St. George Real Estate Blog - The 'Jedi's' Write Here...

St. George Real Estate Blog - The 'Jedi's' Write Here...

Jeremy Larkin

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Your agent tried to warn you, but you just wouldn’t listen. You thought you could save some real dough buying a short-sale. Now months have passed and you didn’t even get the home you wanted!

 

This can either be a long or short post. It all depends on how much convincing you need, which will then determine how much you elect to read.

 

If you’re a Buyer, you’ve probably been enticed by all sorts of real estate-sexy terms like “short sale”, “foreclosure”, or “bank-owned.”

Yes, just hearing those words may have you turned on for a “killer deal” as we speak.

 

As a Seller you’ve heard those same terms and they’ve had more nasty connotations. You  might have said to yourself, “those are things that happen to other people, not me.” Or perhaps you have even become aware of the fact that those very bank-owned, foreclosure, or “REO” properties are robbing you BLIND of your equity. And they are, believe me they are, but that is a discussion for another day.

 

However, this post is mainly devoted to Buyers. After getting really excited about the short-sale, you call your agent and tell them you want to make a really low offer and save some serious cash. Your realtor knows better, and tries to dissuade you from making the offer. “Let’s find another home” he or she says, but you just think they want a quick sale. You can’t be stopped. You are one savvy buyer and hell-bent on making a good deal.

 

Weeks pass, and still no word from the listing agent. Your agent tries and tries to call the listing agent to find out what is up, but they always get the same response: “we’re waiting for approval from the bank.” As the weeks pass, so do other buying opportunities on properties with great equity in them and that you can actually close on in 3-4 weeks. You, of course, are still living where you don’t want to and it’s driving you nuts.

 

Finally after say a 4-6 week wait, the bank comes back and tells you: “Sorry, we can’t accept your offer. Please bring us a higher offer.” Or better yet, “sorry we received a higher offer than yours and we will be pursuing it.” Or let’s say that they actually accept it. Now they need you to close within an EXACT number of days or it is dead and they have to reapprove…yuck! (Hey that 4-6 week scenario may be conservative...I've seen MONTHS pass before approvals).

We will be closing a short sale transaction next week. It took us 5 months, 7 offers, and probably 100 calls to the bank to get to this point. I am hearing figures of only 10% of short sales making it to the closing table, but who can be sure how many really do?

 

But it is a “short” sale…can’t I save money?

Here is the deal: The very NATURE of a short-sale is that the bank is taking a loss on the deal. Why in the world would they want you to give you a good deal in the process? Sure they need it sold, but they aren’t stupid and they will make dang sure that they exact every penny they can out of the deal in the process. They don’t care about you, me, or even the Seller – only their bottom line.

 

What is it with Human Nature?

There is nothing more compelling than the thought of either saving or losing money. Buyers in today’s market live in absolute fear of buying something that may lose value, or that they might have saved money on in some way. Sellers suffer from the same malady, only from the opposite perspective. They notion of selling their home and “leaving money on the table” is almost too much for most Sellers to bear. That is their hard-earned money dammit, right? Well not really. The equity you have on paper is just make-believe until you sell and get it out – just like the stock market.

 

So what DO you buy?

There are hundreds of phenomenal buys sitting right under your nose in our market right now, being offered by either A: motivated sellers with the equity to negotiate, or B: Motivated banks who have already foreclosed on the property (the short-sale never worked) and they have it back on the market at a great price so they can get rid of it quickly.

 

Any while you’re at it, please take caution with so-called “short-sale” or “foreclosure specialists.” These are usually just brand-new agents looking to cash in on the current market, or unscrupulous investors who want to save money at your family’s expense. If it seems too good to be true, it probably is.

 

Summary: Short sales are a necessary evil in today’s market, but they do suck. They suck for several key reasons:

1. They are, in essence, a "mirage." They look good from afar, but they end up sucking the life and energy out of everybody involved in the process: Buyer, seller, agents, Title Company, mortgage lender, the whole works. If you can avoid them, do.

2. As a segway to #1, statistically, you will probably never get that home. Really, you probably won't. You will either give up before the bank approves, or someone else will outbid you in the process.

3. Because of #1 and #2, they don't even end up being the "great buy" you wanted. I just sold one in downtown St. George for $9000.00 OVER the listing price! Yes, you read that correctly, OVER. Does that sound like a good deal to you?

Buyer beware, what more can I say?

"Amazing Deal!! Buy an Oak tree for $209,900 and we'll throw in the home behind for FREE!"

And yes, this DID come from the Washington County MLS by the way. I shall leave the agent nameless because I think he actually is a decent guy, but seriously! Am I the only one who notices the picture of the kitchen in a million-dollar home using Grandma's vintage polaroid camera with all of the shades drawn and the lights off?

It's amazing that even in a true Buyer's market, where Sellers really need and deserve the best marketing possible, Agents continue to reach new lows with their marketing standards. This is an off-shoot of another incredibly entertaining topic, "Worst Realtor Head-Shots", which can be saved for another day.

If you want some REALLY good laughs though, I can't compete with our Friend Norm Fisher in frigid Saskatoon, Canada who has taken the time to create the following website, "Unbelievable Bad Real Estate Photos of All Time." Go ahead and enjoy that one for a moment.

Another Great "Worst MLS Photos" site: http://therealestatebakery.com/category/worst-mls-photos/.  These make the 2 I've inserted here look great.

National Association of Realtors research shows that 85% of home buyers now begin their home search online, and that 24% end up buying a home that they specifically found online. Yet agents seem content to apparently take in excessive amounts of alchohol prior to memorializing a beautiful home like the one below as it tips over and crashes down the hillside into the St. George Historic District Below.

 This stuff is just another example of exactly why Real Estate Agents get such a bad rap for doing poor or no work.

Million Dollar Views!.................$35 camera.  

 

Anyone else who has seen some classics out there in your home searching? I will continue to update this post as long as we keep finding them.....which we always will. We can really have some fun by posting all of the bad MLS/ Real Estate Photos you send to us. Shoot them over to me at larkin@exitredrockrealty.com. (They will be pictured below)

 

 

4/21 - Phenomenal 2 Bed / 2 Bath Condo.....CAUTION: Extreme Radiation Present!

 

 

 

 

 

 

 

5/13 - I actually had a buyer client of mine email me today and ask "what kind of damage is that, fire damage?" No, it's not. It's a piece of crap photo of an otherwise beautiful home. Whoops.

 

 "No Officer, I have absolutely NOT been drinking.......hey who do you know who needs to buy or sell real estate?.............."

 

 

 

You know I wasn't going to write an offer on this home, but now that I see this picture......"

 

 

 

 

 

 

 

 

This home is ACTUALLY listed at $1.7 million.....too bad the photographer snapped this shot right as he/she was knocked to the floor by the mobs of people wanting to buy $1.7 homes right now...(the 35 mm Camera was not damaged however)

 

 

This is peculiar........and a great marketing piece!

But wait, there's more! I'm going to throw in the toothpaste if you write a full-price offer TODAY!

Cheesecake Factory makes the "Worst Company" list...I'm offended.

by Jeremy Larkin

I thought this was interesting. Calpers has been naming the worst companies since 1992. Fortunately their worst company picks WON’T put my beloved ‘Avocado Eggroll’ in jeopardy, but certainly isn’t helpful to the company’s stock.

 

On this year’s list? Cheesecake Factory, (OUCH!), La-Z-Boy, and many, many others.

 

According to Calpers, one of America’s biggest Pension funds ($235 Billion Big), the companies on this list need to improve their stock performance and governance practices.

California Public Employees Retirement System, also named insurance brokerage firm Hilb Rogal & health-care equipment supplier Invacare, and home-building group Standard Pacific to its most recent Focus List.

Making it onto Calpers' annual list is generally considered to be bad for a company's image and business, industry consultants have said, and top executives try to make quick changes to avoid being embarrassed a second time by the fund.

Here is a link to the MSN video that I first saw about this list: Calpers Worst Company Video.  Evidently they contact these companies “discreetly” in advance of publishing the list and tell them “hey, you need to clean up your act on some issues.” Some improve, and others don’t and end up on the list.

Last year the pension fund named insurance broker Marsh & McLennan and drug company Eli Lilly, but they made enough positive changes to escape being singled out again.

Personally, I couldn’t care less about their stock performance as long as they continue to serve those absurd portions and create one of the best products I’ve EVERY put into my gut.

Moral of the story: STAY OFF of any “worst” list of any kind.

Can Increased FHA Loan Limits Help Washington County Sellers?

by Jeremy Larkin

I've been away a few days and apologize for not getting this info up quicker.  This is fantastic news for residents of any county in the Nation, and specifically for Washington County buyers.  For a complete list of limits for all Utah counties, click here: https://entp.hud.gov/idapp/html/hicostlook.cfm

The FHA was established in 1934 to help borrowers, particularly those with low incomes, purchase homes by guaranteeing banks that those loans would be repaid should the borrower default. But the agency's loan limits have generally lagged behind those of Freddie Mac and Fannie Mae and as home prices climbed dramatically and lenders with looser underwriting standards proliferated the agency became less and less of a player in the mortgage market.

As a matter of fact, FHA insured loans have been mentioned as a possible escape hatch for borrowers who may be unable to make payments on their current adjustable rate mortgages when their interest rates reset over the next year, but that plan has its' challenges.

FHA financing is NOT the same as subprime financing.  It provides financing to borrowers with some credit issues and lower down payments, but it requires documentation of income and strives to prevent “payment shock” where a buyer jumps from a low rental payment to a high mortgage payment

This is good stuff, and in addition to the benefit of current mortgage rates (which I commented on HERE), this will allow many more buyers to realize the dream of home ownership in 2008. 

As a specialist in working with expired listings, I have been asked multiple times in recent weeks, "can this increase help sellers in Washington County?" The jury is still out. The real challenge lies in the fact that according to Lawrence Yun, chief Economist for NAR, as many of 80% of today's Buyers are also SELLERS trying to sell their current home before being able to buy. Ouch.

I better start out with the following disclaimer: I KNOW you are all thinking, "but Jeremy, of course you want us to buy now....you're a dirty Realtor!".....

And yes, you'd THINK that was the case, but I'd like to hope that I'm above car salesman-like sales tactics, and if you are thinking about buying Washington County Real Estate for investment or to live in long term, you'd better pay attention to this post, and in more detail, the Time Magazine Article titled "Ignore the Headlines...."

On one hand I can't see this market not declining further, yet John D. Rockefeller made the following logic famous when he said: "The way to make money is to buy when blood is running in the streets."  And running it is!

Allow me to share the following excerpt from the article:

Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today's rate of 5.5%. Monthly principal and interest come to $994.31. Let's say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you'd have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you'd rather not be.

To make matters worse, you'll have just spent 1 more year in a place you don't like! 

Here it is - read it and give me your thoughts!

http://www.time.com/time/magazine/article/0,9171,1713483,00.html 

 

 

You may remember that phenomenon as a child....the ball begins rolling down the hill, driveway, whatever....away from you. You make repeated attempts to "lunge" with your foot and catch it, but to no avail. Finally, you realize that the only way to catch that thing is to get in FRONT OF IT.

So goes the process of pricing property in today's real estate market. I am just seeing the same ugly scenario over and over again right now in the St. George / Utah's Dixie area, and it goes like this. "Help my home won't sell" is the cry of most Sellers in our area these days. Let's look at a scenario that is all too typical with this group:

You decide to list your Washington County property as you will soon be taking a job transfer to another town, (or whatever reason happens to be yours.) You sit down with your Agent who doesn't get started on the right foot by telling you that the home you thought was worth $325,000, is REALLY worth $295,000 max. Can you believe the nerve of that agent? Just trying to steal your hard-earned equity, right?

So you relent and determine that $295,000 is just too low, and besides, your house is WAY nice than those other homes your agent showed you in the comparable. You can get at least another $15k, right? You list at $310,000 against your agent's judgment.  And since your home is better, it probably won't matter that the competing homes are priced from $285 - $300k.

A month into the listing showing activity slows and your agent encourages you to just DO THE RIGHT THING and get that price amended to a competitive level, say $294,900. Sadly, a few competing home sell bringing the new "market" value to around $285k. Still reeling from the news that your home isn't worth $330k, you choose a conservative $300k even price so you don't loose any more money on the sale of your home, money that YOU EARNED, right?

Long story short, 4-5 months pass and the market continues to run away from you down the hill.  In the meantime you, or your spouse, have made the job transfer and the other 1/2 and the kids have been living without you for 3 months already! You finally relent, determine to get IN FRONT OF THE BALL, and price your home at an aggressive $269k where it closes escrow at $259,000 to a really nice family. 

That was most likely a $30k loss, and a TON of time, pain and suffering in the process. Whoops.

The summary points here are very simple, and extremely obvious. We have a TON of buyers just sitting on the fence right now, and 4x that many Sellers getting upset at the "cheeky" buyers and agents who want to "steal" their equity.  

If you don't need to sell, stay put. If you do need to however, then you've got to get in front of the ball to grab it before it runs far, far away. What these buyers need is something that EXCITES them, and that "something" is almost always a well-priced, well-prepared property.

One of the techniques that is working really well for us right now is the process of setting up a series of continual, small price reductions at the time of listing. Say $2500 per week for a $250,000 listing, and maybe 2x that for a higher-end property. It works brilliantly for many reasons.

#1 - This process puts you in constant, proactive 'motion" to stay in front of the market, rather than waiting for the neighbors to out price you months down the road. #2 - Your home is continually hitting the Washington County Board of Realtors "hot sheet", the daily list of new listings, or price reductions. This same list ends up in hundreds of inboxes of actual Buyers who have logged in to the MLS through public portals and signed up for daily email updates of the hottest listings.

Don't chase that proverbial market "ball." Get in front of it.....now.

 

BOY!....has this market taken a turn from the "good old days....."  I say that a bit tongue and cheek since those days were actually just 2 1/2 years ago.  "That long ago?" you ask....yes, it's been that long.

The real estate world is certainly not ending. It is more accurately "adjusting" for better long-term health. Yet I find that I am facing an increasing challenge with helping our Sellers see the truth on the pricing of their properties. I know how easy it can be for an agent to tell a Seller what they want to hear, but can you tell me how that actually helps them?

 OF COURSE you can trust me.......

CASE STUDY - Joe (name changed to protect the overly optimistic seller) Joe IS a real person whom I just spoke with today. He recently finished a spec home in the Hurricane Valley worth I'd guess $250k. He is trying to sell it on his own because there is just no equity there. So I can tell him 1 of 2 things.

WHAT HE MIGHT WANT TO HEAR: "Joe, we might be able to get you that $270k you want so let's put it on the market and give it a go." I tell him this because I don't want to hurt his feelings.

THE RESULT: I spend enormous amounts of time and energy trying to market the home for 6 mos,after which it doesn't sell. He spends $1200/month in interest only payments and utilities (which he doesn't really have to give anyway). 4 months into the listing he is faced with converting the construction loan to long-term with costs him a few grand, PLUS the payment now goes to $2400/month. In the meantime the home loses another 5% in value.

TOTAL LOSS TO JOE: $12,500 value drop plus $12-$15k in actual hard costs for a total of let's say $25k, not to mention that the home STILL isn't sold and now he will have to market the home at the correct price for another 3-4 mos, spend another $5k in interest, and who knows what else in utilities, etc.

BETTER ROUTE: "Joe, I can tell the truth, or I can tell you what you want to hear but I can't tell you both. "(Tell me the truth  Jeremy so I can make an informed decision). "Ok, your home is worth $250k and for all of the above reasons probably needs to be priced at  $245k to attract buyers.

Ahhhh.......that's better.

In this scenario Joe now has the opportunity to rent it, deed it back to the bank, "short sale" it, OR just lower the price, list it with an aggressive agent, take it "in the shorts" and get done with it, saving in the process his marriage, his sanity, his credit, and 6 months of pain. (not to mentioned $20k or more in real losses).

If you were my client, which would you choose?

Wal-Mart, Raving Fans & Sinus Infections

by Jeremy Larkin

 You know you do it.  You walk up to the cashier in your friendly neighborhood Wal-mart and initiate conversation in the simplest way possible: "Hi, how are you?"  You then think to yourself, "I hope they're doing good....I mean if they weren't they wouldn't really tell me, would they?....Cause gosh, if they aren't doing good I will (insert your own feelings here) feel really bad, not care at all, not know what to say...."

And of course, they always say "fine" or something similar.  But not this time, no the Wal-mart cashier just had to tell me the truth, so here it goes..(brace yourself). And I quote:

Cashier: I could be better

Me: Wow!, how come?

Cashier: I've had a really bad sinus infection for 2 months

Me: Can you throw in a case of that hand sanitizer right there?

No, I'm not kidding. Then there's the one at the other Wal-mart that always manages to tell my Assistant about her latest woes of being middle-aged and single and how the last guy dumped her, ran off, got a sinus infection, whatever.

My question is this: How in the world do these people make it to the front lines of the local Wal-mart? No, seriously! I've seen MUCH better qualified employees stacking pallets at 3 AM.

The answer is simple: The Wal-marts of the world aren't committed to creating 'Raving Fans.' They are barely committed to creating 'satisfied customers.' A satisfied customer, of course, is someone who isn't happy or sad about the business transaction, they just..."are"....they're neutral I guess.

Ken Blanchard writes about this topic in one of the best books I've EVER read, conveniently titled "Raving Fans." Blanchard discusses the fact that most businesses are just aiming for satisfied customers, but that satisfied customers aren't good enough!  We are trying to implement these concepts into our real estate practice, and it ain't easy. I have started the process of asking myself questions like, "what are we doing for our clients that is memorable?"  Sometimes I have no answer for myself of course.

What do you think? When was the last time you transacted business with someone or some business that made a "Raving Fan" out of you? Where the experience was so good that you would tell all of your friends about it? What about the opposite? Think about how often you have a mediocore restaurant experience and your reply to the Manager who asks how everything was is "fine." Is 'fine' good enough?

What about in your own business? Ask yourself: "Am I looking for 'satisfied customers' or 'loyal fans'?"

I'd love to hear your stories. In the meantime I've gotta go back to Wal-mart and pickup some Mucinex and hand sanitizer....

Historic Fed Rate drop cuts both ways for Borrowers...What about you?

by Jeremy Larkin

FIrst of all, I'm NOT a mortgage specialist, so what you get here is my best summary based on personal research. (meaning you might want to stop reading now if you really appreciate authoritative mortgage commentary!) On the heels of its surprise rate cut of .75 basis points last week, the Federal Reserve cut key interest rates again, the fifth straight cut since September 2007.  In short, economic data suggests the US is on the brink of recession, and the Fed is acting accordingly.

Who benefits from this cut?
I am LOVING this cut as a HELOC borrower! If you have a loan that is directly tied to the Prime Rate, you will see an immediate benefit. Home equity lines of credit (HELOCs) and variable rate charge cards are the types of loans that will have an interest rate reduction on their next statement.

What does this mean for long-term rates?
Long-term mortgage rates could actually increase after yesterday's cut, based on historical performance and recent trends. Wierd to some, I know, but it's just the way it is.

How does the economic stimulus package fit into the picture?
The economic stimulus package from Congress and the White House could be a double-edged sword for borrowers. Combined with recent Fed actions, the package could create inflation and bring about higher long-term interest rates.

On the positive side, conforming loan limits are likely to be raised from the current $417,000 to upwards of $625,000. This means great potential savings for purchase and refinance candidates who live in high-cost areas across the country.

The reality is that as always, "timing the market" is next to impossible, and if you want to know a little secret - some of the most savvy investors I know are on the lookout for purchases to hold long-term RIGHT NOW. As far as economic stimulus goes, I'm not seeing immediate improvements in the local market, so the jury is still out.

St. George Musical Theater Raises $165k in one Night?!?!?

by Jeremy Larkin

The plan of course, was to raise $50k, which was a noble goal in and of itselt. As a matter of fact I saw on the news this week that a University of Utah fundraiser put together something like $70-$80k, which is no small sum.

Can you imagine $165,000 big ones (including donations in kind) being raise for the St. George Musical Theater?....in one night!?!?!?! Well believe it, and I was pleased to witness it.  That is just plain HUGE!!

If you didn't make it, Dick Nourse "MC'd" the even, which headlined well-known Utah musicians such as Alex Boye and George Dyer.  Alot of wild opinons and commentary have been floating around about the theater for the past 2 years as they have contemplated their future in an effort to raise funds for their new location.  I am personally a huge fan, and as a Real Estate Professional, see ALOT of value in having community theater in our area. 

I challenge all reading this who are able to join the "give a grand" cause to get the Theater into a new home. CONTACT ME direct for more info or feel free to comment here!

Theater Info: http://www.sgmt.org/

Displaying blog entries 251-260 of 266

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Photo of Jeremy Larkin - The Larkin Group Real Estate
Jeremy Larkin - The Larkin Group
Keller Williams Realty
50 E 100 S, Suite 300
St. George UT 84770
435.767.9886
Fax: 435-359-5085

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