Interesting home buying stories follows.
(The Phoenix market)
Kristena Hansen
Reporter- Phoenix Business Journal
Last week, I wrote the first of what will be many blogs documenting my ongoing experience hunting for my first home — and I must say, the response I got from readers was pretty overwhelming.
If you haven’t had a chance to read it yet, take a look here.
It’s pretty rare for a reporter, especially a business reporter, to bring their personal life into their professional one. We are, after all, held to a high ethical standard of presenting facts and all points of view in a fair, non-biased way, so I wasn’t sure how readers would respond.
Luckily, it was well received for the most part.
So until my next blog comes out (which will likely be about the lending process), I thought I’d offer some intriguing stories and advice that both consumers and real estate professionals have since shared with me.
Note: Some of the people below have requested that I not use their last name.
Stories
“My wife and I have been going through the same process for almost a year now. Our price range is somewhere between $180,000 to $300,000 and almost every home that comes on the market (in the past couple months) has at least five-plus offers the same day (and often times contain a cash offer) -- not to mention overpriced and still needing interior/exterior work. The investors are literally buying all of the homes at auction, which makes it a very difficult/frustrating process. The ones that do make the (Arizona Regional Multiple Listing Service) are all almost overpriced now and aren’t worth anywhere near what they are asking.” — Michael, Scottsdale
“While I purchased my home more than 10 years ago, some of the experiences you had are eerily similar to mine. I shopped the same market area, price range and style/age of home, and fell in love with several ‘remodeled’ homes that, with further investigation, revealed numerous flaws (E.G.: crushed AC duct work; no dishwasher; evap. unit removed and poorly transformed into a skylight; shed shoddily attached to the main house as a guest room; pink tile in bathrooms, etc.). Each inspection produced a three-page report of additional problems, which the owners (AKA investors) would not correct or lower the price. Seems like that point in the (real estate) cycle is back.” — Katherine, Phoenix
“We lived (in Arizona) 10 years ago and sold our home just as the market was on the upswing into the bubble (and we didn’t make much money off our sale because our buyer insisted we re-pipe the house at the time) ... Fast forward to 2012, and we decided we wanted to settle in Ahwatukee again .... however, we quickly learned that in order to secure a home comparable to what we were leaving in Austin, we were going to jump into the $150 per square foot range. Ouch! ... We ended up making three offers on three different homes. The first offer was on a home two streets up from where we ended up buying. The home was a single story, listed for $450,000. The kitchen had been updated and the floors redone, but that’s where the updates ended ... We offered $415,000. The seller’s agent never even bothered to respond (The house just closed last week for $440,000).
The second offer was on a home in Cabrillo Canyon ... the kitchen had granite, and a new cooktop and oven installed, but that was it. The rest of the house had not been updated since it was built in 1989. We didn’t want to go over $450,000, but we loved the house and offered $465,000 against a $495,000 list price. The time to respond came and went. When the seller’s agent finally responded to our agent, he claimed they got two CASH offers the same day for $485,000. (And when it finally closed, it did close for cash at that price.) I capitalized “cash” because the crazy investor-cash deals are happening at the higher price points, too.
The third home (the one we bought) had been mostly updated ... We ended up making an offer at $445,000 against a list price of $450,000. The sellers took our offer. However, upon inspection, they refused to fix anything. (We held them to the Seller Warranted Items portion of the contract in order to have the pool and spa fixed; the realtors kicked in for the roof repairs. None of the other items were fixed, so we will have to bring someone in to fix them.) The crazy thing is that even paying $445,000 for this house, we still have to replace kitchen appliances ... We will also have to update three bathrooms ... I share this saga in order for you to see the challenges at a different price point from where you’re shopping.” — Shannon, Ahwatukee
“I work for one of the “hedge funds/private equity” groups you speak of and your info is incorrect at best. This is what is being done with the single family homes. I don’t work for Beazer Homes nor (Kohlberg Kravis Roberts & Co.), but this is 100 percent accurate as we are doing the same thing. Fix and flips are for the small time guys looking to make a quick buck. (Private equity/hedge funds) look for the long kill.” — Anonymous
Advice
“I’d like to add an additional warning: The form purchase agreement used by Realtors in Arizona is heavily biased in favor of the seller (for example, if you default, the seller can opt not to keep your earnest money but can instead sue you for additional damages — a fact most realtors don’t even realize). I appreciate it is a competitive market for homes, and your Realtor will tell you that any changes to the “form” (which “everybody signs without objection”) will result in the seller rejecting your offer, but, I want to posit one question with you: The documents you sign (and that sellers sign) all recommend that the buyer/seller consult with an attorney before signing. Assuming there are 50,000 home sales a year (I am just pulling a number out of the air; it may be more or less), but that means that there are 100,000 parties per year buying/selling homes. How is it possible that no one uses a lawyer? My answer is that the realtors do what they can to dissuade their clients from using a lawyer.” Robert Nagle, attorney at Phoenix-based Nagle Law Group PC
“I hope you are not out there without having been pre-approved by a lender!” — Bill Parker, loan officer at Scottsdale-based GenCor Mortgage Inc.
“I actually think that the mortgage portion of buying a home is one of the most critical steps. Far too many times, buyers are not presented with various options because their loan officer does not listen or take the time to understand the buyer’s current position in life. Where is the borrower at in regards to their career? Job? Income? Family? Future plans? All of these answers help determine the type of loan that best fits their needs.” — Bill Rogers, president of Scottsdale-based Homeowners Financial Group
“Fix and Flip: Many times the average buyer cannot get a loan on a property that an investor can fix and flip. For example, lenders will not close a loan on a property if it is missing flooring or other items.
Square Footage: Check the square footage on the property with the county assessor. If it doesn’t match and it appears there may have been an addition to the property, there may have not been a permit pulled. If you suspect there was work done without a permit, local jurisdictions can tell you if a permit was pulled. Once you own the house, it’s yours and all of the potential fines that go along with not pulling a permit on work.
As-Is: Always have an inspection. Even if it is As-Is, you need to know what AS-IS is. The cost of the inspection will be worth it and will tell you if you should run! My inspector even has an infrared camera that can shoot ceilings without attics to determine if they are missing insulation.
Market Time: Sometimes a property will be on the market awhile due to loan restrictions. You see this quite a bit in the fix and flips. Most lenders will not lend on a property if the current seller has not owned it for 45-90 days, which eliminates some of the market. Another reason is that some of the (lender-owned) properties have owner-occupied offers only in the first week or two.
Sellers: Always be nice to the sellers if they are in the home when you are looking. This can sometimes make the difference on whether you get the house if you’re bidding against someone else. People want to sell to people they like.” — Janae Jaynes-Learned, designated broker at Scottsdale-based Brokers for Charity.
Kristena Hansen covers residential and commercial real estate.
