Sellers to Buyers: Stop With the Lowball Offers!

Phoenix Home buyers who are looking for big discounts on housing nowadays are finding that their lowball offers are no longer sticking with sellers, and that their offers are getting a flat-out “no” when they’re way below the asking price.

Right off the bat, buyers say, ‘I want a steal,’ and I tell them they have to wipe that word out of their vocabulary.People come in, and they think the market is 2008 or 2009, when sellers were desperate, They’re not desperate. Not at all.

What qualifies as a lowball offer? Sellers generally consider lowball offers to be less than 90 percent of their asking price.

Buyers, on the other hand, tend to say offers of 80 percent to 85 percent of the list price are reasonable.

The mistake some buyers make is going so low it’s not even reasonable, says Stephanie Chen, a seller, who refused to take an offer $40,000 less than her asking price. We just walked away from the table.

Another big mistakes home buyers are making in today’s changing housing market is that they are taking too long to make an offer, real estate professionals say, and because of that they are losing out on getting the house they want. The number of for-sale homes on the market nationwide has shrunk considerably in recent months, bringing out higher competition for properties, particularly for move-in ready homes.

The Phoenix real estate market is so hot that properties are receiving multiple offer within a few days. The days of the low ball offers are a thing of the past in Phoenix real estate. Real estate prices in Phoenix are estimated to rise considerably by the end of the year.

Position Realty
www.PositionRealty.com
Office: 480-213-5251

Fed to Extend Operation Twist Program

The Federal Reserve announced it will extend its Operation Twist program to the end of the year, pushing down long-term interest rates in another effort to spur home purchases and business investments.

The program, which began last September, was set to expire this month. It involves the Fed buying up long-term Treasuries and selling them as short-term bonds. The Fed said it will transfer another $267 billion over the next six months to longer-term notes to try to push down rates.

“We are prepared to do what is necessary,” Fed Chairman Ben Bernanke said. “We are prepared to provide support for the economy.”

The Fed said even though the Great Recession ended three years ago, the economy and job market will take longer than expected to recover. The Fed said it expected for unemployment to remain around 7.5 percent to 8 percent by the end of 2013.

Position Realty
Office: 480-213-5251
sean.heideman@positionrealty.com

Apartment Investing Basics: 6 Warning Signs of a Bad Deal

Phoenix multifamily properties are preferred by many investors as they bring in passive income (and its my favorite type of deals to do!). When buying Phoenix income properties, it is normally a longer-term investment, but you need to make sure your money is used in the right place. Below are a few factors that may help in deciding which property to invest in.

Buy an affordable property
One should always choose a income property they will be able to afford; it’s not just about being able to buy a piece of land. Investors calculate that the rent will be able to payoff the debt of the loan and provide extra money at the end of the month for their own pockets. Until a unit is rented out, the owner (that’s you!) has to pay the mortgage, so he or she should have enough monthly income to settle the payment. Apart from the mortgage, other expenses also need to be fished out from the owner’s pocket. One should have enough funds raised so an investment does not end up in a loss.

Neighborhood and surroundings
A good neighborhood ensures how soon a property goes on rent. As an investor, one should purchase a property in a safe and reputable neighborhood. Neighborhoods are generally categorized into A, A-,B+, B, B-, etc. properties Properties near colleges go on rent easily, as every season students enroll and they look for a cheap residence. The surroundings of the property should have all the basic amenities like schools, parks, shopping malls, supermarkets and so on. A property that is far away from these basic requirements might not be able to hold tenants for long.

Get the information
Get know-how of the area, and before signing the deal, visit the area for a few days and at different times. This way one will get to know about the area and the crowd that lives there. Getting information from those who already live there will be a deciding factor in the purchase.

6 Early Warning Signs of a Bad Deal

Your job as a real estate “rainmaker” is to find the deal and make it happen. Leave the building management and operations to others. The big money is made in the deal and that’s where your time is best spent.

Obviously you want to focus only on stellar deals. Forget the marginal ones. It takes just as much time to work on a deal that brings in peanuts as it does to lock down a deal that makes you wildly rich. There are 6 red flags that tell you quickly if a deal will be a time-waster. If you spot just one of these 6 warning signs, move on to the next potential property.

1. The Numbers Don’t Add Up
The bottom line is you want to make a lot of money. If the numbers don’t add up and the seller won’t drop the price, or you can’t get better terms, move on.

2. Missing Numbers.
If the seller can’t provide you with the year-to-date profit and loss statements, plus the actual numbers from the previous two years, move on to another deal.

3. Made-up Numbers.
Pro forma numbers are pure guesswork. They may be educated guesswork, but they are still a projection. Lenders won’t give these made-up numbers any weight and neither should you.

4. Troubled Property.
A property may look good on paper: The numbers are real and they add up. But a site visit paints a different picture. Major repairs are needed because the seller has been deferring the maintenance hoping to pass the headache on to the buyer. Don’t let it be you.

5. Wrong Area.
Don’t spend your money trying to reverse a trend. If the neighborhood is in decline, the property carries that stigma. Tenants will be moving on, and so should you.

6. Months on the Market.
Good properties go fast. Bad properties linger in the listings for month after month. With detective work you can figure out why it’s a dud. And that’s a viable learning experience. But your time will be better spent going after good deals.

You create a beautiful garden by getting rid of the weeds. It’s the same with building a real estate portfolio: you must quickly weed out the lousy candidates and focus only on the prime properties. There are a lot of apartment buildings for sale in Phoenix. Phoenix income properties will yield you the best returns for your investment portfolio. Give us a call TODAY!!

Top 10 Turnaround Housing Markets – Phoenix Is #1

Cities hardest hit by the foreclosure crisis are among some of the cities leading a housing recovery, Move Inc. reports in its Top Turnaround Town Report for May.

Move Inc. compiled a list of Top Turnaround Towns for this month, using year-over-year housing data from the first quarters of 2012 and 2011. Many of the cities in the top 25 that have seen the biggest boosts in price appreciation are also seeing a big drop to inventories of homes for-sale. Some of the states that suffered the worst of the foreclosure crisis — such as Florida, Arizona, and California — have cities represented on the list, and are showing some of the biggest signs of recovery.

The following are the top 10 turnaround markets, according to Move Inc.’s report from May (including the year-over-year median list price increases).

1. Phoenix-Mesa, Ariz.
Median list price increase from Q1 2011 to Q1 2012: +26.94%

2. Miami
Median list price increase from Q1 2011 to Q1 2012: +24.32%

3. Orlando
Median list price increase from Q1 2011 to Q1 2012: +11.54%

4. Boise City, Idaho
Median list price increase from Q1 2011 to Q1 2012: +17.53%

5. Naples, Fla.
Median list price increase from Q1 2011 to Q1 2012: +14.34%

6. Oakland, Calif.
Median list price increase from Q1 2011 to Q1 2012: +7.07%

7. Fort Myers-Cape Coral, Fla.
Median list price increase from Q1 2011 to Q1 2012: +18.27%

8. Lakeland-Winter Haven, Fla.
Median list price increase from Q1 2011 to Q1 2012: +12.95%

9. Sarasota-Bradenton, Fla.
Median list price increase from Q1 2011 to Q1 2012: +12.56%

10. Tampa-St. Petersburg-Clearwater, Fla.
Median list price increase from Q1 2011 to Q1 2012: +11.92%

“We continue to see signs of stabilization and recovery on the local level throughout the country,” says Steve Berkowitz, CEO of Realtor.com operator, Move Inc. “By all indications, the 2012 housing market is unfolding as we expected, and we’re encouraged with the progress local markets are making. However, much will depend on the continued health of our economy, specifically job rates, and how lenders will release their foreclosure inventories.”

Phoenix Multifamily Market Continues to be ‘Bright Spot’

The Phoenix multifamily and condo market showed big improvements in the first quarter, the National Association of Home Builders reports. NAHB’s latest Multifamily Production Index, which measures builder and developer sentiment over the multifamily markets, reached its highest reading since the third quarter of 2005.

This marks the seventh-consecutive quarter the index has posted gains.

“In spite of continuing difficulties in the capital markets, it appears that new construction is underway,” says W. Dean Henry, chairman of NAHB’s Multifamily Leadership Board. “This is certain to help satisfy some of the pent-up demand that has occurred over the past several years.”

Vacancies in multifamily housing remains at low levels, according to the index.

“Multifamily construction continues to be a bright spot in the overall housing market,” says David Crowe, NAHB’s chief economist. “However, as indicated by the [index], demand for apartments is now quite high, and production is still very low in a historic context and in the context of what we project is necessary to meet long-term demand.”

Apartment buildings for sale in Phoenix are selling right and left. The time to find a good deal and buyer is now. Thousands of people that lost their homes to foreclosure are now creating a hugh demand for Phoenix income property.

Arizona and National Economic Update

Consumer credit was the major newsmaker last week, with April consumer borrowing increasing at an annual rate of 3 percent to hit $2.55 trillion for the month, the Federal Reserve reported. Revolving credit, such as credit cards, decreased at an annual rate of 4.8 percent, ticking down to $862.3 billion. Non-revolving credit, such as car loans and student loans, increased at an annual rate of 7.1 percent to $1.68 trillion.

Much of the gains in non-revolving debt were due to student loans, according to Dana Saporta, director of U.S. economics research at Credit Suisse.

Unit labor costs in non-farm businesses increased 1.3 percent in the first quarter of 2012, while hourly compensation increased 0.4 percent. Unit labor costs rose 0.9 percent over the last four quarters.

In the week ending June 2, initial claims for jobless benefits dropped to 377,000, a decrease of 12,000 from the previous week’s revised figure of 389,000. The four-week moving average was 377,750, an increase of 1,750 from the previous week’s revised average of 376,000.

The total number of insured unemployed workers during the week ending May 26 hit 3,293,000, an increase of 34,000 from the preceding week’s revised level of 3,259,000. The four-week moving average was 3,279,500, an increase of 11,500 from the preceding week’s revised average of 3,268,000.

The U.S. economy is still growing but slowly, and there appears to be a little more risk than earlier in the spring. Credit is cheap but consumers will remain cautious due to the excessive publicity of the bad economic data and the exclusion of the good. This is also impacting business hiring decisions. Hopefully growth will accelerate to a more respectable rate by the end of the year, maybe by the end of fall. No doubt this will be wholly due to the re-election of President Obama or the election of Presidential Candidate Romney. Well, at least that’s what MSNBC and Fox News will be telling us.

Phoenix Real Estate Market Report ~ June 2012

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Phoenix Real Estate Market Report

As you can see from the first chart above, Position Realty Market Index, the first time home buyer tax credit created a great deal of demand in the market similar to the Phoenix real estate boom from 2004 to 2006. Currently, the residential real estate market is experiences another buying frenzy that is caused without government intervention or relaxed mortgage underwriting standards. The Phoenix real estate market has reached a level of equilibrium where demand exceeds supply and all buyers are rushing into the market to take advantage of low prices.

Since December 2011 (6 months ago), the average sold price has increased approximately +25.1% (up from last month), the average days on market have decreased approximately -9.8% (down from last month) and the number of transaction has increased approximately +8.1% (up from last month). The largest average price increase over the last 12 months was experienced in March from $168,961 in February to $184,078 in March.

The volume of REO purchases since December 2011 has decreased approximately -40.8% and the volume of short sales have decreased approximately -5.8%. The volume of REO purchases are shrinking due to the increased volume of trustee sales, more banks are accepting short sale transaction and an existing supply of inventory is getting purchased at a faster rate.

The current supply of homes for sale on the market is 20,512 where a year ago there were approximately 48,000 homes on the market. Since the December 2011 (6 months ago), the number of homes for sale on the market has decreased approximately -17.7% (down from last month). As more and more buyers enter the market and as more of the supply of residential homes are exhausted, Phoenix real estate prices will continue to increase at a faster rate (as currently experiencing).

Trying to “time the market” for the perfect time to buy is nearly impossible but there is no better time than now to purchase. Phoenix Real estate prices are at an all time low (not for long), mortgage rates are at a historical low and the market is improving both in terms of prices and the overall economy. Time to buy is NOW!! Give us a call to discuss your best buying strategy, TODAY!!

The Basics of Buying and Selling with Lease Options

Real estate markets across the world are suffering right now. Sellers can’t sell their homes and buyers can’t get mortgages. As real estate agents, it’s a lot harder to earn a living now. Gone are the days of listing a home and expecting it to sell – it is time to get creative to not just survive but actually thrive in this economy.

What is a Lease Option?

Lease options are a way to buy and sell homes without an immediate conventional mortgage. It gives your buyers who can’t qualify for a mortgage right now the opportunity to get into a home right away while they improve their credit and build up a down payment while living in the home. It gives your sellers the ability to beat their competition, which we know in these kinds of markets, competition is great. Sellers can reach a far greater pool of potential buyers. They will likely be able to sell their home quicker and for a better price. For some sellers it may be the ONLY way they can sell their home in this real estate market.

How Does a Lease Option Work?

A lease option works like this: The buyer and seller agree to an option which gives the buyer the right to purchase the home during a set period of time. During this option period the buyer leases the home from the seller. By the end of the option the buyer must either purchase the home or forfeit their option fee. While the option is valid the seller may not sell their home to anyone else.

Advantages for the Seller

Here are some of the advantages to your home sellers when selling on a lease option:

1. Allows them to beat their competition. How many listings have you lost because the home sat on the market and never sold?

2. The seller can collect rent on their home while it would otherwise sit vacant.

3. They can often receive a higher purchase price.

4. They can sell their home in a down market when they otherwise might not have been able to sell at all.

5. Allows the seller to actually sell their home instead of just renting it. Have you lost any full commissions because the home was just rented instead of sold?

Advantages for the Buyer

Here are some of the advantages to your buyers when buying on a lease option:

1. The buyer can get into a home now, even if they can’t currently qualify for a mortgage. How many potential buyers have you turned away because they couldn’t qualify for a mortgage? No longer!

2. They can improve their credit and build up a down payment while they are already living in their future home.

3. They are not obligated to purchase the home at the end of the option if they decide the home is not for them, that homeownership is not for them or if the real estate market changes significantly.

Home Affordability Pushed Higher as Rates Fall

For the fifth week, fixed-rate mortgages reached new all-time lows. The 15-year fixed-rate mortgage dipped below 3 percent, settling into uncharted territory, according to Freddie Mac’s weekly mortgage market survey. Thirty-year fixed-rate mortgages also reached new record lows, continuing to stay under 4 percent and pushing home buyer affordability even higher.

“Compared to a year ago, rates on 30-year fixed mortgage rates are almost 0.9 percentage points lower, which translates into nearly $1,200 less in annual payments on a $200,000 loan,” says Frank Nothaft, Freddie Mac’s chief economist.

Here’s a closer look at rates for the week ending May 31.

30-year fixed-rate mortgages: averaged 3.75 percent, with an average 0.8 point, dropping from last week’s previous all-time low of 3.78 percent. A year ago, 30-year rates averaged 4.55 percent.
15-year fixed-rate mortgages: averaged 2.97 percent, with an average 0.7 point, dropping from last week’s previous record low of 3.04 percent. Last year at this time, 15-year rates averaged 3.74 percent.
5-year adjustable-rate mortgages: averaged 2.84 percent, with an average 0.6 point, rising slightly from last week’s 2.83 percent average. A year ago at this time, 5-year ARMs averaged 3.41 percent.
1-year ARMs: averaged 2.75 percent, with an average 0.4 point, holding steady at last week’s average. A year ago, 1-year ARMs averaged 3.13 percent.

Here are the current mortgage rate in Arizona:

30-year fixed-rate mortgages: 3.96%
15-year fixed-rate mortgages: 3.33%
5-year adjustable-rate mortgages: 3.18%
1-year ARMs: averaged: 3.30%

Arizona Mortgage interest rates are slightly higher than the national average for interest rates. Arizona real estate price are appreciating much faster than the rest of the nation making Arizona a great place to purchase real estate.
Position Realty ~ www.PositionRealty.com

Real Estate Agents Inch Up in Public Opinion

Real estate professionals rank higher than lawyers, business executives, and advertising practitioners when it comes to the public’s perceptions of honesty and ethics, according to a recent Gallup poll.

In fact, real estate professionals received their highest rating yet in the poll, since Gallup began measuring Americans’ perceptions of honesty and ethics of 21 professions since 1976.

In the survey, 20 percent of respondents gave real estate professionals a “very high to high” rating on honesty and ethics. Fifty-seven percent of the Americans surveyed rated them as “average” when it comes to honesty and ethics.

Meanwhile, the profession that scored the lowest of the 21 professions ranked were members of Congress, in which only 7 percent of respondents rated them “very high to high” when it comes to ethics and honesty — the lowest on record.

The professions that scored the highest in honesty and ethics belonged to the medical profession, with nurses, pharmacists, and doctors — who were all at the top of the list.

Position Realty ~ 480-213-5251

Results No Excuses

Monthly Archives: June 2012