Real Estate Investing

Phoenix Real Estate for Australian Investors Scam

Subtitled “If it sounds too good to be true…”

Economist Mish Shedlock wrote about investors in Australia being pitched “hot property deals” in Phoenix.

http://globaleconomicanalysis.blogspot.com/2011/02/phoenix-property-scam-targets.html

Here’s the short-answer version:

First Rule of Investing
Hello Greg, the cardinal rule in investing is "If it sound too good to be true, it is."
This is what I want you to ask your friend

  • What the hell can you possibly know living in Australia about this operation and alleged opportunity, that locals in the US who avoid this like the plague don't?
  • Have you ever managed rental property or been a landlord before?
  • Have you ever managed properties 7,500 miles away?
  • Do you know anything about water problems (lack of it) in Phoenix?
  • What makes you think those growth estimates are accurate?
  • Do you know anything about the city's fiscal problems, other problems?

If these deals were any good, it would not take someone 7,500 miles away to spot them! However, it might take someone 7,500 miles away to get suckered into one.

Yes, prices in Phoenix are amazingly low, compared with the last decade.

Yes, interest rates are amazingly low, compared with the last 40 years.

Yes, housing affordability is near all-time highs.

But that doesn’t mean you can throw a dart & pick up a smoking-hot investment.

Buyer beware.

Your here to help Realtor,

Chris Butterworth

Buying a foreclosure is hard

Sometimes buying a bank owned REO foreclosure home is well… hard.  Sometimes it’s very hard.

It’s not that the homes are sketchy (sometimes they are).  It’s not that the homes come without any disclosures of condition (they do). It’s not that the seller won’t guarantee anything during or after the sale (they don’t). It's not even that there are always multiple offers (although under $150,000 in Metro Phoenix in Winter 2010 there are often *are* multiple offers).

Often, the problem is that you can't contact the darn agent who works for the bank. They’re either overwhelmed with too many REO homes from the bank, or they’re … otherwise… missing in action.


Video created using software available at Xtranormal.com

Thinking about being a landlord?

If you’re thinking about becoming a landlord, The Landlord Protection Agency website is a great resource for you. Besides offering a chat forum, advice and free legal forms, they even have a funny Excuse of The Day feature where website members post their tenants’ most ridiculous excuses for not paying the rent on time.


RentingAuthority.com is another site that was recommended to me by a friend who’s used it over the years to run credit checks on prospective tenants.


Disclaimer: Both LPA.com and RentingAuthority.com offer free legal forms. I don’t and can’t vouch for the accuracy or legality of their forms. Please consult with an attorney or Realtor in your own state.

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.

Tip for New Real Estate Investors

Falling prices and historically low mortgage rates are bringing a flood of new real estate investors into the metro Phoenix market. It's fairly easy in many parts of the Valley to buy a small house, put a renter in it and realize a positive monthly cash flow immediately.


Here's a very brief tip for all the rookie landlords. Budget to replace the carpet and paint the entire interior every time a tenant moves out. Set aside several thousand dollars for this.


This way, if the house needs it you'll have the money. A freshly painted & recarpeted home will rent quicker than one that's been only cleaned. And if The Perfect Tenant just moved out and the home doesn't need new paint & carpet, you've got a nice little savings account. Which is good because houses always need something.


Rookie landlords: Budget for the expenses, not just the income.

New Rental Scam


Head’s up, there’s a new scam in the landlord / tenant world. Funnily enough it involves Nigerians emailing you to send them money overseas.


Fredericksburg, VA Realtor Sarah Stelmok found her own house (which she was living in at the time) listed online as a rental. She did a little digging, chronicled it on her blog, and found …. well, you can read it yourselves. It’s long but shockingly difficult to stop reading.


If you’re a tenant looking for a rental home, do yourself a favor. Check out that the person you’re dealing with is actually the owner of the home. Check tax records in Maricopa County (which covers most of metro Phoenix) to make sure the name on the tax records is the person you’re dealing with.


If the landlord is working through a property manager or Realtor, make sure at some point you see a document that grants the manager/Realtor the right to represent the landlord. The landlord and his/her representative should have both signed that document, and it should have a begin and end date.


It’s a wild world out there. Remember that if it seems fishy it probably is.

Real Estate Glossary, Starter Home

This isn’t an official definition. I’m not sure there is one. It’s just what I use as shorthand for a certain type of property.





  • 3-4 bedrooms


  • 2 bathrooms


  • about 1200 to 1600 square feet


  • small yard




  • usually located about 20-30 miles from anything you can reasonably call ‘downtown’


  • almost always in a master planned community, i.e. there is a Homeowners’ Association which charges fees and makes rules for the community


Like I said, not an official definition, and you’ll see there are a lot of qualifiers in my list (sometimes, usually, often). Take it for what it’s worth.


What about pricing? This isn't a scientific survey, but lately we at The Phoenix Agents have been helping folks buy these houses for between $60,000 and $150,000 in various parts of the Northwest, North and Southwest Valley. The lower the price, the harder it is to find a house that's inhabitable which the investor buyers haven't already made multiple cash offers on.


Homes that fit this description often make great purchases for first time buyers, and often fit the bill for investors too.

Landlords, Need Help?

Landlord:  “Why didn’t you pay the rent on time this month?”




Tenant 1: We all had swine flu and we like you so much we didn’t want to give it to you so we didn’t mail the check.




Tenant 2: I don’t have time for this now. We’re all going to see the new Star Trek movie. I’ll worry about the rent another time.




Tenant 3: My dog at it.



Sometimes tenants’ excuses for not paying the rent on time are downright funny. In the way of the internet, I forget how I found the site these quotes came from, but it’s worth looking and bookmarking.


Beyond listing goofy late-rent excuses, the Landlord Protection Agency website can be a great resource for landlords, even those who have ideal tenants. The LPA site offer free forms like a Late Notice, a Key Receipt and even a Security Deposit Refund Receipt.


If you’re a landlord or thinking of becoming one, I recommend you visit this site. Disclaimer: if using forms found online, check with your attorney to make sure the language is valid in your state.

More on Landmark Towers

WOW! I’m still getting truly awesome comments from readers over at my old blogsite about the Landmark Towers. (one-half of this blog used to be at www.NorthPhoenixAgent.wordpress.com).


I hadn’t paid attention to the old blogsite’s comments in a while and did I ever miss out! I’m reprinting all the comments here. They're in order from oldest to newest.


- - - - - - - -


Submitted on 2009/02/07 at 12:24pm by Mike




Rented out a place on the 17th floor for over 2 years (Oct 2006-Dec 08) at Landmark. I only had the constant issues with the water. (They turn it off for a few hours at least once/month). I know some lower units were water soaked a few times and there were some units with AC issues.


Prices here have come crashing down…..but the HOA fees have skyrocketed up with less services. I really didn’t care for the valet service & actually preferred the setup they have now in taking your own car down.



The prior post about the light rail is true (and I lived on the south side of the building). On the positive side, I guess you don’t need to invest in an alarm clock clip_image001[4] ) It had no bearing on me moving on, but it is quite loud (hearing the horn/announcements/and the rattling on the tracks — which I believe comes around the curve by Camelback/Central)

I think buying here is a losing proposition. You see all the availables for a reason.



Submitted on 2009/02/10 at 12:28pm by Dave




I toured the building looking at units. To me they are priced well. As far as the HOA, again, it includes nearly everything. The noise? Doesnt bother me, that is one of the reasons I WANT to live downtown.


The bottom line is the HOA reserves, legitimacy of winning the lawsuit, the occupancy, and the projected costs. All of these items are easy to accumulate and should be transparent to all homeowners and those looking to purchase.


Additional costs happen in life, however a massive hit is not something anyone can endure.



Submitted on 2009/02/16 at 4:10am by Liz




I’ve lived here 2+ years, and it went from a great place to live to a miserable place to live. Yes, the train generates noise: I don’t mind it a bit – I feel like I’m living in a city. Yes, the water is turned off at least once a month: an inconvenience, but tolerable. Yes, we’ve lost MANY amenities but the HOA fees are still too much, even with electric inclusion; but I’m willing to put up with that… What is completely unbearable is the exceedingly rude staff from City Property Mgmt; it has destroyed this place.



So I had to laugh when I read the following:
“It is possible to get the front desk day-shift woman on your side and then she’s sweet as candy. Start out by acknowledging how hard she works, then ask her questions about the job.”

So now we have to butter up some incredibly rude woman and stroke her ego so that she will quit being rude to our guests, stop gossiping about and telling boldfaced lies about residents to other residents as well as guests, and to quit acting as if she were the warden and the residents were her prisoners?


And to make matters worse, all other front desk personnel know absolutely nothing about anything… Why? So that if a resident needs anything, even a simple question to be answered, they can only be “helped” by the daytime shrew. And help is the last thing you will ever receive from her.



Submitted on 2009/02/22 at 11:51am by Keith




This thread is fantastic.


For the last week, I have been looking at these properties online as a prospective buyer reading opinions everywhere and this by far the most information I’ve found.


Is a good rule of thumb here the higher the better? I don’t know what the elevator is like but I’d figure less noise and possible water damage as you go up.


I’m amazed the front desk woman has a job based on the stories I’ve read on this site and others. What’s the deal? She’s a more common complaint than the HOA fees.


The HOA fees are exorbitant but heating/cooling/etc included is somewhat understood. One could only hope they drop as certain issues are remedied.


I read that the individual tenants have limited control over their own condo’s temperature. Is there any truth to that?



Submitted on 2009/03/11 at 3:40am by “Prospective Buyer”




I just wrapped up a tour at Landmark today and viewed roughly a dozen properties, all of which seemed to be in good-excellent condition considering the asking price.


I was lucky enough to speak with 2 residents here and they provided me with nothing but great reviews about LT; one of them just happened to be a resident of LT for 2 years and has lived on 2 different floors. However, they did acknowledge the ongoing issues regarding the pipes and water temperature/pressure. My boyfriend was able to confirm this when he turned on a few faucets in each unit and noticed inconsistent water pressure each one, as well as hearing noise coming from the water pipes. I also heard good things about the staff, although I don’t know whether they were referring to the residential staff or the HOA management. All I know is that a woman named Vicki is incredibly helpful and sweet.


I’ve been trying to find out as much information about LT and have come across very conflicting reviews. My parents are in the market for an investment property, which I plan to live in, and would love to hear more about LT, so please keep up with the comments and articles!


Other than this blog, this was the only website that I could find with reviews on LT.


http://www.apartmentratings.com/rate/AZ-Phoenix-Landmark-Towers.html


I hope this helps and look forward to future posts on here!



Submitted on 2009/03/17 at 2:24pm by Kathye




I am also a prospective buyer who is interested in purchasing at LT. I noticed many units on the market, and the prices are at a low. I have not been over to the property to check it out. I have seen many pictures. It looks like a cool place. Is there any resident that would like to give me tour? I am not ready to contact a realtor yet. I would love to see the views from the balcony and ask a few questions. I’ll provide the beer or wine! kaypaz@aol.com



Submitted on 2009/04/30 at 3:09pm by Cindy




I am currently in the process of purchasing a 6th floor unit. I had it inspected two weeks ago and no water damage or pressure issues were found. In fact, the inspector said the pipes in this particular unit were nearly brand new. Not sure about the rest of them, though! clip_image001[6] The AC blew me away. All in all, the inspector said it was in great shape and was himself a bit enamored of the place.


I love the bustle of downtown and can sleep through a tornado so bring on the city sounds! I love the north view, the light rail and the gorgeous mountain backdrop. They represent a harmony of nature and technology working together for me. And for Chrissakes I won’t die before it’s paid off! Given what is included, the HOA fees still seem reasonable *enough* to me, and not having to even deal with those little things makes my life easier.


Does anyone know the approximate % of the building that is occupied? I now seem to see the same units over and over again, so I’m assuming most people are staying put that are there.


This site is great, thanks to all for the great research! clip_image002[4]



Submitted on 2009/05/19 at 9:48am by Cindy




Well that is an interesting question. I am still going through the loan process with my unit and yesterday the relator called and said they were raising the HOA fees $800 a month for 8 months to pay for a new air conditioning unit. On top of the $581 I will already be paying. However, that includes air/heat, garbage, cable, water, etc. Everything except internet and electricity, which is about 20-30/mo depending on which side of the building you live on. It is less on the north side because it is cooler. I am needing actually at this point to rethink this because I can’t afford what will basically be $1,622 a month for 8 mos.!!!


HOA fees vary depending on your unit. Mine is a 2 bed 1 bath. If anyone knows anything else, especially someone who is already living there, please contribute!



Submitted on 2009/05/21 at 11:54am by Mario




I am also a perspective buyer at the Landmark. It sure would be nice to have solid info from someone on the hoa board post something on this site to concerns about 800 dollar increases over 8 months !!! Getting scary…..6400.00…..in 8 months? Can anyone comment?



Submitted on 2009/05/29 at 3:55pm by Cindy




I called the HOA directly about this and spoke with the Accountant. My realtor called and told me this so I obviously was very upset. The accountant said that the issue with air had been addressed and if anyone would know about such a ridiculous increase it would be her. I am going forward with the purchase. That is what I have so far, but I’ll be sure to update if anything changes.




Want to search for downtown Phoenix condos, including Landmark Towers and others? Click here.

More Thoughts on REDC Auctions

This is a follow up to yesterday’s post about the upcoming June 13-14 REDC auction of bank owned foreclosure homes.

Most auction houses don’t use the Arizona Association of Realtors’ (AAR) purchase contract form. They’re national corporations; they use their own forms.


REDC doesn’t publish their purchase contract online. However, I’ve seen other auction companies’ purchase contracts, and noticed that many of the buyer’s rights under the AAR contract are not in the auction contracts.


Most importantly, the AAR purchase contract gives buyers the right to cancel the purchase and receive a full earnest money refund if:





  1. the property doesn’t appraise for at least the purchase price


  2. the buyer isn’t approved for financing


  3. the buyer doesn’t like what s/he found during the home inspection period


Most auction houses don’t allow buyers these rights, known as “contingencies”.


Simply put, if the house doesn’t appraise for the winning bid amount, you must buy it anyway or forfeit your earnest money. Your mortgage lender denied you a loan? Oh that’s too bad. Will that be cash or cashier’s check? Oh, you don’t have the cash to buy the house? Ooooh. Well, we’re just gonna have to take your earnest money.  Better luck next time.



A Great Deal?


Two tips if you’re considering attending the REDC auction on June 13:



1) Consider the cost of the marketing fee the auction house adds to your purchase price.

At the REDC auction on June 13, a 5% marketing fee is added to the winning bid. That means the house must be at least 5% below prevailing market prices before it’s worth it to have bought at the auction.


2) Do a thorough home inspection before the auction, including a contractor’s estimate for repairs and a Realtor’s or appraiser’s estimation of value.


Know exactly what you’re buying. Does the roof leak? Does the A/C work? How about the water heater? Does the house have termites? Foundation damage? Slab leaks?


The old saying “you get what you pay for” has been around long enough to get old because it’s often true.


I’ll be attending the June 14 auction. If you’d like to attend with me, call or email.


602-999-8831 or Heather@ThePhoenixAgents.com

REDC Auction

REDC is one of the biggest home auction houses in the country and they’re advertising their upcoming June 13-14 Phoenix area auction heavily on local cable TV channels.


Here’s a few things you should know if you’re thinking about attending.



Access and Inspections




  • You can tour the homes and do inspections before the auction but not after


  • Open House dates for the Phoenix area are May 30, June 6 and June 7


  • Heather’s note: it’s nearly 100% certain that Realtors will be holding these open houses, fishing for unrepresented buyers, so be ready to say No or bring your own Realtor to the open house


  • It probably goes without saying that REDC probably won’t be happy if you do your home inspection during the Open House (but many homes are on Realtor's lockboxes so you can hire a Realtor to get you into the homes at time other than the Open House)


Attending The Auction




  • You have to bring $5,000 cash or cashier’s check to enter


  • You can bring your own Realtor to the auction and REDC will pay him/her a 1% commission


  • If you win a property at auction you must put down a 5% earnest money deposit that day


  • You cannot attend the auction for someone else (no assigning winning bids)


The Money




  • You can finance your home purchase


  • REDC’s lenders are on site but you don’t have to use them


  • If you use your own lender, you must purchase the home even if you’re turned down for a mortgage (no financing contingency)


  • You must close on the purchase within 30 days of the auction


  • Heather’s Note: Lenders a swamped with buyers lately so you might not be able to close within 30 days; start working with a lender before the auction


The Fine Print




  • REDC adds 5% to your winning bid to cover their marketing expenses (if you win a house for $200,000, they’ll add 5% - or $10,000 – to make total purchase price $210,000)


  • The 5% fee is added to your purchase price whether you use your own Realtor or not


  • REDC’s website says they usually auction 25 to 30 properties per hour (i.e. you’ll have 2 minutes, total, to decide whether you want to bid on each home, and how much


  • If you “win” the house at the auction your purchase is non-cancellable


If you want to read the complete FAQ for this auction you can find it on REDC's website. A few more thoughts on auctions tomorrow…




I’ll be attending the June 14 auction. If you’d like to attend with me, call or email.


602-999-8831 or Heather@ThePhoenixAgents.com

Where to Find Homes Online

Did you know that consumers can’t view the MLS? You’re probably thinking “She’s loony. I was looking at the MLS online just the other day.”


Umm, no. You weren’t looking at “The MLS.”


First, a definition. The MLS  (a.k.a. Multiple Listing Service) is a privately-owned local or regional database where all participating Realtors list their properties for sale. In other words, the MLS is like a giant online bulletin board for Realtors only. Each city, town or region has their own MLS. There are probably tens of thousands of MLSs nationwide.


Metro Phoenix (which includes all of Maricopa County and some of Pinal County) uses the Arizona Regional Multiple Listing Service, or ARMLS. It’s pronounced “arm-less”, the thought of which always makes me giggle a little. Given the sorry state of professionalism exhibited by some Realtors, I’ve petitioned to call it “witless” or “brainless”, but that’s beside the point.


So what were you – the real estate consumer – looking at online if not The MLS?


You were looking at a for-profit website that grabs a data feed from one or more MLSs. Then the website designers re-jigger the MLS data and show it to their online visitors next to lots of shiny graphics and cool mapping tools.


Realtors don’t control the data once the other sites’ tech geeks grab the data feed. Here’s where I’m going to pause a moment and ask you to remember the childhood game of Telephone.


In Telephone, a bunch of kids stand in a long line. Then the first kid in line whispers a sentence (such as “I like peanut butter and jelly”) into the ear of the kid next to him, and the message whips downline to the kid on the very end of the row. End Of Row Kid says aloud what he heard (“I might pee under the telly”). Hilarity ensues.


The point is, data gets mangled during the relay. It’s funny when 8 year old boys do it. It’s not funny when it’s housing data and you’re house shopping.  Too often, online consumers are looking at housing data that’s incorrect, incomplete, outdated or just plain wrong. Usually they don’t even know it.


What’s a consumer to do? Use a Realtor’s website to access the ARMLS data directly.


With a hat tip to our broker Jay Thompson, who first did this a couple weeks back, here’s a comparison of the amount of that data you can see on various national real estate websites.



Search Query: 3+ beds, 2+ baths, $0 to $75,000 in Phoenix


(as of May 2, 2009 at about 10:30 am local time)


























SiteNumber of Properties
ARMLS1,975
Realtor.com775
Trulia.com536
ZipRealty.com1,037
AZcentral.com856

Clearly, the ARMLS has the most listings. The only way to see all of the available property listings in the ARMLS is to visit a Realtor’s website that has all the available listings. Can I suggest ours?


All member Realtors have access to every property listed in the ARMLS. But I believe our customer service and market knowledge is simply better than others’.


Search on!


(want more info on this topic? See this 3-part series about "searching the MLS")

Homes for Under $25,000 ??

Buy a Valley home for under $25,000?


Sold Since 3 15 09, listed 25k and Under(map courtesy of FlexMLS. Click to enlarge, use browser’s back button to return)


The map above shows the homes (single family detached only) in the greater Phoenix area, with list prices of $25,000 or less, that sold between March 25 and April 25 of this year. Each blue marker is a sold home.


There were 190 of them. One hundred ninety houses that were listed for $25,000 or less sold in the past 30 days!


Only 2% were not lender-owned. Two-thirds of these homes sold above list price.


I thought it might be interesting to see the pattern of homes sold in this price range over the past few months. It was.



December 2008 – 37 homes sold w/ list prices under $25,000
January 2009 – 48 sales
February 2009 – 87 sales
March 2009 – 168 sales

Seems like a pretty clear upward trend. I can hardly wait to see the April month-end numbers.



Meanwhile, at the other end of the price spectrum …


 


 Listed for 1M or more, 4-25-09 (Map courtesy of FlexMLS. Click to enlarge; use browser's back button to return)


Here’s a map of the homes (again, single family detached only) currently for sale with list prices of $1,000,000 or more. There are 3,107 of them. Only 52 are lender owned. In other words, almost 98% of these homes are not lender owned.


Number sold in past 30 days? One.


In the previous 30 days, 63 homes with a list price of $1M or more were sold. The month before that? Fifty-four sales in this price range.


That’s a microcosm of the Valley’s real estate market this spring. Bank owned homes at the low end of the price range are selling, and fast. The luxury market is dead on it’s feet. Homes in the middle are muddling through. I promise to find and post some stats on the muddling middle very soon.

Landlords, Do You Owe Rent Tax?

The recession has hit everybody in their wallets, even city governments. The Arizona Republic reported recently that the Valley's cities are getting tougher in tracking down landlords who aren't paying the rental tax they owe the city.


Didn't even know that Arizona landlords pay rent tax? You're not alone. The Arizona Republic reports,


"Laws that vary by city make tax requirements confusing to novices. In Chandler, Tempe and Glendale, an owner's first rental is subject to tax. But in Scottsdale, Phoenix and Gilbert you can own two rentals in Arizona without paying a tax but must pay on the third one."


State law requires landlords to register their rental properties with the tax assesor. You can reach the Maricopa County Tax Assesor online. Use this link to register your rental property online. Use this link to download a printable form you can mail or fax to the Assesor.


While the state government sets the requirements that landlords register rental properties, it's the city governemnts that are responsible for enforcement. Chandler is among several Valley cities that is actively conducting audits of property records to find unreported rental properties.


Here's a few methods cities use to find landlords who "forget" to pay their rent tax. City employees can cross-check the names on utility bills against the owner's names recorded at the County Recorder's office. Interns can conduct research on the property transfer records. The City of Mesa even goes so far as to question relatives living in a family member's home and rules that if you pay rent, the owner is a landlord and liable to the rent tax.


What are the penalties for not paying rent tax when it's owed? Chandler gets really tough, filing liens against the property when they find a landlord flouting the law. Tempe allows a 10-day grace period but after that the errant landlord is liable to a $10,000 fine. The City of Phoenix plans to send employees to Chandler to learn new get-tough methods.


My research into the MLS rental listings show that rent tax is usually about 1% to 2% of the rent collected. Most landlords add it on to the monthly rent amount and, in effect, make their tenant pay the tax.


However you arrange to have rent tax paid landlords, don't neglect to register your rental property with the state! Check out this online publication from the Maricopa County Assessor for more information on the registration requirements and penalties for non-registration of your rental property.

Building Real Wealth

For many fist time buyers, the next 6 to 9 months could be the best possible time to buy a home in the past 25 years or so. Not for everyone. But maybe for you.


If you're pretty sure your job is secure, can emotionally handle the potential of a falling home value for a year or two before you start building equity, can afford to make a downpayment of at least 3.5% and still have some savings left over, and most important, if you plan to own the home for 8 to 10 years plus....


There are tons of homes to choose from, prices are as low as they've been in 3 to 5 years or more, and interest rates have dropped into the mid- to high-5's....


For many first time homeowners, now might be the perfect time to buy your first home.


It might also be the perfect time to begin building some real wealth into your future golden years. See my earlier post about current pricing for a typical starter home. Don't want to click over and read a whole other post? In that case, let's start with some assumptions:


A starter home is 3-4 bedrooms, 2 baths, 1400-1600 square feet with no pool and a 2 car garage. Depending on location within the Valley, this home will cost you about $85,000 to $130,000. Willing to do a little true fix-up work? You can get it for less.


Let's further assume a purchase price of $110,000 with 3.5% down payment, $33 per month in HOA dues, $38 per month in homeowners' insurance premiums, and $100 per month in property taxes, and the seller will pay your closing costs up to 3% of the total price. Your total cash outlay is $3,850 and your monthly payment is $795.


"Hey! That's less than my rent," you're probably saying. Exactly!


But let's say you don't think you can picture yourself living in that starter home for 10 years. You're young. You might get a job transfer or promotion. You might fall in love and get married, have kids and need a bigger house. Here's where the wealth building comes in.


Live in your new house for a couple of 3 to 5 years. Then move on and rent it out. As the years pass, you'll continue making mortgage payments (which will probably be mostly or completely covered by the tenant's rent), paying down the mortgage, and eventually the house will begin paying you back.


Rent rates for this sort of house today are about $850 to $1100 per month, depending on age, location, condition and so forth. Over the long haul, rents will increase. That's just the nature of inflationary pressures on the cost of living. "Average" inflation is about 2% to 4% per year. In 30 years, given an average inflationary rate of about 3%, your tenant will likely be sending you about $2,000 per month. Your living expenses will have increased likewise, but having money coming in every month in addition to your salary is nothing to sneeze at.


Thirty years from now, you'll have paid off the mortgage and all that rent money your tenant pays you will become just another source of income. Who knows? If you can budget carefully over the years and buy a 2nd (or even a 3rd or 4th) investment home...  maybe that tenant "income" will be enough to help fund your early retirement.


Think this sounds far fetched? It's what "Rich Dad, Poor Dad" financial guru Robert Kiyosaki has been preaching for years.  Is building real wealth easy? Of course not. Nothing worth attaining is easy. There are a lot of variables in being a landlord. It's not something you should do without serious thought and planning. But it's not as wildly out of the realm of possibility as you might think.


This scenario is attainable. And you could start down that road to real wealth just by looking at a few starter homes for sale this month.


Contemplating Self-Management of your Rentals? Pt. 3: Rents & Deposits

In this third installment, we'll be looking at rental fees & deposits.  Renting a home is very similar to selling in that there is a market that influences what you can charge for a home.  As in selling, the market for your rental will be largely impacted by location, & currently available rentals. 

The better the location of your rental the more you can charge.  For instance, a 3 bedroom, 2 bath home near Metro Center is not going to secure the same rent that an equally equipped 3 bedroom, 2 bath home near Arrowhead Town Centre would.  And that same 3 bedroom, 2 bath home near Arrowhead, is not going to secure the same rent that an equally equipped home near Desert Ridge could expect.  So, location has a lot to do with what you will be able to reasonably charge. 

The other factor in determining the monthly rent is the number of other rentals currently available in the same area.  Again, this parallels home sales in regards to supply and demand.  If there are 5 apartment buildings with availability, and 25 rental homes available within a 3 mile radius all with similar features... 3 bedrooms/2 baths, then you might have to wait a little longer to find a tenant than if there were only 2 apartment buildings (near capacity) and only 10 rental homes. 

Of course, there are people who will not want the hassles of renting a home even though it means they might have a 2 car garage, and private backyard, where others might not even consider an apartment because of the common walls & smaller living area.  You will need to research the area where your property is located and determine a fair rent.  Be sure to qualify your prospective tenants before they sign the contract, and be sure you are comfortable with them.  You will be dealing with them again when it's time for them to move out... whether it's their choice or not. 

Once you have your monthly rental fee determined, then you'll need to decide what deposits you will charge.  According to Arizona law, the amount of the deposits cannot be more than 1.5 times the monthly rent.  So, if your monthly rent is $1,000.00, then you may not charge more than $1,500 in deposits no matter how many deposits you create.  The total of deposits must be no more than 1.5 times the monthly rent.  With that being said, you can charge a deposit for almost anything you want.  The most common are:  security deposit, cleaning deposit, & pet deposit, but you might request a deposit for yard maintenance, etc.  The amount of the deposits can vary, but in the end, the grand total of all the deposits can be no more than 1.5 times the monthly rent of the unit (whether it's a house or an apartment). 

Finally, when determining what to charge a deposit for, it's wise to remember that whatever you ask the tenant to maintain on his/her own, might have a much larger cost in the end if it's not kept up than if you had maintained the responsibility of it yourself.  For example, the rental you have includes a pool.  If you have the tenant maintain the pool, you might get off cheaper (if they actually maintain the pool).  However, if the tenant becomes irresponsible or unable to maintain the cost of the pool upkeep, you may have a much larger expense on your hands when the tenants move out or realize that they were supposed to continue treating the pool even during the off-season, than what it would have cost for you to hire a pool service.  

In the next installment, we'll look at the unfortunate case of a non-paying tenant.  If you have experience with this and would like to share, please do!

More on Selling your Rental Property

It's amazing every time I head out with buyers to look at properties, how many rental properties are on the market and what condition they are in!  This last weekend proved yet another adventure in house shopping as well as an eye-opener to what some seller's are asking considering the condition of their properties and the (lack of) ease in showing it.

Here's a few more suggestions when selling a rental property:

1. Make sure the tentants will allow buyer's to see all the rooms.  We looked at two houses this weekend in which a teenager occupied the room and had locked the door (and no-one had a key), so we couldn't even see inside that particular room.  You can't really expect buyers to purchase a property without seeing it (unless they are other investors who don't really care what the property looks like).

2. If you have a pool that you're not willing to take care of, at least drain it before showing the property.  We saw three houses with pool that ranged from murky to nearly black.  You would think pools would be a great selling point with summer coming along, but if they pool looks contaminated with bacteria and algae, you can bet those buyers are going to look at buying a different property!

3. The term "fenced pool" in my opinion, usually refers to a pool that has a child-proof, self-locking fence around it.  We saw a house this weekend, that listed a "fenced pool", however, when we reached the backyard, we laughed that the seller decided that they could tack up chicken wire around the pool, and list it as "fenced".  Yes, I did say chicken wire!  I was amazed that the Real Estate Agent listing the house would also put in the MLS that this was a fenced pool! 

Sellers and Realtors, it would do you good to be honest about the condition of the properties when listing them in the MLS!  Nothing turns a buyer off more than an exalted description of a run-down property.  Right off the bat, the buyers are reluctant to do business with you, because you come off as not honest.  If buyers know they are getting a fixer-upper, they are much more likely to take a serious look at the property, rather than discounting it due to their perception of false advertising by the seller and Realtor.  �

Contemplating Self-Management of your Rentals? Pt. 2: Finding Tenants

As a self-managing landlord you have the responsibility of locating your own tenants, and the more credible they are, the better.  So, how do you go about locating such tenants?   

  1. You might want to start with referrals from your closest friends/relatives.  Sometimes they generate the best leads.  However, you also have to consider your ability to manage your property when you personally know the tenants.  If you have any reluctancy, you may find yourself more comfortable limiting your tenants to other sources.

  2. Advertise through the internet, newspaper, and/or via a sign at the property.

  3. Possibly have an Open House to draw prospective tenants in.


Once you've located possible tenants, you need to qualify them or determine their credibility.  Nothing's worse than placing tenants only to find out a month or 2 down the line that they were never capable of making the payment in the first place.  So now that you have some possible tenants, you need to know how to qualify their ability to pay monthly rent.

  1. Get the full name, social security number, and birthdate of the financially responsible tenants. 

  2. Previous residential address and payment history 

  3. Employment history including phone numbers for supervisors

  4. Enlist the services of a credit screening agency such as TransUnion, and make sure you have the prospect sign a disclosure allowing you to check their credit.

  5. Request credit references from the tenant's electricity, water, or phone service providers 

  6. Request banking references

  7. Request personal references


Helpful Resources:

Many people have found these books to be handy reference tools for managing their own properties:

Next time, I'll take a look at rents & deposits.