The Junkmail Deluge
September 30, 2008
One of my recent first time home buyers called me the other day, asking about the mounds of refinance, home equity lines of credit, and credit card offers piling up in her mailbox, whether they were important or not.
Usually - not important.
In Pima County, home sales are public record, which means that companies can take a feed of those records, see that you just bought a house, for how much, and send you a bunch of junkmail, offering you loans or refinances and whatnot. By and large, you can ignore this stuff.
However - it’s worth at least a quick look to make sure that the mail is really junk and not your existing lender telling you that they’ve sold your loan to some other company. Many times, the company you make your monthly mortgage payment to changes fairly quickly after you buy a home, so you need to watch for a letter from your existing company, and a letter from the new loan servicing company with your payment coupons.
Because you don’t want to be digging through 3 days of trash to find that payment coupon you ripped into pieces without even opening the envelope, so that you can tape it all back together and mail in your mortgage payment to the new loan servicing company when you realize your loan has been transferred. Not that I’d know from experience or anything.
Continental Ranch – How Home Values have Changed
September 24, 2008
Had a little fun with some numbers and graphs today. Two things to show you.
First, this is a graph of average price per square foot for Continental Ranch from the start of 2004 through today, sold single family homes only:
You can see the Continental Ranch market peaked sort of late 2005, early 2006. And that the spread of this data, the range in selling price per square foot, has grown wider over time as well. Some of those home owners are back to 2004 values, but not all.
One other thing I think this illustrates well - I’m asked near daily if we’ve reached the bottom of the market. But if you look at the period roughly between 9/2005 and 3/2006, there’s a 6 month spread of data where values don’t really go up or down. In this case, it signaled the start of values declining in Continental Ranch, but we didn’t see that numerically until 6 months later. I can’t call an official ‘bottom’ until prices start trending in the opposite direction, which may be half a year after the start of the change. Do I think we’re close? Probably, but there are some major events coming up soon that could change that answer depending on the outcome. The best you can do is to make decisions based on the information available today, and with an eye to how long you plan to own that home.
One more chart. I do love graphs.
This is a chart of the ratio of sale price to original list price since early 2004. Lots of home buyers want to know how much to offer. As we can see here in Continental Ranch, some homes are priced well, and sell at or near 100% of listed price, and others, well, others sell far below their original list price. And many more are selling far below list price than were a couple years ago. Is this a sign of Sellers pricing their homes unrealistically? Or agents not in touch with the market and overpricing? Or both?
The Not-So-Fun Section of the Purchase Contract
September 13, 2008
I recently had the, ah, opportunity to enact some of the clauses in Section 7 of the local Tucson purchase agreement. You know, the section we head into to find out what happens when things go terribly, terribly wrong?
Let me say that our foray into section 7 was, to the best of my knowledge, an honest mistake on behalf of the other party, if there is such a thing. I believe the error made was without malice, but we end up in section 7 all the same.
First recourse if either the buyer or seller is in potential breech of contract is to give that party a chance to fix it with a 3 day cure notice. This is the somewhat friendly heads-up to the other guy to say, “hey, buddy, we’ve got a potential problem here, please fix it” with an implied OR ELSE.
The threat behind the OR ELSE? Arbitration. Mediation. Court Action. Small Claims Court, if you’re dealing with a matter $2500 or less.
Our matter fell into the small claims court bucket, and my client - being a thorough kind of guy - did some research into how small claims court works, and has allowed me to post his findings.
As always, we’re not lawyers, you should seek your own legal advice, your mileage may vary.
Preliminary Home Inspections and Research
September 13, 2008
I have a client considering a home that doesn’t have any covered parking. Nice house, but the owners had a big living room built instead of a carport. They claim that a garage or carport could be built over to one side of the house, but there’s really no guarantee of that.
So if not being able to build covered parking is a deal-breaker, then how much do we investigate before deciding whether or not to make an offer?
We can look up the zoning and setback requirements, get deed restrictions and a current copy of the HOA restrictions. But without a survey, we can’t measure distance from the house to the property line to see if a structure can be fit into the space.
So do you pay for the survey before you make an offer, or do you try to get one done in a limited inspection period? Or make the whole deal contingent on an acceptable survey? Will the owners even allow you to conduct preliminary inspections and surveys before going under contract? What if you spend all this money researching and then you and the Seller can’t agree on price or terms?
And on the other side of this deal, if the owner is claiming covered parking can be built, shouldn’t they really have already done this kind of research and footwork?
Every decision when you buy a home is a trade-off. Same goes for sellers.
If the owners had already done their research before they made the covered parking claim, they might have had an offer from us by now. As it is, why should we go through all that trouble, when there are hundreds of other homes on the market that are just about as good?
The Flats at Julian-Drew – Finally Downtown Condos under $200k
September 13, 2008
One more downtown condo project opened for unit reservations last week - the Flats at Julian-Drew. This is a project I think has potential.
Located on the corner of 5th Ave and Broadway, the Flats at Julian-Drew have a fairly sweet location, in my humble opinion. They sit a block from Hotel Congress and the Rialto Theater, are just a wee bit further from the new 4th Avenue underpass, and the new light rail/trolley line should run just outside of the building, which makes University and 4th Avenue attraction access incredibly easy, and the rest of downtown - the convention center, the dining, the Fox theater - all within a couple of short blocks.
There are 53 units here, in 2 and 3 story sections. They aren’t huge - the smallest studios start around 400 sq ft, and the largest 1 bedroom units are just shy of 700 sq ft. The floorplans are well designed however, and there’s no space lost to hallways - I think they’ll live very well.
Right now, the Flats at Julian-Drew are apartments, so you can’t walk the units at this time, but you can peek in the gate and along with the renderings, get a good feel for what it will be. The owner says they’re blowing out the existing building, more or less, so that the new units will have new wiring, new plumbing, pretty much new everything. Finishes are clean modern, with maple cabinetry, granite counters, tile and wood floors, and sleek fixtures.
They’ll need 32 reservations to start the remodel, and are hoping to have the first set of units completed mid to late 2009.
The North end of the Julian-Drew complex will stay mixed commercial/office space type places, and the middle section - the carriage house - is still undecided, but they’re talking about a yoga space or some other community type amenity, with a cafe adjacent.
The public report should be out in maybe 2 months or so, so pricing may vary, but they’re planning on the smallest units starting around $100,000, with the largest one bedrooms coming in around $150,000. The HOA hasn’t been finalized either, but should run somewhere around $100/month - there’s a pool in the center of the complex.
They’ve also negotiated with the city to alter the adjacent parking to be diagonal resident permit parking, instead of parallel metered parking, and have made deals with the Pennington garage and the One North 5th garage (once built) for residents to park in those places as well for a nominal monthly fee.
It’ll cost you $1500 to reserve a unit now, and an additional $1500 when the public report comes out and the reservation changes to a contract. They’ll limit investors so that the complex can get FHA approval later on, and the HOA will most likely limit rentals to terms of no shorter than a month.
This is the first condo development downtown in this price range, and my personal favorite so far. If you’re thinking about living downtown, this might be a good way to get there. Let me know if you’re interested, and I can arrange a tour.
The Flats at Julian Drew are brokered by Long Realty.
44 East Broadway – Luxury Downtown Condos
September 13, 2008
The first of two condo developments downtown now taking reservations is 44 East Broadway, which sits, coincidentally, at 44 East Broadway, between Stone and Scott, made from what used to be the 1979 Federal building. That first photo is from the 4th floor, looking generally Northwest.
Decidedly on the upscale side, condos here start at $350k-ish for the East facing, 1100 sq ft, 1 bed, 1.5 bath units, and head all the way to $1.35million for the North facing penthouses on the top, which are roughly 2300 sq ft, 2 bed, 2.75 bath units. The public report isn’t out yet, so pricing is still subject to change.
The building will have 34 units, if I remember correctly: 10 units on floors 2-4, and four penthouses on the top. I think they need somewhere around 20, 22 reservations before major construction can begin.
Distinctive features would be the walls-o-windows that will create the North and South exposures of the building, with a new parking garage with rooftop pool and downstairs cafe slated to go in as well.
The floorplans are all lofts, with most having a loft-type bedroom upstairs from the main living area, and finishes should be modern and upscale: nickel finished hardware, walk in closets, solid interior doors, granite counters, stone and hardwood floors.
This is the panorama from what will be the penthouses, looking North and West. I love that you can see the Catalinas, the University, the Hotel Congress sign, the whole city.
There are floorplans here, as well as a little more history of the building. After walking the site, I think there are some units here that will certainly be more desirable than others, based on location and light within the building. If you’re interested in this project, let’s go walk it together, and I’ll show you what I mean. Because right now, it looks like this:
44 East Broadway is brokered by Long Realty.
Downtown Condos
September 13, 2008
Just got back from 2 very different condo complexes downtown that are now taking reservations - one is very exciting. We’re talking 1 bedroom units expected to go in the low to mid $100s. No, they’re not huge, but they should be right next to the trolley line to 4th Ave and the University, not to mention they sit a block or two from places like the Rialto, Club Congress, and the Convention Center. My friends and I had probably a 30 minute private tour from the owner, and I think the project has incredible promise.
More details to follow. I need to confirm some of the stuff I heard today, but if you’re interested, send me an email and I’ll pass along what I know now.
Busy Roads and Bad Floor plans in the Foothills
September 13, 2008
There’s a home just off of Sunrise in North Tucson, up in the Catalina Foothills that I remember showing to clients a couple of years ago when it was on the market for $479,000. It’s back on the market, post foreclosure auction, in the $400k range. All in all, it’s not a bad home. Sits on a good sized lot, has been updated.
Back there today with a different client, we were talking about the property. After all, North of Sunrise on nearly an acre and a half, it’s a rare property for $400k. So why is this property in that price range? Because it backs to Sunrise Road, which you can hear clearly from the backyard. We investigated a lot of neighborhoods today on an individual level, and while that particular area generally does okay, houses on the busy roads will never see the same kind of returns as one just a street or two into the neighborhood.
Also on today’s showing agenda was a home advertised as a 3 bed, 3 bath home. That’s one full, one 3/4ths bath, and a half bath. Gorgeous views, absolutely spectacular. It seemed like an interesting house until we started talking about lifestyle. There were two master suites, and then a third bedroom adjacent to a powder room. So you can never put guests in that third bedroom because there’s nowhere for them to shower. It works great if there’s only a couple living there, but as soon as you toss some guests or children or an ageing parent in the mix, then someone is out of luck when it comes to bathing. Not so great for resale.
So much to consider when buying a home. There are always trade-offs. Just be sure you understand what they are before making decisions.
Reading Preliminary Title Reports
September 13, 2008
I wrote earlier about why you review the preliminary title report, but let’s just review what a preliminary title report is. We call it “the prelim,” in agent-speak around Tucson.
If you’re buying a home in Tucson and using the standard resale contract, then you should receive a preliminary title report from the title company within a few days of opening escrow - that is to say, within a few days of coming to an agreement on price and terms with the Seller.
The “prelim” is a preliminary title commitment, it’s the title company committing to issue title insurance subject to the terms inside.
It starts with a page called “Schedule A.” Schedule A describes who will be insured, to what amount, and describes the property on which they’ll issue title insurance. The Seller usually pays for a title policy for the Buyer, in the amount of the sale, and then the Buyer usually pays for a title policy for their lender, in the amount of the loan.
Next is “Schedule B.”
Schedule B Section 1 describes the requirements that must be met before the title policy is issued. Typically in this section, you see the Seller’s loans that must be paid off, any taxes due, anything that must be satisfied before the policy can be issued. This is a must-read section of the prelim. Sometimes, there’s an odd lien or requirement that you need to find out about sooner rather than later.
Schedule B Section 2 are exceptions to the title policy - things the title policy will not cover. Usually, this list includes the recorded easements, future tax liens, water rights, at least in this part of Arizona, deed restrictions or recorded CC&Rs, things of that nature. In the link at the top of this post, you’ll see where I found a well agreement and an odd utility agreement within Schedule B Section 2. This is also a must-read section.
If you don’t understand what you see in the Prelim, you can always ask your agent or title officer to explain it to you. Better safe than sorry!
Active Contingent and Active CAPA Revisited
September 13, 2008
Previously, I had defined Active Contingent and Active CAPA for the Tucson MLS in this post.
There’s a small update to that.
Because of all of the short sales in Tucson, the Tucson MLS decided in March to make the following recommendation:
Effective immediately, the MLS Board of Directors recommends the following regarding Short Sales: Short Sales are to be reported as ‘Active CAPA’ if there is supporting language written into the Purchase Contract. If the language supporting ‘Active Capa’ is not present and written into the Purchase Contract, the status should be reported as ‘Active Contingent’. This is in addition to the statement ‘Short Sale, subject to court or lender approval’ being written into the Agent Only Remarks.
What that means:
If a home is listed as a short sale and the status is Active CAPA, then most likely, the Sellers have an offer in hand from a Buyer and are negotiating with the bank, but have not yet received an approval to sell the home at that price from the bank.
This can be a long waiting period: weeks, sometimes months.
Be aware though - most often in agent provided searches of the Tucson MLS system, Active CAPA listings are displayed alongside regular Active and Active Contingent listings. The smart bet is to search on a site that will show you the status of the listings.
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