The Phoenix Agents » Investors

Phoenix area housing statistics

Heather — Tue, 15 Nov 2011 16:32:08 +0000

Here are a few charts from the Cromford Report website that show the most current statistics on the Phoenix-area housing market. All figures are for metro Phoenix Arizona through the first 10 days or so of November 2011, and all types of housing (condo, detached home, patio/town home) are included.

These are charts for Days on Market and total dollar Volume of home Sales.

Days on Market, metro Phoenix AZ, Nov 2011

Total Volume of Sales, metro Phoenix AZ, Nov 2011

On the top graphic, you can see that time on market — an indicator of both sellers picking the right price and buyers wanting to buy — is dropping. That’s generally a good thing, and it’s watched as an overall indicator of market health. Three to six months on the market is considered about “normal”; more is a buyer’s market, less is a seller’s market.

The red line chart on the bottom graphic shows the typical bump in sales activity in the summer. But the blue line chart to the right shows that sales volume is higher year-over-year than this time last year. In other words, our summer sales growth left us at a higher point that this time last year, selling more homes overall.

Our buyers are writing multiple offers before getting one accepted, but sellers are still generally willing to pay closing costs. What have you been seeing when you’re shopping for homes? How many offers are you writing on homes before you get one accepted? Are sellers still willing to pay buyer’s closing costs? We’d like to hear your feedback, please leave a comment.

Phoenix area housing statistics 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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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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Phoenix foreclosure bargains #1

Heather — Wed, 22 Jun 2011 12:26:00 +0000

Metro Phoenix can be a real estate investor’s wonderland, or your worst nightmare. It’s all in whether you choose your residential investment property carefully. Or not.

From time to time, we here at The Phoenix Agents @ Thompson’s Realty like to point out those too-good-to-pass-up houses. Here’s one…it’s a complete fixer-upper but priced about $30,000 below area comparable sold properties!

THE SPECS

$45,800 — bank owned
4 beds, 2 baths, 1450 square feet, built 1955
1 car carport — 7,500 square foot lot
Area comps are $75,000-ish and about $950/month as a rental

Near 19th Avenue and Camelback Road in near-West Phoenix, this home is like a time capsule. It literally has not been touched since 1955: you can see the original curtains in the living room and kitchen.

This isn’t a house for the feint of heart or novice investors! It needs significant work – new roof, probably a new HVAC unit, tear down the back porch enclosure, re-tile the master shower, needs all the appliances, remove and replace window coverings, consider replacing the cabinets throughout the house and/or the linoleum floors.

This property needs a lot of TLC, but look at those comps! You can do the basic fundamentals and a few cosmetic remodels and re-sell it (fix and flip) or do the same and turn the home into a cash-flowing rental property.

Use our Foreclosure Search to browse all Phoenix-area foreclosure homes.

If you’re looking for something like this home to invest in, please contact me. I work frequently with novice and experienced investors. In addition to all of Phoenix, I cover territories from Tempe to Surprise, from Glendale to Goodyear. Colleagues in my office cover all of the East and Southeast Valley (Gilbert, Mesa, Chandler, and points east). We’ll all be happy to assist you with your real estate investing goals.

Standard Disclaimer – the property described in this article may not still be available when you read the article. The pricing and value advice offered in this article is meant as a guide only, and does not in any way create a guarantee or a client relationship with the Realtor author. In other words, I am a Realtor but I am not your Realtor… yet, and as such you are responsible for your own due diligence, investigations and negotiations, unless/until you hire me to assist you with same.

Phoenix foreclosure bargains #1 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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Phoenix not in Top 10, but investors still buying here

Heather — Sun, 05 Jun 2011 12:36:49 +0000

Inman News reports on “The 10 Best Markets for Real Estate Investors” and here’s some takeaways from that report:

Tucson is in the Inman “top ten” best real estate markets for investors, but Phoenix is not.
Investors usually pay cash for homes (61% compared to just 20% of owner-occupant buyers who pay cash
Most investors plan to own their investment home for about 10 years, and 52% say it’s likely they’ll buy another property soon
Investors are optimistic about the future of housing: 77% say “now is a good time to purchase real estate.”

You can view Inman’s full report here: http://www.inman.com/reports/10-markets-invest/

Real estate is local, so let’s see what’s going on in metro Phoenix…

Valleywide MLS statistics show that investors are buying in metro Phoenix, and they’re buying a lot of homes. The Cromford Report shows investors are purchasing 24% to 26% of Valley homes sold so far in 2011.

Nationwide, Inman says distressed properties account for 40% of existing home sales, but you can see in the chart above that metro Phoenix area stats are much higher: investors bought 64% of all metro Phoenix area homes sold in May. (6,316 distressed sales out of a total 9,845 homes sold in May 2011).

How’s buyer demand in metro Phoenix?

In a word: healthy. Check out this chart, also from the authoritative Mike Orr at the Cromford Report which shows that February 2011 was the third highest buyer demand month since January 2001. Only June and August 2005 — the peak of the peak of the market — had more homes sold.

Feb 2011 second-highest sales volume for Metro Phoenix since Jan 2001

Are you thinking about buying a home? Either for yourself or as an investment? Contact us before you do anything! We’ve been helping buyers and sellers in metro Phoenix since 2004, before the boom and bust brought our market to it’s knees.

We know how to find and negotiate the best possible deal for you, and our customer service is top notch. Check out what our clients say behind our backs and give us a shout when you’re ready to chat with a professional Realtor.

Phoenix not in Top 10, but investors still buying here 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 happens at a foreclosure auction?

Heather — Wed, 18 May 2011 13:34:56 +0000

A frequent question we’re asked here at The Phoenix Agents is about the process a home goes through when it transitions from being a short sale to a foreclosure. Here’s the skinny.

Typically, banks and mortgage companies will allow a homeowner many months to attempt a short sale. Sellers hire a Realtor who lists the property in the regional MLS database. Showings happen. A buyer makes an offer. For whatever ridiculously silly reason, the seller’s lender denies the short sale. Unless the seller can find a backup buyer in time to satisfy their lender(s), the home goes to foreclosure auction.

What happens at the foreclosure auction?

AZ – Foreclosure Outcomes

As you can see, most homes are not “sold on the court house steps” to an investor. They’re taken back by the mortgage lender/bank who held the former homeowner’s original first mortgage, and the home is now an REO, or Real Estate, Owned. The mortgage lender/bank then hires a Realtor to list the property for sale in the regional MLS.

This information applies only to metro Phoenix, Arizona where we work as residential realtors. This article was published in May 2011. If you’re reading this from another state or long after publication, please consult a professional in your town or contact us for updated information.

What happens at a foreclosure auction? 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 Phoenix foreclosures 30% below market!

Heather — Mon, 21 Feb 2011 17:01:00 +0000

Riffing off what Chris posted yesterday…

In Phoenix, the winter tourist season is here. Every year this means a new wave of newbie real estate investors who are convinced that you can buy investment property in metro Phoenix for 20% or 30% below market value. Here’s the real deal…

I’ve been helping investors in the metro Phoenix real estate market since before the boom of 2005-06. This is my fulltime gig and I’m a happy workaholic, so I feel reasonably sure you can trust me on this. Don’t trust me? Trust my clients, who talk about me behind my back.

As of 2009 through 2011, there is no way to purchase property on the open market for 20% or 30% below market value. It simply cannot be done.*

Why? By my count of the last 12 months, banks were involved in 64% of metro Phoenix property sales. One national estimate puts Fannie Mae and Freddie Mac in charge of 80% of American real estate.

**Metro PHX homes sold, Feb 2010 to Feb 2011:

	# of Sales	% of total sales
Total Sales	91,425	100%
REO sales	38,083	41.65%
Short Sale or other pre-foreclosure	19,365	21.18%
HUD homes	657	0.72%
Total sales involving banks	58,105	63.55%

With 6 of every 10 Phoenix-area homes sold involving banks at some level on the seller side, the banks are so huge they move the market. In fact, in metro Phoenix right now, the banks are the market. Whatever prices banks let their homes sell for is the new market value.

This is just Econ 101 from your freshman year of high school.

Thousands of buyers + thousands of sellers = happy, healthy, free market economy. Market values float up&down according to supply and demand.
Thousands of buyers + handful of sellers = lopsided marketplace where sellers rule and the price they want is the price they get.

Banks aren’t colluding to fix home prices. At least I don’t see any evidence of that (finding evidence of that would be waaay above my pay grade). But banks do have a bottom line on every home they sell and they stick to it without fail. I’ve seen banks turn away an offer for $61,000 when their bottom line was $62,000.

Sometimes, a few investors get lucky and find homes that need paint, carpet and a few handyman repairs and are then worth 15% or 20% more than the purchase value (but closing costs eat up as much as 12% of that ‘profit’). Almost without exception, these buyers go directly the foreclosure auctions and pay cash. The auctions aren’t designed for rookies. I hear they’re literally throwing elbows down there. Our brokerage has an agent who will go to the auctions with you. Contact me for his info.

If you’re an investor who still insists that a “good” Realtor can find you a property for 30% less than market value, please don’t call me. I’m a very good Realtor, but I’m not a magician.

Buy Phoenix foreclosures 30% below market! 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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Funny things in the MLS

Heather — Fri, 18 Feb 2011 16:15:00 +0000

This is one of the funniest things I’ve seen in the Arizona Regional MLS in a long while. It’s in the Realtor-to-Realtor “private remarks” data field.

Promise of response within 12 hours with a full price non-contingent offer.

Okayfine… How random. Am I supposed to think that’s a good thing? Cranky me, I feel like testing them with a full price offer at 2 o’clock in the morning just to see if they can really reply that quickly.

The listing is a condo in a North Phoenix resort community that shall remain nameless. I might be just a little touchy about this because I live in the Pointe, but what really grabbed my attention in the first place was the price – $75,000 for a one-thousand square foot condo. Nothing wrong with that, it’s a decent price compared to the rest of the North Phoenix area.

My problem with this price: the owners bought it on February 3, 2011 for $55,125. They relisted it yesterday, the 17th of February 2011 for $75,000. Know what the new owners did in the intervening 14 days? They painted.

Man, that had to have been some expensive paint!

Head’s up, fix and flippers… nobody’s paint job is worth $20,000. That’s a big “duh” and most of you will figure it out on your own. What you’re likely to miss because you see visions of $20,000 overnight profits dancing in your head is this: no buyer in their right mind is going to give you $75,000 for this condo when 14 days ago you paid $55,125. Plus there’s another bank-owned REO condo for sale 1 building over, in the same general condition for $53,000. Finally, your price point puts you squarely in cash purchaser land, and anybody who’s got $75k sitting around in cash had to be pretty dollar-savvy or they wouldn’t have accumulated that much. They’re smart, so they’re not going to be stupid enough to give you $20,000 extra just because you asked for it and promised to answer their offer within 12 hours.

Funny things in the MLS 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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Landlords: IRS says send a 1099 to vendors

Heather — Tue, 25 Jan 2011 13:05:00 +0000

Hat tip to Scottsdale colleague Dru Bloomfield: the IRS is changing their rules for landlords. Not a huge change, but one you absolutely want to know about ahead of time. It always stinks to have to go back and create a paper trail for the IRS!

New IRS 1099 Requirements for Landlords

Starting in 2011, there is a new tax requirements for landlords. All landlords who receive $600 or more in rent for the year must send a 1099 to all service providers that the landlord paid $600 or more during the year, such as plumbers, carpenters, yard services, and repair people.

The new requirement applies to owners of both residential and commercial property. Prior to 2011, this requirement had only applied to those involved in full-time property management, but now the requirement covers all types of landlords. Landlords will need to gather federal tax ID numbers from service providers in order to file the 1099s. Failure to file the 1099s with the IRS can result in fines of $50 per 1099 not filed with the IRS. In 2012, these requirements will expand to cover providers of good to landlords.

You’ll want to ask for a completed W-9 from each of your vendors (when they do the work!) so you can issue the 1099 at the end of the year.

del.icio.us Tags: Phoenix real estate,Landlord,Real Estate Investing

Landlords: IRS says send a 1099 to vendors 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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Not paying your mortgage? Don’t worry, banks making money off you anyhow.

Heather — Fri, 14 Jan 2011 15:49:00 +0000

Clients always ask me, “WHY are banks so SLOW in agreeing to short sales??”

There’s a ton of reasons; almost none of them make sense. But for about 2-3 years I’ve been adding this opinion to my list of reasons banks are slow to OK short sales.

Mind you, this is my opinion. I have nothing to back up this idea other than a rudimentary understanding of Accounting 101:

accounts receivable = assets
accounts payable = liabilities

I believe that one of the many reasons banks are so slow to approve short sales is that while they stall, they can book the mortgage payments as an accounts receivable item, whether the homeowner is actually making the payments or not. The second the bank OKs a short sale, they have to book a giant loss. Again, only my opinion, but it passes the common sense test with everybody I’ve mentioned it to.

Now, a story at Forbes magazine backs me up, sort of. (hat tip to Mish’s Global Economic Analysis blog for the story link)

Robert Lenzner at Forbes writes US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages

[Due to loose accounting rules, banks are] allowed to accrue interest on non-performing mortgages” until the actual foreclosure takes place, which on average takes about 16 months.

All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a result, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off the books of the banks.

This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.

Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.

Astounding! The extent to which our entire financial system is built on castles in the air is staggering. Banks make money because they say they do. Our dollar bills have value because we all agree they do.

I’m gonna go sit down now. My head hurts.

del.icio.us Tags: Phoenix real estate,foreclosure crisis,bank bailouts

Not paying your mortgage? Don’t worry, banks making money off you anyhow. 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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Lease Purchase, Rent to Own

Heather — Sat, 11 Sep 2010 12:43:00 +0000

Rent to own and lease-purchase agreements are cropping up in the Greater Phoenix real estate world these days. They’re a natural result of the continuing tight credit market.

Lease-purchase and rent to own are essentially the same things. A lease with a purchase option is almost the same, just with more complicated legalese thrown in there.

We don’t typically assist folks with leases that turn into purchases, no matter what the terms. We feel strongly that you really should hire a lawyer if you’re going to do anything that involves renting a house now and buying it in the future.

Here’s some brief thoughts on the situation; I took these from a quick email I sent out earlier today to some friends of ours.

Rent to owns (lease-purchase and lease-purchase options) are usually a little tricky –

does tenant pay a little extra each month towards down payment?
or does the tenant pay a lump sum amount now? (usually several thousand dollars!)
if so, who’s bank account “gets” the deposit(s)? does that money earn interest? for whom?
under what circumstances are extra payments refundable?
what happens to that extra deposits/payments if the rent is late a day or two? if it’s late several weeks?
do you value the purchase price of the home now or in several years when the purchase happens?
do you get an appraiser? who pays for the appraiser?
what if the appraisal comes in lower than the agreed-on purchase price?
what if either side changes their mind between now and the purchase?

As you can see, there are a lot of questions. We recommend you hire a real estate attorney to help you figure out the answers. Call or email us, we know several excellent Greater Phoenix attorneys!

Lease Purchase, Rent to Own 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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Renting? Food for thought here.

Heather — Fri, 23 Jul 2010 13:20:00 +0000

Some thoughts I’ve had lately about being a renter in today’s real estate market.

Landlords usually do a credit check and sometimes even a background check on prospective tenants. If I was a prospective tenant, I think I’d ask the landlord for a credit check on him/her in return. You probably don’t need (and won’t get) a credit check on your landlord, but some information is worth asking for.

Why? Many, many landlords are renting their home because they couldn’t sell it. It’s possible that the rent paid by the tenant doesn’t cover the landlord’s mortgage. If I’m a tenant, I want to know that the landlord is covering that gap, and doing so comfortably. That way, I don’t get a Notice taped to “my” front door one day telling me I have to move out because the house is going to the foreclosure auctions.

I think I’d also ask them if this is their first time being a landlord. If it is, I might want to spend some time talking about hypotheticals:

what is the fair thing to do if the A/C breaks in July?
what is the fair thing to do if the water has to be shut off for a day? for two days? three days?
is there a home warranty in place? if so, who pays for the service call fee when the home warranty is used to fix minor broken things around the house?
how often does the landlord plan on coming over to inspect things? will s/he give notice before hand? If so, how much notice?
Who’s supposed to change the A/C filters inside the house and how often?
Does the landlord keep a key to the house while I’m living in it?

I’m not sure there’s a standard, “right” answer to any of those questions. But – particularly me, as a woman living alone – I’d want to know if my landlord lived in town and kept a key to the house I was planning to live in. I’d probably want to know that too, if I was a parent with small children in the house.

Many tenants work with Realtors to find their next rental home. If you’re looking to rent, I’d recommend it. Personally, Chris and I don’t usually handle rentals. But our broker Thompson’s Realty has a Realtor on-staff that handles rentals all the time, both landlord-side and tenant-side.

If you’re looking to rent, shoot us an email and we’ll hook you up with the Thompson’s Realty landlord & tenant Realtor professional. Or visit them online at SpectrumGroupAZ.com

Renting? Food for thought here. 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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