Flippers are strippers: They throw away appliances, window treatments, shower bars, etc., on the way in, but don’t always replace them on the way out…
Scio in Latin is ‘I know.’ It’s a beautiful as atoms – both ‘sc’ and ‘io’ denote beautiful ideas – but it’s ‘sc’ in English that lends so much ammunition to my cannonades of wit. We have already had The Screed – Sun City Real Estate Eviscerations and Dismay – and now I inaugurate SCUBA – the Sun City Underground Buyer’s Agenda.
I don’t even represent Sun City home-buyers, but I’m not sure anyone else does, either. Luckily, Del Webb’s homes are the very best of ‘good bones’. If you stay on top of the roof, so to speak, the block home beneath it will last for centuries.
And yet: A retirement home that is itself old enough to retire will have required successive updates to deliver on the promise of its good bones. The buyer’s agenda is to nail those issues down, discounting for anything that is either missing or undone.
So here is my EZ punch list for every home, for every buyer in Sun City:
1. No fridge? 2. No window treatments? 3. No landscaping? 4. Popcorn ceilings? 5. Single-pane windows? 6. Two-prong wiring?
The first two mean time, money and effort before you can move in. For the third, the neighbors are good and ready for you to stop looking like a rental. And if the home needs serious upgrades to remain competitive, you will do them on the way out if not on the way in.
Only a plumber can tell you if the pipes need help, but you can see everything I’m talking about in the photos in the MLS listing. None are deal-killers, necessarily, but they all make a difference, both on what you should pay as a buyer and on what you will reap, in due course, as a seller.
I can demonstrate every claim I make in these consistently dismal results. If you want to do better with your home, I can show you how to get at, near or above Fair Market Value in very few Days On Market.
My apologies for not writing here more often. I intend for the posts on this weblog to be canonical – enduringly true for all Sun City home sellers. Whenever you come here, you should learn something important.
For matters of lesser moment, or for the individual instances making up a trend, see me on Facebook. I read the Sun City MLS every day, and I use what I see in every day’s new and closed listings to teach lessons great and small.
And you should be subscribed to both resources. There is literally no one else telling you the truth about about Sun City real estate, so it’s lucky that I’m the best person to do that job.
Here’s fun: Sun City sellers should definitely be following me, and, as above, I can be helpful to buyers. But the people who should be glued to their screens are the listing agents: I know all about what they’re getting wrong – and I know how to get this job right.
If you subscribe to the weblog, using the form at the bottom of this page, you’ll get email notices when I post here, a few times a month. If you follow me on Facebook, you’ll see a few brief posts a day. Either way, I’ll show you everything that is and isn’t working in Sun City residential real estate.
Is it rude to laugh? It takes a LOT more work for a listing agent to sell a house badly than it does to do the job right from Day Zero. It is pure luck that they have but two feet to shoot themselves in…
The emails go out Thursday morning, early, to catch your early-morning eyes. A search portal from your agent? An auto-search you set up yourself on a real estate website? However you arranged things, that email is there to help you plan your weekend home search. And, of utmost importance, the newer listings are flagged with some form of eye-catching text like “NEW!”
And the emails go out again Friday morning, and you pay special attention to the “NEW!” listings because you’re not enthralled with the list you made Thursday.
And the emails go out again on Saturday morning – to go unread or to be set aside for later consideration. Come Saturday morning, you’re looking at houses, not listings.
And if a home was newly listed after Friday’s emails went out? It has, just by that one false move, lost two-thirds or more of the selling power of the word “NEW!” If you jumped on the grenade while the general was golfing, you didn’t get the medal. And if you moved heaven and earth to list a property for sale on the wrong day, this error alone is likely to have enduring consequences.
I’m belaboring this for two reasons:
Second, there were ten brand new listings in Sun City from 1:22 am Friday to 2:52 am Saturday. That’s a lot for any day, and it’s very likely that most or all of them missed out on Friday’s emails. They will not be showing today, Saturday, because the buyers didn’t see them when they were looking for homes to visit today.
But first, this mistake (there will be new listings tomorrow, Sunday, the worst day to be “NEW!”) goes to everything I talk about. EVERYTHING counts in a new listing. The list price matters most, but absolutely everything matters.
The reason is in the headline: You will never have more attention, more excitement, more follow-up interest in your MLS listing than you will have over the first weekend. It is your magic moment to shine, with everything in the listing as close to perfect as you can make it – the wishbook page of your buyer’s idealized future, a breathtaking rhapsody to be heard only within the confines of this one perfect space…
If the price is right – if the value is right – you will excite all the interest you need to sell the home from Thursday to Tuesday – at, near or above list price. The first weekend is your best and perhaps your only chance to ‘beat’ the Fair Market Value of your home. Not by much – everyone is doing the same math – but an irresistible listing can beguile more than one buyer, resulting in a bidding war, which is unlikely to happen later.
Everyone makes mistakes, and you fix what you can when you realize your errors – or when very generous buyer’s agents point them out in showing feedback. But: You never get a second chance to make a first impression. By the time the “NEW!” is off your rose, you may already be doomed to sell below market – no matter where you started.
Everything matters – price first – because you never get a second chance at the first weekend.
Probably not a deal-killer, but no one would have missed this photo, had it been omitted. The listing started at $50k over FMV, finished at $40k under FMV. 278 DOM, 72.67% net-SP/OLP.
Ahem. It’s easy to look at a long list of failed, fractured listings and think, “Well, the agents are really dumb, after all.” That surely is true, but it doesn’t mean that they are not also cynical, craven, mercenary, deceptive and predatory: You can’t slash the list price on a listing you don’t have…
When you’re giving away anywhere from 11% to 27% off the Original List Price, it’s not hard to figure out what the problem is. And whether or not agents are too dumb to learn better, I have every confidence that YOU are not.
Pricing to market in wise numbers produces better, faster results. If, on the other hand, you would rather wait for months for your money, you can pocket a whole lot less of it for your trouble…
I shot my mouth off about throwaway homes, so life handed me one and told me to put up or shut up.
Well, it didn’t quite happen that way. Karen Mushier, a Sun City paralegal who handles wills, trusts, probates, etc., sat me down and explained to me how so many Sun City homes come to be thrown away: The last living resident dies with no heirs, and so it falls to the probate system to reckon with the estate’s assets and debts.
And then she did me one better, referring a badly-neglected property to me to list for sale. The heirs had been identified, and one of the two, designated as the ‘personal representative’ (think executor) of the deceased, was to be my client.
So: The owner had been old and ailing and her live-in paramour was a hoarder of the first water. He packed the house with stuff for around ten years, and then it was abandoned for another four. This is a view of the living room on the day I followed our locksmith – my nephew Tim Brannum of Lockology – into 10754 West Hope Drive:
The water was off but the power was on, and had been on without interruption for the four years the house sat empty – there were still-frozen Klondike bars in the fridge. Every room was stacked high with stuff – some of it just debris, but a lot of new-in-original-packaging merchandise.
A patio had been converted into a dining room at some point, and then that room had been converted into a barn-like kennel for big dogs. That particular space has impressed itself upon my olfactory nerve, seemingly permanently: I will smell those dogs forever.
The two front bedrooms were so packed as to be impassable, at first. Maybe half of their contents was landfill-bait: Huge tubs of old paper documents and VHS tapes. But the other half was resalable merchandise in huge quantities: Paper goods, especially, but all sorts of stuff, much of it obtained at clearance prices from places like Harbor Freight Tools.
I needed the house emptied, but I had no budget. So we had a sale, not in pursuit of money but of bulk-reduction: Everything you buy at a deep-deep discount is trash we don’t have to pay to send to the dump.
The house, the garage and the back yard we are packed with stuff that either could be sold or needed to be trashed. We spent Friday through Sunday emptying everything – and we made that part of Hope’s redemption pay for itself.
Friday was cheap, Saturday cheaper and Sunday was free – if it can be moved, remove it. A sweet lady wanted to search the kitchen for cookware, so I made her this deal: “If you touch trash, don’t just push it aside, put it in a trash bag.” As a result of that little speech, she got what she wanted and she cleaned the kitchen for me in the process.
The sale paid its own labor costs – one person outside selling, one inside removing stuff – plus it paid for the landscaping I had had done, and there was enough left over to pay a cleaner to follow up on the final trashout. But the real triumph was getting virtually everything off of the property at no cost to the seller.
Oh, but if only that was all that needed to be done. The next step, after the sale, was whipping the house into a more-presentable shape. It needed more than we could give it, but I wanted to put its best foot forward, which meant getting the rest of the debris out and dismantling clumsy home-handyman constructions like the dog kennels/stalls. An enormous job, and it was done from Monday to Thursday:
Next came my real function, listing the home for sale. Because it is in such rough shape, it could not qualify for conventional financing – cash or hard-money loans only. Even so, I made a wishbook listing, rhapsodizing the home’s past and future glory. We had met a number of monied Yuppie couples at the sale, and I was hoping for similarly-situated buyers: Cash-rich and eager to take on an adventure.
I met more of those couples as the house was listed, but none prepared to pull the trigger, alas. Instead, I heard from swarms of wholesalers, predatory and destructive. It took me three tries, but I figured out how make it safe to negotiate with them. We finished in 12 days-on-market, but at 90.90% of the Original List Price.
But Hope Drive’s redemption is but barely begun. We sold the home to a true investor, not a wholesaler, and he is already at work rehabbing the property. Here it is last night:
I’m eager to see what happens next for this home. When we took possession, its value was hidden under deep piles of debris. As we worked, we discovered the good bones that had been buried there all along. The next step in Hope’s redemption will be dramatic – so stay tuned.
Meanwhile, this experience illustrates perfectly the listing agent’s job in getting a home sold: Whatever it takes.
What’s a home-buyer? Someone who wants to move up or to stop paying rent or to relocate from another city. Someone with stuff to be housed and who desires, periodically, to bathe and sleep in private. They want a specific, carefully-chosen home, and they don’t want to lose out on it.
But then there are buy-and-hold and fix-and-flip investors. They want the home to invest in, but not quite as urgently: They keep their stuff in their own homes, and, at a certain point, other opportunities can seem more promising.
And then there are wholesalers. They want the home, but only at an insanely low price, and they don’t particularly care which home they happen to be lily-padding on, provided the price is insanely low.
So first, as a warning to Sun City homeowners: Zillow your address. I am Zillow.com’s first and harshest critic, but your home’s Zestimate is a much better reflection of its Fair Market Value than the number some fast-talker is quoting you over the phone. Unless you are beset by an insuperable emergency that brooks no possible delay, you have no interest in talking to pawn-brokers.
But true pawn-brokers at least bear the risk of owning the merchandise. The self-idealized perfect wholesaler owns nothing except the temporary right to palm a property-under-contract off on a greater fool, who in his turn hopes to flip it to an even-greater fool, each taking a fee for the assignment of the contract.
Eventually the contract lands with a lesser wholesaler, whose job it is to effect the second scam: Renegotiating the already-discounted purchase price even lower – much, much lower. The theory is that you will be so desperate for whatever money you can get that you will cave. Does this work? I can show you MLS listings that suggest that it does, at least sometimes.
But it’s scummy, scummy, scummy, every bit of it. The assignment game is pure rent-seeking – demanding compensation for no added-value. And cancellation blackmail is white-shoe extortion.
How can this be? Don’t free markets protect us from this kind of predation? They should, but markets work by equilibrium – balancing costs and benefits on both sides. Where one side has an unfair advantage, fair outcomes are unlikely.
The problem is Section 6j of the Arizona Association of Realtors Residential Purchase Contract:
The specific villain is line 266 – the right to cancel. Owner-occupants only cancel on inspections if they have deeply misjudged the house – foundation issues, rampant infestations, sewer/septic-tank failure. Normal investors will cancel if turns out there is less juice or more squeeze than was expected. But wholesalers cancel deals with abandon, because there is zero cost – to them – to turning every crank on every candy machine until they find the one that’s broken – the homeowner who didn’t Zillow his address.
The assignment problem is actually trivial, it’s the blackmail-by-threat-of-cancellation that makes wholesalers toxic: The game is to get a property under contract, ideally at a deep discount but at full price if necessary, then torque the seller with demands for a much deeper discount on pain of cancellation. The buyer has nothing at risk; the earnest money comes back, if it was ever even deposited. But the seller will have gone through escrow’s nine circles of hell, will have made plans and, at a minimum, will have suffered market-bruising from the experience.
How to slay this dragon? It’s actually pretty easy for an MLS-listed home: “By mutual agreement of the parties, Section 6 of this contract is stricken in its entirety.” That does what I want done, but judges might not love language that comprehensive. Instead, my plan for wholesalers is simply to insist on a signed BINSR – the buyer’s inspection form – along with the contract, accepting the house as-is.
That would be the literal intent of entertaining an as-is offer: The seller agrees to accept a discounted price, and the buyer agrees to underwrite his own risks in operating from an information deficit. Second, if you imagine that you can evaluate the property financially without seeing it, then presumably you can also physically inspect it in the dark. But first, if you actually do want to perform the due diligence appropriate to a true investor, and not a scam-running rent-seeker, do it now, before you write the contract.
Do you see the benefit? I don’t want to deprive genuine investors of the opportunity to inspect the property and to demonstrate its value to their own standards. But I do want to chase away all of the fleas who will never do what I am asking – which takes care of the assignment problem, too. And I want to make sure that I am negotiating price only once.
The purchase contract is broken in the same way the marriage contract is broken, rewarding defection and penalizing cooperation. The fix is to take away the reward for defection: If you insist you must buy from the discount rack, the terms are cash-and-carry – a contract with no contingencies.
That’s a screenshot of my comps for Hope Drive, as seen in my custom list view in ARMLS. If you click on the picture, it will get bigger so you can actually read it.
It’s called ‘Zesidential’. I started building it when I was a ‘pricing algorithm’ for Zillow’s iBuying spree. You’re seeing it in its ideal application: Stacking up comparable properties by their mission-critical features to make at-a-glance apples-to-apples comparisons. It literally creates a table of details, making it easy to select the most comparable/proximate/recent sales.
I’ve talked about some of my other pricing tools. There are others: Custom data exports from ARMLS imported into Google Sheets and calculated and sorted thereupon. That’s how I make The Dirty Thirty, for example.
I can write software, and I used to do things that way. But the customizable tools built into ARMLS coupled with the infinite, intricate elegance of Google Sheets, are giving me everything I need right now.
If you are an ARMLS member, I can share this list view with your broker, who can share it with you. Otherwise, you are stuck with the very limited default list view, when you look at a selection of listings in a 30-day-live-look ARMLS link.
Coulda, shoulda, woulda: Started at $335k – an erroneous entry – but that may have killed it. Corrected price was $235k, stupid but not egregious and clearly hinting at $220k, where it might have sold on the first weekend. Finally sold at $212k after 97 Days-on-Market.
My apologies for not writing here more. I wanted to reflect on the second quarter, and I have interesting things to say about 2-bedroom/1-bath floorplans generally. All still undone.
But: As ever, we are graced with very bad closings in Sun City – 81 Days-on-Market on average for July, with and average of 6.51% clipped off of the Original List Price. (Attention sales-commission shoppers: You’re focusing on the wrong metric.)
None so dirty for June: It was worth $220,000 on the day it listed – for $350,000. After only 238 Days on Market, it sold for $205,000…
June has shuffled away, taking the second quarter with it. I’ll have more to say about both shortly, but for now I want to harp on a familiar theme: The unrelenting ineptitude besetting Sun City home sellers.
Summarized above and linked for 30 days are The Dirty 30, June’s worst performers in terms of net results – (Sold Price minus Concessions) / Original List Price – giving up 9% or more.
Yes, that’s awful, but 64% of June’s 111 closings gave up 3% or more off of the Original List Price – typically taking forever to fail with a whimper. Of those 111 closings only lucky number 13 finished at or above Original List Price – and, of course, some of those are inflated FHA/VA transactions.
There is a right way to sell real estate – at or above Fair Market Value in minimal Days on Market. Sadly, almost no one in Sun City works that way.
I am every day aghast at a class of homes-for-sale that I have never seen before, nowhere but here in Sun City. I call them ‘throwaway’ homes, since this seems to be the essence of their marketing appeal: The net effect if not the conscious intent is to repel all but the most rapacious of all-cash investors.
Do you doubt me? Take the time to watch that slide show – until your heart breaks. Home after home, worst feet forward – and these are marketing photos, intended to entice buyers!
A Sun City home represents a lifetime of effort for its owners. And at every step of their residential history, those owners were fastidious about the husbandry of their wealth. Until the last step.
Is the home’s seller widowed or divorced – abruptly amputated from the place where we are most human? Or beset by diminishing health and rising expenses? Or has the owner expired without heirs?
Many throwaway homes fall into the last category – probate sales. There is literally no one to defend the homeowner’s equity – nor anyone to defend it for.
That justifies nothing. Whatever the seller’s state of mind – or state of desperation – this is none of the buyer’s business. The listing agent is being paid a substantial sum of money to obtain the best possible return on the seller’s investment, even if the seller is no longer with us. Neither the buyer nor the buyer’s agent should be able to tell, either from the listing or the home itself, what the seller is going through.
Nothing about the seller’s circumstances should be obvious to the buyer from the listing. It is literally the listing agent’s job to direct the seller toward the highest attainable return, and telegraphing desperation – or even just despair – achieves the opposite: It attracts only predators and makes them ravenous to inflict the greatest possible pain.
Moreover, the neighbors have not volunteered to have their own equity trashed because they made the mistake of living too near a throwaway home.
There can be no wolves without sheep, but the owner of real property should never be a sheep, not even post mortem: It is never an honest man’s job to talk the other guy into making a mistake. I would go further and say that it is incumbent upon a listing agent to make sure his seller, regardless of the circumstances, is not being fed to the wolves.
Every detail in an MLS listing carries marketing weight – everything counts – but nothing matters more than the price. If a house is priced wisely and well – if it is priced to market using a number that makes sense to the buyer – it should sell at, near or above list price in single-digit Days-on-Market.
I favor numbers that break evenly on $20k boundaries, because that’s the way six-figure homes tend to close in ARMLS – the Arizona Regional Multiple Listing Service, the Phoenix-area MLS. I call them wise numbers, because all other numbers – stupid or sleazy prices – induce delay, at a minimum, and are therefore inherently UNwise.
But there is another piece to this puzzle: Lender pre-qualification tiers. How much is the buyer qualified for? Is it $344,850? Or is it more like $350k? Lenders like round numbers, too, but they often work in $25k increments.
This matters why? If you’re priced at $305k, you might be missing some or all of the buyers who are qualified only to $300k – which you would gleefully take – since they are only searching to their pre-qualification number. If you then reduce the price to $279k, you’re still fishing with your bait out of the water with respect to the buyers qualified to $275k.
That’s a sad but true story, as seen here:
These are yesterday’s price changes from my Sun City hotsheet. None of the prices, before or after, is wise – which is typical, alas. But note how many of them are or were fishing just above the nearest $25k boundary.
The Imputed Value is just an expression of the Sun City Over-Pricing Effect: If a price is not at least $15k over the nearest $20k boundary, it is not that number that is being defended but the next lower value. In other words, $279,900 and $275,000 are both defending $260k, but $269,900 is defending $240k. There’s no substitute for CLOSED comps, but peering through the SCOPE lets you read the listing agent’s mind.
There’s more, of course: You have to price wisely and well with respect to the closed listings while keeping your price lender-friendly – all while undercutting your Active competition, such that yours is the house that closes next.
Everything counts – but nothing counts more than price.
It takes more than just an upright toilet seat to make a listing languish for months…
Tell me if you’ve heard this story before…
As always, the price of delay is FHA. 194 DOM, 91.34 net-SP/OLP.
Started at a wise price, just much too high. The Sold Price looks like a counter to me: Buyer offered $220k, but the seller had had enough of this dagnabit discounting. 116 DOM, 88.42% SP/OLP.
FHA again, and another counter offer for the Sold Price: Buyer offered $300k, seller countered at list? Or are there undisclosed seller-paid concessions? 126 DOM, 95.38% SP/OLP.
The Original List Price hinted at $340k, as did the reduced List Price. But cash is a rapacious king: $330k again is likely a countered number, with the original offer coming in at $320k. The $35k concession is going to be in lieu of repairs, and taken all together this reads like an iBuyer-style flipper offer: Gouge ’em on price, then nick ’em again on repairs. Why did the seller go along with it? They ran themselves out of time playing stupid pricing games. 71 DOM, 80.82% net-SP/OLP.
From sleazy to sleazy to sleazy. I like the buyer’s offer at $380k, with the difference split by counter-offer. Regardless: 239(!) DOM, 86.46% SP/OLP.
In the mood to draw conclusions? These are all of yesterday’s Closings in Sun City – and every one of them pursued the same faulty strategy: List high at a stupid or sleazy number, languish pointlessly for weeks or months, periodically making price reductions to other stupid or sleazy numbers, ultimately approaching market value only to cave to an offer that discounts on price, concessions, repairs – or all three.
And that’s how we get here, with virtually every listing agent in Sun City making the same boneheaded mistakes in the same ways over and over again and learning nothing from the experience:
If you want better results – (ahem) better money sooner – you have to work from a different strategy, one focused on selling high and fast rather than low and slow – and to the least-prepared buyers.
I am proud to say that I have had a salutary influence on real estate agents who live and work nowhere near me. Locally, no one has learned anything, but that’s their problem – and their clients’.
This is me DM-ing in Facebook with an a team leader in Florida whom I’ve known for – could it be? – 17 years or so:
I’m telling my friend to look at thousands of prices, but we’re not going to do that. But there were nine Closed listings in my Hotsheet this Sunday morning – why? it’s a mystery – so we’ll use those to demonstrate my logic:
But wait! Only four of the nine Closed prices are wise. Perhaps. Let’s post-mortem them one-by-one and count again at the end.
Not adorable – collapse for cash at ~60 DOM – but wise.
Another big drop for cash at high DOM, but wise.
This is why appraisers hate Closed sales with low DOM: They conclude that the property was thrown away. I expect the original offer was $240k – 80% – with $255k – 85% – being the counter-offer. Listed at a wise number – which, as I’ve noted on Facebook, is often a tell for throwaway homes. Is 9 DOM, 85% SP/OLP a full, free and fair test of the market? Regardless, unwise.
This is a double-dip – same agent ‘represented’ both seller and buyer – and that looks like a $300k offer with a $5k face-saving counter. I call it a wise offer.
Concession-bait. Born to be unwise. You can see that the intent is to simulate a $300k offer, though.
Wise. It actually sold in 7 DOM. No idea why it took ~40 days to close cash.
Virtually the same story – with both serving as nice illustration of the dilatory power of sleazy pricing. But: Wise.
Cash taking a concession is probably repairs. My bet: Offered $320k, countered at the then-reduced list price, then the investor split the difference post hoc with a repair concession. I like this as a wise offer.
Offered $400k, countered at $405k? I like this as a wise offer.
You have to look at a lot more listings to know for sure where Closed prices cluster in your market. Is it on $20k, $10k or $5k boundaries? But I know for sure where it isn’t – at $xxx,999, $xxx,995, $xxx,990, $xxx,900, $xxx,500, etc.
But: We went from mostly unwise to mostly wise offers, and we dissected the logic behind the unwise numbers.
This is the most painfully obvious truth in real estate, and the one that is seemingly hardest for agents to learn: If you price your listing using a number that seems both fair and honest to buyers, you will sell faster and for more money.
Hard to see what’s going on? Here are the three photos at full size:
See the duct tape? Why is it there? Much as any buyer would, I read the worst possible portents into the mystery.
My wife Cathleen, herself an exemplary lister, explained to me what’s going on.
First: Sewer Roaches. Big, red, ugly, crunchy when dead. They’re not an infestation but an accident: They live where the unmild things are, not in houses.
But: When plumbing J-pipes dry out, as they will in the desert, dumb roaches climb up and get lost in houses, where they die of starvation, dehydration or ennui.
They are NEVER found in occupied homes, where the drains are in steady use, but ONLY in vacant homes that are not being serviced.
That last clause matters: The listing agent for an Active property should be in the home every day – if only to make sure it wasn’t left unlocked from the last showing.
But for the entire time a vacant Sun City property is subject to the listing contract, the home should be serviced at least every-other-day. Why? To keep the Sewer Roaches out. All you have to do is run water down the drains.
And that’s why the drains are taped over, Cathleen reveals: Either the seller or the lister doesn’t want to service the property and yet doesn’t want for it to be cemetery to a dozen red warriors.
Hence it was truly inspired on the agent’s part not to remove the tape prior to taking the photos: The house should be safe from roaches and buyers, both. 😉
