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Phoenix builders acquiring lots – anticipate continued market recovery

September 4, 2012 by · Leave a Comment 

As further evidence that the Phoenix real estate market is in full recovery, many homebuilders are aggressively expanding their land holdings in anticipation of continued recovery.

As noted in the Arizona Republic, Taylor Morrison Homes of Arizona, for example, has already purchased 700 lots in 2012,  has contracts on 1,000 more, and is seeking additional opportunities in Maricopa County.

The builder has communities under construction in the East Valley, but the current focus is on North Valley locations, such as Lone Mountain, Vistancia, Terramar, and parts of Scottsdale.

Charlie Enochs, Division President of Taylor Morrison Arizona, expects the builder to build twice as many homes in 2012 as it did in 2011.

Taylor Morrison isn’t alone.  The City of Scottsdale recently reported a 52% increase in building permits issued over the previous fiscal year.

The uptick in construction activity is a function of resale inventory scarcity, frustration over short sale logistics and waiting periods, and aggressive incentives offered by homebuilders.

From my perspective, it’s refreshing to drive through new home subdivisions and see and hear the hustle and bustle of construction.  For a few years, construction came to a virtual halt.  In fact, in some parts of the Valley you can still see skeletons of subdivisions abandoned mid-build, victims of the housing bust and weak economy.

 

2009 – Home Builders Abandoned Communities

 

 

 

 

 

 

 

 

Today – New Home Construction is Back

 

 

 

 

 

 

 

Considering a new home in Phoenix or Scottsdale?  I have helped many buyers save money by representing them on their new home purchases.  In fact, purchasing a new home without dedicated Realtor representation can cost you big time!

For more information on how a Realtor can help you buy a new home, read this posting.

Phoenix Real Estate Sellers Get Their Cocky Back

May 18, 2012 by · Leave a Comment 

Competitive Phoenix Real Estate Market Inspires Insanity

As more and more local property owners clue in to the state of today’s frenzied market, we’re starting to see some of the crazy cockiness that sellers exhibited in the mid-2000’s during the height of the boom.

Yes, our market is looking better for sellers than it has for 6-7 years, but I’m not yet convinced that some of today’s tactics are justified…if they ever are.

Here are some of my ‘favorites,’ if you can call them that.

“We’re not considering any offers that are less than asking price.”

Yep, I recently showed a property in Chandler where the Listing Agents had been instructed by their seller to not even present any offers below asking price…which was 20% over market value.  I’ve been around the block.  I understand that there are opportunists who are willing to try and capitalize on extreme market conditions.  However, this was short-sighted.  After years of negative media, excessive inventory, and fire sales, most Phoenix real estate buyers aren’t yet accustomed to the idea that they can’t at least negotiate a few thousand dollars off the asking price.  Even the savviest of buyers who are in tune with today’s aggressive conditions aren’t prepared to pay 20% over market value.  As for the sellers, if they want 20% over fair market value, that’s completely their prerogative.  However, they should ask 21% over market value so they can at least give the appearance of negotiating.

 

“Buyers Must Waive All Contingencies in the Contract After 15 Days”

This is a flashback to the “good ol’ days” that I’ve even used myself.  Unfortunately, today’s market is different than even that of 6-7 years ago.  Lending guidelines have become tighter and HOAs are less cooperative than ever with delivering docs in the contractual timeline…among other issues.  In short, my job as a Buyer’s Agent is to advise my clients of the risks of accepting this condition.  It’s up to them to determine whether or not the potential reward is worth the risk.  Personally, I wouldn’t do it today because too many things can go sideways in a transaction that one can’t foresee or prevent.

 

“Showings only at 2pm on Tuesdays and Thursdays”

Seriously.  I called a Listing Agent today to confirm availability on a property and she said her clients only allow showings on Tuesdays and Thursdays at 2pm.  Not 1:45.  Not 2:30.  2pm.  I explained to her that my clients were only in town on Friday, Saturday, and Sunday and were going to make a decision while they’re here.  Too bad, she said.  Wow!  If she was advocating her client’s interests, she would have called them and explained the extenuating circumstances and allowed them to decide whether or not to allow the showing.

As Phoenix real estate continues to sell at a torrid pace, I expect to see more unique terms and conditions from sellers that show they’ve indeed gotten their cocky back

How to Pick a the Right Real Estate Broker to Buy or Sell

April 11, 2012 by · Leave a Comment 

The Art and Science of Selecting a Phoenix Real Estate Broker

Issues to Consider and Questions to Ask

One of the largest single transactions you’ll ever complete is the purchase or sale of a home.  A multitude of factors play a role in the ‘success’ or ‘failure’ of the transaction, not the least of which is your choice for representation.  While some choose to navigate the real estate waters without representation, most elect to employ the services of a professional Realtor.

Whether you’re looking to sell a Phoenix condo or a buy luxury Scottsdale home, picking a Realtor can be an overwhelming proposition.  The recent housing boom and the perception of ‘easy money’ has caused a huge swelling of the Phoenix real estate agent ranks, especially among Phoenix Realtors and Scottsdale Realtors.  Virtually everyone knows a Realtor, or several.  The problem is, how do you select the best one for your needs?

I put together the following list of suggestions as a good starting point for any prospective homebuyer or homeseller looking for ‘the perfect match.’

 

For Buyers and Sellers

Ask around: A good place to begin the screening process is by asking colleagues and friends if they’ve ever worked with a real estate agent that they think did a great job.  Ask very specific questions so you can get a feel for how the agent truly performed.  “How often did the agent communicate with you?  Were they easy to reach?  Do you feel they negotiated effectively for you?  Was there anything they might have done better?  What kind of personality do they have?  Have you heard from them since the sale closed?”  Have you ever had someone give a glowing review of a restaurant that you just “had to try” only to find once you went that it was mediocre at best?  Everyone has different preferences, so don’t rely too heavily on the opinion of a friend’s experience.

Don’t compromise: When researching Realtors, do your homework and listen to your instincts.  As easy as it is to take the path of least resistance by working with the first agent you meet, don’t settle for an agent who you feel gives you any less than 100% effort and professionalism.

Consider certifications and designations: Real estate is an ever-evolving field.  Trends change, contracts change, momentum changes.  In short, the only constant is change.  You should consider working with a real estate agent who continually strives to better themselves and stay abreast of the latest issues and trends.  Certifications and designations reflect a proactive effort to hone ones skills and result in a better educated, better informed real estate agent.

Ask for references:  In fact, if a long list of references isn’t voluntarily offered, I’d be cautious.  Any highly-performing agent will have accumulated a long list of satisfied customers that they can gladly refer you to.

CALL THE REFERENCES!  You’d be surprised how few home sellers ask for a list of references, and then fail to call even one single person on the list.  Pick 2 or 3 references from the list and CALL THEM!  Ask a few very specific questions about their experience with the agent and take notes so you remember which feedback belonged to which agent.

 

For Prospective Home Sellers

Visit open houses, but BEWARE: Successful real estate teams often divide their agents into Listing Specialists and Buyer Specialists.  In Phoenix real estate, if you visit an open house, you will most likely be greeted by a Buyer Specialist on that team who may not be equipped to answer your questions about the team’s listing program.  You should ask for the Team Leader or Listing Specialist to schedule a listing consultation.

Beware: New Realtors and those who don’t carry many listings will often volunteer to hold an open house to pick up buyers.  These agents may have no affiliation with the Listing Agent whatesoever, except that they work in the same brokerage office.  While they may be excellent agents-in-training, to maximize your chances of working with an experienced team you should only work with a Listing Specialist or Team Leader.  Note: If you ever visit an open house in which you were very impressed with the agent holding the house open but you’re not quite ready to sell, be sure to get his/her card and jot a few notes down on the back, then file it away in your “Mortgage” file so you can pull it out and look them up when it comes time to sell.

Also, never visit an open house if you’re currently working with a Buyer’s Agent without your agent present.  In Arizona real estate, your agent will not be entitled to represent you if you view the open house without them present.  And as mentioned above, many agents holding open houses are specifically looking for unrepresented buyers, so be up-front with them.  See my earlier posting about this subject…

Interview the local specialist(s): Most neighborhoods are served by many Realtors, but may be dominated by one or two ‘local experts.’  A local expert isn’t necessarily the best choice, but can serve as a good starting point.  They have likely visited/previewed more homes than anyone else that works in the community and are better in tune with price dynamics and neighborhood trends.  Furthermore, the local expert usually lives in the area, which means they have a vested interest in preserving property values.  Be aware, however, that the local specialist may not be the right choice for you.  Local knowledge may be offset by a stronger marketing plan or an agent with a better personality fit, among others.

Tips for the interview: There are many pieces of information that you should collect before and during the interview in order to make the best choice for your needs.  Does the Realtor show up on time for your appointment?  Are they dressed professionally?  What sort of ‘vibe’ do you get at the very first moment you meet?  Are they comfortable to be around and easy to communicate with?  Do they sound like they know the area?  Remember, this agent will be representing you to prospective buyers, title officers, lenders, and other Realtors.  Your agent should convey the image that you’d expect of a professional and have the knowledge and experience to get your home sold!

Once the introductions are made, let the interviewee ‘lead’ the process.  They should ask for a tour of the home before you ever sit down for the presentation.  During the tour, do they ask lots of good, fact-finding questions about your home?  Do they tour the entire home, including the back yard, sides of the house, closets, and garage?  They should already be trying to determine how to best position your home for the market, even before the listing is issued.  A thorough inspection is part of the process.

Focus on the Marketing Plan: After the tour is complete, the interview begins.  The Realtor will present his/her marketing plan and why they believe they’re the best candidate for the job.  You should look for a marketing plan that advertises to a broad segment of the market, both online and in print.

Make sure your agent will communicate with you: As I detailed in an earlier post, the biggest complaint I hear from sellers about past Realtor experiences is that their Realtor fell out of contact with them after they scored the listing.  “They took my listing and I never heard from them again!”  Your agent should commit to providing detailed, written status updates so you will have a formal record of the progress on the sale of your home.  You should know what is being done at all times to market your home, as well as how it’s being received by the market.

Ask for a cancellation clause: Ask each listing agent interviewee if they will put in writing that you may cancel the listing agreement at any time if they’re not performing to your expectations.  Any Realtor that believes in their quality of service should be willing to offer the same assurance.  Just ask for it.

Don’t put too much weight on sales stats:  Many articles encourage you to ask a Realtor about their listing statistics: average days on market, list-to-sale-price ratio, etc.  I disagree.

Why?  Because stats can be deceptive.

For example, of you list your property on the low side of fair market value, it’s highly likely that your agent will sell your home faster and closer to the asking price.  In this example, days on market and sales price as a percentage of list price will both be favorable for the listing agent.

And what about short sales?  I represented clients in a Phoenix short sale that took 6 months to close.  That’s a transaction that could negatively impact my days on market (time to sale) stats.  To pad my stats, I’d have to turn these clients away.

Finally, you can’t easily validate an agents statistics.  I quit providing sales stats when on one listing appointment I had my sales statistics recited back to me by a seller who had previously interviewed another agent that worked in my area.  Not surprisingly, the other agent had superior numbers.  It’s pretty easy to position yourself against the competition when you know the competition’s numbers.

The bottom line about sales statistics is that they don’t always tell an accurate story.  You can ask for them, you can’t confirm them or interpret them.  Place more emphasis on other screening factors mentioned here.

 

For Prospective Home Buyers

Don’t commit until you’re comfortable: It’s a commonly-accepted practice for a Buyer Broker to require clients to sign a Buyer Broker Agreement, which confirms agency and outlines party commitments.  In my opinion, you should not sign a BBA until you have a chance to evaluate a buyer’s agent.  At a minimum, you should have an initial consultation, be set up to receive Phoenix real estate listings or Scottsdale real estate lisings, and go out for one property showing appointment to determine whether or not there’s a good match with the Realtor.  You will learn so much about the agent the first time you go out to view properties together and you’ll know whether or not you’ve found the right professional.  Once you’re confident that you have, you should be ready to commit to the agent just as the agent is committed to you.

How well does the Buyer Specialist know the process?  You should ask all the questions you can think of about the purchase process, escrow, inspection period, and the contracts.  Even better, ask to review some of the forms that you’ll experience during the purchase process.  Does the agent answer your questions promptly and confidently?  Do their answers make sense?  If the Realtor can’t explain things clearly or you just get the feeling they don’t have everything straight, then find someone else.  No need for you to be a ‘learning case.’

There are so many Scottsdale real estate agents and Phoenix real estate agents that it’s hard to even know where to begin to look for the right one for your needs.  If you follow the tips that I’ve offered here, you will be on the right track.  Just remember to be patient and not to compromise your expectations.

How to buy Phoenix properties in a tough seller’s market

April 7, 2012 by · Leave a Comment 

Bargains can be found on Phoenix properties regardless of market conditions.  Currently, the Greater Phoenix real estate market is facing a supply shortage, with less than a 2 months supply of inventory.  Still, there are steps any prospective home buyer can take to maximize their chances at finding and securing the right property at the right price.

Here are my recommendations:

Work with a Realtor

It may sound self-serving considering the source, but your best first step is to find a Buyer Specialist to guide you through the purchase process, from initial search through close of escrow.  I’ve posted tips on how to pick a good Realtor, which you should review if you haven’t already hired one.  Don’t settle on just any Realtor — determine the service standards that are important to you and filter candidates against these criteria.  And if you find an agent doesn’t meet your expectations and you’re not able to resolve your concerns with them, find another one ASAP.  You have too much at stake to settle for a so-so member of your team.  ‘Nuff said.

Develop a Search Plan

Your Buyer Specialist should have a specific plan to help you find your hidden gem.  My approach involves a thorough initial consultation, after which I build a targeted search and notify you anytime properties matching your criteria are listed.  In certain cases I can also tap into alternative resources, such as wholesalers and local ‘fix and flip’ investment groups.  Different buyer needs dictate the need for different strategies and an experienced Buyer Specialist can develop the best one for your situation.

Be Ready to Pounce!

Over the course of your search, you should see enough properties to know when you find “The Property.”  You’ll understand how features relate to value for your chosen area.  Once you do find your Phoenix or Scottsdale property, don’t hesitate for a minute.  Write an offer ASAP!  Even in the strongest of buyer’s markets, you don’t want someone else to come in ahead of you, resulting in your loss.

Structure a Smart Offer

There’s more to value than sales price for both buyer and seller.  An experienced Buyer Specialist thinks outside the box to help you craft an offer that positions you favorably to the seller and sets you apart from any competing offers.  I’ve helped buyers acquire properties at lower prices than competing offers by putting together offers that didn’t give away anything of material value to my clients, but offered added value to the sellers.  The key is to understand what is most valuable to both parties, as well as what’s not, and reflecting those differences in the offer.

Sadly, you can’t always win.

It’s important to note that there are so many variables involved in the process and things beyond your control, it is possible do everything right and still experience multiple rejected offers and a protracted search.  So while nobody can guarantee a perfect experience, I believe that the issues I’ve identified here can help you buy Phoenix properties in any market.

Real Estate Myth-Understanding 4: “I don’t need a Realtor to represent me on a new home purchase because the builder’s agent will.”

April 21, 2008 by · Leave a Comment 

Truth:

 

The Builder’s Sales Agent represents the Builder ONLY!

 

There’s a sign posted on the front door of every model home sales office in the State of Arizona that states something to this effect:

 

“If you are represented by a Realtor®, they must accompany you during your first visit to this community.”

 

Home builders factor a Realtor’s® commission into the cost structure of every home they build, but they would much rather retain that margin than pay it out for your representation. Therefore, they take the stance that, if your Realtor® is not with you during your first visit to the community, the Builder’s advertising must be the reason you found the community, and will thus serve as the procuring cause (see “Myth-Understanding 1“) if you decide to purchase there. The Builder will not pay your agent.

 

Furthermore, if you do move forward with your purchase, with or without independent representation, the Builder will make you sign a disclosure form whereby you acknowledge that the Builder’s agents and staff represent the Builder and the Builder only, not you. They may make you feel like you’re long-time best friends, but in the end, the Builder’s employees are obligated to do whatever they can within the confines of the law and company policy to enhance the Builder’s bottom line. Shouldn’t you have someone looking out for you?

 

Implications for the Buyers of Phoenix Real Estate

 

Whether you’re considering a new home, Phoenix condo, or a resale home, having an experienced Buyer’s Specialist on your side can:

 

Help you negotiate more effectively with the Builder.

 

In today’s market, a good Realtor® can often save their clients several thousand dollars above and beyond than the Builder’s advertised incentives. At worst, having a Realtor on your side won’t cost you a dime!

 

Review contracts, addenda, disclosures, governing documents, and Public Reports for red flags.

 

In contrast to a residential resale transaction, a new home transaction is governed by documents that are created and drafted by the Builder. They are not the same Arizona Association of Realtors® forms that guide the majority of transactions. An experienced Realtor® will have seen enough Builders’ contracts that he or she may be able to spot ‘holes’ or potential adverse implications before they arise, saving you time, money, and aggravation.

 

Broaden your Horizons.

 

A busy Buyer’s Specialist may know of a new home community that even the best targeted search methods overlook. As an expert on today’s market, he or she may introduce you to Phoenix real estate or Scottsdale real estate that is perfect for you that you would have otherwise never found.

Real Estate Myth-Understanding #2: “I can save money by negotiating directly with the Listing Agent.”

April 18, 2008 by · Leave a Comment 

Truth:

 

As long as the property is offered in the Multiple Listing Service (MLS), this is almost always FALSE.

 

By the time a property is listed in the MLS, the Seller and the Listing Agent have already executed a Listing Agreement that details the commission to be paid upon sale of the home. The Listing Agreement is a contract between the Seller and the Broker. It dictates the total compensation due to the Broker when the house sells, regardless of whether or not another Broker is involved in the transaction.

 

Once the Broker has an executed Listing Agreement, the Listing Sheet that’s advertised in the MLS creates the contract that dictates the commission (reward) that the Listing Agent will pay to the Buyer’s Broker for bringing a ready, willing, and able Buyer.

 

So if you’re looking for Phoenix real estate or Scottsdale real estate, unless special provisions have been created and/or you happen to find a Listing Agent who’s willing to cut their own commission, you will NOT be able to negotiate a lower price than if you had a Buyer’s Agent negotiating on your behalf. The Buyer’s Agent’s commission has already been factored into the sales equation.

 

A small number of agents draft special provisions in their Listing Agreements that reduce their commission if they find the Buyer, but such arrangements are very unusual today when slow turnover has increased marketing and holding costs.

 

Besides contractual factors, there are several other reasons to leverage the skills of a professional Buyer Specialist:

 

Market Knowledge: A busy Buyer’s Agent will preview several hundred properties per year, so they will have an intimate knowledge of property values in various communities and will be fully ‘in-tune’ with current real estate market conditions, giving them a natural advantage over any non-Realtor® who doesn’t have the time to closely track real estate market conditions.

 

Access to Specialized Information: Realtors® invest in technology tools that allow them to ‘dig deeper’ into the details of any given property or community. When properly analyzed, this information can be used to put together a very compelling story to support your offer price.

 

Specialized Training: Many full-time Realtors® attend negotiation workshops and seminars and have refined their skills on the job. The best of them engage in on-going training so they’re prepared to secure for you the best possible terms.

 

Knowledge of Contracts and some Real Estate Law: There are many terms of the Purchase Contract and Addenda that can be negotiated. Some are financial and some logistical. An experienced, full-time Buyer’s Agent knows what these items are and how to ‘weigh them’ and where to ‘push and pull’ to get a favorable offer accepted. Furthermore, a good Buyer’s Specialist will have enough experience to spot potential pitfalls or deviations from the norm before they have a chance to adversely affect the transaction.

 

Obviously, you don’t need to work with a Realtor® to purchase a property. It’s something you CAN legally do on your own. However, there are very few instances where self-representation will benefit you more than hiring an experienced professional to advocate your interests. An experienced Buyer’s Agent will not cost you a dime, but will offer you an arsenal of tools to position you for success from start to finish.

Real Estate Myth-Understanding #1 – “It’s OK to visit an Open House without my Realtor present.”

April 18, 2008 by · Leave a Comment 

After working with hundreds of homebuyers, I’ve come to recognize that there are several common misconceptions that are widely held to be true by experienced homebuyers and first-timers alike. I refer to them as “Myth-Understandings” and I’ve seen many prospective buyers harm their own cause as a result of their misled belief in them.

 

Keep in mind that real estate laws very from state to state. If you have any questions about how this topic applies outside the State of Arizona, consult a local attorney in the state in which you plan to do business.

 

MYTH #1: “It’s OK to visit an Open House without my Realtor® present.”

 

TRUTH: Only if you don’t care to work with your Realtor® anymore! If you visit an open house, whether you’re represented by a Realtor® or not, the Realtor® hosting the open house becomes your only legally-recognized agent for that specific property and the only agent entitled to compensation by the Seller.

 

The legal notion of procuring cause states that the broker who engages in an effort which brings about the sale is the one entitled to the commission. (The Language of Real Estate, John Reilly, Fifth Edition) In this case, the “Open House” signs that guided you to that property would constitute the procuring cause, if you eventually decided to purchase the home. The Realtor® who hosted the open house would be entitled to the full commission, effectively cutting your Realtor® out of the equation. You’d be stuck working with the Realtor® representing the seller, regardless of how professionally and fairly you believe they’ll represent you.

 

Even worse, if you had signed a Buyer Broker Agreement with your Realtor®, which has no effect on procuring cause, you could be compelled to pay your Realtor’s® full commission yourself!

 

Here are a few other situations that fall under the procuring cause umbrella, where you could lose the ability to work with anyone other than the Listing Agent:

 

-You drive by a house for the first time and see a “For Sale” sign in the yard. Not wanting to bother your Realtor®, but motivated to see the property, you call the Listing Agent and arrange for them to meet you for a private showing without your Realtor® present. The Listing Agent’s “For Sale” sign is the procuring cause.

 

-You see a gorgeous property advertised in the newspaper, so you call the Listing Agent and meet him at the home for a private showing without your Realtor® present. The Listing Agent’s advertisement is the procuring cause.

 

-Your Realtor® is out of town for a week when, while searching on the Internet, you see that the ‘perfect’ property has just hit the market. You call the Listing Agent and notify her that you are already “working” with a Realtor®, but that you’d like to meet at the property for a showing so you can tell your Realtor® about it when he gets back in town. Since the other agent showed you the property, they would be the procuring cause.

 

-You visit the Sales Office at a new home subdivision that you’ve never visited before, just to take a look at the models for decorating ideas. While you are there, you fall in love with one of the homes. The next day you meet your Realtor® at the community to put an offer in on the home. Because you visited the community for the first time without your Realtor® present, the builder’s advertising is the procuring cause and the builder would not compensate your Realtor®.

 

Implications When Looking For Phoenix Real Estate or Scottsdale Real Estate

 

In a non-dual agent role, your Realtor® is your agent, your trusted advocate whose sole function is to help you find and acquire the perfect property for your needs at the most favorable terms and conditions to you. The safest thing to do is to notify your Realtor® of ANY properties that you would like to see, including “For Sale By Owner” homes, new construction, and traditional resale properties. Your agent can gather the facts for you and make arrangements for you to visit these homes, when applicable. Furthermore, an experienced agent will begin positioning you for the potential upcoming negotiations with the other Realtor® from the very first communication.