Real Estate 101 Archives - The Phoenix Real Estate Guy

The Little Blue Box ~ A Home Seller’s Friend

May 1, 2015 By Shar Rundio

No, I’m not talking about the beautiful little blue boxes that come with treasures from Tiffany & Co.. Though who doesn’t love those?

Today I’m talking about the REALTOR® specific lockbox (iBox) that only REALTORS® (or vendors with a code from the REALTOR®) can use. In AZ (and many other states), these lockboxes are purchased and monitored through Supra Systems. Why do you as a seller care what kind of lockbox is on your house?

The other day I walked up to a front door that looked like this:

Yep, door wide open, lockbox open, and key in the door. My clients and I waited for a few moments thinking there was another showing going on. Nope, no one to be found. Just the door WIDE open. This house was on a cheapy contractor’s lockbox easily purchased at Home Depot or Lowe’s so when I called the agent to let her know she had no idea who was at the house last and how long it had been this way. I’ve heard nightmare stories where the buyer’s teenage kid watched the agent open the contractor’s box and went back with friends and partied it up at the expense of someone else’s home.

The benefit of an iBox per Supra’s website:

Each time an iBox is opened, both the key and iBox record the date, time and the identify of the keyholder. The information is delivered to Supra’s secure database and can be obtained using SupraWEB. The listing agent can also read the iBox to view recent access information.

The iBox offers the ability to customize showing hours. Another option may be set to require all showings be prescheduled with the listing agent.

The benefits to you as the seller mean that only licensed professionals can access the key to your house AND that access is monitored and recorded when it happens. This allows your agent to track who has been in your house and when they were there. Another helpful benefit is that it allows us to know how many showings you’ve had and to follow up with other agents for feedback.

When interviewing your next REALTOR® make sure to ask about the lockbox they use. And, as always, I’d love the opportunity to earn your business. Email me at [email protected] or call 480.420.4441 if there’s anything I can help with!

Sometimes You Need To Shut Up And Listen

June 18, 2012 By Dean Ouellette

Every now and then you run into a situation that makes you just scratch your head. This week I had such an occasion.

I picked up a client at his hotel, and we headed off to look at a few houses including one in a new build development. My client is telling me how he spent his life in sales and how he does not like salespeople at all, especially Realtors.

Mr. Client was talking about how he gets annoyed when salespeople go around pointing out the obvious like they are adding value. For example, “Over here we have a large kitchen so you have more room to cook. Over here we have a master bathroom with enclosure showers for your bathing pleasure.”

I knew exactly what he was talking about. Do we not think the client knows what a kitchen and bathroom are? I was confident Mr. Client would be happy with me, as I think of myself more as a project manager than a salesperson. My job is to make sure I take care of the project from start (offer) to end (closing) which made me learn sometimes is better to relay on experts like this bathroom shop Sunbury.

So Mr. Client and I toured a few resale houses then headed off to the new build community. When we arrived we were greeted by a man we will call “Jack.” Yes, I am writing this as I watch a special on Jack Nicholas and the 1962 US Open showdown against Arnold Palmer.

Jack started asking the basic questions and within just a few minutes started pushing the “Cactus” model on my client telling him how great it was, how it will have the best resale long term, how he is selling it to his mother, and how they have a bunch of them already under construction.

We took off in Jack’s golf cart and headed over to the models. We arrived at the “Cactus” model, but while my client didn’t have any objections to it, he wanted to see the “Palm” model, which was about 200 sq. feet smaller than the “Cactus” but client was impressed by the resin bound driveway.

The whole time we were walking around “Palm,” Mr. Client is telling me, and Jack why he likes this better than “Cactus”. Jack for some reason felt he needed to defend himself and rebut everything Mr. Client said.

Mr. Client was trying to talk himself into the sale but Jack was not listening to what he was saying; if he had, he may have made the sale in the next ten minutes. I am not sure if there was a big bonus on the “Cactus” model or what. But he was hellbent on selling one.

I worked on leading the conversation the way Mr. Client wanted to go, doing my best to send hints to Jack that he should shut up and listen.

The only other thing Mr. Client cared about was a pool and a gym. We headed up to the playhouse, and while Mr. Client was in the bathroom, Jack asked me if Mr. Client would be interested in seeing the library and the tearoom. I told Jack the only thing he cared about was the pool and the gym, if they were nice I was sure Mr. Client would probably be interested in making an offer on a “Palm.”

Jack of course replied with, “But don’t you think the Cactus is a better value?”

“Well, Jack it does not matter what you nor I think is the better value, it is what Mr. Client believes is better.”

We then proceeded, with Mr. Client, to look at the coffee shop, the recreation hall, the pool and finally the gym. Mr. Client was not overly impressed with the gym, but I do not think it was a deal killer because the indoor and outdoor pool greatly pleased him.

Then despite Mr. Client saying thanks to Jack and saying he needed to get back to his hotel, Jack still felt the need to show us the library and theater.

To say Mr. Client was not impressed is an understatement. Sometimes as salespeople, we just need to shut up and listen to the client. When they are telling you exactly what they want, don’t think you know better. We are there to serve and to assist. So, shut up and listen!

Photo Credit

Can you guarantee that my earnest money will be returned?

May 6, 2011 By Jay Thompson

Recently a client of one of our agents wanted me, as our agency’s Designated Broker, to compose a “Letter of Assurance” guaranteeing their earnest money would be returned to them if they employed a certain tactic. (See Earnest Money ”“ What, why, how much? for an explanation of what earnest money is.)

The short answer is no, I can not make any assurances of what may happen to your earnest money.

“Say what?” the client is probably thinking. They hand over a check, sometimes for a significant amount of money, and I as one of the brokers in the transaction can’t guarantee what will happen to their funds? That doesn’t sound right”¦

Here’s the deal. Earnest money, and how it is distributed in the event of a contract dispute between the parties involved, is handled by the escrow company. This is all spelled out in Section 3f of the standard Arizona Residential Resale Real Estate Purchase Contract:

Release of Earnest Money: In the event of a dispute between Buyer and Seller regarding any Earnest Money deposited with Escrow Company, Buyer and Seller authorize Escrow Company to release Earnest Money pursuant to the terms and conditions of this Contract in its sole and absolute discretion. Buyer and Seller agree to hold harmless and indemnify Escrow Company against any claim, action or lawsuit of any kind, and from any loss, judgment, or expense, including costs and attorney fees, arising from or relating in any way to release of Earnest Money.

Or, in plain English non-legalese speak, the escrow company decides who gets the earnest money and if you don’t like their decision there isn’t much you can do about it.

So back to our original question; can I guarantee how the escrow company will distribute your earnest money in the event of a dispute? Absolutely not. It’s up to them to decide, and you agreed to that when you signed the contract. Will I go to bat for you in the event of a dispute? You bet I will. But ultimately the decision rests with the escrow company.

Does this seem silly? On the surface, probably. Consider the alternative though”¦ An escrow company is a neutral third party in the transaction. As such, they are in the best position to make decisions that affect how earnest money is distributed between parties to the contract. The only other alternative would be to have brokers on both sides decide, and clearly that wouldn’t work as the buyer’s broker would side with the buyer and the seller’s broker would side with the seller. Every time. Nothing would get decided and it would wind up going in front of a judge or jury ”“ another neutral third party, and not an inexpensive option.

That’s why this decision is left in the hands of the escrow company. We can tell you based on experience what the escrow company is likely to decide, but we can’t make promises about things we have zero control over. Contrary to popular belief, escrow officers are people too, and as human beings they are not infallible. In the trickier cases, it’s not one person at the escrow company that makes the decision. A bevy of attorneys can be involved, and yes they are people too. Really. The decisions escrow companies make with regard to earnest money disbursement is almost always spot on.

Just don’t ask me to guarantee that and write you a check if you disagree with their decision.

IMPORTANT NOTE: All of the above pertains to real estate as it is commonly practiced in the state of Arizona. Real estate law and practices vary by state. Your state laws and practices may be entirely different than Arizona’s. In addition, real estate contracts can be modified and changed on an individual basis. The boilerplate language shown here is just that ”“ boilerplate that could have been modified in your contract. Always consult with your agent on specifics to your contract and transaction.

Real Estate 101: Do I Have to Use the Listing Agent?

May 21, 2010 By Jay Thompson

Here’s a question that I see consistently popping up on real estate forums, my email inbox and in conversations on the telephone:

I really like this house, do I have to use the agent that listed it to”¦ [insert one or more of these here: show me the home, represent me as my agent, write the offer].

The short answer is no, you do not have to use the listing agent for anything.

The long answer is you don’t want to use the listing agent. Here is why”¦

Showing Homes

Any licensed real estate agent can show any home listed for sale in the Multiple Listing Service (MLS). Just because the for sale sign says, “Century 21”, “RE/MAX”, “Thompson’s Realty” or “Joe’s Generic Real Estate Company” doesn’t mean only those agents can show you the home. Most homes for sale in the Phoenix real estate market are in the MLS, and most have a lock box that allows any agent access to the home (well, any agent that pays for a lockbox key or access to the combination for agents who still use combo boxes from the dark ages).

In fact, if you use the listing agent to show you the home, you likely have just taken the first step toward enabling a confusing (and potentially expensive) agency relationship issue in what the real estate industry calls “Procuring Cause”.

The “book definition” of procuring cause is, “the uninterrupted series of causal events which results in the successful transaction”. Real estate agents get paid their commission if they are considered the procuring cause of the sale. Erroneously, many agents think simply showing a home entitles them to be deemed the procuring cause in a sale. That is not really the case, but having a listing agent show you a home can (and usually does) start the ugly spiral toward a procuring cause claim. And there are certain scenarios where a buyer (that’s you) might have to fork over a payment for commission that normally the seller would be paying for.

Don’t muck up the procuring cause. Use YOUR agent to show you homes. Don’t call listing agents, don’t go to open houses on your own, and don’t step into a new home builder showroom without first consulting with YOUR agent.

Representation / Writing Offers

The listing agent represents the SELLER. They have a contractual and fiduciary duty to the SELLER, not to you the BUYER. What do sellers want? They want the most money for their home with the least amount of pain. Fundamentally, the listing agent’s job is to get the seller the most money. If they are working for the seller, trying to get them the most money they can, how can they possibly represent you ”“ you who wants to pay the least amount possible for a home.

They can’t.

Oh, some will claim they can fairly represent both sides of the transaction. Many agents like representing both parties in a transaction because then they get both sides of the commission ”“ a double payday if you will.

Dual agency ”“ where one agent represents both the buyer and a seller in a real estate transaction ”“ is legal in Arizona (and many other states). But just because something is legal doesn’t mean it is right, or a good idea. Here’s an often used analogy ”“ if you were being sued in court by someone, would you use the same attorney that the guy who is suing you is using?

Of course you wouldn’t. And you shouldn’t use the same agent to help you buy a home that represents the person you’re trying to buy it from.

(Of note, dual agency ”“ in Arizona ”“ also technically occurs when the sellers agent and buyers agent work in the same real estate brokerage. This is often unavoidable, and is not as problematic as using a single agent for both parties.)

So, what is a homebuyer to do?

Find YOUR agent BEFORE you go out looking at homes. Secure your representation first, and you won’t have to concern yourself with accidently winding up being represented by a listing agent.

How do you find an agent?

In the Phoenix metro area, you literally have tens of thousands of licensed agents to chose from. Many are absolutely brilliant and will represent you competently and efficiently. But let’s be realistic”¦ with the absurdly low barrier to entry to get a real estate license and given the shear number of licensed agents in these parts there are plenty that aren’t so swift.

Ask your friends for recommendations. Look around on the Internet. For example, search for “Houses For Sale” and something’s bound to pop up. Read agents blogs and websites to get a feel of who they are and what they know. Pick three or four agents and interview them. Ask them about their philosophy toward clients, ask them for references from past clients. Trust your gut. Most people have pretty finely tuned BS meters and you’ll know when you’re being fed a line. If you want to Find a Beautiful Home, pick an agent that you feel comfortable with and let them help you.

Any agent can show any home. Any agent can write an offer on any home. Choose the Best Realtor In Nashville and let YOUR agent show you homes, mine the data, and contact the listing agent. That’s what we do. Why use someone else’s agent, especially the agent representing the person who owns the home you want?

Phoenix home buyers, are you being realistic?

March 15, 2010 By Jay Thompson

realistic Much has been written across real estate blogs and mainstream media outlets about unrealistic home sellers. It seems much less common though to talk about unrealistic home buyers.

Naturally everyone wants to get the most home they can for the least amount of money. Which is, of course, in opposition to the home seller, who wants the most money for their home. This inherent conflict is one of the things that makes real estate sales”¦ challenging at times.

It has been my experience of late that home sellers in Phoenix are becoming much more realistic. While it used to be quite common to hear sellers say things like, “But my neighbors house sold for x dollars last year!”, sellers seem to be getting more realistic when it comes to their home’s value, as depressing as that may be.

Home buyers on the other hand almost seem to be losing their grip on reality.

Here are some examples of communication we have received lately:

We’d like to offer $30K under list price”¦
I want a single-family detached house in Scottsdale, on a golf course. I can spend up to $150K”¦
I need a home less than three years old, NOT in a HOA”¦
We just foreclosed last month and are looking to buy. I think our credit is horrible, and we don’t have any down payment money”¦
I need a smoking deal on a bank owned home or short sale. I’m willing to pay 50% of list on multiple properties”¦
I refuse to pay a dime over list price on a short sale or bank owned home”¦

I could go on and on.

The answer for all of those comments above is “you can’t do/get/buy that”.

Here’s the deal. Much of this type of thing comes from simply not understanding what is happening in the real estate market. And by “the real estate market” I am not talking about what you hear on CNN or even your local evening news / newspaper. You need to understand what the market is doing in the specific area you are interested in. “The market” is just too broad and real estate is hyper local.

As a home buyer, you can’t be expected to truly understand your local real estate market. Most people buy available single family homes every 7 – 10 years. We are up to our necks in this stuff every single day. That doesn’t make real estate sales people better than you, or smarter. It’s just what we do for a living (and sometimes I ask myself why in the world I’m doing it”¦). Helping people determine the nuances of their local real estate market is what we get paid for (and why, to be brutally honest, it is very frustrating to have our data, attempts at education, and advice questioned repeatedly ”“ or ignored).

An example:

At this moment in time, the average price of a home in the Phoenix Multiple Listing Service is $175,509. That number is for the entire Phoenix MLS area, which includes all of Maricopa County and a significant swath of Pinal county. That is a HUGE area ”“ almost the size of the state of Massachusetts.

Listen to the mainstream media and you’ll often hear the average priced batted about ”“ it’s rising, it’s falling, it’s hopeless, it’s recovering.

So what does an average home price in the Phoenix area of $175K mean?

Absolutely nothing.

You want a home in Phoenix proper? Average price is $132K

Scottsdale? Average price is $639K

Gilbert? Average price is $221K

El Mirage? Average price is $79K

You see, when you lump every type of home in a 10,000 square mile area into one number, it swiftly begins to become meaningless.

So let’s drill down a little bit. . .

$639K average home price in Scottsdale? What does that mean?

Only slightly more than absolutely nothing.

Right now I could sell you a condo in Scottsdale for $32,000 (but it’s not on a golf course). Or a (really) nice home for $15,000,000. About all the average price tells you is that generally, homes in Scottsdale cost more than say”¦ homes in Gilbert, which are more, generally, than homes in El Mirage.

Here is where being a “realistic buyer” comes in to play

It is a waste of your time and your agent’s time to try to find homes that simply do not exist. That part is relatively easy to educate, and provide hard data to back up that education. Want a golf-course lot single-family home in Scottsdale? A quick trip to the MLS shows you have 323 options, and the five lowest priced ones are: $295K; $350K; $394K; $410K; and $424K. You simply can’t get one for $150K — it does not exist. Don’t waste your, mine and our time looking for one.

You want to “steal” a bank-owned home for 50% of list price? Consider this”¦ In Feb 2010, there were 2,822 lender owned properties sold, at an average of 98.48% of list price. How many do you think were sold at 50% of list price? While I have not looked at all 2,822 sales, I’m quite confident in saying that number is zero. You can’t buy REO properties in Phoenix at 50% off list price. That’s not a realistic expectation.

That’s all hard data ”“ you can’t argue with it (though many do).

Were it gets tough is on some of the more nebulous requests from buyers. You don’t want to offer a dime over list price on a short sale? Well, here is where you may have to rely on your agent’s expertise. I can tell you (and show you) that there are oodles of short sale listings in the Phoenix market priced woefully under market value. We could spend hours pouring over current listings and past sales to demonstrate this. But that’s not an effective use of your time (or mine). And it is still a difficult thing to prove. The problem is, there are listing agents out there with the nasty habit of grossly under pricing a short sale in an effort to generate an offer and/or bidding frenzy. Offer below list price on a home already priced lower than the bank will accept and you are looking at an exercise in futility.

When you are buying a home, you have to be realistic. You aren’t going to get everything a $500K home has to offer for $250K ”“ it just doesn’t work that way. You’re not going to steal a home from a bank, no matter how much the banks annoy you or how much they got in bailout money. You aren’t going to live a Scottsdale lifestyle on an El Mirage budget.

Please please please, for the love of all things good and the little fluffy bunnies, don’t think for a moment that I’m saying all buyers are unrealistic, or that no one listens. Buyers are smart. Smarter than a lot of people, including many listing agents and sellers, give them credit for. Yes, it is frustrating when a buyer won’t listen, or doesn’t believe what we say. Given the general mistrust of real estate agents in the public’s eye, I understand that reluctance to believe. I understand we have to prove we know what we’re talking about. We have to earn your trust. Once that trust is earned however; take advantage of it! Believe what your agent is telling you. I can assure you that they want to sell you a home as badly as you want to buy one.

Think about what your expectations are, and work with your agent to see if they are realistic. It’s OK to ask for as much proof as your agent can provide. Realize though that some things are difficult to prove with hard factual / statistical data. Sometimes empirical data (based on observation and experience) is all you have to work with. Combine the two, work closely with your agent, build that trust and get out there and find that perfect home!

Just be realistic. It will greatly reduce your stress level. And your agents. Remember, real estate agents are people too. (At least most are most of the time”¦)