Gilbert Real Estate Blog

Greater Phoenix Real Estate ~ “Is this property still available?”

September 6, 2009 // 1 Comment »

At least 2-3 times every day we receive an online inquiry, email or phone call regarding a listing.  The question is typically phrased, “Is this property still available?”

My initial answer is always, “It depends!“  I’m not trying to be a smart-ass; I’m simply attempting to lay the groundwork for what is often a complex and confusing answer to many home buyers in the greater Phoenix real estate market.

“On WHAT does it depend?”

The first issue is whether or not the listing is showing as Active in the Arizona Regional MLS.  If it is, then it means the property is indeed available to purchase – correct?!?!  Not necessarily so!  These days, we often see comments in the confidential Realtor Remarks section of a listing saying the bank/seller has received multiple offers on a home, they’re not receptive to any more offers, and they are simply waiting on the bank to notify them which offer they will be accepting.  That waiting process can take up to two weeks, and all the while, the listing remains in Active status.  In effect, however, the property is not available.

Another example is when the listing is in AWC status.  An AWC status is considered to be an “active” status, and the listing will continue to be picked up by Realtor IDX sites, secondary search engines, etc.  However, what the AWC status means is that a contract has already been accepted, but the seller is willing to consider back-up offers.  So is the buyer willing to enter into a contract that will be in second position, at best?  And if there are already 2 other back-up offers accepted, is the buyer willing to take the number 4 position?  Back to the point of this post ~ even in AWC status, the property is not available for a first position contract.

MLS status is the first thing we look at, but are there any other factors?  You guessed it!  What if the buyer is pre-approved for an FHA loan, but the property is not available via FHA financing?  That happens all the time.  If the property’s condition will not make it past an FHA appraisal, then it is not FHA-friendly.  What if the present owner is an investor who just purchased the property at trustee’s sale (foreclosure)?  The property must be owned by the seller (”seasoned”) for at least 90 days before FHA will approve the purchase/loan.  What if the owner/seller is not receptive to a Conventional loan?  Yes, that happens as well.  If the type of financing a buyer is using does not fit the type of payment terms required by the seller, then the property is not available.

Finally, what if the buyer is paying cash?  Answer — it depends on whether or not s/he can provide “proof of cash funds“.  I’ve lost count of the ‘assets’ folks have brought to me to cover the purchase price of a house, but those assets were not liquid, couldn’t readily be converted into US dollars or were under the control of another person or company.  I once had a client who was expecting to receive a large insurance claim settlement from the courts – “sometime withing the next 6-9 months.”  You get my drift?.  If the buyer does not have hard, cold, US dollars, or cannot furnish evidence of sufficient funds, satisfactory to the seller, then the property is not available.

A mortgage lender that I consider to be one of the best in the state, Jeremy House, sent me the following chart of the major loan products and guidelines that are out there right now.  He was careful to note that many things in the mortgage lending industry change on a daily basis, and can be outdated/changed in a heartbeat.  So before you make any decisions about mortgage loans, I would heartily recommend that you check with Jeremy or another local, reputable, experienced lender.  In the meantime, his chart does provide a fairly good overview of what’s out there and available, at this moment, in this room.  And the next time you’re tempted to contact your Realtor/Broker to ask if a particular property is available, be sure to smile and laugh when s/he says, “It depends!”

Posted in arizona market conditions

Short Sales: Reality or Mirage?

August 29, 2009 // 2 Comments »

Those of us that are experienced, professional real estate Brokers, tend to have very strong feelings about them, pro or con, so I decided to share with you some of my personal attitudes toward and feelings about “short sales”.

I remember as a kid when my family would be on a road trip across the hot summer highways of West Texas.  As I would watch the horizon, and the road ahead, I would see what I would always swear was water on the highway.  I knew it HAD to be water, because I could see it with my own eyes.  The reality was that it was hotter than hell, and dry as a bone – and what I was ’seeing’ was in effect a mirage, an illusion, a distortion of perception created by the heat.  That, my friends is exactly how I feel about short sale listings.  They are nothing more than a mirage.

Lenders do what they want, when they want, if they want ~  and there is no way to predict their behavior or decisions.  I’ve facilitated short sales, consulted with short sale and bankruptcy attorneys about it, dealt with asset managers, loss mitigators and bank negotiators, and otherwise kept informed and abreast of the market and the so-called experts and short-sale-gurus’ claims.  The seller’s lender(s) hold all the power, and control, and their actions have proven time and time again that they do NOT care one iota about the homeowners, agents, brokers or buyers that are involved in the attempted transaction.

The fact is that only about 10% of all short sale listings in the greater Phoenix real estate market ever make it to closing.  Period.  And considering that the processing time on short sale transactions is typically 6-18 months, my question is, “Why would any home buyer or investor want to subject themselves to such an ordeal?”

The answer?  As one of my clients put it this week, “I want to buy a house and get a smoking deal, i.e., make a good investment!”  The unfortunate but realistic truth is that roughly 90% of all short sale properties are ultimately going to end up back on the market as bank owned (foreclosure) properties.  Most short sale listings are unrealistically priced below a price point that the seller’s lender(s) will ever seriously consider accepting – which in my opinion is why most of them fail.

But before a lender will even take a serious look at the purchase contract, they will evaluate and scrutinize the homeowner/seller.  The seller’s lender(s) will, in their sole discretion and timetable, decide:

• if the seller is truly in “financial hardship”;
• if the seller has the capability to pay their mortgage loan(s) in full;
• if the investors behind the mortgage loan(s) will agree to take the short sale loss (and amount) right now;
• if the contracted sales price is a number they will accept;
• if they will agree to the rest of the contract terms and conditions, costs, liens, property taxes, etc.;
• if they would rather just foreclose and sell the property themselves.

Lenders do NOT pre-approve short sales or lay out in advance the sales price that they will accept, so the listing/asking price is nothing but a “phantom” or imaginary price that the listing agent and seller use to attract a prospective buyer and secure a contract.  After the contract is in hand, then and only then is when the submission and negotiations begin with the seller’s lender(s).  I could go on and on, but I’ll stop here for today.  My hope is that all of my readers and clients will see the insanity, futility, false hopes and unrealistic illusions of pursuing short sale properties.

Personally, I would much rather go to Vegas and roll the dice or play the slots.  Odds of success are about the same. 

Posted in arizona market conditions

Phoenix Real Estate – June 2009 vs. June 2008

July 5, 2009 // Comments Off

PHOENIX, ARIZONA

The “Valley of the Sun” continues to be one of the most popular cities (and 5th largest) in the United States!

June 2009 vs. June 2008

2,167 single family detached houses were purchased last month vs. 1,030 last year (June 2008).

The average price paid was $129,165 vs. $244,767 last year.

The median price came in at $85,050 vs. $200,000 last year.

The ratio of purchase price to list price was 102% vs. 96% last year.

The average time on the market was 71 days vs. 97 days last year.

There were 12,966 Active single family listings vs. 13,092 last year.

Click Here for full current Phoenix Market Report

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All data is derived from the Arizona Regional MLS and is deemed reliable but not guaranteed.

photo by Miguel Folch

Posted in phoenix market conditions