Charles Dickens sums up my sentiments of this past decade, the start of the twenty first century succinctly in Chapter One of A Tale of Two Cities.

       “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way”

   So it has been with the gyrations of the real estate market, especially here in Tucson where property values soared more than 45% in less than three years, where people could buy a $400,000 home with no money down.  The Light shone upon all…and then it came wickedly crashing down to the season of Darkness.

      But now, people are acclimating to what is occurring in this market. Sellers desiring to move on to other places know that the price they get for their home is not the price they would have commanded in 2006…but then what they are paying for their new accommodations is substantially less than 2006 pricing.  A degree of Realism has set in.

    Snowbirds, arriving daily to escape shoveling snow, scrapping sheets of ice from car windows, slip sliding on black ice, or desiring just to get away from bone chilling temperatures and get warm, have a plethora of homes from which to choose, in all price ranges, and substantially lower in price than last year.

    Communities throughout the county have homes which are in distress.  Potential buyers should look for a Realtor who is knowledgeable about short sale and foreclosure properties as well as an agent who understands resale and new home construction transactions.  Checking the credentials of potential agents and insuring that agent is a Realtor should be the first order of business.  A Realtor abides by the code of conduct and ethics set forth by the National Association of Realtors.  Not all real estate agents are Realtors.

Tomorrow:  Looking for a Tucson home

   I showed property this weekend and amongst the properties I showed to my client were a couple of short sales.  I also had occassion to check a property which I previously mentioned in an earlier blog. 

    I had a client who made a full price offer of $275,000 for the property.  We had had a cursory inspection prior to making the offer and had the requisite information, loan approvals, “as is” documentation, the whole shebang.  We knew before writing the offer that this would be a “go” deal.

    We submitted the offer to the Realtor and were told it would be between 30 and 60 days before we knew whether or not the offer would be accepted and maybe as much as 90 days before the property could close escrow.  My client needed to find a house and we withdrew the offer.  We found another house and closed escrow within three weeks.

     The “short sale” house which we offered $275,000 for closed at $223,000.  That is a $52,000 difference.

     I think $52,000 is a lot of money.

    I was reminded of a short sale I tried to do with a seller who was facing foreclosure.  I had three cash offers on the property.  The property had polybutelyne piping which had burst and therefore there was black mold as well as an assortment of other problems with the property including a green swamp for a pool.

    I had all the appropriate “as is” addenda, proof that the buyers could purchase, a thorough inspection on the property which detailed the problems, as well as photos which I gave to the lender.  This was a property, which to me, seemed to be a liability for the lender and a property I thought the lender would want to get rid of fast.  Wrong again!

     The lender had to send the offer to “committee” and it would be another 30 to 60 days before a response would be generated.  In the meantime, the owner of the property declared bankruptcy, and the lender was faced with just pennies on the dollar.

    In checking the property this weekend, I spoke with a very well regarded Tucson Realtor about a short sale property which now has a contract on it.  She expressed my sentiments exactly, “I don’t have time to do short sales….this has been five months in the making…I can’t tell you how many offers I’ve had on this property, all higher than what the lender finally took.”  

    She then went on to detail some of the problems.  Lenders lose paperwork, it is sent again and lost again, one person says one thing, another something else.  There is no rhyme nor reason to how the lenders do things.  It often takes ten phone calls to get someone on the phone, nevermind an answer to a simple question.

  Lenders are in the business of making money.   That is a noble goal.   I too am in the business of making money.  But one would think lenders could streamline the entire short sale process.  I have long advocated that lenders put all of the paperwork in order prior to putting a home on the market.  Have the appraisal done beforehand and if another appraisal is needed later, so be it.  It’s cheaper than $52,000! 

    When the property goes on the market, allow the Realtor to list the price at whatever price, but the lender would have a base price under which, then “committees”, could be involved.   But if the base price comes in at $238,700, the property is on the market for $249,000, and an offer comes in at $240,000- then the lender can act immediately to accept the contract and close in a timely manner.  A 48 hour turn around from the time the offer is submitted to acceptance would be possible rather than 30-60 days!

     Good Realtors are getting disgusted. Lenders are loosing money right and left.  Maybe $52,000 is not a lot of money in a “billions of dollars industry”, but multiply that number by the numbers of properties where lenders take far less because of their ineptitude and/or bureaucracy and I’ll bet the final number comes to millions!