Gilbert Real Estate Blog
~ by Randy Hooker of Dreamcatcher Realty
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Welcome to Desert Living, Critters Included
This photo was recently sent to me courtesy of one of my all-time favorite home inspectors in the greater Phoenix metro area, Josh Lutz. He spotted the momma brown recluse spider (with babies on board) sitting on his shoe during a home inspection at a house in Gilbert, and after having a small heart attack managed to snap a picture of it. I’m not sure I would have had the composure to handle it as well as Josh did, but I very much appreciate the photo!
So why on earth would I post it here in the Gilbert Real Estate Blog? Because even though personal encounters with brown recluse spiders are relatively uncommon in this area, they do happen. The important detail in this case is that the home inspector was able to report the sighting of the critter so that the prospective buyer of the home – with a warning that immediately upon closing escrow the new owners should perform a good pest control treatment.
The same goes for warnings about other desert critters, like scorpions, snakes, crickets, black widow spiders, lizards, etc. It’s honestly not realistic to think that humans have overtaken the desert here in the Phoenix area and have wiped out all the desert critters. My standard line to clients is, “We live in the desert – don’t forget it.” But with appropriate precautions, it’s very easy to co-exist with them.
No need to panic or develop phobias. Just be aware.
Arizona’s 2011 AAR Mortgage Loan Pre-Qualification Form
If you run across any claims that the mortgage lending industry has in the past few years been (and still is) in a state of turmoil, I would heartily recommend you listen to them. There’s no doubt that tremendous changes have taken place, most of them federally mandated, but in this post I’ll try to avoid discussing the relative merits pitfalls of the new restrictions and guidelines.
The purpose of this post is to update you on a previous post of mine from November of 2010 in which I defined the then-current mortgage loan pre-approval process in Arizona. The new (effective February 28, 2011) terminology and form(s) have been released, so let the games begin!
Replacing the former Loan Status Report (LSR) is the Pre-Qualification Form. The purpose of the new form, according to the Arizona Association of REALTORS®, is
“to provide information on the buyer’s ability to qualify for a loan without a Good Faith Estimate (GFE)”
Say what?!?! A GFE is a document issued to a home buyer by a lender that details the fees and costs associated with their mortgage loan, monthly payment, interest rate, etc. But it’s also a document that is typically considered confidential between the lender and the home buyer. The new Pre-Qualification Form requires the lender to furnish a LOT of additional information about the buyer, type of loan, amount of loan, interest rate, etc., and thus can provide a great way of evidencing to a seller that the buyer is indeed pre-qualified for the mortgage loan.
The proper use of the Pre-Qualification Form is that it should be attached to a 2011 AAR Residential Real Estate Resale Purchase Contract whenever a home buyer submits an offer on a residential property. Here are a few highlights of the new form:
- The form is NOT property specific, meaning it can be issued without naming any certain property address.
- The form is to be completed and signed by the mortgage lender (loan officer), including their Arizona License number and NMLS number.
- The form is to disclose the marital status of the buyer(s), primarily because Arizona is a community property state and marital status can create contract issues and title requirements.
- The form is to disclose the property type, since different types require different loan programs, criteria and documentation. A good example would be the difference between a loan for a single family detached house and a loan for a mobile home – the differences between the two loan programs are HUGE.
- The form is to disclose the maximum total monthly housing payment, loan amount and interest rate for which the buyer is pre-qualified.
- The form is to include an expiration, which is typically when the buyer’s credit report expires.
- The form is to be signed by the home buyer(s), which is basically granting permission for the buyer’s broker to submit the form with the offer/contract. It also authorizes and instructs the lender to issue a Loan Status Update (LSU) to the seller and broker(s) within 5 calendar days of contract acceptance.
As I stated in my post in November 2010, my biggest beef with the Pre-Qualification Form is the form title itself, not the content. That may seem petty to some of you, but for as many years as I can remember, the term ‘pre-qualification’ has always implied a quick, easy, over-the-phone activity with no application or documentation from the buyer. But make no bones about it - this new Pre-Qualification Form requests and requires substantial documentation and commitment from the buyer and lender, and in my estimation is a giant leap forward in the world of residential Gilbert real estate and mortgage lending.
Of course, I’m always open to comments, supportive or dissenting.
What say ye, my friends?Greater Phoenix Real Estate ~ May 2010 vs. May 2009
Courtesy of the Arizona Regional MLS, the below two charts offer up a quick overview of the current market conditions in the Valley of the Sun. Whether you’re into comparing consecutive month over month stats (like May 2010 vs. April 2010), or year over year (like May 2010 vs. May 2009), the charts are provided to help us grasp the overall picture.
Greater Phoenix Market Conditions
Greater Phoenix Market Conditions
I’m always extremely cautious about using real estate “averages”, as they can and do often skew the true picture of individual communities and areas. Nevertheless, there are a couple of points that are worth noting in the above charts.
It’s interesting that normally at this time of year we experience an increase in listings – and yet the past 2 months has seen a decrease in listings. Anybody care to speculate on the reason(s) for this anomaly?
The next observation is that the greater Phoenix market is holding fairly steadily in the number of Active listings as well as sales.
Additionally, at roughly 4.5 months inventory, the greater Phoenix market appears to be showing some consistent stabilization. As always, time will tell.
NOTE: The information and statistics contained in the above charts are deemed reliable, but not guaranteed. If you’re contemplating a major financial decision regarding residential real estate, please do yourself a huge favor and consult with a reputable real estate broker, attorney and/or accountant.
What is APR?
The Truth in Lending Form or the “TIL” was created as a result of the Truth in Lending ACT (TILA) of 1968. The primary goal of the TILA of 1968 was to protect consumers in credit transactions such as home loans and auto loans. The most commonly asked questions related to the Truth in Lending form surround the Annual Percentage Rate or APR.
The APR is NOT the same as your interest rate or “note rate.” APR consists of a combination of both the amount of interest you will pay based on your note rate and the APR fees associated with your loan. The purpose of the APR is to gauge whether or not your loan is “fee heavy.” For example if your note rate is 5.25% and your APR is at 7.5% you know there is a problem based on the drastic difference. It is important to note however that APR will almost always be higher than your note.
For example, in a scenario where the interest rate for a home loan (“note rate”) is 5.5%, the first piece of the equation would be calculated by obtaining the interest paid on the loan at 5.5%. The second part of the equation would include any fees that are considered “APR fees” (meaning they get included into the APR calculation).
Lastly, these two totals are added together and then recalculated and expressed as your APR.
The key definitions to remember are as follows:
- Interest Rate or “Note Rate”: The amount of interest you pay on your home loan. This is the percentage that has been quoted to you as your “rate.”
- Annual Percentage Rate – APR: A disclosure tool or number that is used to help consumers understand the total fees their loan has by comparing the difference between the APR and the Interest Rate.
If you have questions, do NOT hesitate to ask your Mortgage Consultant for clarification.
Greater Phoenix Real Estate ~ December 2009 vs. December 2008
Here ya go, boys and girls. Take a look at the charts below, courtesy of the Arizona Regional MLS. They provide a quick overview of the greater Phoenix real estate market for the past year, with particular interest and focus on the period of December 2009 as compared to December 2008.
I have a personal conviction that real estate should not be micro-analyzed, so I’m electing to not draw any conclusions or speculations from the latest “averages.” It’s clear that prices, on the average, are on the rise. Other than that, all indicators point to a bottoming of the residential real estate market in greater Phoenix.
As always, the information and statistics contained in the above charts are deemed reliable, but not guaranteed. If you’re contemplating a major financial decision regarding residential real estate, please do yourself a huge favor and consult with a reputable real estate broker, attorney and accountant.
Greater Phoenix Real Estate ~ Snapshot of Current Market Conditions
Most of you know that I’m not a big fan of mathematical ‘averages’, since they can really distort the truth about a specific market segment. Once in a while, however, ‘averages’ can provide a quick overview of basic trends in certain markets and areas.
Take a look at the charts below, courtesy of the Arizona Regional MLS. They provide a quick snapshot of the greater Phoenix real estate market for the past year, with particular interest placed on the period of November 2008 thru November 2009.
On this first graph, notice the upturn the past few months in Active listings. Part of that is due to the seasonal nature of the greater Phoenix market. Others would speculate that it’s an increase in bank owned listings. But notice the recent downturn in new listings, seemingly running contrary to the uptrend in total listings (inventory). What’s your take on that observation? I’m wondering if it’s not a result of the upper end of this market, particularly above $350K, where prices are continuing to decline and properties are staying on the market considerably longer than the lower end of the market.
One other note: sales have been relatively consistent and stable, on the average, for the past 8-9 months. Seasonality would predict that we’ll see a slight downturn in the next few months, so it will be interesting to watch it play out.
On the following chart, notice that total inventory just up-ticked to slightly over 5 months – coinciding with the increase in total inventory. What I’m really watching for is any hint of an avalanche of bank owed listings that many people are predicting. I have my personal doubts about this so-called ‘shadow inventory’ of bank owned homes, and even greater doubts that the banks will decide to dump them in one fell swoop. And even though I’m not EVEN a fan of banks, or their real estate acumen, I still have a very difficult time believing they will shoot themselves in the foot and dump all of their residential properties onto the market in one lump. Your thoughts?
As always, the information and statistics contained in the above charts are deemed reliable, but not guaranteed. If you’re contemplating a major financial decision regarding residential real estate, please do yourself a huge favor and consult with a reputable real estate broker, attorney and accountant.
Unreliable Information about The Real Estate Market, by Rob Kosberg
Stories on TV about the national real estate market are misleading to Americans. This is because there is no such thing as a “national real estate market”. Click here for the entire article. It’s a short read, and well worth the time. The greater Phoenix real estate market is a massive market that is fraught with incredibly complex and risky situations. Trust me, every home buyer considering purchasing a home in the Valley of the Sun would be well advised to consult with a local, experienced, professional real estate broker.
Image Courtesy of Shedboy
