Professional Athletes and Buying a Home

By Nolan Thomas

Professional athletes, when it comes to owning a home, have always been in a temporary situation. There is always the chance that they will be relocated to another city through free agency or traded on a moment’s notice.

But these days, because of the recession and high rates of unemployment, home values have declined, moving your family into a new home, and selling your current home has become that much more difficult.

The economic conditions affect athletes just like they affect anyone else when you have property that you are trying to sell. Because of the current conditions and the difficulty of selling a home, many professional athletes have changed their feelings when it comes to home buying.

Most players now days have changed from buying to renting a home or condo in the city in which they play. A lot of players have learned their lesson, as they bought a home, and then they were traded or signed with another team as a free agent and they could not sell their home without losing a lot of money in the process, or ended up paying two or more mortgages. So they still own the home even though they are not living there.

It is not a good idea to buy because they can never predict how long they are going to be playing for a particular team and could be stuck with a piece of property that they never spend time in.

The best part is that many athletes who formally bought their homes and still own them because they cannot sell them at a fair price have started a word-of-mouth network and they will pass along news of possible rentals to incoming players. It adds a sense of confidence to rent to someone who is also a professional athlete and a smart business move.

The last thing a professional athlete wants to worry about is mortgages and loans and cutting the grass. Renting a home until their career is over and they can live somewhere without the worry of having to pack up and move at a moments notice is just the smart thing to do.

Original Article

Pro Athlete Overpays by a Million Dollars Plus in AZ

As written by "The Sheriff":

My office is located in South Scottsdale and most of my work concentration is on upper bracket properties in Scottsdale and ParadiseValley (typically for financial institutions that work indy of any HVCC regs as they don't sell their loans on the secondary market). While completing research on a property in the Cactus Corridor, a $3.5M dollar sale jumped out at me as the property recently closed utilizing bank financing. When reviewing the transaction, it was apparent to me that a local athlete bought the property (maybe the common person wouldn't notice the buyer's name, but I'm a sports junkie).

The sale is relevant to the appraisal I'm completing as the property is approximately six or so houses away on the subject's street in the same non-HOA community and is very similar in overall quality (Excellent Quality, with a range of Class IV or Class V as identified by the Exceptional Homes Guide published by Marshall & Swift for high value residences). Views are similar (non-view lots of approximately 1.1 acres). The $3.5M property is approximately five hundred sq ft larger than the subject when considering total GLA (although it should be noted the house I'm appraising is 6,060 sq ft on the first level and has an additional 1,560 sq ft basement).

When looking at sales in the Cactus Corridor to figure out how the property could sell for such an amount, there were NO sales in the last 12 months within half a million of the sales price regardless of whether the property was located in an HOA community or not (you might say I've done my fair share of upper bracket properties in this area and have a good pulse on the market). More recently, an 11,000+ property sold for $2,890,000 cash in February very near both the subject property and this reported sale.

When speaking with the agent about the $3.5M sale (it was a dual agent transaction needless to say that had a total of 4 ADOM and 0 CDOM with no prior listing history), he stated that both appraisers went to Silverleaf in DC Ranch to get comparable sales to make the sales price work (the agent claimed he did not see the appraisal reports, however, he did volunteer this information when I asked how they could achieve such a sales price in the area considering recent sales over the previous two years). Anyone with the least bit of geo-competency in Scottsdale knows upper bracket properties in the Cactus Corridor and Silverleaf are not COMPARABLE areas.

Yet, these are not junior appraisers doing these types of assignments. At what point do we police our own appraisers after the fact? Properties of this magnitude are not simple (I've realized this during my time in the industry). Anyone who works the upper bracket market as extensively as me realizes agents play a significant role when it comes to a sale of this magnitude (heck, the commission alone for the agent most likely exceeded $200,000 once the property closed escrow due to his dual representation). If an appraiser came $1M low on this sale for instance by staying in the local market area, the appraisal report would have to be bullet proof prior to being submitted to the financial institution (because if I'm the agent with $200,000 riding on a deal closing, I'm steering the appraiser with any sale that would make this look clean on paper - even if it meant leaving the market area).

This property has two independent appraisals, yet, both appraisers would have to leave the subject's market area to allow such a sale to gain bank financing (let me restate that this was not a cash deal). The county has the property assessed at $2.156M for 2010. The most recent owners purchased the property for $2,080,000 in October of 2003. We are very close to 2003 prices in many areas...

So how does this sale occur at $3.5M? The buyer entrusts our profession and knowledge to get this right (and I'm sure the appraisal fees were pretty decent for a property of this magnitude). Yet, deep down, I realize the irrationalness of this transaction. Is it my responsibility to my profession to write to the financial institution who currently owns this loan? Is it my responsibility to report this transaction to the appraisal board? What about offering a service to the owner himself (because he obviously is oblivious to all of this)?

I was recently hired by a banker from California to complete an appraisal for a local athlete who was purchasing a property in a cash deal. The Cali banker got word of my work through another banker with Sun Trust Bank in Tampa who once played in the NFL for a couple of seasons. The current banker befriended me when we played for the same university in college and we both were consistently receiving accolades for our grades. When it was all said and done, the athlete ended up offering $233,000 less than the current listing price (utilizing the appraisal)... and $133,000 less than they originally anticipated offering on the property because the appraisal was bullet proof (even though the selling agent fed everyone sales higher than the original listing price). The sale is going through with the new offer because the selling agent could not rebut the data in the report.

How hard would it have been for just one of the two appraisers to do the same to protect the bank and the buyer in this transaction? This is really a sad story of epic failure on our industry. These appraisers were definitely seasoned individuals in the industry. Things will never change...

Original Article

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