Seller Motivation in 2014

This is first in a series of blogs on buyer and seller motivation in 2014.

Yesterday morning was spent in the company of several agents and one broker touring homes that are for sale.   All of the homes that we saw were well kept (except one), priced according to the market, available for viewing with little trouble on the showing agent's part, and in good neighborhoods.  One was a new build two years ago. The rest were purchased by their current owners as foreclosures.   One had been on the market for over 5 months, the rest on the market for between 30 and 50 days.

After the tour, there was an informal discussion centering on the attitudes of the people whose homes were for sale.  Without exception, the seller's motivation had to do with moving to another part of the city.  They had purchased theirs homes when the values were low,  now they have equity that they want to use to obtain a home in an area closer to an emotional anchor - work, aging parents, better schools.  Another interesting point, the seller's wanted their price, market be damned!

If you have a listing, please comment with their motivation.  I am beginning to sense that this is the year of the no-motivation seller!


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

We only have the Market.

This quote pertains to homes as well.  I have many people who want to find homes under $100,000, and are shocked that they don't get a 2000 sq ft home built in 2002!  They want a quality home cheap.  And, while the homes that are available in their stated price range is were not originally build poorly, many are now over 50 years old and require extensive repairs.

There is no such thing as a "bargain" in real estate.  The only thing we have is the Market.


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

A Poor Investor Decision

The house was originally built in 1942.  It has two bedrooms and a single bath in about 800 square feet.  Unknown is whether the attached "apartment" is supposed to be a portion of the 800 square feet.  There is an addition in the back of the house that allows the "apartment" to access the main house.  The roof appears sound and has maybe another 5 - 7 years left on the shingles.

Here is where it gets interesting:

The swamp cooler doesn't work. The A/C unit, which is about 8 years old, runs, but doesn't cool or heat properly.  Probably 50% of the breakers in the breaker box have two - one has three - wires running from them to somewhere.  The gas water heater is in a compartment that vents inside, and has no insulating collar around it where it goes through the roof.  The electrical service is from overhead power lines, and the fixture that secures the power line to the house looks like it could come off at any time.  There are no smoke detectors or carbon monoxide detectors.  The house has been treated for termites, and there is evidence of a major termite infestation.

My client currently owns - and lives in - a home just down the street.  Many of his relatives live in a 3 block radius.  His emotional pull to this house is such that he desperately wants to own it.  However, he has never been a landlord.  I have tried to explain to him what his responsibilities as a landlord will be, and how much money he must spend to make the house safe and livable.  He doesn't seem to care.  He is ready to own this home for $55,000, and then put another $20,000 into it, just because it is in his neighborhood.

What a pity.


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

The New F35 Fighter Aircraft at Luke AFB

Despite the fact that our military hasn't received much in the way of pay increases, the cities immediately surrounding #LukeAFB in the western Phoenix valley have all seen very nice increases in the past few years.  With the arrival of the new #F35 fighter at the base, this area seems destined to maintain its values, and continue its upward momentum.  Here is a look at the last few years median prices.

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

AS-IS Homebuying - What it really means

During the heyday of foreclosure home buying, #AS-IS  (sometimes referred to as  AS-IS, Where-Is) meant that the buyer would make absolutely no repairs.  You bought all the problems with a property when you signed on the dotted line.  After your inspection, you either bought the property or you didn't.

With a "normal" sale, after an inspection is completed on a home, the prospective owner usually has some sort of list of things that they would like to have repaired.  This list can lead to negotiations that might change the terms of the transaction.  With an AS-IS property, there is not supposed to be a list of repairs.  The buyer is just supposed to either take the property or not.  There is one exception to this rule:  If a defect in a property is uncovered that would stop another buyer from purchasing the property, there might be room for further negotiation of terms.  For example, a cracked foundation, the presence of mold, discovery of termites - things that a bank will not allow to exist prior to issuing a mortgage.

However, minor things are not on this list - especially those things that can be discovered simply by being observant when going through the house.  Things like missing cover plates on electrical sockets and switches, burnt out light bulbs, absence of a tilt guard on a stove and drywall repairs should not be something that an owner of a home being sold AS-IS should be asked to repair.

There seems to be a pervasive idea out there that the AS-IS clause or addendum in the contract is something that can be ignored if a prospective owner wants anything repaired.  Unless the Realtor properly prepares their client, submitting a list of repairs to a home owner after having established the transaction with an AS-IS clause or addendum may be considered to be dealing in bad faith.  This could open up the Realtor to potential litigation.

So please, when you submit an offer for a client to own a property in AS-IS condition, prepare your clients properly, and keep yourself out of the muck!


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

6 Reasons for a Sluggish Phoenix Real Estate Market

The greater Phoenix area has been experiencing a slow-down of buyers and an increase in the number of homes for sale.  Where are the buyers?  Why are sales less brisk than this past year?  It is unlikely that there is any one reason for this situation, but there are many contributing factors that may act singly or in combination to discourage any given buyer.

1)  #Interest Rates - Rates have been creeping up, and are nearly 1% higher than they were last year.  Last year at this time, the average rate was 3.42, now it is 4.34.  However, rates have been dancing between 4.67 and 4.15 for the past 9 months.  Anecdotally, many of the people that I speak with are still expecting rates in the 3% range, despite nearly a year in the 4% range.  This is probably due to advertisements for loans in the 3% range that do not reveal the type of loan program in the advertisement.  15 year mortgage rates have increased from 2.85 to 3.32 in the same time frame.

2)  #Investors are leaving the market - Over the past year, sales to landlords has dropped 6%, from 23% to 17%, and the trend is continuing downward.  This is an imperfect number though, because of the way the statistics are collected.  Nevertheless, the large companies that have been buying huge numbers of homes for rental seem to be leaving the market.

3)  Millenials are not buying homes - Until now, people have been entering the housing market in their 20's to 30's.  The newest set of home buyers is being hampered by large student loans, other credit issues, and lack of a down payment large enough to allow them to own a home.  Therefore, more young people are staying at home and living with their parents.

4)  Higher prices - The average price of a home has gone up since August 2011.  Many people believe that prices will come down again, and are just waiting for that to happen.  Also, the higher prices may be holding people back because they are just suffering sticker shock as they look at home values today.  Homes that just a short time ago were only $100,000 are now $140,000 and higher.  Many people have the ability to put the extra $220 into a mortgage payment, but they get stuck on the overall value.

5)  Difficulty in Obtaining a Loan - Obtaining a mortgage has never been a fun thing to do, but the reward of home ownership made the process worthwhile.  It is an unkept statistic how many people begin the loan process only to drop out because of the onerous documentation requirements.  On top of that are stricter regulations on income, credit score, and less underwriter flexibility when approving a loan.  This is forcing many people into a "pidgeon hole" that excludes them from financing.

6)  Housing in other parts of the country is sluggish - Many people who are relocating to the Phoenix area are doing so as a result of job-related circumstances, either accepting a new job, or receiving a promotion.  Often, these people have homes that they need to sell prior to "putting down roots" in Phoenix.  Lenders no longer make "bridge" loans.  So, if the person has to transfer or move to the Phoenix area, they wind up renting until they can sell their house and buy another one.  This takes a person out of the market for several years, because:  1) the dollar difference between renting and buying is not enough motivation to uproot the family and go through another move  2) the person has adapted to the renting lifestyle, and figures that they will own a smaller after the children are grown  3) renting is nice because someone else has to fix everything 4) after the sale of their previous home, they now have a pile of cash to have some fun with  5) the pile of cash is probably not sufficient to put 20% down and make changes to a home to suit their taste (new counter tops, paint, landscape) 6) they are always going to have a mortgage anyway, so what's the difference between paying rent and paying a mortgage?  The list of rationalizations for not owning a home goes on and on.

I would be terribly interested in whatever you might have to say regarding this topic.  Please add your thoughts.


#AvondaleHomes , #GoodyearHomes , #BuckeyeHomes , #GlendaleHomes,  #PhoenixHomes , #SurpriseHomes , #PeoriaHomes , #TollesonHomes, #LaveenHomes , #WaddellHomes , #WittmanHomes

Average Days to Rent in Phoenix - 49

#Rents are still the highest in the past 9 years in Phoenix!

#rentals
#AvondaleHomes , #GoodyearHomes , #BuckeyeHomes , #GlendaleHomes,  #PhoenixHomes , #SurpriseHomes , #PeoriaHomes , #TollesonHomes, #LaveenHomes , #WaddellHomes , #WittmanHomes