Received a call this morning as my office’s agent on call that left me shaking my head about the lack of understanding of the real estate process.
The caller was asking about a sub-$50,000 property in Queen Creek and, from the questions she asked and the way she asked them, it was clear this had been a long and arduous process to date.
“Can you tell me who the bank is and if they’re willing to work with someone financing so they can live in the home themselves or if they only want offers that are cash or from investors?”
As previously mentioned in this space, cash is king in the sub-$75,000 regions of the Phoenix real estate market. Financing is almost non-existent below $50,000 and in the areas there and just above, cash offers are most common.
There’s a built-in misconception in the caller’s question though – lenders seem to be more inclined to sell a property to an owner occupant, assuming that buyer can purchase on similar terms to an investor. In some cases that means cash. In other cases, it means not needing to use FHA financing (popular because of the 3.5 percent required down payment versus 10 or 20 percent) or VA financing.
In general, odds are slim that a sub-$50K detached home is going to be eligible for FHA financing because of those loans’ required condition of the home. No stove, for instance, no FHA. And the list goes on from there and includes many of the ailments common to the lowest end (pricewise) of the Phoenix real estate market.
Here’s what struck me, though. After asking about this one home, she started to ask about another property then stopped when she realized it’s being listed by a different company. “I’ll have to call them,” she said. “Thanks.” And then she was gone.
The thing is, she didn’t have to call this other company. I can access the information in the MLS and tell her if a property’s available and (if everything’s entered correctly) whether FHA financing is a possibility. In addition, I can search the MLS proactively and provide her a list of what’s available and possible for an FHA buyer – if it’s there, I’ll see it.
Instead, she’s going it alone and relying on sometimes incorrect internet listings and spending the morning (or more likely, several mornings) calling around to find that one needle in a haystack.
Why? There usually are one of two possibilities. Either she simply doesn’t know she can get her own agent to help her look and to represent her, or she thinks she’ll get some sort of “deal” by using the listing agent.
Not that there’s a deal to be had – the bank already has contracted with the listing brokerage at a certain commission percentage and that’s not going to change regardless of who sells the home. And, quite frankly, it’s damned near impossible to reach an REO listing agent to make an offer in the first place. Kris Berg’s cartoon may seem funny but it’s frighteningly accurate.
Personally, I’d just as soon fill my own cavities with aluminum foil than try and purchase a bank owned home without some help given the quirks, pitfalls and utter silliness of the system.
[tags]Phoenix real estate[/tags]