Buyer Help

Email Question – How much fixing up is too much?

Question:

Is it worth putting in some work on the houses or should I just run away? How much fix up is too much?

Answer:

There isn't an exact science about how much is too much.  It's all very personal and very dependent on the ability (financial, emotional, and hammer-swinging) of the person doing the work.

The only obvious truth is that the cost of the home plus the cost to improve it should be less than the value of the home after it's improved.  In other words, if you can buy a different home in the neighborhood for less than the cost to buy & fix up this one, you should just buy the already fixed up one instead.  Unless (and there seems to always be a caveat), the home you want to fix up is perfect in some other way and can't be match by any other - lot size/location is the most common reason.

Another thing to consider is capital.  You can spend $50,000 more on a home and only have to come out of pocket with a couple thousand dollars for the additional down payment; the remainder can be financed (assuming you qualify for the increased mortgage).  However, your fix-up costs will most likely need to be paid for with cash.

Ideally you can find a home that looks a little run down, which keeps the home on the market longer and depresses its list price, but which only needs inexpensive, cosmetic fixing up.  Flooring, paint, and fixtures fall into this category, as well as giving the landscaping some TLC without having to entirely re-landscape the yard.

Countertops and cabinetry go a long way towards freshening up the kitchen and bathrooms.  But this can sometimes cause a domino effect - your vision for the right cabinets will be best complimented with new appliances, countertops, flooring, and an update to the ceiling - now we're talking real dollars!

That's a long answer.  The short answer to your short question is:  it depends.  You can get a great deal on a home if you're willing to do the work, and the harder the work the better the deal.  But you need to be able to do the work as inexpensively as possible (the goal after all was to save money), and you need to have the cash available to do it.

Does that help at all?

Sincerely,

Your looking for value Realtor

Chris Butterworth

Rapidly dwindling inventory of bank owned homes in metro Phoenix

In his September 15th market summary Mike Orr of Cromford Report said




We are projecting about 4,500 new foreclosure notices during September, a drop of some 16% from August and about 2,850 trustee sales, a drop of about 21%. Part of the drop is because September has 9% fewer working days (21) than August (23).


Nevertheless it still looks like the foreclosure tide is on its way out, and the inventory of bank owned homes continues to fall, as does the count of pending foreclosures.



Context: In the 30days preceding Mr. Orr's report, there were 8,763 properties sold in the greater Phoenix metro region. As of September 20, 2011 there are 19,241 properties listed for sale in the area. Nineteen thousand, plus forty-five hundred, minus nearly nine thousand... equals not enough homes for sale in a mere couple of months.


You can sign up for the highly respected and frequently dead-on accurate Cromford Report for a nominal fee for a 3month membership. Last I checked I think it was $90 for 3 months. WELL worth it.


By the way, I completely agree with Mr. Orr. The foreclosure tide is on it's way out. My investors looking for bank owned homes in the under $125,000 price range are having a devilish time finding and getting the right home. Multiple offers, bidding wars, paying over asking price. If you're shopping under $75,000, triple that difficulty level.

Condo financing near-impossible to get

A while back, I wrote a piece called Condo Re-Financing: Tricky to Impossible. Nowadays, that lending dilemma has grown -- it's next to impossible to get a new mortgage to purchase a condo, according to my favorite lenders Kevin Reiser and Jeannie Bolger. (need an ace loan officer? call me or text me and I'll forward their info. 602-999-8831). The exception may be luxury condos, think million dollar plus, but I'm not sure that mortgage market is healthy either.


The reason one can't get a mortgage to buy a condo these days has almost nothing whatsoever to do with the buyer and his/her credit profile. It has to do with the condo community and it's overall financial health/outlook. Many, many condo (and patio home and townhome) communities have experienced so many foreclosures that their Homeowners Associations are in severe financial distress. Other times, the owner-occupant to investor ratio is so out of whack - with investors owning 75% or more of the units in the community - that lenders won't lend to anyone who wants to buy there.


If you're really digging the idea of a condo right now.... check with several lenders first. Getting a mortgage for your new, hip pad might be tricky to impossible.


Want more in-depth explanation of the metro Phoenix condo market outlook? Try this article we wrote waaaay back in Spring 2010. http://thephoenixagents.com/newsletters/viewpoint-2010-0407/

How to make an offer on a Fannie Mae home

This is a post about how to make an offer on a Fannie Mae-owned (foreclosure) home in metro Phoenix, Arizona where I’m a licensed Realtor. If you’re reading this from out of area, or long after Summer 2011, please consult a professional in your area.   Need a metro Phoenix-area Realtor? Contact me!

To make an offer on a Phoenix-area Fannie Mae home at present, you need at least the following forms, completely filled out:

  • REO coversheet
  • Owner Occupant Certification
  • Notification to Listing Agent
  • Fannie Mae Real Estate Purchase Addendum
  • AZ State Purchase Offer/ Contract
  • Agency form
  • Loan PQF

I submitted a Fannie Mae purchase offer this morning for one of our buyer clients -- it was 28 pages long!

Several of these forms you get from the Listing Agent (that’s the seller’s Realtor). The Loan PQF (Pre-Qualification Form) you have to get from the Buyer’s loan officer, and it must be dated within the past 1 to 8 weeks or so.

Currently, Fannie Mae is requiring that the Buyer complete their Fannie Mae Real Estate Purchase Addendum. That’s a fairly new requirement; it used to be buyers didn’t fill in that form at all but rather waited for Fannie Mae to send it once the buyer’s bid had been accepted. Be careful with this form! It has a couple really vital “trigger dates” in it, and the Buyer has to fill in those dates. A trigger date is my term for a date that other contract deadlines count from. For example, the inspection period counts from the Acknowledgement Date which is different from (but closely related to) the Effective Date. Fill in the wrong dates on these blank trigger date fields and you can seriously screw yourself up.

Another thing to be carful with on the Fannie Mae addendum – the form uses the terms Settlement Date and Expiration Date interchangeably, but never use the term Closing Date, which I find utterly stupid. The way the government’s attorneys wrote the form, if the closing doesn’t happen on the Settlement Date, the deal expires, per the Expiration Date. But the addendum doesn’t say what happens then! Does the buyer lose their Earnest Money? Does the deal just close on the next business day? Who knows! The Addendum doesn’t say.

Oh, and don’t forget to specifically ask for the Fannie Mae Incentive of 3.50% of the purchase price from the Seller to cover some of the buyer’s closing costs, by adding that request to your purchase offer. If you don’t ask, you won’t get the closing cost assistance! You also have to know when Fannie Mae’s offering that incentive; they don’t do it all the time.

Confused yet? You’re not alone. If you’re a buyer or potential buyer in the metro Phoenix are in Summer 2011 you’re bound to run into Fannie Mae homes. Fannie Mae’s got so many homes for sale these days, it’s like shooting fish in a barrel.  As the commercials say, “Don’t attempt this at home alone kids!”  

You really need an experienced Realtor working on your behalf when you’re trying to make an offer on a Fannie Mae home. The paperwork is just so confusing and Fannie Mae keeps changing the rules about which forms they want and how you have to fill them out.  Hire a Realtor!

Need a Realtor? Read all about Heather and Chris, authors of this site and experienced Buyers’ Agents.  Then contact us and hire us; we’re happy to help.

Do buyers of bank owned homes pay for back owed HOA dues?

Image ID 1279316 by StockExchange user Yello-dogGot this question from a current buyer client:
Hi Heather:

Silly question, we are not responsible for back HOA fees, are we?

Jennifer

This isn’t a silly question at all. The short answer is “no”. The longer answer is below. Keep in mind I’m talking about buying a bank owned foreclosure (“REO”) home in the metro Phoenix real estate market in April 2011. Consult a residential real estate professional in your area.


1) Whatever HOA dues the former owner of the home didn't pay are not the new buyers' responsibility. Those unpaid dues follow the former owner, and the former owner is financially liable for them. HOAs have the rights to sue former owners for those unpaid back dues, but in reality many times the HOA won't get that missing money back. (huge thank you to our colleague Dean Ouellette for catching my former error here by saying the old dues get wiped out by foreclosure).


2) The selling bank customarily pays all HOA dues owed from the date they took ownership until the date you close your purchase.


3) The dues for the month in which you close will be pro-rated with seller paying for days they owned the home, and buyer paying for days they will own the home. Note that closing day is allocated to the buyer, meaning the buyer pays for the HOA dues for that day.


4) Note though that HOAs usually require 1 to 3 months pre-paid HOA dues at close, and there are transfer fees as well (usually $100 to $500) and then there is sometimes another fee called "Capital Contribution" which is essentially a payment into the HOA's Reserve Fund (savings account) which is usually another 1 to 3 months.

What credit score do I need to get a mortgage?

Image ID 1193076 by Stock Exchange user svilen001The minimum FICO credit score needed to qualify for a mortgage changes frequently. As of February 2011, the general answer is … buyers need a FICO credit score of about 640 to qualify for a home mortgage.

BUT…  there are exceptions. Bottom line: if you have a score under 640 you might still qualify for a mortgage, but you’ll probably need more cash on hand.

From Rob Chrisman’s daily mortgage news email…

Wells Fargo reduced its minimum FICO's for FHA loans to below 600. Direct Mortgage Wholesale has done something similar by reducing its minimum FHA FICO to 580 ….  There are other requirements, of course, including 90% maximum LTV, no gift funds, etc.

Deleting the banker-speak, what this means in plain English is that buyers with FICO scores less than 640 probably are going to need to make a down payment of about 10% of the purchase price, and that money cannot be gifted to the buyer.

“Not gifted” doesn’t mean your money is stupid. It just means that the 10% cash down payment has to be the buyer’s own money, and sitting in their bank account for a couple of weeks before the purchase takes place.

Want to see if you qualify to buy a home? Have more questions? Give me a call or shoot me an email and I’ll connect you with one of my favorite loan officers. They’ll hook you up.

Heather Barr, Realtor
Chris & Heather, The Phoenix Agents @ Thompson’s Realty
602-999-8831 voice/text    
Heather@ThePhoenixAgents.com

read what clients say about realtor heather barr

Buy a home for 1% cash down

Stock Exchange Image ID 164990 by user daimon057

Although most of the low-down and no-down payment purchase programs are long gone with the financial crash of 2008, we do have 1 lender who has 1 loan program that’s a 1% cash down payment program.

Here’s an example of a recent client of mine who used this program.


  • Home purchase price – $85,500


  • Seller contribution to buyer’s closing costs – $2,700


  • 1% Down Program’s contribution to buyer’s down payment – $2,137


  • Buyer’s cash out of pocket for home inspections, appraisals, utility company deposits, etc., – $500


  • Buyer’s cash out of pocket on closing day, all-in – $1,033


The program is good in most of Metro Phoenix, AZ as of January, 2011. Among other things, buyers must meet a minimum credit score, and must have stable and verifiable employment income. Buyers must take a homeowners’ education class which takes about 1-2 hours of studying and about 15-20 minutes in exam time. The program can be used to buy a foreclosure (REO) home. The seller is not required to contribute to the buyer’s closing costs, but may.

Not all buyers qualify, and not all homes qualify. But it could be a viable option for you if you’re a little low on cash but want to be a homeowner.

Contact me for more details.

Heather Barr, Realtor
The Phoenix Agents at Thompson’s Realty
602-999-8831 or Heather@ThePhoenixAgents.com

photo credit: user daimon057 at the online photo sharing site StockExchange
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How do I tell if a house is a "meth home"?

Sadly, meth is always in the news. Here is a little helpful information and a few links to help potential home buyers and/or homeowners sort out the hype from the truth.

The U.S. Justice Department maintains a website of homes that are suspected to potentially be meth homes.

The Justice Department’s website contains a list of addresses – searchable by state – of some locations where law enforcement agencies reported they found chemicals or other items that indicated the presence of either clandestine drug laboratories or dumpsites.

The Arizona State Board of Technical Registration also maintains a list of meth lab homes.

The Arizona Attorney General’s office posts this information about meth labs and meth homes on their website.
As of July 1, 2003, those who sell property are required by Arizona law to inform prospective buyers if a property has been used to manufacture methamphetamine, ecstasy or LSD. They are also required to hire a drug laboratory site remediation firm that is registered with the State Board of Technical Registration, pursuant to A.R.S. § 32-122.03, to remediate the property of residual contamination. Until the site is properly cleaned, it is unlawful for any person other than the owner, landlord or manager to enter the property (see A.R.S. § 12-1000). Clean-up requirements and an approved list of drug remediation firms can be found at the Arizona State Board of Technical Registration. The owner is liable for the costs incurred to remediate the property of residual contamination, even if the owner had no knowledge of the criminal activity at the property.

CNN.com reports on a Pennsylvania couple who bought a meth home without knowing it.
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How much earnest money should I offer?

WHAT IT IS

Think of earnest money like a deposit. Sometimes buyers need to send a copy of their earnest money check with their offer, sometimes not. Your Realtor will know when you need a copy of a check.

Regardless, once the buyer's offer is accepted, the earnest money must be sent to the title company, who will cash the check.  Once cashed, the earnest money becomes part of the total purchase price of the house.

HOW MUCH IS RIGHT?

A lot of buyers ask "How much earnest money is the right amount?"

There's no "right" amount. And the amount of earnest money sellers expect and buyers offer moves up and down with the strength or weakness of the market. When prices were soaring and sellers could get multiple offers within 3 minutes of putting a For Sale sign in the yard, earnest money amounts soared too. I saw $25,000 earnest money on a $250,000 purchase.

These days prices are lower and buyers in many market segments have the upper hand. Earnest money amounts have generally dropped. I've seen $500 earnest money checks lately (Fall 2010).  I've seen amounts up to $3,000 too.

RULE OF THUMB

One rule of thumb about earnest money is, "put up as much earnest money as you can afford to risk." The idea of risk is important. Earnest money is forfeitable if the buyer breaches the contract.

In plain English this means that if you, the buyer, back out of the purchase for any reason other than the many allowed reasons, the seller has the right to keep your earnest money as compensation for the lost time on the market.

Want More Info?
Check out all our Real Estate Glossary posts

Read about the entire buying process

Bother your Realtor. Please.

Recently a consumer visited our website to search the MLS and submitted an online question about a home she found there. I sent her our standard "thanks for visiting our site, let us know if we can help" email. This is the rest of the email exchange between she and I.
Thank you for getting back to me.

We do have a realtor but, he is a friend of ours so I like to look into things first before I get him involved. I would like to know the terms of the lease purchase. Money down, length of option, payments, etc. Could you please forward the information.

Thank you,
Looking in Desert Ridge

.
Hello Looking,

I'm sorry, I'd like to help but I can't.  I am a Realtor. But I am not the seller’s Realtor.  Our website is like most, it shows ALL properties for sale/lease and not just the ones where we represent the seller/landlord.

The Realtor's Ethics Code is pretty cut-and-dried: Realtors should not knowingly work with another Realtor's client.

Your questions are totally legitimate. Most important, the answers to your questions will be part of the negotiation process. Help with negotiations is usually the number 1 reason consumers hire a Realtor. And talking to the seller/landlord's Realtor on your own will probably weaken your bargaining position.

Presumably your Realtor friend will eventually earn a commission, so you shouldn't feel badly asking him to help.

Thing is, this isn't an isolated incident. We hear "I don't want to bother my Realtor" a lot.

  • "Yes, but my Realtor's out of town and I can't get in touch with him."

  • "I already have a Realtor but I don't want to waste his time so I thought you could just show me this house."

  • "My Realtor lives on the other side of town and I don't want to keep asking him to drive all over the place."


I LOVE helping clients. My clients. I do not love helping other Realtor's clients because I don't ever get paid for that sort of thing. I'm a very helpful, compassionate sort of person, but I can't pay my mortgage with compassion. And the IRS gets really cranky when I can't pay my taxes because I was helping other Realtor's clients and didn't actually earn any commissions for my efforts.

Consumers, please - bother your Realtor.  Gathering information, answering questions, offering good counsel and negotiating on your behalf are the job description. If your Realtor is too busy to be bothered with your questions, you need a new Realtor.

How long does a short sale take? Part 2

First, read this recent post with an eye-catching visual about how long short sales really take.


For even more commentary about how long short sales take, see the comments in this blog post about short sale processing time on the weblog REO Insider. Most comments written by Realtors, and other industry insiders.


In short, (as of 9/19/2010), over 60% of short sales were taking 6+ months, and more than 80% are taking more than 4 months.

Lease Purchase, Rent to Own

Rent to own and lease-purchase agreements are cropping up in the Greater Phoenix real estate world these days. They’re a natural result of the continuing tight credit market.

Lease-purchase and rent to own are essentially the same things.  A lease with a purchase option is almost the same, just with more complicated legalese thrown in there.

We don’t typically assist folks with leases that turn into purchases, no matter what the terms. We feel strongly that you really should hire a lawyer if you’re going to do anything that involves renting a house now and buying it in the future.

Here’s some brief thoughts on the situation; I took these from a quick email I sent out earlier today to some friends of ours.

Rent to owns (lease-purchase and lease-purchase options) are usually a little tricky --

  • does tenant pay a little extra each month towards down payment?
  • or does the tenant pay a lump sum amount now? (usually several thousand dollars!)
  • if so, who's bank account “gets” the deposit(s)? does that money earn interest? for whom?
  • under what circumstances are extra payments refundable?
  • what happens to that extra deposits/payments if the rent is late a day or two? if it’s late several weeks?
  • do you value the purchase price of the home now or in several years when the purchase happens?
  • do you get an appraiser? who pays for the appraiser?
  • what if the appraisal comes in lower than the agreed-on purchase price?
  • what if either side changes their mind between now and the purchase?

As you can see, there are a lot of questions. We recommend you hire a real estate attorney to help you figure out the answers. Call or email us, we know several excellent Greater Phoenix attorneys!

Buy for less than you pay in rent?

The conventional wisdom (and a lot of mortgage companies’ advertising) currently says that you can buy a house for cheaper than you can rent an apartment in the Greater Phoenix area.  Is it true? Mmmmm…  Yes and no.



Case in point:


historic

First time home buyer, starter home in the south end of the 85016 ZIP code. House is in good repair but cosmetically it’s stuck in the mid-1950s. Three bedrooms,  1 bathroom, 1 carport, average sized yard, 1100 square feet.


Current rent on 900 square foot, 2-bedroom apartment about 5 miles away from the home noted above = $615. Expected mortgage payment on the new house noted above = $505.


So, yes! You can buy for cheaper than you can rent! Except…



It’s a PITI


OLYMPUS DIGITAL CAMERA

When you’re a renter, you pay the rent and then you’re done. But home ownership means extras.







  • P = principle: repaying the mortgage money you borrowed


  • I = interest: the convenience fee for borrowing said money


  • T = taxes: specifically property taxes on the house you buy


  • I = insurance: the lender who lent you the mortgage money will require you to have homeowners' insurance on the property


Back to our Case in Point buyer from above paying $615 in rent and expecting to pay $505 for her new mortgage. The $505 is only PI, and doesn’t include TI or anything else involved in home ownership. Taxes & insurance add another $150 monthly. So rent, $615. PITI home ownership costs, $505+ $150 = $655.


But don’t forget the WUST and the MAINT, two acronyms I made up.



WUST:


Water, utilities, sewer, trash. Your new house is probably bigger than your old apartment, so you’ll spend more heating & cooling it. What about HOA fees (Home Owners Association)? Factor those in.



MAINT:


Homeowners also face maintenance costs that renters don’t.





  • what if the roof if it leaks? (smallish new roof, ballpark $6,000)


  • A/C and heater systems don’t last forever (ballpark cost $5,000)


  • the cost of keeping up the landscaping. Even Xeriscape yards require a bit of upkeep


  • replacing the faucets when they leak, the toilet flapper if it goes, the appliances when they go, the patio roof when it leaks… you get the idea


Home ownership is a lot more than paying rent. Yes, your new mortgage payment may be less than your old rent. But there are other costs it’s easy to forget about when dreaming about becoming a homeowner.


On the other hand, there’s a big fat tax advantage to being a homeowner: you can deduct mortgage interest paid from your federal taxes. And in your first few years, nearly your entire mortgage payment goes towards the interest you owe, so you can plan to deduct nearly all your mortgage payments from your taxes!


Thinking about becoming a homeowner? Call or email me. I’ve got the coolest little spreadsheet that lets you estimate all your home ownership expenses – PITI, WUST, MAINT and even your negotiables like cell phones, movies & entertainment and groceries -- so you can make a wise decision.



Heather Barr, Thompson’s Realty
602-999-8831 or Heather@ThePhoenixAgents.com

Search the MLS, part 3

Here are the Cliff Notes for part 1 and part 2 of this Pulitzer-winning series on why home shoppers who think they can search the MLS are mistaken:



There is no 1 MLS, there are only lots of city-wide, regional or statewide MLSs.

Consumers can’t search the MLS for their region directly because that database is private and for subscribers only. (i.e. Realtors, appraisers, etc.)

Instead, consumers can view a data feed from the private MLSs. This is shown on thousands of public websites like Trulia and Zillow, Realtor.com and the like.

For a variety of reasons, the housing data consumers on public real estate websites is often imperfect, incomplete, out of date or inaccurate.

Now that you’re all caught up, we’ll move on. But note that consumers can get as close as humanly possible to searching the private database called the Arizona Regional MLS by using our "Search Phoenix Homes" button, up above.



Finding the Seller’s Realtor is Difficult.


A very few sites make it easy to find & contact the seller’s Realtor. Trulia.com does this and so does Homes.com


margy court on trulia DOT com (click any graphic to enlarge it)


Several websites list the brokerage who represents the seller but not the individual agent. Realtor.com and MLSonline.com are two of these.


Margy court on Realtor DOT com revised



Most sites offer no opportunity to locate and contact the seller’s Realtor. In fact, many websites try to purposely misdirect consumers into contacting a Realtor connected with the displaying website. Among these: ZipRealty, Redfin.com, AZmoves.com (which is the Greater Phoenix Coldwell Banker website) and a whole ton of others.


margy court on zillow


Finding the seller’s Realtor on a typical home for sale is difficult enough. Communicating with Realtors who list bank owned homes is next to impossible, mostly because they’re so over-busy.


Our colleague Kris Berg San Diego Castles Realty posted a really funny cartoon about how difficult it is to get in touch with the agents who list bank owned real estate.


If you’re a buyer trying to reach the seller’s Realtor on a bank owned foreclosure (REO) home, you should also try winning the lottery. Or accurately predicting the end of Lost.


Tomorrow. . . is there a benefit in finding and working with the seller’s Realtor? In other words, is all that beating your head against the wall worthwhile?

Search the MLS, part 2

For those who didn’t read my previous post about the myth of “searching the MLS” here’s the Cliff Notes version:
There is no 1 MLS, there are only lots of city-wide, regional or statewide MLSs.

Consumers can’t view the MLS for their region directly because it’s private and for subscribers only. (i.e. Realtors, appraisers, etc.)

Instead, public real estate websites like Trulia, Zillow and dozens thousands of others display homes for sale which they get from a data feed provided by one or more private MLSs.

There are two very important things consumers should keep in mind when they try to search the MLS are house hunting on public real estate websites. (1) Data integrity isn’t what it could be. (2) As a consumer, finding the agent who represents the seller is often difficult.

Today I’ll cover data integrity; come back in several days for info on finding the seller’s Realtor and why you maybe don’t really want to bother.

Data integrity on public real estate websites: spotty


Sometimes data shown on public websites like Trulia, Realtor.com, Zillow, Dwellicious, etc., is a little bit ‘off’.  There are a few causes.

Some real estate websites are slow to update their data from the MLS data feed. Sometimes the websites didn't pull the entire data feed available to them, resulting in homes that are for sale but not shown on the website you're visiting. Sometimes bad data is just a case of Garbage In, Garbage Out: if the seller’s Realtor makes a typo while entering the homes into the private MLS, that typo carries through to every site that grabs the MLS data feed.


Zillow is the ultimate mashup of data and suffers the consequences of most mashups: too many cooks in the kitchen makes for bad soup. Zillow pulls a data feed from the ARMLS (Arizona Regional MLS), the county tax assessor's office, local Realtors who answer consumer questions in Zillow's chat section, and a variety of sponsors (read, paid advertisers) like mortgage officers and credit repair scammers agencies, etc. Trying to cram all that data into one pretty website results in data problems. Zillow admits that it's 'zestimates' are very imperfect. For Maricopa county properties (most of the Greater Phoenix area is in this county) are 10% too high or 10% too low in nearly 6 out of 10 cases. As Chris has said in the past, Zillow is like the kid who gets 6 out of 10 math problems wrong on a test. That's not a grade you want to hang on the fridge.


Many (most?) times the bad data found on public real estate websites is caused by layout & design issues, or maybe software incompatibility issues between the MLS data feed and the database of the receiving website.

For example, Realtor.com and Trulia.com both display one of our current listings for sale: 2835 W Margy Court in Phoenix. Both sites received the exact same data feed from the private ARMLS (Arizona Regional Multiple Listing Service) site.

Realtor.com has great information on this home but the presentation a bit ugly.

margy court on realtor DOT com

margy court on realtor DOT com continued (click to enlarge)

But Realtor.com does provide a handy-dandy “Refreshed at” time so online shoppers know that the Realtor.com site updated their data feed from the local, private MLS only 9 minutes ago (note, I’m unable to verify that). That’s some fresh info!

Trulia on the other hand, has less than perfect information but it’s displayed prettily.

margy court on trulia DOT com

Trulia says the neighborhood is “Alhambra” but it’s actually named Harbor Cove. Trulia also lists the sales price and date of the last time the home was sold, but they get that data wrong.

Two public real estate sites gathered the same data about this house from the private ARMLS data feed, but the resulting data displayed for consumers is different.

We’re all in this together. . . or are we?


Finally, sometimes the problem of real estate data that’s a little “off” is caused by pesky geographic differences. We’re a Big Country after all.

Realtor.com has a data field called “Parking Features” and that field shows “Electric Door Opener” for our listing. True, the house does have an electric garage door opener. But that’s such a common thing in newer Phoenix homes that few Phoenicians would think of it as a “feature”. More like “duh, expected.”

I’m pretty sure there are parts of the country where electric garage door openers aren’t standard. But Realtor.com is a national website, so they display some data that makes sense to Chicagoans (for example) but not to Phoenicians.



Search the MLS – a better way.


Consumers demand accurate data when they search the MLS shop for real estate online. But if the public real estate websites all have little, varied problems delivering that accuracy, what’s a consumer to do?

I can only speak for the Greater Phoenix area where I work. Here, there’s a better way and it’s found on many Realtor’s websites. Scroll back up to the top of this page on this website. See the big button that says Search Phoenix Homes? Click it. Search till your fingers go numb and your vision goes fuzzy. You’re as close as a consumer can get to the private MLS data.

Let’s compare the private MLS data to the consumer data available through our Search Phoenix Homes button. The search I’m using is for:


  • single family homes


  • 2 bedrooms (not more, not less)


  • located in ZIP code 85016


  • priced between $100,000 and $125,000


Private MLS view seen by Realtors, appraisers, etc.


2-1 in 85016 from 100k to 125k FROM MLS (click to enlarge so you don’t go blind)

The Phoenix Agent’s Search Phoenix Homes view available to consumers searching for the exact same thing:

2-1 in 85016 from 100k to 125k (click = enlarge)

 

If you click the pics above, you'll see that the consumers are seeing exactly the same data I can see as a Realtor in the private, members-only MLS. Yes, it is true that our search – like every other search - is displaying a data feed. But. . .


  • our display/graphic layout is an exact duplicate of the private MLS,


  • every home that’s in the private MLS is on our website, and


  • the data is updated in real-time.


  • True, you’ll still see garbage-in, garbage-out typos because I’m not the punctuation police. Yet.


 

Eagle-eyed readers spotted the one difference between the two search display results. On the far right hand side of each graphic above, the private MLS that Realtors can view shows the seller’s Realtor; the consumer side shown by The Phoenix Agents’ Search Phoenix Homes doesn’t.

In part 3 of this series, I’ll look into whether or not consumers can find the seller's Realtor while surfing online. And in part 4, I'll talk about whether buyers who work with the seller's Realtor save any money doing so.

Why you can’t search “the” MLS


  • MLSonline.com

  • MLS.com

  • MLSlistings.com

  • TheMLS.com

  • Realtor.com

  • RealEstate.com


None of those are “the” MLS, or Multiple Listing Service. Listen up peeps, there are two giant misconceptions out there about consumers’ ability to search the MLS. (and see also our own Kelley Koehler on searching "the MLS")

Consumers can’t search “the” MLS because there is no single, national MLS*. And if there was, consumers probably couldn’t view it directly.*

What consumers think of as “the MLS” is a bunch of local or regional private, subscribers-only databases.  Here in the Greater Phoenix area we use the Arizona Regional Multiple Listing Service, or ARMLS. Realtors, brokers and appraisers are the biggest dues-paying subscribers. Consumers cannot access this database directly.

So what are – the consumer - you looking at when you “search the MLS”? Almost always, consumers see a data feed taken from one or more local/regional MLSs.


  • Trulia.com , Yahoo.com, Zillow.com, Roost.com, Dwellicious.com


  • RealEstate.com, Realtor.com


  • Homes.com , PhoenixHomes.com , HomeListings.com , HomeGain.com


  • HouseHunt.com , NewHomesSection.com, NewHomeSource.com


  • AZcentral.com, AZhomesForSale.com, AZlandSale.com


  • PhoenixPowerSearch.com, ArizonaPropertyForSale.com


All of those sites display for consumers the data feed they accept from one or more local/regional MLSs. These sites accept the data – bits and bytes, 1’s and 0’s – and display it on their own website alongside banner ads, pop-up ads, pay-per-click ads, and anything else they choose to display.

I’m not going to cover the arguments about whether or not there should be a single, national MLS, and whether or not consumers should be able to view it directly. Why? Because we designed this blog for consumers, not for Realtors and brokers.

Instead, in my next post I’ll explain the 2 factors consumers must be aware of when searching the MLS searching for homes online. Meanwhile, consumers can get as close as possible to searching the MLS by using our handy "Search Phoenix Homes" button. Scroll up, click and search till your eyesight goes all blurry.

Your formerly a school teacher Realtor,

Heather Barr

*There is no “the” MLS, yet. There’s a push afoot in the industry to create a national Multiple Listing Service which would display every house for sale, anywhere in the US. There’s also a movement within the industry to make that national MLS – if it ever comes to be -- visible to consumers directly. As far as I can tell, these two movements have been around for awhile now; we’ll keep you posted if anything ever comes of them.

FHA.com is not the FHA

File this in the category of Stuff You Should Know.


The website at FHA.com is not run by the FHA (Federal Housing Administration) or by HUD (Housing and Urban Development) or by any other governmental agency.


It’s run by a (presumably for-profit) group that collects information from users including their social security number, credit information, income & debt information, employment, etc. FHA.com then “shares” that information with “third party affiliates”.


In other words, they’re not going to give you a loan and they’re not the FHA. It’s likely they’re going to sell your information to a loan originator, who will then pester you about mortgages.


FHA.com does disclose this information.. . . .



We are not the FHA. They insure the FHA loans that our lenders assist people in getting. If you need to contact the FHA directly, you can do so at:

US Department of Housing and Urban Development
451 7th Street, S.W.
Washington, DC 20410

. . . ..but this disclosure is buried pretty far down in their page structure. Nice how they don’t list a phone number or website link. I will. You can reach the FHA by telephone at (800) CALL-FHA or (800) 225-5342, or online at fha.GOV



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What’s in your electrical box?

fix and flipper fix the double tap

You might find it interesting to have a look at your electrical fuse box. A fairly frequent home inspection finding we’ve noticed lately is the ‘double tap’ inside the fuse box.


If you click on that picture above, you’ll see that one fuse has two wires attached.


I’m no electrician and I don’t even play one on TV, so I can’t explain it better than that. Maybe this seems like a minor problem but messing up electricity is never a good idea.


How do you correct the double tap? I’ve seen it done. It took about 15 minutes and the part cost under $5. We have a couple of good electricians and handymenpeople. Call/email/text us for names of some folks who can help you out with this minor problem.

90 Day Fix and Flip Rule

You know how fix and flipping works in a cynical world, right? Basically. . . . investors buy a craptacular house at foreclosure auction or elsewhere and do no substantive repairs. They slap a thick coat of paint on everything and install cheap new carpet, then resell it as "Remodeled!" with a seriously  jacked up price.


Traditionally, the FHA had a rule in place stating they would not fund buyers who were purchasing a property the seller owned for less than 90 days. This was designed to protect buyers (and the government backed money they used to purchase) and discourage excess profiteering by fix and flip investors.


Some weeks back, the FHA reversed themselves in this area by announcing a new policy that's generally known in the industry as "The FHA Flipping Waiver."


FHA changed it's policy to help the market in clearing some of the excess foreclosure properties for sale which are often holding down pricing at artificially low levels. I don't know how it worked around the rest of the country, but my opinion is that Fix and Flippers are basically, usually helpful here in metro Phoenix Arizona.


Lenders reserve the right to have additional regulations, above and beyond what FHA guidelines say. It's taken some time for these lender 'overlays' to shake out into a coherent whole but it has finally happened.



What the Heck Does this Mean to Me, A Buyer?


The general rule of thumb if you're shopping for a home and you're looking at fix and flips is this:  you won't be allowed to use an FHA mortgage to buy if the seller of the home you love has




  • Owned it for less than 90 days AND

  • Has jacked up the price more than 20% over his/her purchase price

  • Also, don't have any sort of pre-existing relationship between yourself, the buyer, and the seller


If the investor has owned the home for less than 90 days and it's priced 20% or more over the investor's purchase price, you could potentially still buy the home, but you can't use an FHA mortgage to do it. That means a 'conventional' mortgage, which means a higher down payment than the FHA 3.50%. Plan on 10% to 25% cash down payment if you want that spruced up fixer flipper home.