Gilbert Real Estate Blog
~ by Randy Hooker of Dreamcatcher Realty
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Actual Photos seen in Gilbert Real Estate Listings that make you say, “What the…”
I’ve been way too serious in my recent posts, so I thought you might enjoy seeing a couple of impressive photos that I saw this week in the Arizona Regional MLS.
I’m still amazed at how many listing/seller’s agents restrict botch the quantity and quality of pics on their listings, but some of them are downright hilarious.
I’ll protect the identity of the houses, listing agents and brokers, but if your agent ever uploads photos like these to the listing for your home, you might want to have a serious discussion with him/her about Marketing 101 and the hiring of a professional photographer.
Now, ladies and gentlemen, boys and girls, I present to you my two favorite marketing beauties photos from this week:
Ummm... why bother cleaning... the prospective buyer can dig thru my crap to find the counters... right??
What every man (and woman) wants to find in his next home. Just makes you feel all warm and fuzzy, doesn't it??
If any of you run across any others that you find as deliciously tasty, I would LOVE to see them!
What do you mean you won’t show me houses unless I have Mortgage Loan Pre-Qualification?!?!
Before I dive headlong into a subject that all too few Gilbert real estate agents and home buyers avoid like the plague, let me tell you a quick story.
6 months ago, an out-of-state client asked me to take some extra photos of a dozen or so high end ($750K – $1.5M) homes in various parts of the greater Phoenix area. The client assured me he would be paying cash for a second home, and that I shouldn’t worry about a POF (Proof of Cash Funds).
I tend to take people at face value, so I took my client at his word and met his requests. The project resulted in my taking pictures of some very nice properties, but they were scattered from Cave Creek to Queen Creek and included a couple of very nice Gilbert foreclosure real estate houses.
I spent no less than 14 hours on the project, took over 500 photos, and drove over 300 miles. I uploaded all the pics to him via Dropbox, and encouraged him to have fun.
A few days lapsed, and I hadn’t heard a word from my client. After emailing and calling him a couple of times, he finally confessed to me that his ‘CASH’ had actually been coming from a second mortgage loan (HELOC) on his primary residence. Unfortunately, after 3 long, hard weeks of trying to negotiate the loan, he had just been formally and officially declined by the underwriter. As remorseful as he was for having wasted my time, he would not be able to move forward with the home search. The feeling for me was quite similar to taking a direct kick to the solar plexus.
I really wish I could tell you this was the first time I’ve experienced something like this, but alas, it’s not. I’ve lost count of the times home buyers have told me they had plenty of cash reserves, only to ultimately find out days, weeks or months later that they couldn’t live up to their representations and expectations.
I tell you all of this not to whine or complain – but to hopefully help you understand one of the reasons a POF or Pre-Qualification Form has become an upfront requirement for so many professional real estate agents and brokers in the Gilbert real estate market. I fully believe that home buyers have the very best of intentions, but in keeping their real estate agent/broker in the dark, ultimately end up in a very costly and time-wasting situation. My personal and professional feeling is that a POF or Pre-Qual Form should be required by every real estate agent and broker from every new client prior to viewing homes with them.
Now let’s fast forward to current times. Just last week, yet another new client asked me to take them at their word that they are solid people with excellent credit, low debts, plenty of assets and substantial income. All they wanted to do was fly in to Phoenix Sky Harbor Airport and have me show them homes throughout the Valley of the Sun – for two days, maybe three. IF they like the Phoenix area and IF they find a home they love, they’ll go back home and secure a mortgage loan Pre-Qual Form.
Here’s how I responded:
“In a sense of fairness, professionalism and good faith, can we meet in the middle? I’ll gladly show you as many homes as you like. All I ask in return is that you send me an advance copy of your POF or Pre-Qual Form. Does that seem fair??”
Now I ask you, my friends … Is that a fair and equitable arrangement between a Buyer’s Agent and a client? Seriously, what do you think?
What does a POF or Pre-Qual Form do for a Buyer’s Agent? It provides the agent with evidence that the Buyer can indeed finance a home purchase, and lets him/her move forward with great confidence that when the ‘right’ home is located, their buyer client will indeed be able to write the offer, secure a contract and otherwise complete the purchase.
Are there any advantages to a buyer in obtaining a Pre-Qual Form in advance of touring homes? You better believe it! Here are a few of the benefits and values, in no particular order:
- Provides bona fide confirmation of the maximum buying power and price range of the buyer to both buyer and Buyer’s Agent.
- Provides confidence in viewing homes, knowing when the ‘right one’ comes along, the buyer can move quickly to purchase it.
- Puts a lot of the loan processing headaches behind the buyer, thus making the escrow and closing process much less stressed.
- Provides the seller with solid assurance that the Buyer can indeed perform.
- Provides everybody peace of mind that the money/financing is in place – so all we need to do is find the right home.
I’m fully aware that this is a very touchy issue with many home buyers and buyer’s agents. My hope is that I’ve presented a fair and impartial perspective from both sides, but I’m always open to other perspectives, ideas and suggestions.
What say ye, good people?
Arizona’s 2011 AAR Mortgage Loan Pre-Qualification Form
If you run across any claims that the mortgage lending industry has in the past few years been (and still is) in a state of turmoil, I would heartily recommend you listen to them. There’s no doubt that tremendous changes have taken place, most of them federally mandated, but in this post I’ll try to avoid discussing the relative merits pitfalls of the new restrictions and guidelines.
The purpose of this post is to update you on a previous post of mine from November of 2010 in which I defined the then-current mortgage loan pre-approval process in Arizona. The new (effective February 28, 2011) terminology and form(s) have been released, so let the games begin!
Replacing the former Loan Status Report (LSR) is the Pre-Qualification Form. The purpose of the new form, according to the Arizona Association of REALTORS®, is
“to provide information on the buyer’s ability to qualify for a loan without a Good Faith Estimate (GFE)”
Say what?!?! A GFE is a document issued to a home buyer by a lender that details the fees and costs associated with their mortgage loan, monthly payment, interest rate, etc. But it’s also a document that is typically considered confidential between the lender and the home buyer. The new Pre-Qualification Form requires the lender to furnish a LOT of additional information about the buyer, type of loan, amount of loan, interest rate, etc., and thus can provide a great way of evidencing to a seller that the buyer is indeed pre-qualified for the mortgage loan.
The proper use of the Pre-Qualification Form is that it should be attached to a 2011 AAR Residential Real Estate Resale Purchase Contract whenever a home buyer submits an offer on a residential property. Here are a few highlights of the new form:
- The form is NOT property specific, meaning it can be issued without naming any certain property address.
- The form is to be completed and signed by the mortgage lender (loan officer), including their Arizona License number and NMLS number.
- The form is to disclose the marital status of the buyer(s), primarily because Arizona is a community property state and marital status can create contract issues and title requirements.
- The form is to disclose the property type, since different types require different loan programs, criteria and documentation. A good example would be the difference between a loan for a single family detached house and a loan for a mobile home – the differences between the two loan programs are HUGE.
- The form is to disclose the maximum total monthly housing payment, loan amount and interest rate for which the buyer is pre-qualified.
- The form is to include an expiration, which is typically when the buyer’s credit report expires.
- The form is to be signed by the home buyer(s), which is basically granting permission for the buyer’s broker to submit the form with the offer/contract. It also authorizes and instructs the lender to issue a Loan Status Update (LSU) to the seller and broker(s) within 5 calendar days of contract acceptance.
As I stated in my post in November 2010, my biggest beef with the Pre-Qualification Form is the form title itself, not the content. That may seem petty to some of you, but for as many years as I can remember, the term ‘pre-qualification’ has always implied a quick, easy, over-the-phone activity with no application or documentation from the buyer. But make no bones about it - this new Pre-Qualification Form requests and requires substantial documentation and commitment from the buyer and lender, and in my estimation is a giant leap forward in the world of residential Gilbert real estate and mortgage lending.
Of course, I’m always open to comments, supportive or dissenting.
What say ye, my friends?What does AS-IS mean?
With so many bank owned (foreclosure) and short sale properties for sale in Gilbert, Arizona these days, I get this question quite often: “What does AS-IS mean?” The AS-IS terminology is showing up in a lot of MLS listings, and the true meaning of AS-IS continues to be a mystery to many home buyers – and apparently to many real estate agents as well.
In my almost 14 years in this business, I’ve never seen a bank owned listing where the seller would NOT insist on selling the home in AS-IS condition, and their addenda are always loaded with AS-IS language to which the buyer must agree. They declare upfront that the seller will NOT preform any repairs on the property, no matter how major or minor. They also state unequivocally that the buyer will receive absolutely NO disclosures about the property – even if the seller happens to know things.
And then there are the listings that test the very fabric of sanity: Short Sales. It’s become common practice for short sale homeowners/sellers to refuse to perform any repairs on the property, irregardless of the severity. The logic seems to be that if the homeowner/seller is truly in a hardship situation with their lender(s), then how could they possibly afford to make repairs (however reasonable) for the buyer?! So while navigating through Gilbert foreclosed real estate can be a bit tricky and challenging, it pales in comparison to the insanity of short sales.
For those of you that know me well, it will come as no surprise that I can’t write this post without editorializing a bit. But first let’s touch on the meaning of AS-IS. In basic terms, AS-IS means the property is being sold in its existing condition, or as I like say, “What you see or don’t see – is what you get.“ It also means the seller is unable or unwilling to do any repairs on the property, even if we say “Pretty please.“ And to paraphrase the standard Arizona Association of REALTORS® AS-IS Addendum, it also means the seller makes no warranties concerning the condition, zoning or fitness of the property.
For my mini-rant, I’ll say that I know for a fact there have been certain pre-existing property conditions and repairs that were known of and/or done by an asset manager and/or contractor on a bank owned home that could have been and should have been disclosed to the buyer. That doesn’t seem to matter to them, though, so once again we buyer’s agents are left with waiving the ‘Caveat Emptor‘ a/k/a ‘Buyer Beware‘ caution flag. How and why banks are allowed to get away with selling foreclosed properties without having to disclose ALL known facts is still beyond me.
As for short sale properties, there’s absolutely no reason the homeowner/seller cannot deliver a Seller’s Property Disclosure Statement (SPDS) to a buyer. It just makes no sense whatsoever that certain listing agents try to exclude seller disclosures under the guise of AS-IS, and yet I see it all the time.
Word to the wise — it is HIGHLY recommended by the real estate industry as a whole, including yours truly, that every home buyer hires a reputable, licensed home inspector to perform a professional home inspection on the property. Even though you might have signed an AS-IS Addendum, hopefully your buyer’s agent made sure you didn’t sign off your rights to perform inspections. Typically, there is a limited time in which to do your inspections (Inspection Period), but what prevails is what’s in writing. It’s absolutely imperative to do a home inspection as well as a termite inspection. Standard AAR Purchase Contract language gives the buyer an opportunity to cancel the contract and receive a refund of earnest money if anything big, bad or ugly is discovered during the Inspection Period. Please do NOT construe anything in this post as being legal advice, as each contract and addendum is unique to each seller and buyer. If you have doubts, consult with your real estate agent and/or attorney.
I’ll wrap up by telling you that just because a home buyer signs an AS-IS Addendum on a bank owned property, it doesn’t necessarily mean they have no other options. We’ve now negotiated several exceptions to sellers’ AS-IS policies and addenda.
One of my favorite examples is a home that had three (3) covered patios/balconies that on the report of an outstanding home inspector, had little to no life expectancy. The estimated cost of repair/replacement of the patio covers was somewhere in the $15,000 range – much more than the buyer was prepared to suffer. In spite of the AS-IS Addendum, we submitted the inspection report to the listing agent, along with a formal request that the seller repair or replace the patio covers. Guess what –> the seller agreed, and 3 days later all 3 patio covers had been professionally rebuilt, and the transaction closed on schedule. What do you know – a win/win for both parties!
The moral of this story is that in spite of all the attempts by sellers to avoid any responsibility for any property condition(s), AS-IS is not necessarily set in concrete. If you as a home buyer are ever faced with a seemingly frustrating and bitter situation, be sure to have your buyer’s agent at least ask! After all, at that point what do you have to lose?
How can the price of this Short Sale house be so cheap?
Here’s the latest question to hit my ‘Ask the Broker’ Inbox, and to be honest, similar inquiries are posed to me several times a month.
“I saw a house I like. The price is $100,000 less than the other houses for sale in the same neighborhood. How can the price be that much cheaper?“
Without even looking up the listing in the Arizona Regional MLS, I would bet $100,000 that I already know the answer. Would you like to venture a guess before I tell you???
Now how exactly does that Jeopardy jingle go? Da Da, Da Da, Da Da Da… Dot, Da Da Da Da Da. Da.. Da… Was that close?
Does the term Short Sale ring a bell? Or what about the difference between a Short Sale and a Foreclosure? Okay… I’ll quit playing around and get down to business.
The listing my client asked about is a Short Sale that has an asking price of at least $100,000 below the nearest comps in the neighborhood. And given the mindset of most folks looking for a deal/steal in this Gilbert Real Estate market, who wouldn’t be attracted by this price?
So what’s the catch?? => On any given Short Sale listing, the asking price is what’s called a “phantom” price. The seller and a buyer can agree to the price, and even sign a contract at that price, but unless and until the seller’s lender(s) agree and approve of that price, the contract will NOT be honored and the purchase will NOT happen. End of story.
How is the asking price of a Short Sale listing determined? It’s determined solely by and between the homeowner and their listing agent.
Doesn’t the asking price have to be reasonable? Or doesn’t it have to at least be based on recent comps (comparable sales)? Nope!
What are the chances of the lender(s) being willing to accept a payoff amount that is substantially below current market value? Slim to none! Lenders have proven over and over again, by their behavior — that they would prefer to foreclose!
So now that I’ve dispelled the nefarious truth about Short Sale asking prices, or at least cast reasonable doubts about their efficacy and integrity, where does that leave the serious home buyer or investor? => With your eyes wide open! The next time you encounter a listing that seems too good to be true, trust your instincts and know that it IS most likely too good to be true. And when in doubt, consult with a Buyer’s Agent you know and trust, and that speaks the truth from her/his heart and experience.
What’s the difference between a Short Sale, a Bank Owned Home and a Traditional Listing?
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If ever there was a more confusing real estate question than the title of this blog post, I can’t remember it. Here’s my attempt at demystifying the three categories of properties that comprise the residential Gilbert Real Estate resale market in Gilbert, Arizona (and the greater Phoenix area for that matter).
A Short Sale property listing is one in which the homeowner owes more in mortgage loan(s) than the property’s current market value – commonly referred to as being ‘upside down‘ or ‘underwater‘. If the homeowner/seller finds a buyer that is willing to contract to purchase the home, then the homeowner’s lender(s) must be willing to accept LESS than full payoff on their loan(s). Being ‘short’ of payoff is where the term Short Sale originated. [Please note that a Short Sale is anything but short in processing time, as the vast majority of successful or unsuccessful Short Sale transactions take 6-18 months just to find out whether or not the homeowner's lender(s) are willing to play ball and approve the Short Sale.]
A Bank Owned property listing is one in which the former homeowner’s lender has already foreclosed and is now the legal owner of the property. With such listings, an asset manager has been assigned to negotiate the sale of the property, and compared to Short Sales, response times to an offer may be expected by a home buyer or buyer’s agent considerably sooner than with a Short Sale. (NOTE: The terms Foreclosure, Lender Owned and REO all mean the same thing.)
A Traditional Listing is one in which the current homeowner is neither upside down nor in a distressed situation. That can mean it’s owned by a classic homeowner, or it can mean the property is owned by an investor who purchased the property at a Trustee’s Sale (foreclosure), fixed it up and is now re-selling (flipping) it. Either way, the response time to a prospective buyer’s offer is typically quicker than Bank Owned listings.
I can already hear a few of you saying, “SO WHAT?!?! A house is a house, so what difference does it make what ‘type’ of property or listing it is!!” Here’s what –> If you’re a nonchalant investor who loves the thrill of gambling and has no worries about time or energy invested, then Short Sales should definitely be your game of choice. But if you’re a serious investor or home buyer who wants a modicum of predictability, respectability, control and sanity involved with your next purchase, then choose wisely – Bank Owned properties and Traditional Listings may very well hold the opportunities you’re seeking.
Exceptionally Low Interest Rates for an Extended Period Of Time?
Yesterday the Fed announced that they would like to see ”exceptionally low interest rates for an extended period of time.” They have committed to purchasing long term securities that directly impact mortgage interest rates. Experts see a need to help our economy recover and low interest rates are one tool in the Fed shed for promoting economic activity.
The last time the Fed did this was in early 2009, right around the time interest rates for long term mortgages went into free-fall! Rates dropped because the Fed’s purchasing presence spiked both the demand and price of mortgage bonds which directly lowers mortgage rates.
This latest development will likely provide reinforced support for what are already historically low mortgage rates. It may even provide enough pressure to push rates a bit lower. I don’t expect the dramatic decrease we saw when the Fed initiated this type of buying in early 2009. Overall, I do expect our interest rate market to flirt with historically low levels for some time.
Stay tuned, as I am sure there is more to come.
