Phoenix is a Buyer's Market

What?!  Prices have been going up!  Fewer homes for sale!  Nothing under $100,000!

True, but...  For the past 5 months, more homes have been coming on the market, and the number of days a listing has been on the market has gone up too.

So, we have a market with more homes, more time to choose, prices have gone flat and about the same number of buyers.

Right now presents a good opportunity to get in the housing market.  Demand will pick up again,  and the number of buyers will increase.  When that happens, the prices will go up again.  This is a cyclical type of situation that repeats itself. 

Take a look at the charts below and see if you don't agree...

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Inspection Apprehension

When Selling a home, inspections can cause all sorts of emotions to surface.  Homes are complex things, and who knows what an inspector might find as he is crawling through the attic or otherwise shining  a bright light where none has shown before?  What will it cost to fix it?  If the Buyer finds out that something needs repairs, how can I do it the cheapest way?

As a Buyer, when Buying a home, you might believe that an inspection poses as an opportunity to hammer the seller for another couple hundred dollars off the price of the home or closing costs.  After all, to repair the thing-a-ma-jig that isn't working (and that you don't care about) would cost at least $1000 if it is done by a professional.  You, however, will take a $500 credit towards your closing costs and the Seller won't have to worry about it.

Remember, the Seller might have a relative or close friend "fix" things with duct tape and wire.  As long as whatever is fixed is in working condition at the close, a Buyer doesn't have any recourse.

If you don't like the way the repair was made, but the repair causes the defective item to work, you are stuck with it!  

So, be careful what you ask for when repairs are required! 


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Divorce Financing - before, during and after

If you are in that situation in life where you have decided to call it quits with your spouse and need to find a home, here are some financing options for you.  You can qualify for these loans whether you are done with the divorce or not.

3.5% Down FHA

If the breakup is amicable, you may want to consider this option - it has the lowest down payment, which makes it easier to qualify for a loan, but it also has slightly higher payments.  Also, your ex must play nice because they have to sign a quit-claim deed to the property you are purchasing.  In Arizona, since it is a community property state, any debts that either of you owe are counted against your income.  This may run the Debt-to-Income ratio too high.  Also, since FHA changed the rules a little while ago, the Mortgage Insurance Payment does not expire during the term of the loan.  You must re-finance into a different loan to get rid of the MIP.

5% Down Conventional

With this loan, it doesn't matter if your spouse is Atilla the Hun, or Lizzy Borden.  If you can amass 5% towards a down payment, you can wind up with lower payments (because the MIP is less), the MIP goes away automatically when you reach 80% of the loan value, your spouses debts do not count against your income (resulting in a higher Debt-to-Income ratio, so you can buy more house).  If you close before your divorce is final, your ex will still have to sign a quit-claim deed.  Also, you will have to count any debt that has your name on it. 

If you have any questions, please feel free to call me at 623.341.5382 or send an email to Tim.Lass@ZipRealty.com.

Here is the sunrise from my drive this morning:

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Only 4 areas with $100,000 homes now.

If you are wondering if like priced homes are grouped together, the answer is: yes and no.  If you have a look at the map, you'll see the there are very few properties that are under $100,000, and that they are clustered in 4 distinct map areas.  If you are considering an investment and don't have lots of liquid funds, now might be the time to get into the rental market!

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When Good Agents Go Bad

Arizona Realtors are supposed to get 24 hours of education every 2 years. Boring Topic, I know, but shouldn't you know that your Realtor has at least the minimum amount of education to do the job?  You should know that each Real Estate Agent in Arizona must have a minimum of 24 hours of approved education every two years.

Of course, that doesn't mean that the education sticks with some of them...

The educational requirement of holding a license in Arizona is supposed to keep an agent from getting themselves or their clients into trouble, but it doesn't always work that way.  Consider the actions of the following agents.  This report is just one page from the current bulletin, which is available to the public.  CP means Civil Penalty (fine), PL means Provisional License, PM means Practice Monitor (someone monitors all your activity - Like Neil Caffrey on "White Collar").

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Fannie Mae Homes - Fantastic Bargains or Fandango Flops?

Buying a home from Fannie Mae is an interesting procedure.  All the documents have to be filled out twice, the time period between offer acceptance and getting the keys is longer, the inspection period is ill defined and nobody has any specific authority to do anything.

However, they are currently fantastic bargains.  I just helped a client get a Fannie Mae home in an upscale neighborhood for about $20,000 under market value!  There are many homes like this in the Phoenix area now.

How does this work?  Well, the new home owner is going to have to make repairs of about $1000 to the home after it becomes theirs.  It seems that most people who want to own a home now also want a "turn-key" home that they can just move into and live in without being bothered by repairs.

These homes are not expected to last long.  If you are not particular about where you live and don't mind putting in a little "elbow grease" or at least hiring a handyman for a day, you might want to check into a home like this.

Make sure your Realtor is Fannie Mae qualified - ask them how many Fannie Mae homes they have done in the past year.  There is a lot of faith required in a Fannie Mae purchase.

Good Luck,

Uncle Tim

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2013 Average Sale Prices Growth for Avondale, Glendale, Peoria, Surprise, LItchfield Park, Goodyear

Nearly 50 for an overnight low last night...

Last year saw some of the biggest increases in value ever.  Here is the combined average for homes in the southwest valley.  Avondale, Glendale, Goodyear, Peoria, Surprise, Litchfield Park and Waddell are included in this graph.

Note how the graph seems to go up and down near the end of the year.  This reflects the "doldrums" that appear to have gripped the Phoenix market late last year.  For no apparent reason, prices just hit a "ceiling" as demand fell off and more homes were added to the market.

If you would like to know this information for a particular city, please let me know, and I would be happy to provide it for you.

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Weakest Phoenix Real Estate Start since 2008

From the Cromford Report:

Well I hate to say it, but so far 2014 is not shaping up too well for the Greater Phoenix housing market, at least from a seller's perspective. Rather than rebounding from the disappointing second half of 2013, we are mostly seeing signs of weaker than normal demand and growing supply. As yet this has had a very modest impact on the Cromford® Market Index. However, knowing how that formula works makes me think that it is probably headed lower in the short term. The major contributions to the index are:

1. Active listings (including UCB) - 27,700 today - up 9.4% since January 1
2. Pending listings - 5,407 today - up 15.9% since January 1
3. Monthly sales - 4,696 today - down 21.3% since January 1

Pending listings were up 14.6% last year, but this represented a growth of 1,169 listings, whereas this year's 15.9% represents only 740, because pending listings had sunk so low by the end of 2013.
Active listings grew only 5.8% between Jan 1 and Jan 20 last year, and on a much lower base. Inventory is building much faster than in 2013, and the starting point was 21% higher this year.
The monthly sales rate dropped only 7.7% between Jan 1 and Jan 20 last year, much less than in 2014.
All told, this is the weakest start to a year since 2008.
Having said that, the house buying season doesn't really get up to full speed until the Super Bowl is over.

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Kickbacks for Realtors

It is going to be in the mid 70's today.  My dogs have only had to wear coats on their morning walks twice this winter.

Not so long ago, when involved with a complex transaction, one of my clients asked me "how much do you get from your referral" whenever we talked about anyone I was suggesting he engage to remedy a problem.  My responses were as follows:

Inspectors:  Occasionally, an inspector will sponsor a class continuing education class for the entire brokerage.  Other than that, they don't make enough on an inspection to give anything away.

Title Companies:  Occasionally a title company will provide space for meetings if their meeting rooms aren't busy.  Other than that, they don't make enough on a transaction to give anything away.

Handymen:  Most of these guys are in and out of business so frequently that it is hard to keep track of them.  They don't make enough on a job to give anything away.

Mortgage People:  I manage to make my favorite mortgage person's Christmas Card list.  Although the card is a little blah, I get another to add to the collection on the string by my hearth.

The REAL REASON that I recommend anyone is because they have demonstrated to me that they  can handle the job you need to be done with professionalism, in a timely manner, and with as few additional problems as necessary.  That makes you happy as a client of mine.  That is my real kickback!

My adorable doggies:

Foreclosures, For You, For Me

It is going to be 73 degrees today - too warm!

Over the past few years, I have had the opportunity to sell many foreclosures.  Every company seems to have its own procedure to handle foreclosures, but the oddest procedure is probably Fannie Mae's.

Fannie Mae (and Freddie Mac and some of the larger banks) only allow owner-occupants to make offers on properties for the first 15 days of a listing.  This is supposed to keep investors out and allow home owners to get an opportunity to own a nice home at a reduced cost.  But it doesn't really work that way.

Fannie's definition of an investor is two-fold.  First, if you don't intend to live in the home, you are an investor.  Second, if you already own property somewhere else you are an investor.  So, if you own property in Iowa, and want to move to Arizona before selling in Iowa, you are an investor in Fannie's eyes.

It used to be that on the 15th day, there would be multiple offers from investors - all over list price.  That is no longer the case now that housing values have been on the rise, credit is harder to get, and homes under $100,000 are so hard to find now.

Here is some graphical info about pending foreclosures and where the foreclosures are:

Outer Credit Limits

Credit scores range from 400 at the lowest to 800 at the highest.  The formula for determining your credit score takes into consideration the type of credit you have, how long you have had it, and how much you currently owe against it.

For example, Cars, Houses, Credit Cards, an Personal Lines of Credit are all considered different types of credit.  The more types of credit that you have, the better your credit score will be.

The longer you have credit (without missing payments) the better off you are.  Don't cut up those credit cards that you aren't using - they have the longest "life" in your the portion of your credit history that applies to credit cards.  If you have more than 3 or 4 credit cards though, you might want to get rid of some.  It is possible to have too many cards, even if you have a zero balance on things.

If you owe less than 50% against each of the credit cards, houses and car loans, then you are probably going to have a higher score than if you owe 51% or more on each of them.

There are 3 credit rating companies out there:  Experian, Equifax and TransUnion.  Not all credit card companies contribute information to all of the companies.  That's why when you get a credit score, you get 3 numbers.  If you only get one number, it should be a "tri-merged" credit score.

Credit can be a lifeboat or an anchor depending on your situation.  If it is an anchor, give me a call, and I will put you on the track to getting your credit fixed.


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Phoenix Market in Doldrums?

The weather here has been especially nice, but the plants are confused.  With daily temps in the low 70's, they are beginning to flower and pollinate.  This is not good news for people with allergies!

Here is the latest words of wisdom from the Cromford Report:

"The market remains in the doldrums with weak demand and low supply. In the last couple of weeks both have been falling but that is only temporary. Both are likely to grow during the rest of January and it will be important to watch which of them shows the greater acceleration."

This contrasts with my own experience.  I have helped two people to find homes this month so far, and each of them ran into multiple offer situations.  We eventually prevailed and got a very nice home under contract for each of them, but not without a couple offers being passed over.

However, if all you look at is total sales, you will understand where the doldrum comment comes from.  Have a look at the chart, and you can see how sales in the Phoenix market have tailed off, and gone "flat" for about a month or so.  I expect that this will pick up - as it does every year - right about now, in mid-January.

Meanwhile, I am working with 4 clients to find them homes!

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Children make the difference in home sales!

The geese were beautiful silhouetted against the rising sun this morning!

I have been working with a young lady for about 3 weeks, trying to help her find a home.  We have made offers, but they have been topped by other cash offers.

This weekend, we were finally successful - because of her children!

The Seller was also a single mom with two children the same age.  Although there were 3 offers made on the property, ours was chosen because of the information about the Buyer that we shared with the seller.  This is not the first time that this has happened, which leaves me with this Uncle Tim theorem:

When there are similar offers on the table, a Seller will choose the offer of the person they identify closest with.

In other words, when you are buying a house,  make sure you share some of yourself with the Seller.  It could put the odds in your favor if there is more than one offer!


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Qualifying a new Realtor to work with

OK, so you've read all the stuff about interviewing and hiring a Realtor.  Now What?

Since most home searching now begins on the Internet, find 4 homes that you think you might like, and call a Realtor.  If you are using a website that is published by a certain company, call the Realtor that the company is recommending for you.   If you are finding homes on generic sites like Zillow or Realtor.com, call anyone you wish.

Here are the two questions you should ask a Realtor: 

1)  I would like to see these homes, when would you be able to fit me into your schedule?
2)  What is your opinion of the neighborhood that these homes are in?

Yes, only 2 questions.  Why, because you can evaluate their response like this:

If the Realtor just says "How about Saturday Morning?" and  "These are all great neighborhoods", you might want to phone someone else.

Here is what the Realtor should say:

"Let me ask you a few questions.  How long have you been considering owning a new home?  (give them your answer)  How is it that you selected these homes?  (provide your answer)  Let me look these homes up to be sure that they are still available. (if you found them on a generic site, there is a good chance that they have been sold already)  Are you available at such-and-such a time to see these homes?  (work out a time to go see them)".  If they don't ask these specific questions, but still ask questions about you and what your interest in a new home is, that is OK.

An optional question from the Realtor may be "Are you planning on financing this on your own, or do you need the assistance of a mortgage company?".  Translated, this means are you paying cash, or do you need to borrow money?  Another question they may ask is "are you pre-qualified?".  Don't take offense to either of these questions.  However, if your aren't pre-qualified and they follow up with some version of "You need to have a pre-qualification before we see homes", you might want to find a different Realtor.  Anything else would be OK.

If he doesn't want to make an appointment to see homes at this point, go on to the next person.

You see, the reason that the Realtor should ask this question is to be able to serve you the best way possible.  If you already have financing, then the Realtor doesn't have to provide a lot of information.  If you don't have financing yet, he can be a valuable reference when you begin to look for financing.  If you are paying cash, he may be able to suggest a course that keeps more cash in your pocket.

In a nutshell, if you call a Realtor because you want to see some properties, he should set up a time to see them.  If he asks a few questions about the houses you want to see and a few questions about you, that is a great sign!  If he give you a lot of guff about being pre-qualified, you might want to move on.


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Dumb Smart People

Why is it that smart people become so dumb when they try to sell their house?
 
I work with people from all industries - Chemists, Attorneys, School Teachers etc.  They are all smart people.  However, just because they are very smart, does not qualify them to be able to sell their house efficiently and for the best price possible.

I worked with an attorney who came to me in the spring of 2013 and wanted to sell an investment property.  I had a look at the property and said "Great - let's get it on the market".  He didn't want to put it on the market at that time, because he wanted to "upgrade" it to get the best price.  He asked me if he should put tile in the kitchen over the linoleum - I said no, and he did it anyway.  He asked if he should put in granite counters - I said no, and he did it anyway.  He decided to paint things himself (to save on painter's costs) and took 4 months to paint a 1200 sq ft house.  He asked if he should replace the carpet - I said no, and he had it cleaned (YAY for me!).  However, that was the only advice that he took from me.  He also did lots of other dumb stuff.

So, to make a long story short, he did about $8,000 worth of "fix up", and created a house that he would like for himself.  The only problem is, nobody else likes it, and he priced it way too high.  If he had put it on the market immediately in its original condition, it is likely that he would have been able to sell it within a couple weeks.  Since he waited and "upgraded" the house past what the local standards are, and put it on the market too high, he is now entering the 4th month on the market with no offers, and has decided to reduce the price to what he should have made it in the first place.

Net Result?  He is losing the amount that he is paying on the mortgage every month - it took him 6 months to get it on the market, plus the 4 months that it has been on the market, and he is losing all the money that he used for "upgrades".

A very smart man doing dumb stuff, because he thought he knew better than his Realtor.


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I am looking forward to another beautiful day here in the Southwest Valley.  As the rising sun reddened then entire sky and the geese began their daily flight to the fields east of my house, I was again thankful that I am working in a market that is so varied, and has so many opportunities.

They say that the real estate market is going to be really "hot" this year.  We shall see.  The early months of the year are typically quite frantic - there are many people visiting from out of state, and are excited about wintering here.  Who could blame them, with the temps in the upper 60's and clear skies?

My wife has a friend in Michigan - it is 8 degrees there this morning, and I will be visiting clients with nothing more than a polo shirt!

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