… and your wallet as well, actually, if you’re coming to the Phoenix area to purchase real estate.

While I agree with the couple last week who told me that Canadians “are friendly folk” - if not slightly NHL-free-agency-period obsessed - being friendly doesn’t carry much freight in the American banking system.

Checks and bank drafts written on Canadian bank accounts can’t be deposited by local escrow companies, even if they’re coming out of the US dollar accounts many Canadians have at their local banks.

For that matter, my escrow folks tell me that all bank drafts are channeled through one American bank and then re-wired to wherever the final destination may be. (There’s also a nominal charge added by the middleman, meaning your wire for $5,000 or $6,000 may arrive at escrow $10 to $15 short.)

About the only time you’ll need a check in hand is on a bank-owned home, where most lenders require that a copy of the earnest deposit check be included with the offer. Not that the check will be used if your offer is accepted - we’ll go back to the wire route.

Buying Arizona real estate when you’re Canadian isn’t particularly complicated but there are a number of quirks … this was just another such example.

Next up … what to do when your NHL team clears cap space for a free agent, say Marion Hossa, and then doesn’t sign him …

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As of last Tuesday, one in nine of the homes for sale in the Phoenix real estate market (according to the Arizona Regional MLS) was a bank-owned home. If properly priced - either at or below current market rates - many of these REO properties will see multiple offers before a final buyer is selected.

Though some banks are becoming more proactive in making borderline properties sellable - borderline meaning too trashed to ask market value but not trashed enough to offer at near wholesale pricing - bank-owned homes still may not be for everyone.

Here are 5 things to keep in mind if you’re thinking of buying a bank-owned home:

1) Prepare for multiple offers. On one bank-owned home a client of mine tried to buy, there were nine offers the first day. She didn’t get that one. On another REO home, my buyer was one of three offers. We did get that house. On a third house back in March my buyers and I were told there were multiple offers. Still not sure if there were but that’s another story for another time.

If the house is priced well, you’re not going to be the only offer on the property. Which is why you need to …

2) Make your first offer your final and best offer. In a multiple offer situation, at some point the lender (or the lender’s listing agent) is going to ask you for your final and best offer. Knowing that call is almost certain to come,  make your initial offer your final and best. If you get the house, great. If not, you know you made the best offer you could make in an effort to buy.

On the middle example above the lender’s agent asked us for our final and best offer. We told the agent that we already had submitted our final and best. My buyer got the house and will be moving in within the next couple of weeks.

Knowing the game helps.

3) Be prepared for the lender addendums. These vary from Countryide’s 18-page mosnter to a few pages from most other lenders. All are different but all essentially tell you that you’re purchasing the home as-is. Sometimes the addendum also will set a date by which the sale must close which can be different than the date in the contract.

You don’t have to sign these addendums unless, of course, you want to buy the house.

4)  Get a home inspection. If your offer was written on the AAR Purchase Contract, you have 10 days to complete your inspections and other due diligence. Take advantage of this time frame and hire a professional home inspector to check the property for you. The lender likely will not make any repairs but at least you know what you’re up against.

If possible, try and be present at the end of the inspection so the inspector can take you through the house and discuss what they’ve found. Everything in an inspection report sounds severe but a good inspector will help you understand what issues are serious and which are fairly common.

5) Know your lender. Most lender addendums have a sentence adding a per-day fee if you’re unable to close on the house on time. And most often the delays take place because a lender’s unable to get the loan documents to the title company on time. This isn’t the time to use your cousin for your loan, not unless he’s been established in the business for a significant period of time.

Get a reputable lender and stay on top of them to make sure your loan is moving ahead toward an on-time close.

Have additional questions not answered here? Contact me through the form on the right or via e-mail and I’ll be happy to help!

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One of my favorite folks from Trulia Voices made another appearance the past couple of days. It seems the search for a bank owned property in Verrado has not gone well for Jane. Eight-six single-family detached homes have sold in Verrado, a master-planned community on Buckeye’s eastern edge, but Jane has not yet been able to get a home under contract after several months of trying.

The reason? Not the lowball offers, even as the bank owned market quickly became a sellers’ market with multiple offers. No, the issue here is the listing agents themselves.

EVERY time a foreclosure pops up for sale in this neighborhood, it seems like there are SEVERAL offers already made on the house BEFORE ANYONE else even gets the chance to bid. AND, I’m pretty sure MOST of the one’s that have SOLD that are REO, have been sold to the Listing Agent’s Clients so that the LA can get ALL the commission. I KNOW it’s ILLEGAL AND UNETHICAL, but I’m tellin ya, IT’S HAPPENING HERE, sad as that is.

Checking the Arizona Regional MLS, though, there were 25 sales of bank owned homes in Verrado. Want to know how many homes were sold by the listing agent to his or her own clients?

Three.

Bank owned homes in Verrado are remaining on the market an average of 31 days and are selling within a few thousand dollars of list price on average. Contrast that with a strategy that in the past has involved offering substantially below list price.

For several months I’ve wondered why Jane keeps asking the plebicite advice on how she should purchase a house, even once comparing the philosophy to trying to win a car on The Price is Right. Jane has an agent. I presume she even listens to her agent though it’s never been clear whether the agent’s advice matches that coming from the hoards hoping to pick up a scrap of business by helping the agent be cuckolded.

But she is right … Trulia Voices is a Q&A Forum by design. Agents need only choose not to answer should they realize they’re interfering with another agent’s relationship with his or her client, but that doesn’t happen. Instead, one can sit back and watch folks who presumably have other clients running full comps for someone working with another.

Bank owned homes are a different beast at the moment. I’ve written as much not so long ago when confronted with nine offers on one house in one day.

Still, one Canadian buyer just closed on a bank owned home in Goodyear. Another young couple will be moving into their soon-to-be-former REO property in Tolleson within the next couple of weeks. Another young couple moved into their former REO in April.

There’s no mass conspiracy to only sell bank owned properties to our own clients. Most agents here are so desperate for a sale that they’ll be more than happy with their own side of the commission without greedily lunging like the dog and the bone peering into the stream.

Before casting wild (and thoroughly incorrect) accusations about why a purchase has not been successful, perhaps it would be better to heed Albert Einstein …

“The definition of insanity,” Einstein said, “is doing the same thing over and over again and expecting different results”.

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Here’s where things stand on the bank owned home front …

FHA buyers are making up an increasing portion of the Phoenix real estate market’s pool of buyers. Even buyers who could qualify for a conventional loan often are looking at FHA financing because of the lower down payments that are required - typically only 3% of the purchase price.

FHA also is the virtual last bastion of 100% financing thanks to programs such as Ameridream, where sellers can make a gift to a third-party non-profit that then is passed on to the buyer.

But here’s the catch with FHA: FHA is fairly particular about the condition of the property. And there’s the rub. Because the bulk of homes being sold right now are bank owned homes, where the biggest question mark is condition.

Simply put, many bank owned homes can’t be sold to FHA buyers in the condition in which they’re left by their departing owners. And this leaves the bank with a decision - try and sell the home to the few rather than the many, or spend the money on paint, carpet and rudimentary repairs and access the largest possible pool.

In other words, banks are having to think like sellers and not just monoliths transferring property ownership with virually no work required.

Bank owned homes still are a gamble in as much as there’s no telling the condition the home will be in, cosmetically and structurally. But the steady push of the irresistible force that is FHA financing in today’s market is slowly causing the unmovable object - the bank’s REO department - to move in the buyers’ favor.

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Last night I finally had the chance to watch last weekend’s World Cup qualifier between the United States and Barbados - a 1-0 victory for the Americans after winning 8-0 in Carson, California the week before.

Barbados’ national side combines a couple of professional players with some semi-pros and several amateurs who took time off from their day jobs as construction workers, electricians and such to represent their country on consecutive weekends. As the announcers said during the match, when watching practice it was easy to differentiate between the professional players and the amateurs even without checking a roster. The level of expertise displayed by the professionals was apparent.

I was reminded of that statement when reading through Trulia Voices this morning:

How do I best buy in Phoenix without using a buyer agent. I have access to the mls & am a veteran home buyer.

Using an agent isn’t necessary. Simply find the property you want, go to an office supply store that carries do-it-yourself paperwork and go for it. Granted, the paperwork isn’t based in Arizona law and doesn’t carry a fraction of the protections of the AAR Purchase Contract, but if you’re committed to doing it yourself, it’s pretty straight forward.

Everything will be fine … unless it’s not, in which case it can go very, very badly. Buying a home in Phoenix isn’t much different than buying a home elsewhere, aside from the fact that Arizona law governs the transaction. If you’ve done it before, you can do it again.

Most veteran home buyers I know wouldn’t need to ask how they could buy a home in the Phoenix real estate market. They’d simply do it. And you could tell just by looking that they were veterans (if not licensed real estate professionals) and not amateurs trying their best to keep up.

In a vague way this cuts back to the debate over who pays the buyers’ agent. As I’ve said many times before, when I am shown concrete evidence that a sales price will be lower because no buyers’ agent is being paid by the seller, I’ll accept the argument that the buyer is paying their agent in the sales price.

But as long as I see sellers pocketing (or expecting to pocket) the commission they had earmarked for a buyers’ agent - proof positive that there was no difference in price solely on the basis of the presence of a buyers’ agent, the argument falls flat.

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