Before You Buy a Home in Arizona

Phoenix, West Valley, Interest Rates

I was contacted by a buyer who had expressed serious interest in purchasing one of my listings. Numerous emails and phone calls over a 10 day period assured the buyer he was making a great choice for him and his family. I had held off telling the seller there was serious interest as experience had me cautious enough to know better. The buyer made an offer. I had spoken with his loan officer the prior week and felt very comfortable with his financial situation. I was prepared to present the offer to the seller I just needed one little thing. The LSR.

Here is where the happy story falls apart. Of course, had this been the summer of 2005, the buyer would have had 10 Phoenix minutes to decide while the seller was fielding offers from five other buyers.

The Arizona LSR is a Loan Status Report. It is basically a form that gets filled out by the loan officer which states how much the buyer is qualified for and if there are things hinging on the qualification (sale of another property, for example). Most good agents won’t even drive a buyer around without one. More on why later.

I call the buyer’s loan officer and leave a message. He does not get back with me that day. The next morning comes and goes, no phone call. OK, maybe he is busy, sometimes I get really busy. I call him. He is not excited. This is about to become a sad story. Two things happened during the 2 weeks the buyer was thinking. Two Very Bad Things (good movie by the way). The buyer, excited about the prospect of moving, purchased a new car to park in his new garage, and interest rates went up. A Perfect Storm (also a good movie if you are into disasters).

Lesson number one: DO NOT buy anything when shopping for a home. Nothing. I advise all my clients of this but unfortunately this one chose to have selective hearing. Lesson number two: A home is probably the largest purchase you will make. You should take your time and make the right decision. You should also know that while you are taking your time, interest rates change everyday and one little change can be enough to keep you from qualifying for the home of your dreams. OUCH.

Why won’t I show homes to people without LSR’s? This is pretty straight forward. Until the buyer knows exactly what they are qualified for, it is unfair to both of us to look at properties. It is unfair to the buyer because they might qualify for more and could be looking at homes that are larger or that have other amenities. The buyer might also qualify for less. Few things are more depressing then driving a Porsche only to find out you can afford a used Yugo. The situation is pretty unfair to the agent also. Real Estate agents are almost never paid by the buyer and almost never get paid until a successful close of escrow. By expecting an agent to show you homes without a loan approval, you are asking them to provide their services absolutely free with little hope of ever being compensated.

The moral of my story? I have strange taste in movies. OK, that is true but not the moral. If you are planning to purchase a home speak to a loan officer first. Find out exactly where you stand financially. Don’t make any purchases or do anything strange with your credit without speaking to your loan officer first. Don’t get upset with real estate agents who won’t show you homes without a loan qualification. Most of us are independent contractors, we pay huge sums of money to our brokers and to maintain our licenses, and we do not get paid unless a transaction closes.

Contact me today for more information on loan qualifications, the Phoenix and West Valley real estate market, or to talk about bad disaster movies. Tracy Thompson 623-326-0597 tracy@talktotracyhomes.com