The Phoenix Agents » Buyer Help

Email Question – How much fixing up is too much?

Chris Butterworth — Mon, 07 Nov 2011 12:05:00 +0000

Question:

Is it worth putting in some work on the houses or should I just run away? How much fix up is too much?

Answer:

There isn’t an exact science about how much is too much. It’s all very personal and very dependent on the ability (financial, emotional, and hammer-swinging) of the person doing the work.

The only obvious truth is that the cost of the home plus the cost to improve it should be less than the value of the home after it’s improved. In other words, if you can buy a different home in the neighborhood for less than the cost to buy & fix up this one, you should just buy the already fixed up one instead. Unless (and there seems to always be a caveat), the home you want to fix up is perfect in some other way and can’t be match by any other – lot size/location is the most common reason.

Another thing to consider is capital. You can spend $50,000 more on a home and only have to come out of pocket with a couple thousand dollars for the additional down payment; the remainder can be financed (assuming you qualify for the increased mortgage). However, your fix-up costs will most likely need to be paid for with cash.

Ideally you can find a home that looks a little run down, which keeps the home on the market longer and depresses its list price, but which only needs inexpensive, cosmetic fixing up. Flooring, paint, and fixtures fall into this category, as well as giving the landscaping some TLC without having to entirely re-landscape the yard.

Countertops and cabinetry go a long way towards freshening up the kitchen and bathrooms. But this can sometimes cause a domino effect – your vision for the right cabinets will be best complimented with new appliances, countertops, flooring, and an update to the ceiling – now we’re talking real dollars!

That’s a long answer. The short answer to your short question is: it depends. You can get a great deal on a home if you’re willing to do the work, and the harder the work the better the deal. But you need to be able to do the work as inexpensively as possible (the goal after all was to save money), and you need to have the cash available to do it.

Does that help at all?

Sincerely,

Your looking for value Realtor

Chris Butterworth

Email Question – How much fixing up is too much? is a post written by The Phoenix Agents at Thompson's Realty. If you're reading this anywhere other than a feedreader (rss subscription) of ThePhoenixAgents.com, the site you're reading this on is guilty of copyright infringement.

Chris Butterworth is: Realtor. Analyst. Husband. Father. Writer. Amateur Photographer. Triathlete. Soccer Dad. Big fan of technology, efficiency, and the Arizona Wildcats.

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When can I buy again after a short sale or foreclosure?

Heather — Fri, 07 Oct 2011 21:17:20 +0000

This is from one of our favorite lenders, Jeannie Bolger at Nova Home Loans. Don’t despair! You can buy after a short sale or foreclosure. Plus Jeannie and her staff will help you repair your credit during the waiting period.

When can I buy again after a short sale or foreclosure? is a post written by The Phoenix Agents at Thompson's Realty. If you're reading this anywhere other than a feedreader (rss subscription) of ThePhoenixAgents.com, the site you're reading this on is guilty of copyright infringement.

Heather Barr is a Realtor and a happy workaholic. She eats more than someone her size ought to be able, and is a runner as a consequence. Her TiVo's full of spy thrillers, police procedurals and Whedonesque sci-fi.

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Rapidly dwindling inventory of bank owned homes in metro Phoenix

Heather — Fri, 23 Sep 2011 12:06:25 +0000

In his September 15^th market summary Mike Orr of Cromford Report said

We are projecting about 4,500 new foreclosure notices during September, a drop of some 16% from August and about 2,850 trustee sales, a drop of about 21%. Part of the drop is because September has 9% fewer working days (21) than August (23).

Nevertheless it still looks like the foreclosure tide is on its way out, and the inventory of bank owned homes continues to fall, as does the count of pending foreclosures.

Context: In the 30days preceding Mr. Orr’s report, there were 8,763 properties sold in the greater Phoenix metro region. As of September 20, 2011 there are 19,241 properties listed for sale in the area. Nineteen thousand, plus forty-five hundred, minus nearly nine thousand… equals not enough homes for sale in a mere couple of months.

You can sign up for the highly respected and frequently dead-on accurate Cromford Report for a nominal fee for a 3month membership. Last I checked I think it was $90 for 3 months. WELL worth it.

By the way, I completely agree with Mr. Orr. The foreclosure tide is on it’s way out. My investors looking for bank owned homes in the under $125,000 price range are having a devilish time finding and getting the right home. Multiple offers, bidding wars, paying over asking price. If you’re shopping under $75,000, triple that difficulty level.

Rapidly dwindling inventory of bank owned homes in metro Phoenix is a post written by The Phoenix Agents at Thompson's Realty. If you're reading this anywhere other than a feedreader (rss subscription) of ThePhoenixAgents.com, the site you're reading this on is guilty of copyright infringement.

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Condo financing near-impossible to get

Heather — Mon, 19 Sep 2011 13:02:43 +0000

A while back, I wrote a piece called Condo Re-Financing: Tricky to Impossible. Nowadays, that lending dilemma has grown — it’s next to impossible to get a new mortgage to purchase a condo, according to my favorite lenders Kevin Reiser and Jeannie Bolger. (need an ace loan officer? call me or text me and I’ll forward their info. 602-999-8831). The exception may be luxury condos, think million dollar plus, but I’m not sure that mortgage market is healthy either.

The reason one can’t get a mortgage to buy a condo these days has almost nothing whatsoever to do with the buyer and his/her credit profile. It has to do with the condo community and it’s overall financial health/outlook. Many, many condo (and patio home and townhome) communities have experienced so many foreclosures that their Homeowners Associations are in severe financial distress. Other times, the owner-occupant to investor ratio is so out of whack – with investors owning 75% or more of the units in the community – that lenders won’t lend to anyone who wants to buy there.

If you’re really digging the idea of a condo right now…. check with several lenders first. Getting a mortgage for your new, hip pad might be tricky to impossible.

Want more in-depth explanation of the metro Phoenix condo market outlook? Try this article we wrote waaaay back in Spring 2010. http://thephoenixagents.com/newsletters/viewpoint-2010-0407/

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How to make an offer on a Fannie Mae home

Heather — Sat, 02 Jul 2011 12:11:00 +0000

This is a post about how to make an offer on a Fannie Mae-owned (foreclosure) home in metro Phoenix, Arizona where I’m a licensed Realtor. If you’re reading this from out of area, or long after Summer 2011, please consult a professional in your area. Need a metro Phoenix-area Realtor? Contact me!

To make an offer on a Phoenix-area Fannie Mae home at present, you need at least the following forms, completely filled out:

REO coversheet
Owner Occupant Certification
Notification to Listing Agent
Fannie Mae Real Estate Purchase Addendum
AZ State Purchase Offer/ Contract
Agency form
Loan PQF

I submitted a Fannie Mae purchase offer this morning for one of our buyer clients — it was 28 pages long!

Several of these forms you get from the Listing Agent (that’s the seller’s Realtor). The Loan PQF (Pre-Qualification Form) you have to get from the Buyer’s loan officer, and it must be dated within the past 1 to 8 weeks or so.

Currently, Fannie Mae is requiring that the Buyer complete their Fannie Mae Real Estate Purchase Addendum. That’s a fairly new requirement; it used to be buyers didn’t fill in that form at all but rather waited for Fannie Mae to send it once the buyer’s bid had been accepted. Be careful with this form! It has a couple really vital “trigger dates” in it, and the Buyer has to fill in those dates. A trigger date is my term for a date that other contract deadlines count from. For example, the inspection period counts from the Acknowledgement Date which is different from (but closely related to) the Effective Date. Fill in the wrong dates on these blank trigger date fields and you can seriously screw yourself up.

Another thing to be carful with on the Fannie Mae addendum – the form uses the terms Settlement Date and Expiration Date interchangeably, but never use the term Closing Date, which I find utterly stupid. The way the government’s attorneys wrote the form, if the closing doesn’t happen on the Settlement Date, the deal expires, per the Expiration Date. But the addendum doesn’t say what happens then! Does the buyer lose their Earnest Money? Does the deal just close on the next business day? Who knows! The Addendum doesn’t say.

Oh, and don’t forget to specifically ask for the Fannie Mae Incentive of 3.50% of the purchase price from the Seller to cover some of the buyer’s closing costs, by adding that request to your purchase offer. If you don’t ask, you won’t get the closing cost assistance! You also have to know when Fannie Mae’s offering that incentive; they don’t do it all the time.

Confused yet? You’re not alone. If you’re a buyer or potential buyer in the metro Phoenix are in Summer 2011 you’re bound to run into Fannie Mae homes. Fannie Mae’s got so many homes for sale these days, it’s like shooting fish in a barrel. As the commercials say, “Don’t attempt this at home alone kids!”

You really need an experienced Realtor working on your behalf when you’re trying to make an offer on a Fannie Mae home. The paperwork is just so confusing and Fannie Mae keeps changing the rules about which forms they want and how you have to fill them out. Hire a Realtor!

Need a Realtor? Read all about Heather and Chris, authors of this site and experienced Buyers’ Agents. Then contact us and hire us; we’re happy to help.

How to make an offer on a Fannie Mae home is a post written by The Phoenix Agents at Thompson's Realty. If you're reading this anywhere other than a feedreader (rss subscription) of ThePhoenixAgents.com, the site you're reading this on is guilty of copyright infringement.

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Do buyers of bank owned homes pay for back owed HOA dues?

Heather — Thu, 21 Apr 2011 15:42:07 +0000

Got this question from a current buyer client:

Hi Heather:

Silly question, we are not responsible for back HOA fees, are we?

Jennifer

This isn’t a silly question at all. The short answer is “no”. The longer answer is below. Keep in mind I’m talking about buying a bank owned foreclosure (“REO”) home in the metro Phoenix real estate market in April 2011. Consult a residential real estate professional in your area.

1) Whatever HOA dues the former owner of the home didn’t pay are not the new buyers’ responsibility. Those unpaid dues follow the former owner, and the former owner is financially liable for them. HOAs have the rights to sue former owners for those unpaid back dues, but in reality many times the HOA won’t get that missing money back. (huge thank you to our colleague Dean Ouellette for catching my former error here by saying the old dues get wiped out by foreclosure).

2) The selling bank customarily pays all HOA dues owed from the date they took ownership until the date you close your purchase.

3) The dues for the month in which you close will be pro-rated with seller paying for days they owned the home, and buyer paying for days they will own the home. Note that closing day is allocated to the buyer, meaning the buyer pays for the HOA dues for that day.

4) Note though that HOAs usually require 1 to 3 months pre-paid HOA dues at close, and there are transfer fees as well (usually $100 to $500) and then there is sometimes another fee called “Capital Contribution” which is essentially a payment into the HOA’s Reserve Fund (savings account) which is usually another 1 to 3 months.

Do buyers of bank owned homes pay for back owed HOA dues? is a post written by The Phoenix Agents at Thompson's Realty. If you're reading this anywhere other than a feedreader (rss subscription) of ThePhoenixAgents.com, the site you're reading this on is guilty of copyright infringement.

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What credit score do I need to get a mortgage?

Heather — Tue, 08 Feb 2011 22:32:20 +0000

The minimum FICO credit score needed to qualify for a mortgage changes frequently. As of February 2011, the general answer is … buyers need a FICO credit score of about 640 to qualify for a home mortgage.

BUT… there are exceptions. Bottom line: if you have a score under 640 you might still qualify for a mortgage, but you’ll probably need more cash on hand.

From Rob Chrisman’s daily mortgage news email…

Wells Fargo reduced its minimum FICO’s for FHA loans to below 600. Direct Mortgage Wholesale has done something similar by reducing its minimum FHA FICO to 580 …. There are other requirements, of course, including 90% maximum LTV, no gift funds, etc.

Deleting the banker-speak, what this means in plain English is that buyers with FICO scores less than 640 probably are going to need to make a down payment of about 10% of the purchase price, and that money cannot be gifted to the buyer.

“Not gifted” doesn’t mean your money is stupid. It just means that the 10% cash down payment has to be the buyer’s own money, and sitting in their bank account for a couple of weeks before the purchase takes place.

Want to see if you qualify to buy a home? Have more questions? Give me a call or shoot me an email and I’ll connect you with one of my favorite loan officers. They’ll hook you up.

Heather Barr, Realtor
Chris & Heather, The Phoenix Agents @ Thompson’s Realty
602-999-8831 voice/text Heather@ThePhoenixAgents.com

read what clients say about realtor heather barr

What credit score do I need to get a mortgage? is a post written by The Phoenix Agents at Thompson's Realty. If you're reading this anywhere other than a feedreader (rss subscription) of ThePhoenixAgents.com, the site you're reading this on is guilty of copyright infringement.

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Buy a home for 1% cash down

Heather — Fri, 07 Jan 2011 23:26:00 +0000

Although most of the low-down and no-down payment purchase programs are long gone with the financial crash of 2008, we do have 1 lender who has 1 loan program that’s a 1% cash down payment program.

Here’s an example of a recent client of mine who used this program.

Home purchase price – $85,500
Seller contribution to buyer’s closing costs – $2,700
1% Down Program’s contribution to buyer’s down payment – $2,137
Buyer’s cash out of pocket for home inspections, appraisals, utility company deposits, etc., – $500
Buyer’s cash out of pocket on closing day, all-in – $1,033

The program is good in most of Metro Phoenix, AZ as of January, 2011. Among other things, buyers must meet a minimum credit score, and must have stable and verifiable employment income. Buyers must take a homeowners’ education class which takes about 1-2 hours of studying and about 15-20 minutes in exam time. The program can be used to buy a foreclosure (REO) home. The seller is not required to contribute to the buyer’s closing costs, but may.

Not all buyers qualify, and not all homes qualify. But it could be a viable option for you if you’re a little low on cash but want to be a homeowner.

Contact me for more details.

Heather Barr, Realtor
The Phoenix Agents at Thompson’s Realty
602-999-8831 or Heather@ThePhoenixAgents.com

photo credit: user daimon057 at the online photo sharing site StockExchange

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How do I tell if a house is a “meth home”?

Heather — Thu, 02 Dec 2010 15:02:00 +0000

Sadly, meth is always in the news. Here is a little helpful information and a few links to help potential home buyers and/or homeowners sort out the hype from the truth.

The U.S. Justice Department maintains a website of homes that are suspected to potentially be meth homes.

The Justice Department’s website contains a list of addresses – searchable by state – of some locations where law enforcement agencies reported they found chemicals or other items that indicated the presence of either clandestine drug laboratories or dumpsites.

The Arizona State Board of Technical Registration also maintains a list of meth lab homes.

The Arizona Attorney General’s office posts this information about meth labs and meth homes on their website.

As of July 1, 2003, those who sell property are required by Arizona law to inform prospective buyers if a property has been used to manufacture methamphetamine, ecstasy or LSD. They are also required to hire a drug laboratory site remediation firm that is registered with the State Board of Technical Registration, pursuant to A.R.S. § 32-122.03, to remediate the property of residual contamination. Until the site is properly cleaned, it is unlawful for any person other than the owner, landlord or manager to enter the property (see A.R.S. § 12-1000). Clean-up requirements and an approved list of drug remediation firms can be found at the Arizona State Board of Technical Registration. The owner is liable for the costs incurred to remediate the property of residual contamination, even if the owner had no knowledge of the criminal activity at the property.

CNN.com reports on a Pennsylvania couple who bought a meth home without knowing it.

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How much earnest money should I offer?

Heather — Fri, 29 Oct 2010 17:00:43 +0000

WHAT IT IS

Think of earnest money like a deposit. Sometimes buyers need to send a copy of their earnest money check with their offer, sometimes not. Your Realtor will know when you need a copy of a check.

Regardless, once the buyer’s offer is accepted, the earnest money must be sent to the title company, who will cash the check. Once cashed, the earnest money becomes part of the total purchase price of the house.

HOW MUCH IS RIGHT?

A lot of buyers ask “How much earnest money is the right amount?”

There’s no “right” amount. And the amount of earnest money sellers expect and buyers offer moves up and down with the strength or weakness of the market. When prices were soaring and sellers could get multiple offers within 3 minutes of putting a For Sale sign in the yard, earnest money amounts soared too. I saw $25,000 earnest money on a $250,000 purchase.

These days prices are lower and buyers in many market segments have the upper hand. Earnest money amounts have generally dropped. I’ve seen $500 earnest money checks lately (Fall 2010). I’ve seen amounts up to $3,000 too.

RULE OF THUMB

One rule of thumb about earnest money is, “put up as much earnest money as you can afford to risk.” The idea of risk is important. Earnest money is forfeitable if the buyer breaches the contract.

In plain English this means that if you, the buyer, back out of the purchase for any reason other than the many allowed reasons, the seller has the right to keep your earnest money as compensation for the lost time on the market.

Want More Info?
Check out all our Real Estate Glossary posts

Read about the entire buying process

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Bother your Realtor. Please.

Heather — Sun, 24 Oct 2010 13:33:00 +0000

Recently a consumer visited our website to search the MLS and submitted an online question about a home she found there. I sent her our standard “thanks for visiting our site, let us know if we can help” email. This is the rest of the email exchange between she and I.

Thank you for getting back to me.

We do have a realtor but, he is a friend of ours so I like to look into things first before I get him involved. I would like to know the terms of the lease purchase. Money down, length of option, payments, etc. Could you please forward the information.

Thank you,
Looking in Desert Ridge

Hello Looking,

I’m sorry, I’d like to help but I can’t. I am a Realtor. But I am not the seller’s Realtor. Our website is like most, it shows ALL properties for sale/lease and not just the ones where we represent the seller/landlord.

The Realtor’s Ethics Code is pretty cut-and-dried: Realtors should not knowingly work with another Realtor’s client.

Your questions are totally legitimate. Most important, the answers to your questions will be part of the negotiation process. Help with negotiations is usually the number 1 reason consumers hire a Realtor. And talking to the seller/landlord’s Realtor on your own will probably weaken your bargaining position.

Presumably your Realtor friend will eventually earn a commission, so you shouldn’t feel badly asking him to help.

Thing is, this isn’t an isolated incident. We hear “I don’t want to bother my Realtor” a lot.

“Yes, but my Realtor’s out of town and I can’t get in touch with him.”
“I already have a Realtor but I don’t want to waste his time so I thought you could just show me this house.”
“My Realtor lives on the other side of town and I don’t want to keep asking him to drive all over the place.”

I LOVE helping clients. My clients. I do not love helping other Realtor’s clients because I don’t ever get paid for that sort of thing. I’m a very helpful, compassionate sort of person, but I can’t pay my mortgage with compassion. And the IRS gets really cranky when I can’t pay my taxes because I was helping other Realtor’s clients and didn’t actually earn any commissions for my efforts.

Consumers, please – bother your Realtor. Gathering information, answering questions, offering good counsel and negotiating on your behalf are the job description. If your Realtor is too busy to be bothered with your questions, you need a new Realtor.

Bother your Realtor. Please. is a post written by The Phoenix Agents at Thompson's Realty. If you're reading this anywhere other than a feedreader (rss subscription) of ThePhoenixAgents.com, the site you're reading this on is guilty of copyright infringement.

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