Archive for July, 2020

How can appraisal account for wild swings in home values?

The COVID-related fluctuations in Valley housing prices, marked by a huge downswing in March and culminating in unprecedented increases in June and July, are cause for paying extra attention to home appraiser practices, according to a Phoenix appraiser.

During a ZOOM webinar with local Realtors this week, appraiser Jay Josephs said these “dramatic fluctuations can cause panic in the appraisal industry” because of the recent wild swings in prices paid for home in the Phoenix area over just the past five months.

Josephs said that in March, before COVID-19 affected the marketplace, Metro Phoenix had about 8,900 sales for the month, and the average price per square foot for a home was $231. In April, home sales dropped 19 percent to 7,180, and the price per square foot dropped 8 percent in that one month.

In May, 7,028 homes were sold — a 2 percent drop, while per-square-foot prices plummeted 16 percent to $181, Josephs said. 

Then in June, a rebound to 9,719 homes sold — up 38 percent — with per-square-foot pricing at $197.

“We didn’t think the rise would be that dramatic or fast,” Josephs said. “How does an appraiser account for these changes?”

Josephs told Realtors that when representing a home seller, it is important to meet with the appraiser and provide information about the property they may not otherwise be aware of. He encouraged agents to work with sellers to provide a year-by-year listing of important improvements or remodels to the property, to ensure the appraisal is fair and can justify the selling price. In addition, it is a good idea for Realtors to determine the geographical competence of the appraiser and discuss comparable properties or share details of comparable homes that are significantly low or high.

“Arizona and Maricopa County are positioned really well to come out of COVID from a real estate perspective,” Josephs said. “There is a gravitation from higher- to lower-density markets, and a release of pent-up demand — I just didn’t expect it in June. Our market is thriving.”

July 21, 2020 at 12:56 pm Leave a comment

Legal advice offered on fix-and-flip properties

If you plan to sell a home after renovating or remodeling it — commonly known as a “fix-and-flip” property — a Valley lawyer recently offered a few tips on ensuring you don’t entice a lawsuit from the buyer after the sales contract is signed.

Attorney Patrick MacQueen, a 16 year veteran real estate lawyer of Macqueen and Gottlieb, PLC told a webinar audience this week that he has handled about 235 cases involving fix-and-flips in the past four years, accounting for approximately 40 percent of his client caseload.

There are five major allegations a buyer can accuse the parties involved with the sale, MacQueen said. The first is “common law fraud,” meaning an “outward statement” about the property’s condition that is “an out-and-out lie.”

The second is fraudulent misrepresentation is “fraud by omission,” MacQueen said, such as when a question about the property comes up, but the seller or seller’s agent “fails to say anything” despite a known problem with the home with respect to the question. Such can be the case of non-disclosure of mold in the property.

Third is “Consumer fraud” typically has to do with statements or representations made in advertising materials, MacQueen said. “For example, if the MLS listing says the home was a ‘complete remodel’ but not everything was redone,” he explained.

The fourth is “Negligent representation” which involves a statement made to the buyers about the subject property that you didn’t know was false, and the buyers relied on that information. For example, if the seller tells the buyer all needed permits were obtained in the construction of a major addition but one necessary permit was never granted, that would be negligent representation, MacQueen said.

MacQueen said he also sometimes sees breach of contract claims filed against sellers if a claim made by the seller in the signed contract is found to be untrue.

MacQueen said the best practice in selling a fix-and-flip property is to avoid adding superfluous “as-is” statements in the sales contract, because standard Arizona real estate contracts already include a standard as-is language.

Further, MacQueen urged that sellers “disclose what you know” in the Seller Property Disclosure Statement (SPDS) that is typically included in a sales contract, rather than try to avoid using the SPDS when they are selling a property they never occupied.

“Disclose everything,” when selling a fix-and-flip property, MacQueen concluded.

For a Buyer purchasing a fix-and-flip property, MacQueen offers advice. Conduct a third party inspection, request contractor information, warranty, receipts and confirm verbal representation via email through your Realtor. So, when the Seller claims that the contactor who completed electrical repair is licensed, have this confirmation in the form of an email.

Following these tips could reduce the risk of facing a potential and costly law suit.

July 14, 2020 at 4:26 pm Leave a comment

What does Woodside Homes LLC offer that other builders don’t?

The answer: A frame walk through. The frame walk through is an added value that buyers get if they purchase a home from Woodside Homes LLC at Heritage Crossing in Mesa, AZ. It is conducted by the field supervisor with the buyer, and agent if applicable. The supervisor goes over every aspect of building the electrical, mechanical, plumbing, cooling and heating, sewer, foundation, grading, etc. of the interior and exterior of the home prior to installing drywall.

I recently had an opportunity to witness this walk through with a client, which so many builders do not provide. It gave my client and myself an idea of what is hidden behind the walls and gives us a good feeling that the builder is being transparent about how they construct your house.

Angela, the field supervisor, walked us through the entire house and found a few items that needed to be fixed. She immediately contacted her workers and the job was completed even before we finished the walk through. That is great service!

A frame walk through is similar to what a third-party inspection does. With Angela’s competent guidance, it gave my client the assurance that Woodside Homes LLC strives to do their best to build a great house for their client.

My client will be closing on the home in a few weeks and so far Woodside has been communicative and coordinated in providing my client the information they need to close on the new home. Builder representative Susan Collins kept us informed and delivers high quality customer service.

In addition, unlike many builders with one lender, Woodside Homes LLC partners with four different lenders, which allows the buyer to shop around for the lender that best fits their needs.

Currently, homes are going fast at Heritage Crossing by Woodside Homes LLC. Their Landmark development can sell only four lots a month and their Village development can only sell nine lots a month. Both developments have waitlists, since they both exceeded their lot quotas because of early demand. Insane!

July 5, 2020 at 2:44 pm Leave a comment

Valley real estate demand as hot as ever following COVID19 pause

Residential real estate in Metro Phoenix continues to be in an affordable range, and prices are likely to appreciate over the next five years given the current economy and demand, according to recent remarks by a local real estate analyst.

During a June 25 ZOOM webinar, Tina Tamboer, senior analyst from local real estate statistical analysis publication The Cromford Report, reported that historic low mortgage interest rates are helping Valley homes continue to be affordable for buyers, even though the supply is low and prices are up.

For example, she said, the selling price of a 1,500- to 2,000-square-foot home in the Valley is up an average of $50,000 compared to last year – but mortgage payments are roughly the same for buyers because of the low interest rates.

Tamboer said the Phoenix area market is still affordable for homebuyers with an average income ($72,000); the normal range of affordability is between 60 and 75 percent, and Phoenix is currently at 63 percent. (Nationwide, affordability is at 61.3 percent, she noted.)

However, affordability is declining, Tamboer said. “If incomes do not rise with pricing, we may become below normal in affordability.”

Therefore, she added, “buyers need to buy now. No price declines are coming.”

Supply of homes for sale in the Valley are down 11 percent since the start of the Coronavirus shutdowns, and also 13 percent lower than June 2019, Tamboer added. 

“Demand is shooting up, but there is no surge in new listings,” she said, adding that the supply of homes in the $200,000 to $250,000 range is down 61 percent from a year ago.

July 2, 2020 at 3:41 pm Leave a comment


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