I hear this all the time “what should I offer”, I tell my buyers to offer their highest and best offer if they want to buy a house.  Recently I had a client that saw a house and it had all the things in a new home they wanted and need.  I advised my client that the house had an offer and was at the counter stage of the offer.  I explained to my client that if you to buy this house we need to put an offer in tonight before the  owner counter come back.  Well my buyers wanted to go home and think about the offer never called me back that night.  The next day their dream home was in pending status under contract.  My clients lost out on their dream house, I took them out to view other homes but that dream house was always on their minds.  My client now is hoping the dream house  contract will fall out of contract but this house is a regular sale.   Some good advice for all buyers, if you see a house you like put an offer in immediately, dream homes don’t last long on the market.  When buyers go out with their agents have all your necessary documents ready to go such as your earnest money check and proof of funds.  Signing an offer is made so easy now  for buyers, you don’t have print your offer  just sign them online with esign.  Most realtors want to make your transaction as smooth as possible.  So next time you are out with your realtor and see your dream house, put an offer in right away going home to think about your dream house will cause you to lose out.  If a buyer offer their highest and best offer, you most likely with get your dream house.

Stephen W. Brooks

623-202-3833

This program seems to be a streamline program to expedite Phoenix short sales.  More investigation is being done and it appears that only certain loans may qualify.  I would guess that these loans are Chase owned loans and are the exotic type loans like the pay option arm or negative am loan, and am sure that the Phoenix real estate community will be reporting any successes of this new and exciting program.  A tip of my hat to Chase for making an aggressive move in the industry to give Metro Phoenix homeowners the option of an incentive based short sale as opposed to a foreclosure.

I will continue to report my progress and experience with this new program and hopefully the other big banks will follow the lead so we can end the current housing crisis.

For more information and to see if you qualify for this program email me at bryan.choate@exprealty.com or call me at 480-313-2729.

On average, 21.2% of single family homes have received at least one Notice of Trustee Sale (the bank is letting you know that you have an auction date) since the beginning of 2006.  !!!!!

On average, 12.6% of the single family homes in Maricopa County have been foreclosed (ie the bank took them back) with a recorded Trustee Deed since the beginning of 2006.  That’s just over one in eight homes.  !!!!!  NOTE:  there are some 1,300 or so unrecorded Trustee Deeds as of December 22.

So where in the Valley has this foreclosure percentage been highest?  Here are the top 10 zip codes with the highest foreclosure rates:

1-85043 Phoenix

2-85353 Tolleson

3-85037 Phoenix

4-85335 El Mirage

5-85354 Tonopah

6-85326 Buckeye

7-85323 Avondale

8-85033 Phoenix

9-85379 Surprise

10-85031 Phoenix

All of these are in the West Valley; in fact, it isn’t until #24 that you find a property not in the West Valley (it’s in S. Phx).    There’s also evidence that foreclosure prevention attempts are not successful in these areas (or maybe not attempted?).

We see that the two types of areas least affected by foreclosures are those containing higher end homes and the 55+ communities. In many of the luxury home areas there is evidence reflecting a higher success rate in avoiding foreclosure, most frequently through a short sale (or maybe more aggressively or consistently pursued?).

It almost goes without saying that foreclosures have a direct effect on home pricing. Hence the ZIP Codes with the most foreclosures are usually those where home prices have fallen the most, while those with lesser foreclosures have fallen the least. However, the relationship is not exact.

Sun City West 85375 has the greatest preservation of $/SF across the whole valley. But then it also has had the lowest percentage of foreclosures. Again looking for anomalies we see that Chandler 85286 and 85249, Gilbert 85233 and Mesa 85205 have preserved their pricing better than would be expected based on their foreclosure rates.

We can also see that many parts of the Southeast Valley, particularly Tempe, Ahwatukee and South Chandler have preserved their pricing much better than Maricopa County as a whole. This is also true of most of the Northeast Valley.

It is true that foreclosures cause home prices to fall, but it is a vicious cycle since it is also true that falling home prices cause foreclosures – they cause more homes to go underwater and their owners to feel less motivated to maintain their loan payments.

What does this mean to you? It depends from what angle you’re looking.  If you’re looking to short sell, we should look at the trends in your neighborhood and act accordingly.  If you’re looking to buy, ‘a deal’ isn’t necessarily found in a neighborhood with high foreclosures.  A deal is a good price on a home you love in a neighborhood you’re excited about.

Please contact me to discuss your specific situation and needs.

“Casting about in MLS data for signs of a market bottom and subsequent recovery has proved elusive over 2009 and 2010,” the report concludes. “The one-step-forward-two-steps-back phenomenon has become all too familiar in our fragile recovery.”

• The PPI predicts that the median sales price of a home in November will be about $120,000, relatively unchanged from October. The median is expected to drop in December to $117,000, rise in January back to $120,000 and then drop once again in February fairly dramatically to $105,000.  The median is the number in the middle, so there are as many houses priced below the median as above the median.
• Average sales prices are projected to rise slightly in December but to fall in both January and February. The estimate is for the average price to be about $161,200 in November and drop to $145,800 in February.
• New inventory declined in October, but total inventory increased.
• October listings represent nearly seven months of supply making this a buyer’s market. A seller’s market is a four to five month supply.
• Pending foreclosures have been trending downward slightly for the past 12 months.
• Distressed sales, short sales and lender owned sales peaked in September representing 74 percent of total transactions. In October distressed sales represented 65 percent of the total.

For guidance on your specific needs, please contact me at 602-741-1325.  Happy holidays!

The explanation for this reduction in credit score is that the request for the loan modification paperwork is the first indicator that they’re at risk which means a credit score ding.    Consumer Data Industry Association, a trade group in Washington which represents the credit bureaus, says that people would not be asking for help unless they were having sever money troubles.  “The consumer is going into the program because they’re in a financial bind; other lenders would need to be aware of that”. (Norm Magnuson, spokesman; Yahoo Finance 2010).

So, as you’re making decisions about what to do with a mortgage that you’re not happy with, make sure you speak to someone who has experience with not only loan modifications but also short sales to get all questions about credit scores and your options answered.  Go to www.BethAHickey.com for more information on distressed property transactions.

Sales volume was down 6% from August while average pricing is also down 2.5% (price per square foot down 3%).  If you look at sales from Septeber ’09, sales were down 13% and pendings down 22% from last year.  Although this sounds bad, month to month pendings have been increasing about 4% so it seems buyer activity is keeping somewhat dependable and this will positively keep inventory moving if it can be sustained.  The supply on the market increased 2.7% from August, primarily by properties <$200k.  With this price range being attractive for investors, both for flipping and buy&hold, we could see an increase in buying activity by this sector of our market and since inventory is increasing, prices should remain favorable for quite some time.  Foreclosure notices are holding steady, which would which lends to increasing inventory (and hence maintaining favorable buying prices).

For my full Market Trends Report, please go to www.BethAHickey.com for a request.  I will not contact you outside of this report unless requested.

So first, let me start by stating the common definition of a “short sale”. The situation is this. Someone (we will call them the “owner”) purchased a home and financed it through a bank (we will call them the “lender”). Or, another possibility is that the owners took out a home equity line of credit (referred to as a HELOC) The sellers likely lived there for a time and thought all was well. Until our market went SOUTH and they either lost a job…took a decrease in pay…or had some other life altering situation that caused them to have to move.

At this point the owner realizes they have to sell their home. This is an emotional time for them. Then…they call their favorite Realtor in to talk about the sale. This is the point that it becomes clear just how dire their situation really had become. They owe considerably more than the house is worth. The answer? Ask the bank to take less than what is owed and allow the sale. This is now a “short sale listing”.

THE PITFALLS:

Anyone who has been through this process can tell you the potential pitfalls. For one…the bank may NOT approve the short sale. If you have more than one loan the second lien holder may not agree to release the lien. If you are past due on your HOA (Home Owners Association) dues…it can be a real issue getting them to release the lien…and the banks (lenders) do not typically want to payoff these types of liens to allow the sale.

Any good listing agent is going to INSIST that the sellers go to an attorney AND a tax advisor PRIOR to listing their home to discuss THEIR SPECIFIC SITUATION! This is one step you do NOT want to skip. Every deal is different and every seller has potential future risk based on the decisions they make on how to get out of their home. Short sale or foreclosure? That is NOT a question for your Realtor. It is a LEGAL question for your attorney. Will you have to pay taxes on the deficiency? Again…not a question for your Realtor. Ask your CPA or other tax advisor. (I have a list of attorneys and tax advisors if you need a referral)

So keep in mind the lender in first position is the one we have to work with to get the transaction to proceed. They agree to take less than what they are owed…and they MAY agree to give part of their proceeds from the sale to the “junior” lien holders. They also absorb all of the seller’s costs such as escrow fees, recording fees and Realtor’s service fees (commissions). Other fees that may typically be a seller’s fee, such as title insurance, they may or may not agree to pay.

Which brings up another point. How does this logistically work? Well…the owner lists the home with an EXPERIENCED short sale agent (hopefully experienced!)…and obtains an offer to purchase. Then the offer is submitted to the lien holder(s) for approval. Sounds simple…right. NOT! I like to refer to it as “reverse qualifying”. The seller (most often) has to prove to the bank that they are no longer able to afford the payment to remain in the home. The bank wants to be advised of the “hardship” such as job loss, income reduction, divorce or job relocation. Just because you owe more than your house is worth is not usually enough of a reason for the bank to allow a short sale. Now…having said that…I have seen banks accept short sale offers when the sellers had assets. But as of this writing, that is the exception…not the rule.

So the bank gets the offer and reviews it. Again. Sounds simple…and NOT!  They can take FOREVER. The longest one I have personally been involved with I was representing the buyer and it took 14 months! Patient guy huh! 

OK…back on track…the bank reviews the offer and typically orders a BPO (Broker Price Opinion). They then decide what they will accept and what THEY will pay to the “junior” lien holders. For example, the first lien holder may offer the second $3000 from their proceeds to agree to sign off and let the deal close. AND they may have to offer the HOA a payoff as well. But it has been my experience that the do not want to pay the HOA anything at all. So what does this mean? The sellers and buyers have to come up with a solution to get the HOA fees paid. This can kill the deal…BUT if it is a really good buy for the potential buyers…they might want to participate in paying the past due fees to make the transaction close so they can get into the home they want.

When the first lien holder has reviewed all of the documentation and the BPO, they then indicate if they will accept the offer…or counter with a sales price they will accept. This is presented to the buyers and sellers and hopefully all can come to an agreement. At this point the lender issues an Approval Letter.

This is where is can get interesting. The lenders have become VERY sneaky about slipping things into the approval letters. One of the most common occurrences is that they attempt to get the sellers to sign a personal promissory note for the deficiency. I suggest that if the sellers have ANY questions about the wording of the approval letter(s) they have them reviewed by the attorney they originally consulted with.

OK. So let’s assume we have made it through the entire process and we have a deal. This is the time it really just turns into a typical transaction. Buyer’s do their inspections (with the expectation that no repairs will be made) and the buyer’s new lender starts the process of originating their new loan.

But…what if there are property conditions that the NEW lender will not accept in order to finance…like termites for example? Well…back to the negotiations with the seller’s lender. Sometimes they will agree to assist in getting things repaired…and sometimes they will not.

It’s a good idea to make sure your Realtor has a pretty good idea what kind of property conditions cause issues and they can be addressed prior to starting to show the home to avoid last minute problems.

As far as the buyer PITFALLS are concerned…they biggest one is the wait. And even worse…the wait only to find out the bank will not take the offer and having to start the process all over again. I have found that most buyers will live through the process once….but if it does not happen they choose to NOT look at short sales when they go back to shopping. The bad part for the buyers and the buyer’s agent is that they have NO control over anything. All they can do is wait and hope the listing agent is doing their job. Which means calling the lender OFTEN and negotiating HARD to get an approval everyone can live with.

Another buyer potential PITFALL is that the seller is obligated to make NO repairs…so the home transfers “as-is”. The buyer is allowed to have inspections to discover condition…but most often (and per the short sale and as-is addendums which are part of the contract) there will be no repairs made by the seller.

Ok…that was the LONG part of this writing…the Pitfalls…but….

THE PERKS:

For the seller it is a good chance to damage their credit LESS than if they let the bank foreclose on their home. They will be able to purchase a home again more quickly and do less overall damage to their credit.

Another “perk” for the sellers is that this process can take A LONG TIME. If they choose to, they can remain in the home during the process.

And likely the biggest PERK is for the buyer. We have seen some super deals in the way of short sales. If the buyers are patient and can wait out the process…they may end up with a great house at a great price!

So in conclusion, as the old saying goes, ‘It is what it is”! If you are a buyer in this market and you are in no rush…then purchasing a short sale may just be the place to get your DREAM HOME at a price you can afford!

If you are looking for a GREAT agent to help with your real estate needs please e-mail me atAdele@GreaterPhoenixHomes.com or give me a call at 602-504-3898 or 888-897-7821 x 114. Plus, I have a GREAT search tool on my web site that gives you the ability to search the entire MLS…just like agents do. Very COOL! Go to Metro Phoenix Homes and check it out! YOU can create and save as many searches as you would like.

THIS IS THE BEST MOST ACCURATE SEARCH OF OUR LOCAL MLS WHERE YOU CAN SEARCH JUST LIKE AGENTS DO!