Buyer Help

Now, more than ever, it’s important to consider why you’re buying a home.  Nobody knows exactly when the market is going to heal and what the market is going to look like once it does.  Expert economists have differing opinions about what the proposed $750 trillion bailout will do to our economy - short term and long term.  (and given our government’s track record in economics, we can expect some unintended consequences as well.)

Because the Phoenix market is different from the national market, and because every neighborhood within the Phoenix market is different from the next, it’s very difficult to make blanket statements about the future.

Are you going to live in the home for a decade (or longer)?  Or is a relocation in a few years a distinct possibility?  Are you willing to take a risk on getting a great deal on a bank-owned home?  Or would you rather rent until things settle down?  What would you do if prices fall another 5%?  10%?  20%?  How would you feel if your home is worth the same as what you paid for it in 1 year?  2 years?  3 years?  What about if you decide to rent & miss the market’s bottom?

There’s no right or wrong answer, per se.  Each individual &/or family must make their own decisions.  I encourage you to ask yourself these difficult questions.  And you’re always welcome to shoot me a call/email if you want somebody to brainstorm with.

Your campaigning for normalcy in 2009 Realtor,

Chris Butterworth

You’re ready to buy a house.  You write up an offer with your Realtor.  What’s next?

You’re trying to sell your house.  Your Realtor brings you an offer from a buyer.  What’s next?

The escrow process always raises questions from both buyers and sellers.  It can be confusing, and even overwhelming, because there are a lot of variables and moving parts.  On the other hand, every detail is spelled out line by line in the purchase contract, so there shouldn’t be any surprises.

It’s a good idea to read your purchase contract carefully (or even a blank, sample contract) and to discuss it with your Realtor before you have an offer in place.  But just in case you didn’t get a chance to do that, I’ve listed some of the most common events and time frames below.

Loan Status Report (LSR).  The Buyer should have already met with a lender, and should be able to provide the Seller an LSR.  This will show the Seller that the Buyer is able to obtain financing to complete the purchase.

Earnest Deposit.  The Buyer should be prepared to write a check on the day she makes an offer.  The check is typically made payable to the title company, and is held in escrow until the conclusion of the contract.  If the contract closes successfully, the Earnest Deposit will be counted towards the Buyer’s cash to close.  If the contract is canceled, the Earnest Deposit will be awarded to either the Buyer or Seller, depending on the timing and reasons for the cancellation, along with the rules spelled out in the Contract.

Day 0.  Your contract may be accepted as offered, or it may have several Counter Offers and Addendums included.  The Counter Offers and any Addendums add, define, clarify, subtract, or otherwise modify the terms of the original Offer, and are included as part of the Contract.  Once all parties have signed these documents, and the documents have been delivered to the other party (in writing), you have a valid Contract.  This date will be Day 0 for counting purposes.

Seller’s Disclosures.  Typically the Seller has 5 days to provide the Buyer a copy of the Sellers Property Disclosure Statement (SPDS) and a copy of their Insurance Claims History.

Buyer Acknowledges SPDS.  The Buyer will need to sign the SPDS and return them to the Seller.  This is not to say she agrees with them; merely to say that she received a copy of them.

Buyer Inspection Period.  The Buyer has 10 days to inspect the home - any and ALL aspects of the home.  If the Buyer finds anything she doesn’t like, she may either A) Cancel the contract and receive her earnest deposit back.  B) Give the Seller the opportunity to fix the items she disapproved of.  or C) proceed with the purchase.  If the Buyer chooses A or B, she MUST notify the Seller in writing before the end of the 10th day.  (and, of course, we have a pre-written form just for this purpose, called the Buyer’s Inspection Notice and Seller’s Response form - BINSR for short).  Failure to give any notice to the Seller is the same as option C.

Seller Response.  If the Buyer chose to give the Seller an opportunity to fix the items she disapproved of, the Seller will have 5 days to respond.  The Seller also has 3 choices to consider:  A) he may agree to fix everything the Buyer requested.  B) he may agree to fix some, but not all, of the items the Buyer requested.  C) he may not agree to fix anything.  Much like the Buyer during her inspection period, the Seller needs to respond in writing within the given time frame (5 days), especially if he chooses A or B.  Failure to respond is the same as choosing option C.

Timing - if the Buyer took all 10 days to inspect the home, and the Seller took all 5 days to respond, we’re now at Day 15 of the transaction.

Buyer’s Decision.  Once the Buyer receives a response from the Seller, she will have to make another decision.  This decision is much more simple, and there are only 2 choices.  A) she may agree to the Seller’s response and proceed with the transaction, or B) she may decide to cancel the contract (and be entitled to receive her earnest deposit.)

Timing - if everybody took the maximum allowable amount of time (10 days, 5 days, 5 days), we would be at Day 20 of the transaction.  So it can take about 3 weeks to get through the inspection process.

Quiet Period.  Many times the inspection process is wrapped up weeks before the scheduled closing date.  This will cause a Quiet Period, especially compared with how much energy can be spent on the inspection process.  The Seller will be working to make any repairs he agreed to make, and the Buyer will be working with her lender to make sure the loan is in order.  Both parties will most likely be working on other logistical items, such as packing, movers, utilities, etc.  But don’t get too complacent, because things will get hectic again!

Final Walk Through.  Sometime about a week before the closing date, the Buyer will do a Final Walk Through of the home.  She wants to make sure the home is still in "materially" the same condition as when she made the offer, and she wants to make sure the Seller did all the repairs he agreed to do.

Seller Signing.  The Seller will go to the title company’s office to sign his portion of the papers, generally 2-3 days before the scheduled closing date.

Buyer Signing.  The contract calls for the Buyer’s Loan Documents to be delivered to the title company 3 days prior to the scheduled closing date.  The Buyer should be prepared to sign his portion of the papers at the title company’s office at this time.

Buyer’s Funds.  The Buyer should be prepared to bring certified funds to title, or send a wire transfer, preferably on the day he signs.

Closing.  The title company will handle everything for the closing, and will make sure that any & all requirements are satisfied.  They will make sure they have all funds from the Buyer - Earnest Deposit, Certified Funds for the Down Payment + Transaction Costs, Loan Funds from the mortgage company.  They will make sure they have accurate payoff information for the Seller - 1st mortgage, 2nd mortgage, any other liens.  They will make sure they have everybody’s signatures on the Deed and any other legal documents.  Once they have everything accounted for, they will record the Deed at the County Recorder’s Office to show the change of ownership, and they will make the Seller’s Proceeds available to him.

Delivery of Keys.  Once we have word from the title company that the deed has been recorded, we’ll want to get the keys into the Buyer’s hands as quickly as possible.

** Disclosure ** The numbers, dates, and terms used here represent a hypothetical transaction in Maricopa County, Arizona.  This article is intended to provide an overview into the general flow of a transaction, and should not be taken as gospel.  Your transaction may include terms and dates which are very different from the examples given here.  You are advised to read your contract carefully, and to consult with your professional representation.

And that’s it - easy as pie.  A stressful process, but an easy-to-understand process.  An understanding of the process, couple with a good game plan and lots of open communication can go a long way toward relieving some of that stress!

Your ready to answer any other questions you might have Realtor,

Chris Butterworth

Here in Phoenix we count ourselves lucky for a number of reasons – great weather, moderate cost of living, no natural disasters, plenty of parking – overall it’s an easy place to live. One thing that people don’t tend to think about is how lucky we are with regards to our local termites.

I’ve had clients who moved here from The South (Florida, Atlanta, Houston). They talk about termites being the absolute worst thing you could find in a home; apparently if you have a termite infestation in The South, your home can be ruined within a year. It reminds me of a Bugs Bunny cartoon where a swarm of termites turns the wood into sawdust right before your eyes! It’s not like that here in Phoenix.

There are two different types of termites in Arizona – subterranean and dry-wood, and although neither one is going to eat through your home in a matter of months (or even years), the treatment for the two is very different.

Subterranean Termites

Subterranean termites are the kind most often (frequently, actually) found during the inspection process of selling a home. They live underground (hence the name), and they make little tunnels up into the home to forage for food. These tunnels (mud tubes) are what the inspectors look for as evidence. The most common & most effective treatment is to drill holes 12-18 inches apart (either around the entire home’s perimeter or just around the affected area) & inject a pesticide called termidor. Then, if more tubes are seen in the future, they can “spot treat” a given area.

These termites are very small, and because our air is so dry our wood is very hard, making it difficult for these little guys to do a lot of wood damage. Their mud tubes are usually seen in drywall rather than wood; they climb up through the drywall & occasionally take a taste bite of the wood.

Subterranean termites are commonplace in Phoenix. If you ask 100 homeowners in Phoenix about termites, probably 40% have had their homes treated, and another 40% have termites currently but don’t know it – they might not find out for a few years until either there’s lots of tubes in plain view or until they go to sell their home! (these numbers are my estimations, not statistical facts.)

a subterranean termite tube in my garage (after treatment).

a smaller termite tube from a treated area of my garage.

Dry Wood Termites

Dry wood termites are a little bit larger than subterranean termites. They will actually build their colony within the wood. Eating the wood creates more space, which allows for a larger colony, which causes more wood to be consumed in ever shorter time periods. These termites are found much less frequently, but they are a more serious concern.

Dry wood termites are the kind which require a more invasive treatment. A single colony can be sprayed, or the wood can be injected. Multiple colonies or difficult to access colonies could potentially require “tenting” the home & fumigating heavily. However, here’s my opinion of how common this is..

I’ve lived in Phoenix for 35 years. I’ve known 2 people personally who have had their homes tented, and I’ve seen *maybe* 2 dozen homes tented as I’ve driven around. I’ve only seen dry-wood termites once, when I helped a friend remove a wood storage shed from his backyard. The wood floor was brittle, and as we pulled it back we could see their colony. He had that area of the yard sprayed, and never had any problems after that. I’ve been involved in hundreds of transactions as a loan officer and a realtor, and I’ve never come across a transaction where the home was infested with dry-wood termites.

More Information

Sexton Pest Control is one of the largest termite exterminators in Phoenix.

JS Pretreat is another large termite exterminator in Phoenix.

Here is an article about dry-wood termites.

I know it can be discouraging to hear that your home, or a home you’re buying has termites. But if you step back and take a deep breath, they’re really not that big a deal. Just make sure the home is treated properly, and that you get a warranty. Then you can have the termite company come out every year to do an inspection for you, and to treat any new evidence they find.

Personally, we’ve had subterranean termites in 2 of the 3 homes we’ve owned. In each case we got the home treated and never saw new evidence of termites after that.

Your hopes to never see Southern termites Realtor,

Chris Butterworth

So you’re going to move. (smiling face.) You’re going to move. (anxiously looking around the house at all your stuff.) You’re going to move. (full blown panic attack!)

Yes, moving can be intimidating - even overwhelming. But it’s also exciting - a fresh start on life. Your goal during this endeavor should be to make the process as smooth as possible. Understand that it’s a lot of work and it’s very complicated with many “moving” parts. But if you think ahead and make a good plan, you can minimize the chaos. Here are some ideas to give you a smooth move.

1. Attitude

Moving is generally listed as one of the most stressful events in a person’s life - right up there with marriage, divorce, job change, and having a baby. You’re dealing with the mortgage company, the title company, selling a home, buying a home, utility companies, school districts, etc. etc. (ok, take a breath now.)

Sometimes you need to take a step back and remember the big picture. Millions of people move every single month. It’s a one-time event, and soon enough you’ll get your life back. There was a reason you wanted to move in the first place, right? Try to focus on how great your new home is going to be.

Smile. Be friendly. Take a deep breath. You’ll get through it - and a good attitude will go a long ways towards making a good move.

2. Money

You can make all the budgets you want, but be prepared for unplanned expenses. Buying moving boxes, renting a hotel for a night, ordering pizza, calling a handyman/plumber/electrician, making an emergency trip to the grocery store/mall/hardware store. There are a million little expenses out there, odds are you’re going to run into a few of them.

3. Paperwork

You’re going to get bombarded with paperwork - loan papers, real estate contracts, title paperwork, moving estimates, repair estimates and receipts, contact names and phone numbers, travel arrangements, to-do lists and other brainstorming ideas, paint colors, furniture ideas - the list goes on and on. This is no time for sticky notes and scratch pads! (which tend to get lost during packing).

I recommend using an Accordion File for your move. You can put anything inside it - file folders, brochures, loose leaf papers, etc., and you can label various sections if you’d like. This way you won’t have to worry about when to pack the file cabinet, or finding a phone number that’s only inside your computer. You’ll have everything related to the moving process all in one place. Once your move is completed, you can go back to your regular filing system.

4. Packing

Packing everything you own can be a monumental feat, especially if you have a large family, a large home, and/or you’ve been in your home for quite some time. This is one of the areas where you can reduce a lot of stress by starting early. (or add a lot of stress by procrastinating - your choice!)

Get LOTS of Boxes. Go buy yourself a bunch of boxes so you can start right away. Then, over the next couple of weeks, you can keep your eyes open for any used boxes that become available. You might even contact your Realtor to see if he knows anyone who has recently moved and can part with a few dozen boxes.

Pack Early. It’s Phoenix, it’s summer, it’s 112 degrees outside. Why are you waiting to pack your winter clothes? Get those puppies boxed up and out of your way! And while you’re at it, why not box up your holiday decorations, formal dining sets, and power tools that won’t be used this month? Anything you can pack up today is one less thing you’ll need to worry about later, when the pressure’s really on.

Purging. Take a good, long, realistic look at the things you don’t use very often. Use the move as an excuse to overrule your inner packrat; the more you can get rid of, the less you’ll have to move! And I know from experience, it’s very frustrating to take something out, think about discarding it, clean it, wrap it, find a box for it, move it, unpack it, and then put it in the “donate” pile. Grrrrr. You can hold a yard sale, donate things to charity, or call a junk removal service. (or all 3.)

Pack Completely. On Moving Day, you’ll find the 80-20 Rule in full effect. 80% of your time will be spent on the 20% of the small, left-over, “no big deal I’ll grab it as we’re leaving” items. All the big items and all the pre-packed boxes will move very quickly and easily. All the small, one-off, don’t-want-to-put-in-a-box items will take 3 times as long as you expect. Bottom Line: pack it, wrap it, do whatever you need to do, but put it in a box.

4a. Personal Items

Pack a suitcase or duffel bag with a few necessities for each member of the family. A change of clothing and some toiletries at the least. Keep this bag with you during the move. This way, if worst comes to worst on moving day, you can at least stay clean & fresh.

5. Going Pro?

You can have movers do all your packing and moving for you, or you can do the packing and let them carry everything. This is a question of time, money, and personal preference - there isn’t a right or wrong answer. If you decide to enlist the help of the pros, do plenty of research and get a few estimates. Read your estimates & contracts carefully, and know the payment terms beforehand.

Load-at-your-house Storage Units (PODS, Mobile Mini, Door to Door). Here is an option that may be a compromise between hiring professionals and moving yourself. These companies will deliver a large storage container to your driveway. You then fill the container with your own belongings. When you’re ready, the company will pick up the container and either place it in storage for you, or deliver it to your new home, where you can unload it at your leisure.

We used PODS when we moved in 2006, and it was terrific. We had one POD delivered as we prepared to put our home on the market, which allowed us to store excess items from the garage, closets, and other bulky, rarely-used stuff. Then, we had a 2nd unit delivered the week before our move, and we were able to fill it with all the boxes we had pre-packed. Once we moved into the new home, both PODS were dropped off for us to unload.

6. Utilities

Don’t forget to arrange for the utilities to be disconnected from your current home, and connected at your new home. Here are some of the key providers:

APS

SRP

Southwest Gas

Cox Communications

Qwest Communications

Direct TV

Water - whether public or private

Trash Collection - if not included with your water company

Sewer - if applicable

Other local providers

7. Change addresses

Write down a list of ALL the people and companies who will need your new address, then cross them off as you notify them. Here are some of the most common ones:

Friends and family members

Employers, especially your W-2 Form

USPS - complete a change form with the Post Office 2-4 weeks in advance of the move.

Credit Cards

Banks

Investment Brokers/Accounts

Department of Motor Vehicles

Social Security (if receiving benefits)

Veterans Administration (if applicable)

Cell Phone Providers

Insurance Agents/Companies - auto, life, health, disability, umbrella - etc.

Doctors - primary, specialists, pediatricians, dentists, chiropractors

Pharmacies

Veterinarians

Schools &/or School Districts

Magazine Subscriptions

8. Timing

There are 3 basic scenarios for moving: Buy the new home before selling the old home, Sell the old home before buying the new home, and Moving from the old home to the new home on the same day.

Buying First. The moving process is much less stressful, since you can move at your own pace. However, the cost of owning 2 homes can be a financial stressor for many people. This is a personal decision, and there are many variables to consider. I’d be happy to discuss this process in more detail with you anytime.

Selling First. This is almost the exact opposite of Buying First. You remove the financial stress by having your cash in hand and knowing exactly how much you have to work with. And you might have some flexibility with the actual moving process, depending on your temporary situation (if you rent until the end of the month but close escrow in the middle of the month, for example.) However, the stress of moving twice can be more than some people want to deal with.

Same-Day Close. This is easily the most stressful alternative, but for many people it is the only viable option, generally (but not always) due to financial restrictions. There are so many things that have to go right to pull this off - multiple buyers’ lenders, and multiple title companies, multiple buyers & sellers (and each of their Realtors), and multiple movers… Let’s just say it’s a nail-biter when things go well, and it can go sideways in a hurry, often without a particular person at fault. If this is the route you’re going to take, do yourself a favor and be ready with a contingency plan - just in case. (And re-read Item #1 about Attitude!)

9. Time off work

Some people like to schedule time off before the move, so they can make sure everything is packed and ready to go. They figure as long as everything gets to the new home, they can move in over time. Other people like to take time off on moving day, to ensure everything actually gets moved. Still others will take time off right after the move, so they can put the new home together just the way they want. And the luckiest people will do all 3! This is a personal preference item - do what works best for you.

That’s it. 9 Simple things and you’ll make Moving Day a non-event.   (well, maybe that’s a stretch…)

Your really doesn’t like moving Realtor,

Chris Butterworth

1. Get pre-approved for your Mortgage

Get pre-approved by a lender before you go looking for houses. Failure to qualify for a mortgage is the number one reason why houses “fall out” of escrow. You can eliminate this risk (and make your offer more attractive to sellers) by getting approved for a loan subject to finding a property. Besides, most contracts are going to call for you to show an LSR (Loan Status Report), so you might as well get a head start. In addition, you may find that what you qualify for and what you’re comfortable paying are not the same. This step will help to ensure you’re looking at homes you can afford, and you can afford the homes you’re looking at! Give me a call if you need a recommendation for a good lender - I know a few who do great work!

2. Read the Consumer Bill of Rights and the Buyer Advisory

The Arizona Department of Real Estate provides these two documents, both of which are chalk full of valuable information and links to other great websites. While the reading may be dry, the information is important. Click here to read the Consumer Bill of Rights, the Buyer Advisory, and a previous post I wrote about the two of them.

3. Decide what’s MOST important, and what you’re willing to give on.

Are you buying based on the Neighborhood? the Price? the Floor Plan? the Features? Understand that the combination of these variables will ultimately determine the availability of your dream home. You can save yourself a lot of time and emotional energy if you can identify what is most important to you. This is very easy for some buyers, while others aren’t exactly sure until they’ve seen a few examples and “kicked some tires.” I’ve written before about the 5 Criteria to Consider when buying a home - you may want to re-read that post as well.

4. Hire a Realtor

Buying a home without a Realtor makes no sense to me at all. The current MLS arrangement calls for the Sellers to pay their broker, and for their broker to then pay the Buyer’s broker. This means that working with a Realtor is FREE for Buyers!

And what do you get in exchange for the steep price of FREE? How about access to millions of pieces of data, and the tools & expertise to turn those pieces of data into useful information. How about a wealth of experience helping other Buyers (and Sellers). How about knowledge of the marketplace and current trends, from someone whose finger is on the market’s pulse? You also get somebody in your corner who knows the contract inside-out, every line, which will give you the legal guidance you need. And you get somebody who practices negotiating contracts regularly. In the end, you get a professional looking out for your best interests, and you get it all for free. When was the last time you got so much for so little?

5. Communicate with your Realtor

Honest, open, and frequent communication is very important. Your Realtor is committed to serving your best interests - that can be hard to do if he doesn’t know what your best interests are! Is there a home you’ve seen that you really want, or one I’ve shown you that you don’t like at all? Contact me as often as you’d like - phone, email, fax, smoke signals, mental telepathy.. whatever works best for you! You’re not only welcome to get in touch, you’re encouraged to!

Buying a home is a big deal; it’s the single largest purchase most people make in their entire life. But if do these 5 things, you’ll have a smoother transaction with less stress, fewer surprises, and more control over the process.

Your looking forward to helping Realtor,

Chris Butterworth

I wrote yesterday about the games Sellers play with the Short Sale Addendum. The main point being that sellers, in many cases, are not signing the purchase contract during the short sale process. This allows the seller to continue to market the property for sale in the hopes of receiving a better offer.

It sounds pretty unfair to Buyers, at least on the surface. But buyers aren’t defenseless – it is still a buyer’s market, right? In fact, sometimes the best defense is a good offense! Here are a few different alternatives buyers can use to counter these sellers’ games:

Read the Contract – if your offer gives the seller 2 days to respond, and they don’t respond, your offer will expire. The seller no longer has a valid offer to present to the bank, simple as that. Remind the listing agent about this, and let him know that you’ll be looking at other properties &/or possibly submitting another offer on this home, but at a lower price.

Communicate, then Make your Choice – talk with the seller (or their listing agent) about your concerns. If they are dead set on playing the unsigned contract game, you have 2 choices. You can walk away and look for a seller who isn’t playing games. Or you can play the game with them. If they receive several offers, you’re likely to lose. But if they don’t receive any other offers, you might even get a chance to lower your price! How much do you love this house, and how lucky do you feel?

Play the Numbers – if the sellers are looking for lots of offers, assuming that many of the buyers aren’t going to stick around, you can make their prophecy self-fulfilling. Go ahead & submit offers on plenty of short sale listings in the hopes that one of them will accept your offer. (this isn’t my recommended strategy, but it is something to consider.)

I represented a buyer recently where we felt like the seller/listing agent was playing this game. We didn’t want to stick around while they used us as a stepping stone for the next offer, but we loved the house and didn’t want to walk away. When I explained to the listing agent that our offer had expired, and that two of our other considerations had lowered their prices, so we might make another offer at a lower price on her home, she sent over a signed contract within the hour!

Your still feeling like a referee Realtor,

Chris Butterworth

Technorati Tags: short sale addendum

Last year the Arizona Association of Realtors created an addendum to our standard Residential Purchase Contract to help clarify and standardize the process of negotiating a short sale. The addendum was cleverly called Short Sale Addendum to the Residential Resale Real Estate Purchase Contract. I won’t bore you with the legal language in the addendum, but in plain English it basically states the following:

• Buyer & Seller agree to the terms of the Purchase Contract, but both parties understand that the bank must approve the deal (or there is no deal.)
• Buyer & Seller are both aware that the bank might take weeks, or even months, to render a decision.
• Buyer does not have to deposit earnest money or start his/her inspection period until the bank approves the contract.
• Buyer may rescind the offer at anytime until the bank approves the contract.

It seems pretty simple. But then sellers (through their listing agents) figured out the loophole..

If the seller doesn’t sign the contract, there isn’t actually a contract (agreed to in writing), so the seller may legally continue to market the property to other potential buyers using the MLS.

Sellers LOVE this idea. They can take the first offer they receive & submit it (unsigned) to the bank. This will start the ball rolling with the bank’s long approval process. The seller will leave the home as Active in the MLS, and will continue to accept other offers, presenting each new offer to the bank in hopes of getting one of them approved.

But what happens to the original buyer, you ask? So long, sucker. Thanks for nothing. That is, unless you want to raise your offer to beat out the other buyers…

From what I can tell the process is totally legal, although not quite transparent w/ full disclosure – it might actually be in an ethical gray area.

What can buyers do to protect themselves? I’ll discuss Buyers’ strategy tomorrow. Stay tuned…

Your feeling like a referee Realtor,

Chris Butterworth

Technorati Tags: short sale addendum

Somebody sent me an article from Time Magazine online which posts a very interesting thought exercise regarding waiting for the market to bottom out before buying. Consider this:

Today. You’re looking at a home priced at $300,000. You’ll put 20% down, which means you’ll finance $240,000 on a 30-yr, fixed rate mortgage at 5.75%. Your monthly mortgage payment will be $1,400.58.

Next Year. Let’s assume that the market falls another 10%, so you can now buy that home for $270,000. 20% down gives you a smaller loan amount of $216,000. However, let’s assume that you’re buying because the market is beginning to pick up, and you know it’s time to move quickly. This increase in market activity might very well drive interest rates up a little bit, so let’s assume you get a 30-yr, fixed rate mortgage at 6.75%. Your monthly mortgage payment will be $1,400.97.

If it’s going to be exactly the same, why wait? (I told you it was an interesting thought exercise!)

Your scratching his head Realtor,

Chris Butterworth

Technorati Tags: lending, market activity

Do you ever go the mall and look at the clearance racks – they’re usually in the very back of the stores? You’ll see signs like “75% Off”, or “nothing over $10″, which is enough to draw my attention – heck, I’d love to pick up a $60 pair of shorts for $15!

The trouble is, the deal only works if I can find a pair of short in the right size, style, and color – which doesn’t happen very often! I see lots of really small and really large shorts, and lots of off-beat colors and styles. But I rarely see a typical pair of khaki shorts in a size 32. That’s because these shorts are more popular, and sell at the retail prices, so they don’t need to be deeply discounted.

We’re finding the same to be true with the bank-owned houses for sale.

If homes in a particular neighborhood are selling for around $250k - $300k, you might find a bank-owned home (or even a couple/few) listed for $200k. It’s showing as a tremendous value, and the buyer is going to get a great deal on his/her home. But it doesn’t mean the “regular” sellers are going to match this price. Most, if not all, of the regular sellers are going to say, “at $200k we’d rather just stay put – it’s no longer worth it for us to move.”

If the bank-owned property fits you, and you like the style & color – now’s a great time to buy a home off the discount rack. There’s a larger selection for sale than ever before, too!

But don’t expect the rest of the homes out there to match the bank-owned prices. Much like the shorts on the clearance rack – when they’re gone, they’re gone. And once sellers don’t have to compete with the banks in every neighborhood, prices are likely to firm up quickly.

Your shopping for discounts Realtor,

Chris Butterworth

Technorati Tags: bank-owned property

I took a listing a couple of weeks ago (2310 E. Winchcomb Dr. for those of you who might be interested!!) and during my research I came across a listing in the same subdivision that had the square footage listed as 1,535 per the assessor’s tax records.  Well as part of my research I also looked at the assessor’s tax records and noticed that it had the square footage listed as 1,385, not 1,535.  So in an effort to try and figure out why there was a discrepancy, I called the listing agent.  The conversation went something like this….

Me:  “Hi, I noticed that you have a listing on Gelding and see that you have the square footage listed as 1,535 per the assessor’s records, but when looking at the assessor’s records, it shows the square footage as 1,385.  Can you explain that to me?  Was there an addition to the house?  I’m a little confused.”

Listing Agent:  “The tax records say what?”

Me:  “It shows the square footage as 1,385, but you have 1,535 in the MLS”

Listing Agent:  “Oh, well I just took the information from the previous listing and it had 1,535.  I guess I should look at the tax records.”

Me:  Dead silent!! 

I couldn’t believe that an agent would be this careless in the representation of a property.  Now granted, there are several instances throughout the buying process where a buyer is advised to verify, among other things, the square footage before purchasing the home.  So odds are, a buyer is going to be informed of the actual square footage before closing on the property, but if it were to happen, a buyer could find themselves in a situation where they thought they were buying a 1,535 square foot home, when in all actuality they just bought a 1,385 square foot house.  If the home feels right to the buyer it’s not too big of a deal.  But when looking at what the buyer paid for the home 150 square feet could be the difference between buying a home at a value and being upside down the day they moved in.  And in this declining market, starting out upside down is a bad place to start.

In addition to the incorrect square footage, I have recently noticed that the listing agent has now posted the incorrect property photo.  Strike two!!  One more strike, and this agent should be out.  It’s embarrassing to me to be included in the pool of Realtors with this individual.  Most of us work very hard at combating the Realtor stereotype, only to be handicapped by agents like this.

-Steve Nicks

Technorati Tags: multiple listing service, phoenix real estate, desert ridge real estate

One of the known facts about Phoenix real estate (and the entire Valley of the Sun, for that matter) is that a home with north-south exposure is superior to one which faces east-west. This is because the hot summer sun will beat down on your west-facing walls, driving your home’s temperature, and your utility bill with it, through the roof. It’s been this way for decades, and everybody knows it’s true. In fact, it’s so true there’s even an MLS field specifically to notate whether a home is facing north-south. The problem is… It isn’t true at all.

Here are 2 specific reasons why, in most neighborhoods, north-south exposure isn’t as important as the experts would have you believe.

1. South vs West: Time vs Intensity

Because we live in the Northern Hemisphere, the summer sun follows a path each day from east to west, along the south side of your home. In other words, your home’s south-facing walls will be in the sun the entire day. (and your north walls will be in the shade – hence moss growing on the north side of a tree.) Your west-facing walls will take the brunt of the late afternoon sun, which can be brutal in July and August. But your south-facing walls will be in the sun ALL DAY LONG, from sunrise to sunset. Either way, north-south or east-west, you’re going to feel the heat if you don’t have any protection from the sun.

2. Changing Neighborhood Design

In Phoenix and the neighboring suburbs (Scottsdale, Tempe, Glendale, Mesa), you’ll find plenty of neighborhoods which were built in the mid-1970’s and earlier. Back then, the average lot was larger, and homes were typically built length-wise, facing the street. In these neighborhoods, having north-south exposure can make a difference, because the homes have more space in between them. (not always. but as a rule of thumb).

Here is a satellite picture of the Arcadia neighborhood where I grew up. This neighborhood was built out in the late 1960’s. Notice the amount of space – more space than houses.

In the 1980’s, developers realized how much more profit they could make by increasing the number of homes they built on each acre of land. One of the most noticeable changes was to rotate the homes 90 degrees, so that the homes ran perpendicular to the street. The second major change was to remove the alleyway behind the homes, which acted as a buffer. Newer home-lots typically back directly into the neighbor’s lot, with a shared wall to separate them. However, this increased density provides more protection from the sun.

Here is a satellite picture of the Parkridge neighborhood my family recently moved out of. This neighborhood was built out in the late 1990’s. Notice the lack of space – more houses than space. (both pictures were provided by Google Earth, at an altitude of 2200 ft.)

So what does this all mean? It means you need to consider each home independently. There might be a north-south home with a west-facing bedroom window which heats up the entire home. Or you might find an east-west home with strategically located trees and patios, and the sun never hits the home’s wall.

Bottom Line – protect your home from the worst part of the sun, and it won’t matter whether your home faces east-west or north-south. Use shade trees, awnings, window treatments, extra insulation, fresh coats of paint, seal around windows and doors – all the usual tricks, and your home (and your utility bill) will thank you.

Your happy to clear that up Realtor,

Chris Butterworth

Technorati Tags: north-south exposure, Arcadia, Parkridge, summer sun, west exposure, Fletcher Heights

“Your home is your biggest investment.” Haven’t we all heard that before? And it’s true, for most people. We’re talking about an asset that is generally worth several years’ salary. The price of a mistake, or a bad decision, could have serious consequences.

Here are some things to consider as you start down the road of selling or buying a home:

Bill of Rights. The Arizona Department of Real Estate (ADRE) has published a Consumers’ Bill of Rights, which outlines what the department believes every consumer has the right to know. Personally, I think this is simply a starting point, and it brings up some ideas a consumer might not have thought about, but it is far from all-inclusive. A good Realtor and an educated Consumer should be discussing and investigating the subject property in a lot more detail than what’s outlined in the Consumer Bill of Rights.

ADRE Buyer Advisory form. This is another document, tailored more towards buyers than sellers, which has a wealth of information about the purchase process. It’s a bit long and tedious to read, but it should be required reading for anyone thinking about buying or selling.

A Good Realtor will help you understand the entire process, from start to finish, before you start. There may be dozens of pages of contracts, addenda, disclosures, notices, etc., and you’ll want to know what each one means and what your options are at every step of the way.

How do you know if you’re working with a good Realtor? You can start by reading our earlier articles on “How to Interview Your Realtor” and “What Some Agents Will Tell You to Get Your Business“.

Unfortunately, even if you have the best Realtor in the world, you may not get exactly what you want. Unless you…

Become a Prudent Consumer, and educate yourself in the process. If you hear about grading or foundation, and it makes you think of cheese or makeup – that’s ok. There’s plenty of time to learn, but it’s up to you to do it. Talk with your Realtor about what your ultimately trying to do. Ask lots of questions – no question is too small. Do some research online (and then ask/talk with your Realtor again). Read the Buyer Advisory form (and then ask more questions). See a pattern here? You want to have a good understanding of the contract, so make sure your Realtor can help you understand it. You are ultimately responsible for your decisions, so do whatever you can to make sure you’re making good, well-informed decisions.

There’s a lot at stake when buying or selling a home – $200,000, $300,000, $400,000, or more. And there’s an old saying “A fool and his money are soon parted.” The real estate industry has evolved over the years to offer a lot of protection to buyers and sellers, but in the end, the more educated party in the transaction is less likely to be the fool…

Your educating consumers Realtor,

Chris Butterworth

Technorati Tags: consumer bill of rights, adre, buyer advisory, Fletcher Heights