So you have been sitting on the fence, you have been waiting on the sideline, you have been hesitant to jump in the waters since the real estate market has been so volatile.  Waiting for the bottom is hard because you will never know when the bottom has been reached until the market is rebounding.

With the passage of the Housing and Economic Recovery Act of 2008, fence sitters have a reason to jump off – the disappearance of seller assisted down payments through programs like Ameridream and NEHIMIAH.  If you are not under contract, approved with an FHA case number and loan even if the seller wants to help they won’t be able to after September 30^th.  So why are you still sitting on the fence…its last call.  It is time to jump in before the opportunity is gone.

Sure there will be programs that congress will pass to replace those that are being eliminated, but no one can tell you when exactly that will happen and who knows if the market conditions will be as favorable to buyers as it is now.  There is always a risk in a volatile market.  Will prices decline further?  Will the market recovery and create equity in the home you buy?  Will interest rates stay favorable?  Will inventory be available in my price range?  My crystal ball works as good as anyone’s, meaning no one can really know what the future will bring, but I do know the reality of right now.  If you were thinking of buying and using a seller assisted down payment program the clock is ticking and it is time. 

We knew it was coming, but the looks on the faces of the agents in the office as the disappearance of seller assisted down payments sunk in varied from frustration to morose.  So many of us work with first time home buyers in this challenging Phoenix market that comments like “could they make it any harder?” circulated through the office.  The sad reality is that they could and may.  Hopefully there will be new programs coming down the pipe to replace seller assisted down payments, but until they do we will have to look at bond money and other means of assisting our clients who so often don’t have all the funds needed to buy a home.

It brings up a point made by one agent in our office who came out of the financial industry, should they even be buying a home if they don’t have the down payment?  It is a valid question.  It used to be that families saved to buy a home with a standard 20% down payment required to make such a purchase.  There was pride in the American Dream.  It meant something to finally attain homeownership.  People did not walk away so easily from an asset they had worked so hard to gain. 

Has the American Dream been diminished by making it more accessible to people?  I don’t know the answer to that question.  In many ways I think the question and point he was trying to make was true – homeownership is a privilege and maybe to truly appreciate it and its value buyers need to earn it.  Not through 100% financing programs, not through seller paid closing costs, but through the sweat on their brow, the sacrifices they made to save the money to do it, and the feeling of pride once felt at achieving something. 

When you make things easy, no matter what it is, people tend to discount the value.  If it is easy, anyone can have it.  If it is easy, there is no sense of accomplishment.  If it is easy, it is disposable.  By opening up homeownership to so many did we make it a disposable commodity that people just took for granted without truly caring anymore. 

Is it time to reinvent the American Dream?  Is it time for the opportunity to own a home to truly be an opportunity that people take pride in again?  Is it time?  You tell me…

Let’s face it, realtors don’t have normal schedules.  We often work 7 days a week and rarely have a chance to take a day off without having our phones ring.  Work follows us everywhere interrupting anything and everything.  So with that in mind I have to admit I really like holidays like Independence Day where people are focused on home, family and fun because I get the opportunity to have a day where I can relax.

Oddly though, it also kinds of throws me out of my workaholic loop and I have to spend days getting back in the swing of things after having my normal schedule interrupted.  I have to admit I enjoyed going to the movies with a friend and doing some long neglected shoe shopping.  It reminded me of how I have to make time for myself even on non-Holidays.  And it reminded me that if I can get used to that maybe the hiccup of taking a day off won’t impact my routine so much.

It is always a good idea to have a home inspection.  It is imperative to have a home inspection when your clients are buying a lender owned property.  The sad part is that many buyers will bypass this step to save money when they are in the lower price points.  Personally, I don’t know how comfortable I would be representing clients who refused to inspect a property.

Today was home inspection day for my clients and it was a disaster.  The house will definitely not meet FHA standards.  Truthfully the house is an excellent deal for the right buyer, my first time home buyers are not those buyers.  It had plumbing that needed to be replaced, mold issues, electrical issues, and a termite infestation that might very well extend to every stud in the house!

I wonder what future ramifications there will be for the lenders selling these homes.  They have to inspect the house in some way when they take it back, they have to have some knowledge of these problems, and they are choosing not to disclose them.  I can understand that the lenders are trying to negate as much of their loss as possible, but how can they justify selling some of these homes to people who will find themselves in the real life version of the “money pit.”  The karma that will swing back around is unbelievable. 

The Case-Shiller home price index was released today stating that 4 years of home values gains have been wiped out.  That is readily apparent in the Phoenix area where home prices have declined at such a rapid pace that appraisers are starting to use active listings as comparables.  Yes I did say active listings.  Active listings being used as comparables, it makes ones head spin.

The reality is that it is what it is and there is not much we can do about it at the moment except keep on keeping on.  For those of us working in these hard hit markets we just need to be that much more vigilant about what is happening in the areas where our listings are and where our buyers are purchasing.  If a slew of listings hit the market for less than what we wrote a contract for there is the possibility that an appraiser will use them, if not in the appraisal in the appraisal review done by the lender and that it may come in for lower than we expected.

I have decided that this market is really a great thing in some ways.  It is making us better agents.  Those of us that survive and thrive in this challenging market will come out the other side with a focused determination that we would have never had otherwise.  That is not a bad thing by any stretch of the imagination.

One of the most important things real estate agents can do for their clients is to manage expectations.  It is amazing how often agents forget this and the resulting fires they have to put out are completely avoidable in most cases.

Whether we work with a buyer or seller, it is important that we educate them on the process, the potential pitfalls and delays that can occur in a transaction. 

Today has been a reminder in that concept today.  The buyer’s lender needs more time to get the loan through because of underwriting times.  I had anticipated this so when the other agent called me it did not come as a huge surprise to me.  When I called my client and told her that she had another week to pack and we would need to sign an addendum extending the escrow, she was fine with it.  I had taken the time to prepare her that things like this can and do happen, especially in the current lending environment, and she did not panic when it happened. 

Later in the day I talked to my clients who are awaiting the fully executed contracts return from a lender.  They are happy, they know that it takes time.  I prepared them.  It has been several days since the addendums went back to the bank.  Today was the first day they called, ironically while I was working my way through my call list where their names were 2 down from where I was. 

Real estate transactions can be stressful and people can get bent out of shape over the littlest thing.  I think that so much of this can be avoided if we just take the time to manage expectations.  If someone is prepared to deal with a repair request then they do not get upset when one is placed in front of them.  If someone understands that working with a lender owned property is different from working with a traditional seller when it comes to offer presentation and acceptance, they take the delays in stride.

Today made me feel like I was doing a good job of managing my client’s expectations.  I felt I had done what I needed to do in representing them.  It was a nice feeling.

Just a bit of humor to lighten everyone’s mood on this spectacular day. 

Our office has been doing this aggressive open house campaign for weeks with a great deal of success and today was my day to sit one of these open houses.  Now it is Phoenix and we are in the midst of a heat advisory as yesterday’s temperature was a blistering 115 degrees, not to mention gas well over $4 a gallon, but what the heck a plan is a plan!

The lender and I arrived at the house with our signs, balloons and tasty treats only to discover that there was a small problem.  It seems the owner had decided to turn off the power and water without informing the listing agent.  Did I mention it was 115 degrees on Saturday?!?!?

The situation came as a surprise to the listing agent and we sent a few texts back and forth.  Having a grand sense of humor I informed him the power was not on and that we were “hot” and not in the good way!

Now weaker souls would have turned around and headed right back out the door, but alas for several reasons we were determined to stick it out as long as we could until 3PM came or the delirium of the heat over took us.

Luckily another agent from my office stopped by and brought us some ice cold drinks, thank you George!  It was a miserable two hours (we left at 2PM), but we did actually have one person stop by that was an actual potential buyer.  Did I mention that it probably will hit 115 degrees today too and the interior of this fun fest open house was 95 degrees?!?!?

It was a cute house and under better circumstances would make a great location for an open house, but today was not those circumstances.  As I sit at my desk back at the office chilling in the AC I wonder if someone actually came or if it was the heatstroke providing me with a delusional vision of a person like a desert mirage…

Open houses and a Phoenix summer are never a good combination, even when the property you are sitting is chilling with the AC blasting.  Without that AC though it is a lesson in Heatstroke 101!!!

Spending my teen years in San Diego I was unavoidably a fan of local fave Mojo Nixon in the 1980’s.  Now 20 years later as I struggle with the pitfalls and traumas of dealing with lender owned property in the Phoenix real estate market I find myself humming “I Hate Banks” more often than I care to admit.

It is not that the bank owned property is driving down prices or that getting answers and timely responses to inquiries is difficult at best.  It is the blatant way that banks/lenders chose to ignore both national and state real estate laws while disposing of these “bad assets” and that no one seems to be standing up to them to say “hey you, you are subject to real estate laws!!!”

In Arizona all contract negotiations are required to be in writing, yet I and other agents in my office are often called or emailed by an agent representing a bank owned property who says that the bank won’t counter in writing and we have to have a meeting of the minds before they send their addendums.  It’s technically illegal, ok forget the technical part – its not legal by any stretch of the imagination.

Even when the banks respond, they are sending counters without signing the original offer and the counter is lacking signatures as well.  When we are representing buyers we are in the hurry up and wait mode waiting for the bank to respond, getting our clients to sign these blank contracts and addendum, and returning them as quickly as we can in the hope that the bank will actually go through with accepting an offer they have already “verbally” accepted.

When do we as real estate professionals stop this madness and demand that the banks follow the contract laws of our individual states?  When?  How?  We need to do it.  It is our responsibility to do it.

Until it happens though, don’t be surprised if you hear “I Hate Banks” flowing out of the speakers of the iPod player in my office…

I hate banks, just can’t stand them

Give me a shovel & Man I’ll plant them

6 feet under is where they belong

I hate banks is the name of this song

Lyrics from the song “I Hate Banks” by Mojo Nixon and Skid Roper off Frenzy

The owner’s of the pristine little house wanted to move a state away to be closer to their family.  They had not taken advantage of the boom market and felt they had missed the boat.  They saw the price drop as a loss of money that belonged to them.  Their desire to move was stronger than the loss of equity that had occurred in the declining market.

I did my best to advise them during the listing period taking them into my office to show them how prices were dropping in their area.  I counseled them on the dangers of chasing the market when what they really needed to do was lower the price to get the attention of the buyers.

With each price drop, their piece of the pie shrunk and the money that they would be potentially leaving town with dropped.  When a buyer finally came in with an offer the reality of the situation and the impact the decline had on the value of their home became an unpleasant reality they could no longer ignore.  In order to sell their home they would have to come to closing with money and would be receiving none to aid them in their relocation.

Stay or go.  How badly did they want to move?  How important was it to them?  It was the reason their home was on the market.  It was important.  And in the end they were forced to make a hard choice in a tough market which they did with a great deal of contemplation, they sold and brought money to closing.

It is supposed to be the other way around when you sell.  You, as a seller, expect to be getting a check when you sell, not writing one.  However, the new market has forced many sellers to make these kinds of choices, weighing the importance of their motivation versus the reality of walking away from the sale of an asset with nothing, or worse yet like in the above example with less than what they have now.

As we signed the papers to accept the contract they expressed that they wished they had listened to me and lowered their price right off the bat.  They knew that they could have potentially sold the house for thousands more if they had.  I sympathized with their situation.  It caused me to take pause and think about the way I handled them and other sellers in similar situations.

As I reflected over the many meetings discussing price and showing them the market activity I realized that there was nothing more I could have done since I gave them my knowledge and expertise.  I did everything I could possibly do to show them their price needed to be reduced in order to compete within the market.  They made their decision to chase the market not on my information, but from the perspective that they had already lost so much that they couldn’t lose anymore.

This is a hard market for agents and their clients.  We often face the wall of denial that our clients put up and we try to make them see the market as it is.  We try to help them emotionally detach from their home as they see it and shift them to see it as a buyer does. 

We always strive to represent our clients to the highest level, but we can’t force them to make a price reduction, paint a room, or make a house more accessible.  The only thing we really can control is whether or not we take the listing.  Even in the best of times it is hard to walk away from a listing, but in this market it feels like career suicide.  Any listing is better than no listing…right???

Wrong, an overpriced listing is worse than no listing.  Why spend your time and resources on something that isn’t going to sell?  Inevitably the sellers will blame you because their overpriced home didn’t sell and you won’t see a dime of the money you spent marketing the home.  Even in a tough market, especially in a tough market, the best listings are the listings that can and will sell.

Or is it just the Bush Administration…  Who knows?  But I know I care!!!  The Bush Administration is forcing HUD to reopen its proceedings on whether or not seller assistance via programs like Ameridream and Nehemiah should be banned from being used on FHA backed loans. 

I understand the concept that buyers who do not have a “true” monetary investment in their homes are more likely to walk away from them, but by doing away with a viable option that is bringing first time home buyers into the market is just a bad idea considering the current state of the real estate market on a national level.

If we do away with programs that help lower and middle income buyers become home owners via FHA financed mortgages that include seller assisted down payments or closing costs we are going to see homes sit on the market longer than they already are. 

What is the Bush Administration thinking with this one?  It boggles the mind!  Is this ban going to help stabilize the economy?  I think not!