When a lender agrees to accept a mortgage payoff amount less than what is owed in order to facilitate a sale of the property by a financially distressed owner, it’s called a short sale. The lender forgives the remaining balance of the loan.

Everyone loses — or wins

Short sales are a mixed bag for the buyer, the seller and the lender.

If you’re a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure. You’ll also walk away from your home without a penny from the deal, making it difficult for you to find another place to live.

The buyer gets the property at a reduced price, but the property in all likelihood has its share of problems — think fixer-upper — and will need to go through considerable red tape in order to make the deal happen.

The lender takes a financial loss, but perhaps not as large a loss as it might if it forecloses on the property.

Before you even start considering getting involved in a short sale, there are two situations in which an attempt at a short sale is almost certain to fail.
Two short-sale killers

No default on loan — Lenders almost never will accept short sale offers or requests for short sales until the borrower is far behind in payments and a notice of default has been issued.

Bankruptcy — If the seller has filed for bankruptcy, forget it. Few, if any, lenders will consider a short sale when the seller has filed for bankruptcy because negotiating a short sale is considered a collection activity and collection activities are prohibited in bankruptcies.

Can it work for you?

Buying a home in a short sale can be a hassle, so why should you consider it? Mainly, it boils down to the bottom line. You will get the property for a substantial discount. Since the lender is eager to continue to get paid back the money it loaned out. Since the seller plays an active role in the short sale process, you will probably have their complete cooperation. This is not always the case with a property that has gone through foreclosure.

Whether you’ve become aware of the distressed situation on a property through your agent, a FSBO ad or word-of-mouth, this is not a do-it-yourself project. A short sale is one real estate deal where you really need to get help from an experienced agent or attorney. Not all real estate agents know how to handle a short sale, so make sure you consult with one who can demonstrate special training or a good track record with short sales. You may want to select an agent who holds the Certified Distress Property Expert (CDPE) designation or the Short Sale and Foreclosure Resource (SFR) designation. These agents have the knowledge and experience to assist you.

Why lenders (might) agree

It might seem counterintuitive for a lender to go along with a short sale. After all, a lender is legally entitled to pursue the full balance of the loan. When a homeowner falls behind on payments, the lender can (and often does) hold the borrower responsible for every penny owed.

And yet more and more lenders are willing to consider approving a short sale.

Lenders are painfully aware of just how bad the current foreclosure crisis is. They know the cold reality is that a large number of struggling borrowers will end up losing their homes and often see the advisability in accepting the inevitable and trying to minimize their losses. Yet, some lenders seem to remain in denial.

Foreclosure is an expensive and time-consuming process for a lender. By agreeing to a short sale, the lender wraps up this little mess quickly, and perhaps with less of a loss than it would have incurred with a foreclosure.

Remember, after foreclosing, the lender owns the home and has to maintain it, insure it and pay taxes on it. So instead of receiving payments each month, the lender is now forking out money every month. Plus, short sales help the lender look good on paper — the property never gets listed as an actual foreclosure, which helps the lender’s numbers. They see it as the lesser of two evils — if the numbers make sense for them

The entire process gets far more complicated and uncertain of success if there is more than one lender involved. Second or junior lien holders often are the ones absorbing most of the loss. If there is a second mortgage or a home equity line of credit, you’ll need approval from all. In addition, you may find your mortgage loan was sold to an investor and therefore you also need approval from that company.

Short sale properties appear to be the norm in our real estate market and will probably be around for several more years. It is unfortunate that individuals are loosing their homes to either foreclosure of short sale, but on the other side of this ugly mess are buyers/investors who are taking advantage of this housing market.

If you would like more information about the short sale process from either the buyer’s side or seller’s side, please feel free to contact us at 602-620-2164 or visit our Scottsdale Real Estate website  and check-out the drop down menu for Short Sale Help!

It’s a Good Life

Stephen & Alice Proski

Home prices had fallen to a median $119,900 back in April 2009, marking the low point of the region’s housing crash. Recent months showed small but steady increases, keeping the price above $130,000. 

But in July, the median sales price of a metropolitan Phoenix house fell more than 2 percent, according to the real-estate research firm Information Market. It was the first time the area’s median has fallen below $130,000 this year, and the second month in a row that home prices fell.

Pending home-sales data provided to The Arizona Republic show the downward trend continuing.

Thousands of Phoenix-area homes are in escrow. If those deals close at the sales prices listed in their contracts, the region’s overall home-sales price will tumble nearly as far as April 2009′s low point.

If home prices drop below that mark, most analysts will consider it a double dip. With prices below their previous low point, a housing recovery will be even further away.

July is traditionally a slow month for the Phoenix-area housing market. But there is little data to contradict what pending home sales indicate about where prices are headed.

Instead, several other factors also point to a continuing decline.
 

The region’s recession-battered job market is still weak, meaning few new buyers.

The number of foreclosed homes, which often end up being resold at bargain prices, continues to rise.

And most people who were considering buying anytime soon have likely already bought, getting in on a federal tax credit for homebuyers before it expired in June.

Also concerning to some in the industry is Arizona ‘s crackdown on illegal immigration, which has spurred some people to leave the state.

New residents, who help fuel home buying in metro Phoenix , are no longer moving to the area like they were before the real-estate crash and recession.

“The market is much weaker now than it was a few months ago, with demand down severely almost everywhere,” said Mike Orr, who publishes a daily online analysis of Phoenix-area housing called The Cromford Report. “I am currently expecting the average square-foot sales price to fall about 1 percent a month during the next two months. It’s anybody’s guess after that. It could get quite ugly.”

He tracks average square-foot prices because they are less skewed by a few high or low prices. The current average is $87 a square foot, down from $91 a month ago.

Last month changed that. The 2 percent decline was the largest this year.

Valley home sales neared record-high levels during the past 18 months as buyers snapped up inexpensive foreclosure homes and houses discounted for short sales. But last month, sales of existing homes dropped 24 percent from June’s robust pace. New-home sales in July fell to 534, half their pace in June.

Investors continue to buy Valley homes, particularly from lenders who have recently foreclosed on them. In July, investors were behind more than 21 percent of all home sales, up from 17 percent the month before, reports Information Market.

“If you aren’t selling an inexpensive home, it can be tough to sell in this market,” said Jay Butler, director of realty studies at Arizona State University .

Interest rates are near record lows, but it’s more difficult to obtain a mortgage now. Also, potential buyers who own homes and can’t sell them are stuck until home prices climb.

Rising supply
 

As demand from homebuyers dropped, the inventory of homes for sale in metro Phoenix climbed. Too many homes for sale and too few buyers will continue to drive down home prices.

“Demand for housing is directly related to population,” said Ruff, the Information Market analyst. “If there’s an exodus due to SB 1070, expect home prices and sales volume to drop dramatically.”

Despite the housing market’s current setback, many analysts still expect a return to a normal market of steady annual growth by 2015.

For now, market watchers are tracking home sales and foreclosures to determine if prices will drop as far as expected in September and whether they climb again in October as the Arizona Regional Multiple Listing index predicts.

So if you are considering buying a home in the metro Scottsdale/Phoenix area in the near future, this could be a perfect time to find a deal!

Thanks for visiting our blog and look forward to hearing from you.
It’s a Good Life!

Stephen & Alice Proski

The banks should be willing to short sell properties back to property owners at market rate instead of forcing the homeowner to do a short sale to a third party and have to move out. We can see reasons why the banks haven’t done this, but at this point with home prices continuing to drop and foreclosures on the rise we believe it will be in everyone’s best interest if the banks start working out deals on principle reductions. They were bailed out by our government with “our” tax dollars and have done nothing but some token maneuvers to placate those who really need help.

The mortgage crisis is dragging on the economic recovery as more homeowners fall behind on their payments.

More than 10 percent of homeowners had missed at least one mortgage payment in the January-March period, the Mortgage Bankers Association said Wednesday. That’s a record high and up from 9.5 percent in the fourth quarter of last year and 9.1 percent a year earlier

Around 4.3 million homeowners, or about 8 percent of all Americans with a mortgage, are at risk of losing their homes.

 
Should loan modification programs fail to help, their homes will go up for sale either as a foreclosure or short sale — when the bank agrees to sell the property for less than the original mortgage amount.

Many analysts have been forecasting home prices will dip again as more of these homes go up for sale at deeply discounted prices.

 
The Obama administration’s $75 billion foreclosure prevention program has barely dented the problem. More than 299,000 homeowners had received permanent loan modifications as of last month. That’s about 25 percent of the 1.2 million who started the program since its March 2009 launch.
About 277,000 homeowners, or 23 percent of those enrolled, have dropped out during a trial phase that lasts at least three months.

Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, poor lending standards were the culprit. But homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures.

Those borrowers made up nearly 37 percent of new foreclosures in the first quarter of the year, up from 29 percent a year earlier. The risky subprime adjustable-rate loans that kicked off the foreclosure crisis are making up a smaller share of new foreclosures. They made up 14 percent of new foreclosures in the January-March period, down from 27 percent a year earlier.

We have seen signs of improvement this year thus far with inventory going down and sales totals have increased.  We have also seen a slight increase in the median price home values, but if this small improvement doesn’t last, then we can be ready for another melt down
 
If you are having difficulities making your mortgage payments and don’t want to let the bank foreclose on your home, give us a call at 602-620-2164 or email us a  and we will help you explore short sale options.

 Regards

 Stephen & Alice Proski

 

With the Canadian dollar above US90¢ and real estate prices in the United States at a historical low, successful Canadian entrepreneurs who may have surplus funds in their business or may even have sold it may be planning to invest in U.S. property.

Business owner’s who may be weighing the costs and benefits of purchasing a condo or home, or other U.S. property such as shares, must remember to factor in any applicable U.S. taxes.

Business travelers to the United States have the opportunity to see places first-hand. Although business owners should be familiar with U.S. business tax rules, they may not necessarily know about personal tax rules.

Generally, income from certain U.S. investments, including real estate, is subject to U.S. tax even if you are not a U.S. citizen or resident. U.S. investments are usually taxed in three ways: on the income they generate, on their sale or gift, and on the death of the owner.

There are complicated U.S. and Canadian tax implications business owners need to consider if they plan to buy U.S. property through their company, especially if they plan to use the asset personally. However, this article focuses on the tax implications of buying U.S. property personally.

But if you are a business owner who, planning ahead to retirement, decides to buy a condo in say, Arizona, and rent it out. Assume you receive US$10,000 in rent in 2010 and our mortgage interest, maintenance costs, property taxes and depreciation total US$8,000.

A 30% withholding tax normally applies to rent paid to a Canadian resident for real estate in the United States. As such, your tenant should withhold 30% of the rent paid to you, or US$3,000, and remit it to the Internal Revenue Service. That can be eliminated by giving the tenant or agent a form that states you will file a tax return and pay tax on the net (rather than gross) rental income. You must file a personal U.S. tax return, separate from any business returns, by the end of the year. U.S. tax on the net rental income in the example would be US$2,000 ($10,000 rent minus $8,000 expenses). If the tenant withholds tax, you can receive a refund, to the extent the withholding tax exceeds the tax payable. State tax (and possibly a small amount of city or county tax) may also apply to U.S. rental income.

Once you elect to pay tax on net rental income, this election will apply to any U.S. rental real estate you hold now and in the future.

You should file a return even if you have a rental loss so you can carry the loss forward to offset future gains and to claim your deductions, including depreciation, which is not a discretionary deduction (in fact, it will reduce the cost base of the property even if you don’t claim it).

If you decide to sell your condo, a withholding tax of 10% of the sale price normally applies under the Foreign Investment in Real Property Tax Act of 1980. You must also file a U.S. tax return to report the sale for income tax purposes. If you realize a capital gain on the sale and the FIRPTA tax withheld is more than the U.S. income tax you owe on the capital gain, you can get a refund for the difference. Again, state tax (including withholding) may apply.

You may be able to reduce the FIRPTA withholding by applying to the IRS before the sale for a “withholding certificate” if your expected U.S. tax liability is less than 10% of the sale price.

You must also report rental income and capital gains from your U.S. condo on your Canadian tax return. You can generally claim a foreign tax credit for the US tax you paid to reduce your Canadian tax.

When you’re considering selling U.S. real estate, remember the U.S.-Canadian exchange rate will affect the amount of a capital gain taxable in Canada because the cost of the property is converted to Canadian dollars at the exchange rate at the time of purchase and the proceeds are converted at the exchange rate at the time of the sale.

If you still own your condo when you die, U.S. estate tax may apply. This tax was repealed for 2010, but it will be reinstated for 2011 (and possibly some or all of 2010) and will continue to impose a potential burden on the estates of Canadians who own U.S. real estate and other property. Some states also have their own estate taxes.

There are ways to reduce your estate’s potential U.S. tax. However, this type of tax planning is complicated and professional advice is advisable.

If you choose to give your condo to a family member during your lifetime rather than in your will, U.S. gift tax will apply. You may also have to pay Canadian tax if a capital gain has accrued, but no foreign tax credits are allowed in Canada for U.S. gift tax. Due to the different tax treatment of gifts in Canada and the United States, gifting real property in the United States is rarely advisable. Tax consequences are different for other types of U.S. property.

Like rental payments, dividends and interest paid by U.S. corporations to Canadian residents are subject to U.S. withholding tax. The Canada-U.S. tax treaty limits the tax to 15% for dividends and zero for interest in most cases. You do not have to file a U.S. tax return to report dividend income on which the correct tax has been withheld or for interest that is exempt from U.S. income tax.

When you sell your shares in a U.S. corporation, Canadian tax will apply to any capital gain but U.S. tax will normally not apply as long as you are not, nor have been, a U.S. citizen or resident. U.S. tax may apply if the shares are in a private company with a majority of its value derived from U.S. real estate. U.S. gift tax does not apply to gifts of U.S. securities by Canadians even though U.S. estate tax may apply to them.

Tax implications should not discourage Canadian entrepreneurs from buying property in the United States. If you pay careful attention to meeting your tax obligations and take advantage of any opportunities to reduce U.S. liabilities, you can reap the benefits of owning the property while minimizing your costs.  (article supplied by Benita Loughlin of the NationalPost.com

We hope this information was helpful.   When deciding to purchase real estate here in Scottsdale, please contact us at 866-620-2164 or visit our website at www.myhomeinscottsdale.com

It’s a Good Life!

Stephen & Alice Proski
office@myhomeinscottsdale.com

 

Maricopa County homeowners will begin to receive their latest property valuations in the mail today. Most will see a third straight annual drop in home values.

Residential property values fell an average of 15.2 percent in 2009, according to the latest report from the Maricopa County Assessor’s Office.  Values fell 23 percent in 2008, following a 13 percent drop in 2007.

“It’s still bad but not as bad,” county Assessor Keith Russell said.

Last year, the overall median value of homes in the county fell to $131,700 from $155,300.

Some Valley cities fared better than others. For example, home values in Tempe declined 13.4 percent in 2009, while they dropped 27.3 percent in Tolleson.

County homeowners have yet to see declines in property taxes similar to the drops in property valuations, and they won’t again this year.

Many Phoenix-area municipalities and school districts are facing budget gaps and will likely have to raise property taxes this fall.

Property-tax bills lag valuations by 18 months in Arizona and are based on a complex formula that includes funding for multiple municipalities and school districts. Most property-tax money goes to education.

The tax bill homeowners receive this September will be based on 2008′s valuation. Assessments going out now will be reflected in 2011 tax bills.

To save money, the Assessor’s Office is now printing property valuations on a single sheet of paper that is folded to postcard size for mailing.

County property valuations were previously sent in standard business envelopes that also contained several public-information inserts.

The Assessor’s Office saved 40 percent in printing costs by switching to the single-sheet valuation report.

“We want people to know about the new format for their valuations so they don’t mistake them for something else and throw them away,” Russell said.

If property owners think their valuations are too high or low, they must lodge an appeal with the Assessor’s Office by April 13.

Last year, 20,000 people appealed their real-estate valuations in Maricopa County, double the number of appeals from 2005. About 1.5 million properties were valued by the Maricopa County assessor during 2009.

For more information about your home value, check with www.maricopa.gov

It’s a Good Life!

Stephen & Alice Proski

It’s a buyer’s market for golf-club memberships according to a recent report by Peter Corbett of the Arizona Republic.

At most of Scottsdale’s country clubs, a lingering recession has cut the number of new members coming in the front door while financially strapped current members are going out the back door, industry officials say.

And potential new members know they are in the driver’s seat, said Matthew McIntee, a vice president for Crown Golf Properties, which owns and operates Golf Club Scottsdale”There are a lot of bargain hunters,” McIntee said. “People are coming in expecting a pretty deep discount.”

Golf Club Scottsdale is trying the hold the line on its $110,000 membership with $800 monthly dues. But other clubs have slashed membership costs, opened their courses to non-resident play and have otherwise gotten creative to lure golfers with deep pockets in their plaid pants.

Golfers, meanwhile, are trading down from luxury golf to more affordable courses, said Tim Eberlein, director of the Golf Academy of America-Phoenix.

Golf Club Scottsdale, the city’s newest Country Club at 122nd Street and Dynamite Boulevard, is about halfway to its limit of 350 members, McIntee said.

The 5-year-old course, which has no homes surrounding it, has seen its sales slow.

To some extent, that is due to a downturn of people relocating to Scottsdale or buying second homes here, McIntee said.

The Country Club at DC Ranch cut its golf membership last year from $135,000 to $75,000 in the wake of the economic downturn. Monthly dues are $950. Clubhouse memberships start at $5,000.

That price cut helped boost sales to 49 new members in 2009, up from 30 the previous year.

The club saw the biggest dropoff in membership in 2008 when the economy first started to tank, said Melanie Halpert, membership director.

The Country Club at DC Ranch has picked up new members from golfers living outside DC Ranch, she said.

Terravita Golf Club has also added non-resident members, said Steve Mallory, Terravita’s golf director.

Now the club southwest of Scottsdale Road and Carefree Highway is offering one-year trial memberships.

“Like other private clubs we’re being creative to attract new golfers to the industry,” Mallory said.

Terravita’s full membership is $40,000 plus monthly fees of $554. A trial membership is $5,000. That up-front fee is applied to a full membership for those who join within the first year.

Terravita’s members can use their own golf carts, which keeps players’ costs down.

Mallory explained Terravita’s strategy of being the smallest house in a wealthy neighborhood, or in this case, a more affordable country club among some very pricey neighbors.

“When the economy takes a downturn, people are watching their disposable income and a golf club may not be their highest priority,” he said.

Terravita differs from many other clubs in that it is not an equity membership. Some clubs allow members to recoup a percentage of their initiation fee when they choose to leave the club.

“But sometimes that refund doesn’t come to fruition as quickly as the seller would hope,” Mallory said.

Members put their name on an exit list and wait their turn to sell their membership. Sometimes the clubs sell three or four of their memberships for every one membership that an exiting member is allowed to sell.

That can lead to a long wait, especially in a recession.

McIntee of Golf Club Scottsdale said his club’s exit list is not as long as he feared it might be, but added that the economy has steamrolled over some of his members.

“The golf business is in a tough spot now,” McIntee said. “But each segment of the market will survive. The challenge is to be one of the best in your segment.”

With that being said, you can see the struggling economy has affected some of the most wealthest of people, those who can afford a pricy golf club members.  Maybe that is why we are seeing more people flock to public courses these days.

Again, thanks for reading our blog and if you would like information about golfing course communities, please feel free to give us a call anytime at 866-620-2164 or send us an email at office@myhomeinscottsdale.com

It’s A Good Life!

Stephen & Alice Proski

Time is running out to take advantage of some of the government programs set up to help consumers during the economic meltdown.

Among them are programs meant to shore up the credit markets, which allow for more available credit and lower interest rates on loans for homes and automobiles, as well as tax benefits to entice consumers to buy that new house or car

Real Estate

Mortgage-Backed Securities Purchase Program. This Federal Reserve program is slated to end in March. Since its implementation in January — and expansion in March — of this year, the Fed has been buying up mortgage-backed securities from Fannie Mae, Freddie Mac and Ginnie Mae in an effort to keep the mortgage-securities markets afloat. By the program’s scheduled end, a total of $1.25 trillion in mortgage-backed securities is expected to be acquired.

The upshot for consumers has been mortgage interest rates at or near historic lows, says Paul Ballew, senior vice president, customer insights and analytics for Nationwide, an insurance and financial-services firm.

Once the program ends, however, rates most likely will rise, says Keith Gumbinger, vice president at mortgage-education firm HSH Associates.

The question is, how much?

“By our reckoning, rates are about three quarters of a percentage point lower with the Fed’s program,” Mr. Gumbinger says. “Not that we expect interest rates to go screaming off into the night, but rates half or a full percentage point above where they are now isn’t unthinkable” once the program ends.

A one-percentage-point rise could add more than $150 to a monthly mortgage payment for a $250,000 30-year fixed-rate loan.

For homeowners thinking about refinancing, it’s probably best to act now. After the program ends, “there will be more uncertainties in the marketplace than there are now,” Mr. Gumbinger says. “Rates may be affected and the availability of credit might be affected.”

Home Affordable Refinancing Program (HARP). HARP, part of the Making Home Affordable initiative, is slated to end in June. It assists homeowners with little or no equity in their homes, who otherwise wouldn’t qualify for refinancing, to refinance their mortgages backed by Fannie Mae and Freddie Mac. HARP is aimed at homeowners whose houses have lost value and who now have a mortgage that’s higher than the house’s value.

Homeowners who qualify for HARP should take advantage of the program before it ends because later on they might not be able to qualify for a refinance without it, says Greg McBride, a senior financial analyst for personal-finance site Bankrate.com.

Home-Buyer Tax Credit. Consumers also have less than five months to take advantage of the home-buyer tax credit, which originally was part of about $288 billion in tax benefits in the $787 billion economic stimulus package. The credit has been extended — and expanded — through June 2010, though you must have a contract in place by April.

First-time homebuyers get a tax credit of up to $8,000, while existing homeowners may qualify for up to a $6,500 credit if they’ve lived in the same home for five consecutive years in the eight-year period ending on the date of the new home purchase. It must be a primary residence.

You’ll need to show proof of purchase and income limits apply. See the Internal Revenue Service Web site, www.irs.gov, for more information.

Automobiles

Term Asset-Backed Securities Loan Facility (TALF). Slated to start winding down in March, TALF is a loan program meant to help thaw credit markets. Investors were reluctant or unable to buy loans from lenders, and lenders that didn’t want to keep those loans on their own books stopped making loans.

TALF was “designed to provide financing so that those transactions could take place,” says Mr. McBride. “Investors could buy those loans, lenders could sell those loans and then pump more money back into additional loans.”

Consumers have been seeing TALF’s effect on their ability to get auto loans and on interest rates, says Karen Dynan, vice president and co-director of the Economic Studies program at the Brookings Institution.

According to Federal Reserve data, the average rate for an auto loan from auto finance companies was 6.41% in October 2008. Over 2009, however, rates have come down significantly, with an average rate of 3.42% in October.

If the program ends in March, there’s a chance rates could go up, Ms. Dynan says.

Mr. McBride says if the markets are in working order when TALF ends, there shouldn’t be a spike in interest rates. But a hiccup in the credit markets could cause them to tighten up again, which could cause rates to rise again in the absence of TALF.

Sales-Tax Deduction for New Vehicle Purchases. There are only a few weeks left to take advantage of a tax deduction meant to entice would-be car buyers.

You can deduct state and local sales and excise taxes on your 2009 tax return for up to the first $49,500 of the price of a new car, light truck, motor home or motorcycle. The eligible vehicle must be purchased between Feb. 17 and Dec. 31, 2009, and there are income limits.

“If you’re on the fence about…buying a car, this is a good time to go ahead and do it” because you could save hundreds of dollars on your taxes, says Nick Rizzi, CEO of tax-preparation firm Smart Tax.

As you can see from the information posted above, the Federal Government is trying to stimulate the economy and keep us out of further banking problems…….we may not fully support some of these programs, but we have seen a significant increase in housing sales this year which should hopefully start us back to a road of recovery in the metro Scottsdale/Phoenix marketplace. 

So if you are a First Time Home Buyer, we would welcome the opportunity to assist you with your home purchase and help you receive a hefty tax credit in the process.  Give us a call anytime at 602-620-2164 and we can start the process immediately.

Until next time, hope you enjoy the post.

Stephen & Alice Proski

The Federal Housing Administration puts its long-awaited new financing rules for condominium units into operation last week — immediately affecting sales in hundreds of condo projects across the country.

Among the key make-or-break rules that condo marketers, buyers, lender and realty agents now need to know about are the following:

FHA won’t insure mortgages in buildings or complexes where less than 30 percent of the units haven’t already been sold.

At least 50 percent of the units in a project must be owner-occupied or sold to purchasers who intend to occupy them.

No individual owner or investor can hold title to more than 10 percent of the units in the entire project.

No more than 25 percent of the square footage of a condo project can be non-residential — in other words, used for commercial purposes.

No more than 50 percent of the units can have FHA insured financing on them. FHA doesn’t want to “concentrate its risk” in any single project.

No more than 15 percent of the units in a project can be 30 days or more delinquent on their monthly payments to the condo association.

Although some developers and in urban areas welcomed the new rules, industry critics say they will actually curtail the availability of low down payment FHA financing for many individual buyers. Others say some of the percentage thresholds are off the mark.

For example, we recently lost two of our sales in a condo development project because there were too many renters and not enough owner occupied units to meet the FHA requirements.   The developer needed cash flow so they decided to lease a large majority of their condo units rather than wait for sales and closing.

Andrew Fortin, vice president for government affairs at the Community Associations Institute, which represents condominium, cooperative and planned unit developments across the country, told Realty Times that the 25 percent commercial-use cutoff is “problematic” because many projects have been designed for “mixed use” in urban areas.

Fortin’s group also is critical of the new 15 percent delinquency ratio on association dues. Not only is a 30-day delinquency measure “a very arbitrary standard,” he said, but it’s also not a good indicator of the association’s underlying financial health.

The bottom line is this, since the decline to the market and the overwhelming number of apartment complexes that tried to go condo- conversion, it has been hard to get FHA financing for a number of condo projects in the metro Scottsdale/Phoenix area. This new change that was just implemented last week, will significantly help with our future condo sales and hopefully make that segment of our market more desirable.

Until next post, have a good one,

Life is Good!

Stephen and Alice

p.s. Don’t forget to head over and take a look at our home away from home:  www.myhomeinscottsdale.com website for anything you need related to buying or selling your home!  Enjoy.

 

Fall is in full swing and the weather is ideal for some mountain hiking!  Yes, we said hiking.  According to Sunset Magazine and Frommers, the valley of the sun offers some outstanding hiking trails year round, but they can get very difficult during the summer heat.  That is why we love the fall and winter weather changes so we can get outdoors and do some hiking in and around this wonderful and beautiful city of ours.

Several mountains around Phoenix, including Camelback Mountain and Piestewa Peak, have been set aside as parks and nature preserves, and these natural areas are among the city’s most popular hiking spots. The city’s largest nature preserve, South Mountain Park/Preserve (tel. 602/534-6324; www.phoenix.gov/PARKS/southmnt.html), covers 16,000 acres and is one of the largest city parks in the world. This park contains around 50 miles of hiking, mountain-biking, and horseback-riding trails, and the views of Phoenix (whether from along the National Trail or from the parking lot at the Buena Vista Lookout) are spectacular, especially at sunset. To reach the park’s main entrance, drive south on Central Avenue, which leads right into the park. Once inside the park, turn left on Summit Road and follow it to the Buena Vista Lookout, which provides a great view of the city and is the trailhead for the National Trail. If you hike east on this trail for 2 miles, you’ll come to an unusual little natural tunnel that makes a good turnaround point.

Perhaps the most popular hike in the city is the trail to the top of Camelback Mountain, in the Echo Canyon Recreation Area (tel. 602/261-8318; www.phoenix.gov/PARKS/hikecmlb.html), near the boundary between Phoenix and Scottsdale. At 2,704 feet high, this is the highest mountain in Phoenix and boasts the finest mountaintop views in the city. The 1.2-mile Summit Trail that leads to the top of Camelback Mountain is outrageously steep and gains 1,200 feet from trailhead to summit. Yet on any given day there will be iron men and iron women nonchalantly jogging up and down to stay fit. At times, it almost feels like a health club singles scene. To reach the trailhead, drive up 44th Street until it becomes McDonald Drive, turn right on East Echo Canyon Parkway, and continue up the hill until the road ends at a parking lot, which is often full. Don’t attempt this one in the heat of the day, and bring at least a quart of water. Although people do this hike in sneakers, I would never dream of bagging this peak without good hiking boots on my feet.

At the east end of Camelback Mountain is the Cholla Trail, which, at 1.5 miles in length, isn’t as steep as the Summit Trail (at least, not until you get close to the summit, where the route gets steep, rocky, and very difficult). The only parking for this trail is along Invergordon Road at Chaparral Road, just north of Camelback Road (along the east boundary of the Phoenician resort). Be sure to park in a legal parking space and watch the hours in which parking is allowed. There’s a good turnaround point about 1.5 miles up the trail, and great views down onto the fairways of the golf course at the Phoenician.

The 2,608-foot-tall Piestewa Peak, in the Phoenix Mountains Park and Recreation Area/Dreamy Draw Recreation Area (tel. 602/262-7901; www.phoenix.gov/PARKS/hikephx.html), offers another aerobic workout of a hike and has views almost as spectacular as those from Camelback Mountain. The round-trip to the summit is 2.4 miles and gains almost 1,200 feet. Piestewa Peak is reached from Squaw Peak Drive off Lincoln Drive between 22nd and 23rd streets. Another section of this park, with much easier trails, can be reached by taking the Northern Avenue exit of Arizona 51 and then driving east into Dreamy Draw Park.

Of all the popular mountain trails in the Phoenix area, the trail through Pinnacle Peak Park, 26802 N. 102nd Way (tel. 480/312-0990; www.scottsdaleaz.gov/parks/pinnacle), in north Scottsdale, is my favorite. The trail through the park is a 3.5-mile round-trip hike and is immensely popular with the local fitness crowd. Forget about stopping to smell the desert flowers; if you don’t keep up the pace, someone’s liable to knock you off the trail into a prickly pear. If you can find a parking space (arrive before 9am on weekends) and can ignore the crowds, you’ll be treated to views of rugged desert mountains (and posh desert suburbs). November through April, there are guided hikes Tuesday through Sunday at 10am. There are also wildflower walks, full-moon hikes, and astronomy evenings here. To find the park from central Scottsdale, go north on Pima Road, east on Happy Valley Road, and north on Alma School Parkway, and turn left on North 102nd Way.

Another great place to go for a hike in the desert is north Scottsdale’s McDowell Sonoran Preserve (tel. 480/998-7971; www.mcdowellsonoran.org), where you’ll find miles of relatively easy and un-crowded trails. The best place to access these trails is at the Lost Dog Trailhead at 124th Street north of Via Linda. To reach this trailhead, drive east on Shea Boulevard, turn north on 124th Street, and watch for the parking lot after you pass Via Linda. The 2.5-mile Ringtail Loop Trail is a good choice for an hour’s hike.

North of Scottsdale, in the town of Cave Creek, you’ll find a couple of my favorite hikes. The Black Mountain Trail is an un-crowded alternative to such popular hikes as Camelback Mountain and Piestewa Peak. This 1-mile trail leads to the summit of Black Mountain, and from the top you can gaze out over all of Cave Creek and Carefree. Keep an eye out for lizards lounging on the rocks at the summit. To find the trailhead, take Schoolhouse Road south from Cave Creek Road for 1/4 mile and park on the side of the road at the end of the pavement. The hike starts on the road that seems to lead straight up the mountain and then veers off onto the narrow trail. Both longer and less strenuous hikes can be found 3 miles north of Cave Creek at Spur Cross Ranch Conservation Area (tel. 480/488-6623; www.Maricopa.gov/parks/spur_cross). Here you can wander by the water along Cottonwood Creek or hike up on the slopes of Elephant Mountain. In spring, the wildflowers here can be gorgeous. Best of all, this is the closest desert hiking that really has the feel of being away from the city. To reach the trailhead, take Spur Cross Road north from Cave Creek Road. There is a $3 day-use fee.

As we meet along the trails, keep in mind they are for everyone’s enjoyment even the critters……

Until next post, have a good one,

Life is Good!

Stephen and Alice

p.s. Don’t forget to head over and take a look at our home away from home:  www.myhomeinscottsdale.com website for anything you need related to buying or selling your home!  Enjoy.

As a homeowner and considering a short sale it is important you understand the process. The following are some the most common mistakes agents and homeowners make when handling a short sale.

1. Your Property is Priced Incorrectly

Pitfall: Your Property is Priced Incorrectly

This is the most common mistake made with all properties, and the most common reason a property doesn’t sell.

Solution: Agent Providing Understanding and Transparency

Your real estate agent will go through a detailed listing price strategy with you, allowing you to see exactly where your property should be priced based on its current condition, sales in your area, and most importantly, how much time you have left to sell.

2. Your Short Sale Proposal Is Incomplete

Pitfall: Your Short Sale Proposal is Incomplete

This is one of the most frequently seen causes for the rejection of short sale proposals. Most agents do not understand the short sale process and what your lender will be looking for.

Solution: Understand All Aspects of the Process

Your agent should understand the short sale process in detail and be able to explain it clearly. The agent should also be able to communicate effectively with both you and lenders to produce a complete and cohesive proposal.

3. There Has Been Inadequate Follow-up and Communication

Pitfall: There has been inadequate Follow-up and Communication

As your property goes through each stage of the short sale process, an agent can jeopardize the transaction by not properly communicating with everyone involved. As the homeowner, you may not know that your file has been delayed, and that you again may run out of time to close and avoid foreclosure

Solution: Select and Agent with Experience

The right agent knows exactly how to follow-up to ensure that your lender’s issues are addresses in a timely manner, and will make certain you do not have unnecessary delays.

4. Not Enough Time

Pitfall: There Isn’t Enough Time

It is critical that your agent understands the foreclosure laws in your area. They should be able to show you an estimated timeline for the process, from start to closing. In addition, they should know how to communicate with your lender. Certain information can be provided to lenders to postpone your foreclosure for weeks or months in order to negotiate a sale.

Solution: Provide Accurate and Useful Information

Make sure you provide your agent accurate information as to exactly how many payments your have missed and any correspondence you have received from your lender. This will allow your agent to understand your situation and work to improve it.

5. Your Deal is Not Submitted Properly

Pitfall: Your Deal is Not Submitted Properly

If you do not follow the directions you receive for submission, then you are expecting an over-worked, under-staffed department to go out of their way to handle your file. There is very little likelihood of this situation working out in your favor.

Solution: Follow Instructions Closely

If you are instructed to fax your file, fax it and send a backup copy in the mail. If you are instructed to mail two copies, mail tow copies. When you reach the point of having a contract, all your information and a completed proposal, you do not want your deal to fall apart because no one sees it.

6. The Buyer’s Offer is To Low

Pitfall: The Buyer’s Offer is To Low

Many agents will encourage you to submit any offer that comes in. The reality is that a short sale is not the same as a fire sale. In order to have a legitimate chance of getting your deal approved, you must have an offer that is more attractive to the lender than a foreclosure.

Solution: Proper Negotiation

The right agent will work with you to properly negotiate any offer that you receive to get “highest and best” from each potential buyer. This ensures you are presenting the best possible solution to your lender.

7. The Buyer’s Contract Is Not Strong Enough

Pitfall: The Buyer’s Contract is Not Strong Enough

Especially in our current economic climate, willingness to make an offer on a property does not mean that a buyer is truly qualified to purchase. The reality is that buyers need to be pre-approved for financing, closing funds must be verified, and their ability to buy needs to be confirmed.

Solution: An Agent Familiar with Qualifying Buyers

Your agent should be familiar with what must be verified in order to qualify a buyer to submit an offer on your property. Otherwise, these offers may have little chance of closing. Don’t risk this process with an uneducated agent who does not appreciate this aspect of short sales.

While these pitfalls may seem troublesome, the right agent, an agent that has earned their Certified Distress Property Expert designation, someone like myself can help you navigate your way to a successful closing. Please don’t endanger your financial future and the potential sale of your home to an agent who does not fully understand this process.

As a Certified Distress Property Expert, I have completed extensive training in the short sale process, and in assisting struggling homeowners who need real solutions. I understand what you are going through, and I am here to serve and help save your family’s interests. So if you are considering a short sale to avoid foreclosure, please give me a call anytime at 602-620-2168 or email me at alice@myhomeinscottsdale.com and we will do our best to guide through the entire short sale process.

Its A Good Life!