Banks Just Don't Get It

Recently, I railed about agents charging potential buyers for the costs of a "special" negotiation team in securing the debt forgiveness. This was over and above the traditional commission being earned and I felt very strongly that buyers were being gouged.

Later this week, I will have another tirade on how banks are abusing the very people they need, in order to extricate themselves from a mess, largely of their own making.

Meanwhile, I continue to be disappointed by the demands made of buyers by the banks themselves. Many have taken to requiring a potential buyer to qualify with a "preferred" lender. You don't have to use them, of course, but you are requested to at least pre-qualify. I saw one this week that required a buyer to fill out an attached form. Among the required information was not only your social security number, but also your mother's maiden name. All this to be faxed (how very secure) to "Joe's House-Painting, Pet-Sitting and Mortgaging Emporium". In the identity theft capital of the world, as Phoenix most certainly is, this is surely a recipe for disaster. This was not even a recognized bank, although that would hardly improve the situation, but a rinky dink mortgage broker that I had never ever heard of. I would add, that I have so far not allowed a client of mine to be blackmailed in such a fashion, and I have yet to lose a deal because of it. However, in the above example, the agent who "requested" that you comply, stated categorically that your offer would not be presented without it.

Essentially, today's buyer is not being treated with any respect, despite being an extremely valuable commodity and the only way out of this current quagmire.

Banks are sending a very clear message. Even though you have been through the trouble of getting yourself pre-approved, they do not care. They are telling you that they do not trust their "colleagues" in the lending industry. Yet, even while they are telegraphing their mistrust, they are insisting that you place all your trust, and financial information, in them. They are arrogant beyond belief and I suggest that we, as an industry, ride them as hard as possible until they learn better manners.

More to come, stay tuned!

Short Sales; Some Disturbing New Trends

As a Realtor, I am still astounded at how some neighborhoods remain awash in distressed properties, be they short sales or foreclosed homes. Of course, it's not too surprising, especially when you realize that pretty much any home built or sold after 2004 is worth less today, than it was then, at least in the Phoenix area. Many subdivisions that were built in 2006 and 2007 have virtually no original owners. Most have simply walked away, as prices halved, whether they could make the payments, or not. That is a subject for another day, although I will allow that the economy likely hurt many of them, while another large section of buyers took on debt they could not really afford, in the hope of continued appreciation that failed to materialize. All the while, aided and abetted by voracious bankers.

Recently, I was working with an elderly couple who were looking to downsize into a newer home. As usual, we ran into the problem that many homes on offer were short sales. They had neither the time, nor the inclination, to embark on what can be a lengthy process, so we concentrated on REOs and regular sales.

However, whilst skimming through some short sales, I was taken aback by the conditions of many sellers. I am used to a seller demanding the buyer qualify with a pre-selected lender, and I am used to not complying with that request. I see no benefit in my client divulging all their personal financial information to some lackey at a random bank. As I said, I was taken aback by a listing agent that disclosed that the short was being negotiated by a special company and that the buyer was required to pay the $4,000 fee associated with this service. This fee coming on top of the 6% listing fee that is customary in our market. Then, and at least they disclosed it, they revealed on their business affiliation disclosure, that the crack negotiating team was, in fact, a subsidiary of their own real estate company. All this on a $200,000 listing, which means the additional burden on the buyer was 2% of the asking price. Here's a newsflash! If you are unable to negotiate short sales, do not accept listings that require them!

In another short sale offering, the lister disclosed that the bank may, or may not, at its discretion, impose an extra 1% fee on the potential buyer. Genius! Punish the very person who is getting you out of the mess that you were, at the very least, partially responsible for creating. Some of these banks are as useful as a screen door on a submarine.

It will get worse. The ill-advised first time home buyers tax credit of $8,000 will be expiring at the end of June. Watch how many well-intentioned and eager would-be purchasers get entangled in the net of indecision that plagues most banks and their alleged decision makers.

Watch how eagerly our elected officials will scramble to re-fix the fix that they caused to be broken in the first place.

It's gonna be a bumpy ride.

Another Reason to Love Cave Creek- It's Easy To Do

Here is another installment in an occasional series extolling the virtues of our little town Cave Creek. Our many and varied eateries have long made Cave Creek both a destination for tourists, and a haven for snow birders who return each winter. Recently, a new establishment has opened, garnering instant acclaim due to the hard work of its owner. Take a bow, Bryan's Black Mountain Barbecue.

We recently had the pleasure of taking lunch there with some out of town guests. I sampled the pulled pork sandwich, which was delicious and moist. My friend partook of the two meat combo, while the ladies each took a half slab of pork ribs. All were impressed with the preparation and taste. The ribs were smoky and tender and came out piping hot. My wife also had the baked potato salad, which to clarify, is a potato salad in which the spuds themselves are baked, so it is not a hot dish, it has amazing texture and spicing, in a word- Yum. Also, recommended is "our famous olive coleslaw". We had tried it with some friends at the recent "Taste of Cave Creek" festival. To admit, we had taken one bite and not really liked it. Boy, were we wrong! The second bite somehow drags you in and you quickly realize how scrumptious it is.

Located at 6130 East Cave Creek Road in Las Tiendas, they are closed on Sunday and Monday. And remember, it is freshly prepared so it will take a few minutes to arrive cos it ain't fast food, it's real food.

You're Welcome!

Cave Creek Gets A Boost From Walmart

The town of Cave Creek was recently involved in a minor kerfuffle regarding the re-zoning of a parcel of land on which Walmart were proposing to build a new store.

The town folk were overwhelmingly in favor of such a development, indeed the last council elections were a virtual referendum on the issue, with those for it being voted in, and those against being shown the door. In fact, four incumbents were defeated by four newcomers. Pretty decisive.

Naturally, this did not discourage the usual crew from central casting, including many non-residents, in mounting their knee-jerk reaction campaign to defeat the great Satan--- Walmart.

They succeeded in having the issue placed on the ballot in a special election and were resoundingly defeated, as expected. They did succeed in delaying the start of the project, therefore denying the town much needed revenue for another eleven months. Thankfully, cooler heads have prevailed and the tax revenue will prevent the need for a property tax, something for which we should all be grateful. Not only will the revenue derive from an estimated catchment area of 30,000 people from surrounding communities, thereby spreading the "load" but Walmart will also bring around 300 much needed new jobs to the area.

All in all, a good thing for our little town.

Another Good Reason To Make Cave Creek Your Home

Cave Creek, which I am proud to call home, is a great little western town with an eclectic mix of art stores, restaurants and bars, plus antiques and collectibles sprinkled throughout the town core. Add in the awesome Spur Cross Conservation Area with its many and varied hiking trails, and Cave Creek makes a great destination for a visitor on a day out. It also makes for a great place to live.

Many creekers are over-achievers and the latest incarnation of that trait is the monthly (first Saturday) "Thieves Market" situated for the most part in the parking lot behind Big Earl's Greasy Eats. It is an open-air market that brings together a mixture of both local merchants displaying their wares, plus vendors who come up for the day. All manner of arts, crafts, metal-works, vinyl records, clothing (both new and antique), BBQ equipment, jewelry, massage, bric-a-brac, concrete statues, antiques and Americana is on display. Grab a cup of coffee and stroll around. This week I even saw a WWII Japanese rifle. There is truly something for everyone. Come up for the shopping, then stay for lunch at one of our many great eating establishments. You could stay on site and enjoy one of Big Earl's legendary burgers. Or you could cross the street and eat at the newly-opened, and extremely popular, Bryan's Black Mountain Barbeque. (I'll be writing more about that eatery next time).

See you at the next Thieves Market on January 2nd, 2010, it is a blast. And maybe you'll fall in love with Cave Creek just like I did.

(Photo courtesy of Sonoran News)

Oh, Bank of America...Have You Met Customer Service? No, I Didn't Think So.

This is a story that despite being fraught with difficulties, has a happy ending. It is partially about the difficulties we sometimes experience with short sales; it is partially about the hoops one must go through to obtain a loan, but mostly it is a sorry tale of complete, absolute and total lack of customer service that a client of Bank of America can expect today.

Let's start at the beginning, shall we? We had out of state clients that were looking to buy a home in the Cave Creek area, having lived there previously. Naturally, we encouraged them to get pre-approved so that they would not be hampered, should we locate the perfect home. They were well-qualified, with a down payment of 20%, and they told us that they would contact Bank of America, an institution they had used previously, with success. We have long held reservations regarding BofA, which are beyond the scope of this article, but we had no choice but to allow them to proceed. So they called BofA. Again and again and again! That's right, they had to call three times before they were to receive the courtesy of a reply. Personally, I would have dumped them then and there on that basis alone. Unfortunately, the buyers' previous experiences had created a loyalty to BofA that was neither warranted nor deserved, as they would now confess today. As you are no doubt aware, the purchase contract in Arizona requires an addendum called the Loan Status Report (LSR) which, in part, informs the seller as to how far along the process of getting a loan the buyer is. Additionally, it requires that the lender respond to enquiries during the escrow period from the agents involved so that everyone is up to speed. BofA do not "DO" LSRs. Such is their arrogance that they choose to transact business in a state that requires such a form, whilst essentially thumbing their nose at the process. Instead, they give you a "Buyer Ready Approval Certificate" and promise to close the loan within 30 days, or...or, nothing, actually. They make the promise, but there is no penalty if they fail, so it is an empty one. Curiously, when we asked our clients if they had furnished all their tax returns, etc., they told us that BofA said not to bother, until they found a home. Hmm! In reality, they were only really pre-qualified, not pre-approved. The fact is that BofA do not care to perform the necessary work ahead of time, instead they prefer to have you jump through hoops, (hoops that could have been cleared weeks earlier) during the escrow period. It may delay your closing, but better that than have them do their due diligence ahead of time, after all, you are just the customer, right?

As an aside, we were in back-up position on a short sale at this time. Then, the phone call. The original buyers had backed out, so it was ours if we wanted it. We did. BofA swing into inaction. Their ability to return a call was non-existent. Their communication skills dreadful. The "personal banker" that had begun the ordeal would not speak to either the buyer or us, as the file had been forwarded to processing/underwriting. The phone messages on all contact numbers essentially said "The chances of us calling you back with 24 hours are so small as to be incalculable." They demanded all sorts of financial evidence (retirement accounts, IRAs, etc.) that should have been dealt with before we even found a property. They demanded roof repairs two days before we were scheduled to close escrow. They demanded ADEQ water records on the day we were scheduled to close escrow. Such reports normally take 7-10 days to process, although we were able to get them the next business day, due to a helpful contact. It appeared to us, that all these last minute demands were the result of an organization that did not even pick up the file until about the third week of escrow. Such is their contempt for the client, that they would much rather make you do the impossible, than start work on the file in a timely manner, in order to allow you to honor their requests. All the while, not returning calls or communication in any way. They promised to call back, they didn't. They promised loan docs by a certain deadline, three days in a row, and were unable to manage it even once. All without letting the client know. You see, they manage to communicate, the little that they do, through the "customer service" people who answer the telephones. These people cannot help you, they can only relay your messages of frustration via email to the actual person who CAN help you but you are not allowed to speak to on the phone. In all the days of our escrow the client spoke to the actual "loan officer" a total of- wait for it- four times. Meanwhile our clients spoke to the unhelpful drones at "customer service" everyday.

In the meantime, the short sale final approval, which was also handled by another worthless BofA department, was contingent on a HUD 1 being approved that reflected a certain minimum dollar amount. This was duly sent, and ignored. So we had the loan docs signed, were ready to fund, but we still could not close. Bank of America was preventing Bank of America from closing on the house. We knew the name of the individual who needed to approve the HUD 1, take a bow Kim Alexander, but the operator ran interference and could not be persuaded to allow us to speak to her. We were not authorized. The operator would not even explain the procedure or the process or the time frame usually needed to complete the authorization. She preferred to spend 20 minutes arguing about what she would not do, rather than spending 5 minutes on explaining the process. It was like dealing with the government. The listing agent, who WAS authorized to speak to Ms. Alexander, was also denied access. Unbelievably, due to the listing agent's tenacity, someone in the chain of command accidentally gave out the direct number of the short sale deadbeat. OPPS! Ms. Alexander told the lister that "I have had the HUD 1 since 9.30". The lister said, "You mean 9:30 this morning?" "No," she replied, "I mean 9/30 (Sept. 30th)." It was Oct. 5th! Wonderful, but it gets better. She eventually sent the approval to the title company. However, it was encrypted for "security reasons" (I have no idea why as it contained no secure info, like SSNs, for example). The title company was unable to open it, so they contacted Ms. Alexander. Guess what she did? She put them in contact with a techie in India or Pakistan, I am not kidding, who was also unable to open it. Could BofA have been more unhelpful? Why not just scan and email the approval? Too simple, I suppose.

Ultimately, we closed escrow around eight days late, which is not too tragic in the overall scale of things. Remember, though, that we had been in back-up position so I have no idea how long the original buyers had been mistreated before the deal fell in our laps. Maybe they died of old age. I have heard of some short sales taking up to 7 months to complete.

As I said at the outset, this is a story partly about short sales, but mostly about an epic failure in customer care. Not so long ago, when dealing with a buyer, their lender would often make a great effort to impress you in hopes of future business. BofA has made no such effort, and obviously believes it is too big to concern itself with peons like me. That is their right. However, it is probably no coincidence that they just posted a 3rd quarter loss of $2.2 Billion.

Anecdotally, other title officers and Realtors have said that generally banks no longer seem to care. In our area, it seems that BofA have the worst reputation, whilst of the big ones, Wells Fargo maybe has the best.

What do you think? I'd love to know.

How local should your real estate agent be?

We recently closed escrow on a home in the city of Buckeye that we helped a first-time buyer secure. They kindly sent a note thanking us for helping to make the experience as smooth as possible. They also stated how glad they were to have stuck with us, even as friend and colleagues were pressuring them to use a "local" agent. (We are based in Cave Creek, AZ) It got me to thinking "Is that a valid concern?"

As with many things in life, it depends. Information is so freely available in this hi-tech era, that it is relatively easy to garner information. In a previous life, when I lived in Los Angeles, it was not unusual to sell homes as far apart as Marina Del Rey to the west and back to Pasadena or Glendale to the east. In fact, I even sold one home that belonged to a friend in Palm Springs, some hundred miles away. Although some agents choose to concentrate on one particular area, it is not unusual for denizens of large metropolitan areas, such as Phoenix, to spread their wings a little. We have sold homes in areas as far north as Cave Creek and Anthem (and a vacant lot in Black Canyon City) to the home in Buckeye to the west, and houses in Gilbert and Mesa to the East. The only difference between Phoenix and Los Angeles is the commute time. From Cave Creek to Buckeye, a 70 mile trip, takes about an hour and a quarter. A journey of similar distance in L.A. would most likely take two or more hours.

The other important aspect in selecting my wife and I, is that we are very experienced agents. Between us, we have 25 years experience and therefore have run across, and solved, most problems you are likely to encounter in a transaction. We are experienced negotiators. We have many contacts. For example, we are currently representing a buyer on a home in Tonto Hills that has a private water company. A week before closing, the lender required a lot more information on the capabilities of that company. That info can only be obtained from the Arizona Dept. of Environmental Quality and would take 10 days to access. We got that information the very next business day.

So the question becomes. Are you better off with a "newbie" who lives in Buckeye, or an experienced pro who is willing to undertake a 140 mile round trip to show you properties? How about the Buckeye "pro" who was selling homes for $265K three years ago? The exact same home that you just bought today for $110K. How helpful was their advice back then? And before you ask, we deterred many of our clients who did not need to buy over the last few years, soon-to-be-retireds, for example. There is much more to life than money.

Finally, any business depends upon referrals as its lifeblood, none more than real estate. That is why we are always willing to go the extra mile, literally, to satisfy our clients.