I’ve had first time home buyer clients who are frustrated by how much distressed property there is in the market. They can’t afford a renovated home, but they can’t afford to fix up the property on their own.

Well, there is an answer.

The U.S. Department of Housing and Urban Development (HUD) offers homebuyers the opportunity to secure a loan known as a 203(k) loan. This loan is administered through the Federal Housing Administration (FHA) and gives homebuyers the necessary funds to rehabilitate a home.

Many times, a bank will be hesitant and may reject lending money when the home is not habitable. This is where the 203(k) loan comes into play and can help homebuyers obtain the necessary funds to not only buy the home but to purchase the necessary upgrades to make it habitable.

This loan is an incredible opportunity and is coming into play more now than ever since the housing market took a dive. With many people facing foreclosure, they stripped their house of everything that wasn’t, or was, bolted down leaving the house a complete disaster. This loan gives homebuyers the chance to come in and fix up the house.

This does two things: 1) increases the value of the home and surrounding area and 2) boosts the economy of the community by having another family living and buying in the area.

My friend Jeannie Bolger, of Nova Home Loans is well versed in helping you get these “fixer-upper” loans. Jeannie has been trained to help guide clients through the entire process.

But as with any mortgage, there are some criteria both the homebuyer and the home must meet:

1)      The homebuyer must meet FHA financing guidelines which means a FICO score of 640 or more and a debt to income ratio of 31/43 (see FHA for more info)

2)      The home must be the primary residence

3)      For the home to qualify, it must be existing for more than one year

4)      The work must be completed by a Licensed General Contractor – sorry do-it-yourselfers

5)      Work starts after you close on the home and must be completed within 6 months

There are also two types of 203(k)s that homeowners can choose from depending on the extent of the work required:

1)      Streamline 203(k) – this includes uncomplicated repairs and improvements to home up to $35,000 and no more than 2 subcontractors needed for entire project

2)      Standard 203K – this is for major repairs and improvements along with structural improvements to property exceeding $35,000 – up to 6 months PITI (principle, interest, taxes and insurance) can be included in mortgage if property cannot be occupied during construction. A Licensed General Contractor is needed if layered work is involved

These 203(k) loans are a great way to get our housing market back up and running. With a wide selection of homes in the Central Phoenix area, there is something for everyone.

And don’t forget, the Realtor, Lender, HUD Consultant and Contractor will hold your hand throughout the WHOLE process.

If you would like more information on the 203(k) loan, or just on homes in CenPho, give me a call today at 602-456-9388.

If I have to hear another person predict a massive “shadow inventory” I’m going to turn green, and you wouldn’t like me when I turn green.

Well, not really green, more like red with some veins popping out on my forehead and my head spinning around.

So what am I talking about? Well, I’m a news junkie and when I hear every pundit on TV prattle on about  a shadow inventory, like its the forthcoming of the “four horsemen of the house-pocolypse,”  Where is the data to back it up? If they were looking at the same data as I am, then they wouldn’t be saying this nonsense.

I mean, come on, just do some quick research and see for yourself. The Cromford Index is the best guide out there and comes directly from the MLS as well as the county court and recorder’s documents. I would say those are just a teensy bit credible, I mean after all, they take the information directly from sales, right?

Yeah, that’s what I thought.

So what exactly is a shadow inventory? At its core, shadow inventory refers to properties, which are on their way to foreclosure or are already foreclosed that have not yet been sold or put on the market (for whatever reason, we don’t know).

Well, here is why there will be no shadow inventory in the Phoenix area:

1)      A house will not be part of any inventory of foreclosed homes until it has been given a foreclosure notice (see “Pending Foreclosures” on the graphs below). Even if it is a short sale, it probably has a foreclosure notice pending, so it is likely part of the big purple area below. A foreclosure notice is when the bank sends you a note to say, “Dearest customer. We noticed you stopped paying your mortgage. While we love you very much, we will throw your sorry butt out on the street by such and such date unless you pay up. Signed, Your Favorite Bank.”

(Click on graphs to enlarge)

That’s it. That is all there is. You could try to argue that more homes are going to go in to foreclosure because the economy is going to go in to a double-dip recession, but it is waaaay too early to predict that. Further, the foreclosures are going down because the market is clearing of those properties that were purchased at the peak of the market. There are just fewer of them now.

So, please. Tell your friends. Tell your family. Tell your neighbors and strangers whom you don’t even know.

Let’s put this shadow inventory myth to bed for good…

If you are buying a house, this means the inventory is dropping and prices are going to go up. So, don’t delay. If you are looking to sell a house, times are getting better for you. Either way, call me at 602-456-9388.

If you were one of those homeowners who had a foreclosure recently, did you know that you could become a homeowner again sooner than you think?

There is no doubt that a foreclosure affects your credit score, but according to Jeannie Bolger, Senior Loan Officer with Nova Home Loans, it all depends on your situation.

“After a foreclosure, your credit score will definitely go down between 100 and 200 points on the credit FICO score,” said Bolger. “But it’s a tough question because everyone’s situation is so different and it depends on past payment history, mortgage late payments and debt.”

But Bolger also said the waiting period after a foreclosure for an FHA loan is 3 years, for a VA loan it is 2 years, and a conventional loan is 4 years. Although this seems like a long time, it is a perfect time to re-establish your credit and make yourself more desirable for a loan.

And if you did foreclose on your home, Bolger believes there are some important tips you need to follow.

“Do not overbuy and really know what your budget is,” she said. “Have an emergency fund to allow for ‘unexpected’ emergencies and have a savings account to make mortgage payments if you lose employment or get sick.” Have your credit run 6 months after the Foreclosure by a mortgage professional so you will be better prepared to meet the minimum FICO score requirements required by the loan terms.

If you or someone you know foreclosed on a home, there are options available to ensure homeownership again. The US Department of Housing and Urban Development offers tips about foreclosure and information about the process.

If you would like more information on what it takes to buy a home again after foreclosure, give me a call today at 602-456-9388 and I can find you the perfect home in the valley!

Let’s face it, everyone and their grandmother has a cell phone these days.

Aside from the fact that teenagers can’t hold a conversation that includes eye contact, they are great things.

They are so amazing that 90% of Americans send text messages. This is a staggering number! I wonder if they count the “ppl wh txt w/o vwls”?

Another increasing trend is the number of Americans using smartphones! Over 34% of Americans use a smartphone in their daily life and that number is only increasing.

So what does this have to do with you? Well, if you are selling a house, there are new ways to give buyers instant access to information about a home! The number of people using apps, text messages, and a new thing called Quick Response code, or QR for short, are on the rise.

This is what I am most interested in when it comes to using this new technology as an advantage.

Remember last week’s blog post about how short sales are an increasing share of the Central Phoenix market? Unfortunately, this is the new reality for at least the next few years. But if you need to short sell your home, don’t worry! Using tools such as text messages and QR codes, I can help your home get seen above the other homes on the market. (See also my post from yesterday on other Short Sale Resources I’ve developed.)

Want to know how it works? It’s so simple and you can try it yourself!

Text the special 6-digit code on the flag to the number and you will receive information on this house.

Or, if you have a smartphone and a barcode scanner app on your phone, scan the special code and you will be directed to a special website with information on the house.

HOW COOL IS THAT?!?

Using this technology is a great idea and can really help increase the number of people that view the home. Using the old-fashioned flyer box is fine; the problem with those is the fact that you will have to continuously check and replace the flyers otherwise there might be a missed buyer.

Smartphones are amazing pieces of technology and having the ability to quickly access information can make buying or selling a home much easier.

I wrote last week about how the market inventory is shrinking, and that an increasing number of homes are short sales.

Ironically, the average days that a house sits on the market is actually going down dramatically this year. See the graph below.

That tells you that people are making offers faster and short selling banks are getting answers quicker than last year.

If you are thinking to short sell, now is the best time since the crash started.

I want to tell you how I work to get them closed. If you’ve been thinking to short sell, the following could save you some greenbacks.

Many agents work with large law firms that charge you a huge retainer to represent you to the bank short selling the property. In my experience, these firms are not necessarily any faster at getting them closed. In fact I represented buyers who waited 4 months for the firm’s negotiator to get an agreement letter from a bank, only to find that they lost the agreement letter for a month. The deal fell apart due to this.

I’m sure most attorneys are working hard. But I think some are taking on too many clients, or are promising too much.

Here is how I work.

First, if you are thinking to short sell, I refer you to the Law Offices of Roberta Voss (602-697-0730). She won’t represent you as a negotiator to the bank. But she will sit with you for a reasonable fee and make certain you understand the short sale process from the legal perspective. (Whatever you do, don’t skip that talk with an attorney.)

Second, I work directly with either Old Republic Title or Chicago Title, both of whom have dedicated short sale teams that communicate with the bank directly. Why is this such a big deal? Well, because, first, they charge you nothing, zilch, nada! Second, because they are on the phones with the banks all the time, they can get heard above the din.

Third, I use social networks, text networks, QR codes and mobile websites to make certain everybody sees your home.

There is a lot to think about with short sales. If you are thinking to take this step, please give me a call first at 602-456-9388.

What is Condo Chaos you ask? Condo Chaos is only the most exciting thing to happen to Phoenix since the last exciting thing! Come check it out and get an amazingly low price on the condo of your dreams this weekend only! Condo Chaos, CONDO CHAOS, CONDO CHAOS!!!

(Turn off used car salesman speech here.)

OK, that’s better.

I just want to keep you informed about the incredibly low prices of condos in the Central Phoenix and surrounding areas. We already know the housing market isn’t the greatest, but that just means it’s a buyer’s market and you have the opportunity to snag some amazingly awesome prices!

I just want to make sure you know that if there ever were a time to buy, this is it. In fact, since the condo market is the weakest sector of the housing market, the price of condos is lower than low. But just how low is the price of a condo though…

Well, according to the latest data (see below), there are currently 2,156 condo listings across Maricopa county with an average list price of $167,890.  (Remember, this is an average of
the entire county so it includes those multi-million
dollar condos in the Scottsdale and Biltmore area.)

Now you want to know something that will knock your socks off? The average closing price of CenPho condos last year were almost half the price at $84,341! How amazing is this price? All the amenities of a great condo – location, style, and feel – for an incredibly low price.

Living in the Central Phoenix area has never been more affordable. Not only do you get a smokin’ deal, you get to live in an amazing place full of life and excitement.

If you would like help finding the perfect condo, I am here for you! I will make sure you get the best condo during the Condo Chaos madness!

(I think that was the largest number of exclamation points I’ve ever put in a blog post. I need to rest. I think I’m getting the vapors.)

(Click the images below for larger view)

County-wide 2010

County-wide 2011

Central Phoenix 2010

Central Phoenix 2011

So when you are looking to buy a home, how much do you think you need for a down payment? 5%? 10%? What about 20%?

I get people saying to me all the time, “I can’t buy because I don’t have 20% down.” But its not true!

I want to find the news reporters who keep this myth alive, dress them in Lady Gaga’s meat dress and introduce them to a pack of coyotes.

The reality is that with a high enough credit score, you could qualify for a loan where you only need to pay 3% down!

How amazing is that? A new home with only 3% down!

But what about all this talk of 20% down to qualify?

It’s all nonsense. Period. End of story. Jeannie Bolger, Senior Loan Officer with Nova Home Loans, believes the 20% down payment myth stems from misinformation and everyone wanting to give advice without actually doing the research.

(By the way. I love Jeannie. She is great. She gets people qualified and works hard throughout the process.)

So how can you qualify for the 3% loan? To begin, the loan is backed by FannieMae/Freddie Mac (aka, the guv’mt). According to Bolger, to qualify you need at least a 680 credit score. Keep in mind this is only a minimum and is not a guarantee.

Having a lower credit score doesn’t hinder you, in fact, if you have a credit score of 640 you could qualify for a loan with paying 3.5% down!

Don’t get me wrong, paying more as a down payment is great if you can afford it because it can save you money on interest rates. Plus, paying 20% down allows the home buyer to waive the mortgage insurance premiums.

This is an amazing opportunity for people to take advantage of and should not be passed up. With interest rates near (or under) 5% and homes at their rock-bottom prices, now is the best time in over 40 years to buy a home.

So snap up those short sales or foreclosures with an incredibly low down payment and give me a call today to help you find the perfect home!

Short sales. Foreclosures. The media will tell you how bad it is.

I’ll tell you, this is a market of opportunity.

But if you are going to take advantage of this opportunity, you need to understand the pros and cons of short sales.

Why? Because short sales are becoming an increasing proportion of the market.

Why? Because the market is turning around.

Sound counter intuitive? It is, I agree.

The number of short sales has increased as a portion of the entire market because the number of foreclosed properties is shrinking.

With the number of foreclosures drastically shrinking in the Phoenix real estate market and the rapid increase of short sales, those looking to buy will be forced to wait unless they decide TODAY to buy (not literally today, but in the near, and I mean very near, future).

Check out the graphs, below. In the first one you can see those two pies. Notice that the one of the left represents active listings. See the light blue area? Those are “pre-foreclosures” or “short sales.” The red area is lender owned property and the dark blue represents normal sales.

So, look at the right hand pie. These are monthly sales –those that actually close. The red area is much larger because the foreclosed properties actually close.

With the increased number of short sales on the market, a homebuyer waits an average of 3-6 months before closing the deal, and only 40% of transactions actually close.

So, what is the trade off? Not much, really. You can see the bar graph below the pies showing that prices for foreclosed homes are lower than short sales. Problem: there are fewer of them to look at.

Am I saying not to even look at short sales? Nope. Just know what the risks are. If you need to close in a hurry, don’t look at short sales. If you have a longer time horizon, then this can be a great way to find some incredible deals.

Check out the graph further below to see how the number of short sales versus foreclosed properties has changed over the course of the year.

Then give me a call and let’s talk about how I can help you.

If you build it (out), they will come.

There were two really interesting historical perspective articles this week from the Arizona Republic. One article is about how our spread outward was driven by a constant “boosterism” by all who came here. The other article is about what early city leaders hoped for our city.

There was always a tension between building up and building out. It seems that building out won, for now.

The desire to live miles from the city in suburban living can take a toll on residents, I mean come on, there is only so much drive-time radio you can stand during your daily 2 hours in traffic to get to your job.

Instead, residents and home buyers are rediscovering the city and want to move to where historic meets modern (that’s central Phoenix for those who haven’t caught on).

With so many historic homes in the central Phoenix area at such great prices, buyers are scooping up amazing deals in incredible neighborhoods that are full of life and history. In other words, Phoenicians are looking for new life in an old home.

Data indicates that the CenPho zip codes have dropped less in home value and are returning to normal more quickly than other parts of the valley.

Since the population of the Valley of the Sun has increased at a mind-boggling pace (24% since 2000), the only way to keep up was with tract housing that had less character, and we all know how important character is in a home.

But what central Phoenix is experiencing is exciting – new restaurants and nightlife hot spots are popping up. Residents are taking notice and it is only a matter of time before central Phoenix becomes the place to be!

Following on the heals of yesterday’s post about the market, I want to point to this article in the Republic in which it is pointed out that:

1) the Case-Shiller index (which I often decry as being inaccurate for our market) often lags local data and overstates market declines, and

2) Chicago has surpassed Phoenix as a foreclosure market. So, as we’ve been saying, the number of foreclosures is going down quickly here.

But here is the money quote: “Careful calculations show the once-scary shadow inventory in Phoenix is no longer as large as many thought, and what remains can effectively be cleared out in about a year.”

What does this mean? It means that your ability to buy an uber-cheap home is slipping away. Call me for more information: 602-456-9388.