Newsletter

Many of you may have watched news stories about the changes coming to the real estate market based on a lawsuit that was settled with the National Association of Realtors.   I know this article is dense and long but it is likely the most change you will ever see in the real estate market. I am not a lawyer and have no profession to become one, but here is my lay summary of the lawsuit.  Essentially, the proponents of the lawsuit believe that they paid too much commission based on the embedded commission sharing agreement within the MLS. I am certainly not going to try to justify or agree with either side in this matter,  but I can explain the ramifications for you as a buyer, seller or both.  The bottom line is commissions have always and will always be negotiable.  They are not set by any board of realtors or realtor association in any way. This has always been and will always be a free market. Each individual agent makes their own decision on what to charge so let’s explore what has changed.

     For the rest of this article, I will refer to the commission charged in terms of fruit just to avoid any allegations of price fixing.  Let’s begin our discussion with the impact on the buyer. Next, we will address the affect on the seller and finally, we will address some of the unknown aspects of the new practice.  We will try to temper all of this discussion with a little dose of reality based my 39 years of real estate experience and our combined over 54 years of experience.

     The first major change is that no Realtor (and I am intentionally distinguishing between a Realtor and an agent) may now show a home without a written agreement for compensation with the buyer.  There are a few exceptions such as a buyer walking into an open house but we cannot, even for a virtual showing, open a house for you to look at without prior written documentation of a buyer broker agreement of some kind.  We will explain the different kinds in the coming paragraphs.  This means that unlike in the pre-settlement days, if you call off an ad or a sign or a post, we cannot show the home to you unless you agree to a compensation agreement between yourself and our brokerage in the event you should purchase one of the homes that we showed to you.  This will be offset if the seller agrees to pay a commission and the agent will not receive funds from both except in the rarest of circumstances.

     This may seem scary to most buyers but the upside of this is that it will require you to choose and be at least somewhat loyal to an agent of your choosing.  I encourage you to build trust and a relationship with a real estate agent and like many of my clients stick with them for life.

     To ease the apprehension about jumping into a relationship there are a couple of options.  Our broker has described the options as dating and marriage.  I am going to ad lib another version that is included called speed dating.

     Lets start with the most binding one which is an Exclusive Buyer Broker Agreement.  This one is the equivalent of a marriage but with a termination date that is shorter than till death do you part.  If you sign an Exclusive Buyer Broker Agreement with an agent, AND you purchase a home within the State of Arizona, you are agreeing that you will ensure that your agent receives whatever fee you have agreed upon whether that is 2, 2.5, 3 or 3.5 apples or a flat fee of 20000 bananas.  At the end of the term of the contract, you are automatically divorced unless you choose to stay married. This doesn't necessarily mean that it will come from you and not the seller only that they will receive it.

     Let’s talk about the dating aspect of this process.  It is basically the same only less obligatory and more narrow.  A buyer would sign the same type of agreement except it would be for a much shorter term and only apply to specific properties listed in the agreement.  The speed dating version would likely be for a single property for a very short duration of time.

  These commissions were previously almost universally paid by a commission sharing agreement with the listing agent that was automatically communicated to the buyer’s agent via the Multiple Listing System. This practice is no longer allowed. There are two parts of this scenario that come into play.  The buyer can now negotiate with their agent on what that commission structure will be. But they always could! It was not uncommon for me to contribute, especially to veterans or first time buyers to make their purchase a little easier.  Secondly, suppose you negotiate a great deal with your agent to only pay them one apple for the purchase of a home.  Subsequent to that you find a home with a seller that is willing to cooperate with an agent and pay 2.5 apples.  The excess does not go to the seller or to your agent or to the listing agent, it comes to you!  Sounds great!

     But not so fast! Most decent agents are not going to be willing agree to work for one apple (because they cannot survive in business). There is no requirement for an agent to accept your business just because you have a newfound avenue to negotiate upon. If you make it up in volume and are losing money on each transaction, you are only going further in the hole.  So what happens if you have agreed to pay your agent 3 apples and you purchase a home where the selling agent is not willing to pay any apples?  The buyer must then pay their agent at closing the 3 apples which demonstrates that there are pros and cons to both approaches.  Maybe this is just too simple of a process and there is something that my country logic is missing, but I am pretty sure that the buyer, having to suddenly come up with three apples in addition to all of the normal closing costs, is going to make all but the cash buyers very, very, uncomfortable.  The amount of cash necessary for down payment and closing costs has long been the primary deterrent to home ownership in America and most buyers just don’t have an extra three apples laying around to contribute to the sale of a home or at the very least will need a few more years to harvest said apples and bring them to the table.  This is demonstrated by the fact that almost all government programs to promote housing focus on down payment or closing cost assistance because they are the barriers to home ownership.  Adding two or three more apples to the amount needed, certainly isn't going to help the process.

     Which brings us to the sellers version of these events.  There will be some sellers out there that see this as an opportunity to save some apples and I just don’t think this is realistic for a couple of reasons.  The first reason is similar to the reason that For Sale by Owners have been largely unsuccessful over the years.  The unrepresented seller is trying to save the same apples as the unrepresented buyer and they both cannot save the same apples.  The second reason is that, in this new scenario, it is possible for the seller to not agree to pay the selling agent a commission thereby placing that responsibility on the buyer. The seller would get all the benefits of the MLS and the Agent Marketing but the Buyer’s would have to be informed the additional compensation to the Buyers Agent would have to come out of their pocket.  IF I am a buyer, I am going to look at every house that is willing to pay my Buyer Broker before I ever look at the first house that I have to pay my agent out of my own pocket.  This may change in the years to come but this is how I believe the market will operate going forward. 

     One of the other major changes is that you will also now be able to make the paying of the fees to the buyer broker a caveat of the contract when you submit an offer so there will never be an instance where the buyer does not know the status of payment prior to committing to a home.

     For us as Realtors, the major change will be that we will have to do a form prior to showing or presenting a contract, signed by the brokers (not just the agents), agreeing to a compensation amount.  Agents will be authorized by our sellers to offer such an amount of compensation in advance.  This offer just cannot be communicated in any way or facilitated via the MLS.  No we cannot just say that this home pays 3 apples in the remarks as that would violate the spirit of the settlement agreement that NAR has reached.

It remains to be seen whether appraisers will take into account whether a co-broke is paid or not in future appraisals much the same way they do with concessions in the current market.

     Sounds like a lot of changes for us but if you want an agent that is up to date on the latest changes and can balance that with almost 40 years of experience, please call or text the Al Gage Team at (623)-694-9004 or email at al@algage.com

 

I know this doesn't have much to do with real estate, but I was inspired this month by an “Olde Glory” presentation at a convention that I attended.  I am a veteran. but I am no career military officer or war hero by any stretch of the imagination only serving for two years in the Army! My son and son-in-law are both decorated combat veterans as are several nephews.  I love my fellow veterans and will go far afield to try and serve their real estate needs. 

Many of these veterans and/or their spouses have made huge sacrifices to serve.  The motto in the song by Billy Ray Cyrus is “All Gave Some, Some Gave All!”  

As a kid, I was quite a military history buff and studied all of the places mentioned in “Olde Glory”  My father was a Purple Heart recipient from the campaign on Leyte in the Phillippines in World War II. Here is a reproduction of the ceremony and in this era of great division in our country, I want you to think about the service that these veterans and active duty personnel have and will give for their country!

“"OLDE GLORY PRESENTATION"

The flag presentation ceremony performed at retirements. This is a very touching ceremony- there is never a dry eye in the house if the ceremony is properly performed. Flag ceremony participants always wear gloves and it takes practice to get it right. A good MC is a must. The text of "Olde Glory" is divided into the number of segments needed to represent each of the ranks held by the retiring member during his/her career. .

MC: "Flag ceremony participants, post!"

MUSIC: Low volume - Navy Hymn.

Seaman/Fireman Recruit/Private/Airman Basic:
I am the Flag of the United States of America. My name is OLDE GLORY.

I fly atop the world's tallest buildings I stand watch in America's Halls of Justice.

I fly majestically over Great Institutions of Learning.

I stand guard with the Greatest Military power in the World.

LOOK UP! and see ME!!!

Seaman/Fireman Apprentice/Private/PFC/Airman:
I stand for Peace Honor Truth and Justice.

I stand for Freedom!!

I am confident I am arrogant I am proud.

When I am flown with my fellow banners, my head is held a little higher - my colors are a little truer

Seaman/Fireman/Specialist/Corporal/Senior Airman:
I BOW TO NO ONE!

I am recognized all over the world.

I am worshipped - I am saluted - I am respected - I am Revered - I am loved - I am Feared!!

Petty Officer Third Class/Corporal/Specialist:
For more than 200 years, I have fought in Every battle of Every war;

Gettysburg, Shiloh, Appomattox, San Juan Hill, The Trenches of France, the Argonne Forest, Anzio, Rome, The Beaches of Normandy

Petty Officer Second Class/Sergeant/Specialist:
the jungles of Guam, Okinawa, Tarawa, Korea, Vietnam and in the heat of the Persian Gulf and a score of other places.

Long forgotten by all, but those who were there with me.

I was there.

Petty Officer First Class/Staff Sergeant/Technical Sergeant:
I led my Sailors and Marines,

I followed them, I watch over them, they Love Me.

I was on a small hill on Iwo Jima.

I was dirty battle torn and tired but my Sailors and Marines Cheered Me!!!!

I WAS PROUD!

 

Chief Petty Officer/Gunnery Sergeant/Sergeant First Class:
I have been soiled burned torn and trampled on the streets of countries that I have helped to set Free.

It does not Hurt for I am invincible.

I have been soiled burned torn and trampled on the streets of my own country

And when it is done by those whom with I have served in battle. It HURTS!!!

But I shall Overcome for I am strong!!

Senior Chief Petty Officer, First Sergeant/Master Sergeant:
I have slipped the surely bounds of earth and, from my vantage point on the moon,

I stand watch over the New Frontiers of Space.

I have been the silent witness to all of America's finest hours.

Master Chief Petty Officer/Sergeant Major, Master Gunnery Sergeant/Chief Master Sergeant, Command Sergeant Major:
But my finest hour comes when I am torn into strips,

To be used as bandages for my wounded comrades on the Field of Battle

When I fly half mast to Honor my Sailors and Marines

and when I lie in the trembling arms of a Grieving Mother - at the graveside of her fallen son or daughter

I am proud!

Retiree:
My Name is "Olde Glory" Long May I Wave Dear God, Long may I wave.

MC: "Flag ceremony participants - dismissed."

I have seen this ceremony twice in the last month and it brought me to tears both times as they slowly pass the folded flag and do a slow salute to one another both before and after the flag is passed.  Finally the flag is presented to the retiree or the deceased service members spouse and that is the end of the ceremony.

As we celebrate this Fourth of July, be mindful of the pets and fireworks and of course no gun play on the holiday. Most of all remember the sacrifice that all of these service members throughout history have given to their country.  It is also why they deserve a special lending program just for veterans with no money down.

Call us for all of your real estate needs and we will treat you like an American Hero from start to finish!  Call or Text the Al Gage Team at 623-694-9004 or email us atal@algage.com

 

   By the time this gets to you it will be passed the celebration of Mother’s Day but really doesn't matter for this discussion. I am talking about the changes and problems that my mother had to either endure or overcome to partner in one of the most highly successful businesses in Avondale. As my mom looks forward to celebrating her 90th birthday, she has a unique overview of the changing times in Avondale.

     She was born to my grandmother and grandfather in Indianola, Oklahoma. They moved to Chandler and eventually Avondale pursuing migrant farm work in the 30’s. The first major obstacle of her young life was the death of her sister from diphtheria when my mom was three years old. We don’t ever hear of that disease anymore, but it was deadly and uncurable before the advent of antibiotics at the close of World Ward II. I know this still weighs heavy on her heart to this day but of course it made her tougher.

 

 

 

   News Flash! Punxsutawney Phil did not see his shadow on February 2nd during the Groundhog Day celebration at the Gobbler's Knob in Punxsutawney, Pa. This means that according to the highly scientific meteorological forecasting models employed in the tiny groundhog brain, we are in for a mild and early spring.  A welcome relief to many of our snowbird type friends and family that live in that unmerciful winter life that extends below 40 degrees Fahrenheit. I realize that by the time you receive this, his predictions may or may not have already come true.

Here is the best part of this story. NOAA the U.S. Government Weather experts tend to agree.  At least with regard to temperature.  When you get to the precipitation forecast, it models a little bit in the opposite direction for most of the country with increased precipitation as the forecast.  One of the major reasons that we live in the great State of Arizona is that you simply do not have to ever worry about that thing called winter.  As a side note, I recently attended a conference in January in Kearney, NE.  The temperature before wind chill approached –35 F.  I got to discover what frost pimples were!  Frost pimples are when you expose skin to cold and get goose bumps that then freeze.  Not fun!

In any case, you may be wondering why your local realtor is going on and on about the weather.  I assure you I am not.   I am talking about weather prediction.  Weather prediction is very similar to modeling the real estate market.  Have you ever seen the possible paths of hurricanes posted on the news?  They have a general idea of where the storm is going and when it going to hit, but this is all subject to variables and differences in the models’ mathematics.  They are fairly accurate because all of their observations are based on real time measurements and data relays.  Remember, NOAA flies through every storm taking measurements.

The real estate market and those that predict it, including me, suffer from a couple of fundamental flaws in our predictions.  The biggest of all, is that sales data is always at least 30 days lagging from the actual activity of the market.  This is because, even if the market is suddenly very hot and every home that is for sale sells this weekend, it will take at least 30 days to show in the sales market.

One of the statistics that you see used as an economic indicator in the real estate market is “new home starts.”  These statistics also suffer from the same type of lag as the above because contracts for purchase do not turn into actual starts until after at least 60 days. These starts also inflate numbers the other way by speculative starts which you may know as spec or inventory homes.  These are homes that builders construct, so that someone walking in the door can purchase a home without waiting for it to be entirely permitted and built.

Here is the current trend of New Home Starts from our good friends at Fannie Mae.

As you can see, there is a huge uptick in new home starts in the second half of 2023.  Why did this market turnaround so quickly without a significant change in the economy?  The answer is simple! Or is it?  The simple answer is interest rates have dropped significantly to around the 6% range which many people find tolerable even though over 90% of existing homeowners have rates still below that threshold.  The answer is not entirely interest rates though.  The new home builders have very aggressively incentivized the sales of their homes.

I cannot stress enough how important it is for you to take us with you before you look at new homes so that you are properly represented and have access to all the information that we have.  Let me give you an example of what I mean by aggressive incentives.  One builder is currently offering $20,000 in savings (an il defined term) and interest rates as low as 2.875% (6.32% APR) (which means it is likely a buydown or temporary rate that they are paying an obscene amount of money to obtain).  They are also offering agents 5% co-broke for bringing you in.  Want a healthy break on the sale of your existing home, make sure you take us with you.

Another home builder is offering a 2-1 buydown means that you buy the rate down 2% the first year, 1 % the second year and years 3-30 are the same or close to it as the regular going rate. They are also including $10,000 in additional closing costs with their lender for the next four months and $20,000 starting in June as well as a 4% co-broke to the agents.  I put those co-brokes in because they are attempting to incentivize you and to make the average seller realize, that when they negotiate that really low commission with an agent, they are actually hurting their chances of selling the home.

It is very difficult for the average seller to compete with these incentives on a sale so how does a seller compete?  The seller has three distinct advantages!  Most of the new builds are on the perimeter of town, a little bit longer or tougher commute and that is what makes the resale market viable. The second one, is that resale homes are usually just a little bit less expensive as compare to the new builds.  Lastly, the resale home comes with the window coverings, mature landscaping, and all the other little incidentals that come with buying a new home.

What does the resale market forecast look like?  Again, we will turn to our friends at Fannie Mae for that prediction.

If you look closely at this prediction, the prediction was a steady and long upward trend of the housing market once the interest rates were stabilized and the public became velocitized with these new higher rates.  That forecast has been improved, so to speak, to an even better forecast of a rapidly improving market.  The numbers do not quite bare that out yet but again, that is because the numbers tend to lag behind because of the delay in closing.

As predictions go, I remember laboring to get back in shore on my friends boat after a day of diving in Florida that had been undertaken as a result of a forecast of 2-3 foot waves and a slight Westerly wind of less than 10 knots.  Being on the West Coast of Florida, this would have meant that we had a following sea (easier to travel going with the wind) and a fairly smooth trip in my friends relatively large boat.  Instead we were greeted about noon with 40 knot winds from the Northeast that built the 2-3’s into 6-8’s crossing the bow at a 45 degree angle.  I am pretty sure I left a kidney on that boat.

The point of this story is that predictions are just that, predictions and can generally only show a trend.  Please to not hesitate to call if you want the latest up to date market conditions and pricing on your home. Sometimes the meteorologist don’t get it right and we believe in a groundhog?

If you want an agent has years of experience and a wealth of market predicting ability or if you want to purchase a new build and be aware of all of your options in both financing or purchase strategy, give the Al Gage Team a call at 623-536-8200 or email us at al@algage.com

 

A New Hope! Many of you don’t realize it but that was the actual title of the famous movie that was released as Star Wars in 1977.  I must admit that I was a full-on geek on the subject and stood in line for something like 7 hours to see the movie at the Cine Capri Theatre on 24th St and Camelback.  This was a luxurious theatre for the day but it only had a single screen and seated less than 500. Star Wars set the record for the longest running movie in a single theatre at this location. Luxury in those days is nothing compared to the reclining seats in one of the fine theatres we have today. 

     This is a spoiler alert for the ONE person that has been on a deserted island for the past 50 years and has not actually watched the trilogy of original Star Wars movies.  Luke Skywalker is the good guy!  The eternal optimist! The kid you want to root for from start to finish.  That same kid that you want to root for is the real estate market right now!  It is very naïve, makes a few hiccups, is very well intentioned but really has a lack of clear direction. More than anything else, he was stubborn just like this real estate market has been.

The real estate market has spit and sputtered all year.  We ended up with an overall decline in price per square foot in our neighborhoods of 9.24% for single levels and for 9.39%.  Not too bad when you consider that our market was probably a little overheated in the first place. 

Our market began to slow dramatically, almost to a standstill,  from an absolute skyrocketing market.  This was almost entirely an attempt to block inflation (the Evil Emperor).  The Emperor is nothing short of pure unadulterated negativity.  There is no long term gain from it.  If you get a 20% raise in an era with 10% inflation, you are losing money at the start of the third year.  This suddenly runaway inflation had to be stopped or the Evil Empire would surely take over.

Step in the next character who of course is Darth Vader. In this analogy, Darth Vader is the Federal Reserve Board.  The “Fed” as it is so affectionately known is the administrator of federal rates and in my opinion, largely responsible for the runaway inflation.  First, by propagating the low interest rates for so long that we became accustomed to “free” money. Secondly, by not reacting sooner to the inflation. They were trying to curb the inflation that they had denied the existence of for so long. Suddenly, they acknowledged that it was everywhere, and interest rates rose through the roof as a result.

“No Luke, I am your father!”  Much like Darth Vader in the end, the “Feds” intention was good but their implementation was disastrous.  They overreacted instead of reacting moderately after they had denied its existence for so long. The implementation of rate hikes by the “fed’ very rapidly raised common interest rates from starting with 2 or 3 as the first number to starting with an 8 or a 9 as the first number.  This was effectively the Death Star for the real estate market.  Most younger, first time buyer’s simply could not and cannot afford a $2700 a month payment for their first home.  When you eliminate the first time buyer’s every other level of sales is affected.  This effectively brought the real estate market to a halt in the middle of 2023. No one was buying and yet the real estate market did not completely crash. 

This was almost entirely luck! If you want to be lucky you have to at least invoke the spirit of the always lucky Han Solo. This slower than expected drop in prices, was  made possible by a bit of nesting behavior on the part of many home sellers.  They wanted to move but could not give up their two or three percent mortgage to jump to an 8% mortgage so they just stayed. They simply didn't take some of those promotions or lateral transfers.  Again, this was pure luck, but it kept the real estate market stable or at least in stasis although some of our homes went down as much as 15% in the last half of the year.

Everything in this world either runs on politics or supply and demand.  The solution that has evolved is a combination of both.  The interest rate market final invoked its inner Yoda and came to a solid direction.  It said: “Do or do not, there is no try!”

Interest rates have dropped down to numbers that start with a 6 and even once a 5.  This is great news for two of my buyer’s who were locked in at rates in the 8’s and got to float down to the new rate.  This has all happened as a result of what we must call the “Force”.  The “Force” is a combination of the lack of demand for those higher interest rates combined with ever present political pressure to get someone elected or reelected.  This has forced things such as gas prices and interest rates down somewhat more manageable levels.  To quote the movie and use an “old Jedi mind trick”, the supply and demand, the “fed”, and the extremely political pressure resulted in “these are not the droids you are looking for!”  For what ever reason these factors are improving, we should be grateful, as it likely will prevent another major crash.

The next steps for the market remain to be seen but here is what I expect.  For the next few months, there will be continued pressure to ease down on interest rates provided inflation does not kick back in.  As interest rates decrease, demand will increase proportionally.  This will be offset by a relatively equal amount of new seller’s that find that the lower rates allow them to move as well.  All of this should result in a relatively stable balance between the “good’ side and the “dark” side of the force.  My prediction is a very steady and stable market for the next six months but let’s not diminish the fact that the total number of sales in our neighborhoods is less than half what it was in 2019.

There are a couple things that could significantly alter the market.  First if the “fed’ drops the rates back into the 3’s (about as likely as the storm troopers learning to shoot accurately) or secondly some other environmental or world event alters the market. IF that is the case, we may simply have to destroy a second “Death Star” and start completely over with our evaluation. 

Call me the Luke Skywalker of real estate, but I am an eternal optimist on where the market is going despite the fact that we had a pretty dismal market last year. We cannot always predict the future but I certainly hope this is the direction the market goes.

IF you want an agent that truly understands your local micro market and will handle the sale of your home like a Jedi Master, give the Al Gage Team a call at 623-536-8200 or email us at al@algage.com

 

Twas' the Night Before Christmas!

 Twas the night before Christmas and all through the neighborhood on almost every house,

Al Gage signs were popping up listed by him and his spouse.

 

The for sale signs were hung in the front yard with care,

 In hopes that soon a buyer would be there.

 

A buyer arrives looking for a home with 4 beds,

while visions of a pool and a fireplace danced in their heads,

 

Could they get their financing, call Rita Marie,

She’ll run a credit check and then we will see

 

An offer was written, full price not the cap,

Next step the seller “Why, gee I must accept!”

 

Who should we choose for title, Al recommends Patty Miller,

No extra work or paperwork for us, the service was killer,

 

Escrow was opened, earnest money was sent,

Al Gage had accounted for every last cent,

 

When out on the lawn there arose such a clatter…

The home inspector had arrived and threw up his ladder,

 

He found a bad window, broken roof tiles and a backsplash, the eaves need painting and a few outlets have a cross,

We find we can fix it with not too much cash,

Al knows the right people, we avoided taking a huge contractor loss,

 

Next is appraisal, Al’s favorite thing—

Comparable sales are provided, hopefully the appraiser will sing,

 

When what to my wondering eyes should appear,

The buyer’s loan approval with conditions to clear.

 

The conditions are clear and on to closing with a splash,

The seller gets the most money since the time of the crash,

 

Hardworking and eager, I knew to choose Al’s Team,

an expert in the neighborhoods, more sales to the extreme.

 

 

Contracts, CLUE reports, disclosures! What a list!

They handled it all but we got the gist!

 

 

Our house was sold it seems almost before he came,

When leaving he whistled and called them by name,

 

To Rancho, Now Corte, Now Donatella and Wigwam Creek,

On to Las Palmeras, Crystal Gardens, Westwind and Sage Creek!

 

For those with a porch but all have a wall!

Now dash away! Dash away! We’ve sold them all,

 

We will tell all our neighbors, family and even a friend,

The best services available, Al’s team doesn’t pretend

 

He sprang (spring might be an exaggeration) to his car as his phone gave a ping,

Off to sell the next castle, put up a sign and make his phones ring,

 

I heard him exclaim as he drove out of sight:

“Merry Christmas to all and to all a good night.

 

From my team of Rita Marie from Pinnacle Capital Mortgage, Patty Miller from Driggs Title and personally from our family, Terri and I, we wish you the best holidays of your life and ongoing prosperity and health for the new year.

 

As I was pacing a trench in our porcelain floor last night, watching the Diamondbacks in the World Series (yes I know this will be ancient history by the time you get this article), I found myself reflecting back on the life I have been blessed to live.  I have a great wife, children, parents, grandchildren, and extended family in the area.  We live in the greatest country on earth, built on free enterprise that allows people the freedom to pursue their dreams. 

As I watched the game, I drifted back to the last time the Diamondbacks were in the World Series.  Terri and I were fortunate enough to attend Game 7 of the World Series. The Diamondbacks won in dramatic, walk off fashion in the bottom of the ninth inning for the first major championship for the Valley.

I can distinctly remember that after the game was over, nobody left! They all just stood their and cheered.  Even the Yankee fans didn't leave.  You may think “Well it was one of the best World Series Games Ever!” or “Curt Schilling and Randy Johnson pitching AND a walk off win!”  All of those are perfectly accurate. But that is not why they stood and cheered for nearly 2 hours after the game was over!

You see, that game, that series, and even just the existence of baseball represented something more at that time.  It represented a return to normal!  It symbolized that America, and the American way of life would survive! Standing and cheering represented cheering for America!

For those of you that don’t remember that World Series was played shortly after 9/11.  We were all wondering what the coming war, economy and future would look like.  There was a great deal of unknown and uncertainty. 

It strikes me as somewhat similar to now.  We are on the verge of war, there is a great deal of uncertainty in the economy, and I know a great many people are struggling right now with the purpose and ability to survive financially.

But there is baseball!  And its good baseball!  Writing this article, I think about what I like about the Diamondbacks as a baseball team, This article really is about real estate and not baseball!

Fundamental Baseball

This team perhaps plays a little old school.  They play a game based on the basics.  They get on base, bunt, squeeze, steal and otherwise advance runners and then rely on the rest of the team to knock in the runs. They don’t always swing for the fences.

At our team, we also play a little old school.  Straight forward, if you will! We believe in the basics. We believe in pricing the home right (get on base), marketing the property through a system that has been proven more than 1500 times (advance the runners) and then rely on the expertise and reputation in the market to get the home closed (knock in the runs).  My team of lenders, inspectors, escrow officers, tradesman and contractors is second to none.  They will work tirelessly and vigilantly until the job is done.

They Hit for a Good Average!

The Diamondbacks have been able to hit for a good average this year.  That being said, if I sold houses at a batting average of .300 I wouldn't be long for this business.  Our proven system of marketing and pricing has produced a 100% closure rate over the last three years.  I am just trying to figure out What kind of baseball contract I could get if I batted 1.000.  Not sure but pretty sure the number would start with a B.

They Play Great Defense!

The Diamondbacks have led the league this year in defensive efficiency.  I heard one announcer applauding one of the Dbacks players because he had committed only 8 errors in the entire season.  Not bragging, but I have never had a lawsuit or complaint filed against me, my team, or one of my clients by another unhappy customer.  In the grand scheme of things, I have never had an error. If we do make a mistake, we fix it or otherwise make it right, every time!

Good Pitching!

I know we haven't had Randy Johnson and Curt Schiling this year, but the pitching has been good.  To equate that to pitching in our industry, there are so many agents that just are not cut out to be salespeople.  I have enough experience in my neighborhoods that I do not have to be that phony over-the-top sales person that is so stereotypical.  By the same token, I am also not the overcoached, scripted salesperson that will constantly use phrases such as “I am offering decision support” instead of “tell me what you want to do” and “the market is experiencing downward price pressure” instead of the “the market is headed down”.  Its not that I am unsophisticated, I am just going to talked to you in a conversational manner using the easiest language available.

They are Aggressive!

This World Series Team has striven to create chaos and constantly put pressure on the other team.  We will put pressure on the other team to do their jobs, but none of that pressure will ever fall to you. We just don’t believe in high pressure tactics with our clients,  We may say the market may take a turn for the worse because it happens to be true, not as a scare tactic.

They Play Straight Forward!

The Dbacks have played some beautiful fundamental ball, win or lose, in these playoffs.  Nothing extra fancy or reinventing the wheel. Just straightforward honest baseball. I have always believed in treating others as I would like to be treated. Just this week a buyer called and said they wanted to look at a home.  They asked if they had to bring their agent.  I was straightforward with them and explained that they should honor their relationship with their agent and to have them show them the house. Yes I probably could have stolen that client but that is just not my style!

They have fun!

If you have watched any games this year, you can see that they have fun!  We do too!  We got into this business because we like meeting and serving interesting and diverse people.  You will always be greeted with a smile on every encounter and you will be able to hear the smile if it is on a phone or zoom call.

The One Thing We Don’t Have

The one thing that the Dbacks have this year is a thing that we don’t have and actually don’t want!  We don’t have and don’t want a Rookie of the Year.  There are literally hundreds of realtors in the valley that I have mentored or trained over the years and almost all of them are successful.

Dependability and Consistency

While the Series isn’t over at this writing, they have been consistent and dependable.  Our service and professionalism is as consistent as a ballpark hotdog or 4th of July apple pie.  We do what we say and say what we do!

Play Ball!

I know many of you are not baseball fans or possibly root for another team.  The Phoenix Metro area is, after all composed almost entirely of transplants from other place and even if you are from hear, the was no baseball team here when I was young.  The analogy is still quite valid but in addition to playing old school baseball, we also provide all of the latest innovations and marketing strategies that are proven to work.

If you intend to list, sell, or buy a home, trust the largest asset in most peoples lives to the team you can trust!  Call Al Gage at 623-536-8200 or email us at al@algage.com

 

 

ll  22 of my  grandchildren are special to me (23 if you count the great grandson on the way). I tell you how many I have to motivate you to list with me out of sheer sympathy for the Christmas pajamas bill ALONE!  They are all wonderful, and each one is special.  But I do have one little granddaughter who is now 4, soon to be 5, who is just a bit extra special to me, and I don’t think that is a secret to all the rest.  She is a typical red head with a fierce independent streak, which I am sure she got from her grandmother.

Last year around this time, we really had a problem with her  when she visited, because our neighbor had a Halloween decoration of a ghost that just frightened her to death. She would mention it constantly, even when she was in our house watching videos. When she would walk to the car to go home, she would avert her eyes and cup her hands around them to avoid even the slightest peep of the ghost. Occasionally, however, she would sneak the slightest glimpse, much like Perseus looking at the reflection of Medusa in his polished shield.   She didn’t really want to face the ghost, but she needed to assure  herself that it was still there, and that it was still scary.  In her then three-year-old-voice, she referred to it as “The Scary Halloween.” It got to the point that any mention of Halloween costumes, witches, goblins or ghosts triggered a bit of a panic attack.  So you can imagine what that was like  when we took her to any kind of retail or grocery store during the season!

Now this year, having matured for just one year, she cannot wait for Halloween. She dresses up like ghosts and witches; she has six (6!) Halloween Costumes (almost all scary except every little girl has an Elsa costume), and she is absolutely excited about Halloween!

I can attribute this to a couple of different factors.  The first is she has just become accustomed to this thing called Halloween.  She knows it is not actually real, and it’s not going to hurt her.  The second is that she has overcome her fear of the unknown, which, of course, appears to be scary. Most importantly, she has figured out that it is not going to go away.

This is what needs to happen for the average homebuyer and seller out there.  The high interest rates and high prices eventually may adjust, but neither is going to happen very soon, unless the market crashes, which would be even scarier!

You may ask how we got here, to this combination of high interest rates and high prices, and that is worth some historical analysis.  When I first started selling real estate in 1985, interest rates (in order to combat inflation) were around 12.5%, which at the time looked attractive compared to the 16-18% it had been the three years before.  Interest rates of 12.5% seemed great to buyers when compared to the “Scary Halloween” that they had experienced the years before.  I can clearly remember the refinance market being on fire when interest rates dropped below 10% in 1990.  The major reason that this didn't really crash the market with those high rates was because the price of homes was very low.  It was usually under $60,000 in those days.

Those interest rates trended down for the next 40 years, naturally and  without too much pressure from the Federal Government.  Once the politicians figured out that they could win or influence elections based on the economy, they decided to try to win them by artificially manipulating the interest rates.  This led to rates in the 1990’s that were around 6.5% (which is about where they are now).

Then the housing bubble burst in 2008 which, contrary to what you may have heard, was precipitated more by speculation from buyers and bad mortgages than appraisers and agents driving up prices.  The bottom-line supply, albeit artificial, grossly exceeded demand  and so home prices were driven to historically high levels until they became unsustainable.  At this point, the market crashed, partially because the banks refused to believe that they could take a loss, and a plethora of other reasons that almost entirely do not apply to our current situation. 

The Government then felt like it had to do something to stimulate the economy. This spawned the outbreak of quantitative easing which is, in essence, manufacturing money out of thin air. This drove interest rates under 5%, and that trend continued until 2022 when rates bottomed out in the high 2 percents.

The last five years of artificially low interest rates have overstimulated the buying power and appreciation in the real estate market. This is why the current market prices are so high.  For almost five years, appreciation of home values has exceeded inflation.

This combination of high prices  along with high interest rates cannot be sustained in the long run, but is not going to change much in the short run. The interest rates are not likely to change significantly, and the housing prices, even if they do come down, often take 3-5 years to do so.

At some point, the public is going to have to adapt or overcome the “Scary Halloween” effect and become accustomed to the higher prices and higher interest rates.  America is, and always has been, a mobile country.  We move from town to town and state to state.  If everyone would simply stay in place, (that  would means no more job promotions, no more retirement homes, no more second homes, and no more moving closer to family) the housing market might head back to lower prices.  But I just don’t believe the American people can live that way long term. 

On my wish list is a slight reprieve from the feds for interest rates, perhaps back into the mid 5 percents, which is what it has been for 35 of the last 40 years.  This, combined with a slight downward price trend for a year or so, would at least soften the possible bubble, should one occur.  But sadly, my hot line to the Fed is broken, and there is no guarantee of that reprieve.

If you are considering selling your home, the sooner the better, because I cannot foresee another upward trend in the market for quite some time. Don’t let the “Scary Halloween” prevent you from making a move that is right for you!

If you want to maximize your equity with a proven professional with known integrity and professionalism, give the Al Gage Team a call at 623-536-8200 or email us at al@algage.com.

 

 

The real estate market continues to constrict itself.  With 25 year interest rate highs in the mid 8%s following historic low interest rates sometimes beginning with the number 2 for a percentage, this unique set of circumstances has resulted in many seller’s feeling “locked in” because of their current rates. Also called the the “golden handcuff effect”. This has resulted in a very low number of seller’s being willing to sell their home.  It would be very easy for me as a real estate agent with almost 40 years of experience to recall routinely selling homes with interest rates between 17 and 20 percent.  There is one very important distinction, the average sales price of those homes was around $60,000.  Now that the median price range is in the mid $400’s, the effect of these higher interest rates is much more dramatic even though that is still half the rate of the late 1980’s.

I wish that I could wave a magic wand and make those low interest rates still available . . . . But oh wait! I can, sort of!  They won’t be available on every home or as a product that you can get from any lender but reaching deep into my magic bag of tricks of the trade, here are a few ways that you can take advantage of the low interest rates that are still out there.

Very early in my career, almost all loans were assumable without qualification.  If you signed up to take over the loan, it was transferred into your name and the person who had originated the loan was no longer liable for the loan and the new party was now the owner and debtor for the home. Those days are long gone and will likely never come back.  Most of today’s agents have never even heard of such a thing.

When they did away with those types of loans, the loans remained assumable, in many cases, but you just had to qualify to assume the loan.  That is still the case for all FHA, VA, and USDA loans.  The point of this conversation is that there is a vast inventory of loans out there right now in that 2-5% interest rate range that are just ripe to be assumed.

Our industry has either forgotten how to do these or is very short sighted on this prospect as many agents don’t list the loans as assumable and the Multiple Listing Service has altogether done away with the listing of the amount of the existing mortgage which could be assumed.

To illustrate how this would work in round numbers let’s walk through an example of this process.  Envision a listing that is being offered for sale for $450,0000 that was purchased in 2019 for $325,000.  That borrower refinanced in 2022 to $420,000 to consolidate debt and has an interest rate of 3% with a monthly principal and interest payment of $1771.  If you purchased the property for $450,000 on a new FHA loan, you would have a down payment of $15,750 and closing costs around $13,500 (yes the seller may pay these costs) for a total cash outlay of $29,250.  This results in a Principal and Interest payment of $3356 and that does not include all of the FHA Mortgage Insurance Fees. In my scenario above, the buyer would simply pay the difference in the current loan amount existing on the property and the purchase price, in this case $30,000, plus closing costs of approximately $5,000 and assume the existing mortgage at 3%.  It has no additional risk to the seller once the new buyer assumes the mortgage. These sorts of properties will demand a premium and may be difficult to find and/or get the other agent to understand the beauty of this plan.

Although less attractive but far easier to find, would be the same type of assumable FHA, VA, or USDA loan with a low interest rate but a much greater cash to loan requirement.  In this scenario, let’s say the borrower had not refinanced and now only owes $320,000 on the property that they are selling for $450,000.  If you have the roughly $120,000 to put down to bridge the gap, then pay yourself the 7-10% interest on this loan as an investment and close on the home and enjoy your 3% mortgage. 

If you don’t have that kind of money, there may still be hope.  If you assume the mortgage at 3% for $320,000 and obtain a second mortgage or a seller carry back at  an interest rate of up to 10%, your blended rate is still only 4.76% and produces a blended payment of approximately $2262 far less than the $3356 from originating a new FHA loan.  According to my lender, with a FICO of 700 or above, your buyer can obtain a 2nd mortgage behind an assumed 1st mortgage up to a 95% ‘Combined-Loan-To-Value’ (CLTV) for a primary home.  Your buyer can go to 80% CLTV on a second home

It is also important to note that if you have a VA loan instead, the qualification of the buyer may relieve the original veteran of liability but may not restore their VA eligibility because that stays with the loan as long as it is in place unless the new buyer substitutes their own VA eligibility.

In preparation for this article we discovered that a huge majority of properties listed for sale were currently liste as “treat as free and clear.”  I do not think this is accurate and may actually reflect the fact that many agents either do not need this information or do not know how to implement it.  Every good Realtor upon taking a listing should always as their Seller if they are willing to ‘carry paper’.  If so, you can advertise the listing as ‘seller will carry’, or ‘owner financing available’.  Now, you have just broken open the pool of potential buyers for that listing.  There is no reason that listing should not sell for the list price within 30 days.  Why?  Because you now included in the audience for that listing is everyone who can’t qualify with a conventional lender.  Your Seller will be doing a big favor for any buyer.

Your Seller would receive a Promissory Note from their buyer for let’s say, 5 years at 7-10%.  This is way better than nearly every other secure investment out there today.

All of these scenarios are very conducive to those seller’s feeling “locked in” with low rates and high equities to take advantage of this lull in the market and get their home sold and move into and assume an equally low mortgage rate on the upsized home they desire.  This scenario works even better for those that are downsizing.  Equity is generally a percentage of the property value so when you are selling a large property and moving to a smaller property, equity allows for more properties to fit into the criteria for which you are searching.

If you are an investor, these techniques can in some instances be combined with a 1031 tax free exchange to purchase a new property without paying high interest rates or capital gains taxes.

Finding these homes takes extra work but mostly skill and perserverance by an agent because our system simply does not make them easy to find. We are more than willing to do the research for you find or exchange that home you are looking for.

If you are looking for this level of experience, detailed knowledge and straightforward advice, give the Al Gage team a call at 623-536-8200 or email us at Al@algage.com

 

I remember several years ago, taking a class on financial management as part of my professional renewal classes to maintain my license with the State of Arizona. In this class, the instructor talked about what it would look like if you had perfectly timed the stock market on the top 10 days over the last 20 years to buy and sell. The return on investment was astronomical. Something like a 20,000 percent return on your money. So if you successfully hit the top 10 days to buy stock and the top 10 days to sell the same stock of the last 20 years and had invested $1,000 that return would be $200,000 or if you had invested $20,000 that return would have been $4,000,000! Sounds pretty good to me.

Of course, then the instructor dropped the hammer on all that excitement. He explained that the random odds of picking those 20 specific days was something on the order of 500 million to one if they were chosen randomly and most private investors would actually do worse so that would make it closer to 520 million to one. Those are not great odds! When you compare it to a recent Power Ball odds for a pot of $429 million, the odds were 1:292.201,338. You may now be asking yourself what relevance does the stock market have to a my real estate?

One of the first questions that I almost invariably get asked when someone inquires about listing their home goes is usually, “Is now a good time to sell?” The answer to this solution is to make these kinds of decisions based on what your needs are rather than what you think is the right timing of the real estate market. Many of you are sitting on the sidelines right now because you have heard the market is weak, because interest rates are too high, or there are no buyers.

It may be true that there are less buyers than usual, but there are also significantly less sellers than usual, so this is an especially good time to sell. It is an even better time to sell and buy if you can transfer a large portion of your equity to a new home. But no one and I mean no one has a crystal ball.

If you bought a house in the frenzy of the 2007 runup to the 2008 crash, it appeared identical to the runup of 2020-2022 but there was no crash in 2022-2023. There was an adjustment, but that buyer’s market lasted for only one month, while the crash of 2008 lasted for almost 6 years before we got back to 2001 pricing. 

The lesson I am trying to drive home here, is that you cannot predict exactly what the real estate market is going to do. 

A quick high level view of the statistics show exactly why that is. In June of last year, there were 46 total sales across all of our subdivisions and 37 in May for a total of 83. This is in contrast to to 30 and 25 the last two months for a total of 55. This represents a 34% reduction in total sales, at which point you market trackers may conclude that this means that there is not enough demand and we are headed back to a buyer’s market. Basic supply and demand.

This rule of supply and demand however, works both ways. This month we only show a total of 26 Active listings across all the neighborhoods (some of those may actually have a contract on them and be seeking backup offers) and 6 pending sales. In normal conditions, there will be approximately twice the number of listings to the number of sales. The lack of the number of pending sales is not due to a lack or softness in the buyer market, it is because there is nothing for the buyer to choose from. The bottom line takeaway from all of this, is that the supply and demand are pretty close to equal and just a tad bit toward a seller’s market. Yes, as a seller you are still likely to have to pay some concessions in closing costs and repairs, but it is still a very stable market and a great time to sell or buy if you can. You can also take advantage of the lack of pressure to take your time making decisions about the largest asset of your life.

It is important to protect what equity that you have by choosing the right agent. As I snuggle up to my 39th year in real estate (and yes it was hard to achieve credibility with buyers and sellers at the age of 24) I can still show you concrete evidence of the FACT that I can get you more money for your home than what most other agents can get for you. There have been two sets of sales this year that illustrate this point. The first one occurred recently in one of our neighborhoods. I will change the facts slightly but the margins are the same. Two homes, similar in condition, one listed with me and another listed with another brokerage. I advised my client to list their home for more money than what the one across the street was listed for even though our house was approximately 200 square feet smaller with no significant difference in upgrades with any advantage going to the home not listed with me. We listed $15,000 higher than the larger home. When the sales price settled, we had to pay $12,000 in incentives and $1200 in repairs, but we sold for $15,000 more. We received a net of $1800 more for a home that was 200 square feet smaller. If you multiply 200 square feet times $200/s.f. that works out to be $40,000. In essences, we came out $41,800 better than the other seller plus whatever repairs that they had to do.

In another example, we had two homes that were model matches, they were twins, listed within days of each other. The only real difference between the two homes was that my home had a solar lease that had to be assumed that is usually a negative. Both homes were really nice with a lot of upgrades. The other home had started out listed for $499,000 for a few months and did one giant price drop to $425,000 which, of course, made it sell within the week. We listed our home a few days after that for $450,000 and it sold for that. I am not saying that the other seller received bad advice, but I would have approached price drops in a much more incremental way to find the true value of the home. Perhaps there were other factors at play of which we are not aware.

We may well be in for some drastic swings in the buyer and seller supply as we go forward with every increase in interest rate changing the buying power of a client seeking a loan of about 15% of their ability with every one percent increase or decrease in the interest rates. For now, the interest rates have somewhat stabilized in the mid 6’s and the buyer demand is pretty equal to the seller supply which leads to a pretty stable market.

Let’s look at what could derail the market going forward. If suddenly, the interest rates went up another 2%, that would like sideline most of the buyer’s seeking to buy with financing which is by far and away the predominant methdod. This would create an almost instant oversupply of homes for sale and put downward price pressure on the homes that are for sale. Whenever pressures like that exist, just as in the example above, seller’s tend to make a mistake and take drastic action that sometimes exceeds what is necessary.

The converse is also true. With our current, relatively small numbers as to demand, any sudden influx into the market of a large volume of homes such as what is held by many different institutional investors affects the market in two ways. It floods the market with homes for sale leading to an excess of supply and again creating that downward pricing pressure. This is somewhat mitigated by the fact that almost all of those homes that are owned by institutional investors are currently rental units. The loss of those units as rentals will also escalate the demand for homes to buy because people have to have a place to live, and the ones that can buy probably will. This escalation will not be enough to offset the flood of homes if one of the larger owners were to decide to liquidate.

A sudden and drastic reversal of the interest rates back to where we were in 2022, would also flood the market with both homebuyer’s and refinances. This would quickly promote the frenzied buyers market that we saw in 2022 and recreate the same inflationary pressures.

If you want someone that has survived and navigated through these difficult times, give the Al Gage team a call at 623.536.8200 or email us at al@alagage.com

 

One of the big fancy words that we learned in real estate school was the word “fiduciary”.  If you look it up in Webster’s, you get a definition that includes the word. I have had an aversion to such definitions since Miss Ludlow scolded me in the 4th grade at Avondale Elementary.  In searching around, I did find a definition that fits.  A fiduciary is “a person to whom property or power is entrusted for the benefit of another.”   As real estate agents, we have such a fiduciary responsibility to our clients.  A trust if you will!  It is very important to earn your trust as a client in both the legal and common meanings of the word.

     As part of this responsibility, our legal obligations as agents are outlined by the mnemonic CARLOAD.  I will talk about each briefly.

The C is for Confidentiality.  We as agents are not allowed to share the details of your situation with others, especially if they might at some point be negotiating on the other side.  Suppose an agent has a home listed for $500,000 and while out to dinner after a few drinks says that yes, its listed for $500k but they have only had one showing and will accept $450k.  Unbeknownst to them, the one realtor that had shown it is sitting at the next table and  recognizes the agent from all of their marketing materials.  They submitted an offer the next day for $445,000.  This agent has unknowingly violated their duty.

The A is for accountability and this one is very straight forward.  I have to be accountable for the funds that you entrusted me with.  This one is largely not a problem because we as agents rarely handle any funds. Most transactions are done via wire.  Protecting you from wire and other types of fraud falls in this area as well but that is an entirely different article.

The R is for  Reasonable Care and this definition has both a legal meaning and a common meaning.  The legal definition means that an agent must ensure that your rights are protected.  They do this by promoting inspections, disclosures, above-board negotiating, and caring for the clients possessions as if they belonged to the agent.  For the common meaning of the words, it is the little things.  If I get feedback that the property was horrible, stank, was dirty, “is the seller colorblind” or “I wouldn't buy that house in a million years”, which we do, it is acceptable to soften those blows a little bit  before we deliver them to the client.

The L is for my favorite duty, loyalty.  I am as loyal as a Labrador puppy.  This is one where the legal sense of the word is different from the common version.  Loyalty in this instance means that an agent must put the interest of the client ahead of their own interest, to a point.  We as agents obviously are not required to work for free and are under no obligation to negotiate for a lower fee as an obligation to a client.  Let me give you a real-world example of this concept that recently happened.  While on a listing appointment, the client brought to my attention the fact that the house across the street was larger and was recently listed for less than what I was recommending.  They wanted to sleep on the decision. They called in the interim concerned that the price was not right compared to the other listing. I again stated that I thought the other home was underpriced.  When we met, they again brought up the home across the street. At that point, there was an ethical bridge to cross.  I could accept their argument that the house was worth less, which would have meant less work for me or stick to my belief that the home was worth more.  No one would have known! Except me!  I insisted that they list at my price instead of a lower price. The home sold at the price and terms I quoted in just under a week.

The O is for Obedience.  To stick with the pet analogies, this is the opposite of what your cat does. Many would argue that I was not obedient to the client in the previous example.  If they had insisted, I would have obeyed and listed the home for less money and it likely would have been bid up to almost the same amount.  Obedience means following the direction given by the client even if it might be detrimental to the transaction.  An example of this level of obedience hearkens back to one of my very first real estate transactions.  I was working with a family friend that was incredibly wealthy and bought and sold hundreds and hundreds of properties before flipping was popular.  I was very green in real estate, and he was writing an offer for me on a piece of property in Cashion.  He said to offer them a certain amount “cash” and I protested quite a bit that there was no way they would accept such an offer.  He eventually told me to just go present it and sure enough, the offer was accepted.

Some of these have been quite fun.  The price will date this story somewhat, but I had a home listed for $159,500.  We received an offer for $100,000 which really made my seller upset.  I was not really happy either.  The seller directed me to counter at $159,499.50 which I gleefully complied with. To our surprise, they accepted the offer and proceeded to close.

     There are limits to the level of obedience that an agent must comply with. The client cannot require the agent to accept a different fee than what was originally negotiated in the listing contract. A client cannot compel the agent to do something illegal or unethical.  Sometimes, this is not as simple as it sounds.  If the client asks me a seemingly innocuous question such as “Are there children in the neighborhood?” , I am not permitted to answer that question because it is likely a fair housing violation.  To discourage any form of discrimination, I never answer questions such as “what do you know about the buyer?” or “where is the buyer from?” since it could potentially  be discriminatory.  Any overt form of discriminatory language or behavior is an automatic end to our relationship. I also discuss the details of the offers and generally get agreement before presenting the buyer’s names to the seller for the same reason.  If the buyer asks for me to present a buyer letter or other documents, I certainly will.

The second A is for Advocacy.  What this means in the real estate context is advocating for your position to the exclusion of all others.   This is as straightforward as it sounds, but there are times when this conflicts with the duty of confidentiality. Sometimes I seek permission to violate this confidentiality for a specific purpose.  If I have seven offers on the table for a home, all just a little bit over list price, I will ask permission to be able to disclose the best offer to the other bidders to try to get them to improve their position.  I never do this on an offer that is under list price but will often ask permission to tell other bidders that they are not the best offer.  Both of these examples violate the confidentiality of the client but fall under advocacy for the same client.

The D is for Disclosure which is where clients may get in trouble. There should be no surprises!  You may ask how it can be the agent’s job to disclose material about a property.  This duty is twofold: First, it is the agent’s responsibility to guide the client through full disclosure of everything that MIGHT be a material fact  which could affect the buyer’s decision to buy. Secondly, the agent is also obligated to pass along any and all information that they possess with three very specific exceptions under the stigmatized property laws.

Long practice and years of experience with these principles is what separates the good agents from the great agents. 

If you are looking for an agent that can handle and entire CARLOAD of questions and problems and still perform as the law but more importantly, the Golden Rule requires, give the Al Gage Team a call at 623.536.8200 or email us at al@algage.com.

 

I remember as a very small child the treat of being able to spend the night at my grandmother’s house.  She grew up from humble beginnings and lived in the government housing called the Garden Homes where the present day interchange of Dysart and I-10 now exists.  They called the complex Garden Homes because every home had room behind the house for a substantial garden.  My grandfather was an exceptional gardener and grew blackberries (which routinely got my cousins and I in trouble), okra, peas, beans, tomatoes, watermelons and cantaloupe and also had various high producing fruit trees.

     On the days we didn't sneak any blackberries, (actually the days we didn't get caught and blackberries leave a lot of forensic evidence when you are 5), grandma would make us skillet popcorn.  At five years old, this was the best!  A little butter and what she called “grease” in a cast iron skillet with a lid that just didn't quite fit and we were off to the races. Throw in a little popcorn, and the smell would pervade the house.  For me, because I was special, she would burn it just a little and also let me pick through all the half popped kernels at the end.  At my age, this was absolutely perfection!

This level of perfection was exactly where I was in my real estate career 35 years ago.  I was pretty good and served a lot of clients successfully but I just didn't know what I didn't know.

The next popcorn invention to come around was Jiffy Pop.  It was quite a successful innovation and probably made someone an incredible amount of money.  This was long before the era of microwaves and essentially, it was a disposable aluminum skillet with the oil and popcorn built in.  The lid was contained by an expandable foil twisted to lie flat at the beginning and eventually poufing out similar to a bouffant hairdo.

     I equate this era of popcorn to the Buyer Beware era of real estate.  If you were not very careful to protect yourself, it was very easy to either burn yourself, a sibling or the actual popcorn to an inedible or painful conclusion.  This era, which equates to my experience 30 years ago, required that an ethical and conscientious real estate agent be extremely diligent to ensure that the transaction turned out to be edible. This level of caution and perhaps even suspicion is not an unhealthy add on in todays market.  Being on the lookout for an unscrupulous agent, buyer or seller is part of our job to protect the client we represent.

     The next major innovation in popcorn was the invention of the microwave and shortly thereafter, the invention of microwave popcorn.  Microwave popcorn was pioneered by Orville Redenbacher, who happens to belong to the same fraternity that I do.  It was really very good and still is when you are in a hurry and quality isn't the only issue.  It also came with its own dangers.  If you can honestly tell me that you have never burned yourself on a bag of microwave popcorn or melted you glasses from the blast of steam coming out of a freshly popped bag, I am going to say, I am very sorry about your allergy to corn.

     While this popcorn remains very popular, I would like to pose a question.  Is it popular because it is good or because it is convenient?  While I personally believe that the move to convenience is part of what is wrong with society. This is especially true in the real estate market.  The great scourge of the current real estate market is the marketing to the public’s inherent aversion to inconvenience.  I am all for convenience.  I use Door Dash, Amazon, and curbside grocery on a regular basis.  When you pay that 4 or 5% fee for these services, it doesn't seem like much..  When you sell your home this extra 5% in fees or lost sales price because you didn't higher the neighborhood expert turns into thousands and thousands of dollars. The people offering to buy your home or guarantee a sale must buy it at a price where they can sell it and at least break even.

It wasn’t until I got be about 10 years old that I discovered the true créme de la créme of popcorn.  This would be Movie Theatre Popcorn!  Now you may be challenging my reality by questioning my first experience at movie theatre popcorn being when I was 10 years old but let me paint you a picture of what this town looked like back then.  The only two theatres within reasonable driving distance were the theatre at Christown Mall and the old Bethany West Theatre. Christown had more of a multi plex, but Bethany West was gigantic. This 21 mile trip one way was not facilitated by freeways, but there were also not a lot of stop lights or traffic. 

I distinctly remember Christown having the best popcorn ever.  It was hot, fresh from the popper, with just the right amount of salt and an unlimited supply of butter.  Unfortunately, these days, the butter has been replaced with a butter flavored canola oil.  Some of you may have a particular movie theatre that you preferred but everybody loves movie theatre popcorn.  You want to know why?

     It is made by a professional!  Yes that professional may be young and inexperienced in other areas of life but not popcorn.  This person has made more popcorn in their career than you ever will.  This person is also set up with the best tools available to make great popcorn.  They have an industrial style popcorn popper, the best popcorn you can buy, perfect popcorn salt and fabulous canola synthetic butter.  They also have a method of maintaining and delivering this popcorn fresh and hot!

At the Al Gage team, we have the ability to serve our popcorn H. O. T. This stands for  Honest, Open and Trustworthy.  We have built our entire career working in these small neighborhoods. We make a great team!  If we were not all of these things, you would have heard about it from our neighbors. I am the Salt for your popcorn and Terri is the butter.  We have the tools, the skill the experience  and the desire to do a great job for you in selling your home.

     There are many other types of popcorn out there, and while I am going to mention the types of popcorn, I will leave it to you to associate these types of popcorn with their corresponding types of agents.  Please don’t fall victim to the Cheesy Popcorn, the Greasy Popcorn, the Salt and Vinegar Popcorn (these agents know who they are), the undercooked or burnt out popcorn, but most importantly don’t fall victim to popcorn that wants to promise to buy or sell your home the “new way.”

If you want your popcorn done just perfect with the right amount of salt and butter, give the Al Gage Team a call at 623-536-8200 or email us at al@algage.com

 

In every astronaut training film ever made, there is always a scene where the trainee is tested on their ability to withstand g-forces.  This usually involves some kind of centrifuge which the candidate is placed along with some kind of contest to determine who could withstand the most g-forces without losing consciousness or unceremoniously disposing of their stomach contents.  As a small child here in Avondale, we were a bit short on this level of technology.

     Instead of this multi-million dollar apparatus, we were forced to accomplish the same level of testing on 8-year olds with a merry-go-round which I have pictured here so we are all on the same page.  These were variously called a roundabout or a playground spinner and are not to be confused with the motorized version with horse and music. 

     These were motorized by the experts (9 year olds) to the point of blurred vision and at the least, queasy stomachs.  You could be injured by catching an appendage entering or exiting the twirling machine as well as being involuntarily expelled from the same.  The true test of the bravery of an 8 year old was the ability to stand in the middle at a high rate of spin for a few minutes and then egress voluntarily from the machine without losing your lunch, skinning your knees or otherwise passing out from the spin rate.

This is exactly where many of you found yourself in the real estate market.  We started off 2022  at the absolute highest point of the playground.  It crept even higher until about March of that year and I began to have that same playground feeling that I used to get at the top of the metal slide at Avondale Elementary School. 

     For those of you that didn’t grow up here, you may not be familiar with the risks involved with a metal slide in the summer in Arizona.  It comes with all the common risks of a high slide such as falling off the ladder, wrecking at the end of the slide or being struck by another slider but with added risk.  If any portion of bare skin came into contact with any portion of the metal on the slide this resulted in instant second degree burns.  If you combined the natural heat of the slide with the friction of sliding to bare skin, I am sure those were third degree burns.  Our house market between May and December of 2022 did in fact experience 2nd and 3rd degree burns over almost all of the market.  One of the few areas excluded from this were much of the retirement communities which seem almost immune to the economy.

     Do you remember what is was like when you had made one too many trips across the monkey bars and on that final trip you could feel that blister forming in the palm of your hand? At the wrong time of the year in Arizona, that could be as soon as you touched the first wrung but either way most will understand what I am talking about.  It was that feeling of a little bit of panic meshed with a lot of pain which led to some tough decision making.

By the time we got to December of 2022/January of 2023, many of the real estate agents and also many of the sellers were exactly at this point.  Many seller’s had to sell because of job transfers or financial pressures stemming from other elements of the economy.  Likewise, many real estate agents that had prospered somewhat in the super bull market, simply had to go look for other employment or some way to supplement their income.

     I also remember playing on the early versions of a jungle gym.  Same basic risks as the monkey bars but you could also go inverted if you like.

     The real estate market is also a bit of a jungle out there right now.  I have preached incessantly about the misleading advertising campaigns out there and please don’t fall victim to any of those without at least consulting with me first.  There is a definite bottom to this market!  How do I know?  I get anywhere from 4-10 texts or emails a day asking for off market or fix and flip properties.  I am sure most of you get calls at least a few times a week asking if you want to buy or sell a property or if you are the homeowner.

     The best part about the old playground was that it gave you room to run.  There was a seemingly endless carpet of beautiful green grass to run on like the field of dreams.  Of course never barefoot because the field was riddled with goat head stickers and the average field temperature was 140 degrees.

     This is where I feel like our real estate market is right now.  We have a wide open field in front of use with potentially a few goat heads in the way but if we are careful, we should be free to run.

     In the past two weeks, I have received not one but three calls or emails questioning something that a goods or serviceme salesman has told a reader about the value of their home.  Two of them have been in regard to adding Solar to the home. In both cases the salesman stated that adding solar, in one case purchasing the unit and in the other leasing the unit, would increase the value of the home. This is true to a point, and applies to almost any upgrade that you add to your home. 

     These upgrades will increase the value of your home or at the very least the salability of the home.  The real question is by how much will they increase the value in proportion to what they cost. 

      .  The other call was in regard to the addition of some very special (based on the price) windows that they assured the homeowner would increase the value of the home.  Let me just say, to this point in my just under 38 year career, I have yet to make an adjustment on a market analysis or experienced an appraiser give any upward adjustment based on the brand name or upgrade of the windows. After this is answer to the reader, I don’t think she is purchasing the windows!

     These salesman are demonstrating what is termed “puffing” in the sales world.  It is not really the truth but it is also not an outright lie.  It is more of an exaggeration of the truth.  Believe it or not, this is also “legal” in the real estate salesman game. The definition of “puffing” is “conveying an overstated belief about some good or service to a prospective buyer with the goal of making a sale of that good or service”

     Many real estate salespeople promote themselves in a slightly “puffed” manner.  The age old “Million Dollar Producer!” or “Multi Million Dollar Producer!” is a prime example of this concept.  Any real estate agent that is not independently wealthy and want to survive in this business must do more than two million dollars a year in production if they are to survive. Keep in mind that if an agent lists and sells one home for more than $500,000 they qualify as a “Million Dollar Producer!”

     I have long advocated that I am one of the best real estate agents in the area.  I really try to not puff my accomplishments so that you, the consumer, can make an informed and educated choice when it comes to picking the real estate agent to represent you in the sale or purchase of one of the biggest assets in your life!  I do have nine years in a row of being the top selling agent in your neighborhoods if you exclude the largest institutional, single investor agents. With all my years of experience, let me share with you two events that happened just in the last month that I offer as empirical evidence of my superior service and operation that results in more money in your pocket, either as a buyer or seller, at closing.

     In the first scenario, we sold a home that admittedly needed a little work, so we priced it aggressively and conceded a little more in negotiations.  When we received the appraisal back, it came in $15,000 under the sales price.  The other agent did not have any experience in challenging an appraisal, 

     When I reviewed the appraisal, I found the appraiser was placing more emphasis on listed homes than sold homes, adjusting up to $30,000 for a pool (normal is about $12-15,000) but more importantly, they were utilizing comparable sales that were inferior to this home instead of homes that were more similar.

     Lets assume that your home was a single level with a three car garage and no pool.  It is only logical that you would compare it with another home  with similar square footage, a 3 car garage and no pool instead of a much smaller, two story home with a pool that was a less recent sale.  This is what the appraiser attempted to do.  We filed our challenge to the appraisal and got the appraisal corrected enabling the transaction to close escrow.  This is not something that an average real estate agent knows how to do or even that it is available.

     The second instance of empirical proof of the benefit of using the Al Gage Team is actually a bit of statistical luck. In preparing the sales records for this newsletter, I encountered a pair of identical sales, one of which was my own and one from another agent. These homes were twins which is pretty rare. While I have not been in the other home, they appear identical as to colors, upgrades and overall condition.   The other lister started out at $499,000 and sold 80 days later for $425,000, long after it would have been considered stale on the market.  My home was listed for $450,000 and was under contract in three days. Both homes closed within two weeks of each other.  Mine closed for $450,000 to a cash buyer netting my seller almost $25,000 more for EXACTLY the same home.  My listing had a had a solar lease which in most cases is a negative.  The only difference was my lister followed my advice closely throughout the listing and closing process.

     In one example, I saved my seller over $10,000 and in the other almost $25,000 just based on my years of experience.  As always, if you insist on listing with your brother’s ex’s cousin’s mother you have that right, but you should consider choosing experience and professionalism.

Call the Al Gage Team at 623-536-8200 or email at al@algage.com

 

 If you remember the move “Forrest Gump” then you will totally understand this article and if you do not, you should go back and watch it just so you can join the rest of humanity!  The headline above is the declaration that was made by Tina Tamboer of the Cromford Report in so many words at the middle of January!  She actually wrote “Phoenix Buyers’ Market-Aand its gone!” and went on to show that it was the shortest buyer’s market in history.  The article goes on to say that in all but two Metro cities, the market has shifted back to equilibrium rather than either a buyer’s or a seller’s market.  If you remember in the movie Forrest says “And just like that she was gone!” referring to his love Jenny

     My own local statistics verify a sharp uptick in the market with all of my listings spiking in showings and going quickly under contract.  Some of this is due to a slight softening of FHA loan requirements including credit scores and fund sourcing as well as an improvement in interest rates over the month.  While there are no statistics to prove it, it is my belief that there is still significant unspent demand as a result of the frustration of many buyers at the peak of the market.  These buyer’s that desperately wanted a home at the peak last year are braving the higher interest rates and diminished buying power because of the resurgence of closing cost assistance and the lack of a bidding war to shop for properties.  Additionally, the current drop in pricing of somewhere between $40,000-$60,000 on average also spurs some interest.  The bottom line here is that these buyers simply could not hibernate any longer.  If this buyers market truly is over, they will look historically very good for snapping up homes at or near the bottom of this market.

     I believe we can expect this trend to continue throughout the remainder of 2023.  The return of negotiating (a lost art in the previous market) as well as seller concessions is inevitable and we are already seeing both as a common practice although some of the agents are just not very good at it.  I

     If the fed decides to repeat the 1980’s and drive interest rates into the high teens in an attempt to slow inflation, it will result in ALL OF THE BUYERS doing their best RUN FORREST RUN imitation. The economy, led by the housing market, will then crash mercilessly.  If that is the route that things go, we will be looking at 2008 all over again and nobody including the Fed wants that.  I think those steps are foreseeable and avoidable provide there is competent decision making at the Federal Reserve.

     I am not trying to lay all of this at the feet of the Federal Reserve either.  There are many economic factors that drive the remainder of the economy as well.  Shortages or disasters in any of these other factors could affect our rebound quite a bit as can simple gross inflation.  Now that we have all sort of accepted that the housing market goes UP AND DOWN, it is not as shocking as it was in 2008.

    In December, I accurately predicted this uptick in the market.  It appears to be holding but all of these statistics are based on very low numbers.  I was asked about the pricing of a home based on the statistics in the newsletter from a month where the price per square foot was at a high because there was one sale of a very small home.  Small homes invariable sell for more per square foot than very large homes.  When it is also based on low numbers of sales, the statistical significance can be way off.  In this instance, it would have led to a price of upwards of $700,000 and there is no home in our neighborhoods that will bring that price. If pricing was as simple as multiply the price per square foot by the number of square feet, you would not have much need for real estate agents to price your home.  Obviously, Zillow has also failed epically at deriving an algorithm to do such pricing and we continue to recommend that an experienced agent be your first choice option to price you home.

      This leads me to a bit of a hedge of my bets.  There is simply too much uncertainty out there to be certain whether the market is going to continue up or down.  I will return to my original thought and recommend that you do what is best for you now and quit trying to predict which way the market is going.  In other words, “ Life is like a box of chocolates and you never know what you are going to get!”

      If you are forced to relocate or simply want to move, the market is very likely to adjust in the same direction in both locations.  As and example, if you move now and the market goes down or up 10%, it is likely to be the same in both markets.  If you wait and the market moves in either direction, it is not likely to significantly affect you status or equity in either way.

 

Don’t let the market ping ponging back and forth deter you from you goals to buy or sell your home.  Call the area experts, the Al Gage Team at 623-536-8200 or email us at al@algage.com

 

If you remember the article that I wrote last month about whether the economy was going to give us a shiny blue bike or a lump of coal for the New Year, I may be starting to see an answer to that question.  Admittedly, I am an eternal optimist and will latch on to the slightest bit of good news. This apparently is not the path to be taken by the Fed in their ever present attempt to stem inflation because they continue to raise rates after every little bit of good economic news and even sometimes even when there is none.  I expect this to continue for the next few months but eventually we will reach a point of equilibrium.

     The first sign of a better New Year came actually on Christmas Day!  I was on my walk (say hi if you are walking mornings in Rancho Santa Fe) thinking a great deal about the state of the economy and the future real estate market.  It was just a little bit after daylight and the first person that I saw (there are not a lot of people walking at daylight on Christmas) was a young boy in a bright orange hoodie and what was he riding?  You guessed it! A brand new shiny blue bike just like the one that I had described in last month’s article. If this young persons parents will contact me, I will be sure to send them some goodwill movie tickets for the little dose of inspiration.  I was inspired!  I took this as a sign of good things to come but there wasn't much I could do with the inspiration until the New Year’s Statistics came out.

     My New Year’s Day was spent pouring over all of the year end statistics. The trend is pretty clear over the past few months as the market searches for a bottom.  I am well aware of my lean towards the bright side or an optimistic future for the market so I was very careful to not let that hope misinterpret the actual data.

     The market continues to trend downward albeit at slower pace of downward pricing.  How long this trend will continue is the truly important but unanswerable question.  If you are trying to sell a property at the current time, make sure that you get out ahead of that downward curve and get the property sold as quickly as possible.  To illustrate this example, let’s assume you are trying to sell you home for $500,000 and it does not sell the first month because it is really only worth $480,000.  Home prices are going down as much as 2% per month or$10,000.  After you reduce the price to $490,000, you are still the same margin over the new worth price of $470,000.  You continue to do the same amount of price reductions every month and just continue to ride the roller coaster down. The property never sells. If you had actually reduce the price to $470,000 the first month, you would have caught up with the market and it would have sold in that month most likely.

     The seller’s that are taking the time to do upgrades to their home before putting them on the market are finding that in the 2 or 3 months it takes to do these upgrades, the overall price of the home has gone down enough to almost offset the amount of upgrades that were installed. We are currently recommending that seller’s do a minimal amount of new upgrades to their home.

     As I dug through the statistics, I did find a couple of nuggets that gave me cause for hope.  As I did the calculations, I determined that I was again the number one agent in our neighborhoods for the NINTH Year in a row based on the number of different clients represented. (the agents that have one institutional investor do not count).  This is good news for us but bears no reflection on the condition of the rest of the market.  What I did find is that in our neighborhoods in 2022, there were a total of 320 transactions.  In 2021, there were 504.  A significantly lower number!  I then suspected that out of the 320 transactions in 2022, a great number of them occurred in the first 6 months of the year before the market completely changed. My suspicions were incorrect and more than half of the sales (166) occurred in the second half of 2022.  This bucks both the traditional seasonal slow periods and my expectation.  This surprised me and also bodes well for the near future.

     Additionally, single level homes showed an average appreciation of 19,73% and multi level homes had an average appreciation of 19.17%.  These numbers would have been banner numbers if they hadn’t included a huge spike followed by a matching tumble in home prices to date.

     If you look closely at the chart of the prices per square foot of all the different neighborhoods, it produces an interesting but very consistent trend line.  Every one of the December 2022 average price per square foot is lower than the average price per square foot for the year.  The good or optimistic statistic, if you will, is that despite this former fact, all of the December price per square foots were still well above the price per square foots for 2021.  The conclusion to be had from all of this is that yes, we have suffered a major correction but that correction is still not lower than the average price per square foot in 2021.  I think we will survive and thrive in 2023 and I look forward to representing you in the sale of your home! If you want monthly updates on these statistics for your neighborhood go to https://www.algage.com/SubscribetoENewsletter.html

 

If you want the same level of localized expertise from a professional that works almost exclusively in your market, give the Al Gage Team a call at 623.536.8200 or email us at al@algage.com

 

The headline is not the choices that currently occur on a child’s Santa Wish List.  Those lists now include an X-Box, a computer, tablet, or an I-Phone 14 and I sincerely hope many families can afford those gifts this holiday.  I am sure that many will have a hard time. This is not the first time our economy has had a hard time and when I was a kid, for many families a shiney new bike was a major expenditure. The question really is what has this economy, and more specifically this housing market got in store for us in 2023. You can listen to the pundits talk about what is in store for the future but the truth is they probably do not know.  The reason that they don’t know is because the economy and therefore the housing market simply cannot make up its mind which way it wants to go!

The economy cannot decide whether it wants to be on the naughty or nice list for 2023.

     Inflation is rampant and has led at least somewhat to the inflated pricing that we saw leading up to this spring.  We all knew that price increases of $10-$20,000 per month and average sales prices at least $20,000 over list price were simply not sustainable.  Even though it was the practice in the market at the time, I never thought waiving appraisals and inspections was a good idea.  Make no mistake, it was great for my sellers but probably unwise for the buyers.  This hyper rise in prices in the real estate market was not all inflation.  There was some honest and justified appreciation in the rising prices and the shortage of inventory which is why prices remain higher than they were in mid 2021.

     The overall economy is trying to give us a lump of coal for 2023.  With inflation out pacing rises in wages, it is likely that the Fed will continue to raise interest rates to try to slow the inflation rate but this is not the correct fix for inflation.  Yes, it slows demand by making it more difficult to purchase big ticket items such as cars or homes but ultimately, it is not affecting the public uniformly. Artificially slowing  a few segments of the economy will certainly slow inflation, but it will also destroy many individual lives and careers. I choose to believe that the economy will eventually right itself despite or with the assistance of government intervention.  Maybe this is my wishful thinking, but optimism is a major part of my personality

     The bottom line is The Grinch might actually steal the holidays for many of my realtor colleagues. More specifically, we are currently in the midst of a major price correction and many agents simply do not have the financial stability or the experience to withstand such a correction.  The current housing market is not for the faint hearted as a seller, and it is very important to get ahead of the market from a pricing point of view.  This does not mean that you shouldn’t sell your home now because waiting also has consequences.

     While prices continue to drop by 1-2% per month, there are still segments of the homeowner population who SHOULD find a way to sell which likely means aggressive pricing.  By aggressive pricing, I am really only talking about walking the prices back to where they were around May of 2021.  You can look at this pricing as a lump of coal but I prefer to just ignore the wild ride from May of 2021 to March of 2022 and look at the shiny new bike as most sellers still have very significant equity in their home and are selling for a huge profit over what they paid for their home.

     You should sell your home NOW and maximize you equity (assuming the market continues to drop) if you are:

1. Retiring and no longer intend to own a home.

2. Moving to a market that is lower in average price as the potential percentage of net equity will work in your favor.

3. Moving for a job transfer that benefits you.  The loss of equity will be offset by the assumed pay raise at the new job.

4. Experiencing a financial hardship that may put your existing equity in danger of loss by foreclosure or other legal action.

5. Wanting to take advantage of the equity that you have built in your home.

     Trying to time up the market is and has always been a big mistake.  I have heard of many sellers that did not want to face the pricing reality end up in a much worse position by waiting. There is nothing in the home sales statistics that leads me to believe that this is near the end of the drop in pricing.  That being said, we have been doing this for close to 40 years and except for the big crash in 2008, these things generally do not last for more than 18 months and we should be in month 9 of that period.

     With all this being said, it is not likely that a magic flying reindeer with a red nose is likely to swoop in and bail us out. So far the economy this year, has been misbehaving like children destined for the naughty list.  I think that eventually, the Fed will realize that perhaps they have gone too far and will reverse the trend of raising interest rates to slow the economy.  I hope I am not wrong on this point.  If they reverse raising the rates, it is very likely that, with this increase in affordability, combined with the pent up demand that was never really satisfied in this price run up, the housing market will reverse itself.  This pent up demand was only dispersed because of the extremely high pricing in combination with the higher interest rates.  The prices have come down significantly and I think we soon reach a reversal tipping point in the market. As a comparison, the interest rate on the first home that I ever sold was 17.75%.

     From our family to yours, we are truly hoping that the economy will turn into a shiny blue bike instead of a lump of coal.  Happy Holidays to all our friends and neighbors and best wishes for the New Year!

For professional and down to earth real estate service, give the Al Gage Team a call at 623.536.8200 or email us at al@algage.com.

      .

The real estate market is only showing the slightest, little indication that it is bottoming out and that prices may actually stabilize.  Just to be clear, that would be the first time we have been in a stable market since 2012 or so. We have survived and  maintained extreme professionalism, fiduciary, honor and integrity thoughout all of these major upheavals and crashes of the market since 1985.  I am not saying it has been easy, but along the way I have had many professional and personal boosts along the way!

Of course, there are the traditional sources of inspiration that help to form and shape us into the individuals we are today. My dad had an intelligence and work ethic that was beyond belief.  He routinely said “that if any person can do a lot of something , I can do a little.” He would then proceed to try to tackle any building or mechanical problem and was widely know here in Avondale for that skill.

My mother was the accountant and manager of the business.  She was the boss behind the boss or at least she let my dad think he was the boss.  Their love was such that she had to be careful not to even hint that she liked something because he would work 24 hours a day to obtain it for her.

My grandmother also worked very hard her entire life and was my caregiver as a young child.  She taught me how to make donuts and essentially to keep a secret.  My parents had raised me to be so honest that when they came home and asked how my day had gone, I would confess to every minor transgression I had committed that day! Grandma taught me what happens at Grandmas stays at Grandmas.

Moving on into High School, I was an excellent student but my father wanted me to take over his business in the auto shop.  Although I learned and incredible amount of mechanical knowledge from him, this career choice simply did not interest me enough to pursue as a career.

I did have one teacher in high school that completely changed my life.  I was well on my way down the path of, shall we say, being a partier!  Grades started to slip until one special teacher intervened. This teacher was my FFA or Ag teacher.  We worked on all manner of farm equipment at the shop but I did not know much about agriculture.  He peaked my interest in the agriculture area, but very subtlety also introduced me to the leadership side of things.  Eventually, we came to a crossroads and as all good mentors do, he made me make a choice.  I wanted to run for state office in FFA and he had several criteria in order to sign off on the application.  As I read through the list, I could abide by the no drinking and no smoking part of everything, but there was one criteria about which I could not abide.

It was 1978 and he wanted me to get a haircut!  You would never know it now but I had an entirely full head of shoulder length hair at the time of which I was very proud.  One of the things he had taught me how to do (much to his chagrin) was debate.  We debated for hours and  he never once gave an inch.  No sideburns and basically a close to military style haircut.  I really wanted this position, and eventually relented. I went on the be elected State FFA President for Arizona on the 4th ballot, the second in a succession of 3 straight State Presidents from Agua Fria.  That year of servant leadership probably did more to shape me into a leader than any college or other activity. I am still involved with the FFA on both the Local, State, and National level to this day.  It holds a fond place in my heart.

During and after college, I worked a few government and law enforcement jobs while at the same time pursuing my real estate career.  My very first broker in Litchfield Park was a silver tongued devil and he would close 3-5 Litchfield Park Proper properties per month.  Doesn’t sound all that impressive now, but keep in mind, there were no lockboxes, cell phones, fed-x, fax or MLS computer.  You had to learn and know all of the inventory in the area and be an expert in a small area rather that running all over town.  This lesson taught me to become an area expert and I have. 

My next broker also taught me a valuable lesson.  This was around the time when the first few of the gimmicky discount brokers first appeared.  It sounds vaguely familiar with what you are being bombarded with now! “I sold real estate the traditional way for XX years and now I have invented an entirely new method of selling homes!”  “List with me for a brand new experience and net thousands more!”  He taught me to never let myself or my clients fall for such a gimmick!  Do they have a new system? Yes!  Is it unique? Yes!  Does it work? Yes! if you fall for the gimmick!  The gimmick is that you list with them and then they sell your home in the traditional manner, perhaps with a few investor clients.  Do they net more? Yes-more than the average realtor sells a home for but NOT more than an experienced, skilled agent sells for.  The statistics just don’t support that they net more than I would net you.  Can they advertise they net more?  Yes because they net more than the average realtor.

The next major influencer in my life was not someone I worked for at the time but a competitor that happened to be a friend of a friend.  We were on an extended camping trip and were talking about the state of the business and all that is involved with it.  I was demonstrating my technical expertise about a topic when he stopped me to teach me the best lesson I have ever learned in real estate practice.

He was one of the top producers in the entire valley at the time and he said “ Al, you can be the best realtor in the world but if you are hiding under a rock no one can find you! 

I have mailed this newsletter to our neighborhoods almost every month since that day.

I am especially thankful for the almost 2000 clients that have entrusted me the sale or purchase of their largest asset.  It warms my heart that many of them have become very dear friends.  Many of them have gone on to lead successful real estate careers.  Some have passed on and some are sending me the 3rd or even 4th generation of buyers and sellers!

I hope to be able to honorably and successfully serve this community for the rest of my life as well as continue to coach and be involved in many community activities.

I want to thank the entire community for this ability to serve and their faith in my ability!

If you would like to employ the services of an experienced, honorable and professional agent to serve you as an agent, give the Al Gage Team a call at 623.536.8200 or email us at al@algage.com

 

My family is very excited for Halloween! With the rapid changes in the real estate market, it may take just a bit of Halloween magic to get your home sold! Our market continues to decline and almost none of the agents with less than 15 years experience know how to operate in such a ghoulish environment. Let’s talk about first the tricks and then the treats available to an agent with my level of experience.

Here are the tricksters!

1. The Vampires-I know I have tried to put a stake through their heart but don’t let investors and phony or misleading advertisers trick you into inviting them into your home. They have huge advertising budgets at every major sporting event but I have yet to see them actually spend a dime advertising any of the individual homes they have listed for sale.

2. The Zombies– These are the agents that are now wandering aimlessly trying to make the shift from an absolute seller’s market to an absolute buyer’s market in just a few months!

3. The Witches Council- Also known as the Federal Reserve. They are determined to stifle inflation by continuing to raise interest rates and they are not done yet. The best way for them to do this is by rapidly slowing the housing market which they are attempting to do too rapidly in my opinion. Make no mistake, the correction is needed but in a gentle slope not a cliff. Expect continued rate raises at regular intervals.

Don’t be Spooked by this Market! (The Tricks)

If you hire a great agent with a lot of experience, they should have been around long enough to know how to do some of these tricks!

1. Shape Shifter-With some government loans such as FHA and VA loans, the buyer may be able to assume the loan by qualifying for the existing loan and then bridging the remaining equity with either a second loan or their own cash. The advantage to this is that it preserves that existing loan at the now unavailable rate of 2,9%. Assumption is available with qualifying on all FHA loans and VA loans if the assumption is also by an eligible veteran. Assumptions are generally not available on conventional loans.

2. Intermittent Ghosting– This is how I would describe any of the lease to own, lease with the option type of operations that have always been problematic because they never successfully closed escrow. This is especially true in a volatile market. If the price fluctuates very much from the original price, the injured party may be reluctant to close. This problem has largely been resolved by the advent of a company called Home Partners of America. This company purchase the property outright for cash and then installs the lessee with the option to buy and relieves the seller of this burden.

3. Beating the Grim Reaper-While the IRS is not really that dire, there is no need to pay them if there is a legal way to avoid paying. One such way is a 1031 Tax Free Exchange. If you have investment property that is likely subject to capital gains taxes, this is one way to defer payment of these taxes until the final property is sold.

The Treats

1. The Pot of Gold-The limiting factor for almost all of the buyer’s out there right now is the cost of their monthly payments. It really doesn't matter how good of a deal you make on your home or how attractive it is, if the buyer cannot afford it. Many sellers think the solution is to simply lower the price on their home. This is not as effective of a tactic as doing either a 2-1 Buydown or a Permanent Buydown of the rate for the buyer. It both has more effective and costs less than reducing the price. An example is listed in the table below which illustrates options for the buyer that are more affordable than simply reducing the price. It may require a price reduction of better than 15% to accomplish the same payment as the buydowns.

2. Merlin the Wizard-I struggle with comparing myself with the the mystical legend but in many ways the comparison fits. I have closed over 1500 transactions just in our neighborhoods all without a single real estate complaint, lawsuit or in fact any major dispute! I have thousands of happy customers over the years.

This was accomplished by a few simple principals to live by. First, I always put the client first and operate under the Golden Rule of treating other people the way that I would like to be treated.

Second, years of experience has finely honed my Excalibur of negotiating skill and finesse. It is much easier to have happy clients with a few thousand extra dollars in their pocket as a result of the sale.

Finally, integrity and honesty are an inherent part of my soul. My conscious will not allow me to take advantage of someone or operate solely in my self interest to the detriment of another. My wife is even worse on this front and just simply likes to help people! As a team, we will always operate in the best interest of our client!

I hope you all have a Happy Halloween and if you need the same level of Hauntingly Great Service or Magical Success in the Price of Your Home, Give the Al Gage Team a call at 623-536-8200 or email us at Al@algage.com

 

One of the gravest military tactical mistakes that a commander can make on behalf of his troops is refusing to accept the situation that presents itself as reality.  This can be due to overconfidence, lack of accurate information or simply stubbornness. In a combat situation, this can have dire consequences of a life-or-death nature.  When this same situation presents itself in the real estate market, the consequences are not life and death but financially they can be very dire.

The real estate market for sellers is in a full-blown hasty retreat and many sellers are just refusing to accept it.  Hopefully not playing too much on the tactical references, a retreat conserves forces so they may come back in earnest at a different time, circumstance, or location.  This is what I believe the real estate market is doing as we speak. 

Seller’s pricing is rapidly shrinking. Many sellers, currently receiving advice from agent’s that have not ridden this roller coaster before, are failing to keep up with the down swing.  Let me give you one such example.  The percentages are real but the pricing has been changed somewhat to protect the innocent and uninformed, but it is based on several real life case studies.

The home was placed on the market in shall we say May or June when admittedly, the overall agent population, including me, really could not see the direction the market was going.  This meant that in keeping with the market trend at the time, the agent computed the value of the last sale, added 5%, and placed the home on the market for a hypothetical $600,000.  The reality at that time was that the market had surreptitiously turned the other way about 3%.  This meant that this listing started 8% or $48,000 over market which suggest a listing price of $552,000. 

Assuming the market’s reaction to this was no or little activity, the sellers did their part.  Presumably upon advice of their agent, they made price reduction over the course of the next 60 days of –2.5%, -2.9%, -6.6%, and finally-7.7%.  This resulted in prices of $585,000, $568,000, $530,500, and $489,500.  At this point the seller accepted an offer for the hypothetical of $480,000 and it closed.  I want you to understand that the numbers are changed, but the percentages are real. 

The mistake they made is not ever getting out in front of the rapidly declining market. If they had reduced the price to $550,000 in the early days, perhaps it would have sold for more as the market had not yet declined that much. This mistake may seem drastic and this particular case may be a little bit extreme but it only represents a 20% drop in the market. Many people who currently have their home for sale or are going to sell in the near future have fallen victim to the mistake of not getting ahead of the market and refusing to accept their circumstances. The latest headlines have been portraying that the market is going down at 5% per month.  I reject that to a point and believe that the total market decline to date is only about 15%.

On average in our neighborhood, the number of active listings is at better than a 3 to 1 ratio to the combination of pending listings and closed sales.  This means that at a minimum, we have a 3-month supply of homes available if no one newly listed their homes.  When I start to see sales in a neighborhood of 2 or 3 in one category and none in the other, this is at or approaching an all-time low.  This is not because there are no buyers!  It is because the vast majority of sellers and agents are failing to keep pace with current pricing.

There is good news though!  There is a bottom to this market although that bottom could continue to shift.  One of our clients found themselves unable to perform any further maintenance or repairs on their home and needed to sell it quickly.  We factored in what the projected cost to repair the home and a realistic pricing model and discounted the home by that amount plus about 5%.  We had multiple offers in just a few days and settled for a little under that.

     This also applies to some of the listings out there that are receiving offers that are lower than they had hoped.  This is no time for standing on a principle or negotiating over anything less than 1% of the home price.  The buyer has every advantage right now and sellers must accept this reality.

You may say, much the way the buyers did a year ago, I will wait for the market to change in my favor.  The buyers that took this approach are now seeing their patience rewarded.  Despite this, many are still sitting on the sidelines waiting for it to hit bottom which is simply unrealistic to try to time.  One word of caution, the sellers who said they were going to wait for the market to change in their favor in 2008 were not back to their breakeven point again until at least 2016.  The good news is if you take the spike out of this market, current prices have only retreated to at or about October 2021 pricing which is far superior to the retreat in 2008 to 1994 pricing.  This has been a huge spike in pricing from October of last year to April of this year, but it was likely never real and only a few lucky people were able to take advantage of the spike.  Don’t cry over spilled milk!

Again, only about 1 out of 9 listings goes pending in any given month based on current statistics.  At the Al Gage team, we placed under contract or closed 75% of our homes last month.

If you want an honest, up-front, no-obligation evaluation of the prospects of selling your home, future projection of the sale price of your home or to purchase a home, give the Al Gage Team a call at 623.536.8200 or email us at al@algage.com

 

The answer to this might surprise many of you!  Yes, all of the indicators show that the market is slowing and it is! When a race car driver lifts his foot off the gas peddle, the race car does not suddenly screech to a halt and start running backwards.  Assuming no one else on the track collides with him the car will gradually slow down.  Now in this analogy, the Federal Reserve raising the interest rate another .75% is the equivalent of hard braking but again the car doesn't instantly come to a stop. So the final answer is no, the real estate market is not in a recession so to speak but I am not trying to re-define recession.

Let me address some of the “indicators” that lead me to believe the market is slowing. 

1. The fed raises and will continue to raise the interest rate to combat inflation.

2. Marketing times continue to extend.  The average is all the way up to about 30 days.

3. i-Buyers are shrinking or curtailing their buying operation and moving more into the traditional real estate model.

4. Inventory is climbing slowly and steadily.

5. Home builders that were not cooperating with agents and not offering incentives to the buyers are now offering 5% co-broke and up to $30,000 in incentives.

6. The appraisal trend has not statistically reversed itself yet but that is likely to appear in a downward trend in appraisals.

Ah! The smell of panic and fear is in the air!  Not to worry, these are all healthy movements to get our market back to normal! A normal market includes incentives to buyers, co-brokes to agents, 60-90 day marketing times WHERE YOU ACTUALLY HAVE TO DO SOME MARKETING, possible interest rate buydowns or assistance but more than anything else it requires experienced, professional and ethical agents.

I went on a listing appointment this last week and did not promise to sell the home within 3 days even though it might be the 30th set of 3 days when it is actually sold (my average marketing time is consistently better than the office with the three day name).  This particular individual had interviewed several other agents including the company above, both of the major i-buyers and one other experienced professional with a good track record in this area of town.

The one mentioned above recommended a price almost 10% below my recommended price (which had also factored in a market slowdown) and of course promised a quick sale according to the seller.  Of course they would sell it quickly, because it was under priced from the beginning.

Both of the i-buyers declined to offer a purchase amount but were more than willing to market the home in the traditional sense . . . . . . . . At the same lower price almost 10% under market.  I find it exceptionally strange that neither of the major i-buyers were willing to write an offer on the property in a declining market which is further proof that perhaps it is not the future of selling homes.  Of course, this is all as relayed by this seller.

I want to emphasize here that the comparable sales on this particular property were recent and paint a very clear picture of what the home should be priced at.

The other experienced professional real estate agent said according to the seller “essentially the same thing I did”. The seller chose our team because of my track record in the neighborhood. The home will begin marketing early in the month so you will see the opportunity for me to put my credibility where my mouth is.

Going forward the market may eventually cross over into that recession/declining market, but there is no indication whatsoever that it is going to crash like it did in 2008.  As I have stated before, that crash was mostly due to speculation and this market has mostly been driven by the demand of real buyers and sellers if you include the institutional long term rental buyers.

Should these institutional buyers suddenly decide to liquidate their assets, this flood of the market could have a disastrous effect.  This could only happen if the demand for rentals suddenly declines but with the higher interest rates and prices, the pressure on the rental market appears to still be on the upward trend.

The removal of the i-buyers from the market should only account for about 2% of the total market so this little bit of artificial demand going away shouldn't really impact the market very much. 

For now, don’t panic and plan to sell your home when it is convenient for you, knowing that at least you won’t have to have a bidding war or be homeless between moves.  We are experienced at contingencies, interest rate buydowns, pre and post possessions and all the other nuances of the trade that make an experienced agent simply better qualified and more successful in selling your home.

If you want the service of an experienced, straight forward agent that can navigate through all phases of a changing market, give the Al Gage team a call at 623-536-8200 or email us at al@algage.com

 

The market is changing, not crashing, but back to normal.  You may ask yourselves, what does that mean for me, if I am going to sell in the next few months or even in the coming two years?  It likely means that you need a REAL real estate agent.  I am not trying to say that all real estate agents are not real, but many of them have learned their entire experience in the real estate business in the recent extreme bull or seller’s real estate market.  They know how to do a post-possession agreement, waive an appraisal contingency, write an appraisal gap clause and expect to write three to five offers out of every eight homes sold!  All of these skills are appropriate when the sellers market is so strong that the seller can dictate any and all terms.  The market isn't like that any more!

Many  of these agents may not know how to price a home properly, help a buyer make a decision on only one home, convince an appraiser that they are in error or coach a seller on pricing and price reductions,. They also may not know how to determine if a home is priced correctly if it has been on the market for more than a week, write a contingency agreement or in general negotiate with buyers, sellers or other agents.  You may ask why that is and the answer is because they haven't had too!

No more ball park pricing!

As I do the monthly statistics for the individual market areas (which you should all sign up for), I constantly see listings sold for $45,000 under their asking price or $57,000 over their asking price.  In the case of the under, you may think this is great news for that seller and it is.  The market stepped in and corrected the error that the listing agent made in grossly underpricing a home.  I have had agents advocate to clients that they want to deliberately underprice the home in order to create a feeding frenzy.  This is both a really poor strategy to get the top dollar for your home and likely violates the fiduciary duty we as agents have to a seller.  This is because if there is no longer a feeding frenzy of buyer activity. The seller is still obligated to sell at that price or pay the commission to the agents. 

For the seller that hired an agent that grossly overpriced their home, the same applies, they likely took the first offer that came along and the buyer could obviously smell their desperation after getting only one showing in 25 days.  This agent also likely violated their fiduciary duty to the seller.  If they happened to also be the selling agent they may really getting themselves into a pickle by underselling the property.

For almost the past three years, agents need only price a home within about $100,000 for it to successfully sell and close.  Appraisers have been going along with the skyrocketing market and demand has led to some pretty desperate buyers.  As of today with roughly 2 active listings for every pending listing in our neighborhoods, the competition will get pretty stiff  pretty quickly..

Experience Counts!

As we move from an average level of showing from 25 per day to 2.5 per week, which by the way is about normal, it will become more and more important for seller’s to be patient with the market and their agent.  It will also be important for the agent to discuss and plan a price reduction strategy that is measured, proven, effective.  It does not behoove the seller to have price reductions that exude panic and desperation.

Strategy Matters!

In addition to pricing, it will also become important that agents have an integrated marketing strategy that goes beyond placing the home in your personal Facebook post!  Our strategy at the Al Gage Team is proven, repeatable and verified.  We have a nice mixture of print marketing such as this and online presence in both the website and most of the other Real Estate Platforms such as Zillow and Trulia.

Communication and Availability!

Communication is the key in this type of marketing.  Being vigilant about the communication between myself and either another agent or my client is one of the things that of which I take great pride.  You will always here from me by the end of the day and I wont be sitting at the bar when you do..  I laugh when I see preferences on MLS that we only take calls 8-5 M-F or please don’t call only text.  I am sorry but those agents are just in the wrong line of work.  We obviously can’t always answer the phone or text but you will here back from us the same day.  If you don’t, probably should check the local hospitals.

It will now become important that listing agents are able to defend their pricing to both other agents and also to appraisers who once the market trends down at all, have to start adjusting for that in their market comparisons.  In order to be able to challenge an appraisal or an appraiser, you have to be able to speak their language.  We have had very good results over the years in persuading an appraiser to see things from our point of view.

The bottom line is very few agents working today have any experience is a buyer/seller neutral market let alone a buyers market.  At the Al Gage Team we have ridden this everchanging roller coaster from the highest high (4 months ago) to the lowest low (fall of 2008) and you are going to need that level of experience in the coming months.

Don’t roll the dice with a family friend or relative, give the proven, reliable and consistent Al Gage Team a call at 623-536-8200 or email us at al@algage.com

 

I have been predicting a change in the market and it has finally arrived.  I am going to go through a few of the headlines that you may have read recently and give a brief explanation.  While the market is not an absolute seller’s market, it remains leaning in the seller’s favor just not on a 70% slope like it was before.

How iBuyers lost millions on Valley homes despite hot housing market prices. Zillow lost more than $100,000 on more than a dozen homes in the Valley since 2020. 12 News

Of course, they did and they were not alone.  Many of the iBuyers lost money in the hottest market we have ever seen which was also the most favorable to their business model.  Why you ask?  Several reasons!  They weren't playing with their money.  In most cases, they were playing with institutional investor money.  They were also entirely too aggressive at offering too much money for homes that fit their market profile.  Zillow has ceased to purchase homes in the valley and has admitted their algorithm was simply wrong.  Offerpad is also named in the article as losing money.  While not mentioned, I am sure that it is only a matter of time before Open Door and 72 Sold find that their business model is simply not as effective in a slower demand market. There is nothing wrong with any of these firms as a viable sale option but their aggressive behavior, at one time accounting for 12% of the market share, artificially drove the demand higher and higher making theirs and your purchases more and more difficult and inflated.

Housing Market Update: Nearly 1 in 5 sellers dropping their price.  The highest rate since October 2019-Redfin

Maybe a little clickbait but guess what?  This rate of seller’s dropping their price is NORMAL.  Yes, it indicates a change in the market.  It indicates a slowing of demand, but it also shows that agents have been conditioned for two years to price homes at $20,000 over the last sale and never disagree with a home seller about the price of a home for fear of losing the listings.  This is both indicative of a slowing market AND a tendency of agents in a tough market to overprice listings.  This too will sort itself out in the coming months.

The Housing Market Just Slid Into a Full Blown Correct-Fortune.

This article relies on the same statistic that the Redfin article used about sellers dropping their prices. In addition, it adds that interest rates are rising (although they backed up a little bit recently), inventory is growing, the market has peaked, and Henny Penny the Sky is Falling.  The market has peaked but my interpretation of the peak is that it is just the beginning of a return to a normal more balanced market.  Inventory had to rise and demand had do slow in order for that to happen so that we could return to normal.

Let me give you a few indications why I believe that the market is due to slow rather than crash.  The very next article in the same grouping of publications had the following headline.

Real Estate Desperate for More Inventory. Fox News.

This has been the case and the driving force behind our wild market for more than two years.  It has made it difficult to price homes as a listing agent and virtually impossible to represent the “best interests’ of a buyer.  For two years, a buyer has had to do whatever they could, and the seller demanded, to just attempt to purchase a home.

Balancing all of these articles, if you are that person that was holding out to sell your home to hit the peak of the market, you have missed it.  If you are the poor buyer that has written 47 offers on homes unsuccessfully over the past two years, now is your chance.

Many of these articles attempt to garner more clicks by sensationalized headlines but there is some truth in all of them.  I do think that the market is slowing and will continue to slow.  We continue to see other signs such as builders starting to cooperate with brokers again and even offering incentives for the first time in over two years.  Some of the builders were not even cooperating with brokers with buyers.  This will not be forgotten by the agent population, and we have seen this hurt builders before.  Here is the incentive that one builder is now offering: $25,000 to be used however the buyer would like. Additional $1,000 to the buyer’s broker and 2% of the base price.

This is not as good as it once was where the builders were paying up to 5% in incentive and 5% to the agents but it is a step in the right direction.

You may say all of these signs point to the fact that as a seller, we have completely missed it and we now have to wait 5 years before we can sell again.  Nothing could be further from the truth, and this is based on local knowledge of the market.  In the last 30 days, we have listed 3 homes in the Avondale market in the subdivisions that we work.  All three went under contract within 14 days.  One of those has since been place back on the market but we still expect to sell all three in under 30 days on the market.  That still tells me that it is still a seller’s market at least to a point. 

If you want your home sold in less than 30 days for the most money with the highest net and the least hassle plus without any obligation, give the Al Gage Team a call at 623-536-8200 or email us at al@algage.com! 

Maslow’s hierarchy of needs emphasizes that the most basic human need is shelter. It provides protection from the elements, and provides a place of storage and security for other basic human needs – food and clothes, and the “stuff” that all of us have.

     For many of you, the letter from the landlord raising the rent again is a very real problem. We are currently experiencing the most expensive time in our history to obtain housing-either by renting or buying! But the rent versus buy decision is still essentially the same. You may have to adjust your wish list based on budget and qualification concerns, but that math is the same whether you rent or buy!

     I was watching the news and they gave a quick line of 4 questions to determine whether you should rent or buy. Those four questions were

1. Where do you live?

2. How long will you live there?

3. What are you monthly payments?

4. Are you financially fit?

 

None of these address the question that was asked with the possible exception of the first two and even then not directly. Where you live can alter the rent or buy question base on the relative price of rent in an area versus the price of buying in the same market. Generally, one part of town varies greatly from another part of town on price, quality of life and ease of travel but there is not much disparity between the two on rent prices versus sales prices. Demand to live in a good area is universal across rent or buy situations within a location.

     The other questions about how long you intend to live there is important but misleading. Everybody intends to live in their current home for the rest of their lives when they purchase the home and indeed some make it for a very long time. Those pesky statistics say the average time in a particular home is between 3 and 7 years. With the front end of that statistic being 3 years. Unless you know you are moving to another location in less time than that, it really does not apply to the situation.   Many factors can alter this equation: changes in marital status (good or bad); changes in job status (job loss, promotion or transfer); or changes in health status (illness or even death) are just a few.

      The last two questions are solid advice questions, but they really don’t help you determine whether to rent or buy. IN MOST CASES, the financial difference in the ability to qualify to buy and the ability to qualify to rent a single-family home are very close to the same. Financial institutions will allow you to qualify for a monthly payment equivalent to 29-33% of your gross monthly income. Professional management companies require 2.5 or 3 times the gross income to qualify to rent. 

     The only real difference in the qualification is the debt-to-income ratio and credit scoring differences between the two scenarios. Credit scores and debt to income ratios are slightly more lenient for renting than buying. The nature of our question assumes that you have the ability to either rent or buy, so we wont discuss the differences any further. The real question is “SHOULD you rent or buy?”

     The answer is probably rent if you KNOW you will be transferring within 18 months, can’t qualify to buy, don’t have the required down payment and closing costs (although the entry funds to rent are not insignificant) or are really pretty unsure of you employment future.

     In almost all other cases (and even in some of those cases), you are going to be better off to buy rather than rent. The math on this equation is pretty simple as is the logic. As opposed to renting, and assuming that you do not refinance and pull equity out of your home, you are locking in the maximum monthly payment you will have to pay for you home except for increases in taxes and insurance. With rents continuing to increase year after year, this alone should be enough to solidify this decision to buy.

     If I throw out the insane appreciation, we have seen in 85392 the past year of 35% and in 85340 of 22% (I think this is wrong but this is what MLS says), and go back to historical averages of 3-5% appreciation this is how the math works. I buy a home in our neighborhood for the averages price of $450,000 in today’s prices. My monthly payment on a mortgage of $400,000 is $2436 PITI versus my current rent price of $2500. The home appreciates the minimum of 3% per year for the 3 years that I own the property. Rent also raises at an average of 3% per year. In three years, my house payment is still $2436 I owe $375,989 but my home has appreciated to $490,500 so I have gained $40,500 in appreciation and paid off $24,011 in debt making a net gain of $64,511. As opposed to my rent having now raised to $2775 and I literally have nothing to show for it except the smile on my landlord’s (likely a big corporation) face. 

     I would love to sell all of the tenants reading this a home but for you seller’s this is also good news. As long as this math equation remains the same, there is not likely to be the big, dramatic market crashes that we saw in 2008 and 2009. That does not mean to say that this market of 30% increases a year is sustainable. It has to slow to a crawl at some point and return to historical averages. I am shining up my crystal ball to have that answer for you next month.

     I would also implore you not to fall victim to the high dollar, misleading advertising that is praying on everyone’s desire for convenience and getting you a price that is MORE! More than what?

If you want to work with a team of professionals with a proven track record of getting the highest price, in the shortest time, with the least amount of hassle, give the Al Gage Team a call at 623.694.9004 or email us at al@algage.com

 

 Do you remember trying to balance the old-time scale in chemistry class? The slightest amount of extra material on one side of the scale would make it slam to the bottom on that side. Currently, the buyer’s side has a pillowcase full of feathers and the seller’s side has a pillowcase full of gold bars.  This is how the current supply and demand is distributed.

     Demand is currently at or near an all-time high.   Buyers are still frantically bidding and struggling to compete with a large host of institutional, generally cash buyers.  We recently sold a home that was in very poor shape.  In fact, it needed about $35,000 worth of work to be brought to an average condition.  Institutional investors bid the property more than $25,000 over list price, simply out pacing what the average individual buyer could envision.  Essentially, the institutional buyer bought the property at very close to what the as-repaired price would be.  Their game is, by the time they get the property ready, it will be worth $35,000 more. 

     All hope is not lost for buyers!  As interest rates rise, almost ALL buyers lose some of their buying power.  The exception to this would be cash buyers and buyers who were not buying at or near their maximum amount.  This reduces demand or at least the level of demand.

     In addition to this, the constant price increases we have witnessed over the past few years, also gradually and slowly eliminate buyer’s from the current price point.  These decreases demand as well.

     Inflation also contributes to a reduction in demand.  As other items such as groceries and gasoline skyrocket in price, this takes away from the comfort level of a well-qualified buyer spending $2500 per month for a mortgage.

     Rent prices continue to outpace wage increases and home prices. Not the subject of this article, but the Rent vs Buy analysis still very clearly shows that buying a home now instead of renting is still the best approach for a long-term investment.  Buying a home is an investment and, for most, the largest they will ever make. When the rental market recedes a little bit, this will affect demand in two ways.  It will reduce the clarity of the Rent vs. Buy scenario, thus easing demand.  It will also change the math for many of the corporate institutional buyers which is tied to long term hold and lease mathematics.

Lastly, the sheer frustration of many buyers trying over and over to purchase a home and not winning the bid.  Many of my buyers put up to 30 offers in on a home before they are successful.  Make no mistake, buying a home is an emotional decision.  Falling in and out of love with 15 different homes is emotionally difficult at best.  These things may make the buyers simply quit which decreases demand.

I know I just made it sound like the seller side of the market is up in the air on the teeter totter and the person on the other end is about to jump off. (I am sure my current back issues have at least something to do with this widespread practice when I was a child) This may or may not happen but it is certainly not what we are expecting. Demand is so high right now that it will be difficult to happen in a precipitous manner.

The tipping point is likely to come about slowly.  All of the factors I listed earlier will dissipate demand slowly over time.  The major exception to that would be if one or more of the large institutional owners of rental property should suddenly decide that it is in their best interest to divest themselves of large swathes of their portfolio. This could trigger a cascade.  Many of the other investors may join in a panic which could be disastrous for our market.

This is where inflation and some of the other items mentioned earlier immediately kick back in.  An increase in supply will quickly satisfy some of the current demand crisis.  This may make the real estate market volatile for a few weeks or even a full year.  Things like the cost of building materials and labor likely are not going to decrease and may continue to increase in spite of this turn. These factors will prevent any kind of major uptick in new construction to add to supply.

    There will likely be no sudden increase in supply of homes for sale because of the following basic analysis in the sale of  a home that just wasn't present, even three years ago.  Suppose you get offered that great opportunity in another city that requires you to move.  Before our current market conditions, most of what you had to consider had to do with the wages and benefits of the new job versus the security, wages and benefits of the old position. Included in your computation was the basic difference in cost of living and housing between the two markets. 

     In the current market, you have to factor in all of those factors plus the 6-9 months it may take you to gain acceptance of an offer on a home, the different supply of homes and/or housing in the new location and the likelihood of that being a permanent move.  As interest rates continue to rise, it will also be a factor in the relocation calculation. It is very difficult to recruit a new employee from a location where they have $3 or $400,000 worth of equity, a very low mortgage amount, mortgage rate and the comfort of established work.  They will have to overcome the normal trepidation of a move as well as a likely increase in the mortgage amount as well a 2-3 percent jump in the actual interest rate.

     The bottom line here is no one expects a crash like we saw in 2008 but almost everyone is expecting a slowing down of the market which is healthy.  Going back to 30 or 60 days to sell a home would eliminate most if not all the gimmicks of selling a home in 3 days and living there for a half a year as some are advertising.  Those operations only work in this overstimulated market.

     That being said, if you are contemplating a move, NOW IS THE TIME to cash out of your home or investment property as we are at or near the peak!

If its time to go, give the Al Gage Team a call at 623.694.9004 or email us at al@algage.com.

 

 You bought your home in 2017 for $225,000 and now you can sell it for $550,000 so it has appreciated $225,000.  End of Article? Correct?

Not exactly!  There are several other factors that come into play before you can declare that the homes have appreciated by 100% since 2017.  There are actually two types of appreciation:

· Improvement Appreciation-An action is taken by the owner of the property that increases the intrinsic value of the home.  This could include a new pool, granite counter tops, an addition (if done properly) or other upgrades.  I know I am really dating myself but my father moved our house from one location to another which greatly increased its value and no it was not a mobile home.

· Market Appreciation-This is the amount that my property and all the properties in the immediate area go up over time.  This is a measurable number but it is very important to realize that past “appreciation” is not a real predictor of future performance.

Individually, we have control over the first one (although I swear some folks just shouldn't have a Home Depot Credit Card) and little to no control over the vast array of market conditions that can affect the Market Appreciation.  These market conditions might include significant increases or decreases in demand and/or supply.  Here are a few examples of how demand and supply can affect the market.

· Major employer in the area closes an operation resulting in a mass exodus flooding the supply of home.

· Major employer moves into the area and creates a mass influx of population increasing demand to buy.

· Natural disaster destroys the community and/or the infrastructure eliminating demand in the area.

· Gold, oil, gas or some other valuable commodity is discovered in the vicinity and create a mass influx to the market which increases demand.

· Interest rate fluctuations.  Higher rates lower demand and lower rates increase demand spurring the market in that direction.

For the most part, the Greater Phoenix area is immune to either of the employer based examples based on its size but a large employer could certainly make a local impact.  I remember when Bechtel pulled out of the Palo Verde Nuclear Generating Station and every employee of Bechtel lived in the Villa de Paz neighborhood, that local market crashed overnight.

Interest rates are the most applicable unless they do find oil or gold on our area.

Some would say that the difference in home value (intrinsic value if you will) is all embodied as appreciation but we will analyze that number again after we look at our highs and lows for last year.

So if I look at the appreciation numbers from our neighborhoods for last year, I see the lowest appreciation of homes at approximately 26% in multi level homes in Corte Sierra and a high of over 54% in multi level homes in Westwind.  All of the rest of the West Valley numbers fell more or less in this range but these were the extremes.

So that solves it. Case closed! Buy real estate and enjoy a 26-54% return on your investment every year.  Not so fast! There are a couple points to keep in mind that might alter you outcome.

· This was the best year of price increases I have seen in 37 years of real estate.

· What goes up can also certainly go down.  We even have a real estate form now that discloses that the market is cyclical.

So this is great!  Everybody gets more money for their home, has a ton of equity that they can either access for other purchases or just preserve in their home.  Of course, if you are a buyer, you eventually get priced out of the market and decide to just stop looking which leads to a decrease in demand and market pressure in the opposite direction.

But what about inflation? The definition to this point for appreciation has been the difference in the number of dollars given for a property.  That is also the definition of inflation on product.  In this case, the product is your home.  It is a very complicated argument and economic problem to disentwine inflation from appreciation and I will not attempt it here.  I can bless you with some good ole’ fashioned country logic and math.

If you do a quick Google search for the inflation rate for 2021 the consensus number appears to be 7.1%.  If I use that number and subtract it from the appreciation rate for our neighborhoods in 2021 here are my results.

26%-7.1% =18.9% on the low end.

54.5%-7.1%=47.4% on the high end.

Either of those would be the highest rate of appreciation we have ever experienced.

I have no claim to being an economist and I still find it incredible the amount these homes have appreciated.  I have been saying for two years that this is not sustainable and been proven wrong.  I expect that this market will begin to slow unless inflation gets worse, but most likely will not crash.

If you want years of experience and an honest, straightforward approach instead of one of the “new” market gimmicks, give the Al Gage team a call at 623-536-8200 or email al@algage.com

 

 So imagine. if you will. that you have spent the last 6 months writing offers on 27 different homes before you were finally successful in obtaining an accepted contract on a home.  You wire your $5,000 earnest money to the title company per the instructions that they gave to you via email and you confirmed by phone.

You fight your way through the inspection.  There are some significant repairs that the seller does not completely agree to repair but being pretty handy, you can take care of those yourself.  The appraisal comes in $5,000 dollars short and you have to pay the difference because according to the contract you waived up to $10,000 in appraisal shortfall. 

The purchase price is $550,000 but combined with most of your life savings and the proceeds from the sale of another home, you can pay for the home in cash.  Seven or so days before the closing, you receive an email from the title company telling you to wire the money in early so that closing will not be delayed and this is fairly urgent to avoid a delay.  You notice a couple misspelled words but check and it is from the title company.

Your proceed to your bank and dutifully wire in the amount of $547,345 dollars as requested and are happy that closing costs and prorations are less than anticipated.  Since you are cautious, you keep a copy of the email and the receipt for the wire.  A few days later, the mobile notary arrives to sign your closing documents and provides you with wiring instruction to wire $551,286 to the title company and to call to verify the wiring instructions before you send the wire.

Suddenly you have that sinking feeling in your stomach that approaches a near death experience.  Your rush to your email and to you profound dismay find that the domain name of the email asking for the original wire is different by one letter.  All the rest of the signature line is perfect including fonts and colors.

Your frantically call your bank to try to stop the wire and report the fraud but your bank informs you that the wire was sent and received two days ago.  When your bank attempts to retrieve the payment from the other bank, they are informed the account has been closed and was likely under some kind of fictitious name.

Sadly you have likely lost your life savings and the proceeds of the sale of your home.  As you are talking to the FBI, they offer little to no prospect of recovering your funds if the perpetrator is ever caught.  You are speaking to the the FBI because Wire Fraud is a Federal Crime.

Perhaps the Title Companies or Real Estate Agent’s insurance will pay but probably not and here is why.  You voluntarily wired money to an active account.  The fact that the Title Company was impersonated by the hacker does not make either the Title Company or the agents responsible in my opinion but the courts and judges will likely decide this case. 

This entire story is fictional and does not involve any agent or title company that I know or am associated with.  Many title companies have switched to encrypted email to prevent this kind of fraud.

Could this have been prevented?  Of course.  One of the benefits of working with a smaller team such as my wife and I is that you recognize our voices on the phone and we recognize yours.  In this instance, a simple phone call to us as the agents would have caused us to call the title company (where we know their voices and phone numbers) and verify the wire request.  Even if the buyer had called the phone number on any of the US mail documents, this could have been prevented.

This may have your scratching your head just a bit.  Yes it is possible for the hacker to impersonate the Title Company, ask you to call to verify at the number listed on the email and do a live verification on the phone, all of which is fraudulent.

I know of a recent wire fraud that was not part of a real estate transaction that was even more sophisticated.  In this instance, the hacker intervened in the middle of an email string, including the prior email conversations, from the actual email address requesting payment. They diverted the wire instructions to their fraudulent bank account.  There was a little variation in the syntax of the emails but not enough to raise suspicion from four different viewers.  This particular fraud occurred among parties that infrequently send wire or ACH (Automated Clearing House) transfers so this particular hacker either had to be very patient or it was some form of an inside job.

The bottom line here is this level of fraud is not a phone call to grandma saying her grandson is in jail in Mexico and needs bail money.  These hackers are good at what they do and have now perfected actually intercepting emails in the midst of a chain. It is important in any kind of real estate or other type of  transaction that  you verify the recipient of your money. 

Three easy steps:

1. Call your agent before you wire!

2. Call the proposed recipient of the wire at an independently verified phone number before you wire.

3. Send the wire only when you and your agent are satisfied.

 

None of my clients have ever been the victim of such fraud but the sums of money involved at this point make us all attractive targets.

If you want the best protections available from an experienced agent, call the Al Gage

By diamonds, I mean relationships and by relationships, I mean both personal and professional.  I am going to take some of you down memory lane just a bit but hopefully it will also show you how much we care about our clients at the Al Gage team.

I write this with a heavy heart having just lost my first cousin that was part of the fab five growing up, my daughter’s mother in-law who we were close with, and my sister in law that was also in real estate and in that sense we came up together here in the Avondale, Goodyear market.  The memory of those relationships is tough to remember right now so I want to move on.

I can remember the smell of my grandma’s apron when I buried my face in  it after being picked on by the cousins, as plain as day.  I was quite small as child and the cousin who just passed was usually the one picking on me, although we became close as we got older.  He was the oldest and ruled the roost except for, of course, parents or grandparents or his younger sister who was my age.  The pecking order was well established by age except for the deviation from the sister who was just tougher than any of us boys. The only thing more comforting than the smell of grandma’s apron (which she almost always wore) was the smell of her peanut butter cookies. 

Grandma’s are special and of course I was sure I was her favorite (because she said so).  Grandma led a semi-impoverished life but ALWAYS exhibited a strong, almost inhuman work ethic and instilled that on her daughter, my mom, who passed at least some of it on to me.  I am pretty sure, not many of today’s generation could handle the hard labor that both of them did at the time.

Relationships with family are natural and instilled based on the family.  Relationships with clients are harder to cultivate and harder to maintain.  Most of the time people have need of a real estate agent and then don’t need them again for 4-7 years. 

Let me tell you about my oldest and one of my two favorite clients.  By oldest, she certainly is not very old but has been my client for the longest period of time.  I am going to refer to her as Patty T.  I first sold her home for her in 1994 which is almost 30 years ago.  Since then, we have done 5 total transactions together and the level of trust we have built is off the charts.  This has led to some cheerful banter between Patty, her husband Dave and myself that is just refreshing and fun and makes the transactions go smoother for all parties. I texted her for information for this article and she responded that she would be retiring later this year and be ready to sell another one soon.  I take that as a badge of honor that the client trusts me enough to disclose that information to me and knows they will not be hounded by my team from now until they are ready.

My sister in law and I were rivals on a very small scale in the early days of our real estate careers.  She worked for the biggest brokerage in town and I worked for one of the smallest.  When I say rivals, that is very tongue and cheek.  We always share info, stories, and frustrations with each other even though we were at different companies.  About 10 years into her career, she moved away with my brother’s job where she became a rock star in the  Green Valley Retirement Community real estate market south of Tucson.  Health eventually caused her to retire. This relationship, with just a little competitive edge, kept us both going for many of the first trying years in real estate.

The next client I want to talk about is also one of my oldest and favorite clients.  I was sort of down in the dumps based on all of the happenings over the holidays. She called me yesterday (January 1, 2022) from a new Texas phone number and said “Do you know who this is?”  I immediately recognized here voice although we probably haven't talked since she moved to Texas almost 5 years ago and said this is Laura P. I immediately had an ear to ear grin on my face. She said she was moving back to Arizona and could we help her find a new build.  My answer was “of course we can.”  Many of the builders are not offering any or very little compensation now for selling their new builds. We will still take this client to any of those homes, regardless of compensation, and put her in the best home for her.  I am excited to see here again but not nearly excited as my wife was to here that she was buying a home and moving back to the Phoenix area.  We have sold her and her family close to 10 different homes over the past 25 years but my wife has always been close to her because they share decorating ideas. 

Between the reduced compensation from the new home builders and the extra money spent at home for interior design, we likely will not make a profit on this transaction.  That is just how life works sometimes. This is what happens when you become a client for life of the Al Gage team.  Some of you may not desire that close of a relationship and that is fine as well.

As I look back on the anniversary of what will be the  37th year in real estate, I can remember almost all of the clients that we have represented.  Some have been a delight to represent while others have been shall we say “challenging”.  Many of my early clients have passed on and I have sold their homes for their children or grandchildren showing that some of that relationship building passed on to the family as well.

 

If you want to build a life long relationship with a realtor, we are ready, willing and able to accept your relationship.  Call the Al Gage Team at 623-536-8200 or email al@algage.com.

 

I want to share with you some of my memories of the Avondale area and also talk to you a bit about the assault on traditional real estate.  When I was a child, Avondale, Goodyear and Litchfield Park were cities in close proximity to each other and more or less one community.  They were separated significantly from Phoenix, Peoria and Glendale in those days.

My father, who passed away in 2017, would be 101 this month.  I miss him terribly but also miss his sage advice on business which he always performed in a very traditional, handshake fashion.  He rarely asked for deposits and always honored his or his employees work at the mechanic shop or in the machine shop in his later years. (he quit working at about 93)  Rare customer complaints were dealt with handily and in a straight forward manner.  He was well respected as a leader in the community and even signed the Charter for the City of Avondale.  In the auto industry, he was always skeptical of new technology such as electronic ignition and discounted parts.  Although they are accepted and highly functional now, in the beginning, they were prone to failure.  He also didn't like it because it turned a skilled mechanic into a robot that simply replaced modules and other parts instead of repairing them.  These new technologies may be successful now but this is after 30 years of vetting,

To relate that experience to what is going on in today’s real estate market, you are constantly being bombarded by high dollar marketing budgets promoting the “New and Improved” way of selling homes.  They promote themselves as giving you a quick sale in 3 or 4 days for XXXX dollars more.   They are spending a ton of money to promote their new and improved method of selling a home but very little to market the homes they are selling.  Maybe they are right!  I just want you to be a little skeptical when you listen to their advertising.  My statistics, using a traditional real estate approach, produce a better list price to sales price ratio and in a shorter time per sale.  And I can prove it! That is not the direction I want to go with this newsletter.

My traditional approach to real estate is not based on nostalgia or longing for the good ole days.  It is based on the fact that it works!  By works, I mean it gets the most money for the client in the shortest amount of time with the least amount of hassle. Remember, most i-Buyers never represent the seller of a home so they never accept this obligation. Remember the old saying, “You can have it fast, correct or cheap but you can only pick two!”  The one bad outcome there is fast and cheap excludes correct.  Our traditional method of real estate has some real pluses. 

Single Point of Contact.  You dial one phone number and either myself or my wife Terri WILL answer the phone if it is humanly possible.  There won’t be any hold times or talking to underlings that either are not authorized or incapable of giving you the advice you seek or the decision you need.  By providing the single point of contact, you can always rely that the advice given will be backed by us as agents both personally and professionally.

Years of Experience  I have almost 37 years of experience in real estate and Terri has 14 years of real estate experience, 3 years of escrow experience, and more than 40 years of customer service experience.  In that time, I have completed more than 1500 real estate transactions without a single formal complaint.  Does that mean every transaction was smooth and perfect.  Of course not!  If and when an issue arises, we address the problem in a straightforward and open way.  If it is our mistake, we will fix it.  If it is someone else’s mistake we will pursue them as far as we need to. Bottom line, we have lived almost every real estate experience possible.

Integrity. My father was a very big believer in knowing his limitations. He was such an expert mechanic that he didn't have many mechanical limitations.  His word was his bond and if he said he could fix it, nothing would stop him from keeping his word.  I have inherited this tradition and strive to live up to it every day. If I could have my way, we would go back to the old handshake method of doing business but that just is not possible any more. In today’s world of financial checks and balances, a lack of integrity is very short lived and cannot survive in today’s era of electronic reporting and social media.

Proven Track Record.  We have sold more homes in these areas of Avondale and Litchfield Park than any other agent for the past 7 years.  It may seem overly traditional to be an expert in a certain areas of homes. Clients are often shocked when they first describe their homes  and I tell them the square footage or the model name from the description.  They are also shocked, when I describe the progression of termite infestation into Rancho Santa Fe after Cortes Sierra and Sage Creek were built (and the ground treated).  It was almost perfectly timed at the expiration of the treatments of homes in Rancho Santa Fe and you could track the infestation as it moved south. Some of this information may save you from a legal action and knowing the area intimately certainly works in your favor.

Thankfulness

I want to thank all of my past clients, potential clients, loyal readers, friends and family for the almost 37 years of real estate and the more than 25 years specializing in Avondale, Goodyear and Litchfield Park.  Many of my closest friends are now real estate agents that I have trained or worked with and many still call asking for my expertise.  I am thankful to know all of them and those of you I have yet to meet.  Mostly I am thankful for the quality upbringing that made me who I am today.

If you not afraid to do things in a traditional way, give the Al Gage Team a call at 623.536.8200 or email us at al@algage.com

 

 Happy Thanksgiving!

 I have always been a fan of the original CBS TV show NCIS.  Many of you may be fans but many may not, so I will try to catch some of you up and then proceed with my article.  In the show, Jethro Gibbs is the team leader of a group of Naval Criminal Investigative Service agents that are quite good.  Gibbs is a little old school in the show and hesitates to embrace technology at times.  He also never hesitates to rely on the science and investigative leads provided by his team to solve a crime.  Like all TV dramas, they always solve the crime.  There are two other constants in the show.  There is always a new agent called a “nube” and Gibbs has a defined set of rules for investigations.  In the real estate market right now, we have quite a few of the “nubes” attempting to practice in a very tough market so I am going to take some of Gibb’s rules and transfer them to the real estate market.

1: Never let suspects stay together!  The reasons are obvious in a criminal investigation.  I am not try to say that buyer’s and sellers are suspects but we actively try to keep the two parties separate and make all communication go through the agents. The reasons for this are two-fold.  The first is you never know how fragile a transaction may be.  The slightest wrong thing being said or a little attitude perception may be all it takes to dissolve a transaction.  The agents are experienced at talking to each other and have a good read on their client’s sensitivities.  The second reason to operate in this fashion is so that there is preservation of a record of everything that was said or done in a transaction.  This eliminates the accusation that Susie Seller told Bobby Buyer erroneous information.

3: Don’t believe what you are told. Double check!  This is just good basic real estate practice and should be on every agent’s list.  It is very surprising how many agents receive and rely on information that they have not verified.  I remember a home in Upland Park that had the square footage listed on the county assessor as 1387.  Having sold many homes in that area, I recognized that this was not right on the listing appointment. After digging through 20-year-old floorplans and looking at on-line photos of more than 40 listings, we were able to verify that it was in fact 1493 square feet based on the placement of a bedroom window set.  This may not sound like much but when you figure 100 square feet times $200 per square foot, that means $20,000 net to the seller.  When the final appraiser measured the property, it measured 1493 but it would have been too late to renegotiate at that point if we had not spotted this up front.

3: Don’t be unreachable! Not a typo.  There are two rule #3’s.  This one goes without saying for a real estate agent.  The only way I am not answering your phone call is if I am on the other line with a client, on a plane, in church, in the hospital (might answer even then) or in a meeting with a client.  I see many agents that say their business hours are 8-5 and not on weekends or for the fastest response to text them.  Whichever method you prefer to communicate with me, be it morse code or heliograph for you history buffs, I will attempt to respond immediately.

8: Never take anything for granted!  This applies to buyers, sellers, escrow agents, lenders, appraisers as well as other agents.  You cannot assume that they either know how to do their job or that if they do know how, that they are doing their job.  It may be annoying for me to call and ask if you remembered to get that insurance claims history or the documentation for the termite treatment or solar transfer, but I am protecting your interest in the transaction by doing so.

10: Never get personally involved on a case!  This one I can go both ways on.  I love to become friends and get to know my clients.  We will go out of our way to be as personable and friendly as we can be.  Where this rule does apply is when agents get so emotionally involved in a transaction that is starts to affect the outcome of the transaction.  Sometimes agents do this because they are so vested with their clients that they cannot be objective or fair about things and sometimes it is out of a necessity for the transaction to close for the agents financial wellbeing.  Neither of those situations will ever apply to our team.

15: Always work as a team!  We have developed an experienced team of escrow officers, Patty Miller and C.J. Miller and a lender in Rita Marie that have proven their ability to solve almost any problem.  I don’t care whether it is a tax lien, trust question, probate issue or a low appraisal, we have been able to solve almost any problem as a team.

20: Always look Under!  In NCIS, they use this to always look under the bed or under the body or under something.  In our context, we have to always look for those red flags that might lead us to an underlying condition that may warrant attention.

23: Never mess with a Marines Terri’s coffee if you want to live.  Need I say more? I think we can all just live with the fact that working without caffeine is a miserable state of life and leave this one at that.  Terri is an integral part of the team and is well appreciated but there are boundaries.

28:  When you need help, ask.  This may seem simple but there are everchanging rules and nuances of this business that sometimes you just have to ask for help on.  In many cases, my fellow agents are asking me for assistance but sometimes I have to ask for help as well.

36: If you feel like your are being played, you probably are.  If you listen to some of these ads about selling your home to an i-buyer and they say they “received thousands more”, the question is thousands more than what?  The amount you expected because that happens on almost every listing appointment I go on these days.  Thousands more than the home was worth is the implication, but we just know that can’t be real.  Bottom line is, if you sell to an i-buyer, you will never know the true value of your home whereas if you list with our team, you will know the true value of your home and you still have the option to sell to an i-buyer.

45:Clean up your messes!  It isn't often that we make a mistake, but we pledge to make it right if we do.

51: Sometimes you are wrong!  Every time that I have been wrong in the last year, it has been that we received a higher price for the home than the comps or my projection predicted.

Gibbs rules do not all apply to real estate, but they are mostly a reflection of common sense which is sadly lacking in our world today.

For the best in service and compliance with Gibbs common sense rules listed above, please give the Al Gage Team a call at 623-536-8200 or email us at al@algage.com

 

Name that Candy

 

1.Happy Cowboy	1.Jolly Ranchers
2. Galaxy	2. Milky Way
3. Red Planet	3. Mars
4. Not laughing out loud	4. Snickers
5. Can’t hold onto anything	5. Butterfingers
6. A famous author	6. O'Henry
7. Famous New York Street	7. 5th Avenue
8. Round flotation device	8.Life Saver
9. In the present or the future	9. Now or Later
10.Dry cows	10. Milk Duds

 

 

Have a safe and Happy Halloween!

Totally Clickbait! I tricked you, this article is going to be about disclosure and miss representation and not about Halloween although it may include ghosts and certainly includes things that give me, as a licensed agent, nightmares. I also want to include that I am talking to you about standards of practice as a real estate agent. In no way am I offering legal advice, practicing law and I have never played an attorney on TV nor did I sleep at Holiday Inn Express last night.

     Very generally, a seller has the legal obligation to disclose anything and everything to the buyer that is a material fact about the property or area that may affect what the buyer is willing to pay or influence their decision to buy a property! There are a few exceptions to this that we will get into later.

     There are two parts to this that give me nightmares when working with a client. The first is it is very difficult to determine what is a material fact to a buyer that neither the seller or me, as the agent, have ever met. Just a few examples of material facts in our neighborhoods that may come into play. A property backing to the school with the children playing may seem to be a positive to most but may be a negative material fact to the night worker who has to try to sleep all day. For some the property backing to the Goodyear Farms Cemetery may be a negative but to at least one appraiser, he upgraded it to a positive by adjusting the price of the comparable sale upward, because the property backed to a “common area. The proximity to an airport or Air Force Base or a EPA Superfund site all could be items that a seller could claim were material facts that were omitted by a seller and would have altered their decision to buy or the price paid.

     Now let’s talk about conditions of the individual property.  If you have had roof rats, scorpions, snakes, bats, pigeons, gophers, feral cats, coyotes, bobcats, pterodactyls or ground sloths, you have to disclose that fact to the buyer. If it was only crickets or mastodons probably not, but it is also not going to hurt to disclose those facts.

     The part about disclosure that scares me the most is the unintentional kind. If you intentionally hide a defect that you know about in your home to try to mislead a buyer, then please don’t call me. I believe the law has a special place for these people. 

     By unintentional, I am talking about the leaky drain that leaked in 2004 in the main bath, was repaired by a licensed plumber and hasn’t given one hint of a problem in the 17 years since it was repaired. You as the seller completely forgot about and fail to disclose that this occurred.  Buyer buys the house, closes and moves in with their highly sensitive grandfather. They attempt to move one electrical outlet in that bathroom and discover a black fuzzy substance growing profusely behind the drywall. Granddad gets very sick! Are we liable for the mold because it was there? The answer is no! Are we liable for the mold because granddad is sensitive? No! We are liable for the mold and the medical costs because we failed to disclose a leak in that bath that may have led the buyer or their inspector to find the mold. The plumber who repaired the leak has long since moved to Tahiti and good luck collecting from them for the fact that they plumbed the drain open to the wall.   Of course you know, that this story had too much detail to not be a true story.

     I worry about many of my seller’s either forgetting such repairs or getting to the age where memory fades just a bit and unintentionally failing to disclose such repairs to the buyer. One way that this can be prevented is to just maintain a complete and concise list of repairs either on a spread sheet or on paper if you like.

     Now lets go to the second thing that gives me nightmares.  Seller’s relying on third party information to represent things to a buyer. If you tell me the hot water heater was replaced in 2019 and I look at the hot water heater and it is not obviously older than that, I, as the agent can rely on what you tell me and do not have an obligation to investigate further. Same thing with the buyer’s agent. If you told me 2019 and I tell the buyer’s agent 2019 and it looks like 2019, we don’t have an obligation to investigate further because the condition of the property, outside of red flags, is beyond our scope of expertise.

     I want to give you an example of a scenario where a seller could unintentionally and innocently be liable for a misrepresentation. Bob and Suzie, (names have been changed to protect the innocent) purchase a new set of solar panels in 2018 at a cost of $27,000. The salesman for the solar company represents to the Bob and Suzie that the solar system has a 20-year transferable warranty. In 2020, Bob and Suzie sell the home and proudly represent that the solar has 17 years left on the warranty and the system is working great because it is working great! In 2025, Richard and Jane find out the solar is malfunctioning and cannot be fixed requiring an entire new system. When they go to the solar company for replacement or repair, they find out the warranty does not cover replacement, only repair and the warranty is not transferable to a new owner. Of course, this disclosure is in the fine print on the website. In this case, the seller may be liable to the buyer for those repairs by unintentionally representing that the solar had a warranty. Admittedly, the seller’s also probably have a case against the solar company and that salesman for misrepresenting the warranty provision. I also think the buyer and their agent has some responsibility to investigate the stated facts surrounding a warranty so this one may end in a split decision but who wants to go through this process?

     Now to the actual ghoulish part, you are not required (but also not prevented) from disclosing that a death, homicide, or other form of violent crime occurred in the property. This is very important to some people, and I will tell you that a person leaving in an ambulance did not die in the property. A person leaving with the coroner or in a hearse did die in the property. All that being said, you do have to disclose the presence of a ghost!

If you want to be protected from such nightmares, goblins and other mysterious creatures of the real estate night, give the Al Gage Team a call at

We were showing homes last week and 5 out of the 6 were owned by one or more of the i-Buyers that are very active in our market. Those i-Buyers have now become regular sellers.  It’s funny that they use the traditional method of selling homes to dispose of their properties.  All 5 were over-priced but appeared cosmetically to be in very good shape.  My buyer ended up settling on the one home that was not listed by the i-Buyer as it fit their needs better but also because it was a better deal for the property.

     You may ask yourself, what difference does in make to those seller’s as they have already completed their transactions with the i-Buyer, have their money and are down the road.  You would be right!  There are several questions I would like to ask, some of which have answers and some of which are sheer speculation.  These questions are:

 

Did I actually get the most for my home by selling to an i-Buyer?  This is the million dollar (not really but probably $20,000 question)  The answer is there is only one true way to know what the actual value of your home is in this currently extreme (albeit slowing) seller’s market. The i-Buyer can’t tell you, I can’t tell you, the government can’t tell you and an appraiser can’t tell you.  Only the market can tell you. I can offer great insight as to a starting point to price your home.  The only way to tell what your home will truly sell for is to place in on the open market and let the market tell you!

The i-buyer will try to tell you that their predictive model of the market accurately predicts pricing, but they are incorrect.  Of those 5 homes I showed, and we bought the one that wasn't owned by an i-Buyer, all five of the remaining have had a price reduction.  The market can be fickle and have its immediate ups and downs.  For instance, some holiday weekends are fantastic for selling homes and others are not.  Most of the time it is not predictable how a particular weekend will do and can be tied to weather or just the fact that everyone is out of town.  The bottom line, is  ONLY THE MARKET CAN DETEMINE HOW MUCH YOUR HOME IS WORTH! The only way to be sure is to put it on the open market!

 

Was the buyer knowledgeable enough about selling real estate to know whether they needed representation or not? Many seller’s think they have the same research tools and property pricing acumen as an experienced professional real estate agent but I can assure you they do not.  Going off the Zillow Zestimate plays right into one of the major i-Buyer’s hands and this estimate is notorious for being undervalued.  The last 5 listings that I have taken have gone something like this (with my estimate pre-prepared.  Me: “What do you think your home should sell for?” Client: “I have done some research on line and it appears to me that from everything I have read that is should be around $375,000 to $380,000” Me:  “My estimate leads me to believe that is

should be closer to $400,000!”  After listing for my recommended price, every listing has sold for more than the listed price.

     But it is also not just about price.  Part of what you paying a real estate agent for is to assist you through the process and make sure that you comply with things that will keep you from getting sued down the road.  Let’s say that the i-Buyer bought your home (leaving you unrepresented) and later discovers that there was a major defect in the home that you, as the seller, forgot to disclose to the potential buyer.  They are likely going to sue and now you are in a lawsuit with a company that has millions of dollars in assets, is very experienced in real estate and you essentially have no defense.  A real estate agent working for you would have tried to elicit those disclosure responses or at least been on the lookout for red flags with the legal obligation to protect you, their client.

What effect is the i-Buyer having on the market?  I am not sure anyone really knows the answer to this but lets examine some basic economics. The initial niche that i-Buyers filled was that of investors that were widely available, buying homes at discount, fixing them and selling them for a profit.  The current role of an i-Buyer in the market is that of corporate conglomerate with extremely deep pockets setting the bottom or at least a baseline of demand.  This may not sound like a big effect but if homes were so liquid that they could always be instantly converted to a cash position, the market would behave very differently.  This is creating an artificial baseline which would be equivalent to a reserve price on a stock below which it could go no lower.

     The other thing that happens is each time these i-Buyers purchase a home at/or near an inflated value and then attempt to resell it for a profit, if it occurs in sufficient numbers in a neighborhood, continues to put upward artificial price pressure on the market.  In essence, if they occur in large enough numbers, they can drive the market up all by themselves.  When they first appeared, I didn't think i-Buyers would become prevalent enough to affect the market, but it appears that this is no longer true.

Was the i-buyer’s initial offer better than their final offer?  I have been relayed many stories of an i-Buyer’s offer being reduced once they actually tour and inspect the home but amazingly enough, I have yet to hear of them raising their offer.  They do this in a number of ways, some as simple as saying “here is our revised offer”.As a professional real estate agent, I am obligated to get you, the client, the most money possible for your home.  The i-Buyer is banking on your willingness to take a small hit in money for the convenience of a sure thing and not having to prepare for and endure showings by the general public.

 

For the best service in the business and a no-nonsense but no-obligation approach, give the Al Gage team a call at 623.536.8200 or email us at al@algage.com

I am not ready to declare that this epic sellers market is over just yet! I am however sensing and feeling a bit of a shift.  This is backed up by a quote from The Cromford Report which sums up my position for seller’s at this time.  This is a direct quote from last months report by Tina Tamboer with the Cromford Report and matches what I am seeing, hearing  and feeling in the market.

“For Sellers:
The Greater Phoenix housing market continues to shift from an extreme seller market into a less extreme seller market. As prices continue to rise, more new sellers are motivated to put their home on the market and fewer buyers are able or willing to pay the higher price. Over the next 5 months, give or take, the market is expected to move into a weaker seller market, driven in part by dwindling affordability and buyer fatigue.

The first half of 2021 has been so insane with contingency waivers and exorbitant offers over asking price that many sellers may not know what a normal seller market looks like. Here are a few things to expect:

· Sales price appreciation will not average 3.1% per month. April 2021 saw prices appreciate 5.1% within 4 weeks. May was 2.3%. June was 1.1%. From 2015-2019, a long-term seller market but much weaker than today, prices appreciated at an average of 0.5% per month with a range between 0.3% and 0.8%.

· There will be more list price reductions. It’s important to remember that the sales price is the LAST thing to respond in a shifting market. One of the first things to respond is a list price, in the form of a price reduction. When a seller overshoots what the market can bear, they will get the silent treatment in the form of zero offers. That triggers a price reduction by the seller. Weekly price reductions have risen 112%   since mid-February from 317 in a week to 672. In a weaker seller market, expect between 1,500-2,000 price reductions every week.

 

Sellers will get their price, but pay more in concessions. If a seller prices their home high in anticipation of excess demand but only gets one offer instead of multiple offers, they are more likely to accept home warranties, do repairs and offer concessions. Currently the percentage of sales involving concessions is very low at 4%, up from 2.7% the week prior. In 2019, a good seller market, 25% of closed sales involved seller concessions.

 

To put this in perspective you also have to see what is says for buyers from the same report..  It says:

 

For Buyers:                                                     Buyers with budgets over $300,000 may be noticing that they have more listings to choose from compared to a few months ago. This is especially true in the price points between $400,000 and $800,000 where inventory has grown 92% since February. When a buyer has, for example, 4 or 5 homes

available that meet their criteria instead of just one, they are less inclined to throw all of their ammunition into one home in order to win it. They may still offer full price or more, but may not be under as much pressure to waive contingencies and shorten inspection periods.

As this subtle change proliferates with more inventory, the buyer experience will become less stressful. As the median sale price continues to rise, affordability is something to pay attention to. Not what’s affordable to you necessarily, especially if you’re out of state, but what percentage of the local population can afford your home if you need to sell right away or sometime in the future. A family making the median income in Greater Phoenix could afford 63% of what sold in the 1st quarter of 2021. That was within the normal range of 60-75%, indicating a good time to buy or sell. While we wait until August for the 2nd quarter measures to be released, we expect the new measure to land around 57%, slightly below normal.  This does not indicate that the market will plunge into a buyer market causing prices to decline, but it does indicate a reason to expect prices to rise much slower going forward.

 

When you combine those two position many people will conclude that the market is going to crash and we are going to have 2008 all over again. I do not believe this is where we are headed.

 

If the market swings back softly after a prolonged seller’s market, we likely will not see any drop in sales price just a maintenance of price and possibly a return to a few more concessions as indicated in the article. A return to equilibrium in a gradual manner would actually be healthy for this market as there are many may buyers who have simply given up after six months of writing offers without success. 

 

If seller’s view this as the beginning of the end and flood the market with new listings, then would could see a shift to a buyers market. This shift however, will not likely be anything like the crash in 1991 or 2008 where we actually saw significant in the first and major price corrections in the second to the point that it almost destroyed the economy. I will reiterate it again that the 2008 crash, in my opinion was precipitated by the artificial demand of speculative investors which immediately evaporated when profit margins evaporated. In my opinion, this market is almost exclusively driven by demand from real potential homeowners for their primary residence which paints a much different scenario. 

If you want someone that has lived and survived these changes in the market, give the Al Gage Team a call at 623.536.8200 or email us at al@algage.com

 

There is some truly new methods in real estate that may have existed before but they were almost never used before.  If those terms were used before it certainly was in a different context.  I cannot stress enough that these strategies apply for the RIGHT NOW of this market. Here is a list of terminology currently in play and a brief summary of how it is being utilized in this extreme seller’s market.

As-is.  This used to be used by the lenders on their bank owned properties to signify that they had no or little responsibility for the condition of the home. It is now being used as an enticement to seller’s to select the offer with this clause and eliminating any repairs.  It should be noted that this does not waive the buyer’s right to an inspection.  It only signifies that at that point the buyer will either accept the property or cancel the transaction.  Curiously enough, nothing in this clause prevents them from asking for said repairs at the time of inspection.  It is not recommended that  a seller demand that the property be sold as-is because this just plants the seeds that the seller is hiding a defect in the property.  It is acceptable to state from the beginning that no repairs will be performed in the current market.

10 Day Inspection Period. This 10-day inspection period is now miraculously able to be completed in 5 days to make the offer seem to be more competitive.  It almost always was able to be completed in 5 days but now agents are having to be Johnny on the spot to be competitive.  Unfortunately, the 5 days to respond for the seller has not changed and this is generally where we need more time.  If a repair request is received on Thursday, that only gives  until Tuesday for a response and many times it is difficult to get tradespeople in that short of time frame.

Inspection Waiver.  This one should make any agent nervous, and it is understood that the buyer is trying to make their offer more attractive.  Completely waiving the inspection is just asking for a lawsuit based on the condition of the property either to the selling agent or the sellers for failure to disclose a defect.  This one I see as more of a negative than an attractive prospect.

Non-Refundable Earnest Money.  This one combined with the one above is really taking a great deal of risk for the buyer.  Done in conjunction with a regular home inspection, this one signals to a potential seller that the buyer is not at all concerned with their ability to obtain the funds or loan to close on the transaction.  Many times, the buyer is more confident than they should be in today’s lending environment, but it is the buyers money that is being risked.  It should also be noted that this particular clause does not automatically make the earnest money forfeit if the property fails to close. If for some reason the seller fails or is unable to close, the buyer would be entitled to a refund of the earnest money.  They would also be due a refund if they cancelled pursuant to any remaining due diligence provisions such as inspection or appraisal.

Waiver of Appraisal. A complete waiver of the appraisal is being done very commonly in today’s market.  This is a very dangerous proposition for the buyers and their agents.  It is very difficult to predict the market and an appraisal right now.  Most appraisers are going along with the rapid expansion of home values, but I am sure not all.  What would you do as a home buyer if you purchased a home for $400,000 and it appraised for $220,000?   Even if all the comparable sales said that it was worth $320,000, that low of an appraisal likely makes you walk away from the transaction because of the disparity regardless of the consequences to your earnest money.  Please note this example was rewritten 3 times in this market because people are routinely paying $15,000-$50,000 over appraised value.

Appraisal Shortfall.  This is a much better way to accomplish the same effect as above.  This way allows for the buyer to waive a certain amount of difference between the appraised value and the purchase price.  Remember, appraisals are never based on loan amounts so in many cases, the difference in appraised value and purchase price has to be made up with cash over and above down payment and closing costs.  This clause places a definitive limit on the amount the appraisal can come in below purchase price and still require the buyer to proceed.  This method works well as it sets up the buyer with an exact maximum amount of funds needed.  It also clearly defines how much the buyer is willing to essentially overpay for a home.  It also reins in the inspections of the seller that they can simply ask whatever amount they want and get it.  While it is not uncommon for current buyers to agree to a shortfall of up to $30,000, not many have stretched beyond that amount in our price ranges.

Seller Lease Back or Post Possession.  Until this past year, only the really experienced agents, like myself, would even entertain a post or prepossession agreement.  All the brokers frowned (and probably still do) on them.  They are now the rage in the cage and almost every seller that needs one can demand one.  Let’s be careful with this one because being tied to a home sale means that it is adjudicated in superior court not like a regular eviction.  It also fuels the fears and reports of seller’s just never leaving the property which are rare but widely reported.  If your situation dictates that you need such an arrangement, it can probably be a reality.  Selling to qualify for a new home and need a 6 month lease back.  We can make that happen without all the discounts of a corporate I-buyer.

If you want this level of market knowledge and preparedness, call the only team you need to know! Al Gage 623.536.8200 or email at al@algage.com

 

But a master of none. That is how the old saying goes and it somewhat applies to what the expertise of a great real estate agent entails. So let me first start with the things that a successful real estate agent has to be a master of in order to represent their client.

Negotiation-this is not just a matter of relaying information from the other agent to your client. In some ways, this is an inherent skill that is difficult to teach. You may think, how important is negotiation in this obvious seller’s market. In this market having the wrong or an inept negotiator can cost you even more money. In honor of Father’s Day, I will freely confess that I learned some of my negotiating skills from watching my father who was a businessman here in Avondale for over 65 years and recognized in 2003 by the City of Avondale for over 50 years in business. He finally retired in 2013. He was a tough, fair, ethical but mostly a patient negotiator. I pride myself with not ever getting so emotionally involved in a negotiation that I make a mistake or an unintentional move. I have witnessed many transactions or potential transactions fail because one of the agents took offense or offended the other party. It simply is not that hard to be polite and courteous to your fellow agents or their clients. Being a veteran agent and not living paycheck to paycheck, I can accept doing things on my clients preferred timeline without having to push to satisfy some of my own needs. Being patient both with the timing of a negotiation as well as the parties involved is one of the strengths of my negotiating skillset. I have heard through the grapevine that other agents perceive me in the same way and that it is simply a waste of time to try to steal a listing represented by Al Gage.

Technical Expertise-  I am not talking about being able to write your own HTML or being an expert graphic designer. I am talking about knowing the nuances of the contract and having an in-depth working knowledge of what the provisions mean. Little things like even though the Inspection Notice Requires the repair to be done by a contractor, the repair can be performed by a handyman or the homeowner AS LONG AS IT IS DONE IN A WORKMAN LIKE MANNER. I always clarify if this is the route to take but knowing that this is possible is technical expertise. Additionally, there is rarely a situation that occurs in a transaction that I have not personally experienced in over 36 years in the business. Appraisal coming in low, death of a borrower, tax liens, solar transfer issues, repair issues are not just theories in a book. I have actually lived and survived each of those scenarios. It is very rare for us to simply 1. throw in the towel on a transaction. I have and had the escrow survived mentally incompetent parties, jailed or imprisoned parties, drug and alcohol dependent parties, and of course just plain jerks on all sides of a transaction. The psychology of how to deal with each of these scenarios is also part of our technical expertise.

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