Archive Page 2
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Tags: July 2008 Phoenix housing, Phoenix housing Market Statistics, Phoenix Real Estate
How to buy foreclosures
You’ve heard that your cousin’s husband’s brother’s son just bought a $200,000 two story for $120,000 and you want to get in on the action, right? ME TOO. I get calls all the time from buyers who say “I’ll buy anything that’s priced at 75% of market value and I usually respond with; “Get in line behind me”.
Here’s a list of do’s and don’ts for buying a bank owned property.
1. Cash speaks very loud but not as loud as you might think or have been lead to believe. The net amount the seller will receive is usually the most important factor. I’ve had asset managers accept offer that included financing and inspections that net them just a few hundred dollars more than cash offers with no contingencies. Don’t make much sense to me, but then, I’m not the seller.
2. Get pre-approved. NOT just pre-qualified, The bank will not consider your offers unless the offer is submitted with a pre-qual letter. Just recently we’ve had the banks requiring proof of funds for down payments as well as pre-qual letters. With cash offers, be prepared to supply proof of funds when you submit the offer.
3. Know the loan that you’re pre-approved for. Ask your loan officer if a fixer-upper would qualify for the type of loan that you can qualify for. Many bank owned properties need some work; some need a lot of work. It’s usually the later that may seem like a great bargain but many loans will not approve homes that are fixer-uppers.
4. Inspect, Inspect, Inspect. Not just the mechanical items but also the surroundings. We’ve had at least 6 properties within the last year that the seller walked away from because there was a (insert issue here) issue that could not be easily resolved. Easement. Encroachment. Sewer line. Etc. “issues” can be broad, don’t assume anything.
5. All agents are not created equal. I know… your sister has a real estate license and if you don’t use her you might be shunned by the family. If your going to get involved with purchasing a previously foreclosed property then you better be using an agent with lots of experience with bank owned properties. (same holds true for short-sales. Not all agents who handle bank owned properties know about short sales and visa-versa.) Don’t use the listing agent, it will not get you a better deal. You definitely want to be represented by your own buyer’s agent who has bank owned experience.
6. Be prepared to sign the bank’s purchase addendum. Yes, the banks will make sure they are protected. Most of the bank’s addendum’s if seen lately are anywhere from 8 to 25 pages. They all say “as is” in multiple locations but they also have lots of other clauses that you won’t normally see in a traditional real estate transaction. If contracts are scary to you have an attorney who will work with you, review the contracts and get back to you very quickly. But, don’t expect to make too many (usually none) changes to the banks addendums. Either accept that “no resale within 6 months for more than a 20% profit” clause, or don’t buy the house.
7. Calendars and clocks run of different schedules for banks. Don’t think that because you gave them a 36 hour deadline to respond that you are entitled to a response. But, on the other hand, they will expect your prompt response. They can not and will not be intimidated by deadlines and threats of losing a deal if they don’t respond. I have witnessed buyers who have walked over a couple thousand dollar counter offer and banks who say, “whatever, we’ll just sell it to someone else” and then actually sell it to someone else for $8,000 less, next week.
8. Don’t think that you will get or are entitled to a counter offer or signed rejection. In a perfect transaction counters and signed rejections make everyone life easier. Regardless of what you’ve heard or the seller is not required to respond at all.
9. Regardless of the excuse the bank will expect you to close on the date on the original contract. Appraiser could not get in? There was a tornado? Underwriters and back logged by 2 weeks? Doesn’t matter. If you can’t / don’t close on the scheduled date, expect to pay a hefty penalty (sometimes a couple hundred dollars) per day until it is closed.
10. Don’t go out and write low ball offer’s on every back owned property hoping that someone will bite. Asset managers despise time wasters. I’ve had decent offers that were not even considered by the bank because the asset manager recognized the buyers name from previous multiple low ball offers on other properties. If you want the best deal, then determine what your best offer would be and make that offer first.
11. Despite what you might read in media about houses being on the market for months and months this just doesn’t hold true for bank owned properties. They price these properties with the intent of having them sold within 30 days. When they price them right there are many times multiple offers at the same times. I’d had properties recently that sold for 30% over asking price, and buyers upset they weren’t the winner bidder with a 120% offer. MAKE YOUR BEST OFFER FIRST and don’t start second guessing what you might have been able to buy it for.
12. Call me. It’s FREE to have a Professional Realtor help you in the process of finding and purchasing foreclosures. The advice and time you will save is priceless… well, literally!
Scott Harris, ABR 602-841-8242
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Foreclosure map for US
I came across a way to visually see just what the sub-prime foreclosures look like across the country. This closely matches the construction boom in the small map below. Click here for full size version
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Median Home Prices in Phoenix
Currently the median home price in Phoenix is at $279,000. That’s -15.2% over the past 12 months and -1.8% in the past month. You’ve always heard to buy low and sell high. This is the time for some amazing deals right now.
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Worry
A lot of people sure seem worried. I’ve encountered some challenging times in my life and I’ve learned a few things from them. One is that there are only two things in the world you can worry about. One are things we can change, and the other are things we cannot. Why worry about something you can’t change. All the worrying in the world wont’ change anything… so why worry about it. That leaves us with only one thing left, those things we can change. That’s when we need to roll up our sleeves and get to work. First determine how you got there and why you are worried about it. Once you get past that, simply start making changes that will allow you to not worry about it. You will be better for it, and in the future, it’s going to end up being one less thing to worry about. God only knows what our future brings? If we can focus on making good decisions one day at a time, most likely that will give us the best prospect for the future we could have. Not all decisions will be the best ones, but the more we make, the better we will get at it. Doing nothing doesn’t change anything, but getting to work on what we can change does.
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Asset Manager
Yesterday I had the opportunity to talk with an asset manager for a large mortgage company. She personally handles 200 foreclosures and feels we have reached the peak. What does that mean, well that could be an indication that the market has seen the worst and will continue to improve as the saturated foreclosure inventory gets reduced. It certainly won’t happen over night, but at least we could be headed in the right direction.
This is also an indication that shows now is absolutely the right time to purchase. With the inventory being reduced, interest rates at record lows, now is the best time for investors or anyone to talk to me about buying a home in the Phoenix area.
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Sales for February in almost all areas of the valley were up from Januarys numbers. November through January are typically slow sales months. With February’s numbers being up, that shows we are on the same cycle as we’ve seen in a normal Real Estate market. I’m seeing area’s in the valley where multiple offers are being made on homes. That tells me we have hit bottom in those area’s. People can pick up a home between 10-15% below market value since banks are looking to get rid of them as fast as they are getting them back.
If you’ve been waiting for the perfect time to buy a home in the Phoenix area, now is absolutly the time. I have Realtor friends that are picking up great deals each week because they know it’s not going to last much longer. When Realtors and investors are buying, that’s typically means that prices are going to be on there way up soon.
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New FHA Loan limits
Today FHA (Federal Housing Administration) raised the loan limits to $346,250. (Maricopa County)
The FHA increased loan limits will help thousands of homeowners that
do not fit underwriting guidelines for credit requirements.
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Foreclosure map
If your interested in knowing what states have the highest foreclosures, this maps for you. You will notice that California, Nevada and Arizona really are in the red. (highest foreclosures)
Click here to download the map.
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A short sale story.
The current Real Estate market in Phoenix is a hot topic no matter who you talk to. Here’s one of my stories. On Saturday I met a guy that I played poker with. He was a real nice guy even after he lost his money. While we were getting ready to leave he mentioned we were all welcome to come and play poker at his home next time. Of course with a bunch of guys hanging around, someone asked if he’s got a TV in the same room as the poker table. He said yes and included that it was a 73 inch flat panel. Of course that got our interest, so we said we’d talk about it later and get back to him. On the drive home Real Estate came up. He said he just sold his home and it would be closing in a couple of weeks. The part that really surprised me was that he said it sold as a short sale. Wow, I just couldn’t believe what I just heard. He said they really like where they are now because the home is bigger and their rent is less than on the home they just sold. Here is a guy that just lost money playing poker and has 4 kids, a 73 inch flat panel TV and just sold his home as a short sale.
That story really makes me wonder what we as Americans really value. We have so much stuff and never even think about living without it. Is it important to us to save and insure the future of our family and ourselves? Is having and aquiring more stuff more important than owning a home? I always believed a home was something you valued more than that. I really feel for these people who are losing their homes, but if they have the same attitude as the guy I met, maybe some are better off renting a bigger home?
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