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More on Phoenix Short Sales

Jonathan Dalton, Phoenix Real Estate Agent Inconsistent only as much as it’s my intent to wash my hands of short sales in the Phoenix real estate market, there’s a partial solution handy for clients who insist that this is their plan.

The Arizona Association of REALTORS this past summer wrote a Short Sale Addendum (actually two - one for the seller when taking the listing, one for the buyer when making the offer.) After another reading, it seems some of the language is worth pulling out of the buyers’ Short Sale Addendum and turning into a separate agreement to be signed before the search begins.

Here’s what I’m thinking, based heavily on the addendum with a couple of tweaks to make it more relevant to a buyer starting the process:

“Client is aware than in a short sale, there is more debt owing against the premesis than the value of the home.

Any offer written with a purchase price less than the amount owed is contingent upon an agreement between the Seller and the Seller’s creditor(s), acceptable for both, to sell the premises for less than the loan amount(s).

In signing this form, the buyer acknowledges their understanding that it may take weeks or months to obtain approval from the seller’s creditor(s) for a short sale.”

The above may not eliminate all of the “when are we going to hear something” questions but it’s a start.

Technorati Tags: Phoenix real estate, short sales, real estate negotiations

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Washing My Hands of Phoenix Short Sales

Jonathan Dalton, Phoenix Real Estate Agent As of this morning I’m washing my hands of short sales in the Phoenix real estate market.

The longer I have looked at short sales - sales where the value of the property is less than the current mortgage - the more convinced I have become the myths outweigh the reality.

Myth 1: Short sales are “deals.” Hardly. As Michelle Lind from AAR put it yesterday at the Arizona Real Estate Educators Association lunch, people think these “are deals when all it means is someone else paid too much for the property and you’re getting it at value.”

There are far better deals to be had involving real sellers, not sellers depending on a lender. But many buyers don’t see that because they believe …

Myth 2: List prices in the MLS mean something. My continuing favorite was the short sale listing that boasted “price reduced.” Given that the bank hadn’t even approved the original list price as a selling point, how does reducing the list price result in an actually reduced price? It doesn’t.

Just because a list price is in the MLS for one of these short sales doesn’t mean that’s what the lender will accept. More often than not, it’s not.

Myth #3: Lenders are motivated to accept a short sale rather than take the home into their inventory. Not whatsoever. Chris Butterworth recently documented the case of a lender who had an offer sitting on their desk when the trustee sale began. It had been there for weeks. The lender took no action and now owns the home. You’d think the cost to carry would be a deterrent for lenders but it isn’t.

I have a buyer who has been waiting for six weeks for an answer from the lender on his offer. The lender would end up short by a very, very small amount. The buyer’s watching exchange rates in flux and isn’t sure what he’ll do should we ever hear from the lender. The lender’s response to hearing my buyer may walk away? “Okay.”

This person at the lender has 90 foreclosure files on his desk. He will get to this file whenever he has the time to deal with it. Since there’s a sale coming up you’d think he’d hurry, but that’s not how these work.

Myth #4: Homes being sold via the short sale route are pristine properties distinguished only by a lower list price. Sure they are.

If you knew you weren’t getting a penny from your home and that the bank may take it, how inclined are you to be diligent in the upkeep? Or are you more likely to do what many sellers do and start taking out whatever you can.

Craigslist recently had an ad auctioning off everything in the house including the granite counters and the appliances. When it’s clear the house isn’t going to be theirs, most folks cease to care. There are exceptions but they’re very rare.

Myth #5: Two sellers this week have called asking me about “quick sales,” meaning short sales. As I just said, these are anything but short. They are long and arduous and are as likely to end up failing as succeeding.

Bottom line: if you’re looking to purchase real estate here in the Phoenix area and are looking for something priced to sell, let me show you what’s there. Don’t get married to the false hopes of a short sale because what you think you’re getting yourself into and what really will happen are two very, very different things.

Technorati Tags: Phoenix real estate, short sales

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Another Subprime Borrower in Phoenix … NOT

Jonathan Dalton, Phoenix Real Estate Agent Over the past three years I’ve had a handful of buyers purchase real estate through subprime loans. All things considered, every now and then I check the foreclosure link on the Arizona Regional MLS to make sure no familiar homes have been posted.

Yesterday afternoon I received a phone call from one such buyer. A cold shiver ran down my spine as I waited for the bad news to come.

It never did.

You see, my client purchased with a subprime loan. And he’s made every payment. You may not believe that to be possible given everything that’s been written about buyers who relied on subprime financing, but it’s the case.

He was calling about the possibility of getting his home on the market, not out of a pressing need to sell but because he’s now working for the state correction system and has a chance to work in Florence. A home in Queen Creek, land of the $150,000 single-family homes, would fit his family’s needs.

“Economically, physically and mentally we’re doing very well,” he told me. It truly was good news to hear. Owning his own home meant everything to him, to the point that he left Southern California 18 months ago for Phoenix knowing he could afford here what he never could afford there.

There are details to work on: hitting the two-year mark for capital gains purposes, if we’re able to sell his townhouse for more than what he paid. I’ve not yet run the numbers but will be doing so in the next day or so. Then we’ll sit down and see where things are.

In the interim, it seemed worth sharing what you’ve probably not heard anywhere else - a subprime borrowing success story. You’ll never see it in the pages of the Arizona Republic but it did happen now and again.

Technorati Tags: real estate financing, Phoenix real estate

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