I want to reach out to the Short Sale community...with handcuffs, a ballgag, and a blowtorch. Mention the term"Short Sale" to any realtor and you will get one of three responses based on their experience or lack thereof.

 1.  From the Superhero Short Sale genius you will hear "I love SHORT SALES!". Followed by a prolonged verbal wind tunnel of accomplishments that will blow so much smoke up your ass you can signal Indian tribes by farting.

 2. The wise, worn and weary Short Sale war veteran who's more shaken than Mel Gibson's cocktail mixer from transactions that lasted longer than their last marriage and were harder to put together than a dinosaur DNA strand. They've felt the brutal mortality of a six month road to nowhere that left their hearts emptier than Bernie Madoff's inbox and their clients more distant than an Ishtar sequel.

 3. The "I'll try anything thrice" Short Sale virgin that cocks their head sideways like a dog addressing someone tossing a tennis ball between their hands, and exclaims "I've heard they're relatively simple. Let's go for it!". You can smell the forthcoming singed pom poms before they've even depressed the first fax button.

 A Short Sale is when a lender decides to take less than they are owed. Period. End of lesson. If you need more than that, please Google yourself silly.

 Consider this wild thought: If your job, occupation, career is that of someone who lends people money, the business model you apply should probably include the ability to collect more money than you leant out. Am I making sense here? It's called a "profit". It's what is typically required to pay worker salaries, prop the bank building doors open, and keep the candy dishes filled at the teller windows.

 A Short Sale runs counter to everything a Lender is raised, nurtured, and taught to do. Asking a lender to take less than owed is like asking Rosie O'Donnel to eat just one Pringle. It's a fascinating world and time we live in whereby there is even the ‘idea" of a Short Sale. It defies logic.

  "Hey Joe, can you give me $50 if I promise to pay you $25 next week?"

 "Uh, say what?"

 Of course Real Estate is not that simple. The home loan's connected to the...deed of trust...the deed of trust is connected to the...property...the property is connected to the family...the family is connected to the...pile of debt...and so on and so on.

 As a property loses value, so too should the debt against the property? That seems to be the foundation on which the Short Sale concept is built. Imagine if the same logic was applied to the housing market during a real estate escalation boom:

 "Honey, the home across the street just sold for twice what we paid!"

 "Oh no, our house payment is going to double!"

 Yeah, a tad harder to digest the concept in reverse isn't it? I'll leave the philosophical ranting about how we wound up in this mad upside down bank run real estate nirvana for another blog. Today, I want to talk to and about the latest goofball trend in Short Selling:

 The ATOM BOMB PRICE DROP.

 I awake each day at 4am and rifle through every new listing and every new price drop in the Phoenix metro area. That's typically 1500-2000 listings reviewed before most folks have thrown their first shoe at the alarm clock. So perhaps I'm a bit hyper-sensitive to the unrealistic fantasy price drops that Short Sale agents have been flooding our market with lately. If I want to waste my morning with fantasies I'll play with my dolls.

 We discussed how this concept of having a lender take less than they are owed is ludicrous. The lenders do have a choice. They can accept less than owed, let the short sale between the two parties proceed and be on their embittered way a tad lighter in the vault. Or...the lender can foreclose on the house, taking the property in lieu of the debt. In either situation, the lender needs to know how much the property is worth. Even in 2009, property has a value (disregard this statement if you reside in Casa Grande).

 This is where a lot of Short Sale agents appear to veer off the road like Ted Kennedy guzzling a roadie on Prom night. That property does have a value, and your advertised price needs to reflect that ‘actual market value', Sir Drops-a-Lot. The latest trend I am witnessing in the Phoenix market is the Short Sale price adjustment that falls faster than Charlie Sheen's pants at a Miss Tropicana pageant.

 It's not a race to ZERO!

 I watched a well priced $299k home in Chandler drop its price by $50K this morning. The note on the property is $425K. So the road to completion of that Short Sale just got rockier than Marion Barry's nasal passage. If the seller on this property had even the slightest notion that they might walk away from the closing table with a CHECK, I seriously doubt they would agree to a $50K price drop...especially when the latest comps fully supported the $299k price tag. But when it's the lender's money at stake...suddenly that money is about as real as an orange $500 bill.

 The sellers of the property in a Short Sale get nothing but the headache of processing the paperwork mound, unfurling themselves naked financially to all involved, and their Grand Prize is an all expenses delayed kick in the ass with a kink in their credit and a bitter taste in their mouth. Do not pass Go, no not collect $200.

They've lost their dignity and their equity. They are not concerned about anyone else's. Their agent however...yeah you Realtor...you have an ethical responsibility to be forthright with all parties involved. That includes the bank. That includes the price.

 Short Sales are like defusing a bomb. There is the right way, and then there is the Jackson Pollock ‘Ode to the Blue Wire' wall splatter way. Dropping the price far below market value may seem like an ingenious way to make a property more attractive. It's the perfect bait for Short Sale virgin buyers that haven't tumbled down the rabbit hole on previous Short Sale excursions. "It's cheaper than market value! Wow! Let's make an offer!"

 Whoa...hold on there Savvy Shopper. Let's back up the tape to the term "value".

 Over the upcoming three month course of the transaction the bank is going to hire people other than the listing agent to determine the current value. That "threw a dart at the number board" price figure the listing agent posted is gonna fly like a beagle at Bank HQ. The bank is going to want to see comps. Their profit margin is getting voluntarily shot in the head to complete this deal and there will be an autopsy performed.

 Most short sale transactions drag on longer than Tony Danza's career. So you, Short Sale listing agent that prices below market, are enticing all parties involved into a trek across a very long and hot desert with a half filled canteen. Nothing succeeds like a planned failure. What is the logic behind baiting an offer with a sales price that's got as much hope of success as Clay Aiken opening for Metallica?

 The bank will determine the "Fair Market Value"...and if that value's not within the same universe as your "bait price", that deal's deader than a Ramones reunion.

 The appropriate way to process a Short Sale is a strategy that has more wrinkles than John Madden's testicles in a steam sauna, so we'll delve into that on another day. The appropriate way to waste everyone's time and effort in a ridiculous pricing strategy that has as much chance for success as Joe Biden at a Spelling Bee is to under-price your Short Sale listing so you are guaranteed a low ball offer that defies justification.

 Look, Short Sale listing agent, your product is inferior. Your transaction is more challenging than buying a bank owned property, yet it comes with the same As-Is appeal. All parties involved have to throw down with 100% effort, hang on by their fingernails as the transaction spins down an endless vortex of time, and all involved must hold onto that barely visible sliver of faith that if the stars align, the bank succumbs, and the property stays intact there is a one in ten shot at pulling this transaction off.

 Phew! I am glad I'm not you. No wonder you are so eager to discount the price.

 Now try that with your fee.

 Life is short, unless you're pursuing a short sale property. I am just asking for some pricing discipline in the rank and file of Short Sale agents. As someone who has to filter your fantastical price drops out of my daily shopping bin, I need your help. Though you and I both know that the price you just dropped sub-market is a piece of cheese seeking a careless mouse...the average consumer is watching the market too. They might just think your price is real, and thus consider the rest of the market inflated. Everyone seeks the lowest common denominator in a down market. You are IT.

 By shamelessly slicing the legs out from under your own listing, you drag the entire market down. Bravo!

 Until the day comes that the MLS system leaders finally realize that Short Sales belong in their own market, not intertwined with actual sellable real estate, we will be forced to follow your lead over the cliff. I understand the peril you are in. I know what it's like to be softened by the teary confessions of a seller whose equity has evaporated, who are wedged under a blanket of increasing debt, haunted by threatening calls from their lender, and they look to you with big teary eyes and an extended hand pleading for help...

 I learned three words that will help you when confronted with this situation:

 "You are screwed."

 And from that moment on you can have an actual, REAL, conversation with them, avoid fantasy land expectations and prices, and maybe do us ALL some good.

Today I am going to show you how to become a millionaire...

 STEP ONE: Get a million dollars.

 What? Ok, it's a tad more complex...just follow along...

 If Ed Asner's eyebrows dressed in drag singing downtrodden show tunes with a thick Scottish accent can generate 120 million internet hits...you can sell ANYTHING in this country. You just have to find its appeal. Right now Real Estate is about as appealing as Susan Boyle doing toe touches in a G-string. But that voice of hers...oh so beautiful, so perfect, so magical, and oh so uplifting...see, that nasty G-string visual is almost gone.

 Quiz: What's at the root of Real Estate's appeal?

 Anyone?

 Answer: MONEY. The solution and cause for all of the world's problems. So I've heard.

 It's been my experience that most people tend to like money. It doesn't even matter the denomination. A large duffel bag filled with any manner of rectangular green bills is sure to bring a smile to most any face. I had this epiphany last October as I was swirling my ketchup soup with a worn plastic spork in my cardboard apartment. Instead of trying so vainly to make money, perhaps I should SELL money! BAM! Genius.

 And thus I decided to quit selling real estate. Real Estate just doesn't make people smile the way a bag full of money does now does it? Last October my company began selling money...and man, we have discovered that people really like buying money!

 Let me save you some time. Money can't be printed easily. The cloth paper jams the copier. Money can't be "found" easily as the Brinks drivers carry Mace. (Mace stings!) The banks won't give you money unless you pass them a well written explanation note and even then the money you get comes with explosive paint packets that discharge and leave a stain that lasts for weeks. Why did I wear the white pants!?!

  Properly Purchased Property Pays Plenty.

 Say that five times fast. C'mon, ply it!

 For the last few years the Phoenix housing market has hit more snags than Susan Boyle's comb...wait...is there a reference limit? It got so bad around here mortgage brokers began posting the "lack of interest" rates. That's what mortgage brokers do while on their smoke break at Bennigans....or the car lot...furniture store....we miss you guys.

 Beauty is in the eye of the beer holder. We found a pocket of Phoenix real estate that wasn't going to win any beauty contests...but when it opened its mouth, money came pouring out like a Donald Trump pinata. One of our clients, a twenty year "Legend" in Phoenix Real Estate Investment circles, approached us last fall with a challenge. "Find some real estate that rents for significantly more than it costs to hold onto. I don't care what it looks like, or where it is. It just has to make money."

 Game on brother!

 Before we proceed with today's story you must know a couple of basic facts about the Phoenix Metropolitan Housing Market:

 In the Phoenix Metropolitan market we have three distinctly different housing areas. The North  side, the East side, and DA WEST SIDE BABY, A'IIGHT! (Note: there is no longer any South Side as it seceded from the union in 2005).  The North side is home to Day Spas, Porsche dealerships and breast enhancements. On the East side you will find water parks, strip malls and the southern half of Salt Lake City. Over on the West Side...uhm...you will get shot. Ok that's a bit extreme. You will "probably" get shot.

 If you are ever lost in Phoenix, listen for gunshots. If the gunshots become more frequent, you are heading west. This is of course an exaggeration, one unfortunately enhanced by silly things like statistics.

 We are a numbers company. As we studied the Real Estate market's freefall these last few years we noticed that Newton's Law was being violated by the West Side. It was falling at a significantly faster rate than the rest of the valley. Numerous factors account for this...different story for a different day...but if you want to find the bottom of a big metro market, find the spot that's falling the hardest. We did.

 We uncovered a tight geographic pocket of depreciation, where housing prices had fallen so hard, so fast, that the homes could be acquired for FIFTY PERCENT of their previous value. Oh...oops...let me rephrase that: Fifty percent of their 1982 value! Read again: NINETY EIGHTY TWO VALUE. Yeah, half of THAT value. 50%. We're going back in time folks! Cue that annoying Huey Lewis song.

 I am writing this today because the anomaly is now over. The prices have now corrected. The bottom for that area is in the rear view mirror, probably forever. We've moved to a new shopping area for investments, but from October of 2008 thru March of 2009...my friends, we slaughtered that market.

 You know the old saying, "Give someone a fish, and they will eat for a day. But...teach them how to clone a fish's DNA, then genetically manipulate the string, and add a dash of growth hormone...then they're putting the Gordon's fisherman on food stamps."

 In October we set a course for profit. We fished. We bought homes for $30K. We bought homes for $25k. We even bought homes for less than $20K. Never less than 1000 sq feet. Never less than 3 bedrooms. Do you know what $16 per foot looks like? It's rectangular and green.

 For a long while, we seemed to be the only people buying these homes. Over the course of four months, this particular investor client spent more than $1 million acquiring, fixing, and then renting out dozens and dozens of homes. Pay attention and you will get paid. We purchased almost exclusively from banks. The banks misunderstood the election year cycle, and the annual Holiday lull. They buried prices just for the sake of sales expediency. And for a brief moment in Phoenix housing history, the bottom was visible. Then it vanished.

 Those same houses are today subject to bidding wars sixty participants strong. 40 - 60 bids on the first day is common right now. Competition is rough and tough. Prices have recalibrated into the $40K-$50k range. It's odd to think January was 50% less than April. But it was!

 Like Willie Wonka said, "If you want to view Paradise, just look around and view it."

 The properties we purchased won't be featured on the cover of Better Homes and Gardens. They may seem more fitting for Guns and Ammo. To me, beauty is beauty in spite of perfection. Which explains my attraction to one legged women ("Hop in Eileen!") and why a block home with all windows intact, tile floors,  and a flame burnt no maintenance lawn scar landscape makes my heart tremble like Mohamed Ali guzzling a ten gallon pot of espresso. Perfect rental potential!

 When a home could be had for $30k. Then rented for $800 monthly. That is beautiful! Because nothing is more beautiful than a shiny green dollar bill! Well, except maybe a large pile of shiny green dollar bills. How about a fountain of them?

 A few words about the product:

 These are "mature" homes. Built in the post war era, late forties to mid-fifties. My father once told me, "An old house is like your old lady. Don't expect any appreciation." But when it cash flows...suddenly you don't quite care about where the market is headed. If it makes money, it makes cents.

 These are block construction homes. It is mere coincidence that the same construction material used to assemble prisons was first field tested in this part of town.

 This particular part of town is known as gangland to most Phoenicians. We beg to differ. It is simply Hispanic. And if you think a double income household with hard working parents doing thankless jobs for minimal pay to raise their children with a solid roof over their heads is a bad thing...then this game is not for you.

 I mentioned we bought almost exclusively from the banks. The banks OWN the Phoenix housing market right now. They will be gone in time. Grab a nipple and start sucking while you can! They are too big to succeed.

 Bank owned properties can be NASTY. Just touching a doorknob can spawn a Ringworm Brothers Circus in your intestinal tract. I found myself questioning house layouts, "if a human being defecates in the living room, is that a bathroom now?".

 Here are a few Bank Owned (REO) buying tips:

 If you encounter a kitchen with appliances and countertops still in it...beware, the original owners are nearby and not quite done moving.

 Chalk outlines of a body are a great way to keep other bidders at bay. Always carry chalk.

 Pit Bulls are not always friendly. An aluminum bat will change their attitude.

 Everything ugly can be fixed with paint, tile, and a shitload of Clorox.

 I've seen homes that would make a billy goat puke. And I've also seen what they can generate cash wise when revived. For those of you still standing around with a pocketful of million dollar listings, awaiting the paytrain that used to make regular stops. Quit it. Stop. Become aware of your surroundings. Like Sam Kennison said, "Move to the food!".  If the market is declining, let your standards go along for the ride.

 We helped a very wise man invest over a million dollars in real estate this past Holiday season. By my calculations, he has just about doubled his equity position as of today. This recent influx of investor hordes, arriving late to the dinner table, are currently bidding values up...up...UP... in a frenzy of purchasing activity.

 Does this mean the entire Phoenix housing market is on the rebound? Hell no. It just means that this little tidal pool of profit is running dry, and we must move on to the next one. Where might that be? Ha ha...we'll tell you in a couple of months!

 The Chicago Tribune recently featured an article titled "8 Real Estate Trends for 2009". We did a news segment today with ABC15, part of our ongoing "Home Smart" series, outlining how that article's "Trends" related to our own market here in Phoenix.

  It struck me mid-production that the Real Estate insights from a Chicago paper have about as much to do with Phoenix Real Estate as a Chicago weather report has in common with....(hold on, I need to crank up the air conditioning)....with a warm 70 degree Phoenix in January afternoon. I'm guessing the Tribune picked the number "8" because it resembles the snowman in their driveway, or perhaps their knuckles froze solid at the keyboard on their way to a Top Ten List. Regardless, I decided to issue my own trendy list:

 "8 Real Estate Trends for 2009...the Phoenix Metropolitan Edition!"

  8. Income Producing Properties will Overshadow Owner Occupied Purchases

  The Great Price Plunge of 2008 has scarred the psyche of the average Valley home buyer. For the average consumer, awash in a daily sponge bath of negative Real Estate news, buying a house right now is like going on a tandem parachute jump with Helen Keller manning the rip cord. "When will we stop droppppiiinnnggggg?!?"

 Meanwhile, those nasty investor types that GOT RICH selling their wares back in the 2005-2006 Bubble Popping Contest, are clamoring back into the market. Why? Because we have thousands...not tens, not hundreds...yes, THOUSANDS of homes available for purchase today that will "CASH FLOW" immediately. Prices have burrowed into the $20 per foot range in some areas, with more to follow. Seeing as how a large chunk of Valley residents are now "former homeowners", thanks to foreclosure, the pool of future renters has more members than Richard Simmon's hot tub at Spring Break.

 If it makes money, it makes sense. Investors will mark 2009 as the year they struck gold.

  7. Fees Will Create Unease

  Recession 101: When the lump in your throat is bigger than the lump in your wallet, price tags become essential reading material. HOA Fees, Land Lease Fees, and Property Taxes will become deal killers in 2009. A penny shaved is a penny earned. Consumers will finally be asking the oft ignored question, "What DOES the HOA do for me?". Uh oh.

 Valley cities would be wise to begin comparing their own property tax rates to those of their neighboring municipalities. The bad news is that property taxes will likely rise regardless of common sense. Tis the way of government after all! The good news is that you can now list your town as a "dependant".

6. East Valley Will Stabilize. West Side Needs a Defibrillator

 The dirty little secret in Valley Real Estate is that Newton's Law doesn't apply to Real Estate. All things do not fall at equal speed. While certain communities are declining, many pockets of stabilization have already taken place. There are communities in South Scottsdale for instance that stabilized mid-2008, and are now poised for modest value gains.

 Meanwhile back at the paved over ranch...the west Valley continues to dominate the new to market listings, the under $100k club, and the bank owned list of deeds. Were West Valley loan officers issued invisible ink? You mean signatures made in spray paint aren't valid? For every foreclosed home, you have one more opportunity to rent out an investment property. We see 2009 as being the year of the investor in the West Valley.

5. Outlying Communities will Face "Shrinkage"

  "I was in the pool!"...won't be a good enough excuse for the condemned outlying areas to explain their cooling off, and their population growth shrinkage. Buckeye, Maricopa, Queen Creek, Surprise grew with the motto of "If you build it they will come." Well, they will come until gas hits $4 per gallon, construction jobs disappear, and 20,000 homes become available for sale between your town and the job corridor.

  The banks are swinging a wrecking ball at home values in these towns as they struggle to escape their own house of cards. As the banks diminish the property values, the few homeowners left in town are going to take a hard look around and think to themselves, " Why am I paying these banks MY $250k mortgage payment...when the banks are selling the identical house for $90K?". When I get to the bottom I go back to the top of the slide.

4. New Home Builders Go the Way of the Doh!-Doh!

  With costs between $60-$80 per foot to build a basic Xerox-Attack-of-the-Clones type home on a blank stretch of once pristine desert, new home builders simply can't compete with the bank repos. Show me a new home community near Phoenix and I will point out the hundreds of foreclosed homes surrounding it, all priced at less than half the cost to build new homes.

  I suspect new home builders can only survive if they post a profit. Even Bernie Madoff couldn't make the current books look good on paper. The valley is overbuilt. Having more homes than people only works if your last name is McCain. We don't need a wave of job growth. We need a tsunami. The question is not "How many builders will go under?", but rather, "How many will go under without completing the communities they are now building?". Buying a new home right now is like pogo sticking through a minefield. When the sales trailer is hooked to a running vehicle, buyer beware.

3. Proximity, Thy Name Conquers All

  Theoretically, gasoline never should have approached the $4 per gallon heights that it achieved. It was an artificial commodity price increase...but that doesn't really matter. American consumers haven't been this emotionally scarred since "The Crying Game". Not everyone is converting to a horse drawn Prius, but virtually everyone checks the gas gauge before the rear view mirror these days. The fear of a return to $4 gas is here, it is real, it will have a dramatic effect on the 2009 consumer.

Where there are jobs, there will be real estate purchases.

2. New Home Starts...Will Stop

   In a perfect world we could hit a magic button on the new home builder and covert him into a repo-home remodeler. It's a strange paradox that builders are going under faster than Oprah in an undertow, yet we have thousands of repossessed homes that could use a guy with hammerin, nailin, and sawin skills. Did I mention we are overbuilt?

   Many builders will continue to build, holding onto their employees, hoping to wait out the storm. They remind me of Yul Brenner, taking a long drag off a Marlboro through the hole in his trachea, gurgling "I'm gonna beat this"....thulump.

1. Price is King.

Your co-worker tells you he just bought a new home this past weekend. Your first question is:

 a. "Does it have granite countertops?"

b. "Did it come with a landscaping allowance?"

c. "How MUCH did you pay?"

   If you answered "c.", congratulations...you greedy money worshipper! Gordon Gecko would be so proud. As frightened as the masses are of real estate, they are equally as interested. Unlike stocks, bonds, or derivatives, Real Estate is a tangible asset. People ‘see' it everyday as they drive to work, look out their window, stand on a floor. The Valley news story of 2009 will be the crash landing of the Real Estate market. It won't be pretty, there will be casualties, but the descent will be over with! Disembark.

  The drumbeat of recession should place "price" as the favorite focus group for consumers. If they are paying attention to the price of milk, you can bet your food stamps they'll be line iteming the cost of their next home. "Honey, do we really need faceplates on the outlets?". We track the market daily in my office. We are seeing feeding frenzies in certain areas where the prices have finally hit their sweet spot. These are but flickers of light in a sea of darkness, but after twenty years of watching this market go up, down, sideways...those flickers appear to be the end of the tunnel. Or, more like the reflection off the bottom of the well. How the Valley climbs out of the well is a story for a different year. In 2009 we just need to find the bottom.

Being scared to death is becoming a way of life in this country. We recently inked a deal to purchase a four-plex for $25,000. Units in the area fetch $500-$550 per unit monthly. $2000 per month for a fully occupied four-plex is tasty. This is a no-brainer cash flow cow, yet there we were on the buy side trembling like Michael J Fox drinking a triple latte during a 7.0 quake."Land of the Free, Home of the Brave" is now "Land of the Free Home, If You're Brave Enough."

 As many of you know, everyday at 4am our office scours through every single new listing in the Phoenix MLS system. Currently that entails sifting through about 600-700 listings while juggling a half pot of coffee. We post the best deals we find to our website's "Hot List". We want our clients to be first to the feeding trough.

 Many of you likely do something similar, there is no Tao of Real Estate, we each find our own way. But how many times lately have you flushed an unbelievable deal from the bushes, aided your client in spotting the target first, both nodding together that this is game worthy of taking down, then right before he pulls the trigger he glances over and says "Eh...I don't know. Are YOU sure?"

 I am certain that nothing is certain.

 It is a billboard sized sign of the times when you call an investor client and say "Remember that house you sold in 2003 for $399K? It came on market today for $245K." and the reply is not "YAHOO! Let's do it again!!" but rather "Sorry, I've got to wash my hair today."

 Charles Dickens on 2008: "It was the worst of times, it was the worst of times..."

 Banking chaos, stock market confusion, a constant pummeling of negative news all wrapped in election year black paper finds us at a peculiar tipping point where the only thing looking up is the unemployment figure. With all the darkest before the dawn strength we have in us, we sales folk venture out into this wasteland and hope that the long awaited "magic spark" finally arrives. That spark that reignites the American spirit, awakens the American Dream, puts the desire to consume back in the American consumer.  Or Dubai consumer, I'm not particular.

 In 2005 everybody knew somebody who had made a killing in Real Estate. In 2008, you can't throw a quarter down the street without hitting someone who's lost half their net worth. Everyone else on the street is chasing your quarter. It always amazes me that in a country anchored by Independence, conformity rules the day. Depression spreads like a flu bug. At times it feels like we all got herded into the bomb shelter and the only way out is down.

 I'm sure a bomb shelter feels cozier than a backyard hammock when the bombs are going off overhead. Imagine the dark terror of sitting in a crowded room, hearing the world above being pummeled to dust. Imagine everyone inside huddled together, scared, nervous, trembling. (Does this sound familiar?)

 But as the bomb frequency dissipates, and the sounds above slowly fade into the distance, I'm pretty sure that the first guy to throw open the doors and take a look outside is also gonna be the first guy that benefits from the Krispy Kreme store taking a direct hit.

 Are the birds singing outside yet in your Real Estate market?

 Gas prices have lowered. Financing costs have lowered. Housing prices have lowered. Credit scores...oh...damn you consistency.

 Some folks want to stay safely tucked away in their bomb shelter, fearing another shoe is gonna drop. I'm thinking they've thrown all the shoes at us already. If we had a sunroof on the bomb shelter people might just see that the big bombers have already passed.

 Call me crazy, but I don't see the sense in waiting for the crowd to come knock on the bomb shelter door to let you know it's OK to emerge. "Welcome back! Sorry, but we're out of donuts." It is time right NOW to go outside and loot, pillage, attack! I mean...uhm...rebuild, rejuvenate, you know, whatever. After all there will come a day when EVERYONE finally piles out of the bomb shelter and lives to consume again. And when they do, wouldn't it be nice to own some consumables?

 Property in the Phoenix area won't be this cheap or easy to find when everybody wants some. Negative media turns to positive media in the blink of an inauguration. The details we are trained to seek out when investing in property; location in a growth area, premium lot, good architecture, quality construction...how often in the past have buyers had to compromise on these details due to the available inventory? Not today. Yet the sidelines are crowded.

 Emotion is deadly in this business.

Six dollars per foot.

 Let me try that again...

 $16,499 divided by 2554 square feet....there it is again! SIX dollars per foot.

 It was just this past August that we found the first ever $20 per foot listing in Phoenix. Then in October a home came on market for just over $15 per foot, but it had fire damage, was probably a teardown, so the price was for the dirt. When I saw $10 per foot debut in November, in Phoenix, I thought "surely, this is as low as prices can ever go".

 This house today, at SIX dollars per foot, proved me wrong. Way wrong!

 Now I don't want to insert sanity into a space reserved exclusively for madness, but nobody else seems willing to state the obvious about the Phoenix housing market:

 IT'S NOT THE PRICES STUPID!

 We had a deal fall out of escrow in August when the bank (seller) found it more beneficial to donate the home to a charity than to sell it to our client for $23,900.  It was the first time I'd witnessed a cash deal being outbid by a tax write-off. I am tempted to write my next purchase contract with a Purchase Price of: "will take it off your hands for nothing".

 BTW, could you throw in some new appliances?

 The current real estate market in Phoenix is like a beaten marionette doll with the banks pulling the strings like a drunk on roller skates in a tilted room. Our foreclosure epidemic began in spring of 2006 when we crossed the threshold of 6,000 homes in foreclosure. Today we have more than 28,000 properties in foreclosure, with another 22,000 currently under bank ownership.

 In June we witnessed a new aggressive pricing policy from the bank "herd". At my office we look at every single new listing that comes on market, every single day. By doing this we can see the "trends" erupting. The trendy thing banks began to do in June was to price new REO listings 3-5% lower than anything nearby. What a great plan! Genius! The lower price is...WOW...more attractive! These banks have incredible marketing prowess!

 That is until 10 REO properties hit the market in succession. We watched one neighborhood decline in value by 35% over the course of THREE weeks. Seven REO properties came to market, each unit was priced less than the previous unit's debut price. $225k...$190k...$184k...$175k...all the way to $149k in week three. Townhomes, all the same sized units, similar condition. And the funny thing is, the first one to come to market had SIX bidders! The first townhouse was priced RIGHT. The next six that came to market simply gave money away....in my opinion. But what do I know? I don't offer a free savings account.

 Watching the banks try to uncouple themselves from the incredibly poor lending decisions they made is like watching a man on fire in the middle of a dry field of wheat. The man first notices he is on fire. He then feels the pain of being on fire. He then instinctively rolls on the ground to put out the fire...igniting the entire field around him.

 Which brings me to a peculiar quote I read today:

 "My reading of current conditions is that bank lending is constrained more now by the supply of creditworthy borrowers than by the supply of bank capital."

 In other words, "The banks would love to lend money, but the people are not worthy of it."

 I guess tightening a noose around buyer's necks is their idea of "constrained"? I have qualified buyers who are pinned to the sidelines with fear. They want to buy, but at the rate of price declines endlessly perpetuated by the banks, they have a hard time justifying the timing. Who can blame them? The banks have the backbone of a jellyfish when it comes to upholding property value. Move the product. Damn the price. Damn the consequences.

 Six dollars per foot.

 Do I hear three dollars? Three dollars per foot?  I think I just might.

Buying property from a bank is as painless as digesting broken glass. We all know the path to home ownership takes a psychedelic turn down the Willie Wonka on acid expressway when a bank holds the property's beloved deed in its greasy little bank hands. Let's face it, this country's banks can't even do BANKING right...so we can't expect them to complete a complex real estate transaction without a huge mushroom cloud appearing somewhere on the horizon.

 Case in point: My buyer submitted a cash offer for a property five weeks ago. The seller, let's call her Fannie (aptly named I must say!), took the better part of a week to respond. Banks do not respond in writing of course, perhaps because they have nobody on staff with the opposable thumbs necessary to write with. My buyer immediately responded to their "verbal counter" with a brand new contract, written and signed, which included the verbal stipulations the bank had requested. Another week passed...and additional bank verbal requests were made. And we wrote another new contract...then another...

I won't bore you with details, but this scenario repeated itself a half dozen times and the month of October quietly snuck by in the interim.

 This past Friday, November 7^th, the bank did something amazing. They took my buyer's most recent purchase offer and "VERBALLY ACCEPTED" it! Behold common sense! This was great timing. The original close date had been maintained throughout the negotiating process. That close date was November 12^th! 12 minus 7...yeah, acceptance 5 days before close. No problemo!

 Then things went wronger than Bill Gates in Dolphin shorts...

 On Monday I received a new purchase contract from the bank. Strange, but...ok. Over the weekend someone must have jammed a pencil up the head bank monkey's butt and taught it to type! They sent us an exact copy of the contract we had sent them, only they had changed the close of escrow to be November 10^th. Monday, the day I received the contract from the bank, was in fact November 10^th. But hey...No problemo! Let's close today!!!

 The bank did not sign the contract however. Anywhere. They managed to write the contract, but no signatures. Hmmm...me thinks PROBLEMO!

 My client signed the new monkey butt contract, we sent it back immediately, and we are still waiting for a signature today...today is the 13th. The title company is waiting for a signature. The movers are waiting for a signature. Did the monkey retire? Is a signature too much of a pain in the ass?

 If this was 2006 and the idea of a bank owning and selling a property was fresh like spring daisies...I might understand why the bank shows the dexterity and grace of Nell Carter jumping into a hammock. But this is 2008. Fannie's now the dominant OWNER in the property selling game, and she still can't move the pieces around the game board correctly. Five weeks of negotiation to now sit around three days past the close date twiddling our opposable thumbs? When the news reports that there are record numbers of people not working...they must be talking about Fannie Mae.

 Here is my so simple even a chimp with a Bic in its butt can understand it solution:

 Listen up Fannie...it's time to go Walmart with the bank owned props. No negotiating. None. Just a slashed price, a pre-made contract stuffed with all the "we know nothing, nothing, NOTHING!" addendums, the "we fix nothing, nothing, NOTHING" disclosures, all pre-approved, pre-typed, STANDARDIZED with just two places to fill in the blank: Close of escrow date and a signature line.

 Do not pass go, do not collect $200, do not let anyone but prequalified or cash hoarding buyers fill in the two blank spots. Simplify. Expedite. Be gone evil banks, be gone.

 Give me your tired, your poor, your huddled masses yearning to breathe free...

 Just make sure they are prequalified with at least 20% down!

 Americans have spoken. Americans have chosen their new leader. The Chosen One, a bright guiding light to usher us into a new age of promise...or at least "promises". Americans chose to change the world yesterday.

 These were of course the same Americans who chose to buy more home than they could afford. The same Americans that embraced adjustable mortgage rate loans. The same Americans that bought gas guzzling Hummers, ATVs, Plasma screens for every bathroom in their over mortgaged house, and fed their children a high caloric diet of Pepsi, Go-gurt and Happy Meals so their chubby little offspring could muster enough fructose based energy to swing a Wii controller. The same Americans that put what was left of their hard earned life savings into the slippery hands of Wall Street mortgage backed security peddlers. American = Genius? Not necessarily. (See November 4^th)

 If you're not jumping up and down for joy over the result of yesterday's vote, I bring you something to cheer about:

 The media can get off our collective backs now!

 Gone is the media's need to begin every broadcast with more negativity than a Suicide Hotline. Who amongst us has not instinctively recoiled from the television set upon hearing "Coming up, Ron takes a look at local housing values..." and you just know the forthcoming market torpedo disguised as "news" is going to play like a Columbian snuff film with your career in the leading role. Perspective and sanity seem to have taken the year off from making any broadcast appearances, and I for one will welcome them both back, no matter what it costs me in taxes...err...redistribution.

 This is 1992 all over again. An unqualified cat from out of left field lands the sweetest gig in all the land, with nary an accomplishment to justify it other than "He's good in front of a camera". And you know what? That is just what this country needs right now. A pretty face to give Americans that simple reassurance that, "hey man, it's cool."

 Change is good. As a Realtor, I am all for change. Quarters preferably, but dimes and nickels will do fine.

 There is no question that the media's portrayal of our industry affects each and every one of us. We ride the train, they write the trainwreck. There is no question that finding a positive spin in the paper's real estate section is harder than finding a dry spot on Charlie Sheen's couch. And I expect that too will Change, perhaps as early as this weekend.

 During the run up to the election in 1992 I was working as a structural designer for a firm that specialized in high rise design. Our industry was pounded that year as the media described the commercial real estate market as being "the worst market since the Great Depression". Sound familiar? We felt more violated than a BackStreet Boy in a prison riot. Financing for building projects was about as reliable as a balsa wood chair at Oprah's house. We were scared. We were struggling. We were broke. We wanted Change. In surfed Bill Clinton, on a wave of media hysteria.

 Insert positive spin.

 1993 was one of the best years we ever had. Remarkably a commercial building BOOM arose from the ashes of the "the worst market since the Great Depression". All it took was a little good news. I think a lot of the people in this country today, hell maybe even most, have been paralyzed this year in the wake of the absolute onslaught of negative news that has been hurled at us from every direction. Four dollar gas, the Iraq War (back before it was a "good news" story), housing woes, automaker woes, mortgage woes, credit crisis, and the WALL that Wall Street hit...it's been more exhausting and nauseating than Twister night at Madonna's house.

 And it worked. Change was embraced. Change was made. Now the media can Change their tune and help pick up the pieces of the Pinata they've been punching. I look forward to the new administration doing what...well...whatever it is that they do. But more so I look forward to the media's approval of it and the positive spin that will accompany it.

 Good news is coming. Not a second too late

I attended a broker property tour yesterday that really lived up to its name. Everyone was "broker" than the last time we had met!  Realtors pitched their listings with all the enthusiasm of Rosie O'Donnel reading a Jenny Craig menu. Most of the agents were more interested in the free buffet than the properties on tour, and one wonders which of the two drew more attendees. When conversation ensued, it drifted like the Titanic to an iceberg, hopelessly crashing into a cold hard conclusion where everyone's King of the World memories now lie precariously on a sinking wooden slab. It was as if we were huddled underneath a conversational gripe umbrella waiting for the golden shower storm surge of 2008 to bypass us.

And then I heard a string of words that sounded at once familiar...and oh so utterly wrong: "I can't wait for the market to turn around."

 ATTENTION: When the cart is before the horse, turning around isn't an option.  

 People only see what they are prepared to see.  You really can't fault agents for failing to see a market shift THIS dramatically beforehand, but walking into a sales profession thinking everyday of your future career was going to be free of gravitational limitations is...well...shortsighted. Things go up and down here more dramatically than Dick Cheney's EKG.

 Banking on the market "turning around" is almost as foolish as banking on...the banking system. If we are going to survive in Real Estate my friends, and make no mistake this all too often feels like the simple act of survival on some Serengeti Plain of indifference, then we need to shed this notion of a turnaround.  Glancing at my own savings account is as dreadfully shocking as walking in on a naked grandparent. But I'm over it now. I have adapted. Ketchup makes a wonderful soup!

 We have to accept what is right here on our plate, right now, and disregard its appearance. Dig in and enjoy. When I was a wee boy my mother would torment us...uhm, I mean...she would often lovingly prepare steamed brussel sprouts as part of our nutritious family dinner. The awful smell of those slimy leaf clusters percolating would permeate the entire block. Neighborhood cats would go missing for weeks after one of her brussel sprout infected meals strangled the atmosphere. I tried every act imaginable to avoid their vile taste. Fake an illness, bribe a friend to have dinner at their house, even going so far as to pocket the sprouts when she'd turn away. But mothers are wise and she caught me every time. She had some misguided desire to shove vile green objects into my system, and she was far more determined to perform her duty than I was street smart with avoidance plans. She devised a winning strategy. Offer a delicious dessert for a post-meal celebration, with the caveat that I had to mow down an entire bale of those putrid brussel balls to be granted admission to the dessert line.

 I found that a giant slab of banana pudding with Nilla wafers tasted all that much better after I choked down a heaping helping of mother's worst.

 For a long while now I have felt we were going through a wretched period in Real Estate that would make some brighter day in our future feel all the more radiant. That there is a dessert day out there, and we just have to chug through this steaming pile of putrid taste to get to it. Endure, inch forward, survive. Damn you brussel sprouts, you're in my head!

 But I am here to admit I've been wrong. This is not an awful time in Real Estate at all. Nor is it a terrible time to be a Realtor. In fact, after listening to a room full of agents whining about the times, I came to the realization that right now is the most blessed opportunity I may ever see in this business! EVER! If everyone else wants to be the rain, then be the parade. The way I see it, if a thousand Realtors advance; then nine hundred ninety nine get spooked and retreat; we're still advancing. I won't join the fear train. Uncertainty is life folks. It's a gift actually. Embrace it. Don't be afraid.

 Embrace this market. It is exciting in its own way. You can be successful here if you learn to love it for what it is, not for what it used to be or what it could be. And if that sounds like some hackneyed Tony Robbins and Yoda collaborating on fortune cookies type of positive vs. negative babble BS...well...blame my diet. I don't eat veggies anymore.

Love your job or it won't love you back.

Daily routines are an essential part of any attempt at achieving sanity in this fishbowl of crazy we call Real Estate. Back in August I embarked on a "routine change" and incorporated a new daily morning exercise: Research.

 Awaken. Shovel crust from eyelids. Log onto MLS.

 I run a custom search each day that seeks out every new listing and every new price change that has occurred, in the entire Phoenix Metro area, all the listings that were born since I ran the identical search the day previous. Roughly twenty four hours of MLS action condensed into a tidy list format for my personal viewing pleasure. I've been perusing this list daily for three months now, and it is remarkable the things you learn when you simply spend some time paying attention.

 That very first August day there were over 500 new listings to sift through. I felt like an REO agent checking his own listing inventory! That seemed like a pretty large pile of "morning fun" at the time, but I burrowed in with aplomb and three hours later emerged...three hours of lifetime lighter. Crap, I'm late!!! It was like the first time visiting a strip club: interesting, saw stuff I liked, but what was the purpose again?

 Well, dumb luck made me a genius that day when I happened across a new listing that matched well with a buyer I was working with. By two o'clock that day we had visited the property and were writing an offer. My client opined "one day on the market, you're really on top of this stuff."

  Ha! I mean...of course!

 You see....the entire idea for making this routine an essential part of my daily breakfast was born from my frustrations with the new Flex MLS system that the Arizona Regional MLS adopted in July. The system had more bugs than Vladimir Putin's beach condo, and I had grown tired of being told by clients about new listings in their neighborhood days before these mystery listings showed up on my automated neighborhood searches. I may not be all that smart, but I do enjoy ‘looking' smart.

 My epiphany: The daily search of all things NEW would eliminate "lost listings". Agents new to the system might input the neighborhood wrong, or accidentally lose their listing in the confusion of the new system, but I would use my daily fishnet to see their listing regardless of bad input data because I was looking at EVERYTHING. By the end of the first week I had customized the daily search, streamlined the perusal process, and given the entire act a "purpose". Find the best deals available every day. Period. Keep it simple.

 If you are smelling "nerd" right about now, you got it.

 I dedicated a Hot Sheet page at JDSamuelsonGroup.com to showcase the deals I found and that Hot Sheet list quickly became the most visited part of our website.

 Now after three months of performing this glance routine over and over, I have a few observations. I hope these observations may convince those of you who do this type of searching only on occasion, to adopt a regular schedule. Seeing EVERY new listing that enters your marketplace can give you a different point of view for the market as a whole.

 What areas have too many listings.

One particular Phoenix neighborhood offered up so many new listings, five to six per day, that I began wondering if FEMA had issued an evacuation order. One could surely count the rats leaving the sinking ship by doing a simple neighborhood search and sorting by date. But there is something about the continuity of seeing a neighborhood's name splash on the screen every day, for months, that is downright chilling.

 Where the value bubbles are.

You not only learn the various neighborhoods through repetition, you develop a seventh sense to distinguish a great deal from a so-so deal. I have become a bit of a price snob through this process. If a home comes on market in say...Queen Creek (A Xeroxed community of sameness), and it's priced above $40 per foot...no need to look any further into it. It's not an unbeatable deal.

 Trends.

Condos, townhomes, single family. Which type comes to market more frequently? Custom vs. tract home.  Prices falling vs. prices rising. What side of town dominates a particular price range? You begin to see it  all as it is happening. I can tell you right now that South Scottsdale prices are increasing. That's right, INCREASING. Even in this market. In August South Scottsdale  listings were debuting in the $170k - 200K range. They sold quick. Nowadays the same area homes rarely debut at less than $200k!

 Which Agents are notorious for tricking the system.

This may be a case of "takes one to know one", but certain agents tend to shift their prices, re-enter their listings, blah, blah, blah...we all know there are ways to milk the MLS system to get your listings seen by more folks. It's just funny to see how many other agents do so on a daily basis. I thought I was the only one manipulating the....uh...never mind.

 A running reason to contact your clients.

What better reason to contact a client than to show them you found a great deal. Even if that client can't act on the deal themselves, they may know someone who could, and at the very least they'll be appreciative of the effort you bestowed on their behalf. Last week I sent a client a deal for a south Phoenix home that was $17 per foot. It was Pending that same day. Those who think the market is slow probably aren't pricing right.

 Our MLS system has been debugged for the most part now. But this daily habit of listing sifting has proven to provide a few golden nuggets for my clients. At the same time, this daily new listing watch has granted me a market perspective I did not grasp before. We are up to 700 listings per day now. I'm able to rip through them in an hour or so. From that I can find anywhere from three to twenty three "Good Deals". You just never know what you're gonna find.

 I get asked all the time, "Where are the best deals in town right now?".

 "Check my website. It's updated daily"

 This market gets panned, beaten, and abused for being a negative ankle weight chained around the Nation's economic legs. I wholeheartedly disagree. Watching my local market transform everyday is invigorating. Seeing the new listings appear firsthand over and over. This is exciting stuff! Each day is a new Easter Egg hunt!

 Makes me wish I was still a millionaire....(sigh)

 There are certain unwanted talents that you acquire as a Realtor that make your mind think: "questionable vocational choice perhaps?". 

 Due to a rash of lost arguments as a younger man, my nose has been broken more times than Tommy Lee's wedding vows. The net result is that my nose is to smelling ability what Ray Charles is to driving etiquette. I can't enjoy the sweet aroma of fresh baked chocolate chip cookies without inserting one up a nostril.

 That lack of natural God given ability established, I've entered some REO properties that were so incredibly vile that my extinct sense of smell leapt right out of its Rip Van Winkle nap and gasped for relief. I know many REO agents have their nose to the grindstone, but could you please remove it just long enough to smell what the Bank is cooking? A house that puts a buyer's nose out of joint is a house that will prevent you from achieving the task you were hired to perform...getting a SALE.

 I think I speak for the majority of my Realtor colleagues when I place the request that REO agents consider the nasal invasion factor when evaluating their listings. My dry cleaner is beginning to question how I curl my collars to such a degree. In one particular house I buried my face in my own armpit for relief...and it was hot that day! There are simple solutions that won't require you to purchase Febreze by the drum or slay more Pine Trees than Paul Bunyan:

 Clean the House - When you first visit your new REO listing give it a simple test: If I went into a hotel room and it smelled like this listing, would I return to the front desk or settle in for a comfy nap? Get to know a good housekeeper. They'll cut you a deal for cleaning more than one listing, and they will help you make money.

 Air Fresheners - Febreze, Oust, Glahday, they have an entire section of your grocery store dedicated to the practice of using common scents.

 Air circulation - It can be a challenge because the banks reimburse expenses with all the eagerness of Al Gore pull starting a chainsaw, but if the power is on you can run a fan, or an air conditioner. Air in motion can help move a listing.

 Vinegar - This requires that dreaded second visit to the property. But an open bowl of vinegar left overnight can absorb an incredible amount of odor. Add some seasoning, romaine lettuce, then some chopped veggies and enjoy a delightful bowl of ghetto green salad afterward

 Cut an Apple - Sounds odd, but a sliced in half apple can also absorb a lot of odor. You just have to remember to return to the scene of the grime or the apple will switch sides on you and become an offender itself.

 Baking Soda - Who has seen a Bank Owned prop that didn't require a little "Arm and Hammer" eh?

 Prop the fridge door open - Ever stood across the room and witnessed a client reaching for the REO property refrigerator door? It's as if the whole world slows down for that one terrifying moment. Their hand gripping the handle...your eyes growing wide...their muscles flexing...you diving across the room screaming "Nooooooo!".  Then the wave of all encompassing stench floors all in attendance. Left alone and closed up, fridges tend to smell worse then a flatulent skunk eating week old Limburger in a slaughterhouse.

 THE GRAND POO BLAHHH:

 The biggest offender, and ironically the most preventable, is the poo-pourrit. The chocolate sundae ala commode. Nothing is more foul than encountering the weapon of mass destruction left behind by the poor soul whose first clue that the property's water was turned off came when the toilet handle returned an empty "clink".  Please...PLEASE...wrap the toilet with a band that says "Please Do Not Use". Or...place a brick on the lid, chain the lid down, duct tape the entire toilet, park an elephant on the bowl...just do SOMETHING that gives the general public a clue that the toilet is closed for business. Removing the toilet paper is a good start. You don't want your listing to be known as "House #2".

 In sum: Most buyers prefer their houses like they do their linens: Unscented. Please help us keep our noses clean.