Part-Timers Don't Belong in Real Estate

Do you see the error on the stone?  That error will be there forever, because a part-time person was involved.  For all eternity, this poor mother will bear the ridicule of the idiot that put it there.

No, that isn't right - the people who commissioned the stone will first be caused anguish and anxiety, then they will be angry, then they will demand - and probably get - a new stone.  And they will remember every negative emotion and reaction that they have along the way.

As a Real Estate Buyer's Agent, you are responsible for what is written on the stone.  You are responsible for coordinating the ballet of people that dance in and out of the transaction.  You control the tempo, the beat, and are ultimately responsible for on-time closings with a minimum of hassle for both clients.  You are the one who determines what everyone remembers.  It is amazing the number of people that are involved in a real estate transaction.  Consider:

On the Buyer's "side":
Buyer (Usually 1 or 2 people)
Buyer's Agent (usually 1 person)
Buyer's Lender Rep
Buyer's Lender Rep Processor (up to 4 of these people)
Home Inspector
Termite Inspector
Other Inspectors
Appraiser
Underwriter

On Both Sides:
Title Officer

On Seller's "Side":
Seller (Usually 1 or 2 people)
Seller's Agent
Repairmen

The Buyer's Agent is responsible for coordination of all these people.  Putting them into and out of the transaction as necessary is the responsibility of the Buyer's Agent.  This coordination has three elements to it:

1) Availability - the Buyer's Agent has to be available to take calls, read emails and respond to text messages.  Not possible if you are already working another 8 hour job.  Your "window" for response is an hour or two after "work".  This results in many things taking an additional day, and if the person you want to communicate with is only available during "business hours", several days.

2) Communication - the Buyer's agent has to have the ability to take whatever time is required to get an inspector on the job, talk about situations with the lender, evaluate and respond to the appraisal, etc.  They have to be able to forward information to the appropriate party in a timely fashion.  When a required repair has been completed, you have to communicate it to the Buyer, the Appraiser, the Lender and the Inspector.  Where do you find the time to do this if you are working "full time"?

3) Follow-up - The Buyer's agent must continually be following up on each person involved.  What about the required repair?  Is it complete yet?  If so, you have to take photos and communicate them to the Appraiser and the Lender.  Then, you have to make sure that the Lender has communicated with the Underwriter.

When the Buyer's agent works another job, and "does real estate" like most people "do drinks" or "do lunch", the Buyer and Seller will both suffer.  Their memories of what happened will remain indelibly etched on their memories.  Not only that, but the people that they talk to, correspond with, and meet in grocery lines will hear all about how things are so messed up.

There is a clause in the contract on line 341:  Time is of the Essence:  The parties acknowledge that time is of the essence in the performance of the obligations described herein.

People who do "part time" real estate continually violate this most important part of the contract.  Your client is owed a fiduciary duty 100% of the time - not when your "job" allows it.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Solar Power - Not So Sunny - Part 3

This is the third in a series of blogs about #Solar power.  The deeper I dig, the more I find out, so I don't know when this will end.

Solar panels just sit there - there are no moving parts, there are no levers to pull or knobs to turn, so it seems that they might just produce electricity forever...

There are only a few articles out there that tell you how much solar panels degrade - on average - about 1% per year.  That means for each Kilowatt your panels produce, each year they will produce less and less power for you.  So, it follows that the first year you use solar will be the best year ever.  Every year after that, your power output decreases.  Here is a chart that shows how much power output is warranted by several solar power panel producers:

This degradation is covered in the lease - as a matter of fact, the lease under-promises so much that it is almost funny.  Remember Mr. and Mrs. Smith?  Their system is supposed to produce 9 Kilowatts of power.  In Arizona, the sun shines nearly every day for at least 8 hours.  The system should easily produce 72 Kilowatts per day.  The lease promises nearly 15,000 Kilowatts to be produced Annually, which sounds like a lot, until you discover that 15,000 Kilowatts is only 200 days worth of energy production - or just a little over 6 months of power.

So, the warranty is nearly worthless.  The power produced by the Smith's solar system could be cut nearly in half, and the warranty would still hold.  They would still be paying the same lease amount, their bills from their power company could double, and they would have no recourse.

At the end of the lease, the system is only warranted for 12,000 Kilowatts annually - nearly 25% less than originally promised.  That means the amount paid to the power company will go up proportionately, and their "savings" will decrease.

Let's pretend that a car had a warranty on gas mileage like solar systems have a warranty on Kilowatts produced.  A car that gets 20 MPG brand new would only be warranted for 15 MPG by the end of the warranty period.  Is that OK with you?

Yes, there is still more to come!


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Cheap Homes Becoming Extinct

Cheap homes are going the way of the Dinosaur!  In a survey of the MLS this morning, the Greater Phoenix Area reveals that there are fewer homes available in the $0 to $100,000 than there are in any other price group until you reach $400,000 - $500,000 price group.  Here is how they break down this morning:

$0 - $100,000                   2009 Homes available
$100,001 - $200,000        6690 Homes available
$200,001 - $300,000        4908 Homes available
$300,001 - $400,000        2593 Homes available
$400,001 - $500,000        1314 Homes available


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

House Construction Down, Rental Prices UP!

From the Cromford Report:

The Census Bureau has just released its permit counts for March and they tell us a lot about what is going on with new home construction.
The single family permits totalled 1,003, breaking down as follows:

• Maricopa County = 862, down 14% from 997 in March 2013
• Pinal County = 141, down 37% from 223 in March 2013

Clearly the developers are cutting back on production in the light of reduced demand compared with last year. Since very few investors buy new homes, the numbers illustrate that the fall in demand cannot be explained away as purely because of the departure of a large number of investors. The 12 month rolling average is falling now, and currently stands at 12,480 single family permits per year. It has been at or close to this mark throughout the last year. Single family permits are only at one third of the rate we saw in 2002.
The multi-family numbers are going crazy. In March alone there were 1,586 single family units that obtained permits. This is highest monthly total in the last 13 years apart from February and November 2007. The monthly numbers are quite volatile, but the 12 month moving average is now up to 6,660 units. We can justifiably claim that this rate is fully recovered to the level of 2002.
The multi-family developments permitted over the last 12 months have been in:

• Scottsdale = 2,075
• Phoenix = 1,750
• Tempe = 1,400
• Chandler = 965
• everywhere else = 499 (includes Gilbert, Glendale, Goodyear, Mesa, Surprise, Cave Creek, Apache Junction, Maricopa, unincorporated Pinal)

These multi-family developments are very concentrated in a small area and relatively expensive. The average construction cost is $129,605 per unit. This is almost double the average construction cost reported in the same period 10 years ago.
The developers are depending on strong demand from affluent renters.

Average renters are seeing very little built to satisfy their price point and the supply of single family rentals is starting to drop again. They are down to the lowest supply level we have measured in recent history. Average rents are starting to increase too.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Solar Power - Not So Sunny - Part 2

Part 2 in a series of blogs examining the effects of #SolarPower on the selling of a home.

Meet Mr. and Mrs. Smith (not their real name) who retired to their oasis in the Valley of the Sun.  Abhorring the idea of paying more than they have to for anything, they decided to install #solar power on their 2000 sq ft single level home with a pool.  Upon meeting them to list their property, I discovered that they had a very nice lease payment - $60/month.  After speaking to them for a while, it was eventually revealed that they had made a $7000 up-front payment on the lease of the solar equipment.  That is enough to pay for about 4 years worth of electricity bills at their house.  Now, after having the equipment in for less than 3 years, they want to move again.

The representative from their solar company says that they can move all their equipment for $1000.  That is not very much money.  In their lease, it says that they can only move the equipment if: 1) They are in the same utility district 2) They have to pay the costs of all new permits,  3) They have to deliver an easement to allow the installation of the system.  It also doesn't say that the company will move it for $1000.

In addition, any person who wants to buy their house also has to qualify for the lease.  If they don't qualify, then the Smiths have to pay off the lease and have the option of transferring the warranty to the new owner.

At this point, the Smiths have paid about $8,830 for electricity over a period of 2 1/2 years.  That is about $295 for every month that they have owned the system - Winter, Summer, Fall and Spring. About 30% more than they would have without the solar.  If the average cost for a house like theirs is $200/month, it will take 7 years just to break even and that is only if the system completely replaces all the energy supplied by their electric company which is not the case.  They still make monthly payments to the electric company as well.

So, the new owner will get a sweet deal - he won't have the $7000 up front, and will spend less for his electricity right up front.  By deciding to lease a solar system, the Smiths are effectively giving the new owner $7000 off the purchase price.

There is more to this story - did you know that solar panels degrade, and produce less electricity as time goes on?  More on that later.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

The Sellers are Making A Comeback!

From the Cromford Report:

Things are starting to look up for sellers in a few more areas now. We see 18 cities showing an increase in the CMI from last week with 1 unchanged and 10 decreasing.
However we still note the cities that are improving tend to be the smaller ones and several of the largest cities like Phoenix, Scottsdale, Gilbert and Glendale are mostly flat to lower.
The largest improvements are to be seen in:

• Apache Junction
• El Mirage
• Tolleson
• Gold Canyon
• Sun Lakes
• Fountain Hills
• Avondale
• Sun City
• Tempe
• Sun City West
• Arizona City

The largest deteriorations were in:

• Litchfield Park
• Gilbert
• Scottsdale
• Goodyear
• Glendale

Underwriters - The people we Love to Hate

Underwriters are a natural portion of the loan process.  However, there should be a series on TV for "Underwriters gone Mad".

I have a client selling a home in a rural area.  The owner has lived in the home for the past 20 years.  Inside the home is neat and clean, and outside it is obvious that the home has been cared for.  The home was built in 1942, and the buyer for the property said that they would take the property "as is".  The home appraised for the agreed-on price, the inspection turned up a couple of items that did not cause the buyer any heartburn.

Enter the Underwriter.  From his lofty perch, the underwriter has decreed that despite the fact that the buyer has decided to take the property as-is, and has the ability to make any necessary repairs, there must be a roof certification done saying that the roof will last another two years, and some random holes in the ceiling of a basement room repaired.

The roof has been maintained by the owner for the past 20 years, and has never had a leak.  The holes in the basement ceiling have no structural nature to them.  To another underwriter these items would never come up.

However, we must dance to the tune that this underwriter plays, just days before we are to close.

What an abuse of power!


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Return of Alternative Financing Methods

Last year at this time, there were virtually no "alternative" types of financing being offered on the MLS.  Now we have:

Seller Carry - 660 Listings
Lease/Option - 199 Listings
Lease/Purchase - 253 Listings
Wrap - 52 Listings

Let me know if you are curious about any of these types of financing.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Phoenix Market Foreclosures No Longer Hot Topic

From the Cromford news line:

April 1 - Foreclosures are not a hot topic anymore, but continue to happen in good times as well as bad.
In March we had a slight increase in the number of new Notices of Trustee Sale in Maricopa County from 923 to 965 (up 4.5%). We also had a very slight rise in Trustee Deeds from 572 to 575 (up 0.5%). However this is misleading because March had a 10.5% increase in the number of days that the trustees were working, up from 19 to 21.

If we look at the number of notices per working day, we declined from 49 to 46 (a drop of 5.8%).

If we look at trustee deeds per working day, we declined from 30 to 27 (a drop of 10%).

This is the most accurate way to measure foreclosures. Looking at the monthly counts is very popular and common, but of no use at all if you are trying to detect small changes. This is because the change in the number of working days in each month is much greater than the change in the foreclosure numbers, so the noise is larger than the signal. April has 22 working days, so even though it is a shorter month than March it should have 4.8% more foreclosures than March if foreclosures have reached a stable level. At the moment we have not reached stability and the declining trends in foreclosure starts and foreclosure completions are still intact.

There are currently only 2,980 lender owned properties in Maricopa County. There are only 4,494 pending foreclosures (active notices). To put these into context we counted 16,342 lender owned properties and 45,173 pending foreclosures at the beginning of April 2010.

Residential numbers are about 92% to 94% of the totals. Some 6% to 8% are commercial or other non-residential.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman

Why Your Realtor Needs to Talk to your Lender

If you look like the guy in this picture when your Realtor asks you for the contact information for your #Mortgage #Lender, you wouldn't be alone.

Many people don't understand that their Realtor needs to talk to their lender.  Here are many of the reasons why:

• Offers must come with a pre-qualification, or they will not be answered.  Put yourself in the Seller's shoes: If you have one offer with a pre-qualification from a lender, and another offer without any assurances of being able to have funds to buy your house, which will you choose?
• Realtors must know the type of loan that you will be getting.  Sellers can refuse to accept offers with a particular type of loan.  For example, if a Seller knows that a house will not pass an FHA appraisal, they can say that they will only accept Cash or Conventional loans.  This is not discrimination, it is a business decision made by the Seller.  Why look at homes that you are excluded from buying?
• If you have a very low down payment because you have a small cash reserve, the Realtor and Lender can often come up with a plan to help you get a particular home.  By coming up with a mix of Lender paid, Seller Paid and Realtor Paid closing costs, they can come up with a winning offer at no cost to you!
• If you are planning a huge down payment, a discussion between the Realtor and Lender can often save you cash out of pocket to use for things for the home, or just to keep for a rainy day.
• A Lender can give a Realtor tips that will help the Realtor save you money.  For example, it may be that if you have a 7 week escrow instead of a 4 week escrow, you can save another 1/8th of a point in interest due to a credit score change or a DTI change!
• Lenders will have suggestions as to how to implement a transaction to be able to take best advantage of your financial situation, especially if you need to be near your maximum borrowing power.  They can tell your Realtor what the maximum taxes and HOA fees can be for your situation.
• The biggest reason that a Realtor needs to speak with you Lender, is to be sure that you are seeing homes in the right price range.  There is no bigger heartbreak than to look for weeks and get your hopes set on a house, only to discover that you cannot make an offer because it is out of your price range.  The flip side to that is to discover that you are looking far below your price range, and that you could have easily have had that home with the pool and the 3 car garage.  Why spend time, use up the energy and live through the emotional turmoil of buying a new home, only to find that you should be in a different neighborhood?

#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman