Desert Peak Realty

Ways to Take Title to Property in Arizona

Jason Webb — Mon, 19 Mar 2012 21:44:03 +0000

Here is a guide on most options for taking title to property in Arizona. Arizona is a Community Property state, which means that a husband and wife are presumed to have equal interest unless legally specified. One spouse can purchase property as sole and separate with the explicit permission of their spouse. The spouse would have to execute a Disclaimer Deed.

Community Property with the Right of Survivorship

Only available to persons married to each other.
Each spouse owns an undivided one-half interest in the community property.
Estate passes to the surviving spouse upon death of the other spouse.
No court action required to clear title upon death of spouse.
One spouse cannot sell his or her interest.
Requires signatures of both spouses to convey or encumber.

Community Property

Only available to persons married to each other.
Each spouse owns an undivided one-half interest in the community property.
Each spouse may provide by will one-half of the community property.
Upon death, the estate of the decedent must be cleared through probate, affidavit or adjudication.
One spouse cannot sell his or her interest.
Requires signatures of both spouses to convey or encumber.
Property acquired by a spouse during marriage is presumed to be community property except that property acquired by gift, device or descent.

Joint Tenancy with the Right of Survivorship

Available to two or more parties that do not need not be married.
Each joint tenant holds an equal and undivided interest.
Upon death of one of the joint tenants, their interest passes to remaining joint tenant(s).
Requires signatures of all joint tenants to convey or encumber the whole.
One joint tenant can partition the property by selling his or her interest.
All joint tenants do not need to take their interest at the same time.

Tenancy in Common

Available to two or more parties that are not married.
Each tenant in common holds a undivided interest that need not be equal, but in the aggregate cannot exceed 100% of the ownership interest.
Each tenant has right to possession.
Each tenant can convey or mortgage their interest without destroying the co-tenancy estate.
Requires signatures of of all tenants to convey or encumber the whole.
Upon death, the tenant’s share passes to his or her heirs by will or intestacy. The estate of the decedent must be cleared through probate, affidavit or adjudication.

Beneficiary Deed

The owner of real estate may record a deed to transfer title to another upon the owner’s death.
Purpose is to create a transfer-at-death type of grant to a third party without the need for special administration at time of death.
Flexible about who can grant and who can receive. There can be more than one owner and more than one beneficiary.
The grant to the beneficiary can be held in any form permitted by law.

Other Forms of Ownership

General partnership, limited partnership, limited liability company, corporation or any other legal entity or individual can own property.

For a more comprehensive explanation of legal and tax consequences, it is recommended that you consult with an estate planner, tax account and/or attorney. This is for informational purposes only and not intended to be taken as legal advice.

Placing a Good Tenant

Chris Webb — Mon, 19 Mar 2012 21:29:51 +0000

So, you’ve just bought your first investment property – now it’s time for it to start making money for you! In order to realize a positive rate of return, it’s important to find a good long-term tenant that will treat your rental with respect. So, how do you go about that?

First, you must advertise the property for rent. There are several ways to do so:

Placing an ad in the local paper (least effective)
Word-of-mouth – don’t hesitate to drop it into conversation in your social sphere.
Social media – mention it on facebook… once… don’t spam your friends!
Put a sign on the property (you may choose not to do so in an area where there is high incidences of crime targeting vacant homes)
Free ad web sites such as craigslist.org, Postlets, etc.
Paid ad sites such as Zillow
Through a Property Management company that has an active renter call base
Through a REALTOR/Property Manager that will put a professional listing on the local MLS (most effective)

What should go into the listing ad? Most importantly, the price. You can attempt to determine a fair listing price by scouring competitors’ ads on Craigslist, realtor.com, etc., or plugging the property address into Zillow or Rentometer.com, but by far the best way to find out competitive price trends is have a REALTOR such as your buyers’ agent, your hired listing agent, or Property Manager do a comparative market analysis (CMA) of local, recent, comparative rentals in the MLS. Other things that should be mentioned in the ad are: lease terms such as your minimum lease duration, and deposits; and disclosures as to taxes, utilities, and HOA rules. Many landlords do not allow smoking or certain pets – if this is your policy, state it up front. If the media you are using allows it, have plenty of pictures and an accurate property description!

Your phone starts ringing. You don’t want to waste time showing to just anybody, so some basic screening is in order. Does the prospective renter have any pets? How many adults will be on the application? Do they have any prior evictions or judgments, or felony convictions? Do they have credit issues such as unpaid debts? Make sure you are careful not to violate any Fair Housing rules in your screening process.

Once you’ve shown the home, and the prospective tenant wants to apply, you will need to do some real screening. The best way is to have all adult applicants pay for and fill out one of the many background checks available online. Landlords should first obtain written permission from the applicant to pull credit and verify information presented on the application. The best checks will scour for criminal history, evictions, and credit worthiness. You can also search county court records for criminal cases and judgments. Nothing is stopping you from doing your own detective work – you can find a lot of things about some people online. Once we came across an applicant that had a professional license revoked due to sexual assault on a client. Another applicant had a facebook page that described their indoor flock of canaries and destructive dogs… none of which were listed on the application! You may find that you will show many people the home and have a few apply before you find a suitable tenant. Another thing you absolutely must do is call for references from previous landlords, and call H.R. departments for verification of wages. If the applicant just lost their owned home through foreclosure or short sale, you can verify this through the County Assessor. If they are self-employed, you can ask the application for verification of income/funds available from tax returns and/or bank accounts.

Once you’ve found a suitable tenant, it’s time to write the lease. In Arizona, leases of one year or more must be in writing and signed. Standard leases can be found online or in office supply stores, but it is critical that they follow the laws of your state, as well as Federal Fair Housing rules. Make sure the lease addresses all payment rules, penalties for lease violations, your pet and smoking policies, breakdown of deposits, pool rules, and any other terms of the lease, in plain and clear language. It is always a good idea to have an attorney to review the lease. If you are using a licensed leasing agent or Property Manager, they will likely be using the local REALTOR Association leasing forms or one reviewed by an attorney which should break everything down legally.

Before turning over keys, the condition of the property should be well documented. Take lots of pictures detailing condition of walls, floors, ceilings, widow coverings, fixtures, cabinets (inside and out), counters, vanities, landscaping and anything else you can think of. Taking a detailed video is also a good idea. Pictures and video can jog your memory when tenant moves out and can also settle disputes over condition. Tenants suing landlords over security deposits is an issue on the rise. You should also provide the tenant with a move in form so that they can note the condition of the home. This form can be filled out with the tenant at the time you are turning over keys. Optionally, you can provide the form to the tenant and let them complete it and return it within a specified time frame. (The Arizona Landlord and Tenant Act requires the landlord to provide a move in form.)

Once the lease is signed, the best part comes next – collecting the rent! You should only take the first month rent and deposit via certified funds such as a cashier’s check. You can imagine the horror of having the first month’s rent check bounce! Your lease should have specified who and when to make out the monthly rent checks. You may want to have a P.O. box for the tenant to send it to, to keep them from showing up at your home at their convenience. If you have done your diligence screening, you should, hopefully, have a great long-term tenant!

If all this sounds too burdensome or daunting, you may want to hire a professional Property Manager to at least handle the leasing process, if not take over the complete management of the property for you.

Neighborhood Spotlight: Hillcrest Ranch

Chris Webb — Wed, 14 Sep 2011 22:16:46 +0000

A comfortable, well-landscaped, North Glendale, Arizona, community of 1258 single-family homes, Hillcrest Ranch is bounded by 67th Avenue on the East, 75th Avenue on the West, Deer Valley Road on the South, and Patrick Lane to the North. Built in the mid-nineties, Hillcrest Ranch features Spanish-style single family homes in a variety of single and two-story floorplans, many with pools.

It is in one of the West Valley’s most desirable areas, just a few short minutes in the car away from Arrowhead district shopping, fine dining, and nightlife, as well as Peoria Sports Complex, where the San Diego Padres and Seattle Mariners call home to Spring Training. The 101-Loop (Agua Fria Freeway) is also close-by and easily accessable – you can hop on the freeway and be at the stadiums for the NFL Arizona Cardinals and the NHL Phoenix Coyotes in just minutes.

Hillcrest Ranch boasts being in the highly sought Deer Valley Unified School district, and community children may attend three public schools right in the subdivision: Highly Performing Copper Creek Elementary and Hillcrest Middle Schools, and Excelling Mountain Ridge High School (as of 2010) . Other public and private schools of all grade levels, including preschools, are also close by. Also within a very short commute are several higher-learning venues, such as Midwestern University, The American Thunderbird School of Global Management, ASU-West, and the two campuses of Glendale Community College. Another educational opportunity close by is Challenger Space Center Arizona, the Mission of which is to inspire, excite and educate people of all ages about the mysteries and wonders of space, science and the universe.

In the heart of the community, eight-acre Hillcrest Ranch Park (City of Glendale) offers open green space, a ball field, playground, ramadas, picnic tables, and grills. Paved walking/jogging paths also wind through Hillcrest Ranch, connecting smaller green belts at various intervals. For other recreational activities, Thunderbird Conservation Park, Thunderbird Recreation Area, Palo Verde Open Space Park, Westwing Park, and Deem Hills Recreation Area offer miles of excellent mountain hiking/mountain biking trails within a few miles. Two new parks, Westwing park (City of Peoria) also offers a skate park, tennis courts, and playgrounds; and Deem Hills Recreation Area (City of Phoenix) has lighted soccer fields and playground. Even closer to Hillcrest Ranch are two great golf courses – Arrowhead Country Club and The Legend at Arrowhead. There are also public swimming pools, go-cart tracks, water parks, and paintball arenas nearby. Hillcrest is a very short drive to Lake Pleasant, the premier recreational lake to the Valley of the Sun.

If you are looking for a desirable, suburban family community with great schools, close to shopping, restaurants, freeway, and recreational possibilities, yet away from the hustle and bustle of the inner city, Hillcrest Ranch just might be the right place to hang your hat when you come home. If you would more information about homes available for sale or rent in Hillcrest Ranch, we at Desert Peak Realty would love to assist you.

Here are some links for more information:

Deer Valley Unified School District

85310 Demographics from City-data.com

City of Glendale

Hillcrest Ranch HOA

Arizona Public Service (electricity provider)

SW Gas (gas provider)

Listings in Hillcrest Ranch

20,132 Listings

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Housing Prices - Glendale 85310 256847.16,281622.01,288201.61,285512.60,283646.36,275595.61,277736.05,286128.26,288443.89,286893.13,289379.40,295152.89 162556.42,198376.39,170704.55,200877.74,179763.73,223704.40,185423.56,177616.67,173786.11,179185.14,177701.90,211380.07 Information is deemed to be reliable, but is not guaranteed. © 2012	Sales Price vs. List Price - Glendale 85310 99.0,96.8,97.9,98.3,97.8,99.5,98.2,97.6,98.2,99.1,98.8,98.8 Information is deemed to be reliable, but is not guaranteed. © 2012
Inventory - Glendale 85310 166,137,129,134,129,139,132,117,122,125,110,107 59,54,44,42,44,42,39,33,28,37,39,30 Information is deemed to be reliable, but is not guaranteed. © 2012	Absorption Rate - Glendale 85310 4.36,3.58,3.25,3.29,3.13,3.32,3.11,2.73,2.83,2.89,2.56,2.52 Information is deemed to be reliable, but is not guaranteed. © 2012

What are all the implications for a Canadian to buy real estate in the U.S.?

Chris Webb — Wed, 25 May 2011 21:48:04 +0000

Being Canadian-born real estate agents in Arizona, where many Canadians dream of owning a vacation home, we get this question a lot. However, real estate agents cannot answer “what are all the implications”. What you really should do is sit down with a financial/legal professional who knows not just the tax code and laws of each country, but your personal financial situation as well. I’ll try to give you a few starter points though:

There is no real hurdle about buying real estate, except that financing may be a tiny bit more of a challenge or carry a slightly higher interest rate on a non owner-occupied home. We may be able to help you find a mortgage professional that has financing programs available to Canadians. If you are financing, be honest with your loan officer about your intentions. You may need to sign off on whether it is a second home, primary residence, vacation property, or investment.

If you rent out the property, there are tax implications that a cross-border financial professional who is familiar with your personal situation can help you with, as the profits may have to be reported to both Canada and the U.S.. However, there are treaties between the countries that avoid double taxation. A 30% withholding of gross rents may be required by the IRS. Find out more about foreign persons receiving rental income from U.S. properties from the IRS.

When you eventually sell the property, the sale is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. Generally, the buyer must withhold a tax of 10% of the amount paid for the property. Find out more about FIRPTA here.

Time you are allowed to spend in the U.S. is generally under 6 months, although it is ultimately up to the visitor to prove they have not immigrated. If you stay longer, or have investment income here, and you own a residence, you could have trouble proving you have not illegally immigrated. You could also run the risk of losing some Provincial or Canadian benefits. Request to have your passport stamped each time you cross the border to prove your time in Canada, although it’s not required. Also consider carrying proof that you own a residence in Canada. Find out more about visiting the U.S. from the Canadian Embassy.

Talk to a health insurance professional about carrying an extra policy over your Provincial Health Care, which may not cover all of the care you may need in the U.S. if you become sick or injured.

Standard homeowners’ insurance also may not provide sufficient coverage if a home is vacant more than 30 days, so it would be prudent to be very clear to your insurance professional that you need vacancy coverage. Read your policy very carefully!

There are companies that you can hire that will visit your vacant home weekly or monthly to give you reports, but if you are leasing the property you will be wise to hire a professional Property Management Company.

If you are specifically looking to buy in Arizona, be sure to read the Arizona Department of Real Estate Buyers’ Advisory.

Thousands of Canadians buy homes in the U.S. every year as vacation homes or as investments. Currently more Canadians buy U.S. real estate than from any other foreign nation. As long as you follow your qualified financial professional’s advice, it shouldn’t be that difficult to purchase and own property in the U.S. We have handled quite a few cross-border real estate transactions and haven’t come across any major issues. Once you have decided owning real estate in the U.S. is right for you, we’d be delighted to help you with your purchase transaction, if you are buying in the Phoenix area. If you are buying elsewhere in the U.S. we can help you find a real estate professional that works with Canadians.

None of the above is intended to be taken as professional financial, tax, legal, or immigration advice. We recommend speaking with professionals as mentioned above in relation to your pursuit of buying U.S. Real Estate. Enjoy your stay in the U.S.!

FAQ on Home Inspections

Chris Webb — Wed, 18 May 2011 00:31:12 +0000

Professional property inspections are absolutely essential: there is no practical substitute for a professional inspection as a measure to discover and investigate defects or shortcomings in a property. ~ Arizona Department of Real Estate Buyers Advisory

What is a home inspection?

A home inspection is a visual physical examination performed by a professional home inspector in order to identify material defects in a home. The inspector will generally provide the buyer with a report with detailed information about the property’s condition. It is now common practice for many inspectors to provide a report online, with photographs.

Who should get a property inspection done?

Anybody who is considering a home purchase!

When is it done?

During the Buyer Inspection Period, which in most cases, on the standard Arizona purchase contract, is defined as the 10 days subsequent to acceptance by the seller. The seller, especially if it is a bank owned home, may counter with a shorter period. Unfortunately, if you buy at a Trustee or bank auction you may not get an inspection period at all, and you are taking your chances.

How do I find a home inspector?

Your Buyers’ Agent should be able to provide you with a list of home inspectors to choose from, or you may find your own through ASHI. or find out more about hiring a home inspector from the National Association of REALTORS®

What inspection items should I most be concerned about?

The inspector will not be looking for cosmetic imperfections, but should look for structural defects, household or safety hazards, test the electrical system, plumbing, HVAC system, windows, do a visual inspection of the major roofing components, foundation and support, water heater, and more. The report will point to defective items and either recommend repair/replacement or further analysis by a licensed professional in that field. The buyer may use the information in the inspection to determine whether they a) want to go ahead with the home purchase b) get further analyses done c) ask the seller to make repairs at their expense d) use the information to determine the cost to improve the structure or safety of the home after purchase.

How long does the inspection take?

In a typical tract home 2-4 hours.

Are there issues with the home that are outside of the scope of the home inspector?

The home inspector may not include or be licensed in the inspection of fungus (mold), advanced electrical, roofing, or plumbing components, pool systems, or termites/pests. Find out from your home inspector if they include these in their inspections and if not, hire additional inspections if you find them material. For example, if a light switch blows a breaker, the home inspector will be able to point that out, but generally is not licensed to take it apart to diagnose the problem and will recommend analysis by a licensed electrician. Or, the home inspection may note that there is visual water damage that could lead to fungal activity, but may not be licensed to do a comprehensive mold inspection. Some home inspectors are licensed to do mold, pool, roofing, and termite inspections but those would usually be charged extra. What is, and what is not, required of an Arizona Home Inspector can be found at the Arizona ASHI Web Site.

How much does it cost?

It can vary between inspector to inspector, if there are extra add-ons such as termite or pool inspections, and by the size of the home, but usually we see them done in the $200-$400 range.

I know a guy who used to be in the home construction business. Maybe I can save a few bucks and hire him to inspect the house?

Maybe he’s great at building some components of houses, but is he a qualified home inspector? We regularly see home inspections that point out glaring errors made by builders in their haste to get a home built in the shortest time using the cheapest labor possible. Also, with the sometimes short time alotted for code (municipal/county/city) inspections at the time the houses are being built, it’s easy for code inspectors to miss some crucial problems and pass a house with defects as up to code. These errors could be an incorrect circuit breaker for the type of wiring that could lead to fire, or insufficient insulation in the attic which would cost the home’s new owner thousands of dollars in electricity costs, or worse. If you’re buying a house, even a new-build, hiring a licensed, qualified home inspector is essential!

The following photos are all from a single home inspection report. Would you have spotted all of these defects without an inspection?

Melted A/C handler disconnect due to improper size of circuit breaker. Can you say "fire hazard"?

Um. yeah. This has got to be bad.

Cracked roof tile, exposing felt which can lead to more damage and leaks.

Broken dishwasher seal due to previous owners using incorrect cleaning supplies.

What else can go wrong if I don’t get an inspection?

Check out this entertaining article from MSN.com.

Is This Your Dream Home? Ten Important Considerations

Chris Webb — Tue, 25 Jan 2011 21:32:50 +0000

So you’re ready to buy your first home, or maybe move up. How will you know for sure when you come across the home of your dreams? It’s easy to let emotions take over when you see a nice house, and want to put in an offer right away. But maybe you should take a deep breath, weigh it against the factors below and see how it stacks up:

Price. If the house is in the price range that you know you can afford, great! But are you willing to pay more than what it is worth, to ensure you get the home of your dreams? This may be a realistic strategy if you are paying cash, but if you are buying with financing, keep in mind that your lender will not likely allow a loan for more than the home is worth. On the other hand, if you are searching for a true “bargain” and only place lowball offers on fantastic homes, you may miss out. Ask your real estate agent for a small list of comparable sales to ensure that the price is in line with current market value. You can check some of the web sites, such as Zillow, for a rough idea on value, but they aren’t always accurate or up-to-date.

Distressed sale or not? Most of the listings on the MLS today are either Short Sales or bank owned (Real Estate Owned/REO) properties. Short Sales may take months to close, if the deal goes through at all. Is this, your dream home, worth waiting for, or could you be giving up other homes that come along? REO listings are more like traditional sales, except the bank is the seller. Both REO and Short Sales are usually AS-IS.

House Size/main features. How large a home, how many stories, number of bedrooms, baths, and extra living space do you need? Do you require a two or three car garage? Do you prefer newer or older homes?

Location. Do you want to be close to a certain school, medical center, or place of worship? Do you want to be in the center of action in the inner city, or in a peaceful suburb? What will your work commute be like? It is a good idea to take a “test-run” between your potential home and work during rush-hour to see how long it takes.

Condition. Are you a DIY type to make repairs, or do you want a house that is move-in ready? Many of the homes on the market today need paint and other minor touches. That is easy to fix, but to ensure you aren’t buying a home that is in need of more expensive repairs, be sure to get a home inspection. It is better to spend a couple of hundred dollars and walk away from a house that needs major repair, than to have never found out about it until after you move in.

Family/life style. If you have children or extended family living with you, consider extra living spaces such as rec-rooms, play areas, larger dining areas, storage and bath space. If you have visitors with limited mobility, you may want a single story home or at least a main-floor guest room. If you work from home, you may need a dedicated office or garage workshop. Maybe you need an extra room for your crafts or hobby. Do you have ATV’s that you need storage space for?

Lot. Concerned about noise from nearby freeways or busy streets? Do you want a large back yard with trees, pool, lawn, and kids’ play area, or is a tiny, easy-to-maintain yard more your speed? How is the view… or smell – if it’s close to a farm, be prepared for an occasional “aroma”.

Neighborhood. Investigate local crime statistics and registered offenders in the proximity if important to you. Are the neighbors respectful and keep their homes tidy, or do they have cars up on blocks, dripping oil in their driveways? Do they come out like vampires and party with loud music as soon as the sun goes down? A good idea would be to visit the neighborhood at different times of day, including night-time. Talk to the neighbors. Explore the surrounding neighborhoods, as well.

HOA rules, features, and fees. Does the HOA allow you to park your camper/boat behind your RV gate? What do the fees include? The listing agent may have no way of knowing these things for sure, so don’t rely on the MLS printout. Most HOA’s are required to give a copy of their bylaws within 10 days of being requested by your Title Company during escrow. A good idea is for you to do your own homework beforehand – find out who manages the HOA, and call them if you have questions. The HOA may have features that are very appealing to you, such as pool, rec center, etc. Since the fees and dues may be costly, verify the fees or dues if this is material to you.

Other associated costs. You should also weigh in property taxes, home insurance, maintenance (lawn service, pool care etc.), utilities, and other costs of home ownership. Can you afford it?

For more considerations, a definite must when considering buying a home in Arizona is reading the Arizona Buyers Advisory. It is an excellent resource provided by the Arizona Association of REALTORS. It is designed to make the home buying process as easy as possible.

It is next to impossible to find everything you want, but does the home have everything you need? If you’ve weighed the above considerations and decided that this is your dream home, go ahead, discuss it with your agent and have them write up an offer! Good luck, and hopefully you will have many happy years in your dream home!

The ABC’s of FICO Scores

Chris Webb — Mon, 19 Jul 2010 22:36:45 +0000

Almost everyone knows that having a good credit score is important if one ever wants to apply for a loan, credit card, or even a rental home lease. But few people know what defines a good score, and even fewer know how their score is calculated.

The “FICO” (a copyright of Fair Isaac Corporation, a company that offers consulting services and enterprise decision management systems) score’s exact formula is proprietary (meaning it’s their company secret). However, they do make public that Scores are calculated from a lot of different credit data in your credit report, including:

35% payment history
30% amounts owed
15% length of credit history
10% new credit
10% types of credit in use

FICO scores range from 300-850 – the higher the better. FICO adjusts its FICO score formula for each of the 3 national credit reporting agencies (Experian, Equifax, and TransUnion) to take advantage of their unique data strengths and also because not all credit information is reported to all 3 credit bureaus, and there can be errors in a person’s credit record. (It is wise to take advantage of your free credit reports to watch for these errors).

FICO scores do not take into consideration your race, color, etc.; where you live; your salary; size of your home, make of car, or other personal information not related to credit risk. It is also reassuring that requests made by lenders in order to make you a “pre-approved” credit offer such as a home or auto loan are usually not taken into consideration on your score. (but be aware that multiple inquiries from many credit card companies within a short period of time can negatively affect the score).

Negative information on your credit reports, such as not making payments, bankruptcy (both Chapter 7 and Chapter 13), losing a home to foreclosure, deed-in-lieu of foreclosure, or short sale of a home remains for 7 years (10 years if there is a full discharge of debt on a bankruptcy), but the impact lessens over time. Bankruptcy generally has the highest impact on the FICO score. Short sale & deed-in-lieu (especially if you have not made your payments) and foreclosure can all have a similar impact. How much the score changes will depend on how the short sale or DIL is reported, and on the other information in the credit report. If reported in a way that indicates “not paid as agreed,” the FICO score could go down 100+ points. Although the negative info remains for many years, you may still be able to work your score back up to an acceptable level and be able to qualify for loans or other credit in a much shorter length of time, depending on how well you work at it, and the type of circumstance in which the credit was impacted.

If you need or desire to increase your credit score, you should apply for new credit cards only as needed, pay your bills on time, if you are not current – GET current, keep balances low on credit cards, don’t open a lot of accounts quickly, don’t close unused credit cards at once thinking it will improve credit – this may backfire, and see a credit counselor if you are having trouble getting back on track.

*The above general information is not meant to be taken as professional tax, credit, or financial advice. For more information please refer to the source at http://www.myfico.com/CreditEducation/ or seek advice from a tax, law, or credit professional.

Staging a Home for Sale

Chris Webb — Mon, 19 Apr 2010 22:16:46 +0000

When you put a house on the market, it is imperative that you stage the home correctly. But what is staging, exactly?

Staging is preparing your home to show it in its best possible light, and in a way that buyers can picture themselves living there. This can be as extreme as renting high-end furniture to fill the home, or as simple as moving a few things around.

Here are a few pointers:

Remove clutter. This is simple, but one of the most important. Get rid of anything that doesn’t absolutely have to be there – including that toaster oven that hardly gets used, old magazines off the coffee table, those remote controls and video gaming accessories, kids and pet’s toys, cosmetics and bath accessories etc.
Organize. Most of us have far more clothing, shoes, and accessories in our closets than we ever use. Pack up those old coats and ill-fitting clothing, and donate to charity or put in storage. A closet with some space between hangers looks much bigger. Clean up the garage and put those tools and bikes in their proper place. Make sure the curtains are hanging properly and area rugs aren’t out of kilter. Arrange your furniture in the way that fits the home the best.
Clean! Make sure fixtures, mirrors, & windows shine, remove those cobwebs and replace your air filter. Clean the carpets and keep them raked. Keep the landscaping trimmed, and pick up pet waste promptly. Wash your front door and doorknob – they are the first impression!
Replace any dead or missing light bulbs with new bright but efficient bulbs. When property is scheduled for a showing, leave all lights, including accent and closet lighting on, and open the blinds to let natural light also come in.
Remove personal effects. Some buyers may be distracted or turned off by hunting trophies, religious or political artifacts, or other items that might not go well with their own personal lifestyle and beliefs. Even your family photos should be put away, since the buyer wants to picture the home as theirs, not yours.
Add a little decor, if home is vacant. Buyers in this distressed-property market are accustomed to vacant homes, but you can make yours look better by adding some artificial plants, a welcome door-mat, and hang some nice towels in the bathrooms. A few accessories in strategic places can make the house look homey. Easy-listening music playing lightly in the background can enhance a buyer’s mood.
Fix that smell! This is of utmost importance. Consider not cooking foods that have strong lingering smells, such as fish, onions, garlic, broccoli, or exotic herbs. Even the scents of popcorn, bacon, and coffee can turn some people off, so consider your menu carefully! Take the trash out daily, even if it’s not full. Give Fido and Fifi a bath and wash their bedding. Use simple tricks to make the home smell nice during showings: bake some bread or cookies (I hear warming an open can of beer in the oven emits the same pleasant yeasty scent, let me know if it works!), use inexpensive decorative scented oil/reed diffusers or candles with fruit or vanilla scents. Avoid flowery or musky fragrances. Above all, do not smoke in the house. Smoke odor is probably the longest lasting and hardest to remove. I have seen potential buyers walk right out of houses without looking further because of smoke, or if they still liked the home in spite of it, offered less because they predicted (correctly) that there would be more move-in cost due to cleaning and replacing carpets and paint.

The above tips are all relatively simple, but if followed, should make your home stand out above all the dirty, cluttered, stinky homes that are the competition. Good luck with your sale!

Explaining Short Sales / Part 2: From the Buyer’s Perspective

Chris Webb — Tue, 23 Mar 2010 16:56:25 +0000

If a buyer has enough patience, they just might find their dream home through a Short Sale. Back in 2006, right when the market was turning, we were looking for a new home for ourselves. Being our own worst clients, it took several months to find the perfect home listed at a great price. A Short Sale listing. We offered full price and the seller accepted. We waited several months for the bank’s approval. In the meantime, the home was decreasing in value but since we really wanted the house, we kept waiting. The bank finally said they’d approve it, but wouldn’t pay the commission, and there was no way the seller would pay it. We were devastated, as we had budgeted that money for improvements and repairs. It wasn’t going to close! Luckily, the seller’s agent found a way to negotiate the commissions out of funds the bank had set aside for lien payoffs or buyer concessions for which we weren’t asking. It was a close one, but with patience and luck we got our dream home (at a slightly higher price than what was then current market value).

Although a Short Sale may present an opportunity to buy a seller-owned home at a fair price, not every buyer is a good candidate for a Short Sale.

A Short Sale may be a good choice for a buyer who:

has TIME. A Short Sale may take MONTHS to well over a year to close.
is ready to pay a fair market price. The price that it is listed for may not be fair market price or approved by the bank! The bank may outright reject low offers or demand more money to approve the sale. The buyer’s agent can help the buyer determine what fair market price is.
does not ask for any offer contingencies such as on the selling of their own home. The bank will more likely accept a “clean”, fair offer.
has patience. The bank may not agree to the sale. Many Short Sales never close.
should really, really, want that house! The contract may stipulate that the earnest money will not be refundable for a certain amount of time. The buyer probably should not be shopping around or placing contracts on other homes while their contract is under negotiations with the bank as it is not fair to the seller. In addition, the home may decline in value while the home is in escrow.
should not be surprised if the home is not in the same condition at close as when they wrote the offer or did an early inspection. The seller often stays living in the home so there may be wear and tear, and also will likely not have the money or motivation to do any repairs. In addition, especially if the home is vacated, there is a chance that appliances or fixtures get stolen. If the inspection is done after bank approval, there may be material defects exposed that the seller and bank refuse to pay for, and the buyer must be prepared to pay for it or walk away.
has an experienced agent that knows the Short Sale process. Even though they may not be negotiating directly with the bank, they should be able to help the buyer identify listings from the beginning that are less likely to successfully close in a Short Sale transaction or that have several offers being negotiated with the bank on the same listing.
is prepared to contribute some or all of their agent’s commission. The commissions offered by the seller and/or agreed to by the bank may be less than is customary, as banks want as much money at close as possible and the seller may not be willing or able to pay.
is prepared for the interest rate to change while they are waiting. The buyer should definitely be pre-approved (or re-approved if need be) before placing any offers, or have proof of sufficient funds if paying cash.
is prepared for the bank to approve the sale only on conditions that may not be agreeable to the seller, such as bringing money for the deficiency or signing a note to pay a portion of it. Any other lien holders will also have to approve the sale and will also want their share.

Once I was surprised when a prospective buyer told me they only wanted to see Short Sale Listings. I think they had the incorrect impression that they would get a better home, for less money, in a shorter time, than a traditional sale or R.E.O. (bank-owned home). In reality, many buyers probably should not even be looking at Short Sale listings, although for the right buyers, there may be the opportunity to obtain their dream home through a Short Sale.

Explaining Short Sales / Part 1: From the Seller’s Perspective

Chris Webb — Sun, 21 Mar 2010 23:13:03 +0000

The American Dream is commonly perceived to be synonymous with home ownership. To lose one’s home often means to not only lose the roof over their head, but what they feel as their status in society. People in a distressed situation may feel helpless, ashamed, guilty, afraid, or any number of negative emotions that come with losing their home.

However, those in this situation, usually due to some crisis such as divorce, loss of income, illness, or predatory lending, can be assured that there is nothing to be ashamed about; they are not alone. The majority of homes currently available on the Arizona market are distressed homes. Some have been foreclosed upon and taken back by the bank (REO’s) but many are Short Sales.

A Short Sale is where the lender agrees to allow the sale of a home for less than what is owed upon it, because of an economic or financial hardship on the part of the borrower.

A Short Sale should only be pursued after the home owner has exhausted all other possibilities, such as refinancing, getting a loan modification, or selling for market price and bringing cash to closing. Other (usually less favorable) alternatives are to deed it back to the bank, allowing to foreclose, or (EEK!!!) just walking away. The home owner should not decide to exercise ANY of these options without seeking the advice of tax and legal professionals. A Real Estate professional is in no position to give tax or legal advice, although they can help a home owner find those sources.

If the Home Owner’s tax advisors, lawyers, and/or accountants have advised them that Short Selling their home will have less of an impact on their Credit Score (usually much less than a foreclosure) they will be less likely suffer recourse for the deficiency from their lender, and have fewer tax implications, then a REALTOR® trained and experienced in Short Sales should be sought to market their home, find buyers, and assist with/conduct the negotiations with the lenders.

The home owner will be asked to provide materials for a Short Sale Package, which will be used by the bank to determine whether they will allow the sale. It usually contains a letter of hardship from the seller, seller’s financial statements, market analysis, a purchase contract signed by both buyer and seller, proof on the buyer’s part to purchase the property, HUD-1 settlement statement, escrow instructions, and possibly more as required by the bank. If there are secondary liens, additional packages will have to be sent to those lenders for negotiations as well.

If all lien holders allow the transaction and the buyer agrees to any required payoffs, a Short Sale will go through in one of a few ways: The lender releases the lien and the seller agrees to pay off remaining debt; the lender may require the seller to liquidate assets and pay off balance; or optimally, the lenders forgive remaining indebtedness. Again, because there may still be tax or legal implications, tax and legal advice should be sought before any home owner pursues a short sale.

A Short Sale can take months to over a year to close, if all parties agree to the terms. It is an unfortunate situation anytime someone loses their home, but in many instances, a Short Sale is the right opportunity for patient sellers and buyers.

Why We’re in the Real Estate Business

Chris Webb — Sat, 20 Mar 2010 21:03:02 +0000

For our first blog, we’d like to introduce ourselves and explain why we do what we do.

Jason and Chris

Jason and I (Chris) grew up in small towns in western Canada. When we met in our college years in Calgary, we simultaneously fell in love and became best friends, which we are to this day. Several years later, we relocated to Phoenix for Jason’s job as a mainframe programmer/analyst at a major financial/credit services company. After Y2K, mainframe work started evaporating, and technical work being ever-more outsourced, Jason and many others had to either find lower paying jobs or a new occupation altogether.

It was 2002 when Jason bought his first investment rental home. Investing in Real Estate seemed like the right thing to do at the time. Jason expected a modest 5% annual appreciation and a small cash flow. He bought a couple more, then decided to get his Real Estate License and become a REALTOR®. A quick learner, he rapidly became a successful agent.

Soon the market did something marvelous: that 5% appreciation was turning weekly instead of annually! Everybody wanted to get a chunk of the real estate investment action, andbusiness was booming! Jason encouraged me to quit my job at a major health insurance company to help him out. I joined him as a REALTOR® and investor. We successfully represented clients in scores of transactions, and, with banks virtually throwing money at us, we continued to buy rental homes until the market peaked in 2006…

Suddenly, the phone stopped ringing. Our properties were declining in value. Sales dropped dramatically. We wanted to take advantage of the low prices, but for some reason the banks wouldn’t lend any moremoney. Investors disappeared, and people were reluctant to buy in the unstable market.

Changing approach, we found different sources of funding and acquiring properties.

We learned to make money turning uninhabitable properties into beautiful, livable family homes.Flipping properties and helping other investors rehab or get into the rental business has been a large focus for us, although we still especially enjoy representing first time home buyers and finding people their dream vacation or retirement homes. Our philosophy is thateveryone has to win for a transaction to be a success, even though today, many sales are due to the unfortunate circumstance of people losing their homes.

Short Sales and foreclosures (REO’s) are now the bulk of MLS listings and the majority of the transactions we represent. These involve very different approaches than traditional transactions, and they take experience, and training to achieve. That’s why we regularly take continuing ed, join groups, follow market trends, legislation updates, and news. We are excited to have recently completed an excellent course towards receiving our Short Sales and Foreclosure Resource certification.

Yes, there’s been some bumps and curves along the road, but that’s just experience gained and opened doors for new opportunities. We love working as a team in the Real Estate business in Arizona, and can’t imagine doing anything else.