As almost any member of the REBC will tell you, selling real estate isn’t rocket science. It isn’t science at all. But there’s a definite art to the deal which, if you make the effort, you eventually learn. Knowledge of this art often is what sets a true real-estate professional from the crowd of real estate agents.  And the art of the deal also often makes the difference between a closed transaction and a needless cancellation.

Yesterday I wrote about the “as is” addendum and how, if not properly explained to a buyer, it can lead to incorrect impressions about a property. Realizing this after following my client’s instructions, I withdrew a counter offer with the “as is” language and the added AAR “As-Is Addendum.” The withdrawal was confirmed last night when my client signed off on the buyers’ counter offer and the signed, executed offer was returned back to the buyers’ agent.

Except …

At some point yesterday, after explaining to me that telling his buyer that the seller wants to make the transaction “as is” and after I said my seller would withdraw the final counter, the agent for this particular buyer still told him of our counter offer. And when the buyer asked to see the already-withdrawn counter, the agent sent the withdrawn counter to the buyer.

Why? Here’s the fun part: the agent doesn’t know. He says he made a mistake but what can he do? It’s like trying to find out why my children felt the need to drop their gum on the carpet. Why did you do this? I don’t know! It just happened!

Though the buyer eventually came to realize he now was a party to a legally-binding real estate contract, it was clear this ship was heading for the rocks. First, the buyer wanted to visually inspect the units before opening escrow. Second, the buyer wanted to receive full information on rents before opening escrow.

Of course, the buyer’s entitled to both. And if the offer had been written in such a manner that escrow wouldn’t be opened until both conditions were met, there would be no debate.

But it wasn’t. And short of that, the buyer doesn’t have the right to subsequently place contingencies upon the opening of escrow. Escrow needs to be opened the next business day after offer acceptance, which would have been today.

As we were hanging up the phone, the other agent apologized again and said there wasn’t anything he can do. I, with claws extended, told him it was no big deal - all he did was cost himself a paycheck for not knowing the exigencies of the contract.

It happens. Not just in this instance but likely a dozen or so times a day. So many people get their real-estate license and then don’t take the time to actually learn the trade, learn how to sell, learn what the contract does and does not allow. And many continue to make a good living despite this lack of knowledge because it’s never come back to bite them.

But it will. Oh, yes. It will someday.

Technorati Tags: Phoenix Real Estate, Phoenix Arizona Real Estate, negotiating, AAR Purchase Contract

Popularity: 8% [?]

Share This

Tags: AAR Purchase Contract, Phoenix Market, General Real Estate by Jonathan Dalton
4 Comments »

I have a meatier post for today, one about the grandstanding prancing ponies at the Arizona Board of Appraisal. I really do. But given that today started with two hours of phone arguments over everything from the finer points of the contract to rental applications - the kind of things we always say go on behind the scenes that not everyone believes - a new plan is in order.

So … given that my wife has told me she can tell my mood by the tone of my post, I’m going to avoid letting the unadulterated rage hit the page and go with something happier.

I’m a Parrothead. I drive past the future site of the Margaritaville Cafe at Westgate City Center, six miles from my house, and can taste the conch fritters and the rum. I’ve yet to wear coconut shells to a Jimmy Buffett concert, but with the loss of a few pounds I might do it yet (to the absolute horror of my daughter.)

Speaking of my daughter, she recently purchased an outfit for one of her stuffed animals from Build-A-Bear - an aloha-print skirt and a coconut-shell bikini top. I couldn’t be more proud.

Faith sang her first Jimmy Buffett song when she was 18 months old. We were putting her coins into a Bear in the Big Blue House bank and she started wailing something sounding a bit like “idunnooooooooooo … idunnnoooooooooooo.”  Volcano was playing and she was singing the chorus - “I don’t know … I don’t know …” I was a little vaklempt to say the least.

Recently she’s taken to drawing interpretations of Buffett songs. My favorite was her drawing of “Finway” with two dolphins flying over a jungle canopy. She never knew that “Fenway” actually was a baseball stadium. She had just heard the name on the Live at Fenway Park CD over and over again.

Whether she’s a Parrothead for her own sake or because it makes me happy, I haven’t a clue. I hope for the former but believe the latter plays a part.

One thing I haven’t mentioned is Faith comes from a mixed marriage. My now ex-wife and I hadn’t discussed these things in depth, thinking they’d work themselves out. But now it’s coming to a head. You see, my ex-wife is a Metalhead. And my lovely 8-year-old now is singing Metallica … Enter Sandman seems to be one of her favorites.

It’s not that I’m opposed to Metallica in any way, shape or form. But given the choice between the driving metal beat or a steel drum, I’ll take the steel drum.

What I’m really curious to see is what happens should my daughter start to draw her interpretations of Metallica songs. I’m envisioning a Tim Burton-esque nightmare, but that remains to be seen.

Can someone survive as a combination Parrothead/Metalhead? I’m not sure. But I kinda hope so.

And as for this morning’s joy, I’ll leave by quoting one of Jimmy’s recent songs … “breathe in, breathe out, move on.”

Technorati Tags: Blogging, Parrotheads

Popularity: 7% [?]

Share This

Tags: Miscellany by Jonathan Dalton
1 Comment »

If you’re not learning something every day in this job, you’re really not trying. That was proven to me again today as I negotiated an offer on one of the two four-plexes I have for sale in Mesa.

After a couple of counter offers up and back, the prospective buyer was offering to purchase the four-plex for about 5% less than listing price and also asking for closing costs. My seller decided he could live with the price but only if the property would convey “as is.”

Following my seller’s instructions I prepared a counter offer that said just that and added in the Arizona Association of Realtors’ “As Is Addendum.” Not unexpectedly, the buyer’s agent soon was on the phone asking what’s wrong with the property.

I tried to explain that to our knowledge there was nothing wrong. The seller simply isn’t willing to make extensive repairs at such a reduced price. But the impression left by the “as is” addendum - that something must be wrong - is hard to erase.

In the end, we withdrew the counter with the “as is” language. My seller is going to be responsible for certain warranteed items - electrical and plumbing, for example - whether the property was conveying “as is” or not. And as for repairs, my seller isn’t required to make any. In retrospect, the better approach was to accept the offer and simply attack the repair issue when and if a request was made.

The answer seemed much more simple this morning than it did last night. But I also know that I’ve walked away having learned a different approach to a not-so-common scenario in real estate.

Technorati Tags: Phoenix Real Estate, Phoenix Arizona Real Estate, negotiations, AAR Purchase Contract

Popularity: 7% [?]

Share This

Tags: AAR Purchase Contract, General Real Estate, Tips for Sellers, Tips for Buyers by Jonathan Dalton
1 Comment »

As reported here and here, Senate Bill 1291 as amended by Rep. Michelle Reagan (R-District 8 ) failed to pass by the needed two-thirds majority on Tuesday. Of course, as pointed out previously regarding another bill, nothing at the Arizona Legislature truly is dead until the session adjourns sine die.

Representative Bob Stump (R-District 9) made a motion today that the House reconsider the bill on Monday, April 30. (The Legislature’s site recorded the motion to reconsider on March 30 - that would be one hell of a trick - but since I had the bill in the wrong house yesterday, I’m not going to split hairs.)

In spending three years and two sessions covering the Legislature - one for the Sun City Daily News-Sun and another with the Arizona Capitol Times - I saw similar procedural maneuvers take place on several occasions. Here are the logistics:

• The final vote yesterday was 32-22 with six members not voting. Since the bill’s amendment contained an emergency clause, making it effective immediately after the governor’s signature, it needed to pass with 40 votes - a two-thirds majority.
• Among those voting “nay” yesterday was Representative Stump. Why would he vote no and then make a motion to reconsider? Because only someone on the losing side of a vote can make such a motion.
• It’s not uncommon in a situation such as this to see several members switch their votes at the last moment. The procedure is simple and repetitive. They stand and hold their microphone, wait to be recognized by the chair and say “Mr. Chairman, I would like to switch my vote from aye to nay for purposes of reconsideration.” The only people who would know how many actually did this were the ones in the chamber when the vote took place.
• Odds are highly against an amendment making it to the floor without at least the tacit approval of the majority leadership - yet it was the GOP who buried the bill the first time around. And the odds are even more unlikely that a bill will be brought back from the dead for reconsideration without the tacit approval of leadership.

So what happens now? The bill returns for another reading and a new vote on Monday. All possible effort is put into making sure those missing six members are on the floor for the vote this next time around (even if only for the vote - there usually are as many members standing along the back wall after leaving the lounge behind the floor than are at their desks. The scurrying is fun to watch.)

And if the leadership does their job correctly and whips everyone into shape - the terms “majority whip” and “minority whip” are so derived - the bill will pass come Monday.

On a side note, I give full credit to Greg and Jay for watching this bill as closely as they have. After leaving the Legislature beat 11 years ago, I’ve not had the desire to spend anywhere near this much time watching the maneuvering. It was fun and exciting when I was there, but the day job gets in the way these days.

Further reading:

The Zillow Amendment
Zillow News Hits the Republic
Zillow vs. Arizona
Blog Posts are Forever
Zillow vs. Arizona Board of Appraisal

Technorati Tags: Phoenix Arizona Real Estate, Phoenix Real Estate, Zillow, Arizona Board of Appraisal, SB 1291

Popularity: 6% [?]

Share This

Tags: Phoenix Market, General Real Estate, Technology by Jonathan Dalton
1 Comment »

Here’s one other advantage to the notion of divorcing buyers agent commissions in the real estate transaction: transparency.

Right now in Phoenix, it’s common (if not expected) to see buyers asking sellers to contribute up to 3% of the purchase price toward the buyers’ closing costs and prepaid items. Does commission constitute a “closing cost”? Possibly. It all depends on who you’re asking on any given day.

Two recent offers I’ve received raised the question only because the buyers were asking for substantially more than 3% toward closing costs. And reviewing the offers, there does not seem to be any apparent reason why closing costs should exceed 3%:

• Loan origination fee: 1%
• Discount points: 0%
• Assorted loan costs (doc fees, processing fees, etc.): 1%
• Escrow fees: 1%

The latter two figures are ballpark estimates but they hold true except in the most drastic of circumstances. (As an aside, if as a seller you see an offer that states you will contribute up to 3% of the sales prices toward closing costs, expect the fees to add up to 3%. Almost never fails.)

Without a higher origination fee or without some sort of rate buy down involving points, the most logical remaining reason for higher seller closing costs is the commission for the buyers’ agent agreed to between buyer and agent is more than the 3% co-brokerage fee being offered on the listing.

Which is fine, to a point. An agent can negotiate whatever fee they choose when working with a buyer. But should that commission be higher than the co-brokerage fee offered on a substantial portion of the market, should a buyers’ agent tell their client ‘don’t worry. We’ll make the sellers pay for it.’?

If the commissions are divorced, the commission structure for all involved would become transparent. Sellers wouldn’t be asked to contribute high percentages toward a buyers’ closing costs to cover an undisclosed commission. (And lest I not give a nod to those who feel the buyers pay the full commission as part of their mortgage, I again will say that this argument is two views of the same pane of glass - the higher contribution also cuts into the sellers’ proceeds.)

As I’ve said before, there are some challenges that divorced commissions will cause - will some of these buyers willingly paying large commissions to a buyers’ agent under the idea “it won’t cost you anything” still do so if they have to pay their own way or will they decide to purchase without representation? Is that in the public’s best interest?

Let the debate continue.

Technorati Tags: Phoenix Real Estate, Phoenix Arizona Real Estate, buyers agency, buyer representation compensation, commissions

Popularity: 7% [?]

Share This

Tags: Phoenix Market, General Real Estate, Tips for Sellers, Tips for Buyers by Jonathan Dalton
No Comments »