Monday, November 17, 2014

"Jumpy" Buys a House

It's been a couple of weeks since my last blog: “Is this the right house?” A friend of mine said, “Is it that time already? Wow! Time flies when you are having fun!” It reminded me of the frog who remarked, “Time's fun when you’re having flies!” But, this is a blog on real estate and not herpetology.

In a previous blog I mentioned the process for a double close. In my last blog I wouldn't share this secret as I wanted more people to read more of my blogs. Well, this time I will give a brief explanation as it is important for the experience I will share for this installment.

Process: We get a property under contract and open escrow. If the seller is a bank we generally have to use their preferred title company. We deposit earnest money. We market the property for sale. We find a buyer. Our buyer opens escrow with our favorite title agency, Security Title, and they deposit their earnest money. Let's say we have a purchase contract of $50,000 with the bank (seller). And, we have a sales contract with our buyer for $55,000. On closing day the buyer deposits the $55,000 with Security Title. Security Title then wires the $50,000 to the bank's title company. Once the closing with the bank's title company is complete we close our sale with our buyer with our title company. The $5,000 difference is our profit. This is typically the most creative double escrow we do.

I hope this helps. If not, don't worry about it. The story will make less sense, but I only have so much time and patience to explain these things.

The above example is how a smooth transaction should go. I am sure by this time the readers are sensing there is more to the story. You are correct in your assumption. I am sensing you are all of above-average intelligence. And, my measure of above-average is anyone smarter than me, which is nearly everyone. I know, this is not supported mathematically. Did you know “mathematics” is the study of math? Clever. But, this is a real estate blog. Know what? There is not a fancy word for the “Study of Real Estate”. How unfortunate.

Ok, back to the experience. We bought a property from a bank. Well, by “bought” I mean we had it under contract. We marketed it and found a buyer. Let's call him “Jumpy”. Jumpy was what is called a “rehabber”, or a fix-and-sell buyer. In other words, Jumpy would buy the property, fix it up and then resell it retail to a homeowner.

Everything was moving along fine and we were scheduled to close on a sunny Friday afternoon. I don't recall if it was sunny or not. But, this is Phoenix and the odds are in my favor. Jumpy was anxious and couldn't wait to get started on the project. We were in a hot market and the quicker he could close, rehab and resell the better off he was. There are two measures to a profitable project, time and money.

Friday afternoon there was a hiccup with the title process and we didn't close. So, the closing would be postponed to the next week. This was no big deal. As much as we wanted to close we understood they couldn't close until the issues were cleared up and we could get clean title that we could pass on to our buyer, Jumpy.

Mid-day Monday we hadn't closed. The seller's agent happened to drive by the property. Actually, he didn't drive by. He slammed on his brakes and came to a screeching halt. There was a construction crew working madly on the house. He was shocked! The windows were being replaced and the inside had been torn apart. They were putting in a new front door as he was sitting in his car with his mouth agape. He immediately called our agent to find out what was going on. Our agent called us and asked what was going on. We called Jumpy and asked him what was going on. He said, “Well we closed on Friday. So, on Friday afternoon we started to work on the project and have been at it all weekend!” He was pretty happy with his incredible efficiency. Well, happiness turned to panic. We had NOT closed on Friday. Now he was nervous, really nervous. He said he had already sunk $20k into the project (likely an exaggeration, but there was no doubt he had spent money).

We called our agent and told him the crew thought we had closed. The best thing to do was just close and all would be fine. He called the seller's agent and relayed the information to him. The seller's agent was not happy and suggested lawsuits, fights, legal battles and more. Our agent informed him if he went that route the selling agent would ultimately lose the listing and get nothing. He told him to just close and all would be fine.

Well, Monday turned to Tuesday and Jumpy was getting jumpy. He hadn't slept well. He begged us to make it happen. We told him we were working on it and to just relax. Jumpy was jumpy and not going to relax. Plus, he hadn't slept. Tuesday turned to Wednesday. Anxiety was rampant. Wednesday turned to Thursday. Our agent was in communication with the title company and the seller's agent. The seller's agent was getting super angry. Our agent told him to relax. But, the selling agent wasn't listening.

Well, on Thursday while the agents were arguing about who was responsible for what and which side of the lawsuits each would be on, we closed. There was a collective sigh of relief. Well, with all except the selling agent. He wanted blood. The commission check must have changed his mind. We never heard from him again.

And that is real estate in my corner of the globe.

Bruce B Wuollet
Bakerson, LLC

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Monday, November 3, 2014

Is It This House?

Last month the blog was the first of many on “Family Matters.” It was about the Addams Family and the dysfunction within it regarding a house we had purchased and flipped. Speaking of family, one of my favorite stories from the late Zig Ziglar is one he told at a conference. He said he was on an airplane and visiting with the man next to him. This man had a wedding band on his middle finger. Zig looked at him and said, “Your wedding ring is on the wrong finger!”, in his southern twang with a tinge of a drawl. The man looked up and said, “I married the wrong woman.” Zig emphatically exclaimed HE hadn’t married the wrong woman and took the opportunity to mention his wife. It was trademark Zig. That brings us to today's blog. What if you bought the wrong house? What if you sold the wrong house? What if you tore down the wrong house? Well, tearing down the wrong house isn’t funny. But, it did happen to a friend of mine. They DID tear down the wrong house. But, these are MY real estate experiences, not his. So, I won’t tell that story. Although, it is quite funny…

Let me bring you back a few years. We were flipping houses by simply tying them up and flipping the contracts. In a previous blog I mentioned how this is done. So, if you don’t know you will have to read the others to find the answer. I won’t even tell you which one. Don’t worry, they aren’t long. Well, except that one blog, it was long. But, the rest are reasonably shorter. It’s not that I don’t want to tell you again, it’s simply that I want more people to read more of my blogs. So, go ahead, read the other ones and then come back. I’ll just wait here.

While the few people that haven’t read the other blogs are gone I will plow forward without them. I hope they don’t mind.

We had a fellow working for us. His name was “Aaron” and he was getting started in real estate. He found a lead from a seller and drove to the property. The addresses weren’t too clear. But, he happened to see it. The house was boarded up just like she said. However, the code wouldn’t open the lockbox. He called the seller. No answer. So, he snooped around and got some basics from the property without getting inside and then he called Jack. Jack agreed it was a deal and we would get inside once we confirmed the code.

We went into contract, opened escrow, and marketed the property. Well... “marketed the property” is a relative phrase. In those days we simply made some phone calls and sent a few emails. We didn’t have photos. We didn’t have video. We just had the simple details on the bed, bath and beyond. Wait, I can’t say that! "Bed, bath and beyond" is trademarked. Oops.

Jack found a buyer and told him to meet at the property. Jack and Aaron went to the property early to meet the buyer. When they got there the lock box still didn’t work. They called the seller. No answer. They walked around the property and VOILĂ€! The back door was unlocked! They walked in to see inside for the first time. They checked out the property. They unlocked the front door. Aaron’s phone rang and it was the buyer. He asked where they were. Aaron said at the property. The buyer said, “So am I. I don’t see a car. Did you walk here?” Aaron said, “No. We drove and parked out front.” They confirmed the address. Weird. They were at the same address but not at the same house. Confusion. The buyer told Aaron he was in a red pickup.

Aaron and Jack went outside and walked out to the street. Down the road a few houses and across the street was a red pickup. They looked at the curb and saw their mistake. They had transposed the numbers! They were at the wrong house. Jack quickly went back and secured it. Aaron told the buyer they were down the road at another vacant house. The buyer asked, “Do you own the WHOLE block?”

They walked up to the house and tried the lockbox code. It worked just fine! Imagine that! Their first walkthrough of the house was with the buyer. He liked the house. And, he bought it. He asked Aaron if he had any others. Aaron said he was working on another one just down the street and would let him know when it became available. It didn’t. That seller did not want to sell.

And that is Real Estate in my corner of the Globe.