By Brett Woolley
Author’s email: BrettW76@cox.net

When it comes to buying a home there is a tradition in real estate that is probably at least a hundred years old—it’s the agent’s job to “find the home.” Before computers that may have been true by necessity, but I submit that it was never a very efficient process. Today many agents still cling to that philosophy and believe their greatest worth is hording and gatekeeping property information from their clients to create a dependency. Again, that is not very efficient. There’s a reason why 95% of home buyers look on the Internet for homes well before working with an agent. Buyers have always wanted to find their home. In fact, the very minute a buyer tells the agent “what they’re looking for” that agent is immediately handicapped by what the client last told them. There’s no room for the client to have sudden flashes of inspiration or change of mind. They have to constantly change what they are telling their agent. Hence the phrase used by agents to describe home buyers: “Buyers are Liars!”

I believe the Client is the center of the transaction. I tell buyers that I am different from the vast majority of real estate agents. I am the “Anti-Agent.” When you work with me, you are on the team and you are an equal partner in the home buying process. No one really knows for sure what they want in a house sight unseen. Having the agent primarily responsible to find your home is a little like an arranged marriage to someone you’ve never met—maybe it’ll work out. Instead, I provide my clients with access to the live, official MLS system that all of the agents use in the Phoenix, AZ area. It’s called flexmls. I have a link to it on my Website www.GilbertHomesAZ.net. I provide training and constant coaching to my clients so they know how to use the system. By the time they through working with me they can search and use the system better than half the agents out there. Using features like the Portal they can save their Favorites and Possibles, save custom Searches, and all the while I can see what they are doing from the agent side of the system and provide coaching and feedback. I also put live Saved Searches in their Portal for Solds in the subject city. Now they can see for themselves what homes are actually selling for. That’s real teamwork!

There is so much that has to be done once the home is identified. There are also clients who want more help and ask me to send them listings. I do that, but at the same time I encourage the client to get in the game! It’s also my part of the teamwork to do the background research my clients cannot do and come up with winning strategies to get the home. But I love letting my clients get the credit for “finding” the home. It’s their home after all.

Why not try it yourself? Just scan this QR code and you can look at homes using a special mobile phone version of the official flexmls system.

By Brett Woolley
Author’s email: BrettW76@cox.net

Here’s how to dramatically speed up the recovery of the housing market here in AZ and the whole country.

Through legislation make the penalty for people who have been foreclosed on 3 years, the same as short sales. Example: Two people can’t afford their mortgage. They both file paperwork for short sales. One person manages to sell via short sale because the bank asset manager decided to do it. The second person got foreclosed on by the bank in the middle of the short sale because the bank asset manager decided to do it. So seller one waits 3 years, and seller two has to wait 7 years, to buy another home. Why? Because two different asset managers made decisions that affected the credit of two sellers in identical situations!!! How freakin’ fair is that? The Short Sale serves ONE purpose only—a desperate attempt by a seller to save 4 years on their credit so they can buy another home sooner. That is it.

So if the penalty for foreclosure was also 3 years, you would completely, and totally, eliminate ALL short sales because there would be no need for them and all of their endless paperwork and uncertainty and outright fraud. Instead, the bank gets it over with quickly and forecloses, becomes the new owner, then turns it over to the real estate pros to market and sell as a traditional REO. The time it will take to get the “poison” out of the system would be cut dramatically, perhaps even by as much as 4-5 years, and greatly accelerate the recovery of the housing market and the overall economy. Can you imagine what would happen if every short sale listing could be instantly converted to a traditional REO? The Listing Agents would be estatic! I believe this recovery would add billions and billions to tax revenues because houses and home ownership stimulate economic activity, not bail outs!!!!

The second thing to do is bring some order into the chaos that is our current real estate industry. The MLS has clout if it only had the will to use it. Start removing listings from the MLS by sellers (namely banks and their sometimes accomplice list brokers) who think they can make up their own rules. Restore the prominence of the AAR Contract. Accept all legal forms of signatures. No more “unapproved” and thereby fraudulent list prices. No more Listing Agents who refuse to communicate with Selling Agents by phone and other means designed for “time is of the essence.” No more discrimination against “Un-protected” classes of buyers such as investors or second home buyers. No more re-writing real estate laws, the law is 10 days for an inspection period, not whatever the bank feels like. Comply with the rules or get the heck off the MLS!!! You will be amazed at how quickly banks will comply when faced with the option of listing or selling their portfolios “for sale by owner.”

These two concepts would have a spectacular affect on both the real estate market and the overall economy. Even the banks would fair better although they are too dense right now to see it. That’s what bailouts do, they prevent people from thinking and innovating and being resourceful because the manna is coming from heaven.

By Brett Woolley
Author’s email: BrettW76@cox.net

In real estate the market speaks when a house is sold, not when it is listed. The Active List Price can be very misleading because almost every home seller starts out by listing their home way above what similar homes are selling for. That’s why you see charts like the one in my sidebar showing the great disparity between Original List Price and actual Sold Price. In Gilbert, AZ the ratio is currently at 90%, meaning that sellers on average are getting no where close to their original asking price.

There are other problems with focusing on current List Prices. Here in Arizona we still have thousands of short sale listings. In a short sale, the List Price is determined by the Listing Agent, but may be far from what the bank will accept and is therefore a completely arbitrary or outright phony price. In the case of a foreclosure, prices can sometimes be lower than market and multiple bidders actually drive the price up a little. So to really understand the market, you need to know what houses in your area are actually selling for.

The power of Sold Price information is enormous. A well-informed seller is less likely to overprice, and a well-informed buyer is less likely to waste everyone’s time low-balling. So how can you see what homes have sold for? On this Website go to the Home Page and click on the link to search the real, live flexmls system that the agents use. Go to the Map and draw a circle or box around your neighborhood. Zoom in until you see the individual lots. Then at the bottom of the map, click on the blue circle with the letter “i” in it. It’s called the Nosy Neighbor tool. With that tool selected you can click on any lot and see its 10-year history!

You can also go to the top tool bar and click on “Log In.” This will prompt you to register with a Portal into the real flexmls system. Once you have a Portal, I can place a “Saved Search” for sold properties in there that you can view anytime. Using the map feature, you can zoom in to your neighborhood and see what all of the recently sold homes sold for. Knowing what homes actually sold for is the key in real estate. Home buyers and sellers will have a much more efficient experience in their transaction when solidly grounded in reality. And there’s no better way to get there than looking at Sold information.

Brett Woolley is a professional Buyer’s Agent specializing in helping clients buy homes in the Gilbert, Mesa, Chandler, and Scottsdale AZ areas. Contact Brett at 480-236-2735 for a no-obligation buyer consultation.

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By Brett Woolley
Author’s email: BrettW76@cox.net

FHA buyers in many cases are first time home buyers seeking both an inexpensive home and the program’s low down payment requirement of 3.5%. As of January 2010 there were approximately 4,700 single family homes in the Phoenix metro area listed for under $100,000. Of these about 30% or 1,401 are foreclosed or “Lender Owned/REO” properties. You would think that the Lender Owned below $100,000 segment of the housing market would be ideal for the FHA buyer (note I am excluding Short Sales from this discussion, see my blog article on Short Sales). Yet the reality is that most foreclosed properties in this price range are very difficult to buy with an FHA loan and end up going to cash investors. In fact, more than half (53%) of the banks currently selling Lender Owned properties below $100,000 refuse to even entertain offers from FHA buyers. The rest of the banks will entertain FHA offers but you clearly have to get in line behind cash and conventional buyers. To complicate things further the below $100,000 market is the hottest and fastest selling segment in the Phoenix area right now. So, what is an FHA buyer to do? You need a new stratgey! Here’s how I recently helped an FHA buyer:

1. Stop looking at homes upfront. This was a new paradigm for me. We were wasting our time (and gas money) looking at all of these REO homes in the traditional way, only to find out they were sold while were standing in them. Instead, we relied on MLS photos and descriptions to make offers, and we toured the home only after the bank expressed interest in our offer and countered us with their contracts.
2. Make multiple offers. Making an offer on one home, waiting for a bank response, then starting over wasn’t working. In the REO world it is common for the bank to collect offers and make multiple counter offers to several buyers at once. So we decided to fight fire with fire by making offers on multiple homes the minute they hit the market. To make these offers we needed a loan pre-qualification letter from the lender with the address and loan amount left blank. With this necessary letter we could fill in the home information over and over and not have to wait for a new letter each time. Our strategy was to keep at least 3-5 offers going at all times including weekends.
3. Make good offers. This part of our strategy really paid off! How do you compete with a cash offer? You have to out bid it. In our market out bidding the cash investors was easy—offer at least the list price! Even though REO homes in AZ have already been severely discounted, the typical cash investor has a garage sale mentality. The garage sale shopper sees a lamp for .25 cents and says “will you take a dime?” Cash investors are the same. Offer list price or be willing to offer a little more and surprise, you beat the low-balling investors and now the bank is interested in your FHA buyer.

I now believe that an FHA buyer can succeed in the Lender Owned market below $100,000. You just have to know exactly where you want to live, and be aggressive in following the preceding steps. If you are thinking of buying a home through FHA, call me and we can discuss a strategy that’s right for you.

Brett Woolley is a professional Buyer’s Agent specializing in helping clients buy homes in the Gilbert, Mesa, Chandler, and Scottsdale AZ areas. Contact Brett at 480-236-2735 for a no-obligation buyer consultation.

CLICK HERE TO SEARCH FOR HOMES USING THE SAME SYSTEM REAL ESTATE AGENTS USE!

By Brett Woolley
Author’s email: BrettW76@cox.net

There is a time and place for counter offering. However, many real estate agents believe that counter offering on price alone is not only to be expected, but is actually their strategy when counseling both buyers and sellers. I have discussed this strategy countless times over the years of giving workshops to real estate professionals nationwide. Almost without exception, and when pressed to reveal the truth, the story does not turn out well for either side when counter-offering on price gets out of control. That leads me to wonder why so many agents do this. I have to believe that it is largely part of the way real estate has been conducted for decades, sort of like some middle-eastern marketplace where you would haggle over a Persian rug.

I remember well the agent who helped me purchase my first home.  He would say “the best offer to make is the lowest offer that a seller will take without countering.” Over the years I have witnessed time and time again the wisdom of that philosophy. Think about it. In the first place you are counseling your buyers not to low-ball but to make a good offer. Secondly, the very dynamic of the offer/counter offer tends to pull people apart and not bring them together.

A friend of mine from Northern California just went through this scenario. At first he was excited about buying the home and made what he thought was a fair market offer. He didn’t back up his offer with any rationale as I would have done had I been representing him. The sellers came back with a counter offer that was no where near the buyer’s price. So my friend countered again and went up $10,000. The sellers responded with yet another counter offer and they reduced a mere $2,000 leaving a gap between the two parties of over $20,000. Never at any time did either party (or their respective agents) attempt to explain their positions with facts. The buyer countered a third time and reluctantly came up another $10,000 and this time the sellers took it after a weekend of no competing offers.

After all of the haggling the buyer was exhausted and when termite and other problems were found during the contingency period, the buyer canceled the contract. I asked why he didn’t ask the seller for repairs and try to keep the deal alive. His response was “I don’t even want to buy that house anymore.” The whole transaction had soured. Many of you have heard, or maybe experienced, this scenario. I believe in making good offers and then backing that offer up with what I call an “Offer Rationale Addendum” where facts are used to support and explain the offer. In the case of a seller the same strategy can be effective. Make only one counter offer and back it up with some facts. The vast majority of agents never attempt to explain how they arrived at their price and yet they can all do a CMA. Most believe in the haggling process and whoever lasts longest wins. And yet, in a large number of cases the counter offer process is counter productive and both sides lose.

Brett Woolley is a professional Buyer’s Agent specializing in helping clients buy homes in the Gilbert, Mesa, and Chandler AZ areas. Contact Brett at 480-236-2735 for a no-obligation buyer consultation.

CLICK HERE TO SEARCH FOR HOMES USING THE SAME SYSTEM REAL ESTATE AGENTS USE!

By Brett Woolley
Author’s email: BrettW76@cox.net

Investors are flocking back to the Gilbert, Mesa, and Chandler AZ real estate market in droves. Homes in the lower price brackets, with the exception of Short Sales, are selling fast with multiple offers. Most real estate investors seek capital gains over cash flow, or in other words buy low and sell high rather than buy to rent. With all of this activity, how can today’s investor be more efficient in finding target properties?

Let’s look at the numbers! As an MBA REALTOR® with statistics training I offer my investor clients something that no one else has—the “statistically enhanced” investor report! This report first breaks down the market by price segment and zip code. This is important to do because a good target price per square foot in one zip code may not be appropriate for another zip code. You have to do the analysis.

Second, the report calculates the average Sold Price per Square Foot for that price segment and zip code over the past four months. This number is vital to get a picture of what the “market” really is. Next the report calculates the Standard Deviation for the Sold Price per Square Foot. The Standard Deviation measures the average distances from both sides of the mean or average. An investor wants to buy properties at less than the average Sold Price per Square Foot. The question is how much less? The Standard Deviation Bell Curve answers that question. See Exhibit One.

Homes that fell in the group that is one standard deviation less than the mean were probably good deals. However, the real place to be is in the group that is more than one standard deviation less than the mean. These are the properties that are statistically disconnected from the market and offer the best capital gains potential. Therefore, the investor report creates a list of properties where the MLS advertised List Price per Square Foot is more than one Standard Deviation less than the average Sold Price per Square Foot. This condensed list saves valuable time by targeting the properties with the highest return potential.

A final key element of the investor report is that it completely strips out Short Sales from the equation. Short Sales are eliminated from the analysis because they distort the data with non-approved MLS list prices, a major factor currently plaguing the appraisal industry. For an investor, they are a severe waste of time due to the typical months of waiting for a bank’s response to an offer. I am happy to provide the Statistically Enhanced Investor Report to my clients for any Phoenix area zip code that interests them. If you are an investor and are becoming weary spinning your wheels looking at too many homes and would like a more targeted approach, then give me a call!

Brett Woolley is a professional Buyer’s Agent specializing in helping clients buy homes in the Gilbert, Mesa, and Chandler AZ areas. Contact Brett at 480-236-2735 for a no-obligation buyer consultation.

CLICK HERE TO SEARCH FOR HOMES USING THE SAME SYSTEM REAL ESTATE AGENTS USE!

By Brett Woolley
Author’s email: BrettW76@cox.net

Short Sales have been a hot topic among home buyers since mid-2008. Many buyers believe Short Sales represent the best opportunities to get a “deal” on a home here in the Gilbert AZ area. What many buyers don’t know is that Short Sales are much more likely to be a waste of time and effort, in addition to the tremendous risks they pose.

The concept of the Short Sale is sound. The banks agree to forgive the difference between the amount owed and current market value. Unfortunately, it’s the way the banks are managing these sales that make them something a serious buyer should avoid. There are two keys. The first is whether or not the bank is really serious about selling the home. The second is the backwards system the bank is using by NOT giving the listing agent an approved price up front.

Here’s how I explain Short Sales to my clients. Imagine you are in a grocery store and you see your favorite cereal with a price sticker that says “$1.00.” “Oh yea,” you say as you put the cereal box in your cart. When you get to the cashier she says “that cereal is not $1.00.” “But it says $1.00 right on the box,” you protest. “Let me explain,” says the cashier. “I’m the cashier and I have final approval on the price. We hire stocking clerks to put the cereal on the shelf, and they can put whatever price they want to on the box to get you to put it in your cart. But when you get to me, I have final approval!”

“Ok, I surrender,” you say. “How much is the cereal?” “Come back in four to six months and I’ll tell you,” replies the cashier. “And even then I might not sell the cereal. I might send it back to the warehouse or simply sell it to someone else.”

This is a crazy scenario, I know. No one would buy groceries, or cars, or appliances, or anything at all that way. And yet this is the way the Short Sale properties are sold. So if you really want to buy a home, skip the Short Sales and look for a “clean listing” or a foreclosure. At least you’ll know where you stand after making an offer and your chances of closing are astronomically higher than with a Short Sale.

Brett Woolley is a professional Buyer’s Agent specializing in helping clients buy homes in the Gilbert, Mesa, and Chandler AZ areas. Contact Brett at 480-236-2735 for a no-obligation buyer consultation.

CLICK HERE TO SEARCH FOR HOMES USING THE SAME SYSTEM REAL ESTATE AGENTS USE!

By Brett Woolley
Author’s email: BrettW76@.net

Have you ever watched the HGTV show called House Hunters? An actual real estate agent helps actual buyers who have narrowed their choices down to three properties. I like the show. However, one element of the program disturbs me. Once the buyers have made their choice, the only thing left to do is make the offer. Even though the real estate agents change, I see the same scene over and over—“well what do you think you should offer,” says the agent.

In the absence of much real guidance the buyers then come up with well, whatever. It’s too bad that the home buying public has been conditioned to this poor level of service. For decades the real estate industry has built a wall around the home seller. It wasn’t until the late 1990’s that home buyers could even reliably have their own representation in the transaction. Before then ALL agents worked for the seller, buyers just weren’t aware of it. Helping the buyer make an intelligent offer is a critical element of being a buyer’s agent.

I believe in aggressive buyer representation. That means getting the buyer into the home they have chosen to buy. I protect the buyer’s interests at all times, and that means even protecting buyers from themselves if necessary. When it’s time to make an offer I do something that no other agent in the Phoenix metro area does (that I’m aware of): I use a tool I call the “Offer Rationale Addendum.” The Offer Rationale is a brief one-page explanation of how the buyer came up with the amount they are offering for the home. Sounds reasonable, doesn’t it? Then why have you never heard of it?

Using my MBA and statistics background I take a good look at the numbers. What has the overall market done in the last three months and where are prices trending? What is the average sold price per square foot in the target neighborhood? Are there any issues with the home itself that could impact the offer? The Offer Rationale is based on a non-emotional evaluation of the facts. At the end it says “based on this information the buyer feels confident that seller will agree that our offer represents current market value.”

The Offer Rationale is then included in the Purchase Agreement Contract as an addendum. Why is it an addendum? So it cannot be screened by the listing or seller’s agent. As an addendum it has to be read and initialed by the seller. Actually explaining the buyer’s offer using real data forces the seller to 1) agree, 2) disagree based on their own data, or 3) disagree without any data which is being unreasonable. The most common result is the seller agrees without countering and the transaction moves on. When an agent says you have to start low with your offer to allow “negotiation room” that’s a clear signal they don’t know what they’re doing. Making low offers is a very inefficient way to negotiate and often causes unnecessary emotional reactions. The best way to make a winning offer is to know what the true market value is, and then offer that amount while backing it up with the facts.

Brett Woolley is a professional Buyer’s Agent specializing in helping clients buy homes in the Gilbert, Mesa, and Chandler AZ areas. Contact Brett at 480-236-2735 for a no-obligation buyer consultation.

CLICK HERE TO SEARCH FOR HOMES USING THE SAME SYSTEM REAL ESTATE AGENTS USE!

By Brett Woolley
Author’s email: BrettW76@cox.net

Foreclosed or Lender Owned properties are homes where the bank is now the owner and has selected a broker to list the home on the MLS. The listing agreement is between the bank and the real estate broker. The following points outline some of the risks involved in purchasing a Lender Owned property:

• The “bank” has never occupied the home, and therefore cannot provide the typical disclosures to the buyer that an owner-occupied listing would provide.
• Lender Owned properties are listed “As-Is” and the bank will usually not guarantee warranted items or make any needed repairs. The buyer assumes all of the risk pertaining to the condition of the home.
• Many Lender Owned properties are vacant with the utilities turned off. In this situation the buyer is limited in his or her ability to thoroughly investigate the property during the tour of the home. Banks may authorize the listing agent to turn on utilities during the short inspection period.
• Many Lender Owned properties “counter” all offers with one-sided, non-state approved corporate contracts (addenda) that often supersede the state commissioner-approved purchase agreements, thus nullifying the buyer protections built into the approved contracts.
• If the buyer is getting an FHA loan, and in the case of many conventional loans, a home and termite inspection will be required as non-refundable expenses to the buyer. In many Lender Owned “counter” offers the inspection period is reduced significantly, and if problems are found that prevent the obtaining of a loan and cause the buyer to cancel the offer, the buyer cannot recoup the costs of the inspections.
• Typically in these transactions, the bank will dictate the escrow company that must be used.  Many agents report very poor quality communications and service with these escrow companies.  This raises concerns about closing the transaction on time.

Brett Woolley is a professional Buyer’s Agent specializing in helping clients buy homes in the Gilbert, Mesa, and Chandler AZ areas. Contact Brett at 480-236-2735 for a no-obligation buyer consultation.

CLICK HERE TO SEARCH FOR HOMES USING THE SAME SYSTEM REAL ESTATE AGENTS USE!

By Brett Woolley
Author’s email: BrettW76@cox.net

UPDATED August 2010! As if things could not get worse, Short Sale listings have become even riskier here in Arizona. This list has been updated to include more examples of why Short Sale listings are not worth the time and risk involved. Short Sale properties are listings that have not yet foreclosed. The bank has agreed to let the owner list and sell the property at a price that is less than the remaining balance on the mortgage. The bank absorbs the loss and the seller is “forgiven” the unpaid principle. The following points outline some of the risks involved in purchasing a Short Sale property:

• As is the case with many Short Sales, the homeowner has to vacate their home in preparation of a foreclosure.  The home is vandalized while empty.  The borrower is responsible for this damage as long as they still own the home.  The borrower’s homeowners insurance covers the damages, but the lender directs the homeowner to sign the check over to the lender for disbursement to the contractor after close of escrow (COE).  After COE, the lender refuses to pay the contractor and sends funds to the note holder for missed payments, leaving the homeowner with an unpaid bill from the contractor.
• The lender’s mortgage insurance company demands a note from the homeowner before a short sale closing.  This usually occurs at the eleventh hour and comes as a complete surprise to the borrower.  In most cases, the borrower was unaware that the lender had purchased mortgage insurance on their loan.  Again this is an example where the borrower needs legal counsel prior to any payments being made.
• A second lien holder in a short sale refuses to allow the sale to close unless the borrow pays the bank outside of escrow. This is called “Greenmail” and remember, in a foreclosure the borrower is protected from these practices but in Short Sale there is no such protection.
• Second lien holder agrees to an amount in a Short Sale for release of lien.  This is not a full release from deficiency.  This is just the amount they require to allow the short sale to close.  From a borrower’s point of view, it makes no financial sense to agree to pay this if there is not a full release, as the lender could still pursue a deficiency suit against the borrower.  If the second lien holder persists and the first lien holder will not provide the funds to the second lien holder, it is generally better to let the home go to foreclosure.
• Homeowner has the house for sale as a short sale and the bank has set a foreclosure date in the future. Homeowner arrives home and finds the locks on the house have been changed and several boxes of personal belongings were taken. Bank admits to changing the locks even though the trustee’s sale has not been completed.
• If you are a homeowner, DO NOT have any other bank account with the same bank as your mortgage. In a short sale situation some mortgage banks are starting to “sweep” your other accounts to pay a delinquent mortgage payment. Some banks have even increased a checking account overdraft protection from $1,000 to $10,000 so they could take the mortgage payment out, leaving the homeowner with no way to close the account until the overdraft balance is paid.
• In a Short Sale the bank approves the purchase price. Since the bank typically orders a BPO (Broker Price Opinion) only after an offer is made, the list price you see advertised in the MLS is almost always not pre-approved by the bank, and may be listed artificially low to attract offers.
• Short Sale properties are listed “As-Is” and in most cases neither the bank nor the seller will provide any property disclosures, guarantee warranted items, or make any needed repairs. The buyer assumes nearly all of the risk pertaining to the condition of the home.
• In a Short Sale the bank may take weeks or months just to respond to an offer. In the meantime, even though the buyer can take their offer off the table, the buyer could miss another purchase opportunity or see the value of the real estate market drop during the lengthy process.
• In a Short Sale the bank has the right to foreclose on the property and sell it at auction, even after offers have been made and in some rare cases even after an offer has been accepted.
• A significant number of Short Sale listings are in a situation where the seller has two or more mortgages. The buyer may get approval from the first bank, but not the second bank, in which case there is no contract even after the buyer has waited a long period of time for the first bank to respond.

Brett Woolley is a professional Buyer’s Agent specializing in helping clients buy homes in the Gilbert, Mesa, and Chandler AZ areas. Contact Brett at 480-236-2735 for a no-obligation buyer consultation.

CLICK HERE TO SEARCH FOR HOMES USING THE SAME SYSTEM REAL ESTATE AGENTS USE!