AZ Real Estate

They Love Me, They Really Love Me...

2011-05-22T14:41:00.003-07:00

Being a real estate professional is never really easy. It's not really that difficult either, truth be told, but the last few years have been quite a roller coaster ride.
None of this is evidenced more clearly than by how new home builders treat Realtors. Talk about feast or famine! Back in 2005/2006 they were so confident of their ability to attract buyers that they practically dared Realtors to show their homes. "Must be present at initial showing to be eligible for commission, Blah, Blah, Blah..." "Do not pass machine gun towers without obtaining special permit from obergruppenfuhrer..." Well you get the message.
Suddenly, it's a brand new day and my inbox is flooded with all kinds of generous offers. All I have to do is swing by, take a look at the new complex (now with highly competitive pricing)and I get a voucher good for dinner and a movie.
Or- Are gas prices forcing you to park your fuel-guzzling land yacht in despair? Never fear. Zoom by our new and improved mega-sub-division and we'll give you a $25 gas card. Just for showing up!
My how times have changed. As I get older, I realize that some of my faculties are not what they used to be. Luckily, my memory isn't one of them. So,you'll excuse me if I don't immediately add these guys to my Christmas card list.
I was even offered an I-Pad, whatever that might be. I suppose if I ever get my I-Period, I'll find out.

Retirement and Vacation Homes: Are They Worth The Trouble, or Expense?

2011-05-07T09:37:00.002-07:00

Recently, I got sucked in by a T.V. show called "House Hunters International" on HGTV. The concept is fairly self-explanatory and involves a family who decide to buy an additional home (although some are actually re-locating) in a country other than their own. So, we are treated to Europeans of every stripe checking out properties all over that great continent, as well as Americans making the trek overseas.
I must admit that I have never been a great fan of buying a second home and have often advised friends, neighbors and clients against it. I have good friends who travel to Cape Cod from Arizona each summer for three months. They have toyed with buying an apartment back there, but I have generally discouraged it. In my mind, it is very difficult to deal with the maintenance and upkeep when you are 3000 miles away. Quite how these people cope when the 2nd home is in another country (sometimes involving a different language) is hard to fathom.
My initial thought is why would you want to go on vacation every year for the rest of your life in the same spot? In the same house, even? I could almost justify it, almost, if your intention was to ultimately retire in that location. However, I still feel that a seasonal rental is the better way to go. That way you can visit a different resort, country, locale or region each year and just walk away from the property after each trip. I fully recommend a website that has holiday homes for rent by owner around the world, including entire islands. It is www.vacationrental.com.
Still and all, it is a fascination T.V. show to watch, especially as it showcases cultural differences between countries as related to buying and renovating homes. However, one American in Paris stopped me in my tracks the other evening. I about dropped my gin and tonic. She was looking for an apartment in the heart of Paris (they call it a Pied a Terne, which I think is French for potato) and found her ideal home priced at $250,000. Except for one thing. It was 85 sq ft! You read that right. Eight and a half feet by ten feet. Slightly less than a quarter of and average two-car American garage. Do you really want to live in Paris that badly? Or , if it is to be a vacation home, do you take your $250,000 and rent a place for $5000 for one week for the next 50 years?
As they say, you pays yer money and you takes yer choice...

Banks Hit Bottom. Keep Digging.

2011-04-16T15:36:00.003-07:00

Part of the fun of being a Realtor is that you are required to attend 24 hours of continuing education in every two year period. The categories covered include legal matters, fair housing and ethics among various others. Some of the presenters on these topics can be quite dry (not always their fault) while others can make almost any subject entertaining. No mean feat when each class is 3 hours long, by law.
Therefore, like many other Realtors I am sure, I have a small group of "favored" instructors whose classes I am happy to take. One such class occurred just last week. As a Realtor, it is sometimes interesting to get together with other agents to share stories, both good and bad, about the real estate market in general. That day was no exception.
It began with a pet peeve of mine, and one about which I have posted previously, which is being forced to pre-qualify with "preferred" lenders on REO properties. This led to a general diatribe against the inefficiencies of most banks dealing with both short sales and their own inventory.
We heard of banks foreclosing on properties on the day before a scheduled short sale that had been approved by their mitigation dept. with full knowledge of that fact. We heard of some banks in that situation that then re-listed the property at a price that was lower than the approved short sale price. Shareholders, are you listening?
The best tale was a doosy! The buyer was negotiating an REO purchase with a bank. The buyer kept submitting ever lower counter-offers to the bank until they finally accepted the lowest price. Apparently, they thought the market was crashing around their ears. Too funny!
Remember, these banks are desperate to take over the real estate business, particularly the listing side. Yet, many seem to struggle with just their core business of managing loans.
I say be careful what you wish for. If banks continue to dump homes (thereby lowering prices across the board) they may indeed end up owning the whole real estate market, inventory included. Of course, at that time it will all be worthless, so they will be welcome to it.
What say you?

Does It Really Have To Be This Hard?

2011-03-02T09:18:00.004-07:00

As any Realtor will tell you, there are times when this profession can really wear you down. Times when you wonder why you bother. Truthfully, I am sure most jobs are like this, but then we remember why we decided to sell real estate, or whatever it is you do, and the moment passes.
In this vein, and considering the many hurdles that face both seller and buyer in these troubling and difficult times, I have to ask? Why do we have to make this more difficult than it already is, or than it needs to be?
I came across a listing in the MLS that seemed to be a good match for one of my out of state clients. Good location. Perfect size. And a pretty decent price. And then: there it was. Like a turd in a swimming pool. Hidden away in the private Realtor remarks, "Tenant has first right of refusal." What? So you want my client and I to view your property, go to the trouble of writing an offer in the vain hope that the tenant won't exercise his right and steal the property away from us. If he wants to buy it, then just buy it! Does it have to be this hard? Oh yes, and all for 2 1/2% commission. I wish you luck.
Also, and I've mentioned this before. I despise the must-pre-qualify-with-my-lender for an offer to be valid listing. Guess what? All my buyers are pre-APPROVED not pre-qualified. In essence, you are saying that you do not really trust our lender, but you insist that we provide sensitive personal info to a lender that you alone deem trustworthy. Better yet; you want us to cough up this info in Phoenix the identity-theft capital of the U.S.A. What could possibly go wrong? "But," they bleat, "The Bank that owns it insists upon it..." they would. Then again, they're the idiots mostly responsible for this mess in the first place. Avoid such listings like the plague and they will eventually figure it out. Or not!
Finally, an increasing amount of short sale listings require that the potential buyer be on the hook for attorney's fees for "handling" the transaction. Here's a hint. If you are unable to negotiate a short sale as a licensee, don't take the listing. Let's keep the parasites out of our business.
It really doesn't have to be this hard.

Going Into Foreclosure Again? Twice in Six Years. How Is That Possible?

2011-02-04T09:14:00.003-07:00

Part of being a good real estate professional is knowing your local market intimately. It sounds obvious, but it is imperative that you are aware of trends, subtle neighborhood differences or any other factor that can affect value. Education is key.
Whilst reviewing homes for sale in my town recently, I came across a potential short sale that "rang a bell" with me. Sure enough, it was a home that I remembered had gone back to the bank back in early 2008. Here it was again, just three years later, being offered as a short sale. It was a little jarring so I decided to investigate. I realize prices had not really done much of anything in that time; well slightly down, but how was it possible to be back in trouble so quickly?
A bit of history. The home sold in mid 2003 for $320,000, and then was re-sold at the end of 2004 for $400,000 even. This is in keeping with what we know of pricing trends back then. Prior to 2004, prices were mostly flat-lined and it was in late 2004 that we began to see "investor" fueled increases in a few states. Flash forward to February 2008 and we see it being foreclosed upon with a total indebtedness of almost $450,000. More than the original sales price. Safe to assume the owner, like many others, had re-financed to release some of his "equity". Which wasn't really there. House-as-ATM strikes again.
The bank then sold the house some five months later for $400,000. I remember thinking at the time that the price seemed high. And therein lies the problem. That last owner simply paid too much, but as he put down 25% the bank was less than stringent in its appraisal. That last selling price was identical to the 2004 selling price, even though the reality was that prices had dropped to pre-2002 levels. Because of the large down-payment the bank figured they were safe. Well they were wrong! As ever, price is everything.
It reminded me of another case in 2006. I had a client looking for vacant land to build his dream home. He found a 5 acre parcel priced at $639,000. Wary that the market had likely peaked, we offered $450,000. The seller countered at $539,000 and actually wrote this on the counter-offer, "And not a penny less!" I advised my client against it, given the market conditions, and we walked away. Three years later, the land sold for $272,000. Glad we dodged that bullet!
By the way, four years later in 2010 he bought a 4000 sq. ft. home with a pool on 4 acres for $850,000. A home that had sold for $1.5 Million when he was looking at land. I love a happy ending, don't you?

Market Correct Pricing Is Crucial, And Always Has Been

2011-01-25T09:14:00.003-07:00

Now, perhaps more than ever, a sensible approach to pricing is imperative in today's difficult market. With more restrictions on appraisers keeping a tight rein on their work, it is important that both buyers and sellers are reasonable in their expectations.
Some weeks back I received a phone call from a gentleman whose home was currently listed by a friend (not always the best situation, in my opinion.) "Why," he wondered, "is my house not selling?" A quick search revealed the truth. His home was a plain Jane, builder-basic Formica and vinyl house in a large sub-division. There were many other homes with updated kitchens, granite counter-tops and top quality flooring on the market. He was asking $269,000 even though a near neighbor with a much nicer home was listed at $249,000. The only fix was to lower the price to a point where a potential buyer could perform the upgrades and be rewarded financially for doing so. He thanked me and I noted that a week later he had reduced the price. To $264,000! Clearly, he did not get it and his friend was not helping him. A month later, however, I noted that he had lowered it to $225,000 and now it was in escrow. A bit of a slow learner, but he got it in the end. You're welcome.
In a similar vein I got to talking real estate with a gentleman whilst on a hike recently, after he discovered I was a licensee. We were discussing recent sales on a particular street, one of which I participated in, at prices that were close to one million dollars. He opined that to him they were only "worth" half a million. To back it up he trotted out the old saw that something is only worth what someone will pay for it. Sure, except that people were paying those prices in many cases. I tried to explain that more accurately something is worth what the "market" would pay for it, not what a misguided individual my want to pay for it. It all fell on deaf ears. He then went on to say he thought that it was a good time to build his own home (???). However, he was having trouble, even in this down-economy, finding a contractor willing to discount his services enough to satisfy his needs. I wonder why.
Ultimately, I walked away and, unusually for me, decided not to offer him my business card. I have worked with difficult folks in the past, but as Ron White memorably stated, "You can't fix stupid!"

Real Estate Predictions For 2011

2011-01-11T09:36:00.006-07:00

Well it's going to be a question of good news and bad news, depending on which side of the fence you stand: buyer or seller.

If you are a seller, I expect that prices in the Phoenix metropolitan area will remain flat, with a possibility of some areas losing another 10% in value. This is because we are not done with distressed properties. In fact, Bank of America's recent moratorium on foreclosures, since expired, only served to kick that can down the road. Add in the fact that the state of Arizona is suing them, and you can deduce that 2011 will also be a rocky year.

At this point I must add, and I have said this before, that the banks are also their own worst enemy. Their languid responses to short sales, (anywhere from two to twelve months) is costing sales and delaying the possibility of a return to a normal market; whatever that will mean in the future. Their utter disdain for the conventions and customs of the real estate market is certainly not winning them any friends among the ranks of real estate professionals. So, keep offering insulting commission rates for what are arguably more difficult transactions and see the caliber of agent you will attract. Keep insisting that potential buyers MUST pre-qualify with your Aunt's second cousin at Billy-Bob's Ammo, Pizza and Mortgage Emporium. Let me know how it all works out for you. Many real estate pros have long memories so your future will not be bright.

I think the main problem with the banks, due to their corporate culture, is that few of the people tasked to approve a short sale have the stones to actually sign off on that loss. Too often they are scrambling for excuses to kick it upstairs, or off to another lackey, so as to avoid responsibility for any decision-making. This further exacerbates the problem.

On the positive side, it won't be a bad year for buyers, price-wise at least. For those who saw prices sky-rocket in '05 and '06 and who thought that the dream of home-ownership had died for ever, the reprieve has been extended. It will be a demanding and possibly fraught experience due to the above-mentioned reasons, and the cautiousness, understandably, of the appraisal community. However, for those buyers with a steady job and a good credit score there will be some good deals to be had.

Here's hoping that everyone enjoys a happy, prosperous and most importantly, a healthy 2011.

Fannie Mae: Please Stop Trying To Help.

2010-08-12T08:24:00.003-07:00

Recently, I was working on a search for a client when I came across a Fannie Mae owned property, the lister of which encouraged me to click on the "documents" tab in the MLS. For those of you not in the know, this is a folder that contains any extra disclosures or forms that are required to close the transaction. Lo and behold, what did I find on that day?
The latest folly to be foisted upon a weary industry trying desperately to recover. This form required a potential buyer to agree to pay Fannie-Mae $5,000 if they should have the temerity to re-sell their own home within a year. Note, not only if they sell it at a profit; just if they sell it at all! Where to begin. I understand that these people are trying to punish "investors". This is not the way to achieve that. What of some poor schmo who loses his job, or has to re-locate? Why should he be punished? If a so-called investor is able to make a sufficient profit, then the re-capture amount will best be another cost of doing business.
We do not need any new laws. We need to enforce the ones we already have. The last property boom and bust was fueled, in part, by an "investor's" ability to claim he was going to "owner occupy" each property he bought. Over and over again. To claim such on the purchase contract erroneously is a felony. How many prosecutions have you heard of? Exactly!
Mind you, this is the same Fannie Mae that was formerly run by Franklin Raines. Mr. Raines is famous for massively and fraudulently over-stating Fannie Mae profits in order to inflate share prices. That little boondoggle enriched him to the tune of some $90M. After investigation, he and his two co-conspirators reached a settlement. He surrendered his stock option, which is hilarious because his shenanigans had rendered them worthless, and was fined just under $3M. That, in itself, was particularly odious because the fine was paid by an insurance policy paid for by Fannie Mae. Which means you paid it.
To re-cap then: The same Fannie Mae that was largely responsible for the current melt-down, and that aided and abetted Mr. Raines in his criminal enterprise is now trying to pick our pockets one final time in the unlikely event our home should increase in value.
We are in the best of hands.

Home Affordable Foreclosure Alternatives Program (HAFA)

2010-07-13T08:37:00.002-07:00

For those of us selling homes in the greater Phoenix metropolitan area, short sales are a simple fact of life. In some newer communities, homes built in 2006 for example, almost every single one has entered the re-sale market a distress sale of one kind or another.

We all know how frustrating it can be when banks take up to 7 months to respond to an offer, by which time the buyer has likely already purchased something else. Frustrating for seller, buyer and agent alike. Hopefully, that is about to change.

On April 5th 2010, the above mentioned program, known as HAFA, came into effect. On its face, it seems to be a step in the right direction. Participating banks, and that is almost all of them, agree to abide by established time frames for responding to offers and for determining the net proceeds they desire from a short sale. If they do not comply, they will be ousted from the program.

It is quite involved so I suggest you Google it, but here are some highlights. For the Realtor, it prohibits the bank from reducing the commission. For the seller, they will be absolved of the debt without any judgements or promissory notes allowed. The seller may also receive $1500 for re-location. (Quick translation; relocation= not trashing the joint.) The bank also receives a financial incentive for following the guide-lines.

All in all, it seems to be a win-win situation. So why am I concerned? I search the MLS every day for various clients, often in areas that are chock full of short sales. Since this program was announced, of all the short sales I have reviewed, only ONE has mentioned HAFA. This is tragic. This means that there are hundreds of agents out there who have the listings, but do not have the faintest idea of how to process them within the new frame work. It is tragic because what is, or was, an extremely difficult process no loner needs to be. If the agents don't know about it, do the banks? If a great idea fell in the forest, and no one was there to hear it...

I am curious to hear opinions on the from professionals across the country. Maybe it's just my area. What say you?

The Shame Is, That They Don't Really Have Any

2010-07-03T07:51:00.003-07:00

In this short post, I am re-visiting a topic upon which I have ranted before. Realtors who negotiate commission rates in the "remarks" section. Firstly, it is in direct contravention of MLS rules to negotiate the commission in an MLS listing. I saw one today that said, and this is disappointingly typical, "commission to be 50% of whatever bank will pay." So if the bank offer $1.00 and a sandwich you are obliged to accept 50 cents and half a PB & J? Have you no pride in your work? Have you no self-esteem?

If your client were to see that type of verbiage, would they see you as a champion of their cause; fighting fearlessly for their last dollar? More than that, when I see that kind of defeatist phrasing in a listing I sit back and smile. Why? Because I know that if we were to pursue your listing, I would crush you in the negotiations.

If you are that agent, you need to consider another line of work. You most certainly are not benefiting your client, so you need to step aside and let us professionals take care of business.

Likewise to all you puppets who insist that buyers must qualify with your preferred lender. Grow a spine! The message you send is this, "I do not trust the loan status report (LSR) that your lender has provided because the lending business is so corrupt/malleable/unregulated (pick one), but I insist you blindly trust my random guy with all your most private and critical and secure information before we can proceed."

If you don't stand up to these banks, you will just end up under their complete control.

For the record, I have never allowed a client to qualify with another lender on the whim of a seller, and I never will.

A Disturbing Sign of the Times

2010-06-01T07:34:00.002-07:00

There is an old adage regarding the "Golden Rule". Them with the gold, get to make the rule. We had an irritating example of this just last month. We had listed a property for our client and it had sold within days for full price, which in and of itself was quite a shock. We later discovered that the buyers had coveted the home years before so that when it came on the market they just snapped it up. Even though they were going with a large down payment, we still felt an appraisal at full price might be a stretch in this market, and advised our seller accordingly.

In the meantime, our seller also had a second shot at what he considered his dream home when a short sale that had dragged on for almost a year suddenly became available. Our offer was accepted, but it was contingent on the first sale. The appraisal came in at the desired price of $545,000 and it looked like two families were going to get their dream homes. Who was it who said "I love it when a plan comes together"?

Then, the waste product came into direct contact with the oscillating, rotating air-moving device. The day before drawing docs on the first sale, a loan processor arbitrarily and capriciously decided it did not like the appraisal. It then ordered a drive-by appraisal which came in at $470,000! The original appraiser was mortified by this lack of respect for her work and requested the opportunity to defend herself. This was duly granted. In the meantime, the processor ordered another drive-by, and this one came in at $400,000! Nobody told me there'd be days like these!

In the end, they completely ignored the official appraisal and said they would stick with the drive-by evaluation of $470,000. Everybody said "They can't do that!" But they did. Luckily, both buyer and seller were willing, and financially able, to reach a compromise. The seller came down $25,000 and the buyer was able to come up with the extra cash, so it closed, albeit a couple of days late.

Interestingly, when we came to an agreement with the bank on the short sale we were buying, they gave us 10 days to close it. This, after they had messed around the previous buyers for more than 9 months. The stones on these people. We closed it in 9 days. That night, Mrs K and I went out for frozen yogurt. It was good.

I'm From The Government, And I'm Here To Help

2010-05-30T07:05:00.003-07:00

Recently, in the middle of April, we were working with a buyer looking to purchase a home in the $150-$160K range. With the $8000 tax credit about to expire, we thought there might be a spring in his step, but we were wrong. He was curiously detached about the credit and reasoned that prices might even go down upon it's expiration. We tend to agree with him. When the government introduced "cash for clunkers" to salvage the auto industry, its main effect was to drain all future sales from the pipeline in short order. Much the same will happen in the housing market. It makes sellers and buyers lazy when it comes to negotiating. If $8000 is on the table, the seller wants to get his "share" while the buyer is less motivated to haggle. I am not a fan of artificially supporting the market for anything, especially when the money involved does not exist and will have to be borrowed. All in all, another smoke-and-mirrors job by the ne-er-do-wells in D.C.

Talking of smoke, an agent called me for feedback on a house we had shown. I told her it positively reeked of cigarettes. To which she replied that they had repainted the house. Be that as it may, the place still stunk like an ashtray. Either have the place professionally deep-cleaned or throw out the carpets. To not do so is a sever dis-service to your client and frankly, is wasting the time of your fellow agents. No one will contemplate such a home without a deep discount.

FNMA, Corruption and Personal Responsibility. Where Have All The Grown-Ups Gone?

2010-03-19T08:57:00.003-07:00

Many folks reading this article today are probably fellow Realtors who are well aware of the further eduction requirements that must be undertaken in order to remain licensed by the state. For those with real jobs, let me explain that we must complete eight 3 hour courses every two years here in Arizona. This morning was just such a course. Sometimes, the subject and the lecturer are so interesting that the time just flies by. At others, the subject matter is so dry that even the most entertaining speaker in the world, can not make it interesting. Today was such a day. However, in amongst the drudgery, a few nuggets came to light that make it worthwhile.

It wasn't the fact that Franklin Raines, after inflating the reports of FNMA's profitability, was able to enrich himself to the tune of $90 Million in unearned bonuses. Nor was it the fact that his lawyers negotiated the return of a paltry $5 million of his ill-gotten gains. Nor was it the fact that he voluntarily returned his stock options: never mind that they had been rendered worthless by his pitiful leadership. It wasn't even the fact that he was not imprisoned for his deeds. I've come to expect that from the denizens of Washington, D.C.. It was the fact that, despite all the shenanigans, the mis-management, the misguided rules and regulations imposed by a clueless congress; we have learned nothing.

Had a foreclosure? You can get a new home loan after three years. Bankruptcy? No Problem. Only a two year wait. The Fannie Mae Homestep program for their REO properties has a "no appraisal necessary" component. Most likely because none of their properties would actually appraise in the real world. Their solution, therefore, is to finance their over-priced turkeys in house so long as you are able to come up with a 3.5% down payment. Mind you 2% of that can be gifted. In reality, the buyers are in no way "buying" a home. They have not invested in anything. The are glorified renters. This is one of the many reasons people have walked away from their homes. They had no vested interest. Apparently, some genius thinks it's a good idea to do it all again to see if the results differ. And we all know what that is the definition of.

The culmination of the sorry times in which we live is demonstrated by an article that most of us have read. It is entitled "cash for keys". This is the latest fiasco in which lenders, prior to taking a property back, bribe the owners with cash to not trash the property on which they are delinquent. That's right. Rewarding people for doing exactly what any decent, upstanding citizen should do. It has come to this. It does not bode well for the future.

Banks Just Don't Get It

2010-02-22T08:53:00.005-07:00

Recently, I railed about agents charging potential buyers for the costs of a "special" negotiation team in securing the debt forgiveness. This was over and above the traditional commission being earned and I felt very strongly that buyers were being gouged.

Later this week, I will have another tirade on how banks are abusing the very people they need, in order to extricate themselves from a mess, largely of their own making.

Meanwhile, I continue to be disappointed by the demands made of buyers by the banks themselves. Many have taken to requiring a potential buyer to qualify with a "preferred" lender. You don't have to use them, of course, but you are requested to at least pre-qualify. I saw one this week that required a buyer to fill out an attached form. Among the required information was not only your social security number, but also your mother's maiden name. All this to be faxed (how very secure) to "Joe's House-Painting, Pet-Sitting and Mortgaging Emporium". In the identity theft capital of the world, as Phoenix most certainly is, this is surely a recipe for disaster. This was not even a recognized bank, although that would hardly improve the situation, but a rinky dink mortgage broker that I had never ever heard of. I would add, that I have so far not allowed a client of mine to be blackmailed in such a fashion, and I have yet to lose a deal because of it. However, in the above example, the agent who "requested" that you comply, stated categorically that your offer would not be presented without it.

Essentially, today's buyer is not being treated with any respect, despite being an extremely valuable commodity and the only way out of this current quagmire.

Banks are sending a very clear message. Even though you have been through the trouble of getting yourself pre-approved, they do not care. They are telling you that they do not trust their "colleagues" in the lending industry. Yet, even while they are telegraphing their mistrust, they are insisting that you place all your trust, and financial information, in them. They are arrogant beyond belief and I suggest that we, as an industry, ride them as hard as possible until they learn better manners.

More to come, stay tuned!

Short Sales; Some Disturbing New Trends

2010-02-10T08:56:00.010-07:00

As a Realtor, I am still astounded at how some neighborhoods remain awash in distressed properties, be they short sales or foreclosed homes. Of course, it's not too surprising, especially when you realize that pretty much any home built or sold after 2004 is worth less today, than it was then, at least in the Phoenix area. Many subdivisions that were built in 2006 and 2007 have virtually no original owners. Most have simply walked away, as prices halved, whether they could make the payments, or not. That is a subject for another day, although I will allow that the economy likely hurt many of them, while another large section of buyers took on debt they could not really afford, in the hope of continued appreciation that failed to materialize. All the while, aided and abetted by voracious bankers.

Recently, I was working with an elderly couple who were looking to downsize into a newer home. As usual, we ran into the problem that many homes on offer were short sales. They had neither the time, nor the inclination, to embark on what can be a lengthy process, so we concentrated on REOs and regular sales.

However, whilst skimming through some short sales, I was taken aback by the conditions of many sellers. I am used to a seller demanding the buyer qualify with a pre-selected lender, and I am used to not complying with that request. I see no benefit in my client divulging all their personal financial information to some lackey at a random bank. As I said, I was taken aback by a listing agent that disclosed that the short was being negotiated by a special company and that the buyer was required to pay the $4,000 fee associated with this service. This fee coming on top of the 6% listing fee that is customary in our market. Then, and at least they disclosed it, they revealed on their business affiliation disclosure, that the crack negotiating team was, in fact, a subsidiary of their own real estate company. All this on a $200,000 listing, which means the additional burden on the buyer was 2% of the asking price. Here's a newsflash! If you are unable to negotiate short sales, do not accept listings that require them!

In another short sale offering, the lister disclosed that the bank may, or may not, at its discretion, impose an extra 1% fee on the potential buyer. Genius! Punish the very person who is getting you out of the mess that you were, at the very least, partially responsible for creating. Some of these banks are as useful as a screen door on a submarine.

It will get worse. The ill-advised first time home buyers tax credit of $8,000 will be expiring at the end of June. Watch how many well-intentioned and eager would-be purchasers get entangled in the net of indecision that plagues most banks and their alleged decision makers.

Watch how eagerly our elected officials will scramble to re-fix the fix that they caused to be broken in the first place.

It's gonna be a bumpy ride.

Another Reason to Love Cave Creek- It's Easy To Do

2009-12-12T08:18:00.007-07:00

Here is another installment in an occasional series extolling the virtues of our little town Cave Creek. Our many and varied eateries have long made Cave Creek both a destination for tourists, and a haven for snow birders who return each winter. Recently, a new establishment has opened, garnering instant acclaim due to the hard work of its owner. Take a bow, Bryan's Black Mountain Barbecue.

We recently had the pleasure of taking lunch there with some out of town guests. I sampled the pulled pork sandwich, which was delicious and moist. My friend partook of the two meat combo, while the ladies each took a half slab of pork ribs. All were impressed with the preparation and taste. The ribs were smoky and tender and came out piping hot. My wife also had the baked potato salad, which to clarify, is a potato salad in which the spuds themselves are baked, so it is not a hot dish, it has amazing texture and spicing, in a word- Yum. Also, recommended is "our famous olive coleslaw". We had tried it with some friends at the recent "Taste of Cave Creek" festival. To admit, we had taken one bite and not really liked it. Boy, were we wrong! The second bite somehow drags you in and you quickly realize how scrumptious it is.

Located at 6130 East Cave Creek Road in Las Tiendas, they are closed on Sunday and Monday. And remember, it is freshly prepared so it will take a few minutes to arrive cos it ain't fast food, it's real food.

You're Welcome!

Cave Creek Gets A Boost From Walmart

2009-12-08T08:20:00.002-07:00

The town of Cave Creek was recently involved in a minor kerfuffle regarding the re-zoning of a parcel of land on which Walmart were proposing to build a new store.

The town folk were overwhelmingly in favor of such a development, indeed the last council elections were a virtual referendum on the issue, with those for it being voted in, and those against being shown the door. In fact, four incumbents were defeated by four newcomers. Pretty decisive.

Naturally, this did not discourage the usual crew from central casting, including many non-residents, in mounting their knee-jerk reaction campaign to defeat the great Satan--- Walmart.

They succeeded in having the issue placed on the ballot in a special election and were resoundingly defeated, as expected. They did succeed in delaying the start of the project, therefore denying the town much needed revenue for another eleven months. Thankfully, cooler heads have prevailed and the tax revenue will prevent the need for a property tax, something for which we should all be grateful. Not only will the revenue derive from an estimated catchment area of 30,000 people from surrounding communities, thereby spreading the "load" but Walmart will also bring around 300 much needed new jobs to the area.

All in all, a good thing for our little town.

Another Good Reason To Make Cave Creek Your Home

2009-12-06T08:51:00.006-07:00

Cave Creek, which I am proud to call home, is a great little western town with an eclectic mix of art stores, restaurants and bars, plus antiques and collectibles sprinkled throughout the town core. Add in the awesome Spur Cross Conservation Area with its many and varied hiking trails, and Cave Creek makes a great destination for a visitor on a day out. It also makes for a great place to live.

Many creekers are over-achievers and the latest incarnation of that trait is the monthly (first Saturday) "Thieves Market" situated for the most part in the parking lot behind Big Earl's Greasy Eats. It is an open-air market that brings together a mixture of both local merchants displaying their wares, plus vendors who come up for the day. All manner of arts, crafts, metal-works, vinyl records, clothing (both new and antique), BBQ equipment, jewelry, massage, bric-a-brac, concrete statues, antiques and Americana is on display. Grab a cup of coffee and stroll around. This week I even saw a WWII Japanese rifle. There is truly something for everyone. Come up for the shopping, then stay for lunch at one of our many great eating establishments. You could stay on site and enjoy one of Big Earl's legendary burgers. Or you could cross the street and eat at the newly-opened, and extremely popular, Bryan's Black Mountain Barbeque. (I'll be writing more about that eatery next time).

See you at the next Thieves Market on January 2nd, 2010, it is a blast. And maybe you'll fall in love with Cave Creek just like I did.

(Photo courtesy of Sonoran News)

Oh, Bank of America...Have You Met Customer Service? No, I Didn't Think So.

2009-10-26T07:47:00.005-07:00

This is a story that despite being fraught with difficulties, has a happy ending. It is partially about the difficulties we sometimes experience with short sales; it is partially about the hoops one must go through to obtain a loan, but mostly it is a sorry tale of complete, absolute and total lack of customer service that a client of Bank of America can expect today.

Let's start at the beginning, shall we? We had out of state clients that were looking to buy a home in the Cave Creek area, having lived there previously. Naturally, we encouraged them to get pre-approved so that they would not be hampered, should we locate the perfect home. They were well-qualified, with a down payment of 20%, and they told us that they would contact Bank of America, an institution they had used previously, with success. We have long held reservations regarding BofA, which are beyond the scope of this article, but we had no choice but to allow them to proceed. So they called BofA. Again and again and again! That's right, they had to call three times before they were to receive the courtesy of a reply. Personally, I would have dumped them then and there on that basis alone. Unfortunately, the buyers' previous experiences had created a loyalty to BofA that was neither warranted nor deserved, as they would now confess today. As you are no doubt aware, the purchase contract in Arizona requires an addendum called the Loan Status Report (LSR) which, in part, informs the seller as to how far along the process of getting a loan the buyer is. Additionally, it requires that the lender respond to enquiries during the escrow period from the agents involved so that everyone is up to speed. BofA do not "DO" LSRs. Such is their arrogance that they choose to transact business in a state that requires such a form, whilst essentially thumbing their nose at the process. Instead, they give you a "Buyer Ready Approval Certificate" and promise to close the loan within 30 days, or...or, nothing, actually. They make the promise, but there is no penalty if they fail, so it is an empty one. Curiously, when we asked our clients if they had furnished all their tax returns, etc., they told us that BofA said not to bother, until they found a home. Hmm! In reality, they were only really pre-qualified, not pre-approved. The fact is that BofA do not care to perform the necessary work ahead of time, instead they prefer to have you jump through hoops, (hoops that could have been cleared weeks earlier) during the escrow period. It may delay your closing, but better that than have them do their due diligence ahead of time, after all, you are just the customer, right?

As an aside, we were in back-up position on a short sale at this time. Then, the phone call. The original buyers had backed out, so it was ours if we wanted it. We did. BofA swing into inaction. Their ability to return a call was non-existent. Their communication skills dreadful. The "personal banker" that had begun the ordeal would not speak to either the buyer or us, as the file had been forwarded to processing/underwriting. The phone messages on all contact numbers essentially said "The chances of us calling you back with 24 hours are so small as to be incalculable." They demanded all sorts of financial evidence (retirement accounts, IRAs, etc.) that should have been dealt with before we even found a property. They demanded roof repairs two days before we were scheduled to close escrow. They demanded ADEQ water records on the day we were scheduled to close escrow. Such reports normally take 7-10 days to process, although we were able to get them the next business day, due to a helpful contact. It appeared to us, that all these last minute demands were the result of an organization that did not even pick up the file until about the third week of escrow. Such is their contempt for the client, that they would much rather make you do the impossible, than start work on the file in a timely manner, in order to allow you to honor their requests. All the while, not returning calls or communication in any way. They promised to call back, they didn't. They promised loan docs by a certain deadline, three days in a row, and were unable to manage it even once. All without letting the client know. You see, they manage to communicate, the little that they do, through the "customer service" people who answer the telephones. These people cannot help you, they can only relay your messages of frustration via email to the actual person who CAN help you but you are not allowed to speak to on the phone. In all the days of our escrow the client spoke to the actual "loan officer" a total of- wait for it- four times. Meanwhile our clients spoke to the unhelpful drones at "customer service" everyday.

In the meantime, the short sale final approval, which was also handled by another worthless BofA department, was contingent on a HUD 1 being approved that reflected a certain minimum dollar amount. This was duly sent, and ignored. So we had the loan docs signed, were ready to fund, but we still could not close. Bank of America was preventing Bank of America from closing on the house. We knew the name of the individual who needed to approve the HUD 1, take a bow Kim Alexander, but the operator ran interference and could not be persuaded to allow us to speak to her. We were not authorized. The operator would not even explain the procedure or the process or the time frame usually needed to complete the authorization. She preferred to spend 20 minutes arguing about what she would not do, rather than spending 5 minutes on explaining the process. It was like dealing with the government. The listing agent, who WAS authorized to speak to Ms. Alexander, was also denied access. Unbelievably, due to the listing agent's tenacity, someone in the chain of command accidentally gave out the direct number of the short sale deadbeat. OPPS! Ms. Alexander told the lister that "I have had the HUD 1 since 9.30". The lister said, "You mean 9:30 this morning?" "No," she replied, "I mean 9/30 (Sept. 30th)." It was Oct. 5th! Wonderful, but it gets better. She eventually sent the approval to the title company. However, it was encrypted for "security reasons" (I have no idea why as it contained no secure info, like SSNs, for example). The title company was unable to open it, so they contacted Ms. Alexander. Guess what she did? She put them in contact with a techie in India or Pakistan, I am not kidding, who was also unable to open it. Could BofA have been more unhelpful? Why not just scan and email the approval? Too simple, I suppose.

Ultimately, we closed escrow around eight days late, which is not too tragic in the overall scale of things. Remember, though, that we had been in back-up position so I have no idea how long the original buyers had been mistreated before the deal fell in our laps. Maybe they died of old age. I have heard of some short sales taking up to 7 months to complete.

As I said at the outset, this is a story partly about short sales, but mostly about an epic failure in customer care. Not so long ago, when dealing with a buyer, their lender would often make a great effort to impress you in hopes of future business. BofA has made no such effort, and obviously believes it is too big to concern itself with peons like me. That is their right. However, it is probably no coincidence that they just posted a 3rd quarter loss of $2.2 Billion.

Anecdotally, other title officers and Realtors have said that generally banks no longer seem to care. In our area, it seems that BofA have the worst reputation, whilst of the big ones, Wells Fargo maybe has the best.

What do you think? I'd love to know.

How local should your real estate agent be?

2009-09-23T09:13:00.004-07:00

We recently closed escrow on a home in the city of Buckeye that we helped a first-time buyer secure. They kindly sent a note thanking us for helping to make the experience as smooth as possible. They also stated how glad they were to have stuck with us, even as friend and colleagues were pressuring them to use a "local" agent. (We are based in Cave Creek, AZ) It got me to thinking "Is that a valid concern?"

As with many things in life, it depends. Information is so freely available in this hi-tech era, that it is relatively easy to garner information. In a previous life, when I lived in Los Angeles, it was not unusual to sell homes as far apart as Marina Del Rey to the west and back to Pasadena or Glendale to the east. In fact, I even sold one home that belonged to a friend in Palm Springs, some hundred miles away. Although some agents choose to concentrate on one particular area, it is not unusual for denizens of large metropolitan areas, such as Phoenix, to spread their wings a little. We have sold homes in areas as far north as Cave Creek and Anthem (and a vacant lot in Black Canyon City) to the home in Buckeye to the west, and houses in Gilbert and Mesa to the East. The only difference between Phoenix and Los Angeles is the commute time. From Cave Creek to Buckeye, a 70 mile trip, takes about an hour and a quarter. A journey of similar distance in L.A. would most likely take two or more hours.

The other important aspect in selecting my wife and I, is that we are very experienced agents. Between us, we have 25 years experience and therefore have run across, and solved, most problems you are likely to encounter in a transaction. We are experienced negotiators. We have many contacts. For example, we are currently representing a buyer on a home in Tonto Hills that has a private water company. A week before closing, the lender required a lot more information on the capabilities of that company. That info can only be obtained from the Arizona Dept. of Environmental Quality and would take 10 days to access. We got that information the very next business day.

So the question becomes. Are you better off with a "newbie" who lives in Buckeye, or an experienced pro who is willing to undertake a 140 mile round trip to show you properties? How about the Buckeye "pro" who was selling homes for $265K three years ago? The exact same home that you just bought today for $110K. How helpful was their advice back then? And before you ask, we deterred many of our clients who did not need to buy over the last few years, soon-to-be-retireds, for example. There is much more to life than money.

Finally, any business depends upon referrals as its lifeblood, none more than real estate. That is why we are always willing to go the extra mile, literally, to satisfy our clients.

Fannie Mae, But Then Again, Mae Not.

2009-08-06T10:23:00.003-07:00

Real estate owned (REOs) form a large part of the inventory in the Valley of the Sun, for reasons that have been written of many times. In a nutshell, meteoric price rises fueled by speculators, followed by catastrophic price plummets equals mucho REOs.
So the chances are, especially in the lower to mid-priced range, that if you are looking to buy a home in one of the may burbs of Phoenix, you'll likely find some that are bank-owned. You also may find some that have been taken back by the Federal National Mortgage Association (Fannie Mae) as they insured many loans, and have since had to take possession of certain homes where the owner had defaulted on their loan.
Recently, I have written of our endeavors in Buckeye, AZ, where extreme low prices and excellent value for money, has enlivened the local real estate market. As previously noted, many are REOs, bank owned short sales. Such has been the intensity of the market, that the local paper carried a story of one young couple who had written 15 offers before successfully securing a property.
Our previously mentioned clients were a little forlorn at that news, but due to superior representation, Moi, we were able to get their dream home on only our third attempt. The seller was none other than Fannie Mae, and is the point of this post. Finally.
Being a government organization, they like to do things differently. Rarely better, but certainly different. I like to say that government being government, they like to add as many extra layers of efficiencies as possible. Let me explain.
We wrote and presented our offer in the normal fashion. We received a verbal counter, which goes against everything you have ever done, which you have to accept so that they can click the "accept" button on the computer. Then you get a written confirmation of your verbal agreement, signed only by the selling agent, in this case me, which is hardly binding on either party. Some days later you are again verbally informed that your offer is now "accepted", which starts the countdown on the various contingencies. Sometime the next day we received an entirely new purchase contract, generated by the seller, purporting to have amalgamated both the original contract and the counter into one document. In this case it did, but also added a few clauses and contingencies not previously mentioned. They were not deal-breaking, so our clients elected to sign off and secure their home. Bear in mind, at this point we do not have a single signature from a representative of Fannie Mae, which is a little disconcerting. Listing agent assures us this will be rectified in escrow, although from a legal standpoint I still doubt that the contract is binding on either party until that point. That's gubmint for ya!
Then the good news. The home had no stove and no water heater. We had advised our clients that as they were getting a USDA loan, the HUD appraiser would require them to be installed prior to closing in order for the home to be "habitable". They were willing to comply. However, we received a call that Fannie Mae was installing a brand new water heater, stove and microwave hood, plus a ceiling fan and sundry bathroom fixtures. Completely unbidden. Needless to say, my clients were ecstatic! A more duplicitous agent might have claimed it was as a result of endless hours of negotiation and desk-pounding on his part. I demurred.
So as I said, Fannie Mae and, then again, Fannie Mae not. In this case, she did.

Jump Starting the Greater Phoenix Metropolitan Area Housing Market

2009-07-23T09:19:00.003-07:00

Recently, I have been working with a young couple looking to buy their first home in the Buckeye area. I believe I have mentioned this before, but it is possible to purchase a good-sized four bedroom home, less than 4 years old, for around $100,000. Some are available for even less. Coupled with the tax credit available from the government, it make buying a home a no-brainer. Especially, when compared to renting.

However, it is staggering to see that virtually all the homes for sale are bank-owned or short sales. The underlying stories behind some of these homes can be disheartening. So many of the bank-owned properties were sold just 2-3 years ago for $250,000 or so, and are now being offered at $80-100K, a loss of some 60%. Sad indeed for the families involved. However, as they say, it is an ill wind that blows no good. Consequently, buyers like my clients, who thought the possibility of home ownership had passed them by, are now getting another chance. In fact, the market out there has been so hot, and understandably so, that we are now seeing multiple offers in many cases. This can be a little frustrating, but perseverance will win the day.

I also spoke with an agent who is involved in selling some remaining new homes after the developer went bust. These homes are essentially bank-owned short sales, some only part completed. What was surprising was his tales of how long it takes some banks to respond to offers. Many, sensing the urgency, respond in a couple of days. One in particular, that I won't name (but the initials were Wachovia) had 7 active offers sitting on their desk awaiting approval for over 3 months. What on earth are they thinking? I would hazard a guess that many of those offers will be rescinded by buyers who have found a more willing seller. Who would want to miss out on buying a home due to the laziness of some pencil-pushing banker. The bank is also doing a dis-service to its shareholders by not liquidating non-performing assets. Maybe they are all too busy counting their T.A.R.P. funds.

A good time to buy, I think.

Greater Phoenix Metropolitan Area Real Estate Markets Begin to Stir. It's Alive!

2009-06-30T16:04:00.002-07:00

My regular readers will know that I am not a fan of government intervention. Rarely, if ever, does it result in a better product, good or service. Typically, it adds cost and bureaucracy. Having said all that, as a Realtor, it is also my job to stay abreast of any programs that might assist my clients. Naturally, the first government aid is the $8,000 tax credit that first time buyers receive if they buy a home. A first time buyer, by the way, is categorized as someone who has not owned a home in the past three years. There are some conditions, and limitations, attached to this credit so please consult with an experienced lender for more information.

Secondly, whilst consulting with a lender in concert with a young couple searching for a new home in Buckeye, we learned of another loan program administered by the United States Department of Agriculture. Yes, really! It is designed to provide assistance to spur rural development of land that was once farmed, or designated agricultural.

It is very similar to a V.A. loan in that borrowers can get a 100% loan with no down payment, no private mortgage insurance and a 30 year loan with a fixed rate. The icing on the cake? The seller can contribute up to $6,000 towards buyer's closing costs or pre-paids.

When you factor in that a 2000-2500 sq. ft. home in Buckeye, likely less than 3 years old, can be bought easily for around $100K, it is no wonder these home are flying off the shelves. It's cheaper than rent. By the way, it's not just Buckeye that qualifies, there are other communities, so speak to your preferred lender today.

Code of Ethics Woes in the Phoenix Real Estate Market

2009-06-10T16:05:00.005-07:00

A recent ethics investigation demonstrated a Phoenix area Realtor did not act in the best interests of his/her client.

Recently, a Phoenix area buyer ran into a spot of bother with his Realtor. Obviously, the reporting named no names, so this anonymous story could occur to anyone, and is a tale worth re-telling.

Briefly, the buyers found their dream home and instructed their Realtor to prepare a full price offer in order to increase their chances of buying the home. The Realtor said he would do so, but only if they signed an agreement that stated should they ever re-sell the home, he would get the listing. The buyers said "No way!". However, after due consideration, they decided that they wanted the house so badly, that they acquiesced, signing the agreement. After the closing, they filed an ethics complaint with the local board. Good for them.

The Realtor lost. The board found that he was placing his own financial gain over his fiduciary responsibility to his clients. The "pre-listing" was cancelled and the Realtor presumably received some form of punishment. This can range from a warning letter, to additional education requirements, and sometimes revocation of licence; unlikely in this case.

The buyers in this instance did the right thing, and the Realtor behaved despicably, and is the type of person I would like to see run out of the industry. To that end, I would have taken it one step beyond, were I the buyers.

I would have contacted a strong, experienced agent and had him/her write the offer, after having fully explained the situation. The deal would then close, as it had done previously. Then, in all likelihood, the spurned Realtor would probably haul the second Realtor before the board demanding a commission as the "procuring cause" in the transaction.

If I were that second Realtor, I would then argue strenuously that the vagabond had abdicated his fiduciary responsibility to the buyers, who justifiably no longer felt he was acting in their best interests. I believe I would win that argument. The buyer would still have their house, but the rogue Realtor would not receive a commission. After a while, folks like that go back to their "real job". Good riddance.

Strippers Arrested In Phoenix Area Real Estate Scam

2009-05-31T09:41:00.003-07:00

Well, there's a headline I never thought I would write. But it's not what you think. As a Realtor, some of the worst homes we sometimes see, are bank-owned. In other words-Foreclosures. It never ceases to amaze me that some folks, admittedly a minority, think it is okay to vandalize the home they are losing. It is common to see a home where light fittings and light switch cover plates have gone missing. To the extent that the homeowner may have customized their home with better fittings, it is somewhat understandable. However, many people go to the extent of smashing what they can not easily remove. Bathtubs, showers and toilets, for example. Not only is this incredibly immature, it is also a criminal offense. Too often, however, the banks decline to press charges on the basis that a person who lost their home to foreclosure would be very unlikely to be able to afford any court-ordered restitution. Banks also seek to avoid the adverse publicity that would result from prosecution. I have often remarked that if these homeowners had been as diligent in their regular job, as they were in destroying their home, they may well have been able to keep both.

Back to the headline. It seems the FBI has a mortgage task force that has been going after people who have systematically been stripping homes to sell fixtures and fittings. Again, they are mostly concentrating on investors and speculators who had purchased multiple homes, probably to avoid negative public reaction should they chase after individuals who could not keep up their payments. However, make no mistake, laying waste to the property is a crime whoever commits it, and it damages everyone by further depressing home prices.

The FBI recently arrested one genius who was even advertising granite counter tops on craigslist.org, one of which he had the misfortune to offer to an undercover agent, shortly before the bracelets went on. Oops!

In these sad times of decreasing personal responsibility, too many people are looking to shift blame for their own ill-advised decisions. To then trash the property that you should not have bought in the first place shows a level of immaturity that boggles the mind. The fact that some of these folks are also parents does not bode well for the future.

Why No-One Likes A Short Sale

2009-04-19T08:52:00.002-07:00

Short sales, along with foreclosures are a large part of the Phoenix area real estate market. Here are some tips to guide you through the minefield.
The general consensus is that short sales, where the owner owes more than the home is worth and asks for debt forgiveness, are a good deal. I am here to tell you, that while they can be, they are sometimes more trouble than they are worth. Both for the potential buyer, and for real estate agents.
Let me explain. First of all, there has been a growing tendency, which I deplore, here in the Phoenix area, to massively under-price a short-sale property. I understand why they do it. They must attract a qualified buyer in order to go through the process with the bank. To the inexperienced buyer, and indeed agent, the low price fairly leaps off the page. Many times it is priced at 70% of its true value. I feel that this is misleading. It is imperative that the experienced agent explain to the potential buyer that while it is priced at $495,000, for example, the bank will likely require closer to $600,000 to close the deal as that is the home's true value. The trouble is that some first-time buyers just think you are being a "slick" agent and are distrustful. Who can blame them?
The other thing that I find annoying is the banks' constant attempts to take money from my pocket. Understand that commissions are always negotiable, however never in the purchase contract, between seller and listing agent. Many times, however, the bank is taking a bath and tries to get the agent to join in by slashing the commission. By the way, the agent is under no obligation to do so. Sadly, many agents famously will do almost anything for a dollar, or food, so banks often get away with this. Couple that with the fact that a short sale involves a lot of extra work, and steps, so a bank should really pay more in gratitude for someone persevering and ridding them of a most-likely self-imposed bad debt.
And then we have the Realtor® - lemming of the type I encountered today. Before I even write an offer, they require me to sign a disclosure agreeing that whatever the bank decides to pay in commission, I will meekly split it with the listing agent. Bank says $10.00 and a slurpee, I get $5.00 and half a brain freeze.
If you have the range of choices available, as we do in Phoenix, buy the foreclosed home, or the home that is owned by a real live motivated seller. You will thank me for it.

Pending Sales Are Up In Phoenix

2009-04-08T08:41:00.004-07:00

A rise in pending transactions bodes well for the future of real estate in the Phoenix metropolitan area.

As we have noted in the past, the free-market, when it is allowed to operate always has and always will re-dress the housing market. You may not like the way in which it is achieved, but it will occur naturally, if left to regular market forces. By this, I mean that well intentioned programs to enable folks to stay in homes they still cannot afford, only delays the inevitable.

Twice in recent memory, November 2008 and March 2009, prices have dropped so drastically, partly due to foreclosures and partly due to the economy, that sales have leapt up. Many people who thought they had missed the boat are now stepping up and finding that there are many bargains to be had.

Analysts use many benchmarks to gauge the health of the real estate market-pending sales is one of them. A pending sale is classified as one that has an executed contract, with an agreed price, has been taken off the "active" market, and is going through the regular processes prior to closing.

The Cromford report compiles such statistics and shows that in March 2009, pendings were up over March 2008 virtually across the board, with the exception of Anthem and Paradise Valley. The latter probably due to the high cost of homes and the tendency for the wealthier to be able to ride out bad economic times and stay put. The former, Anthem was down a little, but from a statistical standpoint of just one month, may merely be a hiccough.

One minor nitpick with the report is the figures for Cave Creek, which show 45 pendings versus 32 for March last year. Anybody with a working knowledge of Cave Creek would know that 45 is an absurdly high number for such a small town, as was the 32. the compiler of the report makes the same mistake that many "analysts" make. By dint of post office fiat, Cave Creek shares a zip code (85331) with a large portion of North Phoenix. This radically distorts the figures. I complained when the number of foreclosures reported in Cave Creek, which is detrimental to the community, were mis-reported; so in the interest of remaining fair, I must complain when it inflates the re-sale activity as well.

Other than that, things are slowly beginning to recover, so long as government doesn't stop by to "help" again.

Pricing Is Key; Always Was, Still Is.

2009-04-02T08:47:00.002-07:00

Pricing your home to sell is always a main factor in marketing your home. The sagging Phoenix real estate market makes it vital.
The old adage in selling real estate was always, "Location, location, location". While that still holds true to a large extent, there are other factors just as crucial, not least of which is - Price.

I was reminded of this again, today, as I was sifting through the MLS. Time after time, the same old frequent flyers kept popping up. Homes that were $550K two years ago when they should have been $500K, now marked down to $400K, when they should be $350K. Always a day late and a dollar short, as the expression goes. You have to price into a falling market, not reflexively reducing to imitate local sales after they have closed. In the above example, had the seller started at a realistic $450-$475K two years ago, it would have sold. Now the selling price will likely be $100K less than that.

It is sometimes too easy to blame the seller, when many times it is the fault of a weak agent. Someone who has not worked through tough times may not have developed the skills needed to persuade a recalcitrant seller to lower their price. Or indeed, may not have developed the confidence to walk away from, or decline in the first place, an over-priced property. All Realtors say they need listings; what they really need are saleable listings. Big difference.
As a home seller you need to speak to your prospective agent in order to satisfy yourself that he/she is capable of getting the job done.

Then we have homes that have been around so long, that the sellers are now upside-down, and owe more than it is worth. Often, this is as a result of re-financing to release equity. In retrospect, not a good idea, at all. These "short sale" homes are often priced temptingly low, in order to hook a buyer with which to begin the process. For a serious buyer, this can be a frustrating experience. Be wary of the short sale that is under-priced, it may disappoint you. Given the choice, I would go for the bank-owned, or real live actual motivated seller, if I were able.

Are Short Sales A Good Deal

2009-03-21T07:50:00.002-07:00

A quick look at short sales vs. foreclosed properties, in the Phoenix metropolitan area real estate market.

A short sale, as opposed to a fore-closed home, is neither good nor bad, in and of itself. The real question is whether the house you are attempting to buy is worth the price you will have to pay.

Let's back up a moment, and discuss the difference between the two. Briefly, a short sale is where the home is worth less than the amount owed, and in order to sell the home, the lender(s) must forgive some of that debt. A foreclosed home is one that has passed that point, and the bank has re-possessed it, and is the actual owner.

If two homes in the same subdivision, with essentially the same features are offered for sale at the same price, one being a short sale, the other a foreclosure, the only real difference might be the ease with which the deal can be closed. With a foreclosure, the bank has already taken the loss, so a sale can be completed as easily as one from a private seller.

With a short sale, things may get a little complicated. Not only are you dealing with a seller, you also have to get the approval of the lender. Sometimes, the lender may be 100s of miles away, in a different state, and be unaware of prevailing market conditions. This can stall the process. Maybe, the listing agent has never dealt with the intricacies of a short sale before with potentially fatal results to the transaction. Some sellers may have been less than truthful (i.e. lied) on the loan application when they bought the house. Now, upon claiming hardship to garner a short-sale, those lies are often revealed, resulting in no short sale and criminal charges.

Also, as a buyer, be aware that some agents price short sales at ridiculously low levels, a practice with which I disagree, in order to suck in a buyer with whom to initiate the process. These are just some of the many pitfalls you may experience.

My advice is usually as follows; if you love the house that is a short sale, by all means, let's try to buy it. But do not let the sometime lengthy process deter you or cause you to lose, another readily available property that might come you way, that will serve your needs equally well.

So, are they good or bad? They are neither. The overwhelming considerations should be the price, and the ease with which you can consummate the transaction.

Cancelling A Listing

2009-02-27T08:04:00.006-07:00

Over the weekend, a letter was published in the real estate section of the Arizona Republic regarding the cancellation of a listing. The seller, it seems, had reluctantly agreed to a 6 month listing, after the listing broker had verbally agreed to cancel at any time. Right there, you can see the problem. Verbally.

After two months, for whatever reason, the sellers decided they no longer wanted to sell their home, and requested cancellation of the listing agreement. The broker said "Sure"; but requested $1000 compensation for advertising and promotion already completed.

The attorney who responded to the letter surprised me with his answer which was, essentially, try to come to a financial agreement.

First, let me say that if, as a Broker, you are willing to cancel the agreement, and so state at its inception, it is to the benefit of both parties to put the terms, and any financial penalties of such action, in writing at that time.

It seemed to me that the broker decided, retroactively, to charge for services rendered, and held the seller to ransom until he coughed up. Ethically, I find this disturbing and disappointing. We charge a reasonable rate for our services, but never collect a penny until they are completed, i.e. the home is sold. Some we win, and some we lose. It's part of the cost of being in business.

There are some companies who break down each individual service offered, and charge accordingly, sort of "a la carte" pricing. That is fine. In this instance I think the broker should take the high road, forget the charges and move on. If, in the future, that is how he/she wishes to conduct their business, disclose it up front and in writing.

Making Phoenix Home Buying Easier

2009-02-17T08:22:00.004-07:00

Freddie and Fannie try to make it easier for you to buy a home, not like it's been that hard in the last few years.

Sometimes, here in Phoenix, and other parts of the nation, you will come across a home for sale in which you will be encouraged to use either "Homepath", or "Homesteps".

Let's look at "Homepath" first. This is a program for homes that are owned by Fannie Mae. Naturally, they need to shift their inventory, so they are trying to make the home-buying process as streamlined as possible. No appraisal is required as they have priced the home right at market, allegedly, although that doesn't mean you have to offer full price: bargain away. A down payment of 3% is usual, although seller's can contribute up to 6% of purchase price towards closing costs. Also, investors can buy 1-2 unit buildings with only 10% down.

"Homesteps" is a similar program offered by Freddie Mac for homes which it owns (REOs). They are trying to combat the notion that foreclosed homes are wrecks (they often suffer damage at the hands of spiteful owners) and will mildly re-hab a property to enhance its chances of selling. Typically, that would include fresh paint, carpet and, in some cases, new appliances.

Finally, you may come across a program, from non-government lenders, called "Express Path". Supposedly, they are pre-inspected, pre-appraised, low closing-cost, ready to buy homes. Of course, all those services are paid for in the asking price, there is no free lunch. This allows a speedy close, but to whose benefit? Some processes need not, and should not, be rushed. Industry fondness for this program seems to be mixed. Remember, one stop shopping rarely benefits the buyer, as the savings are not passed on, but retained, as profit.

Caveat emptor!

Foreclosures Are Up In The Greater Phoenix Metropolitan Area

2009-02-15T17:05:00.003-07:00

Free market principles at work as sales jump to meet drop in prices.

I have said this before but it bears repeating. When the free market is allowed full rein, it will correct itself. Echoing a national trend reported recently, we discover that as prices tumble, in part due to the increase in foreclosures, buyers in Phoenix are stepping up in larger numbers.

Our misguided government's attempts to cure the market by forestalling foreclosures will only delay the inevitable. The renewed push to lower lending standards, or provide tax credits to first time buyers are merely band-aid fixes. They are just kicking the can down the road.

Anecdotally, we are seeing an uptick in enquiries at our website, which is a welcome development. Hopefully, buyers are being encouraged by lower median prices. As they begin to absorb the aforementioned inventory, swollen by foreclosures, we will begin to see a true market recovery. Not one artificially created by Congress.

Pricing Your Home

2009-02-13T10:17:00.003-07:00

A home or any commodity, is only worth what the market will bear. A troubled Phoenix real estate market doesn't change that.

Quite often, we hear from sellers that they need to net X amount of dollars from their home sale, despite its value being considerably less. Well, I'd like a second home in the south of France, but that's not going to happen, either.

The point is, you have to be realistic in your hopes for your home, and be able to adapt your plans accordingly, or you are effectively buying your home back at your inflated asking price.

The other side of the problem, unfortunately, is that weak agents often encourage, and support that behavior which is a waste of everybody's time.

Remember, you have the right to want whatever you want for your home, as much as the market has the right to insist that you keep it.

The Good News, and the Not So Good News in the Housing Resale Market

2009-01-26T16:26:00.003-07:00

Today, Bloomberg.com published an informative article by Bob Willis, on November existing home sales. Please click the link to read.
The article speaks for itself and shows the power of the free market to stimulate sales. Yes, prices were down, but it encouraged buyers to step up. I have never understood the rush to artificially prop up prices. What is wrong with lower prices? It allows more folks to become home-owners without the lowering of credit-worthiness standards that have brought us to this current debacle. Note that all government attempts at "rescue" have centered on helping the banks that were encouraged, aided and abetted by Congress and Wall Street, to offer loans to people who could not afford them. Other organizations, like the under-investigated A.C.O.R.N. and various inter-faith groups are slated to receive billions in funding to offer "counselling" to those who are in danger of losing their homes. Counselling? We are witnessing the largest single giveaway of public funds, that we do not have, in the history of this country. Future generations will pay dearly.
Senator Chris Dodds, currently under an ethics investigation due to the preferential terms and conditions of two mortgages from Countrywide, was not only in charge of this tragedy, he remains empowered as someone who is supposed to extricate us from this mess. As I write this, Dodds promised to reveal the details of his sweetheart loan 185 days ago. Click on this link to see how much time has elapsed since his empty promise.
In politics there is no longer any shame. Throughout this entire fiasco, name one politico who has resigned. Remember, Pelosi promised to "drain the swamp" and give us the "most ethical Congress ever". I'm still waiting.

North Phoenix Real Estate Market, Healthy or Not?

2009-01-22T10:17:00.002-07:00

In response to various inquiries, I delved into the statistics of an anonymous Phoenix area neighborhood to check the pulse of the market.

Around this time of year, whilst attending a never-ending round of cocktail parties that being a busy Realtor entails, one question is posed time after time..."How's the real estate business?" the truth is- not bad! It could be, and has been, far worse.

So I decided to run the numbers on a neighborhood that has homes for sale from the low $200's, up to the one million dollar mark; and here is what I found.

In the last six months there have been 37 genuine sales, not change of ownership by virtue of a property being returned to the bank. Of these sales, 13 (35%) were regular person to person, arms-length transactions. A further 43% (16 homes) were either REO's or short-sales, and the remaining 8 homes (21%) were sold at a loss by their owners. Currently, in the same area, there are 83 homes active on the market. This means that this community has slightly more than a 12 months supply of homes available; or slightly less than 12 months if the 8 homes that are currently "pending", actually close. Not good news for sellers but definetly a buyers market.

Clearly, from the numbers I have cited, two thirds of sales have been a distress sale of some kind, which is not good for sellers. However, buyers are out in force, and taking advantage of lower sales prices. If this trend continues, it will represent a great stride towards the return of a normal and balanced market-place. Once all foreclosed and bank owned properties are absorbed, we will begin to see a return to single-digit annual appreciation.

Strangely enough, we hear some buyers are still being reticent, lest prices fall further. Whilst, no one really knows for sure if they will, it is a lucky man who is able to buy at the absolute bottom, or sell at the absolute top. Most of us just need to ride the general wave of the trend to do well. Interestingly, during the crazed sellers' market of 2005-2006, buyers were falling over themselves to purchase a home in case they missed out to higher prices. My suggestion would be to take advantage of this current buyers' market and remember that, in the long term, a home is still the best investment you can make.

If you were unfortunate enough to have purchased your home at the wrong time, but are able to weather the storm; then do so. It will turn around soon.

2009 Predictions for the Phoenix Real Estate Market

2009-01-04T09:26:00.000-07:00

My annual attempt at the impossible. Trying to guess where real estate markets will trend in the greater Phoenix metropolitan area in the coming year.

Predicting future events is never an easy job, and more often than not, a futile exercise of vanity over reality. However, that has never stopped me from sticking my neck out! Further complicating the issue this year is the fact that we will be installing a new administration on January 20th, 2009. Also, due to the strange peccadilloes of the electorate in general, we have managed to re-elect virtually every member of Congress, (leastwise those who were up for re-election). Please bear in mind, that this was a congress whose popularity rating has never, ever been rated at a lower percentage, since records have been kept. This means that they very same congress-critters who got us into this mess, will be the ones who will be attempting to fix it! Encouraged-I am not!

I believe that the volume of sales will remain steady, or increase slightly, during the course of 2009. Here, in the Valley of the Sun, we have a great deal of affordable housing, which attracts out of state buyers. If the economy remains constant, or improves slightly, there will be a commensurate increase in sales. Notice I said "increase in sales"- not increase in prices. Big distinction. I still believe that the majority of sales will be some kind of distress sale, i.e. REO's, short sales or people losing money personally to close the deal. However, it is absolutely vital for these properties to be absorbed into the market in order for normalcy. Whatever that may be, to eventually return.

In the more affluent neighborhoods, Cave Creek, Carefree or Fountain Hills for example, I think we will see fewer sales. This is because in those areas, many of the homes are owned by retirees or wealthy snowbirders. Often, they do not have to sell, so the decision to stay in the property and ride out the storm is a relatively easy one.

So, is it going to be a good year, or a bad one? Well, it all depends on your perspective. For buyers, I think it will be all good--especially first-time buyers. For homeowners, who purchased in 2005 or later, who have to sell, there will be some degree of pain. For those who don't have to sell, or bought before 2004, it's a wash. Although, the growth they initially experienced has gone away, I think we will return to low single digit appreciation in late 2009, early 2010. Which will mean, as ever, that a home is always a good Long-Term investment.

More importantly than all of the above, however, is to stay healthy and enjoy life.

Phoenix Real Estate, How Far have Prices Fallen

2008-11-10T08:51:00.000-07:00

Some months ago, I wrote of two homes that had come onto the market due to the owner's need to re-locate (Phoenix Real Estate, No More Mr. Nice Guy) I will briefly re-cap the stories.

Couple "A" bought a phoenix home in March 2006 for $335,000, with a substantial down payment of $185,000; or more than 50% of sales price. Couple "B" bought a more grand home, also in Phoenix, in December 2005 for the sum of $530,000, with a 10% down-payment of $53,000.

This summer, both couples were in the position of having to sell, due to the fact that their employer was re-locating them. Here is how they fared.

Couple "A" sold their home for $230,000, which basically represented a loss of one third (33%) of the initial sales price. Because of their relatively low mortgage, as a result of their large down payment, they were able to actually walk away with some cash, even though their loss was substantial. If you estimate closing costs, including commission, at around 8%, they probably walked away with around $61,000.

Couple "B" sold their home for $363,000, again representing approximately a one third loss on the initial sales price. (Incidentally, that sales price of $363,000, is almost identical to the $365,000 this home had previously sold for in April, 2004. Demonstrating quite neatly, both the dramatic rise and precipitous fall of home prices in the Phoenix Metropolitan area in the last four years.) Unfortunately, in order to close this deal, by paying off the loan plus the closing costs, they also had to write a check of approximately $156,000 to cover the shortfall. Remember, this is over and above their initial $53,000 down payment.

As you can see, home ownership in Phoenix was a very expensive and unpleasant experience for both these families. In fairness, I think it is very unreasonable to expect to live in a home for 3 years, in a normal market, and do anything more than break-even. However, these losses were spectacular.

Now contrast these stories with those of the many people who bought homes, with no money down, using adjustable loans that they knew full well they would not be able to afford. Many of those folks have just walked away from their homes. I would argue that they were never really "owners" in the first place, as they really had no financial stake in their "homes". The very people who fueled the fires of greed that were instrumental in the rise and collapse of the real estate market get to walk away scot-free. Those who had invested their own money get burned. This is what happens when government interferes with the free market. They are also the people who are going to "fix" this problem. Don't you feel safe? One of their proposals, again completely contrary to free-market principles, is to delay foreclosures in order to keep prices up. Since when were high home prices a good idea? What happens when this temporary support measure expires? Do you think prices will then go up, or down?

As the late lamented Ronald Reagan said "The nine most scary words in the English language- I'm from the government, and I'm here to help."

May God help us all!

Phoenix Real Estate, No more Mr. Nice Guy?

2008-08-11T09:37:00.000-07:00

In the extremely competitive real estate market that is gripping the nation, and particularly the greater Phoenix area, should your agent be a nice guy?

Let me explain. First of all, should your real estate agent be a "nice"guy? (or gal, I know!) Well, whether you are selling or buying, what you need most of all, in any market, but especially in tough markets like Phoenix, is an experienced and competent agent. Many tout their longevity as a plus, and it is to an extent, but their competence is much more relevant. Ask yourself, who would be better? A motivated, 4 years experienced, internet savvy, go getter with several closings to his credit? Or a jaded, 25+ years experienced, "inter-web/tube-hating" old crank-pot? Clearly, it is not a simple question. However, let me give you an example of why "nice" sometimes does you no good, at all.
Quite recently the relocation department of my previous company had me visit with a couple who were, of course, selling their home due to a business re-location. One of the problems with the home was that it had an addition, but it was not clear whether it had been permitted or not. Plus, when they initially bought the house, it was implied that the additional footage was not recorded by the assessor, and was therefore "bonus". After due diligence, I was able to show them that it was permitted (the good news), but that there was not "bonus" extra square footage, the city had already included the footage in the assessment (the bad news). I was in competition with two other companies, but the couple chose me to represent them. We agreed to start at $259,000, but to reduce it to $249,000 within 2 weeks if showings, and interest were low.
There were a number of cosmetic items that needed to be addressed, for which we allowed 2 weeks before entering the property in the MLS. Well, the two weeks became 4, and in that interim period I had taken the decision to move to another company. I immediately returned the file to the re-lo department for them to assign it to another agent. Well, they assigned it to a "nice" guy, and this is what he did. He listened to the sellers who "wished" that the extra footage was bonus, even tough they knew it was not. In the MLS he actually wrote that the extra footage "probably" was bonus, despite the assessor's assertion to the contrary. This last act, incidentally, leaving both the sellers and himself open to a lawsuit. At their prodding, and despite having a signed agreement at the lower price of $259,000, the "nice" guy decided that they would at least try $289,000.
So, 60 days later, the price is finally $259,000 but the property is as stale as week-old bread. See, what a "nice" guy gets you?
If the agent will not stand up to his client, how on earth do you think he is going to stand up FOR you in a negotiation.
In a slightly different vein, I sometimes have clients who say (of their neighborhood Realtor) "Oh, you must meet Jim. He's the nicest guy you'll ever meet!" They then proceed to recount all the neighborhood secrets that Jim has gleaned and has happily divulged to all in earshot. Little gems like, "I listed it at $750,000, but it'll go for $650,000!" The fact that such gems are ethical violations do not bother Jim, or the people he tells. I normally respond by saying if he is telling you all your neighbor's business, don't you think he might be revealing yours" That normally gets them thinking.
Let's be honest, nice is a very overused and meaningless word. Should your Realtor be nice? It would be nice, I suppose. Ideally, you really want smart, knowledgeable, honest and diligent. Believe it or not it is out there if you look hard enough.

Pricing Your Home in the AZ Real Estate Market

2008-06-13T15:42:00.000-07:00

Competitive pricing has always been an important factor when selling your home. Now, more than ever, it is an essential component when marketing your home in the Valley of the Sun.

Traditionally, the summer has been a time when the real estate market begins to slow down in Phoenix, AZ. Partly due to snowbirds returning home, and partly due to our high temperatures which make us less inclined to search for a new home. However, and regular readers know that I am more realistic than I am wildly optimistic, I feel that this summer season is beginning to show some signs of life.

Recent FHA loan limit increases, coupled with dramatic price reductions across the board, have opened up the possibility of home ownership to a whole new bunch of people. Many of these folks thought their chance to become a homeowner had evaporated forever, but are now being presented with a second chance. Good for them.

Unless you have been living under a rock, you will likely be aware that many homes on the market are either R.E.O.S or "short sales". Let me explain. An R.E.O. (real estate owned) is a property that has been foreclosed upon and is now entirely owned by the bank. A "short sale" is where the current owner owes more than the home is worth and, in order to sell it, will ask the bank to forgive some of the debt in order to complete the sale.

For various reasons, many banks are dis-inclined to offer debt relief so, very often, the attempt to purchase a "short sale" ends in frustration I advise buyers that if they find a "short sale" that they like, by all means make an offer. However, as response times can be long, do not let it deter you from looking at other homes. In other words, if you find another home that suits your needs, do not pass it up whilst waiting for a response that may never come. It is a simple matter to rescind an offer before it has been accepted.

R.E.O.s, on the other hand, are an excellent source for the home purchaser. I doubt that you will find a more motivated seller (a much-abused and cliched term) than a bank. They have no desire, whatsoever, to own the home and best of all, they are emotionally detached from the property.

I have been tracking one home in an upscale market that started out very well priced. Within in a month it went from "fair price", to "somewhat of a bargain", to "that seems cheap", to "is there something wrong with it?", to "sold!" A successful result occasioned by a combination of a smart realtor and an astute bank ending with a happy buyer.

Recently, I have also been seeing some spectacular reductions in the million dollar range. Some clients have even asked me whether prices are still crashing. In my opinion prices are flat to slightly soft. What we are seeing is overpriced homes, some of which have been on the market for a long time, getting introduced to reality. I see many homes priced at, or above, $1,000,000. That in reality are worth around $850,000. The owners hope against hope that some rube, preferably a cash buyer, will miraculously appear and fall so helplessly in love with their home that they must buy it. Meanwhile, back on planet earth, few buyers pay cash and there is a person called an appraiser who has to share your opinion of the price, before the bank will part with its money; so, I think you know the ending to this little story.

It seems like a good time to buy a home, or trade up to a larger home. Truthfully, no-one knows where prices will go and this is an election year, but it is certainly a better market for buyers than the past few years.

Good News in Phoenix Real Estate

2008-06-06T12:42:00.000-07:00

At last, some good news for the Phoenix real estate market? Well, yes, but...

As I write this article, in the dying days of May, it seems that there may be a light at the end of the tunnel; and I do not believe it is a train coming towards us!

It has been reported, on a nation-wide basis, that existing home sales in February, 2008, actually rose. Something that has not occurred in seven months. So that gives us one reason for cautious optimism.

Also, the weakening of the U.S. dollar is not all bad news. It has made homes here in the United States a very attractive proposition for overseas buyers, and we have noticed a sizable increase in inquiries. Particularly from our neighbors in the north, many of whom seek retirement homes here in the Phoenix area, as a respite from the frigid temperatures that Canada often endures.

Locally, the news is a mixed bag depending on your geographical location. Carefree lived up to its name, reporting a median price 6.7% higher than last year, at $944,000. At the other end of the scale, Queen Creek saw a 19% drop in median prices. Why the disparity? Queen Creek is an entry-level community that appealed to a lot of first-time buyers, and "investors", that have been affected by the whole sub-prime mess. Consequently, the level of foreclosures and short-sales, plus the abandonment by said 'investors' has, naturally, had a detrimental effect on prices. Hopefully, this year will see these homes absorbed by real end-users to bring some level of stability back to the market.

Conversely, Carefree is an extremely upmarket, witness the median price, mostly retirement community that has emerged relatively unscathed by the vagaries of the real estate world. The reported increase of 6.7%, on the back of just 70 sales in 2007, reflects the fact that wealthy retirees, or snow-birders, who did not have to sell, are able to ride out the rough times. Also, wealthy buyers are able to pay higher prices for the quality that Carefree provides.

Interestingly, neighboring Cave Creek reported a drop of 4.7% in 2007 to $505,000. The reasons for this, I believe, are a little more nuanced. For reporting purposes zip code 85331 is used for Cave Creek. It does not make a distinction between houses actually in Phoenix, generally south of Carefree Highway, that share the zip code by post office whim. Home prices in "actual" Cave Creek have been quite resilient, but the statistics have been skewed slightly by the "not real" Cave Creek sales.

To sum up, things are starting to look up and I think 2008 will set us back on a path to normalcy, such as it is in real estate.

Buyers are timidly emerging, so sellers remember to price your home like 2008, not 2006, and all should be well.

To Permit, or not to permit; that is the question.

2008-01-31T12:57:00.000-07:00

Here in the Valley of the Sun, as in the rest of America, many homeowners decide to remodel rather than move. Often, it is a sound idea. However, many Phoenix residents pose the question "Should I get a permit?"

The simple answer to this conundrum is, of course, yes. If it is required by law for the work you are contemplating, one could argue that you are indeed obligated to obtain a permit. However, this does not make for a very interesting article, so let us dig a little deeper to find out why.

Firstly, is it actually required? Obviously, you do not need to pull a permit for something as simple as changing a washer on a faucet. but in some parts of the country, any alteration to the home that exceeds $500 in cost, may require a permit. Make sure to check with your local authorities before you even start on the project.

Many folks tell me they do not want to obtain a permit because they want to "save" money. The reality, usually, is that such a move would probably prove to be a false economy. Because the permit is only part of the process; the other part being the physical inspection. Many folks regard the inspector as an overbearing busybody, and I suppose one or two are, but the fact is they are extremely knowledgeable professionals who, in essence, act as a buffer between you and your chosen contractor. You could argue all day with your contractor about a detail you think is necessary all to no avail. The inspector says "do it" and it gets done. Therein lies the reason to do the job properly. An inspector checks the plans, and the completed work, to ensure that all areas of work are completed correctly, and most importantly, to the standards required by the building code. (Most municipalities adhere to the International Building Code) It is a health and safety issue, and circumventing the permit process really is, as noted earlier, a false economy.

In a previous life, I was involved in constructing a new garage on my property, which was built on a hillside, which means the code is much more stringent. Special concrete mix is required, extra rebar was necessary as was a substantial retaining wall. The inspector's advice was invaluable as he thwarted the contractor's attempt to save money (cut corners) at every turn. I shudder to think how the project would have evolved without the inspector's participation.

Also, when it comes time to sell an addition to a home constructed without a permit is not just "not a positive". It is not even a wash. It is in fact a negative as any potential buyer will not only ignore the "improvement", they may attach a negative dollar amount to it, as the city, or state, may require its complete removal.

Also, do not fall victim to a contractor telling you, "I will do it all to code, but we will just save the cost of the permit." You will just be wasting your hard earned money if you do.

Finally, if it is not added by permit, and therefore to code, it will not show up on your city/state tax records. That means that any square footage you thought you added will not be recognized by an appraiser, nor the lender who employed him, when valuing your home for a potential buyer. Still glad you "saved" money on a permit?

Phoenix Real Estate Predictions for 2008

2007-12-14T16:35:00.000-07:00

Well, here we are again! Another year older and deeper in debt (thank you Roger Miller.) Before I put quill to parchment I went back and read what I had predicted for 2007.
I think I was right to predict a gloomy market and the market has indeed seen a reduction in sales volumes and sales prices. In fact, with only minor editing, I could easily re-print last year’s predictions without worry.

Unfortunately for some, prices still have around 5%-10% more downward potential before the market stabilizes, which I predict may occur by late ‘08, early ‘09. I say “unfortunately for some” because lower prices are good news for first time buyers, and for those folks looking to trade up to a larger home.

It is also the reason I am at a loss to understand why the government, in a bi-partisan effort, is attempting to bail out some of those who took out adjustable loans that they could not afford, and that they now claim not to have “understood”. I fail to see how manipulating the free market, in an attempt to keep prices up, is a good thing. Luckily, our inept government has structured the bail-out so poorly, that I doubt it will reach many of its intended targets. However, it will provide the politicos with “window dressing” in an election year to create the illusion that they cared.

So, back on topic, in 2008, inventory, which remains at a historically high level, will diminish for the following reason. Clearly, about half the current listings are not truly for sale. Many are overpriced and what I call “opportunistic listings”-- I.E. the owner will sell only if someone pays their inflated price. Not gonna happen. As those listings expire, and more experienced agents decline to re-list them, and novice agents go back to their original jobs, we will begin to see a return to some sort of equilibrium.

Another factor in depressing re-sale prices is the relentless onslaught of new construction. Even though housing starts have slowed, there remains an unbelievable amount of new homes being built. That is a builder’s right in a free market, but it will have an effect, All of which is good news for buyers, who remain nervous, but will start to re-emerge in 2008.

Sellers are not in such a happy position but, realistically only those who purchased since 2005 are in any sort of hurt. Even in “normal’ markets, it is very difficult to turn a profit on a house in only 2-3 years, partly because of closing costs. If you are just slightly upside-down in your home, my advice is to hold on and ride it out. Eventually, it will come back. The effect of running away and possible foreclosure or bankruptcy could decimate your credit rating for many years to come, so do not take those steps lightly.

Finally, whilst the housing market can be stressful at times, remember without the health and happiness of you and your loved ones, you really have nothing.

Phoenix Homeowners and Personal Responsibility

2007-10-29T15:57:00.000-07:00

This is a subject about which I have often been tempted to put pen to paper, but have shied away from it for various reasons. However, an article in a prominent Arizona newspaper recently has forced me to re-think that decision.

Once again, we are told how a young couple, trying to get ahead in this world, were duped by some big, bad lender. Apparently, they were approached by a lender who told them that he could move them into a much bigger house and that at close of escrow they would receive $20,000 in cash. The article also stated that they signed loan docs in a parking lot and that they were not notarized at that time. The article then goes on to state that even though they could not afford the payments, the lender “promised” he would help them refinance within a couple of months to obtain a more affordable payment. Well apparently the lender subsequently went missing, and now, boo hoo, they cannot keep up the payments. Well, cry me a river!
There were so many warning signs in the above scenario; what could possibly have caused the buyers to overlook them. Oh right, that perennial standby-greed.

I am reminded, in this case, of the many people who are duped by Nigerian internet scams who end up sending vast sums of cash to those predators. They whine how they were taken advantage of, when in many cases the scammers openly admit that they are taking money that is not theirs, and need your “help”. In both instances the “victims” are overwhelmed by their own greed.

Unfortunately, it is a result of the general sense of entitlement that many people possess today. Do you really “own” a home if you are putting no money down? Do you really “own” a home if you get cash back at closing as legal as that may be and therefore have nothing invested in said home? We make it too easy for people to buy homes they cannot really afford, which makes it too easy for them to walk away when times get tough. This is one of the reasons the real estate market in Phoenix, indeed in the U.S.A., finds itself in the perilous state it is today.

Do not misunderstand me, banks are extremely willing co-conspirators in this whole scheme. Watch how they scream for federal assistance as their greed comes home to roost.

Ultimately, if a deal sound fishy, it probably is. If it seems too good to be true, it probably is. Exercise some restraint and take responsibility seriously.
Unfortunately, for some folks who crave the ultimate American dream of homeownership, their zeal and greed impedes their ability to exercise caution, turning the whole exercise into a nightmare.

Please act carefully and responsibly.

Reverse Mortgages Help Phoenix Homeowners

2007-10-03T14:13:00.001-07:00

A few days ago, Mrs. K was talking on the phone to Grandma, who was lamenting the fact that Grandpa never "believed" in life insurance so he had never taken out a life policy. Later, as we discussed it, I pointed out that while there had been no insurance windfall after his demise, he had provided for his spouse by ensuring that their home was paid off in full. In fact, Grandma has not had a mortgage payment in twenty years.

It is unusual for a realtor to cover this subject as it is somewhat out of our area of expertise. Which is Realtor-speak for "I don't make any money from this." It's like when your mechanic says of the mystery squeak "They all do that" is mechanic speak for "I don't know how to fix it".

I digress; eventually the conversation led to reverse mortgages and people's perception of them. Most folks think it is a scam. And they could not be more wrong. I do not intend to cover all the intricacies of a reverse mortgage in this article, but I will provide links at the end so that you, dear reader, may undertake further research.

Very simply put, if you are over the age of 62 and, either, own your home outright or have sufficient equity to pay off the loan and still have equity remaining, you are in business. You must also live in the home.

You may never be kicked out of your home or owe more than its value. You can receive the equity in any of the following ways: As a single lump sum, as a credit line account from which to withdraw funds or to be left to grow as an interest-bearing fund. You may elect to collect a fixed monthly stipend for as long as you live in your home. Or, you may concoct a combination of all of the above to best suit your needs.

From a practical standpoint, the only other requirements are that you keep both taxes and insurance on the home current.

Remember that this is a H.U.D. program under the auspices of the F.H.A. If a member of your family is sceptical, and they have a right to be cautious, reassure them that this could be a way to ease their financial burden.

In fact, our Grandma decided to downsize from her 2 acre property to a more manageable condo. The surplus cash will be invested wisely to provide a monthly income, thereby preserving all capital whilst still retaining the flexibility to obtain a reverse mortgage in the future if needs require it.

Anyway, that nice Jim Rockford advertises them on T.V. so how bad can they be?

Resources used:
http://www.rmaarp.com
http://www.hud.gov
http://www.ftc.gov

Phoenix-Marketing Tips for Selling Your Home

2007-09-26T14:27:00.000-07:00

Today I was conducting an MLS search for a client in an area that was entry-level priced, so consequently there were many, many homes to choose from. Whilst refining the search to better tailor it to my customer's needs, I could not help but be amazed by how many Realtors had "shot themselves in the foot" in the remarks portion of the listing. Buyers have a multitude of choices, in this market, when choosing a home. The last thing you should do as listing agent, is relegate your home to the "only see if nothing else suits" pile.

In the next few paragraphs I will furnish actual examples of search-ending folly, which range from the merely unimaginative to the downright ridiculous.

"Motivated seller"; if I had a dime for every time I saw this phrase in a listing I would be much wealthier than I already am. It ranks right up there with the adjective "nice" on the blandness scale. From the same family of real estate no-nos we also get "instant equity" which ranks right up there, but also earns points for its ability to foster law suits later on. Its cousin "below appraisal", while technically accurate, is plain silly because by definition an appraisal is merely a snapshot of value based on historical sales, which in our falling market will naturally have been higher.

Another turn off for buyers is "chandelier does not convey". It seems innocuous, but nobody likes to have something taken away from them. If it does not convey, take it out before you list the home. It makes for more pleasant negotiations.

Homebuyers, like all consumers, are a very visual bunch. It is hard to get enthused over a home that only has one photo. Worse still, some have none. If the lister does not care enough to display the attributes of the home, why would you expect a potential buyer to care. Also, I do not buy into the "It's a new listing" argument. In this day and age, who does not own or have access to a digital camera? Come on people, make an effort!

Huge co-brokes are also a turn-off. After all, who is ultimately paying for them? The buyer, of course.

How about this one; "Seller will contribute (car)(boat)(helicopter) whith reasonable offer." Reasonable to whom?

This one made me laugh out loud, "It's a little rough right now, but will be nice by close of escrow". Doesn't that make you want to jump in your car and race over there. If it is not yet ready for sale, do not list it. You only get one chance to make a first impression. (See remarks re: photos above)

Try to make the property as easy to show as possible. Asking buyers to call Bill, the owner's cousin, to ask him to tell Fred, the neighbor, to leave the key under the mat with 24 hours notice will not likely get the home shown.

This is not rocket science, and in an overcrowded real estate market it is imperative to make the process as easy and smooth as possible for a potential buyer. I hope these tips have helped.

Finally, to my fellow Realtors I have one word, please take heed accordingly "spellcheck".

Phoenix: Short Sales and Foreclosures are Coming to Visit

2007-08-21T12:39:00.000-07:00

Without delving too deeply into the reasons for this current predicament, it is a sad fact of life that many Arizona homeowners are running into serious difficulties in meeting their mortgage obligations. As with most areas of life, in order to combat a problem, it is necessary to first admit that the problem exists. If that sounds crazy, you will be surprised how many Realtors get the call "My home is being foreclosed on next week" especially since that procedure comes at the end of a 90 day period. Too many homeowners ignore all phone calls and correspondence from the bank until it is too late. They cover their ears and go "La, la ,la!" However, there are avenues to explore before we get to that point.

If you know you are unable to make this month’s payment and may have more difficulty in the future, contact your lender immediately. Be aware, the bank does not want to talk to a Realtor at this stage; this is a call you must make yourself. Also, make sure you talk to the right department. Just calling the 1-800 will not suffice. It may take some digging, but you must speak to the "loss mitigation" or "work-out" department. The, probably, outsourced employee at the end of the 1-800 does not have any authority to help you, that employee just wants you to make your payment. Some lenders may be willing to modify the existing note, extend the loan period, or give you a six-month break and add those costs to the loan. This is if your financial difficulty is temporary in nature.

If your monetary problems are an ongoing situation with no end in sight you may try to negotiate a "short pay" with the bank. This is when the bank may agree to accept less than what is owed in order to release the lien from the home and enable you to sell. Most likely, they will try to work with you because the last thing any bank wants is to take the property back. Bear in mind, also, that your setback must be real; if you own other homes or assets you cannot, and should not, expect them to forgive you debt while you still have worth. You will most certainly have to "reverse qualify" to obtain a short pay. In the same way you had to qualify to get the loan in the first place, you will be required to furnish proof you can no longer afford said loan. This is where some people run in to trouble. If you "fudged" your initial loan application, if you "stated" income you did not earn, if you said you were going to "owner-occupy" and you did not; this is when the chickens will come home to roost. Some of these conditions I just mentioned are felonies, so think very carefully a) whenever you apply for a loan b) whenever you try to seek relief. Indeed, with the recent spate of "no-doc", "stated income" loans, which many would argue have fueled this current crisis, you may find the reverse qualification more stringent than the original application.

Remember, a foreclosure or a short pay is going to affect your credit history for a long time to come. Also, remember that in a short pay you will receive an IRS 1099 form from the lender for the short fall, just as if you earned that money. Income tax, therefore, will be due on said amount.

To summarize, if your financial difficulty is short term, most lenders will be very willing to work with you to resolve it. If your difficulties are permanent, it is probably time to consult with a Realtor. You will need them to find a qualified buyer at a fair price, and then you will need their expertise to persuade the bank that this is the fair and equitable solution for all parties involved. In either case, the earlier you acknowledge the problem, the better the resolution.

Finally, make sure the Realtor you choose has the knowledge and experience to see it through, your financial future is Dependant upon it.

Phoenix Real Estate Price Wars

2007-07-30T11:25:00.000-07:00

I was recently involved in a real estate transaction in Phoenix, thank the Lord, that I feel bears repeating because there are lessons to be learnt for both buyers and sellers in this difficult market.

The subject was an entry-level home in Phoenix that had just been reduced from $229,000 to $219,000. It had been empty for about a year, but the sellers were long time owners (over 20 years) so they were not in distress. However, they felt the home was priced right, given the vagaries of the market in the Valley of the Sun, and they were probably correct. Plus it had a remodeled kitchen and an impressive 4-car garage, which was an absolute boon to my client, who I represented as a buyers agent. He wanted the property, because of the garage, and was willing to pay full price. We started at $212,000 which is an amount that is respectfully close to asking and not insulting in any way. The Lister had told me in light of the reduction they would probably not go lower than the asking at this point. Whilst she was at the owners' home presenting the offer, she called me to say, "if you re-wrote the offer at $215,000 today, they would sign it, as they are going on vacation in the morning, and did not want to mess around with a counter-offer. If not they would counter back at $219,000." Verbal negotiations are not valid, all offers must be reduced to writing, so I said "Do what you have to do." Remember, they had already indicated they would accept $215,000 so their $219,000 counter could be countered back by a $215,000 counter from my client if needed. Why the rush? Two hours later, they accepted the $212,000 without any counter. Why? Well, buyers have a lot of choices these days, so if a well qualified one comes along it is important to take them seriously. In this case our offer was close enough that they could "smell it".

Too many people start way too low then the seller feels insulted and takes it personally. In fact, it is a business transaction but both buyers and sellers can get over-emotional because we are dealing with their home, with all the hopes and memories that that can contain.

I also try to dissuade clients from annotating offers with language like "final offer" or "firm". They are combative terms and I find them to be petulant. Be
business like in negotiations and allow people to keep face and respect. It will turn out better in the long run, and you will feel better, too.

I also avoid advertising homes as "with instant equity" or "tens of thousands below appraisal". Seriously, does anyone buy into that nonsense? It always reminds me of T.V. ads from jewelers who guarantee "our items will appraise at twice our price". Good, will you buy them back from me then? I could make a tidy living popping in and out of jewelry stores all day.

The truth is that, in the cooling market that is Phoenix real estate at the moment, correct pricing will help you find the few real buyers that are out there. Negotiating fairly and with respect will help you close the deal, and keep that buyer. And, of course, your integrity.

Home Sales at Lowest Levels in Four Years

2007-06-28T08:36:00.000-07:00

The National Association of Realtors reported another drop in existing home sales in May, a rate of sale not seen since June 2003.

In fact, some areas of the country, notably the north-east and north-west has seen a small rise in sales. Unfortunately, that means the stats are being pulled down by a disproportionate fall in sales in other areas, for instance, the south-west, and of particular relevance to us, of course, here in the greater Phoenix metropolitan area.

The main reasons for the regional differences are as follows; while housing growth was quite dramatic in the Pacific north- west, for example, it was largely driven by an underlying growth in the local economy. Such was not the case in Arizona. We fell victim to a confluence of circumstances; lots of new construction, lax lending requirements, and a booming national economy that made Phoenix, and its environs, attractive to non-resident speculators. The professionals moved in, and out, quickly but left the impression among amateur speculators that it was easy money. Many of these people are now left holding the bag.

Here in Phoenix we now have inventory at over 60,000 units representing, at current sale rates, an eight to ten month housing supply. Not a positive thing if you need to sell your home. What never ceases to amaze me, and I am sure it does you, is that they are still building thousands of homes throughout the Valley of the Sun. I have said this before but it bears repeating, developers that sold you a home in 2004 for $150,000 that now could sell in the secondary market for $225,000, can still build and sell an identical home for that earlier low price today. They will continue to price their new builds at, or below, what the market will currently bear, until their inventory is reduced.

The good news is that our economy here in Arizona is strong and tens of thousands of people are relocating to our great state each month. Ultimately, the housing market will return to some form of equilibrium, just not in the very near future.

If you need to buy a home you are in a good position; if you want to trade up to a larger home, likewise; if you have to sell (and I mean absolutely have to) set a reasonable price and they will come. If you need to sell three or four or more homes...well you're an investor, you'll think of something.

Phoenix Real Estate Market-How healthy is it?

2007-05-31T17:46:00.000-07:00

Recent reports show that nationally, home prices have dropped for the third straight quarter. Interestingly, here in Arizona we were reporting less sales, but sales prices were actually increasing. What does it all mean? Well let us not forget that anyone can pull a set of statistics and interpret them to suit their own purposes. In this case, nothing nefarious is occurring but we do need to analyze the stats carefully. What is happening in the Phoenix metropolitan area is that although the number of homes sold has gone down, the ones that have sold are at the higher end of the price range. This reflects a couple of interesting points in the Arizona real estate market. Firstly, the fact that more expensive homes are still selling just reveals a broader fact of life that the more wealthy among us are not as affected as the less financially fortunate, by the overall economy or the ups and downs of a finicky real estate market. Secondly, the folks in entry level homes who desire to trade up for something bigger or better (and this is an excellent time to do this) are experiencing a great deal of difficulty in selling their current homes due to unrealistic pricing and an over-abundance of inventory. The pricing problem is one I encounter all the time. Otherwise intelligent folks cannot seem to grasp that the "investor" fueled madness of two years ago is over. I point out recent comparable sales and the response is universal. Those people just "dumped" the property at below market prices. The old "grassy knoll" conspiracy trick!

The overall economy is generally healthy. In the Pacific Northwest prices have either held, or dipped slightly, due to excellent job growth. Here in Arizona, the economy has some catching up to do, to help siphon off excess inventory. That may take time. Also, banks are tightening up lending parameters; making loans, particularly "low-down" or "no-qual" loans, much harder to get. Lenders are now seeing an increase in foreclosures, Arizona ranks 7th in the nation, as their previously lax requirements are coming back to haunt them.

Lenders are also starting to process "short-pays". This is a situation whereby a bank will forgive a portion of the debt secured by a home, in order to allow it to be sold. Traditionally, in a foreclosure a bank would receive, after expenses, around 70-75% of sale proceeds, whereas a short pay could net as high as 90% of proceeds. See your Realtor, or accountant, for more details of both procedures.

It is not all gloom and doom. There will not be any catastrophic decline in house prices, as we saw in the 90's, due to the underlying strength of the economy. Some of the huge "investor" fueled increases will inevitably be given back. However, the market will stay robust, but it will need a year or more to rid itself of the so-called investors, the foreclosures and for inventory levels to return to normal.

Look on the bright side, at least the weather is excellent!

Scottsdale, Arizona, Where The Living Is Easy

2007-04-11T14:25:00.000-07:00

Scottsdale Arizona, is internationally renowned as a major resort destination despite barely squeaking into the top 100 of U.S. cities in terms of population. No Virginia, size is not everything.

Although its nickname is "the West's Most Western Town" I have to say that really is a misnomer. In fact, construction of new horse corrals was all but banned back in the 70's. Call me old fashioned but to be "Western" I think horses should factor into the equation somewhere. The only re-shoeing going on in Scottsdale today is a trophy-wife exchanging her Blahnicks for Jimmy Choos!

That being said, Scottsdale truly is a treasure. It has been written that in terms of entertainment and culture, Scottsdale ranks at #3 behind Los Angeles and New York. As someone who has lived, at length, in all three places, I have to say that Scottsdale is most definitely on the ascendancy; indeed it may already have surpassed L.A., in this humble scribe's opinion. Certainly, theatre, dining and entertainment are L.A.'s equal, but housing costs are much lower, and the traffic here in Scottsdale is a breeze compared to the grid-lock that L.A. has become.

It is also the reason that many wealthy people, and in fact several celebrities, have chose Scottsdale for their second home. Spectacular estate homes in Scottsdale are available for a fraction of the cost of comparable homes in LaLa land. Of course, many are of new construction with all the attendant modern conveniences that would be expensive retrofits in Los Angeles. Plus we still have abundant land available here in Scottsdale, a situation not available in L.A. for many years.

Scottsdale is also well served by its own airport as well as Phoenix International Sky Harbor Airport just minutes away. Of course, the northernmost boundary of Scottsdale abuts Carefree,(which also has its own airport) even so it is still a scant 30 minute drive to downtown Phoenix.

Believe it or not, when the town of Scottsdale was incorporated in 1951 it was just one square mile. Today, it covers around 184 square miles.

As testament to its status as one of the premier golf and tourist destinations in the world, Scottsdale is home to the annual FBR Open Golf Tour, the most attended PGA event on the tour.

It is also home to the world famous Barrett-Jackson Collector Car Auction, plus a host of lesser auctions staged at the same time, such as Russo and Steele and Kruse.

While it is true that it can be an expensive place to live, it should be remembered that the older parts are quite affordable and are enjoying something of a renaissance. One of the benefits of the cooling real estate market, is that for some who felt the ship had sailed forever in 2004 and 2005, there is a second chance to grab a piece of the dream.

Whether your interest is cars, horses, museums, art, theatre, entertainment, shopping, nightlife or golf, there is something for everyone in Scottsdale, Arizona.

Responsibility in Home Loans Goes Both Ways

2007-03-20T13:26:00.000-07:00

Whilst watching the news on a local Phoenix TV Station recently, I came across a human interest story about a couple who were in danger of losing their Phoenix home as they could not afford the payments. In this case, the homeowners had an interest rate of 9%, we will get to that later, and the mortgage broker who had arranged the loan in the first place had told them that would refinance after a few months in order to get lower monthly payments.

Firstly, they did not have great credit, plus they had no down-payment, hence the aforementioned interest rate. Also, given those circumstances, they were gambling that home prices in the Valley of the Sun would go up, of course they didn’t, which would enable them to refinance with a better loan-to-value ratio, they couldn’t. The fact is, they could not really afford the payments in the first place, and were using their meager savings to supplement them until re-financing. It was a house of cards, and it all came tumbling down. Yes, it is sad, but also quite predictable. If you are paying 9% in a 6% world something is not right. If you cannot afford the initial payments don’t take the loan. Do not take an adjustable rate loan with a low teaser start rate if you know you will not be able to afford the payments when the honeymoon period is over. Do not gamble that your home will increase in value in the next 6-12 months. You don’t know! Nobody knows. Some, but not all, lenders are quite willing, and ethically-challenged enough, to tell you anything you want to hear, in order to get you to sign on the dotted line. This is not an Arizona specific problem, it could happen anywhere.

The second case involved a gentleman in California who re-financed his home in order to finance his home-based used car business. The lender failed to supply, as required by California law, the loan documents translated into the language used predominantly in the negotiation. The borrower claimed he was duped, however he did admit an English speaking friend had read and translated the terms of the loan to him. Now he could not afford the payments and was looking to lay off the blame. In this case, I know for a fact that in order to be a car dealer in California, you must (amongst other requirements) have a storage facility for at least four cars, not at your residence. It must be completely separate. My point is, in this case, the borrower was quite willing, and ably abetted by the lender, to circumvent the rules while it suited his agenda. When he could not make the payments, he cried foul.

In both these cases, the borrowers played a little loose with the rules, or ignored early warning signs in pursuit of their goals. The will both certainly pay a price in the future because of bad credit, late payments and maybe even foreclosures.

Studies have shown that many times ethnic minorities end up paying more for their home loans than other folks. What the P.C. police do not tell you is that in most of those cases the victims were taken advantage of by people of the same ethnicity, that is to say unscrupulous people taking advantage of their own. In the end we are responsible for our actions, but remember everything must be in writing. If the broker “said”, then have him put it in writing. If he won’t, well you know the rest.

Property Pricing In a Falling Market

2007-03-01T13:45:00.000-07:00

This past weekend, a colleague asked me to join him in a visit to a homeowner who wanted a frank and brutal assessment of his home’s value. As usual, we prepared a bunch of comps, i.e. recently sold homes plus a list of currently available homes. This last list is less helpful, obviously, as the homes have not yet sold, but is somewhat helpful as they will at least indicate an upper price level by virtue of their listing price.

We started out by touring the home and making notes on various maintenance matters that should be rectified to better show the home. Pointers were also given on room staging to make better use of the available space. All in all, a fine home, with a pool, from a respected builder with all the right upgrades in both kitchen and bathrooms.

Them come the moment of truth “How much is it worth?” said Mr. Straight Shooter. “Seven Ninety Nine” I replied. Well, we gave him some smelling salts and when he came around it seemed he thought he was somewhere in the low $900K area.

How come we were so far apart? Well, the main point of his argument was a similar home that seemed to have sold for $915,000 about a year earlier. The problems with that are many. Firstly, a sale a year ago is useless to an appraiser. They prefer to go back 3 months as a rule, or six months if absolutely necessary. Secondly, this particular home sold in a week, for cash, to an out of state buyer. When folks pay cash, some of the checks and balances of a normal transaction are lost i.e. an appraisal and a bank watching over you. Who knows, the price may have included all the furniture and the $100,000 R.V. in the driveway. We do not know. We do know that an appraiser would have many questions regarding the sale of a home that seems to have sold for an excessive amount before an underwriter would allow him to use that comp.

I then pointed out that three similar homes had sold in the mid to high $700K range quite recently. He replied that they just “dumped” them to screw up the neighborhood! Believe you me, this is not the first time I have heard this “conspiracy” theory.

I then pointed out that there were three similar homes listed, but still unsold, in the low $800K range, that have been on the market for between 210 and 270 days. Anyone can list a home at whatever price they like, but if you want to sell a home you have to price it right. It has to be priced so well that a potential buyer in the price range has to see it. In this current market there are a lot less buyers, so they can pick and choose freely.

Finally, he told me that if he priced it too low (i.e. to actually sell) the neighbors would be mad at him. Well, you know what they say. “Misery loves company.”

Is it Equity, or is it Memorex?

2007-01-24T14:04:00.000-07:00

What is equity? Well I consulted my trusty dictionary and one of its meanings is “the value of a property in excess of claims against it”. Fair enough, but what prompted me to look it up? Well, I was having a discussion with a fellow real estate professional who was rather proud of himself. He had a client who had bought an “investment” property this past summer, who was having a little trouble re-selling it for a profit after upgrading (and spending too much on) the kitchen. So the agent advised, and the client complied, re-financing to take out the “equity”. Do you see where I am going here? After marketing the home for sale for several months no one had bought the property at its asking price which suggests it may have been overpriced. Let’s be honest, in the overheated and now somewhat cooler, real estate market we are experiencing here in the greater Phoenix metropolitan area, the chances of buying a home in summer of 2006 and flipping it for a profit within 6 months are very slim. So what was wrong with re-financing? Well the problem is that the buyer is releasing equity that does not really exist. Sure, you can find a lender, and a helpful appraiser, to value the home a little on the high side so that they can grant you a loan. In some cases, we will get to those later, such helpfulness borders on the criminal. However, lenders will usually bend over backwards to loan you money, it is their business after all, but they will be the first to cry “foul” when you can no longer make the payments, or the property goes into foreclosure because its value has dipped below the size of the loan. And that is the problem. If there was real equity in the property, it would have sold. Now that you have taken every last penny out of the home, you cannot endure any drop in property values that the Arizona real estate market may suffer in general.

Now, what of the actual criminal activity I mentioned earlier, I hear you cry. As houses stagnate on the market, sellers and agents start to get creative, and that is where the trouble begins. Usually, it ends in a criminal investigation into fraud, and a trip to the “grey-bar hotel”. The current crop of schemes and scams operate broadly as follows. It generally includes a buyer making an offer way above the asking price with the excess to be kicked back either for “repairs” or, in cash, under the table. It will involve, with varying degrees of complicity, a corrupt agent, lender, appraiser and likely title and escrow officer. A duped or criminal buyer, who very often does not even view the property and an unwitting, usually, seller who is unaware of the fraud being perpetrated, but may still be criminally liable.

The key factor in all these, and similar internet “Nigerian type” schemes is greed. Do not let greed blind you to the reality. These are difficult times in Arizona real estate. There are no quick fixes, no get out of jail free cards and no charitable angels paying big prices to get you out of a jam.

Remember, if it walks like a duck….

Phoenix Real Estate Predictions for 2007

2007-01-04T13:27:00.000-07:00

Good Grief! Another New Year sneaked up on me and took me by surprise. Welcome, 2007, I wonder what you have in store for us all. Hopefully, happiness, good health and prosperity to keep you in the manner to which you have become accustomed. I no longer ask for warm, sunny days as that is a given here in the Valley of the Sun.

So what will the new year bring to the greater Phoenix area real estate market? Of course, no one truly knows the answer to that, but we can make some informed guesses.

Firstly, as a nation, the economy is robust; interest rates remain low as does the unemployment rate, which is all good. The balance of power in Washington D.C. is changing and commentary in that direction is beyond the scope of this blog, but I suspect that for most politicos it will be business as usual.

What effect will all this have on the Phoenix, Scottsdale Metropolitan area? I still see 2007 as a slow year in terms of sales and a relatively flat one in terms of prices. We still need to recover from the massive (over?) building of 2005 and 2006. We have yet to pass on to real end users all those homes that were purchased by “investors” in that period. There are some communities where “investors” own between 50% to 75% of available homes. Believe me, they do not like leaving them vacant, nor do they like renting them out below cost. How long they will actually hold them is a game of steely nerves that we will monitor carefully in 2007. All the while, developers continue to churn out more properties that are able to be priced very competitively with current inventory. Remember, and I have said this before, those same builders that were selling homes, identical to yours, for $150,000 for a profit, three years ago, could do it again today if market forces demand it. Translation: if you can sell that home today for $225,000, then do so; do not squander that equity by being stubborn.

All is not gloom, however. The laws of supply and demand are very much in effect. Buyers have many options both in new and resale homes. Sellers do not have to sell their homes, but if they need to they must price accordingly. Too often, a stubborn seller is merely an expensive “re-owner”. You have that right, but don’t whine about it.

Remember also, now is a great time to trade up. Sure your house may be worth a little less, but the big house up the block is also worth a lot less. The actual cash differentials have closed making it easier to move up. Just be sure to sell your current home first.

Best wishes to all for the New Year.

Sales Incentives, Do They Work?

2006-11-28T08:41:00.000-07:00

Sales incentives are just like us, they come in all shapes and sizes; some work really well and some are virtually worthless. I have said this many times, and regular readers will be aware of this, that price fixes everything. It is my mantra.

Let’s discuss the shapes and sizes. Here in Phoenix, Arizona it is quite common, and increasingly so, in this slow market, for new home builders to offer inducements to both buyers and buyers agents. Incentives to buyers range from upgrades to the home itself, i.e. Granite counter tops or premium appliances, low interest rate or no money down loans, free swimming pools and sometimes free automobiles. Incentives to buyers agents are almost always in the form of higher commissions (Realtors only respond to cash or food) to try to persuade agents to bring their clients round.

The advantage to the seller/builder is obvious. They desire to keep prices up, so that all future sales can remain higher. Offering incentives allows them to not lower prices, but still attract buyers. Which is good for them.

But is it good for the Buyer? Well, please remember that, whatever the incentive, the buyer is the one who is paying for it. I would agree that upgrades to the home itself are a benefit. However, when your agent receives an 8%, as I have seen offered in the greater Phoenix area, you, Mr. and Mrs. Buyer, are paying that commission and paying interest on it, most likely, for the next 30 years with your mortgage. I always have believed that paying much higher commission to an agent as an “inducement” indicated that the buyer is paying too much. I have always questioned the ethics of such an arrangement as an agent is supposed to represent the best interests of a client. However, the choice of either a 3% or 8% commission is bound to sway the thinking process; but to whose benefit?

As to receiving a “free” car. Well, I am not an accountant, nor do I play one on T.V., but I believe there would be tax consequences for a buyer. Also, for a private seller offering such an arrangement, it would also have tax consequences as it affects your tax basis in the home. Please consult your C.P.A.

Having said all that, it is extremely difficult to persuade a builder to drop all this fancy packaging and just lower the price for reasons stated above. Remember, in many communities in the Phoenix area, builders are selling the exact same properties that they could build, market and turn a profit on for the low $100’s three years ago, for the mid $200’s today. Sure, a little of that goes to higher material costs and inflation, but please! They could sell you a property for much less but they have an obvious vested interest to maintain price levels.

Eventually, prices will adjust to correct market levels driven, as much as anything, by falling prices on re-sale homes.

So, before you drive that “free” car, drive a hard bargain first. Happy Haggling!

Tips on Selling in a "Down Market", Pitfalls to Avoid

2006-11-13T16:17:00.000-07:00

As I have been saying for some time now, prices are not going up here in Phoenix; nor are they flat; they are, in fact, declining. People are beginning to realize this and the latest figures in the Arizona press back up this assertion. Those folks blaming these reports for depressing home prices need to get their heads out of the sand and face reality.

Having said all that, I am definitely getting the feeling that buyers are beginning to come out of their shells here in the Valley of the Sun. With prices down considerably from the peak, but interest rates still at almost historical lows, buyers, quite rightly, feel that this is a good time to buy. However, they are in a strong position. Unlike recent years, they have plenty of inventory to view, can take their time making their selection, and can expect reasonable sellers to work with them on price and terms. Notice I said reasonable. Too many homes on the market today are so massively over-priced, and the owners are so ensconced in cloud cuckoo land, that they are not really for sale. Oftentimes, one of these owners of overpriced homes will tell you “Hey it gets shown a couple of times a week….” What they do not realize is that shrewd agents are showing the overpriced “turkey” in order to sell the fairly priced home down the same Arizona street.

What is a seller to do? Well, if you have to sell your home, you have to price it accordingly. “Price fixes everything” has always been my mantra and always will be. If you want to sell your Phoenix area home the list price has to be in what I call the “Top-Ten” of lowest prices. In order to sell a home, it has to be shown. It will not get shown, at all, if the price is unreasonable. If you want to sell your home make sure, at the minimum, that you have as many clear photos as possible. You should have a virtual tour. If your agent has neither of these things, fire him or her. Buyers, mostly on the internet, skip over properties without visual representation. You cannot afford to be skipped over.

Finally, in this type of market, watch out for the bottom-feeders. There are people, and agents, who churn out junk-offers by the score at an arbitrary 70-75% of the asking price in the hope of finding desperate sellers. Often, even if you agreed to their low price, they just want to tie up your property until they can find a buyer to sell it to, at a profit, of course.

Also, beware the offers that are 30-35% over asking price in which you kick back excess funds, over appraised value, to the buyer. These almost always involve bank fraud, corrupt appraisers and an excellent chance of a trip to the hoosegow.

Don’t let greed or desperation blind you.

Anthem Arizona, A Terrific Place To Call Home

2006-10-21T10:12:00.000-07:00

Many times over the years, a new subdivision is created with little or no real thought about the infrastructure required to support the newly-created community. Well, this is categorically not the case with Anthem. Everything you need is there, or on its way, and then some.
Created by Dell-Webb, this Arizona town on the outskirts of Phoenix offers homes to suit all budgets; from the mid to low $200K all the way up to “oh my goodness gracious.” There is something for everyone. From a young family just starting out to a retired couple looking for space to entertain the grand-kids, from time to time, Anthem has you covered. All of this, plus an easy commute via I-17 to Phoenix if that is where work takes you.
Also, for the family, there is the lure of brand new schools, with excellent sport facilities, libraries and, in some cases, theatre complexes to help keep your children motivated and actively involved.
Plus, the recreation facilities are world class. The park-like, open space communal area with duck-ponds and waterfalls are an absolute joy to behold. Early one evening, recently, I saw a father with his young son and daughter doing a little fishing. What better way to unwind after a long day of work, than to kick back with your children and exchange stories of your day, whilst teaching a worm to swim at the end of a fishing pole? Remember, though, “catch and release” only! Arizona living at its finest.
There is also a model railroad that runs through the park offering rides to one and all.
For the more energetic amongst us, the diversions are endless, offering basketball and tennis courts plus a gymnasium complex with 2 swimming pools that are the envy of the surrounding Arizona communities.
The huge gym is stocked with up-to-the-minute equipment, including stationary bikes, treadmills, free weights; you name it, it’s got it! Aerobic classes are offered and there is also a rock-climbing wall for those days when you don’t have enough time to conquer Everest.
Then there are the pools. An enormous regular pool for swimming and an even larger one with water slides and water features worthy of a water park anywhere in the world. Watch out for the enormous bucket in the air that fills up and then overturns and splashes down on everyone. Great fun for all kids aged from 8 to 80. Lifeguards are in attendance but please, be careful out there.
Anthem, like much of the Valley of the Sun, has golf courses that rival the finest that Scottsdale and Phoenix have to offer.
Everything is right here in Anthem including Wal-Mart, Home Depot and many other nationally renowned “Big Box” stores. There is also an outlet mall for those canny shoppers among us who like saving money. Plenty of good eating to be found from upscale local restaurants to well known fast-food stores.
In all my years of selling real estate, I have rarely seen such a well planned and executed community. Anthem AZ is truly a great place to start or raise a family. What are you waiting for?

It's An Ill Wind...

2006-09-29T14:45:00.000-07:00

Headlines are a funny thing. By their very nature, they are, of course, designed to catch our eye. They are supposed to entice the reader to read further. Unfortunately, in this day and age, few do. I mention this because a client recently pointed out a headline, in a local Phoenix newspaper, which said, or words to this effect "survey shows Phoenix house prices to rise." Boy, was he excited; and no, he did not read the article. The poll was conducted, and I will not name names, by a cable company. Yes, a T.V. cable company. Respondents were invited to answer a series of questions by pressing a button on the remote. They overwhelmingly thought that house prices would rise next year. How unscientific can you get? A poll is only valid when questions are asked of a broad-based demographic, in this case hopefully of people buying or selling a home in the next year, or at least having the wherewithal to do so. Likely respondents in this "poll" could range from bored teens, the baby-sitter, folks trying to change the channel or even the family dog's errant paw. But people point to the headline because they want to believe. The facts, unfortunately, might lead you to a different conclusion.
I decided to do some research to see where this might all lead. I picked an area, the type of subdivision of which there are many in the Valley of the Sun, again I won't name it, that had 37 homes for sale, all in close proximity, in the $200-$300K range. Essentially, all were 3 bedroom, 2 bath, and essentially the homes were very similar, having been built by the same contractor. Of those 37, fully 29 were either vacant or had a tenant. This means that 78% of them are owned by an "investor". What does logic tell you will happen to prices if some of these guys "start to panic", (if you are a seller), or "Get real" (if you are a buyer)? Couple this to the fact that the Builder is still frantically constructing more competition on a daily basis: Plus he is offering no-money down, low interest rate financing, granite counter-tops and sundry other upgrades. Still think prices are going up?
Disaster, huh? Not at all. The vast majority of folks bought these homes 2 or 3 years ago in the $150-175K range. Admittedly, some folks who bought last year may have bought at the top, but historically all should be well over a 5 year, or more, period. Just not in 6 months. But the folks who still have equity in their property get real stubborn. They hope against hope that prices will rise at the same rate they did 2 years ago. Extremely unlikely. It never ceases to amaze me when, otherwise, sane folks; doctors, lawyers and other professionals, get real blinkered in the face of evidence to the contrary. Many say to me, "I'll just rent it for 6 months, and it'll be fine...won't it?" It might but I somehow doubt it.
Let's look at the positive sides. For those folks who thought they had missed out forever, on owning a home in Phoenix, here is another chance to get a foot on the ladder with sellers, both private and corporate, bending over backwards to help you. Have at it!
This is also a great time to trade up. Remember, a year ago you were so happy your house was worth $500K? But sad also, because your dream home with pool and horse facilities on an acre was $1,000,000? Well guess what? This year your house is only worth $350K, but your dream home is now only $700K. So last year the move would have cost you $500K ($1,000,000 - $500,000= $500,000); This year it will only cost you $350K to effect that move. What are you waiting for?
Seafaring folk have an old saying "It's an ill wind that blows no good..."

Desert Hills, Arizona; Rustic Ranches to Sophisticated Custom Homes

2006-06-14T16:02:00.000-07:00

Desert Hills is a newer community the boundaries of which are, approximately, Anthem to the north, Carefree Highway to the south, 24th St. to the east, and I-17 to the west.

It has a very interesting mix of smaller cottages at the lower end of the scale, up to million dollar properties at the higher end.

Definitely a favorite amongst equestrians as demonstrated by the many ranches in the area, plus the varied homes that enjoy horse privileges and have corrals and tack barns in their backyard.

One of the big advantages of Desert Hills is the proximity, and ease of access, to downtown Phoenix afforded by I-17. It is eminently possible to work downtown during the week, but at weekends enjoy all the fun of horseback riding, easily achieved with a 30-40 minute commute.

Not too long ago, some would have deemed Desert Hills as a little too remote, although that may have been a bonus to others, but today as more and more homes are being built, the infrastructure is starting to arrive. Also, with the building of the eclectic and wonderfully charming development called Tramonto, at the western most end of Desert Hills, there are now supermarkets and fast food restaurants to serve the new residents. As of this writing, Home Depot is about to open a new store further increasing amenities in the area.

So, whether you are a horse lover or not, Desert Hills is a wonderful community to raise a family; or to retire and relax and enjoy the wide open spaces, and magnificent mountain backdrop.

Come set a spell, I'll bet you'll want to stay!

Carefree living in Carefree, Arizona. Desert dwelling at its finest.

2006-06-05T14:27:00.000-07:00

On the north-eastern outer reaches of the Valley of the Sun lies Carefree, like neighboring Cave Creek, a hamlet nestled just to the north of Scottsdale. Principally known as a haven for retired folk, many of whom visit during the winter from colder climes and are known as "snowbirds", however, of late, many year-round residents are opting for the tranquility of Carefree, while commuting to their jobs in either Phoenix or Scottsdale. Consequently Carefree, much like Cave Creek and the surrounding environs has seen considerable growth in recent years.

Spanish Village is a shopping center in the heart of Carefree with many eclectic stores and restaurants. It is also host to antique car shows, home shows, art shows and horticultural events during the course of a year, making it an extremely popular destination for both residents and tourists alike.

A little further south on Tom Darlington Road we have another shopping complex known as "El Pedregal". This is a more upscale development with many art galleries, gourmet shops, boutiques and jewellers. There are several excellent restaurants at the facility, which is a two storey affair arranged in a circular fashion. There is a stage at one end and, due to the "amphi-theater" style arrangement, it is an excellent venue for the many musical concerts, of all genres, that El Pedregal hosts each year. Grab a glass of wine, sit back, relax and enjoy the show.

Carefree also has a general aviation facility with a 4100 ft. runway, which is home to many aviation enthusiasts covering vintage aircraft to modern experimental lightweight craft. This year, at a combined antique car and plane show. We were privileged to have a bit "flying fortress" of World War II vintage fly over in all it's majesty. Very awe inspiring; an what a crowd it drew that day. We also were fortunate to have two F16 fighter jets do a fly-by from Luke Air Force Base. All in all a good day out for all the family.

That sums Carefree up really. Many people come to visit from all around, and some just cannot bear to leave. It has all the benefits of a small town with all the attractions and facilities of two major cities, Scottsdale and Phoenix, just a scant 30 minute drive away.

It cannot be beaten.

Cave Creek, Arizona; A Great Place to Call Home

2006-05-08T14:50:00.000-07:00

Cave Creek is one of those towns you must visit the next time you are in Arizona. Situated in Maricopa County, about half an hour northeast of downtown Phoenix, in the Valley of the Sun.

First settled in the 1870s as a mining camp the town incorporated in 1986; consequently it will celebrate its 20th Anniversary this year. In fact, a visit to the Cave Creek Museum is very informative and is well worth it.

Nestled on the western side of Black Mountain, the town recently took steps that will lead to the opening of hiking trails on that mountain, which hopefully will lead to its preservation as a nature reserve. In that light, in recent years Cave Creekers voted to buy, via a self-imposed tax, the several thousand acres that now form the Spur Cross Ranch Preservation area. This is a very popular local attraction that provides many hiking trails, of varying difficulty, as well as many guided tours by park rangers through normally restricted areas several times a year.

About 10 miles east is the Tonto National Forest, which just recently was blanketed in a foot of snow; an occurrence that happens roughly once a decade that brought many visitors from all around, the youngest of which were glimpsing the white stuff, in person, for the first time.

Cave Creek is well known as an equestrian town and seeing a horse on the highway is almost a daily occurrence. Many homes, usually on more than 2 acres, are zoned with horse privileges in mind. (Check with the very helpful folks at Cave Creek Town Hall to make sure). The two main equestrian events are Fiesta Days in the spring and Wild West Days in the fall, which attract many visitors to the town.

The main street offers western flavored stores, including many saloon-style Bar/Restaurants. And yes, you will see a horse tied up outside, just like the movies. We also have a world class five star restaurant, Binkley's, which is a treat this writer reserves for special occasions.

Buying a single family home in Cave Creek "proper", generally, but not exclusively, north of Carefree Highway starts in the low $400s, and goes all the way up to the multi-millions. At the higher end, many homes have between 4 and 10 car garages, and it is not at all unusual, on the weekend, to see motorcycles and antique cars touring through the countryside.

If you were ever thinking of coming to Cave Creek, there has never been a better time. Prices have leveled, if not dipped slightly, since the madness of last year, giving buyers an opportunity to negotiate a fair price for their next home.

I live in Cave Creek myself, and heartily recommend it.

Before You Buy That Home, Do Your Homework

2006-04-15T15:40:00.000-07:00

When it comes to buying a house, I often think that people do more due diligence and research when buying a computer or a stereo, than they ever do when buying a home. They know all about woofers and tweeters and gigabytes and hard drives, but get a blank look when you mention GFCIs and R-factors in insulation. Why is that?

Firstly, I think with certain products, say a new car, we've read consumer reports; we know the mileage; we know how well it holds it's value; so, all we really have to do is pick the colors. All the research is already done for us; an Accord is an Accord is an Accord, they are all the same.

Houses, generally speaking are not and I think we approach the purchase of a home from a much more emotional standpoint. That is entirely understandable. Sure, we check to make sure we are in the required school district, but after that it all gets a bit hazy. We walk onto the property, we love the rose bushes in the front yard, the flooring in the dining room is superb, the window coverings are to die for and the backyard barbeque area is just perfect.

In reality, and realty, these things are just superficial accoutrements. They are important, at some level, in the sense that you have to be attracted to the home in the first place, but before you make an offer you really need to cast a more critical eye over the property. Walk to the very back of the property. You might get a better view of the roof and chimney. Does it look ship shape up there, or will it need work. Are the floors even, or do they slope? Do the stairs creak and groan? How are the walls? Are they straight and even or do they look like they've been patched up lately, maybe from water damage. Sniff around the bathroom and under the sink. Any mildew-like odors emanating from there? Walk the perimeter of the structure looking for any foundation cracks or settling. Walk to the street for a different angle of the roof. Check the driveways and walkways for cracking. Their replacement can add up to big bucks.

I know what you're thinking; I'm going to get a professional inspection done anyway. Right you are and, of course, you always should. But you might discover something that puts you off the property before you incur that expense. Plus, having a good look around may influence the price you wish to offer, if you find items that will require attention.

Two final points. If they are around, talk to the neighbors as they can be invaluable sources of information, both good and bad. Finally, come check the place out after dark, you never know what you may discover.

Happy Hunting.

Preparing Your Home For Sale-A Guide to Listing Your Home

2006-03-30T14:11:00.000-07:00

When You drive up to your house, maybe on the way home from work, or the gym, do you always approach from the same direction? Well, stop it. My point is, and bear with me because I do have one, how does your home present itself from all directions to a potential buyer? By driving up from the other direction, you may see your trash cans or some other visually displeasing feature that might be easily fixed, and improve the chances of your homes first impression being a good one for everybody. It's a variation of an old Realtor trick. When approaching a home, we try to take the most scenic route. Is it dishonest? Not at all. It is our job to show the home in the best possible light.

Do you ever walk up to your front door? I rarely do. I drive up, park my car and walk round to the back door, where I am greeted by my dog, and enter the house through the kitchen door. Just my habit. However, the point is that you need to view the front of your home very critically as this is what potential home buyers will see first. Is it neat and tidy? Is it swept? Is the front door clean and shiny or could it use a lick of paint? How about some colorful plants; maybe in pots? You get the idea. The point is, as they say, you only get ONE chance to make a first impression, so make it count.

Recently, I have been showing and selling a lot of homes in the Gilbert, Arizona area that are vacant, normally owned by "investors" deserting us for calmer seas. The problem is that some of them look a bit worn out. You can see the vague outline on the wall where pictures used to hang. Or the rubbing mark left on the wall where the sofa used to be. Often, you leave the home feeling a little "grubby". One of the best investments you can make when "fluffing up" your home is paint and carpet. For around $20 per room, you can paint and transform a room from drab to dynamite in about half a day. Add new carpet, with temporary plastic trails to protect it, and a buyer feels like they are getting something special and new. We all like that feeling. The point here is that as the market has returned to normal, especially here in Phoenix, buyers have a lot more choices, so your home needs to stand out. In some Arizona communities there are upwards of 500 homes available within a price range that are all competing for buyers. In some of those communities they are still building comparably priced new homes that are also in competition. The market is really quite healthy at the moment, although prices are softening a little. Homes are back to selling in around 60 days, as opposed to the 30 day average of last year. Interest rates remain historically low. Many buyers, who last year thought their chances of home ownership had slipped out of their reach, are back; ready and able to buy as the market temporarily slows and gives them a second bite of the apple.

Remember, it is very competitive out there. Make your home stand out, price it well, and it will sell.

Now go sweep that porch.

Listing Your Home is Easy, Selling is the Hard Part

2006-03-10T09:53:00.000-07:00

Last year, to be a successful real estate agent all you had to do was get any listing. Underpriced? Never mind, multiple offers will fix that. Overpriced? Never mind, we'll get there in a week or two. Anyone who could fog a mirror could be a real estate pro.
This year, it's going to be a slightly bumpier ride, so make sure the Realtor you list your home with has enough experience to handle the current market conditions. Last January, the Greater Phoenix area had just above 3000 listings; this January the number is over 33,000, which is a much more normal level and will restore balance to the market. The key to success in the real estate market is often said to be listings. That is partly true. The real key is "saleable" listings which means the price has to be right. Yesterday, a lender remarked to me that many appraisals, of late, have been coming in over price. That is to be expected because the superheated market of last fall, which has cooled considerably, is still recent enough to be used as comparables. And therein lies the rub. An inexperienced agent will use those comps to justify a high listing price which will placate an owner temporarily, but won't get the house sold. I have had supposedly experienced agents attempt to justify their high, in my opinion, listing prices by stating "similar homes in the area are for sale at the same price". Right, and they're not selling either.
A good Realtor should persuade an owner of the benefits of not overpricing, in order to list and sell a property promptly for the best price. The only thing that fixes everything wrong with a home is price.
In order to survive a species has to adapt; the same can be said of Realtors and, of course, sellers.

Thinking About Retiring to Arizona?

2006-03-04T14:03:00.000-07:00

When moving to an unfamiliar community, like Cave Creek or Carefree, Arizona, it is important that you engage a Cave Creek Realtor who will possess intimate knowledge of the amenities and nuances of the neighborhood. Cave Creek, Arizona is essentially an old cowboy town that, whilst retaining true to its roots, also caters to a growing core of residents who enjoy the equestrian, hiking and golfing opportunities that Cave Creek has to offer. Cave Creek provides homes that range from simple seasonal townhomes to luxurious spacious compounds. Cave Creek real estate runs the gamut from desert landscaping, mountain top aeries, hillside estates, golf club properties and spectacular wilderness getaways bordering state land.
Carefree is another upscale community bordering Cave Creek, AZ, which also sports a thriving community with upscale shopping, dining, and an artist community that is the envy of the state, all minutes from Scottsdale.
Carefree and Cave Creek real estate is a magnet to automobile enthusiasts from around the country. Arizona offers fantastic scenic drives on uncrowded roads that attract both motoring and motorcycling aficionados alike. Recreational vehicles abound and many Cave Creek and Carefree luxury homes include facilities to accommodate them. Oversized garages are often included in these Sonoran desert hideaways to house the family toys and heirlooms.
Many people are astonished to learn that the great state of Arizona is also home to the highest number of boats per capita in the USA. Yes, even in the middle of the Arizona desert, waterfront real estate is a possibility for the marine enthusiast.
Of course, your Cave Creek real estate professional would be privy to all this information and is the reason that when selecting an agent for that long awaited move to Arizona, you should pick someone who lives in the community you are considering. Go to our website at www.garizonaproperties.com for complete information on Cave Creek, AZ and the surrounding communities.
Finally, your Cave Creek home will be an excellent central base from which to discover the rest of the state of Arizona, be it the theater district of downtown Phoenix all the way up to the Grand Canyon.
Come home to Cave Creek or Carefree Arizona, you know it makes sense.

The Times They Are A-Changing....

2006-02-09T14:24:00.000-07:00

What started out as a trickle is now becoming a very steady stream of price reductions in the Phoenix metropolitan area. Admittedly, some of these homes were overpriced to begin with, but the cold harsh reality is that prices will come down as supply now exceeds demand.
So who, or what, is driving the steady fall of prices. The same folks who helped fuel the dramatic increase of the last year, or so; "investors". In many communities in the greater Phoenix area a very large percentage of homes are owned by "investors". In many cases they have seen a 50% increase in the homes value in the last 18 months and now they want to cash out. As quickly as the prices ran up, that's how quickly they could go down again. Remember, as eagerly as these "investors" trampled over each other to overbid prices on the way up, that's exactly what they will do to each other on the way down. It's going to be a dog eat dog world for a while on the way back to normalcy.
Yesterday, I read of a couple who, having already purchased a larger home, were not getting anywhere near the interest they thought they would on their currently listed home. They decided to wait it out. I would have to say that is a very brave decision. Plus the fact that area rents remain relatively low, it is also an expensive decision as these homes will not carry themselves financially.
What does it all mean? Well, genuine owner-occupiers will be giving back some of the equity they have earned, although I would be very surprised if we see wholesale price plummeting. More likely, if you picked up 40-50%, you might give back 10-15%, but in the long haul (say 5-10 years) you will be fine. For buyers it's good news. They will benefit from lower, and steady prices, with more choices and a bit more time to make their decisions. Now, they will have the luxury of being able so sleep on a decision without pressure.
What of the "investors" I hear you cry? Let's hope they don't get burnt. Too badly.

Wanna Junk Junk Mail?

2006-01-23T11:44:00.000-07:00

I'm willing to bet that junk mail is like cockroaches, difficult to destroy entirely. But here are a few tips I came across recently, that might save a few trees, along with your sanity.
Firstly, you can have your name removed from the mailing lists used to flood you with unsolicited credit card and insurance offers. Just by calling (888)567-8688, an automated service, will remove you from the lists of the major credit bureaus. Or you can do it online at www.optoutprescreen.com .
Next, are you one of those that always fills out the warranty card on your new purchase? Well, you don't have to and you are still covered. Mostly, they use the info you provide to create a mailing list. To be removed, write to this address:
NDL List Order Services
1621 18th St., STE 300
Denver, CO 80202
Then, and this may be the most effective of all, the Direct Marketing Assoc. believes that dropping them a line will stop up to 75% of all mailings to your house.
Drop them a postcard with your name, address and signature to:
Mail Preference Service
Direct Marketing Assoc.
P.O. Box 643
Carmel, NY 10512
Finally, I hear you cry, how can I stop realtors from calling me? Just register on line at the National Do Not Call registry.
You can't say I'm not a fair man.....

New Year, New Attitude and New Batteries

2006-01-16T15:24:00.000-07:00

Welcome to 2006. This is the time of year that we traditionally make resolutions to be slimmer, better and healthier. How about safer?
This is a great time of year to go around the house and test those smoke-detectors. Press the button, listen for the squeak, comfort the dog and move on. Remember, a waning detector will start to make plaintive squeaks to let you know it's on the way out. Eventually it will die! Many people, and I'm one of them, say "hang the expense" and replace the batteries annually. Small price to pay for peace of mind. If you are installing new ones remember to read the instructions carefully regarding positioning as this can have a vital effect on performance. Also, do not paint them when redecorating as this can render them useless, with potentially disastrous results. This year I installed an additional one in my office area at the far end of the house. Because, like most of us, my computer, fax machine and printer are always plugged in , and early warning of any problem would be greatly appreciated.
Another potential danger area is the exhaust on your tumble dryer. Over the course of a year, lint can build up in the flexible tube, which not only represents a fire hazard, but also reduces the efficiency of your dryer which will cost you more money to run. Unclip both ends, clean it out and replace.
Who knows, after going up and down the step-ladder checking detectors, and bending down to service the dryer, you might even lose a couple of pounds for your trouble.
Good luck and stay safe in 2006.

Selecting An Agent

2006-01-03T13:29:00.000-07:00

Whether you are a seller or a buyer, selecting an agent to work with can be a daunting task. Unfortunately, for many folks, real estate practitioners rank slightly above snake-oil salesmen in the popularity scale of life. Every profession has its rogues, and real estate is no exception, but the reality is that the vast majority are hard-working, honest people just like you. Make sure your agent is a member of the National Association of Realtors, as this means they have a written "Code of Ethics" that must be strictly adhered to, and gives you some recourse if there is a problem.
Everybody always says interview three agents before you decide and I agree, but even then it can be hard to make a decision. Always go with you gut. If you feel a little uncomfortable, move on. You will spend a lot of time with your agent so it is essential that you feel at ease.
One of the best ways of finding a good agent, as is the case with many service providers, is by referral: ask your friends, colleagues and neighbors who they used. Nothing is more pleasing to a real estate professional than a referral from a satisfied client.
Finally, many people say stay away from a rookie. I disagree, with the following caveat. Under the right supervision, from a reputable company, often with a mentor, a newbie can be a great agent. They often have great enthusiasm, can offer undivided attention and will likely repay your faith in them. Remember, this is a rookie who admits to being a rookie, not someone who tries to pull the wool over your eyes. Who knows, you might meet an agent for life.

It's Crystal Ball Time

2005-12-27T11:59:00.000-07:00

After a tumultuous 2005, what can we look forward to in 2006? Of course, nobody truly knows what will happen but let's play anyway.
I think we can be fairly sure that multiple, over priced offers are probably a thing of the past. Last year was very definitely a sellers market and I think 2006 will return a balanced market; one that is fair to both sellers and buyers. This means that buyers will have the luxury of being able to look at several homes, sleep on it, and being able to make a decision without feeling pressured.
Here, in Arizona, pundits are predicting continued appreciation but in the single-digit range. Largely, I agree with this, but I also think there are a few areas, and no I won't name them, that will see small declines. These will be areas with a large percentage of investor ownership. Many have made a 50% return in one year, and likely will be happy to give back a little of that in order to liquidate that investment. Some homeowners in those areas have moaned that investors are "dumping" their properties and are hurting values. This isn't really true. The reality in some cases is that if you live in a community where there are, sometimes, hundreds of similar properties for sale, the investor may sell into the "curve" for a speedy sale. These are in no way "fire sales" and reflect the prices achievable, today in a balanced market.
So, for sellers, you may have to give a little back but you already gained so much, so what? For buyers, a return to normalcy which, for many, means the train hasn't left the station after all.
So, it's good news for everyone.
Happy New Year!

Fix it, or not to fix it; that is the question

2005-12-16T14:19:00.000-07:00

Should you fix your home up before you sell it? Good question. Bearing in mind that a potential buyer will most likely perform a professional inspection of your home, you might want to walk around your house and see what little problems are lurking that could easily be fixed. That dripping faucet and the running toilet are types of minor problems that are so easy to fix but if left untouched, give the buyer an impression of "deferred maintenance" which will not endear them to your home. Also, you replaced the roof last year but the water stained ceiling has not been re-painted. Why not? Those popcorn ceilings you've always hated; hire a professional. We did and they spent 70% of their time covering the interior of our home in plastic sheeting to control dust and mess. By the time they were done our ceilings were so smoooooth and there was zero mess in our house. Plus, it wasn't expensive. Also, here's a quick tip for good coverage with ceiling paint. Buy the paint that goes on pink, but dries white. It is excellent and ensures an even coat.
I think it's a good idea to have your home inspected by a licensed termite company at the time of listing. The reason I advise this is that in the event of infestation being present, there is an excellent chance that the buyer will ask you to fix it. It may be a $500 problem, it may be a $5000 problem, either way it is better to know ahead of time as it affects your bottom line.
Remember, you don't have to fix anything, although it might be wise to, but the most important thing is that you must disclose any known problems, or you could suffer legal consequences.

Cost vs. Value

2005-12-13T15:42:00.000-07:00

The National Association of Realtors recently published its annual report on the cost of various home improvements versus the value they add to that home.
Below, we will show the top ten home improvements and the percentage of the cost of that improvement that is recouped upon sale.
1. Bathroom Remodel 102.2%
2. Minor Kitchen Remodel 98.5%
3. Siding Replacement 95.5%
4. Attic Bedroom 93.5%
5. Deck Addition 90.3%
6. Basement Remodel 90.1%
7. Window Replacement 89.6%
8. Roof Replacement 84.7%
9. Family Room Addition 83.0%
10. Home Office Remodel 72.8%

As you can see, many projects are quite beneficial when selling your home. More important, however, is the effect that not doing some of these improvements can have. For example, an old fashioned bathroom or kitchen can often cause a home to languish on the market.
Remember, when planning these projects get estimates, references and a contract in writing. Also, do not try to cut costs by not pulling permits. First, they provide an additional level of protection for you from shoddy work. Secondly, that unpermitted 500 sq. ft addition could devalue your home due to the cost of remedial work to bring it up to code, or the very real possibility of having to remove it entirely. Finally, if it isn't legally there, the best an appraiser could do would be to ignore its existence; at worse it could have a detrimental effect on appraised value.
Now get to work.

Be Careful What You Wish For

2005-12-11T09:50:00.000-07:00

When it comes time to interview a real estate agent listen carefully to what they have to say. Most will be seasoned professionals, or so we hope, with the experience to help market and sell you home. I recently went on a listing appointment, a listing which I did not get or want, where the homeowner knew everything, having bought a home once.
I decided to monitor this listing to see how it went. It didn't, and is still available at a much lower price but with that added stench of staleness attached.
The mistakes he made were numerous. First, he wanted to give the buyers agent 4% and the listing agent 2%. The buyers agent is not a decision maker and should not be rewarded with bonus commission. After all, the buyer is really paying that commission and might be urged to overpay by an unscrupulous agent. Most experienced agents smell a rat when offered above the norm commission rates or incentives. It screams "I am overpriced". Supply and demand determine prices, not commissions.
This seller got himself a weak agent who was dictated to by the seller. The seller got what he paid for. After starting at a way too high price, they played the price change game. This is a tactic, often employed by dopey agents, whereby a change in price prompts it to appear on an MLS update, putting it back front and center. This is fine for a legitimate price reduction, but these guys drop it buy $100 here, $500 there, sometimes raising it up, then back down again the next day.
To the experienced agent, these tactics telegraph the fact that the seller is an idiot, and that the listing agent is a spineless dope. Does that sound like an appealing duo to be in escrow with? I didn't think so.
So be careful what you wish for and remember; you pay peanuts you get monkeys.

Financing Your New Home

2005-12-07T18:29:00.000-07:00

Pretty much everyone knows that in order to obtain a loan for your home purchase at a competitive rate you need to have a good credit score. If your credit is less than stellar you may still obtain a loan but it could come at a higher interest rate and the need for a larger downpayment to make you less likely to walk away thus protecting the lender better.
For most people it makes sense to consult with a lender before you even begin to look for a house. Firstly, you need to know how much you are able to borrow, or in some cases how much you are willing to borrow. Secondly, in order for an offer on a home to be taken seriously a seller will want to know that you have been pre-approved and not just pre-qualified, which essentially means the lender has verified your information and you are ready to purchase, usually subject only to a clear title and a satisfactory appraisal.
Another reason to get started early is that you would be surprised how many times a person runs their credit report and finds something that isn't theirs, or that they forgot about. Even genuine mistakes can take weeks to resolve and you may miss out on the opportunity to buy your dream home.
Lenders reserve the right to, and often will, run your credit report prior to funding so hold off on buying that new Lexus, or all that new furniture until after you close escrow. Also, changing jobs before close of escrow could jeopardize the loan.
Now all you have to do is keep up those payments.

Architectural Nightmares

2005-12-03T14:32:00.000-07:00

During the course of a year in my capacity as a Realtor I get to view many houses at both ends of the price spectrum. Recently I got to see a home that had been subjected to some "improvements" by the owner. In doing so, the home, which was priced at just under a million had been ruined; and I do not use that term lightly.
As I surveyed the property, I remarked to my wife, as I often do in these situations, "Looks like someone got a D-I-Y book on Architecture this Christmas." I was also reminded of the current T.V. commercial where a doctor advises a patient where to make an incision over the telephone. You wouldn't operate on yourself, so equally, get some professional advice before altering your home.
Back to the house in question. The garage had been converted into two bedrooms. The first could only be reached by going through a laundry room. Ok, that's not too bad. The second could be accessed in two ways. By going through the aforementioned laundry room and bedroom, how nice, or by going through the master bedroom and through the master bedroom closet. Realtors like to call them "tandem bedrooms", I like to call them ridiculous.
To compound this the owner had built a new garage in front of the property and then installed a pool between the house and the garage. Doesn't sound too bad, except that all the way to the rear of the property was the outdoor kitchen with a BBQ area completely separated by the house. A family day of outdoor fun would be totally compromised by this crazy set up. The sad thing is that there was plenty of room out back for the pool.
A prospective buyer would wander round this home aimlessly and leave looking dazed and confused. This home owner spent a lot of money on these modifications buy seriously devalued his property as most of them would have to be undone; or the home sold at a seriously discounted price.
Please consult a professional.

Preparing Your House For Sale

2005-12-01T11:54:00.000-07:00

The key to selling your home is to make it attractive to prospective buyers. It is not rocket science and boils down to keeping it simple and uncluttered. It also need not be expensive.
Let's start at the front door, as we all know first appearances matter. How's the front door look? Could it use a lick of paint? Go ahead, it's a few dollars well spent. Take a good look at your welcome mat. Is it welcoming? Or is it threadbare and yucky? Get a new one, it will make the home look better, plus you can bring it with you to your new home if you wish. Or you can be a good guy and leave it for the new buyer. Also consider planting some flowers to brighten up the front of the house.
Inside, keep it simple. Put everything away. Do the dishes. Put them away. Pick up your clothes. Put them away. A gallon of paint costs around $20 and is one of the most cost effective ways of making your home more saleable. Sky blue, pink and purple may be your favorite colors, but they won't sell your house. Light neutral shades or whites will make each room appear larger.
When you start the process of selling your house it is often a good time to have a yard sale, before you list, to rid yourself of unwanted clutter. A furnished home always shows better than an empty one but remember less is more, don't make it feel cluttered. Also, minimize the number of personal photographs as they tend to be a distracting influence.
Finally, set the table, it will look more appealing. Light a fire is the season is appropriate, and bake some cookies so that alluring aroma will permeate the home. Good luck.

Owner Occupied!

2005-11-28T11:44:00.000-07:00

There have been several articles in the press recently on the subject of owner-occupancy. The focus here in Arizona is on the fact that owner occupants receive a small break on their property taxes, and many folks are receiving that benefit even though they do not live in the property. With the huge increase in prices over the last year, Arizona real estate has attracted many investors. Many have not been truthful.
However, while the state suffers the loss of revenue from reduced taxes, there is a much more serious aspect to this situation. Oh, and by the way, it's a felony.
When investors, usually with a "co-operative" lender, falsely claim that they will occupy the property, that is a felony and as such will be prosecuted by the FBI. That's because they are misleading the lender to get better terms on their loan i.e. lower interest rate and lower downpayment. Also, the risk of default is much greater when an investor buys a property.
Regrettably, there are many unscrupulous Realtors and lenders who will help you commit this crime, in order to line their own pockets. Remember, in a downturn, when banks are forced to take back defaulted properties, they will investigate. Indeed, there have been successful prosecutions even when the Lender incurred no loss at all.
Think about it!

Do you really want to sell your home?

2005-11-21T12:23:00.000-07:00

Interesting question. As mentioned in one of our previous blogs, inventory has more than doubled since June of this year. But how many are really for sale? Despite the recent slow down in home price appreciation some people are still pricing into the curve, as if prices were still off to the races. These are what I call "opportunistic sellers". That is to say if someone is crazy enough to meet their price then they will sell. Of course, there are plenty of dopey agents who will accept those listings, but they won't stay in business very long. "But they show my house all the time" bleats the seller; little realizing that an astute agent will show the overpriced turkey in order to sell the house down the street that is priced correctly. Also, with these types of sellers, if the actual market value creeps up to their price over time they will actually raise the price! Always a day late and a dollar short.
Finally, don't reward the buyer's agent with bonuses and extra commission, after all the buyer ultimately pays for those incentives. In any case that is a red flag to an experienced agent that your property is over-priced. Don't try to re-invent the wheel, reward the Buyer with a lower sale price. It just makes sense.

Will the "Bubble Burst"?

2005-11-16T15:57:00.000-07:00

Figures released today by the National Association of Realtors show that the Metro Phoenix Area actually increased in price in the last year by an amazing 55.2%, the highest in the nation.
Nobody is predicting a bursting of the "Bubble" but it may lose a few pounds of pressure. The market has been driven by speculators, cash-rich Californians and first time buyers eager to get a foot on the ladder. But remember, unlike California, we have plenty of room to build, and continue to build lots more homes to satisfy demand. To that end, expect to see home builders start to be a little friendlier, no more lines around the block; no more lotteries for your lot, a welcome return to civility.
Finally, interest rates are creeping up to 6.36% 30 year fixed (national average). Although it affects affordability, realistically it is still very cheap money for those of us who remember 8 1/2% ten years ago, and high double digit interest rates twenty five years ago.

Is the boom over?

2005-11-14T13:36:00.000-07:00

It seems very likely that the housing market has stopped it's meteoric rise, which last year rose 40%. Those days are over, as home prices dipped slightly in October, the first such monthly drop since December, 2003.
In reality, I think it is a well needed return to normalcy. The growth of late is unsustainable and I would expect the prices to level out slightly, with annual increases more likely to be in the single digit level in the near future.
Another reason for a return to normalcy is a marked increase in inventory, which in June was at an all-time low. Of course, some of those listings are opportunistic in the sense that owners are pricing into the rising market, which no longer exists, so they will ultimately be disappointed.
Remember, if you need to sell, be reasonable. Pigs get fat, hogs get slaughtered.