This is a story that despite being fraught with difficulties, has a happy ending. It is partially about the difficulties we sometimes experience with short sales; it is partially about the hoops one must go through to obtain a loan, but mostly it is a sorry tale of complete, absolute and total lack of customer service that a client of Bank of America can expect today.

Let's start at the beginning, shall we? We had out of state clients that were looking to buy a home in the Cave Creek area, having lived there previously. Naturally, we encouraged them to get pre-approved so that they would not be hampered, should we locate the perfect home. They were well-qualified, with a down payment of 20%, and they told us that they would contact Bank of America, an institution they had used previously, with success. We have long held reservations regarding BofA, which are beyond the scope of this article, but we had no choice but to allow them to proceed. So they called BofA. Again and again and again! That's right, they had to call three times before they were to receive the courtesy of a reply. Personally, I would have dumped them then and there on that basis alone. Unfortunately, the buyers' previous experiences had created a loyalty to BofA that was neither warranted nor deserved, as they would now confess today. As you are no doubt aware, the purchase contract in Arizona requires an addendum called the Loan Status Report (LSR) which, in part, informs the seller as to how far along the process of getting a loan the buyer is. Additionally, it requires that the lender respond to enquiries during the escrow period from the agents involved so that everyone is up to speed. BofA do not "DO" LSRs. Such is their arrogance that they choose to transact business in a state that requires such a form, whilst essentially thumbing their nose at the process. Instead, they give you a "Buyer Ready Approval Certificate" and promise to close the loan within 30 days, or...or, nothing, actually. They make the promise, but there is no penalty if they fail, so it is an empty one. Curiously, when we asked our clients if they had furnished all their tax returns, etc., they told us that BofA said not to bother, until they found a home. Hmm! In reality, they were only really pre-qualified, not pre-approved. The fact is that BofA do not care to perform the necessary work ahead of time, instead they prefer to have you jump through hoops, (hoops that could have been cleared weeks earlier) during the escrow period. It may delay your closing, but better that than have them do their due diligence ahead of time, after all, you are just the customer, right?

As an aside, we were in back-up position on a short sale at this time. Then, the phone call. The original buyers had backed out, so it was ours if we wanted it. We did. BofA swing into inaction. Their ability to return a call was non-existent. Their communication skills dreadful. The "personal banker" that had begun the ordeal would not speak to either the buyer or us, as the file had been forwarded to processing/underwriting. The phone messages on all contact numbers essentially said "The chances of us calling you back with 24 hours are so small as to be incalculable." They demanded all sorts of financial evidence (retirement accounts, IRAs, etc.) that should have been dealt with before we even found a property. They demanded roof repairs two days before we were scheduled to close escrow. They demanded ADEQ water records on the day we were scheduled to close escrow. Such reports normally take 7-10 days to process, although we were able to get them the next business day, due to a helpful contact. It appeared to us, that all these last minute demands were the result of an organization that did not even pick up the file until about the third week of escrow. Such is their contempt for the client, that they would much rather make you do the impossible, than start work on the file in a timely manner, in order to allow you to honor their requests. All the while, not returning calls or communication in any way. They promised to call back, they didn't. They promised loan docs by a certain deadline, three days in a row, and were unable to manage it even once. All without letting the client know. You see, they manage to communicate, the little that they do, through the "customer service" people who answer the telephones. These people cannot help you, they can only relay your messages of frustration via email to the actual person who CAN help you but you are not allowed to speak to on the phone. In all the days of our escrow the client spoke to the actual "loan officer" a total of- wait for it- four times. Meanwhile our clients spoke to the unhelpful drones at "customer service" everyday.

In the meantime, the short sale final approval, which was also handled by another worthless BofA department, was contingent on a HUD 1 being approved that reflected a certain minimum dollar amount. This was duly sent, and ignored. So we had the loan docs signed, were ready to fund, but we still could not close. Bank of America was preventing Bank of America from closing on the house. We knew the name of the individual who needed to approve the HUD 1, take a bow Kim Alexander, but the operator ran interference and could not be persuaded to allow us to speak to her. We were not authorized. The operator would not even explain the procedure or the process or the time frame usually needed to complete the authorization. She preferred to spend 20 minutes arguing about what she would not do, rather than spending 5 minutes on explaining the process. It was like dealing with the government. The listing agent, who WAS authorized to speak to Ms. Alexander, was also denied access. Unbelievably, due to the listing agent's tenacity, someone in the chain of command accidentally gave out the direct number of the short sale deadbeat. OPPS! Ms. Alexander told the lister that "I have had the HUD 1 since 9.30". The lister said, "You mean 9:30 this morning?" "No," she replied, "I mean 9/30 (Sept. 30th)." It was Oct. 5th! Wonderful, but it gets better. She eventually sent the approval to the title company. However, it was encrypted for "security reasons" (I have no idea why as it contained no secure info, like SSNs, for example). The title company was unable to open it, so they contacted Ms. Alexander. Guess what she did? She put them in contact with a techie in India or Pakistan, I am not kidding, who was also unable to open it. Could BofA have been more unhelpful? Why not just scan and email the approval? Too simple, I suppose.

Ultimately, we closed escrow around eight days late, which is not too tragic in the overall scale of things. Remember, though, that we had been in back-up position so I have no idea how long the original buyers had been mistreated before the deal fell in our laps. Maybe they died of old age. I have heard of some short sales taking up to 7 months to complete.

As I said at the outset, this is a story partly about short sales, but mostly about an epic failure in customer care. Not so long ago, when dealing with a buyer, their lender would often make a great effort to impress you in hopes of future business. BofA has made no such effort, and obviously believes it is too big to concern itself with peons like me. That is their right. However, it is probably no coincidence that they just posted a 3rd quarter loss of $2.2 Billion.

Anecdotally, other title officers and Realtors have said that generally banks no longer seem to care. In our area, it seems that BofA have the worst reputation, whilst of the big ones, Wells Fargo maybe has the best.

What do you think? I'd love to know.

We recently closed escrow on a home in the city of Buckeye that we helped a first-time buyer secure. They kindly sent a note thanking us for helping to make the experience as smooth as possible. They also stated how glad they were to have stuck with us, even as friend and colleagues were pressuring them to use a "local" agent. (We are based in Cave Creek, AZ) It got me to thinking "Is that a valid concern?"
As with many things in life, it depends. Information is so freely available in this hi-tech era, that it is relatively easy to garner information. In a previous life, when I lived in Los Angeles, it was not unusual to sell homes as far apart as Marina Del Rey to the west and back to Pasadena or Glendale to the east. In fact, I even sold one home that belonged to a friend in Palm Springs, some hundred miles away. Although some agents choose to concentrate on one particular area, it is not unusual for denizens of large metropolitan areas, such as Phoenix, to spread their wings a little. We have sold homes in areas as far north as Cave Creek and Anthem (and a vacant lot in Black Canyon City) to the home in Buckeye to the west, and houses in Gilbert and Mesa to the East. The only difference between Phoenix and Los Angeles is the commute time. From Cave Creek to Buckeye, a 70 mile trip, takes about an hour and a quarter. A journey of similar distance in L.A. would most likely take two or more hours.
The other important aspect in selecting my wife and I, is that we are very experienced agents. Between us, we have 25 years experience and therefore have run across, and solved, most problems you are likely to encounter in a transaction. We are experienced negotiators. We have many contacts. For example, we are currently representing a buyer on a home in Tonto Hills that has a private water company. A week before closing, the lender required a lot more information on the capabilities of that company. That info can only be obtained from the Arizona Dept. of Environmental Quality and would take 10 days to access. We got that information the very next business day.
So the question becomes. Are you better off with a "newbie" who lives in Buckeye, or an experienced pro who is willing to undertake a 140 mile round trip to show you properties? How about the Buckeye "pro" who was selling homes for $265K three years ago? The exact same home that you just bought today for $110K. How helpful was their advice back then? And before you ask, we deterred many of our clients who did not need to buy over the last few years, soon-to-be-retireds, for example. There is much more to life than money.
Finally, any business depends upon referrals as its lifeblood, none more than real estate. That is why we are always willing to go the extra mile, literally, to satisfy our clients.

Real estate owned (REOs) form a large part of the inventory in the Valley of the Sun, for reasons that have been written of many times. In a nutshell, meteoric price rises fueled by speculators, followed by catastrophic price plummets equals mucho REOs.
So the chances are, especially in the lower to mid-priced range, that if you are looking to buy a home in one of the may burbs of Phoenix, you'll likely find some that are bank-owned. You also may find some that have been taken back by the Federal National Mortgage Association (Fannie Mae) as they insured many loans, and have since had to take possession of certain homes where the owner had defaulted on their loan.
Recently, I have written of our endeavors in Buckeye, AZ, where extreme low prices and excellent value for money, has enlivened the local real estate market. As previously noted, many are REOs, bank owned short sales. Such has been the intensity of the market, that the local paper carried a story of one young couple who had written 15 offers before successfully securing a property.
Our previously mentioned clients were a little forlorn at that news, but due to superior representation, Moi, we were able to get their dream home on only our third attempt. The seller was none other than Fannie Mae, and is the point of this post. Finally.
Being a government organization, they like to do things differently. Rarely better, but certainly different. I like to say that government being government, they like to add as many extra layers of efficiencies as possible. Let me explain.
We wrote and presented our offer in the normal fashion. We received a verbal counter, which goes against everything you have ever done, which you have to accept so that they can click the "accept" button on the computer. Then you get a written confirmation of your verbal agreement, signed only by the selling agent, in this case me, which is hardly binding on either party. Some days later you are again verbally informed that your offer is now "accepted", which starts the countdown on the various contingencies. Sometime the next day we received an entirely new purchase contract, generated by the seller, purporting to have amalgamated both the original contract and the counter into one document. In this case it did, but also added a few clauses and contingencies not previously mentioned. They were not deal-breaking, so our clients elected to sign off and secure their home. Bear in mind, at this point we do not have a single signature from a representative of Fannie Mae, which is a little disconcerting. Listing agent assures us this will be rectified in escrow, although from a legal standpoint I still doubt that the contract is binding on either party until that point. That's gubmint for ya!
Then the good news. The home had no stove and no water heater. We had advised our clients that as they were getting a USDA loan, the HUD appraiser would require them to be installed prior to closing in order for the home to be "habitable". They were willing to comply. However, we received a call that Fannie Mae was installing a brand new water heater, stove and microwave hood, plus a ceiling fan and sundry bathroom fixtures. Completely unbidden. Needless to say, my clients were ecstatic! A more duplicitous agent might have claimed it was as a result of endless hours of negotiation and desk-pounding on his part. I demurred.
So as I said, Fannie Mae and, then again, Fannie Mae not. In this case, she did.

Recently, I have been working with a young couple looking to buy their first home in the Buckeye area. I believe I have mentioned this before, but it is possible to purchase a good-sized four bedroom home, less than 4 years old, for around $100,000. Some are available for even less. Coupled with the tax credit available from the government, it make buying a home a no-brainer. Especially, when compared to renting.
However, it is staggering to see that virtually all the homes for sale are bank-owned or short sales. The underlying stories behind some of these homes can be disheartening. So many of the bank-owned properties were sold just 2-3 years ago for $250,000 or so, and are now being offered at $80-100K, a loss of some 60%. Sad indeed for the families involved. However, as they say, it is an ill wind that blows no good. Consequently, buyers like my clients, who thought the possibility of home ownership had passed them by, are now getting another chance. In fact, the market out there has been so hot, and understandably so, that we are now seeing multiple offers in many cases. This can be a little frustrating, but perseverance will win the day.
I also spoke with an agent who is involved in selling some remaining new homes after the developer went bust. These homes are essentially bank-owned short sales, some only part completed. What was surprising was his tales of how long it takes some banks to respond to offers. Many, sensing the urgency, respond in a couple of days. One in particular, that I won't name (but the initials were Wachovia) had 7 active offers sitting on their desk awaiting approval for over 3 months. What on earth are they thinking? I would hazard a guess that many of those offers will be rescinded by buyers who have found a more willing seller. Who would want to miss out on buying a home due to the laziness of some pencil-pushing banker. The bank is also doing a dis-service to its shareholders by not liquidating non-performing assets. Maybe they are all too busy counting their T.A.R.P. funds.
A good time to buy, I think.

My regular readers will know that I am not a fan of government intervention. Rarely, if ever, does it result in a better product, good or service. Typically, it adds cost and bureaucracy. Having said all that, as a Realtor, it is also my job to stay abreast of any programs that might assist my clients. Naturally, the first government aid is the $8,000 tax credit that first time buyers receive if they buy a home. A first time buyer, by the way, is categorized as someone who has not owned a home in the past three years. There are some conditions, and limitations, attached to this credit so please consult with an experienced lender for more information.

Secondly, whilst consulting with a lender in concert with a young couple searching for a new home in Buckeye, we learned of another loan program administered by the United States Department of Agriculture. Yes, really! It is designed to provide assistance to spur rural development of land that was once farmed, or designated agricultural.

It is very similar to a V.A. loan in that borrowers can get a 100% loan with no down payment, no private mortgage insurance and a 30 year loan with a fixed rate. The icing on the cake? The seller can contribute up to $6,000 towards buyer's closing costs or pre-paids.

When you factor in that a 2000-2500 sq. ft. home in Buckeye, likely less than 3 years old, can be bought easily for around $100K, it is no wonder these home are flying off the shelves. It's cheaper than rent. By the way, it's not just Buckeye that qualifies, there are other communities, so speak to your preferred lender today.

A recent ethics investigation demonstrated a Phoenix area Realtor did not act in the best interests of his/her client.

Recently, a Phoenix area buyer ran into a spot of bother with his Realtor. Obviously, the reporting named no names, so this anonymous story could occur to anyone, and is a tale worth re-telling.

Briefly, the buyers found their dream home and instructed their Realtor to prepare a full price offer in order to increase their chances of buying the home. The Realtor said he would do so, but only if they signed an agreement that stated should they ever re-sell the home, he would get the listing. The buyers said "No way!". However, after due consideration, they decided that they wanted the house so badly, that they acquiesced, signing the agreement. After the closing, they filed an ethics complaint with the local board. Good for them.

The Realtor lost. The board found that he was placing his own financial gain over his fiduciary responsibility to his clients. The "pre-listing" was cancelled and the Realtor presumably received some form of punishment. This can range from a warning letter, to additional education requirements, and sometimes revocation of licence; unlikely in this case.

The buyers in this instance did the right thing, and the Realtor behaved despicably, and is the type of person I would like to see run out of the industry. To that end, I would have taken it one step beyond, were I the buyers.

I would have contacted a strong, experienced agent and had him/her write the offer, after having fully explained the situation. The deal would then close, as it had done previously. Then, in all likelihood, the spurned Realtor would probably haul the second Realtor before the board demanding a commission as the "procuring cause" in the transaction.

If I were that second Realtor, I would then argue strenuously that the vagabond had abdicated his fiduciary responsibility to the buyers, who justifiably no longer felt he was acting in their best interests. I believe I would win that argument. The buyer would still have their house, but the rogue Realtor would not receive a commission. After a while, folks like that go back to their "real job". Good riddance.

Well, there's a headline I never thought I would write. But it's not what you think. As a Realtor, some of the worst homes we sometimes see, are bank-owned. In other words-Foreclosures. It never ceases to amaze me that some folks, admittedly a minority, think it is okay to vandalize the home they are losing. It is common to see a home where light fittings and light switch cover plates have gone missing. To the extent that the homeowner may have customized their home with better fittings, it is somewhat understandable. However, many people go to the extent of smashing what they can not easily remove. Bathtubs, showers and toilets, for example. Not only is this incredibly immature, it is also a criminal offense. Too often, however, the banks decline to press charges on the basis that a person who lost their home to foreclosure would be very unlikely to be able to afford any court-ordered restitution. Banks also seek to avoid the adverse publicity that would result from prosecution. I have often remarked that if these homeowners had been as diligent in their regular job, as they were in destroying their home, they may well have been able to keep both.

 
Back to the headline. It seems the FBI has a mortgage task force that has been going after people who have systematically been stripping homes to sell fixtures and fittings. Again, they are mostly concentrating on investors and speculators who had purchased multiple homes, probably to avoid negative public reaction should they chase after individuals who could not keep up their payments. However, make no mistake, laying waste to the property is a crime whoever commits it, and it damages everyone by further depressing home prices.

The FBI recently arrested one genius who was even advertising granite counter tops on craigslist.org, one of which he had the misfortune to offer to an undercover agent, shortly before the bracelets went on. Oops!
In these sad times of decreasing personal responsibility, too many people are looking to shift blame for their own ill-advised decisions. To then trash the property that you should not have bought in the first place shows a level of immaturity that boggles the mind. The fact that some of these folks are also parents does not bode well for the future.

Short sales, along with foreclosures are a large part of the Phoenix area real estate market. Here are some tips to guide you through the minefield.
The general consensus is that short sales, where the owner owes more than the home is worth and asks for debt forgiveness, are a good deal. I am here to tell you, that while they can be, they are sometimes more trouble than they are worth. Both for the potential buyer, and for real estate agents.
Let me explain. First of all, there has been a growing tendency, which I deplore, here in the Phoenix area, to massively under-price a short-sale property. I understand why they do it. They must attract a qualified buyer in order to go through the process with the bank. To the inexperienced buyer, and indeed agent, the low price fairly leaps off the page. Many times it is priced at 70% of its true value. I feel that this is misleading. It is imperative that the experienced agent explain to the potential buyer that while it is priced at $495,000, for example, the bank will likely require closer to $600,000 to close the deal as that is the home's true value. The trouble is that some first-time buyers just think you are being a "slick" agent and are distrustful. Who can blame them?
The other thing that I find annoying is the banks' constant attempts to take money from my pocket. Understand that commissions are always negotiable, however never in the purchase contract, between seller and listing agent. Many times, however, the bank is taking a bath and tries to get the agent to join in by slashing the commission. By the way, the agent is under no obligation to do so. Sadly, many agents famously will do almost anything for a dollar, or food, so banks often get away with this. Couple that with the fact that a short sale involves a lot of extra work, and steps, so a bank should really pay more in gratitude for someone persevering and ridding them of a most-likely self-imposed bad debt.
And then we have the Realtor® - lemming of the type I encountered today. Before I even write an offer, they require me to sign a disclosure agreeing that whatever the bank decides to pay in commission, I will meekly split it with the listing agent. Bank says $10.00 and a slurpee, I get $5.00 and half a brain freeze.
If you have the range of choices available, as we do in Phoenix, buy the foreclosed home, or the home that is owned by a real live motivated seller. You will thank me for it.

A rise in pending transactions bodes well for the future of real estate in the Phoenix metropolitan area.

As we have noted in the past, the free-market, when it is allowed to operate always has and always will re-dress the housing market. You may not like the way in which it is achieved, but it will occur naturally, if left to regular market forces. By this, I mean that well intentioned programs to enable folks to stay in homes they still cannot afford, only delays the inevitable.

Twice in recent memory, November 2008 and March 2009, prices have dropped so drastically, partly due to foreclosures and partly due to the economy, that sales have leapt up. Many people who thought they had missed the boat are now stepping up and finding that there are many bargains to be had.

Analysts use many benchmarks to gauge the health of the real estate market-pending sales is one of them. A pending sale is classified as one that has an executed contract, with an agreed price, has been taken off the "active" market, and is going through the regular processes prior to closing.

The Cromford report compiles such statistics and shows that in March 2009, pendings were up over March 2008 virtually across the board, with the exception of Anthem and Paradise Valley. The latter probably due to the high cost of homes and the tendency for the wealthier to be able to ride out bad economic times and stay put. The former, Anthem was down a little, but from a statistical standpoint of just one month, may merely be a hiccough.

One minor nitpick with the report is the figures for Cave Creek, which show 45 pendings versus 32 for March last year. Anybody with a working knowledge of Cave Creek would know that 45 is an absurdly high number for such a small town, as was the 32. the compiler of the report makes the same mistake that many "analysts" make. By dint of post office fiat, Cave Creek shares a zip code (85331) with a large portion of North Phoenix. This radically distorts the figures. I complained when the number of foreclosures reported in Cave Creek, which is detrimental to the community, were mis-reported; so in the interest of remaining fair, I must complain when it inflates the re-sale activity as well.

Other than that, things are slowly beginning to recover, so long as government doesn't stop by to "help" again.

Pricing your home to sell is always a main factor in marketing your home. The sagging Phoenix real estate market makes it vital.
The old adage in selling real estate was always, "Location, location, location". While that still holds true to a large extent, there are other factors just as crucial, not least of which is - Price.

I was reminded of this again, today, as I was sifting through the MLS. Time after time, the same old frequent flyers kept popping up. Homes that were $550K two years ago when they should have been $500K, now marked down to $400K, when they should be $350K. Always a day late and a dollar short, as the expression goes. You have to price into a falling market, not reflexively reducing to imitate local sales after they have closed. In the above example, had the seller started at a realistic $450-$475K two years ago, it would have sold. Now the selling price will likely be $100K less than that.

It is sometimes too easy to blame the seller, when many times it is the fault of a weak agent. Someone who has not worked through tough times may not have developed the skills needed to persuade a recalcitrant seller to lower their price. Or indeed, may not have developed the confidence to walk away from, or decline in the first place, an over-priced property. All Realtors say they need listings; what they really need are saleable listings. Big difference.
As a home seller you need to speak to your prospective agent in order to satisfy yourself that he/she is capable of getting the job done.

Then we have homes that have been around so long, that the sellers are now upside-down, and owe more than it is worth. Often, this is as a result of re-financing to release equity. In retrospect, not a good idea, at all. These "short sale" homes are often priced temptingly low, in order to hook a buyer with which to begin the process. For a serious buyer, this can be a frustrating experience. Be wary of the short sale that is under-priced, it may disappoint you. Given the choice, I would go for the bank-owned, or real live actual motivated seller, if I were able.