I get many calls from folks who need my help, but I'm also a magnet for the unscrupulous types who want to use my license to legitimize their shady operations. Quite frankly, a jail cell is the box that I'm trying to think outside of here.
RED FLAGS
Here are some Red Flags that tip me off to the fact that I am being asked to compromise my license (and that of my Broker) in order for someone else to make a quick buck.
1) The seller is not aware of what is going on. This should be kind of obvious, but many companies who specialize in helping people out of foreclosure basically do all the work for the seller and have them sign things as necessary. Some people are so overwhelmed by the financial difficulties they are experiencing that they will grasp at any straw to get them out of their situation. I won't be involved with any transaction where everything is not disclosed in writing and the seller is not made aware of the possible tax or legal ramifications of what they are doing.
2) The bank has approved everything but they need an agent to "get the commissions out" - True story, folks. If the bank has already approved a deal, then they have addressed whether or not commissions will be paid, how much and to whom. If commissions are still up in the air, then the bank probably hasn't approved the deal. And if they have, why would the parties involved want to bring someone else in to take a chunk of their payoffs? Common sense here, folks...
3) The identity of the end buyer is concealed - Otherwise known as a double closing, this is illegal in many places. Everything is required to be on the HUD (Settlement Statement) at closing. Now there are legitimate companies whose goal is to purchase low and sell to another end buyer, but if they are legitimate they reveal that not only in the HUD, but in disclosure statements and possibly even in the contract that the seller signs and the bank sees.
4) Everytime you ask a question, things get more convoluted - If I ask questions and the more I ask the more questions I have, a red flag goes up. Granted, on some complicated deals it takes some time to get all the facts straight, but the person trying to talk me into working with him had better have a handle on what is going on and be able to explain it to me. Stammering and round-about answers don't go over well with me.
These are just a few that I've thought of. Feel free to add your own red flags in the comments below. I think I'll keep my real estate license for now. Being a single parent, I could really use the income it helps me produce!
Recently in Arizona, the Department of Real Estate has made it possible for the public to find out how much continuing education a real estate agent has, along with other information previously available, like how many complaints or disciplinary action an agent has against him or her.
There are two propositions on the Arizona ballot this year that will effect homeowners. Here's my take on how to vote to best protect your property values.
One of the things that every Buyer considers when purchasing a home is real estate taxes. After all, that can add a sizable amount to your monthly payment, between $100 and $300 per month for most Tucson homes. Real estate taxes are assessed annually and paid in two installments, one in April and the other in October. However, if Arizona follows the example of many other states with transfer taxes, homeowners in Arizona may soon be experiencing what amounts to double taxation.
What is Proposition 100 About?
Proposition 100 addresses the possibility of an additional transfer tax being assessed anytime a property is transferred, whether it be by sale or simply transferring the property from one party to another, such as one family member deeding the property to another family member with no money exchanging hands. The effect of Proposition 100, if it passes, will be to amend the Arizona Constitution to state that no new real property sale or transfer taxes can be created or imposed.
Happy Fall, everybody!! While we normally back off in terms of real estate sales at this time of year, 2008 is proving to be the exception to the rule, at least in Tucson, AZ. There are deals to be had and buyers seem to be more interested in getting a good deal than in listening to the doom and gloom in the media. Yes, consumers are feeling the crunch, but for some, lower home prices help make living more affordable during these tighter times. I have had three out of four listings receive contracts within the last two weeks and am wondering if other agents are experiencing the same thing.
I have decided to label 2008 the Year of Fear. There is so much uncertainty in the economic marketplace, the real estate market and in the employment sector of our economy that a lot of people are either responding in fear or are hesitant about what to do next.
One woman who did not hesitate pulled the trigger on herself. Addie Polk of Akron, Ohio was apparently overwhelmed by the fact that she could not make her payments and was going to be foreclosed on and she shot herself as sheriffs were trying to serve her the foreclosure notice for the 30th time. Keep reading at http://www.robinsrendition.com/short-sales/woman-shoots-herself-into-mortgage-forgiveness/.
Like the rest of the country, the Tucson Real Estate market has taken its share of lumps over the last year or so. However, we have been seeing a reduction in inventory over the past nine months, which is the first step towards a recovery. Will we continue this trend or will national economic woes along with the ongoing foreclosures have an ill effect on our market? Let's look at the numbers.
Note: These numbers are from August 2008 so we do not yet know what effect the current shenanigans on Wall Street will have on our local home buyers and sellers.
Home Sales Volume and Home Sales Units
As is typical for the current market, both Home Sales Volume and Home Sales Units are less in August of 2008 than they were in Tucson in August of 2007. We are still seeing the gap being closed in home sales units while the gap in the volume has increased. Why? A lot of our sales are short sales and foreclosures and even homeowners whose homes don't fall into those categories are being affected by those numbers. So basically the price of homes is lower than the price last year so even if we sold exactly the same amount of homes, the volume would be lower.
Home Sales units decreased year over year by 17%, a slight improvement over July's numbers of a 20% decrease comparing to 2007. Compared to last month (July 2008) we see a decrease of 4.4% which is not bad for this time of year. Typically things slow down from July to August.
Median and Average Sales prices
The median and average sales prices, while typically not telling the whole story, are actually very interesting to me this month. Our median sales price in July of 2008 was $199,900, down from $217,000 the year before. In August, the median sales price plummeted to $185,000. This tells us that more lower priced homes sold than higher priced ones this month. This makes sense when you consider that so many of our sales are foreclosures and short sales. As a result, our average sales priced dipped to $238,504 in August of 2008, a 13% decrease from last year.
Pending Contracts
Well, we certainly improved in the Pending Contracts this month as opposed to last month in Tucson. We had an 8.5% decrease in pending contracts from last month, again keeping in line with the trend of real estate slowing down at the end of the summer into the fall months. However, it was only a 14% decrease year over year, whereas last month the decrease was 46% year over year. We are headed in the right direction, but we are far from being out of the woods.
Active Listings and New Listings
Here in Tucson our Active listings decreased both month over month and as compared to last year, but our new listings showed a 16% increase over last month. Overall our active listings decreased by a mere 1.4%, which is negligible. In order for us to be continuing to clear inventory, that number should have been much greater considering the time of year that we are in.
I estimate that we have a 4.3 month supply of homes currently if we continue to get as many Pending and Solds as we did in August. However, using that method I am counting Pending listings which will be counted next month as Sold listings. If I calculate only using Sold listings versus Active Listings, we have an 8.6 month supply still active. I believe that number is more accurate and really reflects what sellers are experiencing out there right now.
The Great Economic Shake-Up
Anyone who has read or watched the news over the past two weeks knows that Wall Street has had an enormous shake-up with Fortune 500 companies such as Lehman Brothers claiming bankruptcy, Merrill Lynch selling itself to Bank of America, and AIG requiring $85 billion from the government to stay liquid. As of this writing, our government is hammering out the details of a $700 billion buy-out of illiquid assets (namely underperforming mortgage loans), but we have yet to see the details.
Consumer confidence is such a major factor in whether the value of our stocks go up or down and when banks are unable to unload their assets, they do not have the money to lend and the entire financial world here in the U.S. gets frozen. This happened on a much smaller scale here in Tucson and around the United States when banks such as First Magnus who were simply selling huge pools of loans as opposed to lending their own money were suddenly unable to sell their loans and were forced to stop originating new loans.
Obviously if the government bail-out does not perform as desired we could still have trouble for quite a while. Right now I am seeing an increase in cash buyers and now is a good time for them to buy since prices are low and they can be certain of being able to close the deal. If the government bail-out performs well, then we could see more loans being made and our market continuing to recover.
The numbers for this market analysis are based on August 2008 and September's numbers won't be available until next month. They won't even really reflect buyers' and sellers' reactions to what has happened in the financial world, so in terms of how our market responds to the current crisis, we won't have a very clear picture until November or December of 2008. I personally still have investors who are looking to take advantage of the current market and are even anxious to get their money out of the bank and into an investment like real estate which should increase in value over the next few years.
So how's the market? That seems to be everyone's favorite response when they find out I'm in real estate. I appreciate the question because it means that people want to know from a local expert instead of relying solely on the media for information. The market was kind of blah for the month of July, although I am personally experiencing heightened buyer activity and expect that to be reflected in the numbers in the next two to three months.
Home Sales Volume and Home Sales Units
As usual, I will compare home sales volume and homes sales units by those same categories a year ago and a month ago so you get more of a feel for how things are moving instead of simply a snapshot in time. Things are getting interesting in this category. We are still seeing a decrease since last year, 24% and 20% respectively. And month over month, those numbers declined by 9.5% and 8.6%. The interesting part is that last year, month over month the numbers declined by 22% and 14% respectively. So while July's sales volume tends to dip a little compared to June, our dip this year was less than our dip last year. That's encouraging, but not as a stand-alone figure.
What I find to be more encouraging is that our annual percentage change in the month of June 2008 compared to June 2007 was 34% and 25% in these categories. Now that you're sure I've lost my mind or that I took one of those "Realtor Optimism" pills, let me explain. If you read my market report from last month (Tucson Market Experiences a Hiccup - July 2008), you remember that our numbers dipped suddenly after months of steady improvement. So I am happy to see that our numbers have come back into a respectable range again instead of matching last month's numbers. I am hopeful that overall we will continue to make steady progress and our market will be solid once again.
Median and Average Sales Prices
The median and average sales prices of Tucson homes actually stayed almost exactly the same as they were last month. If you are a regular to my analyses, then you know that I don't put a lot of stock in these numbers because they can be skewed by larger numbers of homes at either end of the price spectrum being sold at any given time. However, it's nice to consider the numbers as part of the greater picture.
Pending Contracts
There were 11 more homes in July of 2008 as opposed to June of 2008 that went "Pending". A pending contract means that all contingencies have been removed and the parties are just waiting for the closing date to roll around. This is a mere 1% increase, which is negligible. The annual change is actually a 45% decrease. Even with fewer listings on the market, we are going to need the pending contracts to increase (as well as the home sales volume) in order to keep us moving forward. I mentioned last month that we are seeing increased difficulties and decreased cooperation from banks. This month I am working with a bank that seems to be motivated to get my short sale closed. If more banks become like-minded, short sales will remain attractive and things will keep moving. It's a patchwork out there, though. Some banks are great, while others seem to be trying to lose money!
Active Listings and New Listings
We still see movement in a positive direction in the Active Listings and New Listings categories. For example, there were 20% fewer New listings in July than there were in June. As compared to July of last year, the decrease was 39%. However, we must compare these numbers with others to get the full picture. Even though new listings are decreasing, if listings are remaining on the market for longer, we could still have an extremely high inventory. That's why we also look at Active listings. That category decreased 3% month over month, but a little over 9% as compared to last year. This is good, but it hasn't caught up with our home sales volume and pending contracts numbers yet.
We're headed in the right direction, but have more work to do. For July 2008 the Home Sales Units and Pending Contracts totaled 1,905 homes. Our total Active Listings totaled 7,876 (under 8K for the first time since March, 2006). This is a four-months supply of homes, which is not terrible. For comparison, in January of 2008, using the same method of computation, we had a 5.5 month supply of homes available and in April of 2008, it was only 3.5. It will be interesting to see where the numbers head as we go into the traditionally slower fall and winter seasons.
My Analysis
I am pleased to see that our numbers did not match last month's "hiccup", but would like to see them get better. If what I am seeing out in the field is any indication, then they will. If our supply continues to drop to better match demand, we will see a more stable market. However, that will mean that fewer people are selling their homes and the flow of money in our economy will have slowed down. Ideally, it would be nice if demand would rise more to meet the supply. With the amount of investors taking advantage of current conditions, that could very well be the case. We shall see. I am very late this month in writing this analysis due to the fact that I have been working more, so the next analysis should be in just a couple of weeks. Stay tuned...
By the way, different areas of town are experiencing different market conditions right now. My analysis here is general, covering all of Tucson. However, if you are thinking of buying or selling in a particular area of town, give me a call and I would be happy to get numbers specific to your area and even your neighborhood to you. I can be reached at (520) 481-3695 or RWillis@gotucson.com.
Did you know that banks are continuing to contribute daily to the declining market? Even though they have tightened their belts in terms of loaning new money, I see them squander their investors' money on a very regular basis. Here's how:
The Short Sale
At this point, short sales are about 2/3rds of my business so I am working with them quite regularly. Time after time, I counsel my client on how to put in a good offer to the bank while also protecting their equity position in case the market continues to decline. As a basic rule of thumb, it makes a lot of sense for a bank to accept an offer that is about 10% below current market value.
The Bank's Response
For a while, banks seemed to "get it" when it came to their position in these transactions and the bank's response would be either to accept the offer as submitted or counter with a number that better met their criteria. That works because it gives the buyer an opportunity to accept the counter, counter back, or simply walk away from the transaction if the bank is trying to pull them higher than their best offer.
Lately, however, I am watching many banks reject offers outright (even at amounts that they had previously accepted on the same property). With no opportunity to respond, the buyer is left either randomly increasing their offer in hopes that the bank will accept or simply walking away. Most buyers opt for the latter.
The Money Wasting Part
On the surface, it may look like the bank is actually protecting their investors' money by employing these tactics. However, the money wasting part comes after they reject the offer. They then foreclose on the homeowner, spend around $30,000 or so on the foreclosure and turn around and list the property on the market at well below the price that my clients had offered on the short sale. This is an obvious waste of money on that particular transaction, but it gets worse!
Pushing the Market Down
Here's the bad part. When a bank or several banks perform this way repeatedly, they are effectively pushing the market down in that neighborhood. Let's say a home sells as a foreclosure at $30,000 less than the rest of the market. One house like that might not affect market values, but the problem is that this happens repeatedly. The buyer of the next short sale in that neighborhood now uses the foreclosed home as a comparable and offers even less than before. The bank rejects the offer, forecloses, and then sells at a price even lower. Can you see where this is headed? Eventually, it pulls the values down in the entire neighborhood because the gap between the price of the distressed properties and non-distressed properties is too great. To compete, even non-distressed homeowners must lower their prices.
I'm all for buyers getting the best deal and declining prices are good for that in a sense. However, with this sort of activity some buyers are leery of even making offers because they are concerned about what the value of the home will be a year from now. Fortunately in Tucson this is not happening in every neighborhood, but there are pockets where I see this and wonder when the banks are going to see the big picture.
Tucson, AZ is a varied and exciting community to live in. Whether you are buying or selling a home, it's vital to have someone on your side who has the information pertinent to your area.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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