Each year, owners rent their home for a big premium during the Masters and make tax-free income. Homeowners benefit from a little known provision in the tax code that does not require taxpayers to recognize the income derived from renting their home for less than 15 days per year. See Rental of property also used as home on IRS.gov.

Large sporting events like golf and tennis tournaments, championship games and other high attendance events increase the demand for a temporary rental of a private residence. Obviously, there are challenges with personal belongings and damage but getting a premium rental rate with a substantial deposit and not having to recognize the income could be worth it.

Over the last 10 years, the Phoenix metro area, including Tempe, Glendale have been the site of the BCS Championship, MLB All-Star & World Series, NBA All-Star. This has created many opportunities for private rental incomes.

You’ll certainly want to discuss this with your tax professional prior to making this decision. You’ll probably also want to get some help from an experienced real estate professional.

As I approached the playground equipment, she was approaching from the opposite direction. I shortened up on Bella’s leash anticipating Bella’s excitement of an approaching stranger.  Labs are very lovable but also very strong. I did not want Bella knocking her over.

To my surprise, she diverted to the children’s swing set, put her umbrella down, dusted off one of the swings very delicately, got on it and started swinging back and forth.  I thought to myself, there was something sweet, and innocent, almost childish but beautiful.

I told Bella the next pre-dawn trip through the park I was going to go experience what she so innocently had done. We all need to stop and smell the roses.

There are several simple ways to save money on your summer A/C bill. Having your air conditioner serviced in the spring and remembering to change out your filters every 30 days are two ways. Also an automatic thermostats can lower your monthly utility costs while conveniently regulating your comfort by adjusting temperatures on your heating and cooling systems. These can be particularly effective in homes with zoned systems where you live in one area during the day but sleep in a different zone.

There are programmable thermostats available at home improvement stores that can make the adjustments for specific times during the day and specific days of the week. They’ll allow you to override the setting when needed without tampering with the programming. They’ll even remind you to change your filter.

An exciting development is the Wi-Fi enabled thermostat that allows adjustments from any Internet connection such as computer or Smartphone. Imagine how convenient it can be to change your temperature from the car before you get home.

Reasonably priced under $100 for most models, it makes it easy to recapture the cost of the thermostat quickly. Most of the thermostats are designed for do-it-yourselfers; however, you can always have a heating and cooling professional install it for you.

Bella- Walking in Chandler

We barely got out the door and the paper boy (or more correctly paper man) came whizzing down our street in his truck, tossing only a few papers on to the neighborhood driveways. I counted only 5 homes on our street out of 20. One was our home.

It started me thinking, why aren’t more people getting the paper? My hunch is because of the digital age and people are getting their news on-line. I ask myself, “Why do I still get the printed paper?”

I search for information on-line all day long for my real estate business. I go to www.azcentral.com , US Today, Wall Street Journal and Phoenix Business Journal for work-related articles but it just doesn’t have the same “feel” as reading newsprint as I drink my morning cup of coffee.

It certainly isn’t because I’m computer illiterate. Heck, I bought my 1^st computer in 1983. It was an IBM 5150“Personal Computer”.

You’ll laugh… it had 2 floppy drives to load programs and to save files onto. I know you 20-somthings out there probably never heard of a “floppy”. Think of a DVD or CD but it was bigger, thinner and could bend a little. I think the hard drive was only 10 MB not GB. I was so thrilled because I could use it for calculations for my work. I wasn’t really into games. Over the years I even had an Apple Mac but mostly PCs. All for work functions. I wouldn’t say I was a geek but instead somebody who used the advancement of technology to make their everyday life simpler and more fulfilled.

Back to the newspaper… my argument for years against “reading” the newspaper on-line was I couldn’t enjoy it where I wanted to read it. I was tied to my desk with my PC. Along came laptops, so I was a little more mobile but they were heavy on my lap and needed charging. Those issues have been solved in the last few years, thank you Steve Jobs.

So what was my excuse now? There is something simpler about glancing at a full written page and quickly deciding not to bother reading (most) articles but finding a great human interest story such as the one about Pat Tillman’s wife, Marie Tillman, and finding myself savoring every word. Oh yes, she’s married now and has a baby…congratulations Marie you deserve it.

To AZ Republic, I’m still with you (for now at least).

Going back for a 2^nd cup of coffee….where’s the sport section?

Before you call the repairman next time, keep these things in mind to see if it is something simple:

• Disposer not working – check to see if the reset button has been thrown. It is usually on the bottom of the disposer. If the disposer is
  making a humming sound, the blades may be stuck. While the disposer is turned off, use a wooden broom handle as a lever to gently rotate the blades. Remove the broom handle and turn on the disposer to see if it works properly.
• Air conditioner not working – check to see if a breaker has thrown on your electric panel. You might need to flip the breakercompletely off and flip it back on.
• Electrical outlets not working – Electrical plugs in bathrooms or outside, especially on a porch or patio, are many times connected to a ground fault interrupter. The GFI will be a wall outlet and it may be located in the garage. Locate the outlet and reset the button that may have tripped.
• Clogged drain – a simple way to correct a slow or clogged drain is to use the water pressure from a garden hose. You’ll need a helper to turn on the water full-blast once you have safely placed the hose in the drain and are holding a hand-towel around the hose to direct the water to the drain. Be prepared to tell your helper to turn off the water when needed.

Whether it’s preparing a home to market or arranging repairs required by the sale, REALTORS® know reputable, reasonable and reliable service contractors. We’re here to share our contacts with you to help make home ownership better.

The Housing Affordability Index was developed over thirty years ago to help consumers determine when it is a good time to buy a home. It’s considered advantageous to the buyer when the index is over 100 because a median income family can qualify for a median price home.

Recent figures released by the National Association of REALTORS’ economic department show that the 2011 index of 184.5 is the highest annual average since it has been calculated. The most recent month released, December 2011, was 194.9. The index is also broken down into four regions of the country. With pricing so low in Chandler, Gilbert and Mesa, the index is even higher.

The two major components that contribute to the index are home prices and mortgage interest rates which are lower than they’ve been in the last five years which account for the dramatic rise in the index since 2006.

The Housing Affordability Index is another indication that this is a good time to buy a home for people who have good credit, a down payment and want a home. It may be the best time we’ll see in our lifetimes.

However, with interest rates as low as they have been in the last two years and the price of homes having come down considerably, it is possible that the standard deduction may be the better choice.

Each year, the taxpayer can compare the total of the itemized deductions to the standard deduction to select which method will result in the most benefits. The 2011 standard deduction is $11,600 for married couple filing jointly and $5,800 for single filers. If you are not using tax software, this simple calculator will help decide which way to go.

The Housing and Economic Recovery Act of 2008 allows homeowners to take the standard deduction and the lesser of their actual property taxes of $1,000 if filing their return married jointly. For more information, see Schedule L found on www.IRS.gov and consult your tax advisor.

Recently, Michael Orr, the new Director of the Center for Real Estate Theory & Practice at WP Carey School of Business, Arizona State University published his Monthly Report- Greater Phoenix Housing Market for January 2012.

Michael Orr’s name might be familiar because I have relied on him for years as an expert in real estate statistics and as publisher of the Cromford Report. The Cromford Report reviews and analyzes all home sale transactions for the Phoenix area. Orr is an ex-IBM mathematician so he knows a few things about numbers.

His report came out February 22^nd. In comparing January of 2012 to January 2011 he finds:

1. Home prices have gone up 3% when measured by $/sq ft
2. The median home price has gone up from $113,166 to $120,500; a 6.4% increase
3. New notices of trustee sales, which give the home owner 90 days notice, has fallen 49%
4. Monthly foreclosures (trustee sales) were down 42%
5. The number of home sales were up 8%
6.  The number of homes for sale on the market is down 42%  

Orr concludes after the 3^rd Qtr of 2011,”The Phoenix residential market has improved significantly and a recovery is now under way.”      

Now from a testimonial side, my experience in February has confirmed Orr’s points above:

1. On non-short sale homes, many of my buyers have made offers at the list price, which were not accepted because there were multiple offers. To improve the probability of success, I have started to include in contracts an escalation clause. It basically says,”Here’s the price and if there are any other offers that are higher, the buyer will be willing to go $XXX above the other offer up to a maximum of $XXX,XXX .“
2. Banks are returning previously agreed short sale contracts with a demand to raise the price by $6,000 to $20,000. This constitutes a 4-7% increase over the original contract price. Most buyers are accepting this increase knowing the price on homes in the market place today have gone up also.
3. While I don’t get directly involved in buying trustee sale homes on the courthouse steps, I have heard from several who specialize in that work, their trustee sales activity has decreased significantly.
4. With a dwindling amount of homes for sale the buying process has become more competitive. Last night ABC 15 News reported a “Drastic Shortage’ of homes available to buy. Who would have thought six months ago, we would be talking about a housing shortage, multiple offers on homes and the possibility of prices going up 15%?

To summarize, the market is on an upswing, but not without its challenges and rewards.

1.  In the short term, traditional buyers may become frustrated with multiple offers and short sales buyers may lose patience by the lengthy time required and eventual purchase price.
2. With the short sale process, sellers will experience the same obstacles as buyers.
3. Buyers will celebrate an almost immediate appreciation of their home value, while enjoying a very low interest/mortgage payment for years ahead.  
4. As homes appreciate, sellers who might have been slightly upside down on their loan will find their negative equity becoming positive and can forego selling their home as a short sale.

Whether you are considering buying or a selling, give me a call so we can review your unique situation and determine how to minimize your stress and to maximize your results.

Fulton Ranch Monterey Bay Home

The “Right Size” Home

Work hard, buy a home, start a family and continue to upgrade your home until everyone has enough room. This has been the blueprint for lots of homeowners for the last fifty years but there is certainly a shift in thinking that could change all of that.

Interestingly, Americans live in much larger homes than most people in other countries throughout the world. The U.S. Census reported in 2006 that the average single family home completed had 2,469 square feet which was 769 feet more than in 1976.

Once the children are grown and have moved out, homeowners are finding they have too much room. Even if their home is paid for, they have higher property taxes, insurance, utilities and maintenance on the larger home than they’d have if they were living in the “right size” home.

Some homeowners state they’re keeping their larger home because it has luxury features that smaller homes don’t have. There’s a movement that seems to have started in the United States to find the “right size” home with the amenities and convenience that homeowners want.

This philosophy has been expressed by Sarah Susanka in her book Creating the Not So Big House. It proposes a house that “values quality over quantity with an emphasis on comfort and beauty, a high level of detail, and a floor plan designed for today’s informal lifestyle.” ]]> http://foreclosedhomeschandleraz.com/downsize-upsize-or-right-size/feed 0 http://foreclosedhomeschandleraz.com/real-short-sale-experiences http://foreclosedhomeschandleraz.com/real-short-sale-experiences#comments Thu, 29 Dec 2011 21:34:38 +0000 Steve http://foreclosedhomeschandleraz.com/?p=392

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.