As I was driving back to the office from a showing this afternoon I heard this story on NPR’s All Things Considered:

Here’s the gist of the story: an investor in Miami bought 19 bank-owned condos from the bank at 1:25 p.m. on March 5 for $1.25 million.  At 1:45 p.m. the same day that same investor sold all 19 condos to another investor for $1.45 million.  $200,000 profit in 20 minutes.  Nice work, if you can get it.

“There are opportunities where investors who have inside information and/or are well-connected can get their hands on these properties.  And if they can line up a buyer there are fantastic profits to be made,” said Peter Zalewski, principal of Miami’s condovultures.com.

The story actually made me reminiscent of the Phoenix real estate market circa 2004-06.  In the outskirts of Phoenix, especially, investors (many from California) were buying new homes in bulk, sometimes to rent for a short while, sometimes to turn around and re-sell to individual homeowners right away.  And they were making boatloads.  Prices were increasing so fast that new home builders stopped advertising prices – sometimes a home would become $10,000 more expensive every month.

Today, the Miami condo story is playing out in the Phoenix and Scottsdale bank-owned condos market, too.  Not that I’ve seen a $200,000 profit in 20 minutes, but there are incredible deals to be had.  I recently listed a Scottsdale bank-owned luxury condo at 32nd St. and Camelback for $100,000.  Wow.

So what does this mean for you as a prospective buyer of Phoenix or Scottsdale condos?  It means that there are incredible deals to be had.  But to get them you need, as Zalewski pointed out:

1. To be well-connected. Banks don’t market bank-owned Scottsdale condos directly to prospective buyers.  They use real estate agents, like me, to do it.  So you don’t have to “know a guy who knows a guy who once met a guy” but you do need to hook up with a Scottsdale real estate agent who’s in with the banks.

2. To connect with buyers. The great thing about working with an agent at the #1 ranked real estate agency in Arizona (that’s Keller Williams Arizona Realty) is that you’ll immediately be connected to hundreds (or thousands) of potential buyers for your property, if you’re planning to flip it, or renters if you’re planning to rent it out for passive income.

The term “condo arbitrage” sounds dirty – and maybe even illegal.  I prefer to think of it as making some money on Phoenix or Scottsdale condos.

What do you think?

Arbitrage! Phoenix Condos is a post from: Phoenix Real Estate-Phoenix Homes For Sale - Phoenix Condos

Signs are beginning to appear that consumers are more confident that the U.S. economy is improving. Retail sales were up in February, and the stock market has recovered from its January/February fall. Yet many people are still fearful about buying that new TV, or car, our house — there’s no guarantee that the economy is fully out of the woods.

But if you’re a homeowner, if you have a well-paying, stable job, if you have a sizable rainy day fund, might it be time to think about selling your home (or renting it out) and moving up? There are a number of factors you might want to think about as you consider that question:

1. How much equity do you have in your home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of paying a mortgage, but if you’ve owned your home for a number of years, you may have significant unrealized gains.

In the Phoenix real estate market, more than half of all homeowners actually owe more than their homes are worth. But if you bought before the real estate bubble (and didn’t tap all of your equity during the boom), you may well have equity in your home – prices today are about at their pre-boom levels.

If you do have equity in your home, you can use it as a down payment on your next house. Most lenders are now looking for down payments of at least 10% (if you have excellent credit) though the FHA will guarantee loans with a 5% down payment.

2. Will your income comfortably cover the extra mortgage costs and the costs of moving? We all know what happens when people buy more house than they can afford. Today, lenders typically want to see a total debt ratio of less than 36% (including housing expenses). To figure out how much the bank thinks you can afford, take your current income and multiply by 0.36.

For example, say you earn $6,000 per month before taxes. According to the bank, at least, you can afford $2160 ($6000 x .36) in monthly debt. Subtract from that your monthly debt payments (including car payment, credit cards, student loans) of $1,000 and you can afford a house payment of $1,160.

Check out this mortgage calculator to see how much house you could buy with a $1,160 monthly payment:

Home Value: $ Loan amount: $ Interest rate: % Loan term: years Start date: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Property tax: % PMI: % Output parameters » Draw charts Monthly vs bi-weekly payments Show annual amortization table Show monthly amortization table Mortgage Calculator Script

If you qualify for a 5% interest rate, 30-year fixed mortgage, you could take out a $215,000 loan and keep your payments right at $1,160 per month.

3. Does your Phoenix neighborhood still meet your needs? Often, our needs change over the time that we live in a house. And neighborhoods change, too. Think about your situation and whether your neighborhood meets your needs today. If you have school-aged kids, are the neighborhood schools good? (Check out GreatSchools.org) Is your commute to work relatively short? Does the neighborhood have amenities that you enjoy?

4. Can you add on or remodel? Sometimes, the things you dream about in a new home can be had by remodeling or expanding the home you have – especially if the neighborhood you live in now still meets your needs. If you have a large yard, there might be room to expand your home. Think about HOA regulations, and whether or not you want to undertake the big job of a home renovation. And remember that you probably won’t recoup your investment dollar-for-dollar when you sell your home.

5. How is the Phoenix real estate market? On one hand, with Phoenix homes priced still relatively low, it’s the perfect time to buy. On the other hand, it’s not the ideal time to sell. If you can find a renter to at least partially cover mortgage costs on your current home, you might consider buying up now and renting out your current home until prices rise farther and then selling. If you’re interested, I’m happy to help you figure out what you could get for rent on your current home.

6. How are interest rates? A low rate not only helps you buy more home, but also makes it easier to find a buyer for your current home. And interest rates today are at historic lows.

Reproduced with the permission of Mortgage-X.com

An added incentive to move up now if the $6,500 tax credit available to home buyers who sign a contract by April 30. If you’ve lived in your current home for at least 5 of the last 8 years and make less than $225,000 you can get $6,500 off your tax bill if you sign a purchase agreement by April 30 and close escrow by July 1. It’s too good to pass up, right?

What do you think? Do you have plans to move up? Did you think about it but then decide to wait? Click on the “Comments” link below and join the discussion!

Thanks to REALTOR® Magazine Online for inspiration and some content, which was used with permission from the NATIONAL ASSOCIATION OF REALTORS®.

Does Moving Up to a New Scottsdale Home Make Sense? is a post from: Phoenix Real Estate-Phoenix Homes For Sale - Phoenix Condos

It’s really nice because I save these newsletters as templates on my computer and for the past 7 months I haven’t had to change but one number in the title.  That’s because Phoenix home prices continue to rise, now for 7 months in a row.

Usually for my monthly look at the Scottsdale and Phoenix real estate market numbers I turn to The Cromford Report – there’s really no better source of up-to-date information on the Phoenix housing market.  But a fire destroyed all of The Cromford Report’s computer equipment last month and they’re still working to restore their databases.  I wish them all the best.

So for this month I’ll look at the Case-Shiller numbers (which are good, too) to analyze what’s been going on in the Phoenix and Scottsdale real estate market.

The S&P/Case-Shiller Home Price Index released February 23, 2010 (and covering through December 2009) had more good news for the Phoenix real estate market: prices increased for the seventh month in a row.

Phoenix real estate market highlights

• Phoenix home prices were up 0.5% in December 2009 compared to November.  That gain followed a 1.1% gain in November over October.  It was the 7th straight month of month-to-month price increases in the Phoenix real estate market.

• Rising for the seventh month in a row, Phoenix home prices are beginning to eat away at the overall price decline since the real estate bubble burst.  As of December, Phoenix home prices were down 9.2% over the previous year (that’s compared to 14.2% in November).  Year-over-year price declines in the Phoenix real estate market have been shrinking since March 2009 – from 36% in March to 9.2% in December.  In other words, the Phoenix housing market continues to improve!

Phoenix Real Estate Market Home Prices in 2009

Source: S&P/Case-Shiller

• As you can see from the chart below, Phoenix home prices have clearly fallen from their June 2006 peak (down 50.5% since then), but home prices have been rising since June 2009.  The dotted line is the trend line for Phoenix home prices since 1989 – it makes clear the fact that prices are rising over time, despite the real estate crash here.  In other words, homeownership is still a good investment.

Source: S&P/Case-Shiller

By the Numbers: Phoenix Home Prices Up for 7th Straight Month is a post from: Phoenix Real Estate-Phoenix Homes For Sale - Phoenix Condos

Across the nation, winter weather is being blamed for slowing real estate sales.   According to the newly released  Credit Suisse Monthly Real Estate Agent Survey, the market is still being moved by first-time homebuyers and investors.   Here in the Phoenix area, the survey found that we are bucking the national trend with traffic being up although it is still well below expectations.  Agents highlighted buyers’ concerns over economic stability and uncertainty about price stability.  Buyers seem to be unwilling to move forward because of the fear of further price erosion.  There appears to be a belief among many that prices have more room to decline even though in many areas of the Valley prices are actually rising.

Meanwhile, as the market continues to show shoots of recovery, experts believe that the roots will continue to grow. In his annual letter to the shareholders of Berkshire Hathaway, Warren Buffett said, “Within a year or so, residential housing problems should largely be behind us.”

After a steep run-up in prices during the first half of the decade, home values have readjusted back to normalized levels. Fixed mortgage rates are sitting near record lows and the number of homes available for sale is providing home buyers with more options. Also encouraging are indications that the high end of the housing market could begin moving again as luxury financing becomes more readily available.

Despite high unemployment and looming foreclosures, experts maintain their expectations that the economy will grow in 2010, while the government carries on its search for solutions to help both troubled homeowners and the unemployed.

The National Housing Market

Existing Home Sales

Existing home sales slowed in January. According to Lawrence Yun, NAR chief economist, this is mainly due to the lack of urgency with the extension and expansion of the first-time buyer tax credit in November. January sales of 5.05 million remain 12 percent above the 4.53 million-unit level last year.

Median Home Price

Existing-home price was $164,700 in January, 3.4 percent below December and unchanged from January 2009. Distressed homes, which accounted for 38 percent of sales last month, continue to skew prices downward as they typically are discounted in comparison with traditional homes.

Inventory

The supply of homes continued to shrink, falling 0.5 percent to 3.27 million, representing a 7.8-month supply at the current sales pace. Compared to a year ago, there are now 10 percent fewer homes on the market. This is the lowest level of competing homes on the market since March 2006.

Mortgage Rates

Mortgage rates edged above the 5 percent threshold during the week of February 25, but remained near historically low levels. As the Federal Reserve mortgage-backed securities purchase program is scheduled to run out at the end of March, the Fed has held the door open to extending it if the economy weakens.

Affordability

Affordability remains at record levels, supported by the lowest mortgage rates in decades, low home prices, as well as the first-time buyer tax credit. So far this year, the home price-to-income ratio has fallen well below the historical average of 25 percent. The ratio now stands at 14.1 percent.

Sources: National Association of Realtors, Freddie Mac

Government Action

Jumbo Mortgages Begin to Thaw

The cost of jumbo loans, often used to purchase luxury homes, shot up during the financial crisis because lenders steered clear of anything that could be considered somewhat risky. Plus jumbo loans are too large for the government to support through the Federal Housing Administration, Fannie Mae, or Freddie Mac.

The good news:  The jumbo loan markets are beginning to unfreeze and return to normal.

The difference between interest rates on conventional loans and jumbo loans has decreased from higher levels seen last year.

In some cases, the down payment requirements are easing as well, but they often still depend on the level of borrowing – the more the mortgage, the higher the down payment percentage. In New York, mortgage professionals report the following common down payments:

Borrowers will still need a good credit score, typically at least 700, evidence of high income, and a sizable bank account.

Sources:

Los Angeles Times, Inman News

National Real Estate Market Update – March 2010 is a post from: Phoenix Real Estate-Phoenix Homes For Sale - Phoenix Condos

The Obama administration, which has struggled to implement effective programs to help homeowners in trouble, has introduced a plan for homeowners who can’t be helped by a loan modification or refinance.  The program will pay homeowners $1,500 to do a short sale rather than let their homes go into the foreclosure; it also includes a $1,000 incentive for lenders to approve the sale.

The program is set to begin on April 5, though the administration is still working out the details.

An article in the New York Times the other day well articulated the benefits that a short sale offers (compared to foreclosure which, for most distressed Phoenix homeowners, is the alternative):

• For the homeowner: A Phoenix short sale is typically less damaging to your credit than a foreclosure.  And, short sales completed under the program will include a deficiency release — meaning that the lender can’t come back later and sue the homeowner for the unpaid mortgage balance.

• For neighborhoods: “As many as half of all foreclosed properties are ransacked by either the former owners or vandals.”  A short sale might help neighborhoods avoid that outcome.

• For lenders: In part because they avoid the high legal costs (tens of thousands of dollars) associated with Phoenix foreclosure, and in part because short sales are often discounted less than foreclosures, lenders may well get more money from a short sale.

I still do a lot of work selling Scottsdale and Phoenix REO properties (homes that have been foreclosed on) but in the last few months I’ve been helping a lot of homeowners short sell their Phoenix and Scottsdale homes, too.  So by my experience, at least, Phoenix short sales is a growing trend.

Wondering how the Phoenix short sale process works?  Here’s a rundown:

Step 1: Write a “hardship” letter and gather supporting documents to submit to your lender to request a short sale. A hardship letter explains why you can no longer afford to make your mortgage payments and outlines the steps you’ve taken to work out a modification or refinance (and why they failed).  If you can make your mortgage payments but you have to relocate (to another state for work, for example), owe more than the house is worth, and don’t have the funds to make up the difference, explain that situation.

I’ve blogged a lot about strategic mortgage defaults, but it’s easy to see why lenders don’t want to approve a short sale unless the homeowner can prove an inability to pay the mortgage or absolutely has to move and can’t pony up cash for the difference between what he owes and what the house is worth.  Lenders will use your hardship letter and supporting documentation to ensure that you’re not just trying to skip out on a bad investment.

Step 2: List your home for sale. Much of the sale part of the short sale works just like a traditional sale; I list your home on the MLS, put out a yard sign, market the home to my buyer database, hold open houses, etc.

Step 3: Submit the offer to the lender. Once we receive an offer on your home, we’ll submit it with a range of financial documents that your lender asks for (W2s, bank statements, expense sheets, etc.).

Step 4: The lender will send a real estate agent to do what’s called a BPO, or broker’s price opinion.  Basically, the BPO gives the lender an idea of the fair market value for your home.  If your offer is too far below the BPO value, the lender will likely reject the short sale.  If the lender rejects an initial offer, we can always go back to the prospective buy with a counteroffer (or market the home more to get a higher offer).

Step 5: Once the lender accepts the short sale, close of escrow is scheduled, typically within 30 days.

I’d be glad to help with your Phoenix or Scottsdale short sale — it can be a great alternative to foreclosure.  Give me a call and we’ll go over the details.

Thinking about doing a short sale?  Click here to get a FREE ebook with PROVEN SOLUTION to sell you home in just 60 DAYS!

Phoenix Real Estate Trends: Rising Short Sales is a post from: Phoenix Real Estate-Phoenix Homes For Sale - Phoenix Condos

I posted a blog and sent out an e-mail blast reminding everyone about the incredible deal that the homebuyer tax credits is – and about the fact that the great deal is going to expire soon.

So if you’re on board with buying your first home, or a new home, what are the steps you should take to make sure that you get a good deal?  First, and most importantly, you need to sign a purchase agreement on a home before April 30 (that’s less than 60 days from now) to get up to $8,000 back from Uncle Sam.

Even though 60 days may not sound like much (and it’s really not), if you follow these 10 steps you can get a great deal on your new home, and cross your t’s and dot your i’s.

1. Decide how much home you can afford. Generally, you can afford a home equal in value to between two and three times your gross income.
2. Develop a wish list of what you’d like your home to have. Then prioritize the features on your list.
3. Select three or four neighborhoods you’d like to live in. Consider items such as schools, recreational facilities, area expansion plans, and safety.
4. Determine if you have enough saved to cover your down payment and closing costs. Closing costs, including taxes, attorney’s fee, and transfer fees average between 2 percent and 7 percent of the home price.
5. Get your credit in order. Obtain a copy of your credit report.
6. Determine how large a mortgage you can qualify for. Also explore different loans options and decide what’s best for you.
7. Organize all the documentation a lender will need to pre-approve you for a loan.
8. Do research to determine if you qualify for any special mortgage or down payment-assistance programs.
9. Calculate the costs of homeownership, including property taxes, insurance, maintenance, and association fees, if applicable.
10. Find an experienced REALTOR® who can help you through the process.

Some material reprinted from REALTOR® Magazine Online by permission of the NATIONAL ASSOCIATION OF REALTORS®.  Copyright 2005. All rights reserved. www.REALTOR.org/realtormag

10 Steps to Buy a Phoenix Home is a post from: Phoenix Real Estate-Phoenix Homes For Sale - Phoenix Condos

Sell or Remodel – What the experts say is a post from: Phoenix Real Estate-Phoenix Homes For Sale - Phoenix Condos

Getting Your House In Order is a post from: Phoenix Real Estate-Phoenix Homes For Sale - Phoenix Condos

You know, I was just reading the latest news from the National Association of Realtors and something interesting caught my eye. Did you know that the experts are saying that potential home buyers who are still on the fence have a lot more to lose than gain? With the first-time home buyer and move-up tax credits worth $8000 and $6,500 expiring April 30; buyer’s who don’t take advantage of these programs could face other obstacles.

For example, there is concern in the market that our historically low mortgage rates could rise if the Fed stops purchasing mortgage-backed securities. That could happen as soon as the end of this month.

Plus, prices are rising in about 30% of all markets across the country INCLUDING Phoenix.

So really, what are you waiting for? This isn’t about me making a buck. This is really about YOU getting in on what could be the best deal we’ve ever seen in real estate. When was the last time the government gave you a dollar for dollar reduction in your taxes for a purchase of a property? When do you think they’ll ever do it again? I think the answer to both is “never”.

Let’s do this… if you’re thinking now is the time (and it is), then let’s just chat. A 5 minute phone call is really all it takes. You have my number.. it’s 602-318-1114 or you can email me. I want you to do the right thing. I want you to look back and say to yourself, “yep, I took advantage of the best deal in real estate history”. Sound okay?

Still Waiting To Buy? Why? is a post from: Phoenix Real Estate-Phoenix Homes For Sale - Phoenix Condos

This is my response to a recently-asked question on the REALTOR.com® Ask a REALTOR®.

So my answer to the question “What do I look for in a REALTOR®?” is really two steps: in the first, you should create a short list of Phoenix real estate agents that you’d like to interview.  To do that, I recommend searching for agents active in your Phoenix neighborhood (you can do that easily using Find a REALTOR® from the REALTOR.com® home page).  Search by the specific neighborhood – remember that all real estate is local.

I recommend creating a list of three agents that you’d like to interview.  It may sound like a tedious, over-involved process, but remember that if you’re selling, this is someone who can make you (or lose you) tens of thousands of dollars on the sale of your home.  If you’re buying, this is someone with whom you’ll be spending lots of time looking for your “perfect” home.

When you sit down to interview an agent, I recommend asking these questions:

1) Will you write a marketing plan that’s tailored specifically to my home?

Marketing is one of the most important ways your Phoenix REALTOR® will let people know that your home is for sale, and why it’s such a great buy.  Yet the best marketing strategies really depend on the kinds of buyers you want to target.  I sell a lot of Scottsdale bank-owned homes and Phoenix short sales, so a lot of my buyers are investors – I market to them differently than I market a home in a neighborhood where a lot of first-time homebuyers and young families live.

2) Are you a real estate agent or a REALTOR®?

All REALTORS® are real estate agents, but not all agents are REALTORS®.  REALTORS® are licensed by the National Association of REALTORS® and bound by a strict code of ethics.  They’re also expected to maintain a high level of home buying and selling knowledge.  The REALTOR® designation is a sign of quality you can trust.

3) Do you have the connections necessary to get my house in front of many other real estate agents and prospective buyers?

According to the National Association of REALTORS®, 82% of home sales are the result of agent connections.  In other words, Scottsdale buyers agents in my office who bring their buyers to see your home.  Or buyers who I represent.

4) Do you have references (other homeowners you’ve worked with) who I can contact?

I can tell you that I’m the greatest thing since sliced bread, but you probably want to hear it from my past clients.  Ask for references and then actually call them.  Ask about their overall experience with the agent and ask for the stats ­– how many days the home was on the market, sales price compared to original listing price, etc.

5) What’s your track record?

In addition to references, an agent’s track record of selling Scottsdale homes recently, in your area, is your best indication of how well he’ll be able to sell your Scottsdale home.  If an agent has sold five homes within a few miles of yours in the last six months, all at or close to list price, you can feel confident that he will do the same for you.

6) Will you discuss with me the market analysis you did on homes in my area? Will you be forthcoming with the information you use to price my home?

Home sellers are often inclined to price their home too high.  That’s a bad idea, for a number of reasons.  So while you should hire an agent with a strong track record in your area, and then trust him to price your home at market value, you should also expect your agent to be forthcoming with the information he used to price your home.

7) What makes you different? Why should I list my home with you?

Let the agents you’re interviewing explain in their own words what they think sets them apart from the pack.

Do you have experience selling homes like mine, in my area?

See #5.

9) How many buyers are you currently working with?

On one hand, an agent who works with a lot of buyers has a ready supply of prospective buyers for your home.  On the other hand, he may not have a lot of experience or expertise in helping sellers.  So if the agent you’re interviewing has a lot of buyer clients, ask some detailed questions about his experience with sellers.  Then ask how he’ll leverage his buyer relationships to benefit you.

10) Can I cancel my listing contract if I’m not happy with your service?

On one hand, as agents we need to protect ourselves against clients who sign a listing contract with us, use us to market their homes, and then cancel the contract before their Phoenix home sells (and before we’re reimbursed for the out-of-pocket money we’ve spent to market the Phoenix home).  On the other hand, it’s important for you to be able to “fire” your agent if he isn’t performing.  Ask about cancellation provisions in the listing contract.

By creating a list of several Phoenix real estate agents who are active in your area and then interviewing them using the 10 questions I’ve listed above, chances are good that you’ll find a Phoenix real estate agent who will not only do a great job helping you sell (or buy) your home, but who you’ll be able to “live with” for the several months it will take!

What do you think?  How have you found your Phoenix real estate agents?  Click on the “Comments” link below and join the discussion!

Ask a REALTOR® in Phoenix: What Do I Look for in a Real Estate Agent? is a post from: Phoenix Real Estate-Phoenix Homes For Sale - Phoenix Condos