Chandler home with pool, near Intel, Chandler Regional Hospital, Fulton Ranch, Tumbleweed Park, Ocoillo golf courses

Instead of giving you the full blown statistical update this month, I thought I’d share some real life practical experience situations that have occurred to me recently.

First, let me give a mini version of the numbers.  Most numbers pretty much stayed the same from the November update, except the pricing numbers:

1. The number of homes sold in November was up 8% as compared to November 2010
2. Active listings (# of homes on the market) were down 50% as compared to November 2010
3. Then it’s no surprise, days inventory on the market were down almost 50% also
4. The Ave sales price per Sq Ft was up .09% from November 2010 BUT more importantly it is UP 6.5% from the low on September 15, 2011.  That is called appreciation.
5. The mix of Foreclosed, Short Sales and “Normal” homes available to sell continues to change. The foreclosed number is decreasing, while short sales and normal are a growing %. The breakdown of type of homes on the market is 9.1% Foreclosed, 52.4% normal and 38.5% short sale.
6. Homes currently under contract (Pending) have a higher price in all 3 categories: foreclosed, short sales and normal sales

In summary, the supply of homes available is continuing to go down, especially the foreclosures and the pricing of homes that have actually closed in November & December has been going up. The pricing of homes currently under contract (Pending) and should be closing in January and February has an even high price per sq ft. If you also add the increase in demand for starter priced homes because we are entering the winter visitor season, this all points to a projected upward trend in the market for the 1^st half of 2012.

Now on to the practical side of things let me share some examples that have occurred to me in the market place. I have had 3 short sale transaction fall apart (cancel) in the last 30 days. Let me give you a little background information on each:

1. I represented an investor buyer of a short sale home in Laveen. The original contract price was $60,000. This would have provided a good positive cash flow from the rental income with substantial upside appreciation. When we were about 5 months into the short sale process, the lender came back and said they thought the home should be priced at $65,000. The buyer increased their purchase price to $65K, so we thought we had an agreed upon price. At that point, the seller decided he wanted to apply for the Home Affordable Foreclosure Alternative (HAFA) program for short sellers. There is a $3000“relocation assistance” payable to the seller so it made sense. The lender had agreed to the short sale price but they had to re-process the short sale through the HAFA program. After 2 more months of paper work processing, the short sale bank came back and thought the house was really worth $74,000. My buyer had enough and cancelled the contract. Interesting enough, the market had probably gone up during that waiting processing time but in the buyer’s eyes, it didn’t make any sense. Unfortunately, when my investor buyer went back into the market to look for another home they were surprised to see there weren’t the same “great deals” out there like there were 7 months ago. See my summary above. PS: I talked to the listing agent and she received multiple offers above the banks $74,000 price. So it looks like the market has “gone up”. Remember the old adage, the market price is where ever you have a ready and willing Buyer and Seller (and bank) agreeing on a price. 
2. I represent the seller on another short sale in Laveen. We had it listed at $119,000 for over a month with no offers and very few showings. I dropped the price to $105,000 and got an offer for $102,000 within a week.  After a relative short 2 month short sale processing time period, the bank came back and said they thought the house was worth $117,000. The buyer wasn’t going to increase her purchase price. The bank came back with a lowered counter price of $111,000. The buyer said the house wasn’t worth that much (to her) and she cancelled the contract. I put it back on the market and within less than a week I received a contract for $112,000. Again, it looks like the market has gone up.
3. I have an investor buyer looking to purchase condos in Tempe because they would make great rentals with a positive cash flow and tax advantage, especially with the ASU rental demand. About 3 months ago, we found 2 units in the same complex, both short sales. We got both under contract in the $75,000 price range. This week, the bank (FHA) decided to go ahead and foreclose on one of the condos. They didn’t even come back and say they wanted more than the original $75,000. From talking to the listing agent she has started to see this happen more and more. Why? It sure flies counter to the government’s public policy and what you are hearing over and over from the banks…”we want to do everything possible to prevent foreclosures”. We had a very willing buyer (ready to pay more) and he didn’t even get the chance. I even tried to arrange for him to buy it at the foreclosure Trustee Sale but the bank set the minimum opening bid at $214,000. There is no way anybody would bid on it. So it guarantees the bank would get it back. I have talked to my buyer about purchasing it as a foreclosure, as soon as the bank puts it up for sale. I have had this happen before to a different buyer and he ended up purchasing it for a lower price. Banks… go figure.

In summary, the statistical numbers show the supply of homes is down and the pricing is increasing. My practical experience has been showing the same trend and unfortunately the banks know it and the pricing is going up during their short sale processing time.

So if you are a buyer, is it better to go after either foreclosures or normal sales and get in on the appreciation vs. waiting for the short sale bank just to raise the price or foreclose on a home you have a contract on and then you have to start all over at a higher price level? 

Give me a call or email me to discuss your specific circumstances, so we can develop a strategy that best fits your situation.

4 bedroom home with pool, near Intel, Hamilton High School in Chandler Unified School District and Hospitals

Sorry, it’s been a couple of months since my last update but I was waiting for more of a statistical trend to be confirmed. Ending October numbers were very similar to September’s. The bottom line is “Active” listings continue to go down and  pricing is inching its way up, especially in the under $175,000 price range in Chandler, Gilbert, Mesa and Tempe, AZ.

There are multiple reasons why:

1. Fewer foreclosures notices and fewer foreclosures taking place 
2. More short sales are being approved by the banks, in a shorter period 
3. Investors and 1^st time home buyers continue to buy. Out of staters and Canadians will be coming soon. A wave of previous short sale sellers will be eligible for buying. 
4. Local economy is ever so slowly starting to improve  

Fewer Foreclosures- In the last 6 months the number of Trustee’s Deed recorded in Maricopa County has gone down each month from May 4393, June 4073, July 3309, August 3568, September 2838, to October 2400. While August was higher than July on a per working day basis August was lower. Another indicator that this trend will continue is the decrease of the Notice of Trustee Sale which is sent 90 days in advance of the sale to the owner.

More Short Sales- It appears there are fewer foreclosures because the banks are coming to the realization it is better for them to do a short sale vs. forcing a foreclosure.  This is more favorable to the individual because it doesn’t hurt their credit as much. It is more favorable to the community since the short sale home owner continues to live in the house, causing less neighborhood blight.  It is more favorable to the real estate market in general because short sale homes do not depress the pricing like foreclosed homes end up doing.

Investor, Out of staters, Canadians and 1^st time Home Buyers, original short sale sellers – Traditional most of the country experiences a peak in real estate activities in the summer time when families like to move when children are not in school.  The Phoenix market with its sunshine is different. In Phoenix there is little move up market home buying going on right now. Most of the activity is in the under $175,000 price range. Out of staters and Canadians are not here in the summer time. Their buying period typically is November to May. I believe with the favorable Canadian dollar exchange rate, we will see another strong buying season from Canadians. The 1^st wave of short sale sellers will be eligible to get a FHA loan after waiting their 3 yr ineligible period. They are eager to take advantage of the great buying opportunity out there now.

 Local Economy-   Growth from employers in Chandler, Tempe, Gilbert and Mesa has occurred over the summer.  For example Intel is building a $5 Billion Fab expansion and the solar energy jobs in Goodyear, Tempe, Mesa, Surprise and Peoria. Another example of the economy improving is the local municipals sales tax revenue collection has been increasing. In other words, people are feeling better about the economy are spending more money.

In summary, I like how Michael Orr wrote in the Cromford Report on November 3, 2011, “We have emphasized many times that changes in the balance of supply versus demand take a long time to be reflected in changes to pricing. This is illustrated by the latest numbers. The supply increased and demand fell during October, yet pricing made the most positive move it has done for at least 15 months, driven by the large reduction in supply over the last 12 months:

• average active listing $/SF – up 2.3% to $139.98 per sq. ft.
• average pending listing $/SF – up 1.8% to $79.65 per sq. ft.
• average monthly sales $/SF – up 1.1% to $80.95 per sq. ft.”

In other words, the number of “Active” homes on the market (supply) has been going down, down, down and finally the pricing is starting to turn around. The pricing improvement is even more dramatically upward in the under $175,000 price range.

As I was walking, I wondered where this expression came from…” Dog Days of Summer”? I always thought it was named for that summer period when it was so hot, dogs just laid around. Partially correct.

It really has an ancient astronomy origin defined by the period in late July in which the “Dog Star,” Sirius, rises in conjunction with the sun. The ancients believed that the star’s heat added to the heat of the sun, creating a stretch of hot and sultry weather. They named this period of time, from 20 days before the conjunction to 20 days after, “dog days.” Sirius is the alpha star in the constellation Canis Major. Canis Major is called the Big Dog, which gives Sirius its nickname of “the Dog Star”. The name Sirius means “scorching,” which may relate to its brightness as a star and its relationship to summer.

Or simply put “Dog Days od Summer” can also be defined as the time period or event that is very hot or stagnant, or marked by dull lack of progress.

The weather might feel like the “Dog Days of Summer” in Phoenix but the housing market is anything but stagnant and sultry. There is plenty of activity in Chandler, Gilbert, Mesa and Tempe with short sales, foreclosed and traditional home sales being purchased by investors, 1st time home buyers, 2nd home/vaction buyers AND people moving here from out of state because of JOBS.

In the last 2 weeks, I completed 2 purchase contracts. They were both moving into the Phoenix area for work related reasons from out of state. This last week, I was showing homes to a Canadian couple. Typical this time of year I don’t see Canadians or northern staters. Interesting enough their reasoning was exactly that, they didn’t want more competition in the home buying process. So they came during the “Dog Days of Summer”. The strategy worked. We got a contract on a home that was not a short sale or foreclosed home, just a good old traditional home with the sellers in it looking to move up.

The weather might be defined by the “Dog Days of Summer” but the real estate activity certainly isn’t.

However,  I do look forward to the cooler September weather   

The good news in 2 months, not much has changed.  After having a record breaking number of homes sold in June there was still plenty of positive news in July.

1. The number sold homes in July 2011 (8,522) was up 23.3% as compared with July 2010
2. “Active” homes for sale on August 1, 2011 were 27.787, down 34.6% from 8/1/2010 and down 3.6% from June 2010
3. Pre-foreclosure (or 90 day Notices of Trustee Sales) continued to go down in July to 4,015 as compared to June  4,262 and July 2010 7,802
4. Homes actually foreclosed on by the banks also went down in July to 3,176 compared to 3,887 in July. This has been the trend.   
5.  Homes under $100K had dramatic sales growth in number of homes sold, while the $200-400K range and the very top end over $3 million were down significantly.
6. So when the media talks about averages, it looks like the average sale price has gone down but in reality in those price ranges where the number of homes sold has increase the pricing has been increasing.
7. New home sales are making a resurgence. Permits taken out by builders have been increasing. Since their time of construction is 4-6 months out, their view point of the home market is longer term thinking than what is taking place today. 

Personally, I had 2 out of state buyers looking for a 2^nd home for their winter stay; make offers on homes under $130K only to get back a multiple counter offer and my buyers lost out because they didn’t go high enough ABOVE the list price. 

I had 2 other buyers be successful in getting homes they wanted. Both homes were investor fixed up homes, not foreclosed or short sale homes with repair issues. They were listed in the $175-235K range. On both, we originally offered $12-18K less than what they were listed for.  But there was no budging on the list sales price from these sellers. They knew they could command top dollar because; they had a lot of viewings of their respective properties, other homes in the neighborhoods were selling above their listed price and they looked great because they had been rehabbed. Both homes “appraised” for the price we contracted for and these homes should close in August.

Where does the market go from here? Nobody knows but the laws of supply and demand usually dictate.  When supply goes down and demand stays the same, then pricing will go up.

Feel free to write back or email questions to Steve@SteveRook.Net

In February and March I started to see changes. Sellers were being  more demanding about what they needed in the offers from buyers. There were multiple offers on many of the homes my buyers were making offers on. There were fewer foreclosed and short sale homes on the market. The number of investor fixed up homes was increasing. Fannie Mae and Freddie Mac implemented a 1^st Look initiative for owner occupants for the first 15 days a home was on the market. This froze out investors or 2^nd home buyers from making offers for 15 days.

In April, I posted a blog after attending a conference put on by our local MLS. One of the sessions I attended was presented by Michael Orr, the owner of the Cromford Report.  I always look forward to hear his perspective on the local real estate market. To recap, he was seeing very positive signs in the real estate market numbers he follows daily. Go to my blog to read the full post.

In May, I sent out an email to many of my clients expressing my concern this shift from a buyer’s market to a seller’s market was occurring.  I wrote back then  “In the
last 3 weeks, I  had clients lose out of getting a house with multiple
offers and above list pricing. These have not just been “starter” homes.
I had one client make an offer on a $444K home and within 5 days there
were 9 offers!!! The number of foreclosure notices getting sent out 90 days prior to the
Trustee Sale went down in April.
http://www.azcentral.com/business/articles/2011/05/03/20110503foreclosure-activity-catherine-reagor.html
So the number of foreclosures coming down the pipeline in the next 90
days is not going to be increasing.”

Now in early June, not only have my clients & I continued to experience these changes but the statistical data by Michael Orr, the owner of the Cromford Report supports it as well. In his latest market update he compares what’s going on today with what was occurring 6 years ago when the market was crazy with “irrational exuberance” BUT in reverse. In many ways everything has been turned upside down. Back then if you were looking at supply and demand you were SELLING BEFORE things started to collapse. Now you should be BUYING before pricing catches up with supply and demand.

I say this because the main stream media either reports national real estate news, (which is irrelevant because real estate is a “local” market and nothing to do with what is occurring in New York, Chicago, Atlanta or Seattle) or reports on outdated information from sources such as Case-Shiller Index which averages 2 previous months and compares it to the same 2 month period the year previous.  For example the latest Case-Shiller Index out on May 31, 2011 was reporting on data from February and March 2011.

I have re-printed Michael’s full post below in its entirety for those that want to see the information.

Market Summary for the Beginning of June

By Michael Orr, Cromford Report

It feels almost like the inverse of 2005.

In the second half of 2005, supply rose dramatically but no-one seemed to take any notice. There was a widely believed myth that prices could never go down. Between March 31, 2005 and June 30, 2006, active listings rose from 8,394 to 45,729 (up 445%) creating a huge glut of homes for sale. Yet average sales prices continued to rise throughout this period, up 28.6% from $146.98 to $189.05 per sq. ft. Meanwhile demand fell 16.5%, with sales per month dropping from 8,490 to 7,093. It was as if everyone believed the laws of supply and demand no longer applied. Of course we found out by 2007 that supply and demand really did matter and the bubble burst explosively in 2008 causing untold damage to the economy and family finances.

It’s a question of timing. Supply and demand do control pricing, but in real estate there is a very long time delay between cause and effect. That timing can be extended even further by sentiment. In 2005 sentiment was off-the-charts positive – “irrational exuberance” ruled the roost and caused people to make decisions that in hindsight look crazy. Not just homeowners and developers, but especially lenders and the investors who fueled the credit surplus. Those few of us who tried to warn people in early 2006 that prices would fall dramatically were treated a bit like Harold Camping predicting the end times.

The opposite seems to be happening now. Sentiment is very negative. Everyone seems convinced that prices can only fall further, yet demand is rising and supply has been falling like a rock dropped off a cliff for 6 months now. It comes down to one simple fact: people believe what they want to believe. The facts do not exert a significant influence.

Here at the Cromford Report, we only deal with facts and figures, not beliefs, so here is the market update.

Sales – We are currently recording 9,814 sales in May. This is up 3.5% over April and up 10% over May 2011. This is a very strong sales total because in May 2011 sales are not being boosted by the government bribe (sorry, tax credit) that applied in 2010 for buyers of owner-occupied homes.

Pending Sales – At 13,268 on June 1, pending sales are down 0.4% compared with May 1 but up 6.7% compared with June 1, 2010. Again an extremely strong indicator of demand. In 2010 demand fell sharply during the summer after the tax credit expired, but there is no sign so far that the same will happen in 2011.

Active Listings – At 31,346 on June 1, active listings are 9.4% below May 1 and 23.3% below June 1, 2010. Supply is clearly falling fast. However this understates the situation because a large proportion of the active listings already have a contract against them. In fact there were 7,737 AWC (active with contingent contract) listings as of June 1, 2.6% higher than the very high level we saw on June 1, 2010. If we exclude these AWC listings, we have only 23,609 active listings, down 12.7% in a month and down 28.8% compared with last year. This is almost 60% down from the peak of October 2007.

Supply Versus Demand – The average months supply (active listings divided by monthly sales rate) for the period Jan 1, 2001 to June 1, 2011 is 5.9 months. Right now we have a 3.2 month supply. Yet we read everywhere that there is a “glut of foreclosed home on the market”. What we are reading may have been true in November last year. It is not true now. In fact available supply is really even tighter than this. If we only count active listings that don’t have a contract the months supply number drops to just 2.4 months. Anyone who thinks this is a “glut” is not living in the real world. They should just ask anyone who is actually trying to buy a home right now. Competition is intense, and not just for bank-owned homes and trustee sales. It is also heating up for short sales and normal listings. If you are trying to buy a home that is at all desirable and is priced at market or below, expect multiple bids. If you are a seller, then you only need to price realistically and your home well sell quickly.

(All the above numeric information is for “all areas & types” within ARMLS.)

Records Being Set

In Maricopa County, May saw the largest ever number of distressed homes disappear from inventory. Pending foreclosures fell by 3,394 homes while REO inventory fell by 971 residential properties.

For Maricopa County, May gave us the highest ever percentage of out-of-state buyers. 29.9% of sales went to non-Arizona residents. The average between January 1999 and May 2011 was 11.9%. The absolute count was also a record – 2,648 homes sold to out-of-state buyers. The average since Jan 1999 is 1,446.

For Maricopa County, May saw the highest ever number of foreclosures selling direct to third parties at the courthouse steps. The record set was 1,476, 33% of all the trustee sales.

Paradise Valley

Exceptionally strong market activity is occurring in Paradise Valley where sales are now averaging 52 per month compared with 31 last year at this time. Inventory is down to 319 from a peak of 581 in April 2009 when sales were averaging only 9 per month.

Prices

After a bump upwards between mid April and mid May, average sales price per sq. ft. is back down a little at the beginning of June. Although we are still some 2% to 3% above the market bottom in January and February this year, in most places prices have not yet responded to the huge changes in supply and demand. Why not? Please refer to what happened in 2005, but with everything upside down. The rules of supply and demand have not been lifted. Of course, you don’t have to believe me, but please don’t say I didn’t warn you.

I recently attended a conference put on by the Arizona Regional Multiple Listing Service. It was a day of mini-training sessions and speakers on various current real estate topics. One of the sessions I attended was presented by Michael Orr, the owner of the Cromford Report.  I always look forward to hear his perspective on the local real estate market. For those that don’t know, Michael has been accumulating sold MLS date for approximately 10 years. He is a mathematician with IBM work history.  Talk about a geeky guy who thrives on numbers and what they mean….he takes it to a whole different level. Let me see if I can simplify it for us mere mortals.

1. He sees a very positive trend developing.  He didn’t think this way back in November 2010.
2. If it wasn’t for the negative perception the numbers would be a lot higher. The demand is higher than the supply but it is overwhelmed by negative perception.
3. He evaluates 8 criteria to predict/forecast changing trends in the market place. The 1^st 6 of the 8 have already changed

                                                               i.      Cromford Market Index- this is an index of housing demand & supply. It looks at homes available for sale as compared to homes under contract and recently sold. Supply is decreasing and the demand is increasing.   

                                                             ii.      Days Inventory or Absorption Rate- homes available for sale has been decreasing. Month’s supply has decreased to 3.8. This is a huge shift and in the lower price range it is even less. For example Maricopa and Queen Creek only have 2.4 & 2.6 months of available homes on the market to sell.

                                                            iii.      Pending Sales- currently there are 13,540 homes that are “under contract” not yet closed. This is the 2^nd highest ON RECORD, even going back to the crazy 2005/2006 market. This means homes are moving in recent months.

                                                           iv.      Contract Ratio- this is an indicator of how “hot” a market is. It specifically measures the number of completed sales contracts relative to the supply of active listings. Currently it is 28.5. Last year it was 24.7 and two yrs ago it was 12.7.

                                                             v.      Sales Volume-  The number of homes sold is growing.

                                                           vi.      Listing Success Ratio- this measures the % of listed homes that ultimately end up closing.  A year or 2 back when short sales came on the market and sellers were listing their homes at an unrealistic price this number was very low.

                                                          vii.      Pending $/ sq ft- the price per sq ft of homes under contract has not improved

                                                        viii.      Sales  $/Sq Ft-  the price per sq ft of homes that have closed has not improved

1. Other Michael Orr comments

                                                               i.      Investor demand is key for low end property (investors and 2^nd home buyers are very strong on my website)

                                                             ii.      Downward pricing pressure has disappeared

                                                            iii.      Growing sign of recovery for homes above $300K

                                                           iv.      Slower recovery in areas with highest population decline

                                                             v.      Prices have declined so much we are seeing it “drag” people/buyers from other states so we will recover faster

                                                           vi.      There is a rental house shortage still and the rent rates are still improving, obviously good for investors

So where does this leave us? I believe these improving factors (demand increasing and supply decreasing) show this is the ideal time to be buying because factors 7 and 8 have not changed yet, mainly because negative perception (emotions) is too big of a factor and is keeping the pricing down. This is occurring without governmental interference in the market place, such as last year’s 1^st Time Home Buyer Tax Credit.

You have to ask yourself …. Once the mainstream press and other statistical measurements catch up, what will happen in the market place?  Will it change this negative perception in the market place? Will prices be moving up?

What is your viewpoint on the real estate market?

There are some great winter/early spring activities for everybody in the Phoenix area:

1. Auto auctions are all over the valley. The most famous one is the Barrett-Jackson. The Silver Auction will be over 1-29-11. On Barrett- Jackson, I saw a 1966 Mustang convertible and a 1970 GTO listed. Those sure brought back memories. Maybe too late for this year but put it on your calendar for next year.
2. If you like to watch golf The Phoenix Open will be starting on Thursday 2-3-11 and concluding Sunday 2-6-11. The 16^th hole is golf’s most entertaining spectator viewing spot. The afterhours lineup of great entertainment includes Doobie Brothers, O.A.R, Slightly Stoopid and MetalHead at the Birds Nest this year.
3. Maybe you want to play some of the best courses in the world while you are here or some that are more reasonable.
4. For the baseball fans spring training starts with pitchers and catchers reporting 2-14-11 and the games starting 2-26-11. The AZ Diamondbacks & the Colorado Rockies have moved from Tucson and will be joining the other 13 Cactus league teams in the Phoenix area. They will be opening a new spring training facility near Indian Bend & the 101. It has seating capacity for 7,000 and the outfield berm will hold 4,000 more.
5. If you like speed and the pure adrenaline of racing, NASCAR has moved the Phoenix stop to 2/25/11-2/27/11.
6. If you are more into the arts and entertainment, Kenny G, Rod Stewart and Stevie Nicks are performing in the valley. Check out the many other entertainers coming to the various venues around the Phoenix metro area.  Body Works has also returned to the Phoenix area. The Heard Museum is always a popular for local artifacts and history.  

What more could you ask for; weather in the 70s, sunny blue skies and a lot of fun things to do?

What’s the weather like where you live?

So when are you coming to Phoenix?

In the United States there are two types of foreclosures. There is the judicial foreclosure and there is a trustee sale foreclosure.  State law determines which type of foreclosure is used in each state. In the judicial foreclosure the mortgage company has to petition to the court to show one has been delinquent in paying their mortgage and a judge awards the house back to them. In a trustee sale a Trustee (appointed at the time a buyer gets their mortgage) is directed by the mortgage company to sell the house to the highest bidder to pay off the mortgage.

The “Robo Signing” issue ONLY applies to judicial foreclosures. In Arizona, mortgage companies only use the trustee sale method, so the “Robo Signing” issue does NOT apply to foreclosures in this state.  Unfortunately the media has not accurately represented this issue as it relates to buying an Arizona foreclosed home.

In Arizona, the banks end up getting the homes back through a trustee sale, if there isn’t a buyer for the home. The bank, in turn, lists the home on the market. A buyer can make an offer and secure a purchase contract for the home.  At closing, title insurance is provided to the buyer to insure a “clear title” so that nobody else has a claim to the home.  This is very important, as it protects the buyer. Title insurance companies have NOT stopped issuing title insurance on foreclosed homes in Arizona.

Hopefully, this helps to clear up any confusion about foreclosures in Arizona.  Now is the perfect time fpor a buyer to take advantage of a strong short sale and  foreclosure market.  I have experienced great success in finding and closing purchases of foreclosed homes for many of my clients.   Feel free to write back comments or email questions at Steve@SteveRook.Net

Chalk another screwed up short sale to Aurora. I believe they purposefully strung this along so they can foreclose. They totally mislead the seller, the buyer and the agents involved. The National Association of Realtors or AZ Association of Realtors should be compiling statistics from Realtors and go in front of Congress and the American public to disclose how (with some banks) the short sale process is a total sham. OK, I’m venting.

Here’s the back ground info:

My client, from out of state, was looking for a home where he could eventually retire to during the winter season. Since he wasn’t ready to retire for the next 3-5 years he wanted to rent it out. He wanted to take advantage of the very affordable housing market in the Ahwatukee, Chandler, Gilbert or Tempe area.

We found a 2100 sq ft, 4 bedrooms, 3 bath home in Gilbert built in 2001 with a tenant who had 11 months still on the lease. The Buyer made an almost a full price cash offer and it was accepted by the seller.

Since May, Aurora had indicated they had all of the necessary short sale paper work but then they would need something updated, such as the seller’s most current bank statement. This went on for 3 more months. Aurora would say …”Yes, we have everything” and then ask for an updated document. They postponed the foreclosure (Trustee Sale) 3 times while this went on.    

The seller has been unemployed for 10 months so there was a definite hardship. The current rental income doesn’t come close to covering the mortgage and taxes. To agree to the short sale, Aurora wanted the seller to pay $7,500 cash at closing PLUS sign a promissory note for $20,000. They were going to require the promissory note knowing full well that Arizona is an anti-deficiency state. This means the bank (Aurora) COULD NOT collect the difference on the short sale but yet they still wanted the $20,000 note!!!

Back in February, I thought it was the perfect situation for all…. seller sells via short sale, renter gets to stay in the house for at least another 11 months, and my buyer gets an investment home for his future retirement. But obviously it wasn’t in Aurora’s best interest.  

This is just an example of some of the pitfalls of short sales.  Others include buying property “AS IS”, unnecessary damage done by short sale seller when moving out, the length of time to close, higher buyer’s closing costs and the bank changing (or canceling) the terms of the purchase contract.

I have helped many buyers and sellers complete successful short sale transaction. They have been very satisfied with the outcome. However, this sale has taught me to advise future buyers of my experience with Aurora.

A new season means it is time to do yet another analysis of the real estate market in the greater Phoenix area. This includes cities in the east valley such as Chandler, Gilbert, Mesa, Scottsdale and Tempe as well as cities in the west valley such as Avondale, Buckeye, Glendale, Goodyear, Peoria, and Surprise. There are pockets of continuous growth while there are many areas that are still experiencing some ups and downs.  Like other cities in the United States, the Phoenix real estate market got a “shot in the arm” when some buyers were able to take advantage of the temporary First Time Home Buyer Tax Credit.  As nice as that was for many, it inflated the recovery of the real estate market, so one must keep this in mind while reading journals, newspapers and blogs that report August sales numbers. 

There is one segment of the real estate market that seems to be leading the recovery.  Even though the 55+ communities such as Sun Lakes, Sun Bird, Springfield and Del Webb Solera have experienced minor price decline since 2007, in 2010, they have been showing a steady increase in value.  For example, per the Cromford Report, Sun Lakes, located south of Chandler, has seen an increase in the average sale price of $232,616 in November of 2009 to $244,756 in July of 2010.  See chart below.  In partial, this is due to the fact there are fewer short sales and foreclosed homes in the 55+ communities.  These areas also continue to draw from those who want to live in a warmer climate during the fall, winter and spring. 

Many of my clients, who are still working, are not ready to retire, yet are taking advantage of these low prices in the market, as compared to just four years ago.  Knowing these prices may never be this low again, they are acquiring properties for their future.  I have several clients who are renting their Arizona property until they retire and spend their winters here.  With our sought-after winter sunshine, the 55+ communities are in demand for fall, winter and spring rentals.  As the Baby Boomer generation continues to mature, the demand for these communities will always be present.

If you are interested in finding out more about how to take advantage of this market, please contact me at (480)688-3612.  You can also start your no obligation search by clicking on Search Homes and fill in your criteria. If you want to see specific homes in Sun Lakes expand the plus symbol next to SE Valley, scroll down to Sun Lakes and fill in the rest of your home features.

I look forward to helping you with any of your real estate needs.