REO/Short Sale/Normal – What’s really selling in the Phoenix area housing market

I was looking through the charts and statistics and came across these 2.  They offer an interesting view on what homes are selling, and how much of our housing market is really about the foreclosures.

From the chart below you can see that steadily for the past 6 months the REO (bank owned properties) are about 15% of the active listings. The Short is for short sale listings running at about 35% and Normal, is a regular buyer and seller no bank involved is still 50% of the homes on the market.

active-listings

Compare the above chart with this one and you can see REO (bank owned property) sales dominate. Currently about 45%, down from 55% of all the sales are REO’s.

Normal transactions having 35% of the sales (back in Nov what was thought to be the end of the home buyer tax credit and people were looking to make the home purchase happen and not mess with the banks)

The Short Sales have increased from 15 to 23%.

monthly-sales

What does all that tell me, a few things?

1.       Bank owned homes sill offer the best value

2.        Banks are starting to approve short sales.  (it sure has taken a long time)

3.       With more short sale approvals, fewer homes are going to foreclosure

4.       And there is nothing like a home that has been loved and taken care of

Considering buying a Short Sale?

Anyone watching the active listings of homes will see the abundance of  “Short Sales” available.

So what are they?

  • A short sale is where the seller owes more on their home than the current value and they are asking the bank to be ‘shorted’ the funds due them.

And what’s the deal…

  • Any offer must also be accepted by the Bank(s) holding the loan(s) on the property
    • Banks are slow to respond (could be months and months)
    • Bank must determine if it is in their best interest to do a short sale (is there mortgage insurance on the existing loan?)
    • Bank will determine at what price/value they will accept an offer (could be an amount greater than the asking price)
    • Bank may choose foreclosure over short sale
  • It is an “as is” purchase – (no repairs will be done by the seller)
  • The seller is not allowed by the bank to contribute any expenses regarding the closing (to pay for a home warranty for example)
  • All parties must agree to the terms, buyer, seller, and bank(s)
    • If the seller does not agree with terms from bank – they can cancel
    • If the seller has excessive tax implications that they learn about – they can cancel
  • And many more items to consider

And yet they could be a good deal for the person who…

  • They sell for near foreclosure prices, and sometimes less
  • is not in a hurry with no time frame requirements to meet
  • Realizes the “list price” may not be the sales price and is prepared to raise their offer beyond the list price.
  • has the patience of Job

New stuff on Scottsdale-Blog

I have been busy adding new info to Scottsdale-blog. I have added detail about each of the communities in McCormick Ranch, starting with the town home/patio home communities, then the apartment styled condos and the last section, still to come, will be the single family communities.

Check out the tables, making it easy to identify communities with features like golf views, heated community pool, gated and others. As the weeks go by I will be posting about each of these different communities. Making it easier for you to identify the right neighborhood for you.

Why use your Realtors preferred lender?

The short answer: All lenders are not the same.

I recently completed a transaction where the lender was one my client had been working with. I respect the relationships that are built between LO (loan officer) and buyer. My client had been working with this LO building her credit back up and getting to the savings goals she needed to purchase a home.

As we started he promptly emailed me the LSR (Loan Status Report) a document that is included with every offer filled out by both the LO and the buyer. Soon after we were in contract, all going smoothly…. Everything was great.

Till it wasn’t. The LO was never available to answer his phone, he didn’t respond to his email. I finally had to call his office and get connected with his loan processor. The file had been in underwriting for over a week, we had been told we would get the file back in 48 hrs. I had no idea what the delay was. And with no communication, I was fearful of the worst. The selling agent was anxious too. We were supposed to close in just a few days, and I couldn’t get the lender to communicate!

When he did communicate, he assured me that the file would be out of underwriting that afternoon…. But it wasn’t and not the next day or the next… once the file did come out of underwriting it was to be just 48hrs till the documents would be at the title office for signing, and funds were to be sent at the same time as the docs so there would be no delay. It took almost another week to get the docs, and the funds were delayed beyond that.
Thank goodness the seller was patient. We extended the contract again, and again, again and finally closed.

It takes a team to purchase and close on a home. Each person is needed to do their part, working hard behind the scenes to make the transactions move along smoothly. If there is one member of the team not holding up their part, it makes the whole transaction stressful for everyone.

Communication is key, I don’t care if you prefer to communicate via phone, email, text or any other form as long as you communicate.

In this instance the buyer had her belongings packed in a truck and had fully moved out of her previous home, and had to stay with friends as she was homeless during the delays.

Castles in the Sand

This is a cautionary tale of buying foreclosed homes. The documentation you don’t get when you purchase a home is just as important as the documentation you do. One of the things missing in a foreclosure purchase is disclosure on the history of the property.

… A young buyer found the home of his dreams. He won the bid and eagerly awaited his closing date. In his excitement he would come by the neighborhood, walking his dog, meeting some of the neighbors, and peeking in the windows of his soon to be new home.

His enthusiasm was growing each day, until he peeked in the window of his soon to be castle and discovered the ceiling of the kitchen had fallen and was strewn across the counters and floor. Water was pouring down into the kitchen and upon further inspection into the living room as well.

The beautiful new carpet, the fresh paint, new kitchen and bath cabinets. All ruined…

With this type of news, the neighborhood gathered to commiserate with the saddened buyer. From this gathering it was revealed that this house had had similar issues in the past. In fact when the bank foreclosed, they had to do the same repair, and apparently the source of the water leak had not been corrected by the banks cleanup crew.

Now, the future of this young and disappointed buyer is still not known, but the banks cleanup crew is back again, doing the same job, with less mold to remediate, due to the speed the water damage was reported and addressed….

And the Bank, did they disclose the repairs they had to do prior to selling the property – No

Will the bank disclose the damage and repairs that are being done today… No

Because when you purchase a bank owned property you are purchasing “As Is”, “Where Is” and you not only do not receive disclosures, but sign documentation that says you can’t sue the bank for any items you discover in the future either.

New Real Estate Scam to be aware of


Brooklin Bridge

Originally uploaded by [desta]

I don’t mean someone selling the Brooklyn Bridge: When you are working with money, there is always a scam around. Some are easy to detect, others a bit harder.

This past week I was at a training class sponsored by Lawyer Title. They identified and shared with us the newest scam to be aware of. Sellers having a “dirty” Release of Lien. The release has been filed with the recorder’s office, so when the title company goes to provide clear title, there are no mortgage notes attached to the property. (Those have been released)

The scam is: the release if fraudulent. The seller still owes. The seller continues to make their payments, so no one is aware and once the home closes they walk away with all the proceeds from the sale of the home. Then they stop making payments and the house starts to foreclose.

When a call is made to the previous mortgage lender, the fraudulent actions are exposed. If this is detected by the title company prior to closing, the buyer is out of luck. They will get their earnest deposit back, but they won’t be getting the house. If it is not detected and the house closes, the title company is in for a big payment to the sellers bank as they guarantee clear title to the buyer.

So if a seller recently paid off their mortgage, and has the ‘paperwork’ to prove it. Be aware. Things may not be as they seem.

Home Owners Associations – some not doing so great

Recently, at a continuing education class, the instructor shared some facts about HOA’s. There are currently around 11,500 Home Owners Associations (I am not sure if that is in the state, or in the county I didn’t write that tidbit down) and of those HOA’s 3000 of them are upside down financially.

I was surprised to learn that as little as 15% of properties going into foreclosure in an HOA can cause financial stress to the balance sheet.

With our residential purchase contract, you the buyer, do get to check out and approve during the inspection period, the CCR’s (rules and regulations of the HOA). We are now suggesting adding in that the buyer to also receive the current financial records for the HOA. Knowing what the financial status is of an HOA, you will have a better idea if there are going to be large assessments in the future, does the HOA have reserves, and are they adding to the reserves each month.

Purple Barn – or why I love my HOA

Here in the greater Phoenix Valley of the Sun, we have Homeowners Associations eveywhere.  In fact, McCormick Ranch is the larger Homeowners Association with many (52) neighborhoods with their own associations.

Have a love / hate relationship with your HOA.  There is a reason to keep the broken down cars out of the drive, to keep yards kept up and tidy, and to make sure your neighbor doesn’t have a purple barn…

Housing Market Recovery in the wind

Who would have thought that the out lying areas would recover first.   We are seeing a huge number of homes selling in the outer communities like Queen Creek, Buckeye, and Maricopa.  Some of these towns are showing a 3 month supply of homes.  (the number of active homes on the market divided by the number of homes that sold in the past month.)  That is a huge difference from about a year ago when those areas had over a year supply of homes. 

Since the prices plummeted in those areas, we are seeing prices under 100k for a 2000 square foot home. Once again, the “drive till you can afford it”  is back. 

FHA requires 3 1/2% down payment, and you can ask for the seller to contribute up to 6% to closing costs.  With the first time home buyer tax credits, buying a home is back on the “to do list” in a big way.  

A beautiful view of the Sunset – I’ll pass

With spring in the air, in Scottsdale Arizona summer is around the corner.  With that comes our warm ok hot summer days.

If you are lucky enough to live in the mountains, or in a cooler local during July and August, then ignore what I am about to say.  If you are like me, living here in Arizona all year round, then listen up.

The beautiful sunsets are not your friend.  The way most of the homes are designed here are with the living area, and master bedroom to the back of the house.  If the back yard faces to the setting sun (west) you are not going to enjoy your back yard in the heat of the summer.  In fact, you will most likely do everything in your power to block the sun (and your view) to reduce the heat.

Homes with west back yards have much higher cooling bills during those summer months.

So what direction should you be looking to have your home face?  The first preferred direction is to have the back of your home face South, getting the sun in the winter months and the shade in the summer.   Our MLS even has an identifying feature of North/South.

Some people love an east facing home, so they have a shady back yard and they enjoy the outdoors in the afternoons.  An east facing home, will still have rooms facing west, and those will be hotter than the remainder of the home.

So when considering a home consider your enjoyment, are you looking to live there seasonally, then south or west is perfect, enjoy the sunsets!  If you are going to live in the home year round, then north, south or east is the way to go!