July 26th, 2009 at 1:39 pm 
For certain, the Phoenix real estate market has seen both sides of the emotions; either a rapidly declining market fueled by negative economic news, a downturn in employment or rising interest rates, or an increasing market pushed on by available money and eager buyers. Is there a middle ground for a normal real estate market? Some say yes, but that lasts almost as long as an ice cube on the sidewalk in Phoenix in July. (About 5 minutes).
In reality, Phoenix is most often a stable market, either on a moderate rise or a gentle pull-back. Rarely do we see the markets we saw in 2005 and 2006, when builders could not build them fast enough, lenders were pushing money to anyone who literally had a pulse, and sellers who saw their values increasing by the day. That was an oddity and most likely will not occur again for quite some time. Contrast that to a market we have been in for the better part of 2 years with an increasing inventory due to foreclosures, lenders pulling back and not making loans and sellers seeing a rapid decrease in values. The fuel to that fire is the fact that many borrowers in 2005 and 2006 obtained teaser rates at 3% or lower, paying only interest. Often, buyers ended paying less for a mortgage for a big house than they were paying for rent on a small apartment. That was very attractive. They never projected that they could not re-finance in 24 months when the rates changed. Lenders promised to refinance as the values would continue to increase 20 – 30% a year. Well, we all know that the values went in the opposite direction, and many of those borrowers have subsequently lost their homes.
So, where are we now, in the middle of 2009, and most likely at the beginning of the climb out of the bottom.
Here's why we feel we are climbing out…
May, 2009 saw 9760 sales in the Phoenix Metropolitan area. That was the 3rd highest sales month in 5 years. (Sales are contracts in escrow waiting to close)
May, 2009, the existing inventory in the MLS system was 44,772 on May 31. It was 55,904 on January 1.
Some caveats to the improvements in the market.
- We expect an increase in foreclosures through the summer and into the fall. Lenders sat back after the moratorium last winter and started the process up again in the spring.
- Stricter FNMA and HUD regulations have slowed the lending process, causing frustration among buyers and sellers and causing deals to cancel.
- Government regulations such as the HVCC laws (Home Value Code of Conduct) have hamstrung appraisers, lenders and agents with a bevy of convoluted regulations that befuddle many buyers and sellers.
- Local statutes or regulations, such as revisions to a statute here in Arizona that relates to mortgage deficiencies, can cause confusion and in some cases panic among homeowners. While good intentioned, the net result is a law that places an unfair burden on homeowners in default.
Thus, we are cautiously optimistic, seeing more lenders willing to loan, more buyers ready to buyer, foreign investors buying with cash and available inventory for them to buy. Lenders who have foreclosed have become more realistic in pricing, willingness to do repairs and incentives to the buyers. We are confident that we are climbing out of this hole and will return to a normal, stable market by the spring of 2010.
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July 13th, 2009 at 2:49 pm
SUMMARY OF S.896, TITLE VII-Protecting Tenants at Foreclosure Act of 2009
On May 20, 2009, President Obama signed into law a mortgage rescue bill that included the above referenced Act. In short, any foreclosure of a federally-related mortgage loan or any residential real property foreclosed on after May 20, 2009 is impacted by this Act.
The major change to existing Arizona law is that arguably any successor in interest to such property shall assume the interest in the property subject to the existing bonafide lease. If that lease was entered into by anyone other than the mortgagor or the child/spouse/parent of the mortgagor, that lease was entered into more than 90 days before the notice of foreclosure, the lease was the result of an arm's length transaction, and the lease requires rent substantially the same as the fair market rent, then that tenant shall have the right to continue to reside in the unit under the same terms and condition of the lease. The tenant must pay rent, permit access pursuant to ARS 33-1343, etc. If they do not, the new owner has all rights and remedies under the lease and Arizona statute.
There is one major exception: In the event that the new owner wants to occupy that unit as their primary residence, the owner must give the tenant a 90 day written notice of termination of the existing lease.
If there is no written lease or if the tenancy is month to month, the new owner must give the tenant a 90 day written notice of termination of the tenancy.
Section 8 leases are subject to this law. However, short sales are not. Additionally, the tenant has no rights under this Act until and unless the home is foreclosed on, the loan was a federally related loan, the lease was in place at least 90 days before the foreclosure, and the lease was an arms-length transaction for at least market rent to someone who is not the owner's child, spouse or parent. Simply receiving notice of a pending foreclosure does not trigger this Act.
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June 30th, 2009 at 1:34 pm
Is that true? In Arizona, do we see a significant slow-down of sales when the temperature climbs to 100 and above?
Not necessarily. While some agents feel that the heat stops people from looking at homes, that is simply not true. Our market is truly a 12-month market, certainly with peaks and valleys. April historically is the strongest month for real estate sales, both locally and nationally, while December is the weakest month. The strength of April is generally associated with weather; as the northeast and other parts of the country start to thaw out, those that hibernated in the winter come out and start looking. December, however, is not weather-related. It is that time of year from Thanksgiving to New Years where people are simply focusing more on family, gifts, etc and not real estate.
June, July and August are statistically strong months in Arizona. And, this year, we predict it to be even stronger, as several factors are in play. They are…
- The market is coming out of a severe downturn and by simple timing, is improving.
- Home prices have not been lower in decades, and many buyers are getting into the market.
- Lenders, while actually tightening the rules, have money and are lending. In this market, however, someone needs to have a strong credit rating and a down payment in order to qualify. Believe it or not, lots of people do and they are ready to buy.
- Investors are still grabbing foreclosed properties and placing them in the rental pool, believing that since many people cannot qualify to buy will still look to rent.
As a result, we expect a strong 3rd quarter for 2009 going into the fall. While lots of real estate agents take the summer off, or a considerable amount of time, those staying in town and working are the ones that will grab these deals.
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June 4th, 2009 at 4:22 pm
Does the VA have the same requirement as FHA regarding the 90 day "hold" rule for the seller of a "flip property?" ...........
This is a popular question lately. NO THEY DO NOT. But you have to be careful as to the transaction on who is involved and the increase of sales price. What does that mean? If the underwriter determines that title did change during that prescribed period of time via a non arms-length transaction, that could spell trouble. Also there is a greater possibility of a review appraisal being done by the lender very close to close of escrow, which could stop a deal in its tracks.
The 90 day hold rule imposed by FHA means that for a borrower to obtain an FHA loan to buy a house, the FHA lender must be certain that title did not transfer on the proeprty within 90 days, or that there has not been a significant increase in price via any transfer after 90 days. Case in point. Buyer bought a house for $129,000 in December. Did $18,000 worth of work and put it on the market. Received a contract 107 days after they took title, so well past the 90 days. Everythings OK, right? Well, maybe not. They accpeted a contract for $185,000, which the current comparables support, but the FHA underwriter, just before closing, killed the deal, and said in a soft or declining market, the price escalation was excessive.
Lesson learned? Short flips of title or excessive value increases will almost certainly fail the underwriters approval.
Credit for the content to Mike Neill American Alliance Mortgage Company
480-505-2202 x 208 E-Mail: mike@aamcbank.com
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May 28th, 2009 at 2:04 pm
This news article was sent to us by Mike Neill, American Alliance Mortgage Company. You may reach Mike at mike@aamcbank.com
NEW YORK – A record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit. And the wave of foreclosures isn't expected to crest until the end of next year, the Mortgage Bankers Association said Thursday.
The foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process.
At the same time, almost half of all adjustable-rate loans made to borrowers with shaky credit were past due or in foreclosure.
The worst of the trouble continues to be centered in California, Nevada, Arizona and Florida, which accounted for 46 percent of new foreclosures in the country. There were no signs of improvement.
The pain, however, is spreading throughout the country as job losses take their toll. The number of newly laid off people requesting jobless benefits fell last week, the government said Thursday, but the number of people receiving unemployment benefits was the highest on record. These borrowers are harder for lenders to help with loan modifications.
President Barack Obama's recent loan modification and refinancing plan might stem some foreclosures, but not enough to significantly alter the crisis.
"It may be too much to say that numbers will fall because of the plan. It's more correct to say that the numbers won't be as high," said Jay Brinkmann, chief economist for the Mortgage Bankers Association.
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May 20th, 2009 at 7:55 pm
With the flood of foreclosed homes on the market, many agents are faced with the task of convincing the lender/seller of their statutory obligations to make certain disclosures or provide certain services. They are:
Federal Lead-Based Paint Disclosure. This is a federal rule and lenders are not exempt. Although they will try and cite the exemption to the rule that states it is not needed “…in foreclosure transactions…” they fail to realize that they are misinterpreting that rule. When they foreclose on the property; THAT is the foreclosure transaction. But, when they sell it to your buyer, they are not exempt and if the property was built prior to 1978, they must provide the disclosure.
Septic Certification. This is a state law that went into affect a few years ago, whereby upon transfer of title, any property that has an in-service septic tank must have the tank inspected and serviced and thus, certified before title is transferred. This is a statutory obligation of the seller, even a lender who foreclosed, to provide that certification, and the agents should be proactive in getting this accomplished.
Affidavit of Disclosure. Another state law, that went into affect around 2002, which requires a seller of real property that is in the county (not in an incorporated city) and never subdivided, to provide a disclosure statement to the buyer as to certain information regarding the property. The actual form itself is required by statute, so the seller must complete and sign it, have it notarized, provided to the buyer 7 days before COE. Our AAR purchase contracts change that last part to 5 days after acceptance. Once completed and signed by the buyer, the Affidavit must be recorded.
In all three cases above, the seller is obligated to provide the disclosure or service, and they cannot be waived. Even if both parties agree to waive either their rights or obligations under a statute, any such waiver would be deemed unenforceable y the courts.
Thus, the agents; both listing agents and buyers agents, must be aware of the necessity of any of the above, and be instrumental in making sure they are completed and delivered to any buyer.
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May 15th, 2009 at 8:59 pm
Technology scares many people, including real estate agents for many reasons. Are you one of those that are intimidated by technology? Probably not, if you are reading this blog (on a website). But, are you using all the tools you could without maxing out your credit cards?
When a new agent joins the business and asks, “how much will it cost to get started?”, most brokers and managers respond with the typical answers… schooling, testing, license fees, start-up fees to the broker, the local association, MLS etc. What is often overlooked are the costs for the necessary basic tools to get started. Agents often think in terms of what type of car, what clothes they need, etc, yet so often a new agent is not guided on the levels of technology that would help develop a career quicker. Waiting to make enough money to buy the needed tools would be like receiving a prescription for a needed drug but not filling it.
We asked an expert on real estate technology, Jeffrey Raskin, to give us the three levels of technology that an agent should look at.
Bare minimum essentials: (total cost averages $1100 plus monthly fee for internet and cell phone usage)
- A home computer with high speed internet access and a printer (preferably with a fax built in)
- A decent point and shoot digital camera
- A cell phone (you probably already have one, but be careful to separate business and personal) with basic voice service.
More sophistication and use: (total cost averages $2700 plus monthly fee for data plan)
- Replace the home computer with a laptop computer. (or add the laptop)
- Replace the point and shoot camera with a single lens reflex digital camera
- Add a smart phone for your business line (remember, separate business from personal) for access to e-mail, Internet, downloaded material. (would need a monthly data plan with the phone).
Top of the line: (total cost averages $3500 plus fee for fax service)
Tablet or notebook computer allowing digital signatures
Full function scanner
Add e-fax service
Add a high quality (HD) video camera
Here are some other tips for professionalism with technology:
- Your voice mail message should be clear and short… No music or background noise. Don't allow your voicemail to fill up.
- Don't use your home or personal phone numbers. You do not want children or visitors answering your business calls.
- Use a profession e-mail domain; either your server (such as mine, jon@desertsageseminars.com) or your brokers'. Avoid using the web based free programs such as Yahoo, Google, Hot Mail or MSN, since your clients will believe that you are not professional enough to have your own.
- Use a professional e-mail address, such as your name at your server or broker. Avoid complicated, lengthy addresses or those that could be deemed unprofessional. You want people to remember your e-mail address. One such as the#1bestagentphx@yahoo.com sends the wrong message.
Once you buy any tool, you must have the drive and commitment to learn how to use them to the fullest. In the Phoenix metro area, Jeff Raskin offers classes on technology and the use of most of the tools we have described here. Visit Jeff's website at www.technology4realestate.net or e-mail him at jraskin@usa.com for information about his classes.
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May 13th, 2009 at 6:12 pm
We are pleased to provide a guest blog regarding mortgages and lending. Mike Neill of American Alliance Mortgage Company will be our guest blogger… Mike can be reached at 480-505-2202
or via e-mail at mike@aamcbank.com
§ When using a non-occupant co-borrower, such as parents, the occupant borrower is not required to have any income or assets of his/her own.
§ 2 to 4 unit owner-occupied properties are eligible for 96.5% financing at the same interest rate as 1-unit homes.
§ Mom and dad can lend, (as well as gift), some or all of the money for closing, and put a second lien against the home that exceeds 100% Loan to Value (LTV = Loan Amount/ Home's value) Note: The $8,000 First Time Home buyer Tax Credit can be used to pay Mom and Dad back!
§ FHA has NO declining market policy reductions in LTV.
§ Seller Contributions. The seller (or other interested third parties such as Real Estate Agents, builder, developers, etc., or a combination of parties) may contribute up to six percent of the property's sales price toward the buyer's actual closing costs, prepaid expenses, discount points and other financing concessions.
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May 12th, 2009 at 6:30 pm
So, you took a listing on a potential short sale, and the seller's lender is acting as if they are in control. Are they?
Well, to some extent, yes. While your seller still owns the house, will sign any contract, deed and closing papers, their lender will say yes or no to the deal. Since we are asking the lender to accept less than they are owed, they can say no to deal, thus stopping the sale. Thus, they often act as if they are in control, since they do control that part of the deal.
Your seller will have some control once/if the lender approves the short sale. The lender might require something from the seller that the seller cannot or will not comply with. At that point, the seller could say no and cancel the deal.
In essence, the seller's goal should be to sell the house. To do so, they must get their lenders approval. That might mean giving up some control, and if so, if that accomplishes the task at hand, then so be it. Control is important, but not everything.
Always keep in mind; as the listing agent, your client is the seller, not their lender. You should follow any instructions from your seller, yet might be reluctant to follow any from the lender. If the lender puts any obligations on you, be sure to discuss that with the seller before proceeding.
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May 11th, 2009 at 12:27 am
Do you feel like you are working harder for less money?
Does it feel like every deal takes more and more time?
If so, you are not alone, and you are correct in both. We are working harder for less money, and, time grows shorter as each deal takes more time. Here are some ways you might be able to overcome those issues.
- Time management. Yes, that phrase again. In a lifetime of one or many careers, we have hard the concept over and over again. But, if ever it was a critical tool, it is now. Imagine years ago you learned to be a juggler. Get to three balls in the air, and you were good. Juggle four bowling pins, and the circus hired you. Now, a juggler, just to get an audition, needs to juggle a bowling ball, a sword, a chainsaw, a lit candle and an orange, all at the same time. For the same or less pay. Do you feel like that juggler?
Managing your time will help soften that blow.
Plan your day. That's right, write it down. Use a calendar, and be sure to allow enough time for each activity. Do not overlap and leave time for personal issues, such as; do you need to go to the bank, pick up your dry cleaning, etc.
- Avoid activities that steal time from you. Sounds simple enough, but many things in a day can cost you time. Once you are determined what needs to be done, often other people can waste your time. It is a fine line between managing your time effectively and insulting other people; but, someone stopping you to waste your time is no different than them reaching into your wallet and taking money from it. Not so easy, but once you master it, you will be more in control of your time.
- Delegate… get some help, even from your family. Have someone else handle the mundane items, such as submitting ads, paperwork to your broker, and other issues that you must do but does not create buyers or sellers.
Given that each listing and sale takes more time to generate and close, you need to take more time to work on them, therefore using good time management skills and planning your actions will allow you to be more productive.
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