Thursday, May 16
When it comes to Sellers who short sale Arizona, it is an entirely different scenario against when the Seller has equity. The offer is no longer just between the Seller and Buyer, and thus becomes more complicated.
The lender, investor, and any other lien holders all have to agree on pricing and terms. When the buyer wants to close may have no bearing on the actual closing date. Therefore, it's key to work with an Arizona short sale realtor who can set expectations and keep everyone coordinated.
Sometimes, it is best to educate your buyer’s agent about the Arizona short sale process. Not all Buyers agents are well informed on the short sale process, and in fact each sale and lender is different.
Buyers involvement with a Short Sale Arizona
Let us discuss some important points that a short sale Buyer and their agent need to know:
· The current trend among lenders is to place the house near its market value and there are very rare chances that you may get a steep discount. Especially in hot markets like phoenix, getting a bargain on a short sale Arizona
is becoming more rare.
· For the short sale properties available in “as is” condition, make sure to consider the cost of repairs, occupancy permits, and any similar repairs before making a final offer. Even though you may offer on price, the bank may not see eye to eye, so make sure they are aware of repairs
that need to be made.
· Another important factor in a short sale is that the will of the seller is not enough to close the deal. It is important the seller’s lender approves the price and terms proposed in the offer. Like any other offer, they can accept, reject, or counter the price and terms.
· After the offer has been approved and signed by the seller’s lender, they will expect buyers to close the deal within 30 days. This can be extended in some cases, but other lenders and/or servicers are very strict about it, especially if you are close to the foreclosure date.
· If you are purchasing a short sale arizona
, make sure to stay in the know about the occupancy status of the home. If there are tenants or owners still in the property, keep in touch with the Arizona short sale realtor to coordinate the move out and closing as close together as possible.
· The policies may differ from one lender to another, make sure to confirm the terms of the buyer regarding the closing date, closing terms, and restrictions. They need to be aware of the added disclosures and risks that may come from purchasing a short sale.
· If the buyer’s agent is required to take an emergency or planned vacation, ask them about the concerned party covering for them.
A short sale requires double the effort as compared to any other real estate transaction. In case you don’t have the sufficient time for the process, hire an Arizona short sale realtor who would work as per the situation demands.
At any time in a short sale Arizona, it is important to maintain healthy communication between concerned parties and keep them informed about the proceedings accordingly. This will help turn a normally frustrating process into a win-win-win sale.
Wednesday, May 08
For those of you that are following or are interested in the Phoenix-Metro real estate market, here is my monthly update.
The information is extracted from the Arizona Multiple Listing Service (MLS).
Thanks and enjoy!
Friday, March 22
Hello, hope everyone's week has been good!
I just posted a Phoenix market update over at my blog and thought it would be of interest to you that follow Arizona real estate.
Thanks and let me know your feedback!
Friday, March 08
Republican legislators express concern, seek reform of the FHA
The Federal Housing Administration has seen better days. In the past year it is has suffered financial losses and could potentially be suffering billions of dollars more in losses as a Treasury subsidy becomes more likely. Now, with the FHA likely to fall short on the amount needed to cover future losses by up to $16.3 billion, heads are turning and discussion has been fueled.
Like most financial complications, the housing crisis can be blamed. These losses can be traced back to the loans the FHA approved in the midst of the housing crisis and the number of defaults that occurred soon after.
Many republicans are looking at these numbers and calling for reform, some even pointing fingers. Take the House Financial Services Committee Chairman, Jeb Hensarling, R-Texas, for example, who said at a recent hearing that the FHA no longer focuses only on low and middle income Americans and now controls a majority of the mortgage market, including both low and high priced homes – a far stray from the administration’s original purpose.
Bad practices are also being blamed
Suggestions are being made to improve the FHA’s financial status, one being to scale back the reach to include only mortgages on smaller and medium sized mortgages, as originally intended. This would pertain not just to the FHA, but to the government’s role in housing as a whole, which many republicans believe also needs to be downsized.
Democrats, on the other hand, share similar concerns over the FHA but do not want to make changes that will make it harder for Americans of all financial classes and situations to obtain a mortgage.
It isn’t to be believed that the FHA is just sitting around waiting for action to be taken. The administration has raised annual borrower premiums, increased down payment requirements, and placed more focus on application approvals in an attempt to weed out individuals with a low credit score or large amount of debt.
With possible changes to the FHA on the horizon, now may be the time to seek Arizona short sale help.
What do you think?
Tracy (G+) is an Arizona Short Sale Realtor, Investor, Rehabber, and Foreclosure
She also is an avid blogger, vlogger, contributor to the Bigger Pockets Blog and consultant on all things Arizona
Wednesday, February 13
Relief to Millions of underwater homeowners that may no longer have to Short Sale
During the market crash of 2008-2010, people were stuck with their homes. Home values nosedived, leaving many homeowners owing more on their mortgages than what their home was worth. Selling at that time would have been financial suicide because homeowners would be unable to sell the home for more than what they owed. Sadly, these underwater homeowners had few options other than to wait and hope for the best.
Fortunately, the best has come sooner than most experts ever expected. Maggie Medved, a Phoenix homeowner, experienced just this – she lost all equity in her home, a quaint retro-style house, after the market crash and was forced to keep living in the home until things turned around. Instead of capitulating and going through the short sale process in Arizona, two years later, Medved and her husband were able to take advantage of the rising home prices in Phoenix by selling their home and moving into a larger one.
Twelve million homeowners in the U.S. were considered underwater at the time. Not only were they unable to sell their home or purge their debt without foreclosing, but they were also unable to take advantage of record low refinancing costs that helped millions of other homeowners save money and get a bargain on a new home.
Rise in Prices starting to Float some Homeowners
With the market now in recovery, underwater borrowers are finally coming up for air. JPMorgan Chase & Co. reports an estimated 7 million homeowners still underwater as of last year, down nearly five million from the peak of the housing crisis. Furthermore, that number could drop to as low as 4 million by 2015.
Luckily for these homeowners, now is still a great time to buy and an even better time to sell. The Federal Reserve has still managed to keep mortgage rates low, investors are continuing to acquire the decreasing number of foreclosed properties on the market, and housing construction is adding new homes to the market faster than it has in years.
Home Price Appreciation
Rising prices are adding tremendously to the growth of the market. Price appreciation, or the increase in value of an asset, is putting confidence back in homeowners. Just knowing that the value of their house is appreciating can change the entire way they budget, spend, and credit, which is great not just for the housing market but for the economy altogether.
Medved’s house sold for $85,000 after just two days of being on the Phoenix market. That price was just a tad lower than what she paid for the home back in 1998, and probably more than what she would get if she did a short sale. She has been planning to move for a while, but the crash set her back longer than she would have liked. Her financial situation – debt reaching $30,000 and a house that was worth less at a time when no one was buying – forced her to stay and wait patiently. Two years later it paid off. Now she and her husband live in a much larger home in a beautiful neighborhood in Glendale.
One thing in Medved’s favor was the fact that Phoenix was the top market in the entire country for home price appreciation. Home values shot up 22 percent between October 2011 and October 2012, which was the biggest increase anywhere since May 2010. Eighteen other major U.S. cities also showed year-to-year increases.
While this is certainly good news, let’s put it into perspective: current home prices in Phoenix are still down 45 percent from their peak in 2006 – nearly half in just a span of six years. The national market fares better, however, with the average home price now down 19 percent from its peak in May 2007.
A Drop in Supply
In Phoenix, the supply of available houses for sale dropped substantially. About 14,700 homes are currently on the market or ready to be made available, which is half of the normal amount. The reason for this: investors acting more quickly than buyers, taking advantage of the diminishing number of foreclosed homes on the market. As well, homeowners are tightly holding their rapidly appreciating asset.
This drop in supply is responsible for pushing prices upward (as the law of supply and demand would agree, a drop in supply means an increase in demand, which results in an increase in price). However, buyers are hooked. Last year, increasing prices led to 4 million homeowners getting back above water, so even those that might be considering a short sale are trying to hang tight.
What’s interesting to note is that although a 5 percent increase in the average house price would result in a decrease of 2-3 million underwater homeowners, a 5 percent decrease would put that same number back underwater.
This has led to a critical tactic by stalwart investors, such as Colony Capital and Blackstone, who are restraining the tapering supply of homes by pushing traditional homeowners who are also looking to buy these properties out of the market.
How are they doing this exactly? We can specifically look at Blackstone, the biggest private real estate owner in the United States. The sudden jump in prices in the Phoenix market caught them off guard, but they acted quickly by purchasing over 16,000 homes at a total cost of $2.5 billion in November. In October, they only spent $1 billion on homes, and even that was up from their average spending. They will handle these homes as rental properties. What might happen if they all unload in 3-5 years is still up for debate and I'm sure will be closely watched.
Decline of Foreclosures
Meanwhile, foreclosures elevated in part because of underwater borrowers who did not want to wait to get rid of their home until the market recovered. Known as strategic default, the idea that their home would never again be worth more than what they owed on it led them to hand in the keys, move out, and count their losses, leading to an increased number of abandoned homes that made many neighborhoods less appealing to potential buyers. The others that couldn't do a strategic default just opted to do a short sale and leave.
At the moment, however, foreclosures have slowed tremendously. From a year earlier, foreclosures were down 28 percent, as reported by Lender Processing Services in November.
Underwater homeowners who waited can now get back in the market. As prices continue to rise, home equity will go back up, causing many of these homeowners to sell now while buyers are interested and rates are still low.
While a lot of attention is being placed on the “sudden” increase in home prices, this has been sensationalized into something that is largely false. As predicted, the increases will affect the market gradually, but with all the pieces of the puzzle connecting, it’s certain they will continue rising.
Future Estimates for the Housing Market
In the last year, the combined home values went up by about $1.3 trillion, or 4.5 percent, to $23.7 trillion. This coming year, values are expected to rise an additional 3.3 percent, while the number of existing home sales is predicted to increase by a substantial 7.2 percent to nearly 5 million.
On the other hand, bond investors could run into trouble with the widening diversity of borrowers who are eligible to refinance, due to the increasing prices and continually low mortgage rates. Investments without government support, including adjustable rate mortgages, subprime bonds, and others that were made at the height of the housing boom in the mid-2000s and that trade at discounts to break even, will be affected by the high levels of financing.
Government supported mortgage bonds – with prices averaging about 108 cents on the dollar – will also be affected, mainly by faster prepayments.
Lastly, the economy has benefited and will continue to benefit from an improving housing market. The crash was essentially responsible for the recession our economy suffered at the end of last decade, often considered the worst since the Great Depression. While our economy is still not at the strength it was before the crash, it’s improving right alongside the housing market – unemployment has already dropped to 7.8 percent, one of the lowest rates in many years, and overall economic growth of 2 to 3 percent is expected this year.
The connection between the housing market and economy is easy to figure out. For most families and households, the home is the biggest asset. Once equity is lost, finances are sent on a downward spiral. But when prices begin to rise again, so does consumer spending, which is the main driver of economic growth.
Thursday, January 17
Whether you are landlord or tenant of a house that is foreclosure, it may bring up a whole gambit of new questions of what happens between the lease, sale, and renter displacement.
As an owner, it may be an extra headache on top of dealing with the sale. As a tenant, it can be confusing and frustrating to learn the home you’ve made a commitment to, doesn’t share the same commitment back. On either side, it’s important to know your rights.
First and foremost, the agreement the owner (seller) has with the bank, and the agreement the tenant has with the owner are two completely separate things; one does not negate the other when the Seller falls behind on the payments to the existing lien holders.
If there is a lease in place, it’s stays in place and has to be honored in most cases. If the house is going to auction in 3 months, but the lease is good for another 6 months, the new owner has to abide by the existing lease, (in most, but not all, instances).
Protecting Tenants of Foreclosure Act
Let’s explore this a little more:
The law that was set in place Protecting Tenants At Foreclosure Act of 2009 has been extended and included some changes.
Before, a lease must have been signed at least 3 months (90 days) BEFORE the foreclosure auction in order for the tenants to recognize any rights. Now, tenants can sign the lease at almost any time before the auction date to realize the same protections.
Now that doesn’t mean the tenants get to stop paying rent. Much to their frustration, I’m sure, but if they stop making payments, you as a landlord can still start the eviction process. It doesn’t matter if you as the owner have stopped making payments to the bank; their lease agreement is a completely separate and legally binding lease that has to be acted upon according to the terms and conditions in place.
But as the tenant, even though it might be vexing to know you’re making payments to an owner that isn’t using those funds towards a mortgage payment, it’s important to pay rent on time in order to avoid getting evicted. Try to work with your current landlord as best you can before the foreclosure happens, and perhaps a local tenant advocacy group or attorney that can help you understand you rights and responsibilities.
Federal laws and local laws
Since there are state laws in place, I cannot speak to any of those, but let’s cover some of the benefits and exclusions of the federal law for tenants in homes in foreclosure.
1) Even if the renters in place only have a month to month lease, they can still stay up to 3 months after the date of the title transfer (after the foreclosure). The lease has to be valid though.
2) Once the foreclosure occurs, tenants on a longer term lease can exercise the rest of the lease. But, this is a challenge if the new buyer is actually going to be moving into the home. If that’s the case, the existing renter have 3 months (90 days) from the date of the title change to move from the property. Although it might not be ideal, it’s still a buffer of time for both parties.
3) Notably, the Tenants in Foreclosure Act doesn’t protect renters who are behind on payments, have invalid or fraudulent agreements, or put together a lease after the foreclosure date (which is now recognized as the date of transfer of title).
As a tenant, again, the best advice is try to work out something with the current owner, try to stay up to date on any and all changes, and if you do work out some sort of agreement other than what you have in place, keep everything in writing.
As an owner, it would be wise to do the same, as well as speak with a local eviction attorney that understands the caveats and rights of Landlords of a home in foreclosure.
Please note, I’m not an attorney, I’m not a CPA, and none of this is advice for your particular case. If you are in a situation that pertains to the information contained in this article, you are encouraged to contact local professionals and do your own due diligence.
Resources: (Full Act)
Protecting Tenants At Foreclosure Act of 2009
Tracy (G+) is an Arizona Short Sale Realtor, Investor, Rehabber, and Foreclosure Expert.
She is also an avid blogger, vlogger, contributor to the Bigger Pockets Blog, and consultant on all things Arizona Foreclosures.