Tag Archives: closing escrow

So It Goes

So it goes –  as Kurt Vonnegut might say.  A phrase meaning nothing and summing up everything at the same time.  A continuing state of affairs. Resigned status quo. Sad lack of meaning and resolution.  Profound inability to close the chapter and say:  “Our work here is finished.”

A recent conversation I had with clients keeps sticking in my head. Banging around in there like a bad meme from a McDonalds TV commercial – circa anytime in the last 30 years.  Have it my way – indeed. Special orders don’t upset us – indeed.  Let’s all grab a happy meal and buy the world a coke shall we?

We were sitting around the kitchen table of a nice home they were buying and the conversation went something like this:

Clients:  Now that we’re releasing inspection contingencies we’ll be able to close before the end of the month right?

Me:   It all looks positive but let’s just take it one step at a time.

Clients:  The Sellers can’t back out can they?

Me: No, not to worry.  They’re locked in at this point.  Sellers don’t have the same kinds of contingencies Buyers do.  We haven’t gotten the appraisal yet.

Clients: When does that happen? We paid for it.

Me:  I’m waiting for the appraiser to call for access. Hopefully it’ll be soon since we’re supposed to have loan approval in another 10 days.

Clients:  What’s taking so long?  When we bought our last house we closed in three weeks.

Me:  Yep.  But that was then. This is now.  The whole system has changed in ways I’m not sure I can describe. There’s no there there. I’m not sure anyone understands it completely.

Clients:  Can’t you just call the appraiser and set it up?

Me:  No.  I don’t get to call them.  They call us.

Clients: Should we call our loan person?

Me:  Nope. He doesn’t get to talk to them at all – especially him.

Clients:  Who knows then?

Me:  No one knows who the appraiser is or will be right now. We have to wait till this new thing called an appraisal management company finds an appraiser to accept the assignment on the property – for whatever amount of compensation that’s being offered.  We’re at the mercy of the system.

Clients:  But we paid $450 already!

Me:  Yep.  But not all of that money actually goes to the appraiser.  The middle man gets a cut. Sometimes they can’t find an appraiser willing to take the job for what they’re paying.

Clients:  But why is it taking so long?  We want to move in before Labor Day.

Me:  The system is overwhelmed. There are fewer appraisers.  Appraisals are harder to do.  Appraisers know their work is being scrutinized up the wazoo and they don’t like the tough ones. There’s a refi boom going on. A lot of experienced appraisers have retired. The ones that are left are working harder for less money.

Clients:  Don’t they just come out and measure? Look at a few sales? Compute the value?

Me:  If only it were so simple.  It seems like every appraisal is an epic struggle these days. There are fewer sales to compare to.  And a lot of those are short sales and REOs that usually sell for less and pull prices down.

Clients:  But there were four offers on this place. It went for more than asking.  Doesn’t that make it automatic?

Me: No. That’s what makes it harder. The price got pushed up.

Clients:  But we’ve looked at tons of places.  We’re happy. It’s our appraisal.

Me:  Well. Not quite. It’s the bank’s appraisal. It has to be happy with what it’s lending – not just with what you agreed to pay.

And so it goes. Ad infinitum. Ad nauseum.  Stay tuned for the next week’s exciting conclusion of “as the world of real estate turns”. We’ll continue looking for the there that’s not there.  Like sands in the hourglass, so go the days of our escrows.

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 Real Estate Thought Bubbles

I’m not an appraiser.  I don’t even play one on TV.   All I know is, I seem to be stumbling across more and more of these kindred real estate souls slogging through the neck-deep, muddy trenches of the same difficult transactions I’m wandering around in these days.

Ships passing in the day.  Comparing notes.  Commiserating on the sad state of comps. Measuring the level of frustration in each other’s voices.  Scratching heads together below a common thought bubble that reads: “How is this supposed to work?  Are we part of a broken system that’s designed to fail rather than succeed?”

Assuming that most on board define success as closing escrows.  But of course there being no lack of conspiracy theories blogging around out there, claiming just the opposite – that the new paradigm of success for banks is fewer loans approved and more escrows not closing.

The daily grind of real estate has settled into a painfully slow peristalsis.  A weirdly protracted form of trench warfare. Bogged down in a place where familiar landmarks have been blown to bits.  No recognizable mileage markers in the flattened landscape.  Almost impossible to tell on a day-to-day basis whether the escrow everyone is working on just took one step forward or two steps backward. Or both.

Simple Translation?  Nothing is easy anymore in real estate.  Easy isn’t even easy.  Not that it ever was.  But there was a time when hard was at least a lot easier than easy is now.

Are there any key players in the process having a harder time than Appraisers?  Any getting more middle fingers of blame pointed at them?  Any thrust more conspicuously onto the front lines of real estate’s no-win ground zero?

There’s always been a lot of confusion around an appraiser’s role in a standard residential purchase.  First: they are not sitting in for God.  Theirs is not meant to be a pronouncement from on high about the enduring value of a home for all eternity.  Second: they are not there to put the Buyer at ease or quell onslaughts of remorse. Third: they are not there to help a Seller salvage a shred of equity.

They are there to protect the lender’s interest. Pure and simple. Since the bank is usually the Buyers majority partner, it wants to know that reasonable collateral for their risk really does exist.

Fast forward to the mortgage meltdown and subsequent fallout that has flipped just about every aspect of the loan process on its head. Or inside out. Or ass forwards. Or (insert your favorite phrase here).

Real estate has fallen down the rabbit hole and it looks radically different from almost every vantage point.  There’s been a huge overhaul of the appraisal system. And ongoing directives from Appraisal’s Central Command are in flux – still shifting daily, weekly, monthly.

Enter the AMCs or Appraisal Management Companies. A perfect example of consumer protection run amuck.  A middle layer inserted into the process to protect borrowers from loan brokers.  But with no way to protect borrowers or loan brokers from those same AMCs grabbing for their own piece of the money pie. AMCs who are successfully breeding an increasingly dysfunctional appraisal system.

Let’s see…appraisals now take longer,  cost more, are subject to far more doubts and delays and often employ less experienced appraisers venturing further afield to communities they don’t have much of a clue about, because they don’t live there.

At the same time: Appraisers actually make less per appraisal, find themselves bidding for jobs farmed out to the lowest bidder, while many of the most experienced appraisers have retired and those that are left are overworked, underpaid and rushing to meet deadlines that aren’t remotely feasible. All under increased scrutiny and threatening review.

All in a market when there are a lot less comps to work from because of less overall sales. Where the few comps that do exist are often suspect because the task of differentiating between organic sales, short sales and bank-owned sales requires the wisdom of Solomon when almost half the sales (distressed) violate the prime directive known as “willing seller, willing buyer.”

Aren’t we asking Appraisers to go out and determine accurate market values in a market that is no longer functioning much like a free market?

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Chestnut Roasting

Good old Buyer’s Remorse. A dog-eared catchphrase in the well-worn lexicon of real estate. One of it’s grand old chestnuts.

Oft-experienced. Oft-invoked. Buyer’s Remorse is the staple we trot out of the stable when we don’t have other words to describe unstable weather (or whether not) conditions inside a troubled buyer’s head.

Deep down “there.” In the dark corners of the mysteriously thick skulls we all possess. Where rational layers of neo-cortex rub up against a Pandora’s Box full of inner demons residing in the lowly, sub-cortical regions of the brain. Tiny bottomless pits of adrenalin, emotion, survival instincts and ancient, hair-trigger, fright-and-flight mechanisms ready to go off at a nanosecond’s notice.

Moribund tales of Buyers Remorse abound. Every Realtor has their share. Etched indelibly onto the casualty rolls of hard to forget, crash and burn transactions. Decimated deals. Escrows that flew south when terror attacks came in the middle of the night. Skittish clients spooked and bolting out of their comfort zone. As the song says: Remorse is remorse of course of course. And no one can talk to remorse of course. Except maybe a house whisperer named Ed.

There’s the story about the offer that went along just fine until it came time to actually sign it. Or worse…write the deposit check. The one about the multiple offer situation where all ten would-be buyers panicked and ended up scattering to the winds. The one about the serial buyers who kept buying a new house every year thinking the next one was really going to fix their lives. The one about the buyer who was just as anxiety-ridden at the thought of getting the house as he was about not getting the house. Hundreds of stories about poor first-time buyers who turned tail and ran as soon as they got a gander at their first home inspection. And thousands more.

Suffice to say no one is immune. Buyers are only human. We all have boogey-men hiding in our closets. What better time to take them out for a stroll than in the middle of buying a home?

In the old days Buyer’s Remorse seemed simpler. More straight-forward. It usually camped out at the far end of the regret spectrum. Where there was no going back. Right after Close of Escrow (COE). When the Dirty Deed was already done.

My made up Latin name for this familiar garden-variety is Post-Rigor-Remorsus.

Buyers act diligently. Move steadily through escrow. Cross T’s. Dot I’s. Rigorously attend to each detail along the way. But some put their heads down a little too far. Focus so intently on small things, they don’t notice their own shadows following them. Walking like dopplegangers in their own shoes.

This kind of double-trouble lies in wait until the dust settles. When those powerful, brain-produced, mind-altering drugs linked to anticipation and excitement have vanished. Reality doesn’t always live up to realty’s staging. Be careful what you wish for…the saying goes. The other you just might get it.

What do Buyers do if post-rigor-remorsus strikes? One of three things: a) Kick their own butts unmercifully. Don hairshirts of self-blame for eternity. 2) Go through their inner rolodex and find someone else to blame. Or better yet, find everyone else to blame. 3) Move on. Get back to the bigger picture. Nothing is ever as perfect as imagined. Dream homes included.

These days more people are showing signs of Early-Onset, Pre-Remorsus-Remorsus. It won’t be listed in the upcoming fifth edition of the DSM due out next year – but it’s becoming endemic. Increasing numbers of Buyers are regretting all the regrets they might succumb to long before they’ve ever had a chance to get there and start regretting where they are at. More on this next week.

And after that? Seller’s Remorse…the other dark meat.

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