Tiffany Cloud's Arizona Blog

musings from 35 yr AZ resident and Realtor®

Two Breaches don’t make a Right…

We do a lot of transactions that involve buying or selling properties that are ‘distressed’ properties.  The dictionary defines distress as:  a state of extreme necessity or misfortune.  A distressed property might be anything from a vacant, bank-owned home, a pre-foreclosure that involves tenants being forced to move, or a traditional sale where the sellers are forced to sell and must walk away from a large down payment that has been lost to them in a declining market.  Currently, 60%-70% of all homes closing in the Phoenix Metropolitan area would fit into this category.

thief REO Distressed sales are never ideal for the sellers or residing tenants and can introduce a myriad of possible problems at close of escrow for a potential buyer.  What happens if the property is damaged or ‘trashed’ before Close Of Escrow (COE)?  What if the occupants leaving take appliances, fans, or fixtures that are supposed to convey or stay with the property?    What if a vacant property has had vandalism that has altered the condition of the home? 

What remedies do you have as a buyer of a home if one of the above problems arises shortly before close of escrow (COE) or recordation?

There is a short answer to this question and a long answer.  Most people want to know if they can refuse to close until the property is ‘whole again’ or demand some kind of compensation for the damage before close of grdma pointing fingerescrow.  So here is the short answer:  Just because the other party has breached the contract, doesn’t give you a legal right to breach it as well.  How can you be breaching the contract by refusing to close escrow?  You agreed in the contract to close on a specific date.  Remember your mother telling you two wrongs don’t make a right? – Yep, it’s still true.

This post was originally 5x the current length it is now, because I started with the long answer.  The long answer involves taking a detailed look at the purchase contract we use in Arizona to define what the parties have agreed to in terms of:

      1. the condition of the property
      2. the inspection periods
      3. the seller warranties
      4. the seller’s obligation to inform the buyer of changes in the property
      5. remedies the non-breaching party has against the breaching party

Suffice it to say that there is much that can be discussed and a great deal of detail along with different ways to circumvent through the above mentioned items.  It is imperative that your agent has extensive and skilled knowledge at trying to pro-actively address and protect you as much as possible.  For instance, Julie and I feel it prudent to conduct 2 walk-thrus of the property before close of escrow. The first walk-thru should be completed about 6 or 7 days before close of escrow and then a second one done a day or so before the close of escrow, after any occupants have vacated the property.  Will this earlier walk-thru guarantee discovery of a potential problem? – No, not necessarily (especially if the breach hasn’t occurred yet).  Might it help you discover a problem  before it’s too late to put into action some of the built-in remedies allowed for a breach of contract – specifically a 3 day cure notice delivered to the seller? – Absolutely!

Ultimately we will tell you this, when the property isn’t handed over in the same condition as it was when the contract was agreed upon, the solution is not as easy as the buyer refusing to close escrow and you could be forced to make some tuff decisions at the last minute.  Make sure you are prepared for the possibilities and realize that this is one of the inherit risks of getting a great home at rock bottom prices.

Thanks for reading!  

 

August 29, 2009 Posted by | Uncategorized | Leave a comment

Etiquette and Manners for purchasing Short Sales in Arizona

etiquetteSince Short Sales etiquette is not included in the Emily Post’s Etiquette Daily, I thought I might share a few things I have learned and observed the last 2 years that short sales has become a regular part of my real estate business.

1.  Short Sale and Pre-Foreclosure are the same thing.

2.  Make an extra effort to view a home advertised as ‘short’ or ‘pre-foreclosure’ when the occupants are not around.  They don’t want to talk to you.

3.  If you happen to run into owners or occupants/tenants while viewing a home advertised as a ‘short-sale’  Don’t ask them questions.  If it’s a tenant, they might not even know that the owner is selling short and the owner might not be ready for them to know that yet.  If it’s an owner….they are losing their home, this is not the time or place to ask questions.  have your buyer’s agent discuss details with the owner’s listing agent.  Don’t put the owner on the spot to discuss details of their uncomfortable position.laundry

4.  Just because someone is selling short, doesn’t mean that they do not deserve the same etiquette when scheduling appointments, keeping appointments, locking up and leaving your business card.

5.  When writing a contract, DO NOT ask for any of the owners personal property  including appliances, furniture, lawn equipment, etc.  Don’t add insult to injury – they are already losing their home don’t ask for the few personal items of value they DO get to take with them.

Do you have a right to ask questions and find out specifics about the situation of the homeowners’ situation?  If you are a consumer/buyer – you have the right to ask your agent.  If you are an agent you better ask questions!  Don’t ask the owner though, ask the co-operating agent.  You need to find out some specifics regarding how many liens, amount and status of the liens, who holds them, at what stage the foreclosure is in, what documents have been sent to the bank etc…that is your job and you better do it – via the listing agent.

If you have additional items of etiquette for us to consider please leave a comment.  Thanks for reading.

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August 12, 2009 Posted by | Arizona, Arizona Housing Market, East Valley Real Estate, Uncategorized | , , , , | Leave a comment

Tipping Point – Arizona Housing Market

The million dollar question for the last several years in the Phoenix Metropolitan area is “when will the housing market hit bottom?”  This leads us to ask, “how does one define the ‘bottom of the market’? ” I am no statistician by any means, but you can only define “bottom” by looking backwards.  One can’t state that we are at the bottom now without knowing what will happen next month and the month after.  Usually when we talk about trends and defining trends in real estate, we want to see a four month consistency, or ‘last quarter’ type of stability.  If March or April of 2009  is the bottom of the market price-wise, we won’t know until mid to late summer.  We can only look back to determine with any certainty what the data tells us in relation to the broader picture.

Having said that we are definitely at a tipping point in the greater-Phoenix housing market.  Let’s look at both ends of the supply and demand  scale that impact our sales price.

Supply is the inventory of homes we have available for purchase.  At our peak in October 2007 we had 58,334 homes available.  To contrast this figure with the other market extreme of 2005/6 our inventory of homes was at a whopping 8,342 in April of 2005.   (Normal inventory is about 32,000 active listings) Now let’s look at the decrease in inventory over the last several months.

Phoenix Housing Market Decline First Quarter 2009

Phoenix Housing Market Decline First Quarter 2009

Now lets take a look at the supply side of the Phoenix housing market.  Pending sales is our most current indicator of the demand for homes.  While closed sales is arguably a more accurate indicator, because not every pending sale ends in a closed sale.  Closed sales again are looking backwards.  Pending sales are a more immediate picture of current demand.  So what do the pending sales in the Greater Phoenix housing market tell us?

Highest amount of Pending Home Sales than any other time in history in Phoenix Metro area

Highest amount of Pending Home Sales than any other time in history in Phoenix Metro area

As the above chart indicates, are pending sales are through the roof.  As this chart is 2 weeks old now, our pending sales are even higher now at over 14,000 units.  We are currently several thousands units above what are previous high in the 2005 market.  I don’t know that we could have any clearer indicator of demand except what agents and buyers are experiencing out in the trenches right now.

Here is what I have heard from other agents in the last week. “I Can’t believe their were 18 offers on that house”,  “2 of the 5 properties I was going to show my buyer went under contract last night”  “The listing agent told me not to bother to write on homes if I was going to ‘low-ball’ – thing is, we only came in $5,000 under asking price – the listing agent told us we were the lowest price offer he had of 6.”

Thanks for reading.

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May 1, 2009 Posted by | Uncategorized | Leave a comment

Mesa’s Historic ‘Citrus Corridor’ Explained

You might hear it referred to as “Mesa Groves”, “Citrus Sub-Area”. “Citrus Corridor” or just “The Groves”, they all refer to a protected sub-area in North-East Mesa, Arizona where estate size housing lots abound in and around 80-year old Citrus Groves.

There are many unique things that set this area apart from any other area in Mesa or the Valley. According to the City of Mesa’s Citrus Sub-Area Plan, the purpose of the sub-area is, “to provide estate-type residential uses and characteristics associated with large lot residential development.” Citrus Lined Streets croppedApproximately 89% percent of the roughly 3 square miles is zoned R-35, low-density single-family housing, with schools and parks making up another 5%. In addition to miles of large estate size lots, a double row of citrus trees line most of the arterial streets and are incorporated into many of the sub-divisions and private lots. Consequently, The Citrus Groves Corridor has it’s own microclimate which can be 10-15 degrees cooler at night than the adjacent desert areas.

In order to protect and maintain the history of what remains of the once 1,000 + acre groves, developers are strongly encouraged to follow guidelines set forth in the Mesa Citrus Sub Area Plan.

Below are a sample of a few of the Guidelines of this Area Plan that promote a rural experience:

  • All Garages Should be side or real entrySomerset Estates sinage
  • All walls should be of solid masonry construction using natural stone, stone veneer, brick or decorative block in keeping with the rural theme.
  • Minimum lot size should be no less than 30,000 square feet.
  • Citrus Trees should be maintained with flood irrigation when possible.
  • In the Citrus Sub-Area, all new residential development should promote and encourage custom home development on R1-35 zoned lots.

You are going to see a lot of mature citrus, grass and beautiful custom homes in this area.  While there is still evidence of a dessert, it is greatly muted by an abundance of green. From November to March is not citrus groves mesa with tractor small uncommon to see an occasional John Deere tractor loaded with a trailer full of citrus driving down the street. People drive from all over the Valley to the few local citrus stands and stores that still remain in the area. In fact, Winter Visitors love to ship the fresh citrus to family and friends back east and beyond during the winter months. Several city parks, award-winning schools, a few churches and a couple of antique stores are also a part of this unique citrus sub-area. It is not a surprise, that The Phoenix Business Journal 2008 Book of List, states that Mesa’s wealthiest zip code, 85215, is a part of this unique area.  The Groves are bordered by Loop 202 freeway on the North with easy access to Scottsdale and Tempe and less than 15 miles from Sky Harbor International Airport and Arizona State University.

3-11-2009 citrus preservatio area

As of March 4, 2009, ¾ acre lot homes in The Mesa Groves are listed from $339,900 to $3,150,000. The average list price per square foot is $263 and the average listing has 5688 sq/ft. If you would like more information on homes in this unique area, please give me a call 888.668.4629 or email me Tiffany@CloudHomes.com

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March 11, 2009 Posted by | East Valley Real Estate, Neighborhood Tours, Uncategorized | , , , , , , , , , , , | Leave a comment