Another Part Time Agent Story

Here is another story giving weight to the idea that there should be no part-time agents.

First, a little background:

I represented the Seller in a transaction that closed two weeks ago.  The Lender in the transaction required some costly repairs to be completed before they would allow financing.  The Buyer's agent thought the transaction was dead, but I negotiated with the Lender to allow the Seller to put some of the proceeds of the sale into escrow for repairs at the end of the transaction.   In the process, I persuaded the Buyer to increase the amount he was paying for the property to cover a portion of the repair costs as estimated.  The licensed contractor that provided the $10,000 repair estimate would do the work within 10 days of the close of escrow.  150% of the estimate ($15,000) was placed in escrow to allow for any cost overruns from the estimate.  Anything that was left in the escrow account after the job was completed was to be refunded to the Seller.

I checked in with the contractor about a week after escrow closed to make sure everything was OK.  The contractor said that there had been some delay because of the unusual winds, but they would finish the job with time to spare, and they did.  The contractor, being from a very reputable company and being honest, only turned in a bill for the work that he did.  The contractor billed $8000 - $2000 less than the estimate.

The Buyer learned of the difference in the estimate and the actual  cost of the work, and now wants his part-time agent to recover some of the funds for him.  The Buyer now feels that he "over-paid" for the property because the price increase that he agreed to covered nearly 100% of the repairs, and he wants a "refund".

Last night, the part-time agent representing the Buyer of the property called.  She complained that the lender was no longer returning her calls after she had used them exclusively for years.  She thought it was unfair that her client didn't get back some of the money for the work that the contractor didn't do.  Also, she revealed that she authorized the contractor to leave out the labor that would be affected by the weather, in order to allow the contractor to finish on time.  She did everything but ask straight-out for a Buyer refund.

Fat chance!  The other agent said she had  never read the escrow repair distribution agreement.  There was no provision in the escrow repair agreement to split any amount of the funds due to the Seller after the work was completed if the cost came in under estimate.  The Buyer was perfectly willing to let the Seller assume all the cost if there was an overrun.

The Buyer got exactly what he wanted - the repairs were completed to everyone's satisfaction with a 10 year guarantee by the contractor.

What the Buyer's par-time agent is doing here is wrong on so many levels:

1)  She should have extended the escrow agreement instead of allowing the contractor to do something other than his estimated work
2)  Now that everything is done, she should be telling her client that a deal is a deal, and this is what he agreed to.
3)  She should not be whining to the lender or the other agent about how unfair the world is
4)  She shouldn't be representing anyone if she doesn't take the time to read the agreements that her client is signing.
5)  She should have obtained counsel from other more experienced agents before taking on a transaction where she had "never done anything like this before".

She should not be in business!


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Zillow Zestimate - Who are these people kidding?

This is worse than the Government Unemployment Data!

Here we have a company who gives out free values based on a "Proprietary Formula" that doesn't work as well as throwing darts at a list of values behind your back. It cheats both the home buyer and home seller by presenting inaccurate data as fact.

In Phoenix, the Zestimate is within 5% of the sales price 41.6% of the time.  That means that if you are selling a house for $200,000, the Zestimate will say it is worth between $210,00 and $190,000 less than half the time.  The rest of the time is is off by nearly twice that amount.

This is what the Zillow website says on its own web page:

Nationally, the Zestimate has a median error rate of 6.9% percent, which means half of the Zestimates in an area are closer than the error percentage and half are farther off. For example, in Seattle, Zestimates for half of the homes are within 6.2 percent of the selling price, and half are off by more than 6.2 percent.

This is a case of statistics being very misleading.  Let's look at an example that uses 6.9% as the "median error rate".

If Zillow values your home at $200,000, its true market value may be $213,800 or it may be $186,200.  That is a difference of $27,600.  

I don't know about other Realtors, but if I was off by $27,000 on a value that I put on a home, I shouldn't be in the profession!

And neither should Zillow.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Buyer Agent Knowledge - For Buyers

By nature, most people don't want to share their personal information directly with another person.  It amazes me that people will put the oddest things on the web for general consumption, but don't want to share the amount of cash that they have on hand with their real estate agent.

So why does an agent have to have that information?  The answer is simple - he can negotiate much better if he has all the facts!

Contrary to popular belief, Realtors and Real Estate Agents have your best interests at heart.  As a Buyer's agent, they would much rather have you pay $10,000 less and have you recommend them in the future than the other way around.  Reputation is everything to a Realtor!

Among many other things, your agent needs to know how much cash you have on hand, how much you qualify for - even if you don't want to borrow as much as you can - and all the things that are important to you about the house you are making an offer on.  He needs to know the answers to questions like:

1)  Do you have to close at the end of the month to reduce your closing costs?
2)  Can you put more down to reduce your monthly payment if the seller pays closing costs?
3)  If the Seller won't pay closing costs, does the deal fold?
4)  Can you offer a little more and ask for the difference in closing costs?
5)  If you don't get the Seller to pay for a home warranty, will a home repair take up all your savings?
6)  Can your lender assist with closing costs?
7)  Will buying appliances for the house (Fridge, Washer, Dryer) require all your savings if you don't get the Seller to include them in the sale?

Notice that all these questions are about saving your money.  A skillful negotiator can satisfy all your requirements, and keep more money in your pocket.  However, a skillful negotiator cannot help you if he doesn't know the answers to the questions.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Lender Paid Closing Costs Save Negotiations

Perhaps the most misunderstood portion of a #RealEstate transaction are the #ClosingCosts.

For the purpose of this blog, closing costs are everything that the buyer has to pay for except the down payment.  Title Fees, Origination Charges, pre-paids, everything rolled into one number.

On a recent transaction, I was representing the Seller.  The Buyer's initial offer was quite low, and also included a Seller Concession for Closing Costs.  After talking with the Buyer's agent at length, I discovered that the primary concern of the Buyer was that he be able to keep the cash that he would normally lay out for closing costs.  The Seller was adamant that he would not pay closing costs.

I called the Lender involved in the transaction to see if he could talk to the Buyer about putting closing costs into the loan.  The interesting part of this is that the Lender initially said that they wouldn't do it.  After a couple of minutes of chatting about loans, I discovered that the lender could cover a good sized chunk of the closing costs, but they would require an additional 1/8th point of interest.  As a matter of fact, for an additional 1/4 point, they could cover them all!

So now the question was how much would this add to the loan, and how much could the Buyer put up with?

It turned out that 1/8th point added $11 to the monthly payment.  1/4 point added $23 to the monthly payment.

When the Seller learned that the Buyer was going to pay at least some of the closing costs, he decided that splitting the costs with the Buyer would be OK.

We closed the transaction.

#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Contingency Sales in Phoenix

I had an interesting conversation with someone the other day about contingency buying.  This person wanted to make an offer on a house contingent on the sale of their house.  The only problem is that their house is not on the market yet, and they want to have an offer accepted before they put their house on the market.

Interesting, isn't it?  There is no lack of lunacy in the world!

Here are conditions that might allow a contingency to work:

1.  The Buyer's house already has to be under contract
2.  The Buyer's transaction must have already cleared the inspection and appraisal contingencies
3.  The person purchasing the Buyer's house has to have two things:  a) a good sized earnest money deposit and b) an assurance from the lender that underwriting has already OK'ed the purchase
4.  The purchase of the Buyer's home cannot be a contingency purchase.

Colleagues of mine have had contingencies that have had as many as 7 homes lined up and falling like dominoes when the market was stable and lenders were solid when they pre-approved a person for a loan.

Would you consider a contingency purchase/sale now?  I would be interested to hear from you.

Have  a great day!

Tim


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

How Much Do You Want?

When taking a listing, I have found that one of the questions that people are hardly ever prepared to answer is "how much cash do you want to walk away with?".  If you would like to sell your house, this is a critical factor!  No matter what amount you sell for, you can only get so many pesos after everything is done.

People always seem to think in terms of "how much can I get for my house".  This is a wrong-headed way of trying to wring the highest price out of a property.

Why is it wrong-headed?  Consider this:  You have two offers in front of you, one for $200,000, and one for $195,000.  The $200,000 offer asks for 3% concessions from the seller to cover closing costs.  The $195,000 offer asks for no closing costs.  Taken at face value, the $195,000 offer actually nets the seller $1000 more than the $200,000 contract.

Also, when it comes time for the appraisal, you stand a much better chance of having the $195,000 value approved by the appraiser than the $200,000 value.

So, beware when your pal down the street tells you how much his house sold for - you don't know how much he netted from the sale.  After all, isn't the bottom line the most important one?


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Phoenix Market Has No Explanation

Is this the expression that you get from your clients when you try to explain the Phoenix market to them?

Here are the facts, let's try to make some sense out of them.

1. Appreciation is still more than 10% over last year
2. The Number of Listings are not quite double than this time last year
3. The Number of Sales is tracking along "normal" lines, but are about 300 less than last year on average
4. Average Sale prices took a small hit early this year, but are higher than they have been in the last 5 years
5. Average Number of Days on the Market is currently 83 - Higher than last year, but lower than the 5 years previous to that.

If there is a single explanation to this set of facts, it would be "we are headed towards a normal market", but that answer is a little too simple.

There are lots of social issues being brought out in the market today, along with several big impacts on the financial side of things.

Socially, we are seeing people staying out of the market until they are older.  Many College and University graduates are not finding the high paying jobs that they anticipated, and they are leaving school with an already large financial burden and don't want to add to it by financing a house.  They would rather live with their parents a little longer to get their financial situation stabilized.

Financially, people seem to still be holding their breath to see what is happening next.  They believe (maybe rightly so) that they need to see some solidity and growth in the economy before making any large changes.  They have the feeling that there could be a big negative shift in the economy, even though they can't pinpoint where that shift may occur.

Leave a comment - let me know what you think!


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman