Buyer Hunt - Let a Home Find You

Mortgage Fraud Looms

A big issue in Arizona right now is mortgage fraud. Over the past few years, the Phoenix area has seen a fairly large amount of appreciation in home values. Even while the rest of the country is posting record drops in home values, its seems Phoenix keeps truckin' along. Unfortunately, this rapid appreciation leaves a market ripe for fraud. Savvy (if you can call them that) investors, with ties to mortgage and appraisal institutions, have taken full advantage.

Though there are many different types of mortgage fraud, one type specifically has seeped far into the crevices of our market. Here is how it works: Mr. Buyer will write a contract on a home that reflects an inflated value. In the contract, Mr. Buyer will ask that Mr. Seller credit him back a certain amount of money (often the difference between the real and inflated value) at the close of escrow. Mr. Seller often agrees, since despite the credit back, he will be receiving all the money he wants from the sale of his home. With the help of a "friendly" appraiser and lender, Mr. Buyer will have the home appraised for the inflated value and the loan approved. Mr. Buyer then defaults on the loan, and with the cash in his pocket, leaves the lending institution to deal with the sale of the home.

I want to caution all buyers and sellers out there of the dangers of being involved with this type of fraud. Despite the legal implications (which are extremely stiff), it can destroy an otherwise thriving market. It hurts our lending institutions, neighbors in the area, otherwise qualified buyers and the general public as well.

If you are selling a home right now, please be very weary of this type of fraud. Look for tell-tale language in contracts like "credit-backs". Though some types of credit-backs are perfectly legal, be sure that the buyer's lending institution and the title or escrow company are fully aware of any money going back to a buyer. If you feel at all hesitant about a deal, talk with either your Realtor or the authorities and take appropriate action immediately.       

SOLD or not to SOLD

It's often a great time in a homeseller's life. They have run the gauntlet and survived. An offer has come in, the negotiations were made and both parties signed the contract. Make it through an inspection period and the tribulations of buyer-financing and you're on your way to freedom.

So what do you do now? If you're represented by an agent they will probably (if they really know what they are doing) ask you to put up a SOLD sign. At first you might object. It does seems a little illogical to put up a SOLD sign before it has closed, right? What if it falls out of escrow? What about all those prospective buyers that might not now look at it because it's "SOLD"?

You might remember in my last post I mentioned that it is always best to play into a buyer's sense of jealousy. Buyers, especially homebuyers, will ALWAYS want that which someone else has (hey, I've been there, I know). That SOLD sign is your ticket to the promise land. Play it up.

Display it proudly and let every buyer that drives by see it. They'll most likely be thinking about how they missed out. "Could that have been the one?", they'll ask themselves. And they'll be calling. Every buyer wants to know what it sold for. A good agent or FSBO will get those names numbers and save them.

That SOLD sign makes your property shine. It shouts, "I had something to offer that none of these others did." And it did. Whether it was priced right, had some unique feature or was stunning inside, a home with a SOLD sign is better than the rest.

And if, God forbid, your home does fall out of escrow, those buyers (and some new ones) will still be there...waiting . Then it's your (or your agents) job to use it as a selling point. "Ohh, you cant believe it. The deal was made, but the buyer just couldn't come up with proper financing", you'll say. 

Buyers will be salivating at the idea of a second chance...guaranteed.   

   

Buyer Biology: Opportunity v. The Perception of Opportunity

My father has made a habit of catching me off-guard with mind bogglingly open-ended questions. To which no answer i have ever given has been totally correct. Today was no different. As i was enjoying my morning coffee at my desk the question came. "Corey", he said, "what gets a homebuyer excited?". Ah-ha. I had him. In his old age he had slipped up and asked me a question to which i already knew the answer. In fact, we have spent days discussing this very question. How could he have forgotten? With all the confidence in the world I answered, "opportunity, dad". In the 26 previous years of my life, this might have sufficed. But today, this was not the case.

40 minutes later i had the true answer...the "Greg approved" answer. It's not necessarily opportunity that excites buyers, rather the perception of opportunity. And only those agents, systems, websites or real estate tools that can create real or perceived opportunity will be effective in accomplishing real estate transactions.

So here, today, i will humbly attempt to write a summation of his thoughts.  

Let's start with the obvious. Price. A well priced home creates an obvious opportunity for any buyer: instant equity.  But is that real opportunity? Actually, No. That equity cannot be realized until the home is re-sold, thus there is no guaranteed opportunity. Rather, the home's price in relation to the market created the perception of opportunity.

How about days on market? If there is one thing I have learned, it's that you will never have more interest in your home than the first 15 days it's placed on the market. For buyers, that's prime opportunity time. They're feeling as though they are seeing something others have not had the chance to see, and that maybe, just maybe, they can snag it from someone who, if given the chance, would buy it instantly. Simple psychology has taught us that new is often good. But, something new, rare and wanted by the masses is even better. The real opportunity is in finding the home of your dreams and buying it before someone else does. However, it's limited time on the market has created the perception that an opportunity exists to buy something others will swoon and tear their hair out in a jealous fit over.

As a homebuyer I don't doubt that you have seen ads for homes that promise an incredibly low mortgage payment. In fact, the payment is often posted on the ad. Opportunity or Perception? One could argue that since that payment suddenly makes the home financially manageable, they're being given a real opportunity. They would be right. But that reduced payment wasn't the product of a reduced price. In fact, in 30 years they will have payed more for the house than a more qualified buyer would have. The perceived opportunity is affordability.

A staged home? Look at the statistics. A well staged home is more likely to sell, and more likely to sell faster. Why? It's going to look the same whether empty now or empty when the furniture is out. It's because the perceived opportunity is buying a beautiful home.

So for the endlessly tired and hardworking agents and FSBOs out there...read and learn. It's not necessarily real opportunity that will sell that home, but the perception of opportunity. So forge on my whithered brothers and sisters, and get a little creative. Your buyer is out there, they just have to be convinced they're your buyer.

And in all fairness to you ever-so-prudent buyers out there...while sellers work to create positive perception, please beware of looming deception.   

A New Year

And we’re back…

Let me first apologize for the lapse in time between blog posts. I guess it comes with the territory of being a small operation with big plans. Rest assured that while we weren’t writing, we were exhausting ourselves preparing BuyerHunt for the year to come. 

The New Year has brought new and exciting changes.

We would first and foremost like to thank Inman News for inviting us to speak at their NYC Connect Conference. It proved to be the most successful bout with networking to date. Thanks must also go out to our new friends: Niki at Homethinking.com, Travis at Neighboroo.com, The team behind Sellsius, Pat at Transparent RE, Joel at Future of Real Estate Marketing, Mike at Postyourproperty.com, Kevin at Byowner.com and Bill at recafe.com. We wish you guys much success in 2007. Hopefully, our audience has had the chance to check out these websites, as they are surely the basis by which Real Estate 2.0 will flourish in the upcoming months and years.

As for BuyerHunt, 2007 seems like it might be THE year. We have been working endlessly to create strategic partnerships with companies and people throughout the country, and have made strides thus far. Look for good things to come and Happy New Year.