Have you heard of a HECM?

Have you heard of a HECM?

Home Equity Conversion Mortgage?

Are you or your spouse 62?

You could live in your home without any mortgage payments.  Did you know that?

Its true.

 

Jacqui Hamilton
Concord Mortgage
jacqui.hamilton@concordmg.com
623-900-1935

What do Harvey and Irma mean for you and having your new home built?

As Irma heads to Florida, Houston is in the early stages of picking up the wet pieces and trying to look forward to sunshine filled and dry days.  

One area that is affected nationwide after a disaster like major Hurricanes is building supplies.

Building time frames will get longer in Arizona, and other states not affected by Harvey and Irma.   

Suppliers prioritize their materials to those locations hit hardest. (and it is mandated by the government that they do)  Builders in other areas and states have delays in their construction due to lack of materials.  This also means that the builders don’t require as many employees to just hang around and wait to swing their hammer.  The combination of lack of materials and fewer on hand workers result in delayed construction build times.  

If you are already contracted with a builder for your new home, plan on your closing date being pushed out.  If you are about to have a builder start your home, and they previously informed you of a 5-7 month build time.  That just got extended to 7-9 months.  

The builder purchase contract has a clause to allow them up to 2 years to get your home built.  Now they don’t want to take that long, but they have the right to.  That clause exists for times like these.

Many of the construction workers will leave states where they have resided and move temporarily to the areas that have been ravaged by nature.  Creating another challenge of not enough construction workers available when the supplies are once again readily available.  

Our prayers and donations are directed to helping so many recover from unimaginable loss.  

 

Predictions for the Greater Phoenix Real Estate Market

This is a portion of an article written by our broker, Jim Sexton in the Arizona Journal of Real Estate and Business for December.   The first half of the article deals with variables to be resolved post election by the president.   Jim’s predictions follow:

 “2012 will have around 90,000 sales reported by ARMLS, which will be a 10-12% drop from 2011 numbers, but the overall dollar volume of those sales will be up almost 6% from 2011.  The average price per square foot will be up over 13% for 2012.  Using these trends, I believe that the number of sales in 2013 will remain around 90,000, although if I could give a range it would be 85,000-95,000 sales for the year.  I think prices will continue to bounce back.  I don’t expect another 13% increase, but I see a price improvement in the 5-8% range.  I expect active inventory to rise from the current less than 3 month supply to the more balanced 3-4 month supply.  Both short sales and REOs

will continue to decrease.  Distressed properties made up 70% of the market 2 years ago, 65% 1 year ago and currently are at 41%.  Look for that downward trend to continue to under 30%, with REOs below 10% and short sales dropping to around 20%.  Also expect to seeArizona’s population continue to grow and the building industry inPhoenix‘rise from the ashes’.  Both will continue the positive steps we’ve seen to our economic recovery for the region.”

 Based on Jim’s experience, knowledge and his great batting average we are expecting that 2013 will be a successful and positive year for real estate in our Valley of the Sun.

 

 

How the “fiscal cliff” might impact you as a home seller.

How the “fiscal cliff” might impact you as a home seller.

One of the “Bush tax cuts” that might be falling off the cliff could hurt you as a home seller.  Until Dec 31, 2012  the formula for paying tax on the sale of your principal residence is very favorable.

You take the ‘basis’ which is what you paid for the home initially plus major improvements you have made. (my very simplified explanation)   Then subtract that ‘basis’ from today’s sale price.  We think of that as profit on the sale.  The existing tax break lets you take $250k off that profit if you are single and $500k if you are married (again simplified).  The overage remaining is taxed as a capital gain, the rate depending  on your tax bracket.

If that tax cut falls off the cliff, you will be paying capital gains tax on the entire proceeds over your ‘basis’.  There will be no more $250k or $500k reduction.  There is to be a raise in the capital gains tax from 15% to 25% (% is variable per your tax bracket).   Plus there is a new medicare tax of 3.8% on capital gains.

PLEASE understand that my explanation is super simplified !

There are so many ins and outs and dozens of pages in the IRS books defining this formula that only your tax person will understand it fully.   I am in no way qualified to explain more than the simplified basics to you.  My purpose is to give you a heads up for your future home buying plans if they depend upon the proceeds from the sale of your existing home and to make the strong suggestion that you have a meeting with your tax person at your soonest.

What does the typical seller accept for price on their home?

 

A client of mine, recently  asked me a great question; they asked me “How much a seller is willing to sell their home for, less than asking price?” To start the answer… there is no typical seller….

Every person selling their home has a different reason for selling; every person selling their home is in a different financial position.

The more important question is to ask What are the market and the market conditions telling you about where homes are selling?

· you need to consider the purchase price of the home you’re looking at

· the neighborhood the home is in

· as well as the sellers and what did they purchase the home for and was it financed

These items together will give a little better idea of where to start with your offer; and what the seller is likely to accept.

 

I still wish I had a crystal ball….

So you want to buy on the Courthouse Steps?

colorful road curve

We just attended a class dealing with Trustee Sales in Arizona, given by a real estate attorney specializing in this portion of the law and a Realtor who is on the steps every day.

We took away a lot of information, but facts that directly apply to you as a buyer are what we will mention here. First the purchase money: you will need a certified check for $10,000.00. That will be verified as you sign up to bid. You will need to make the balance of payment for the property within one business day ! If you fail to make the payment by the end of the following business day after the auction, you lose your $10,000.00 earnest money.

This eliminates all bidders with loans, unless you are to be an investor non-owner occupant and want to deal with one of the unlicensed short term “hard money” lenders at up around 18% with 20-30% down.

The starting bid is stated and it is usually the amount of the first mortgage plus $1.00, but it can change up to the moment of the actual auction. Bids are usually increased by $100 each bid.

Next most important is that you are buying the property totally and completely “as is”. That is the physical as well as the legal condition. You do not get title insurance with the purchase, you may have to evict the current residents. You may have additional liens on the property. You may not have legal title to the property. You may not be able to inspect the property. It may be pristine or it may be destroyed.

There will be bidders representing investors or investment groups who are buying 5 to 100 homes at a time! Definitely the big league.

Incidentally the current (Jan-May 2012) sales numbers show that the winning bids are an average of 31% above the opening bid and 64% of the original loan amount. 80% of the sales are postponed from their original sale date and 60% additionally are postponed on the day of auction! Of those 40% remaining, 56% are purchased by 3rd party buyers.

Our conclusion is that everyone should visit the Courthouse Steps once, just to get a feel for the pace and intricacies of the auction. BUT that to participate as a buyer or as an agent of a buyer is a mistake and could be an expensive mistake. There are Realtors whose only activity is to bid on those steps every day. They have entire teams of professionals working for them, checking bank records, checking with not 1 but 2 title companies, doing Comparable Market Analyses on the property, estimating repairs and establishing a top bid. It is definitely one of those things that we are accepting as “out of our area of expertise” and we will be happy to connect you with confidence with a Realtor whose entire business is centered around Trustee Sales.

They say it is not a Real Estate Tax

Adult students working together in a libraryI wanted to get this notice we  received from the National Association of Realtors out to all our blog friends.   This is the information and examples about the new 3.8% tax and how it affects real estate sales.  This tax is a part of the Obama Healthcare Bill.  It will be interesting to see if and what the Supreme Court upholds.   They say it is not a Real Estate Tax, because it does not remove the $250k and $500k deductions on the profit from the sale of your home, but applies to the profits after those deductions are taken and applies only to individuals over a certain income. It will apply to certain other incomes and capital gains.   I suggest you discuss it with your accountant or tax advisor.    The National Association, the Arizona Association  and the local Realtors are opposed to this tax, but our disapproval went unheeded.

Exciting Changes

Greetings,

We want to take a moment to share some exciting news with you regarding our real estate business. Our brokerage, John Hall & Associates, has been acquired by one of the largest real estate agencies in the southwest; Realty ONE Group.

Realty ONE Group has experienced exceptional growth with their state-of-the-art technology and professional office facilities. They have retained the exceptional leadership from John Hall & Associates; combining innovation with experience! 

We have physically moved to an office around the corner from our homes. In doing so we have opted to get new phone numbers and fax number.   We will be turning off the old toll free number in a couple of weeks.  The home/office and cell numbers you currently have will remain the same.   We have also abbreviated our email addresses.   (The old ones will work indefinitely.)  Our main website is undergoing remodeling so please be patient while we make it even better.  (We already were on Google’s first page….which is quite an accomplishment in the geek world.)

Thank you for your patience and understanding of this change.  We think it is a really good one. John Hall & Associates has a reputation since 1974 for outstanding service, integrity and professionalism.  Realty ONE brings us the technology to maintain our standing in today’s high tech world.

If you have any questions about this change, please contact us!

Should I keep/extend my Home Warranty Service?

My favorite answer – Yes, No, Maybe

Yes – a home warranty service is another insurance policy on your home. If something breaks getting it repaired/replaced for a fixed cost is a ‘good thing’ . Not having an unexpected bill for getting your garage door fixed, AC repaired, hot water heater replaced… and it is nice to know you have someone to call when something quits on you.

No – You have a new home, just built and all of the appliances are warranted from the manufacturer, the house is still covered by the builders warranty.  Everything in the home is still covered, so no need to get an additional plan.   If this is you… a good idea is to contact the AC manufacturer to see if you can extend the purchase warranty.

Maybe – Your house is not brand new, but you realize the appliances/AC is older but you are going to upgrade and remodel.  If you are looking to put in a larger AC unit than is the minimum size requirement, or upgrade your appliances, then maybe getting/renewing your home warranty isn’t the best option.

So should you get/renew/keep your home warranty service… yes, no, maybe

Risks to living in a 55+ community…

Risks to living in a 55+ community are not as has been recently reported, the risk is not having a surviving spouse less than 55 years old having to sell, but grandchildren!

  • A recent article in the Arizona Republic “ Homebuilders pin hopes on retiring Baby Boomers” mistakenly wrote that “ …if the husband died before the wife turned 55, she would most likely be forced to sell the home and would not be allowed to remain there alone.”

The surviving spouse if under 55 is covered by the HUD regulation of 80/20.  Only 80% of the residents need be 55 or more.  The remaining 20% is designed to cover the heirs. That 80% is carefully monitored and checked every 2 years.  To drop under that 80% is a fearful thing in these communities and puts them at risk for losing their Fair Housing exemption and turning overnight into a multigenerational community.

The true risk in purchasing a home in a 55+ community is grandchildren!   Two scenarios create the risk.  The first is today’s economy and high unemployment rate.   Adult children are moving home to Mom and Dad and bringing the grandchildren with them.   The fine print in the 55+ communities HOA’s is that NO ONE under 18 years old can reside for more than a limited number of days.   So Mom and Dad may have to move out of their 55+ resort community and into a multigenerational one! The second risk factor is again Grandchildren.  Adult children move out of state for one reason or another and take those grandchildren with them.  Grandma & Grandpa do not want them to be so far away and choose to leave their 55+ lifestyle and follow the grandchildren.