BloodhoundBlog

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Author: Allen Butler (page 1 of 2)

Realtor, Audio Engineer

June 14, 2008

Short Sale Trouble: How To Avoid It!

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Realtor, Audio Engineer

Author website

So,

As the short sales go rumbling along in our various real estate markets, a question has arisen, and the answers are varied and contradictory. The question is: how do I, as the listing agent, handle a multiple offer situation on a short sale?

Make no mistake, however you decide to handle it, people are going to be upset. It’s just like any multiple offer situation. There are winners, and losers. There are essentially two views of how to handle this scenario with short sales. We’ll assume for the sake of clarity, that these multiple offers come in, not all at once, but successively, over a period of a few weeks. If they all come in at once, it’s a no-brainer. Your seller chooses the highest and best offer, with the most likelihood of passing lender scrutiny. However, even if a bunch of offers come in, and you pick the best one, another one is probably going to come in after this initial flurry, and what are you going to do with that one? Suppose it’s higher than the highest and best you have in hand?

 One group of agents will simply take the next offer that comes in, and submit it to the lender also. If any offers come in, each offer is simply passed along for the lender for consideration. Some agents will not even take the highest and best of the bunch of initial offers; they’ll just submit them all. As justification, they say that they are “serving the interests of their client”.

I personally believe that not only is this operating unethically, I also believe it is damaging to the interests of your selling client. Let me explain:

First, when your seller and a buyer sign a contract for purchase, it is LEGALLY BINDING. Just because there is a caviat that indicates the contract is subject to the ultimate purview of the lender does not make it any less valid as a contract. Remember in real estate school when your professors talked about “VOID vs VOIDABLE?” This contract, because it is subject to lender approval is voidable. And, it is not VOID Read more

May 5, 2008

Arizona Short Sales: Who Are You Working For?

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Realtor, Audio Engineer

Author website

I, like some of you, have just received the AAR’s May newsletter, in which Christopher A. Combs, AAR’s “legal hotline” counsel, provides a legal treatise on a contractual issue regarding short sales in Arizona.  I direct your attention to Exhibit A (page 11, dab-smack in the middle of the page). 

In this article, Mr. Combs Esq. indicates that a “short seller” can accept as many offers as they can possibly get for their home, but that only the first one is “active,” will all subsequent offers being in a “back-up” position. 

Now, to me, what this means is that the first offer I get is the “active offer,” and only that offer can be sent to the lender. Any subsequent offers will be on hold, unless, and until, something goes wrong with the first offer.  If the buyer flakes out, or the lender rejects the first offer, we then send them our “next in line,” and hope for the best.

The way I see it, this is a clear breach of my fiduciary duty to my client. My duty is to sell the client’s property. Now, because of the nature of a short sale, my client, in fact, has very little to do with the process. He could care less how much I sell his property for, as he really has no control over whether it sells or not. Is it not in the best interest of my client to “accept” any and all offers, as they come in, and submit them to the lender, and let the lender decide which one, if any, they will accept?  By dragging out the process of “oh. . .you don’t like that one? Let me send you this one. . .,” am I not doing even more damage to my client’s credit? Am I not to act in a timely manner, and get the most money for my client’s property as I can, so that we have a greater chance of getting the deal done?

This nonsense from the legal hotline seems to hamstring me while trying to perform my fiduciary duty to my client. The only remedy I can see Read more

April 16, 2008

Making A Case For Blundering Nincompoopery

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Realtor, Audio Engineer

Author website

Did I spell that right? Hope so. . .

So anyway, I’m back with more “tales from the dark side.” I am going to continue on my  Saga, while throwing Papa John’s Pizza into the mix. Let me just state flat out, in as clear a way as I know how, that CountryWide’s loss mitigation department is the most incompetent group of blundering nincompoops that I have ever seen.

Case #1: I have a certain short sale that Countrywide has had in their possession since February 19th. Two loss mitigators later, and they just ordered the appraisal yesterday.

Case #2: On another active file, newly minted, fresh outta loss mitigation school comes Paul Romero (the name has NOT been changed, so as to shame the guilty) . Now Paul, bless his little heart, indicates that he’s gonna “send the file to the investor” to get their response. Uh. . .Paul? Countrywide owns the loan.  He calls me back two days later to indicate that he was wrong. Problem? He’s suddenly discovered that there is PMI on the loan, and he’s “sending the file to them immediately.” That’s great Paul, but their is no PMI on this loan. He argues with me for awhile and says he’s gonna send it to the PMI company to get their response. In the meanwhile, I’m off to demonstrate conclusively that there IS NO PMI on this loan. Within about 3 hours, I have written confirmation that there is indeed NO PMI on this loan. Fast forward 24 hrs. Here’s Paul on the phone again: “Uh. . .the PMI company has denied the short sale. They think the property is worth more than the offer you have given them”. Ok. Paul, let me explain this to you again, real slow. . .: There is no pmi on this loan. He proceeds to tell me that he’s sorry, but the short has been denied. Okay Paul. Give me the policy number, inception date, & contact information for the person handling the case at the PMI company. “Uh. . .I don’t have that information.” Well then how did you send them our offer? Read more

April 12, 2008

Preview the New “FLEXMLS” System Coming to Arizona in July 2008

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Realtor, Audio Engineer

Author website

Just got an email today with this link to a small tutorial of some of the new features and layout of the new MLS system coming to Arizona’s ARMLS system. The new features are absolutely exciting to me, as they appear to be a whole world better than the one we use now. Check out the new system here:

Arizona’s New MLS System (Coming in July)

Special thanks to Bob Bemis, CEO of ARMLS, for sending me the link.

April 4, 2008

Countrywide Loss Mitigation–A Lesson In Ineptitude.

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Realtor, Audio Engineer

Author website

I have written in the past about the hassles and pitfalls of dealing with lenders for possible short sale workouts. While I must admit that the whole process, regardless of the lender, can be “painful,” Countrywide is the epitome of ineptitude. I am here today to inform you, and warn you, my fellow agents, that if you are involved in the process of a short sale, and Countrywide is involved, please, PLEASE, run in the other direction. Let them have the property back through foreclosure. They’ll loose LOTS of money this way, and in my professional, experienced, and reasonable opinion, they deserve it.

I could vent my spleen for the next several paragraphs concerning the bumbling incompetence of this institution, and really just scratch the surface.

However, I do actually have some good news for those of you who happen to be in the unfortunate position of having to deal with Countrywide. I believe I have found the chink in their collective armour. Stick with me for a moment, as I recount the typical timeline for loss mitigation with Countrywide.

1. Get authorized to speak with them concerning your client’s situation. (48 hrs for acknowledgement).

2. Fax in a short sale package (72 hrs for acknowledgement).

3. A loss mitigator will be assigned to the case (within 7-10 days)

4. A loss mitigator is assigned ( and will review your case for 30-45 days)

Now, unless my math is wrong, this is A VERY LONG TIME!

SO, I have a few tips and tricks that will help those of you in this very difficult position to possibly expedite the process.

1.) Use a very thorough short sale package. Many agents simply send in a contract, (and a net sheet it they feel like it).  Later on, when the lender finds out they don’t have everything needed to complete the package, the inexperienced agent will then scramble to find the requested documents and forward them a little at a time. My short sale package is just over 100 pages long, and includes everthing the negotiator could possibly need, and a few things they don’t need, but creates the burning desire to get Read more

March 28, 2008

Arizona Short Sales Not For The Faint of Heart

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Realtor, Audio Engineer

Author website

 

I’ve commented before about short sales on this blog, but not to much extent, and I haven’t seen many of the other contributers do it either. I wonder why? Does everyone abhor them? Are they afraid of them?

I have taken a lot of advice around here, and one of the best pieces of advise I have gleened is to write about something that interests me, and build a long tail. Well, the long tail has actually been working. I have written on my home blog about The Ins & Outs of Arizona Short Sales,  and lo and behold, people started coming out of the woodwork. And I don’t mean a few. Let us just say it’s been a fabulous return on investment.

I have agents calling me from around the country asking for short sale help. I have homeowners calling me (from around the country, no less) about the possibility of doing a short sale on their home. I refer them out. (Incidentally, if you are from some other state than AZ, and you are familiar with short sales, send your contact information to me, I may have clients for you.)

I would like to first give a shout out to the new Barry. His Real Estate Radio USA  has been very cool and helpful for me professionally, and is entertaining to boot.

When I say that short sales are not for the faint of heart, I mean that in two distinct ways: for realtors, and for sellers.

 

Realtors are running up against brick walls with “The Gate Keepers.” That’s what I call the people who protect the actual “loss mitigators” like the Swiss Guard protects the Pope. Loss mitigators are behind bullet-proof glass, tucked away somewhere in a bunker under the Potomac river, without email, without phone lines, without fax machines; they are completely incommunicado. They send messages between the bunker and the outside world by carrier pigeon. The particular brand of pigeon they use is not one of the kind where you separate it from its home turf by a thousand miles, thow it up in the air, where it circles a few times and Read more

March 8, 2008

A Deficiency Judgement? In Arizona? Not Likely.

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Realtor, Audio Engineer

Author website

Hello again!

Have clients asking you about short sales? I know I certainly do! In fact, it’s become a big part of my business. In fact, I am conducting short sale negotiations for 3 different REALTORS, as well as 5 different clients. Unfortunately, a lot of questions have arisen lately about Arizona’s Deficiency Statutes regarding foreclosure. I say “unfortunately” because I feel somewhat less than qualified to definitively answer these questions. Greater legal minds than mine (and mine is decidedly NOT legal) will be required to put the issue to rest. I will, in spite of the danger of blatantly misrepresenting the facts, case law, and statutes, attempt to answer one (NON-) simple question:

“If I do a short sale, or my property is taken from me by foreclosure, can the bank ‘come after me’ for the difference between what the property eventually sells for, and what I owe them, including sale costs, legal fees, etc?”

First, let me point the reader in the general direction of actual legal minds on this issue. Here is a rather esoteric treatise on the subject of getting sued for a deficiency judgement. Very good read, and fairly definitive on the issue.

Here is another article, that is more user-friendly on the same subject. Now, because I have a public education, and am somewhat literate, I will attempt to provide a synopsis of the above:

In Arizona, there are two types of “notes” given for real property: a “Deed of Trust” or a “Mortgage”. Despite the common parlance of the term “mortgage,” most people in most states do not actually have Mortgages. They have Deeds of Trust. I won’t go into the differences here, but suffice to say that a Deed of Trust has three parties to the agreement, and an actual Mortgage has only two. Actual mortgages are very uncommon in most states.

Now, the remedy of a lender for a home in default depends on what type of note was used to secure the property. If there is a true mortgage in place, the lender must sue in civil court in a process known as “judicial foreclosure.” The particulars of a Read more

February 23, 2008

Allow Me To Divert Your Attention For A Moment. . .

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Realtor, Audio Engineer

Author website

SO. What an entirely eventful week. When I’m done here, you may be shaking your head in disbelief, but YOU JUST CAN’T MAKE THIS STUFF UP. Every single thing contained herein is the truth, and all of it has occurred within the last 7 days.

First, on a routine visit to the doctor’s office with my oldest son Hayden, I am informed by the physician that he has a very irregular heartbeat, and needs to be transported to Phoenix Children’s Hospital by ambulance, immediately, for more thorough testing. Of course, there’s an 8 hr line at the hospital for the paediatric cardiologist.  Both of my sons are my absolute LIFE. You can imagine. . .
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I’m happy to report that 48 excruciating life-times (hours) after that, my wife and I were informed that my son is fine. An exuberant new doctor made an overly cautious judgement call on a sinus arythmia (A common and harmless irregular heart-beat  caused by. . .breathing; it is especially common in children between the ages of 3 and 6).  Wow. That sucked. Try to settle in for some seriously needed “do-over sleep”.

Second, my cat Jasper, whom my wife and I picked up from the Humane Society in early January of 1990 passed away. This cat was 18 years old. He had been with my wife and I since just a few weeks after we began dating.  I’d never had a cat like this one in my life. He was the most mellow, laid-back, snuggly cat I’ve ever has the pleasure of loving. Here’s me and him a month or so after we got him.  (Don’t laugh at me. I was 18, and I’m fairly certain I was stoned.)
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Eighteen years later, here we both are, much older and wiser. (This picture was taken about 4 hours before he breathed his last in my arms.)
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About mid-morning today, as I’m burying my cat in the sunny spot under his favorite tree, my mother calls to tell me that my sister, who is 31 years old, and pregnant, has suffered internal bleeding from a tubal pregnancy. The baby is gone, and my sister comes close Read more

February 20, 2008

Is There Actually A Sky Up There Anymore?

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Realtor, Audio Engineer

Author website

I listen to misery and woe almost daily. There are plenty of Chicken Littles out there reporting that the sky is falling. And it is! There’s no doubt that the real estate market is in the tank in many places in the country. It certainly is in my neck of the woods. The question needs to be not, “Why is the sky falling?” or “Is the sky actually going to touch the ground?” or even “Is there a sky any more?” but “What do I do with this new reality?”

In my market, equity is a very rare thing. The area that I service primarily is a relatively new area of metro-Phoenix. So new, in fact, that there are very few people who have any equity left. Unfortunately, many of them are throwing up their collective hands, and thinking something like this:

“My house in not worth anywhere near what I paid for it. It will not be worth what I paid for it for a very long time.  There are tremendous houses out there that are much better, much bigger, and more upgraded than mine, that are offered for sale for way, way less than I owe on my house.  Let’s see. . .I’m paying $2500 per month on my mortgage. The market is glutted with rental properties that are better than mine, and I can rent them for about $1,000 per month. Think of the money I’ll save! It makes financial sense for me to kick my house to the curb, go rent a better one for half-price, let the market continue to go into the tank, then buy a better one a few years down the road. What will I lose? My credit? Credit comes back. My mortgage interest deduction? Pah. . .a measly sum compaired to what I’ll save each month on payments. Sounds like a plan to me. . .”

An unethical plan? Sure, but one that is ultimately appealing. Who said unethical was synonymous with unappealing? This is just the people who are manufacturing a crisis to get out of an unfavorable position. There are plenty who are facing a real Read more

February 7, 2008

Choosing A Brokerage

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Realtor, Audio Engineer

Author website

Let me state first and categorically that I am not leaving my brokerage. I actually have been having a protracted dicussion with a colleague about choosing a brokerage. He’s new to town (Arizona) and is looking for a brokerage. Now, I have a different perspective than a new agent might have, and certainly different than a “mega-agent” might have.

For a new agent, I would assume that a person would want a brokerage that has excellent training to help launch a career. If I were new, I would want lots of help. I might like lots of classes, great mentors, lots of broker contact and communication, and possibly lots of “added stuff” like free printing, brochures, business cards, and the like. Of course, I would assume that a brokerage that has all of these extras will charge a higher commission split. I would expect to give them 20 – 30% of my money for these “helps.”

However, if I were an experienced agent, I might like to have a brokerage where I have low fees, very little interference, and a broker that I like/respect. As an experienced agent, I don’t need training, free stuff, and lots of oversight. I just need a place to hang my license so I can get to producing.

Here’s a specific scenario that my friend and I discussed the other day. He was talking to a well known firm that is very large and growing. They have a tremendous “company culture,” lots of education/support, and “profit sharing.” (You can probably guess. . .) Now, for all of these perks, the brokerage will take 30% of the agent’s earnings until a certain dollar amount is collected, then the agent will go to 100%. What is the dollar amount? $18,000 per year. So, after he makes the company 18k, the rest of the money is his, with low monthly/transaction fees.

So, my question is, “Will all of these perks raise your productivity?” Will you earn enough “extra” to justify the expense of belonging to said firm?

What say you all?

January 18, 2008

So I’m The Bad Guy, Huh?

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Realtor, Audio Engineer

Author website

This particular scenario has been played out four times in the last few months, and I’m tired of the liberal application of chap-stick to my ass. It goes something like this:

 I take my overly qualified clients out on the town to look at homes. We find one they really like. It has everything they want: acre lot, built in 1969 but completely remodeled, close to town, great pool, a guest house out back for aging parents, the works.  So far, so good.

Once my clients find this fabulous house, my real work begins: protect my client’s interests. You know, do a little research on market conditions, comparable properties, the recoupable costs of remodeling, all while keeping an eye on where the market is headed. Now, it would be easy for me to seriously lowball my offer in order to protect my client from market depreciation, but I don’t actually think that’s a fair thing to do. There is inherent risk in any real estate transaction, and it needs to be spread fairly evenly in order to work. My job is to carefully balance the risk so that my clients have as little as possible. The balancing act is in shifting more risk to the seller’s plate than they might have been prepared to eat. But, if I slide over a heaping helping of steaming risk onto the seller, I have doomed and relagated the negotiation to the realm of “principle.” Arguing on principle is not an effective strategy, ever.

Consider this recent example. A certain home had been purchased in 2005 at a price of $450,000. It was in various states of disrepair and an overall delapidated condition, so the sellers decided to put $100,000 worth of (very nice) upgrades into the home.  It appears that the slab and walls are 1969, everything else (and I truly do mean everything) was 2006.  Once the home was completed in mid-2006, it was placed on the market for $669,000. By the time my clients became interested in the home, is was priced at $515,000. The sellers had been steadily dropping the price over the period of Read more

November 9, 2007

How Stupid Would This Be?

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Realtor, Audio Engineer

Author website

I came to the conclusion (in about 1990) that text based communication was destroying the intricacies, nuances, and intimacy of verbal communication.  There are non-verbal cues that lend a richness and meaning to verbal communication that cannot be achieved with emails, text messages, instant messaging, and most pertinently, blogging. I do not mean to belabor the virtues of oratory or rhetorical skill, but perhaps I should. Because we have many gifted writers here on Bloodhound Blog, our writing skills enable us to infuse our text with meaning and richness, humor, pith, sarcasm, and emotion. The use of visual images in the form of emoticons and jpg images has helped to facilitate some of the lost intricacies of speech. Is this enough? Maybe, but I think we could do better. Now on to the potentially stupid part.

Imagine that I have something that I want to say (verbally) on Bloodhound. I open up the link, I click a button that says “Post,” a window opens up, and the beautiful botton says, “Click Here When Your Camera is Ready.” So, I straighten my tie and hair, make sure my portliness is portrayed from just the right angle, and launch. . .my webcam. So there I am, in all my humanity, sitting in front of the camera, saying what I want to say. Now, if and when someone wants to comment on my blog post, they do the same thing. Click the link, and start recording their response. Oh the richness! The humanity! Now, I realize that there would need to be a few advances in technology to facilitate this, and perhaps some ungodly amount of bandwidth potential, but think of the coolness! One of the things that really fills me with trepidation and hope is actually meeting the people who write here. I have met a handfull personally, and I must say that this opens up a whole new dimension to my reality. It really lets me know a lot more about these people. Some things I would like to know, for example:

Is Kris really that pretty, or is that a high school photo?

Does our Read more

October 31, 2007

Really, an Open House.

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Realtor, Audio Engineer

Author website

First, let me say that I normally DO NOT DO OPEN HOUSES!  I generally think them to be a colossal waste of time for everybody involved. The neighbors come snooping, tire kicking strangers are tromping through a pricey home, and for what? Decorating ideas? Casing the joint? Checking list prices? I anticipate strangled cries of “BLASPHEMY” from the peanut gallery, but really, what are the stats? There have been lots of ideas bantered about concerning the efficacy of the open house, but I like the one that goes like this:

     “Less than 1% of homes are sold at an open house.”

If I had any real credibility, I suppose that I’d provide a citation for that, but alas, I have none (er. . .citation, that is).

 

 BUTT–I mean “BUT,” and that’s a big “BUT,” sometimes, extra-ordinary circumstances call for extraordinary measures, and there is a 1% chance, right?

 

For example, I have a listing on the market right now in Tramonto that is what I would call “ideally situated” for an open house:  great traffic, premier location, smoking bargain, sits on the highest point of the mountain overlooking the valley, and in this market, every little bit helps. SO, I have determined that I will indeed do an open house, this very weekend. I have been planning it for a few weeks. 

Now, because I am an “over-the-top” type of person (and I am obsessive compulsive), I decided to go all out.  There are flyers blanketing the area shopping centers, restaurants, and cultural centers. There are postcards, to the tune of about 1000 going out to adjacent areas that may have “move-up buyers.” There are html blasts going out to about 600 people in my buyer and lead database. There are signs, balloons, food, drinks, door-prizes, the works.

Now, will this work? Perhaps. We’ll see. Maybe my faith in buyers will be restored. Maybe I will be firmly convinced that I should never do THAT again. Who knows.  It does make me look like a good agent, I guess.  If any of you all are in the area, you should stop by and say “hello.” Who knows, you Read more

October 17, 2007

The Magic of Numbers

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Realtor, Audio Engineer

Author website

    

A combination of magic and the truth seems to be where it’s it. In regards to the selling of homes, in this current market, agents are willing to try anything; witchcraft, voodoo, incantations, an appeal to Jesus Christ, and aside from these, more orthodox approaches, including bribery, trickery, flattery, and simple marketing. Having tried some of these methods (of which my conscience would dictate), I have discovered that Russell and Greg are right. In this market, price matters most.

I had begun to view myself as one of those scantily clad women at boxing matches parading with a placard. Instead of “ROUND 2,” my placard read, “A STEAL AT ONLY $739,000!!” Generally speaking, these women are afforded a certain measure of respect, even if only for their outward attributes. I, on the other hand, was being pelted with rotten eggs and tomatoes. This was evident because my “steal” was in fact, not a steal, and at the worst of times, my glorious placard was entirely ignored.

So began the quest for Truth. Having searched diligently, I discovered what others before me had discovered: price will sell anything. An old Floyd Wickman adage goes something like this:

“I can’t sell this house. Nobody will look at it!”

“The price is too high.”

“No, it can’t be that. I comp’d the property every which way. It is priced right.”

“Are people going to see it?”

“Uh. . .no.”

“Then it is priced too high.”

“Nonsense. Maybe I need some new photos. Maybe some more advertising, or an open house.”

“Do you think you could sell it for $100,000?”

“Well, of course! That’d be like giving it away!”

“Then the price is too high.”

I determined to really get to know my market. I needed answers. I began to study and research the hard numbers. How many homes are selling? What is peculiar about these homes. Are they the nicest? Are they the cheapest? Are there agent bonuses? Are there buyer concessions? What I began to learn is that the ones that were selling were, in most cases, both the nicest and the cheapest. If I wanted to sell my homes, I needed to have the nicest Read more

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