Archive for November, 2009

It’s a Great Market for Investors

Investors are making good in today’s market. Buyers who are frustrated about being outbid on lender-owned properties, don’t have reserves to do repairs or cannot wait for a short sale approval end up turning to investor-owned “fix-and-flip” properties.

These investor properties are remodeled and often look like new. It is an easy and simple transaction for the buyer, with quick response and a guaranteed close of escrow date. First-time home buyers who are looking to benefit from the $8,000 tax credit or repeat buyers who can benefit from up to $6,500 in tax credit find fix-and-flip properties appealing because they provide a scheduled, certain close of escrow date.

I recently helped a client investor purchase a 3 bedroom, 2 Bath home in Chandler for under $50,000. The client fixed the home up, listed it for $118,000, and received multiple offers on the property. The home is now under contract for $121,000, just three months after my client initially purchased the property. That’s a better-than-100-percent return on investment, minus remodeling costs, commissions and taxes. That’s a handsome profit.

In another transaction, I represented a buyer in purchasing an investor-owned custom home in Southwest Mesa. The seller purchased the home in a trustee sale for $102,000 and sold it to my buyer for $155,000 in less than three months’ turnaround time. There were four offers on the property and my client was the successful purchaser.

Making money on fix-and-flips is simple and easy if you find a house that’s easy to sell at a great price. Consult with a knowledgeable and competent Realtor who can simplify the process for you. Otherwise, you may end up losing money instead of growing money.

As always, I am available to answer all your questions about short sales, investment properties and fix-and-flips. Please call me today at 480-650-0075 for information on these or any other real estate questions you have.

November 30, 2009 at 1:19 pm Leave a comment

What is the Future of Short Sales in the Greater Phoenix Real Estate Market?

I was fortunate recently to be in the same room with Mike Orr, author of the Cromford Report, a widely-respected publication with current real estate market analysis information. Mr. Orr was one of the guest speakers at a class that focused on “The Future of Short Sales in Real Estate.” Based on compiled data based heavily on the Multiple Listing Service (MLS), Mr. Orr observed the following regarding the Greater Phoenix real estate market:

1. There is no evidence of shadow inventory as others project. In other words, the lenders are not hoarding foreclosed properties. It just takes time for the lenders to sell the houses to the public. There is no sign of “new wave of Foreclosures.”

2. Far fewer Notice of Trustee Sales (NOTS) are turning into foreclosures in 2009.

3. Short sales are five times more likely to succeed in 2009.

4. Loan modifications are being accepted in 2009 – around 500 to 600 successful loan modifications monthly.

5. There is a 20 percent increase in sales of properties bought at the Maricopa County Courthouse.

6. As of this date, the inventory of homes for sale is made up of 39 percent short sales, 13 percent lender-owned, and 48 percent are traditional sales.

7. Average days on the market for short sales is 139 days and 34 days for lender-owned homes.

8. Lender owned properties have been rising in price since April but are currently stable. Normal sales experience a sharp decline from June onwards. Short sale prices declined between May and September but are showing more strength. Current average price per square foot is: Normal sale – $114.18, Short Sales and Pre-foreclosures – $87.55 and Lender owned – $69.45

Conclusion: The impact of lender owned homes reached a peak in the winter season 2008/2009. While these were available in large quantities and at falling prices, buyer interest was focused almost entirely on them. Supply was sufficient to keep REO prices declining until early April 2009.

After the second quarter of 2009, REO became much harder to find and with competition for them very fierce, short sales have become far more important. Given the large number of homes in distress and the banks’ apparent determination to avoid foreclosure if possible, we expect short sales to become the most important segment in the market over the next few years.

Greater Phoenix suffered a very significant price decline which prevailed between May 2006 and April 2009. So the majority of non-lender homeowners who wish to sell their home and have a deed of trust on their property are going to find themselves in a short sale situation for the foreseeable future. Fortunately, lenders are now devoting more effort and resources to short sales and many Realtors are learning the tools and techniques to bring them to a successful conclusion.

As properties get purchased by new buyers at the new lower prices, and prices stabilize and then increase, we will eventually see a peak in short sales and a long slow decline in their importance. However that peak is still ahead of us and the next several years are likely to be remembered as the “Age of the Short Sale.”

*Information obtained from Mike Orr of Cromford Report

November 21, 2009 at 8:53 am Leave a comment

What Does the First Time Home Buyer Tax Credit Extension Mean to our Economy and our Future?

It looks like the Congress is on the verge of extending first-time home buyer tax credit of $8,000 through April 30, 2010. The Obama administration has said they support an extension. In addition, repeat buyers who have owned a home for at least five years and buy a new house will receive a $6,500 tax credit under the Senate version of the bill.

What does this mean for the economy and for our future?

More taxpayers’ money is being handed out to anyone who buys a home for the first time or to those repeat buyers fitting the qualifications. The government has yet to release close to $8 billion in housing recovery effort under the stimulus package. In the end when the economy turns around, lawmakers could ask for higher taxes from responsible taxpayers to pay for everything else and make up for their lavish spending. Our pain is just about to begin.

Our country is awash in debt. By some estimates, the total cumulative debt for each American may be around $700,000, according to discussion on the topic at Money has been borrowed from many foreign countries, chiefly China and Japan. When the loans come due, what will we give them? Trade concessions; military concessions; land? Anything but money, because we don’t have it. Whoever has the most money holds massive power. America is financially strapped and may not hold on to the power it has for so long.

But back to the matter at hand — will the housing market recover faster with or without the $8,000 home buyer tax credit? Given the correct approach and perception, the housing market would recover without the $8,000 or with a reduced tax credit. The perception that home buyers should buy a home because of the tax credit is flawed. Instead, lawmakers should encourage home buyers to buy a home now because it is good for them and good for their future. If they buy a home now, they get ridiculously low prices. Some prices are below building cost, interest rates are very low and home buyers get instant equity with their home purchase. These are more than enough reasons to buy NOW. To add a whopping $8,000 tax credit to the deal is to spoil home buyers for doing something that already benefits them!

Anyway, why an $8,000 tax credit? Why not $2,000? How did Congress come up with the figure? For all the benefits that home buyers already get in this market, $8,000 for every home purchase is way too much.

In the end, the lawmakers should focus on increasing home values more quickly instead of increasing sales. If potential home buyers realize that prices are moving convincingly higher, they will feel a sense of urgency to buy a house now, before prices move higher, which will fuel a recovery in the housing market. That is much better than an $8,000 tax credit and would save taxpayers a lot of money.

November 1, 2009 at 2:31 pm Leave a comment



Fresh Tweets