by MICHAEL BODEEN | Nov 12, 2014 | Bodeen Team Blog, Real Estate News
You’ve seen the mortgage financing ads quoting a certain rate, such as 2.99% on a fixed rate mortgage, but your lender is quoting you 4.00% for that 30 year fixed rate loan. Is your lender gouging you?
Or, when you chose your lender, they gave you an initial quote for that 30 year fixed at 3.75% and no points. You choose that lender, and shortly thereafter, the lender quotes you a far higher rate. Are you being hustled?
Or, you’ve got a solid 20% cash down payment but now your lender is saying you’ll have to switch to a FHA loan rather than conventional. Is this bait and switch?
We know there are a few lenders who may take advantage of you, but the answers to the above frustrations are all probably no, you’re not being gouged, hustled, or bait and switched. More likely, that 2.99% fixed mortgage is a 2.99% fixed rate loan, but it’s really a “fixed/variable,” as in a fixed rate, amortized over 30 years, but in 5 years it adjusts to a variable rate mortgage.
In the case of the lender who quoted you 3.75%, they may have been quoting you based on top FICO scores of 780 or higher. When the lender actually pulled your credit and your FICO’s were lower your rate was now quoted higher based on perceived higher risk to the lender.
And the lender who’s now saying you may need to do an FHA loan rather than the conventional even though you have a strong down payment, may be suggesting that because you’re still not qualifying for the conventional, but would qualify for the FHA as their qualifying standards are more lenient.
So, how important is having stellar credit when looking to finance a home purchase? As the above examples show, you may be able to get a loan, but unless you have good credit, you will pay more for that loan as in a higher interest rate and/or higher loan costs. You also may not qualify for as high a mortgage amount which means your price range will be less, therefore you get less house or less neighborhood, or less whatever.
Today we’re seeing a number of credit issues affecting buyer/borrowers. Student loan debt, poorer credit due to fiscal mismanagement, and folks still in the “Penalty Box” waiting period of having had a short sale, foreclosure, or bankruptcy.
There is financing available for folks who have had a short sale or foreclosure and don’t otherwise qualify for a loan. These are called “Portfolio” loans. Local community banks may have these loans available, but one such loan quote we got for a buyer recently was requiring a 35% cash down payment, 10% interest, all due and payable in two years. The good news is that if you have to have the house, you can get it and then refinance in two years when you come out of the “Penalty Box.” This is risky however.
We’ve talked before about reasons why the market is not more robust with rates as low as they are, and I tended to blame the Millennials’ generation for not buying, but credit obstacles are probably the main reason. As these issues
For better or worse, I think the new congress, commencing in January will be more pro-active in setting policies that could lighten the loan requirements thereby increasing the number of qualified buyers in the marketplace. Time will tell.
(Next week, we’ll look at how you can best discern if you’re getting the best rate and terms available from your lender)
by MICHAEL BODEEN | Nov 3, 2014 | Bodeen Team Blog, Real Estate News
Where have all the Buyers Gone?
Sung to the tune of “Where Have All the Flowers Gone…”
Where have all the buyers gone, long time passing
Where have all the buyers gone, not so long ago
Where have all the buyers gone, gone to rentals everyone
Oh when will they ever return? Oh when will they ever return?
2014 will go down in local real estate lore as the year we Phoenicians caught our collective real estate breath. This is a good thing. Though the Phoenix-Scottsdale metro market has been languishing for a year plus now, our prices have so far held up.
As far as sales are concerned, we have to go back to September 2006 to find as few sales as we had last month. So, this begs the question, where have all the buyers gone? More importantly, when will they return? And what will bring them back?
There’s good news on this front (in my opinion). Before I go there, let’s take a look to see where our buyers did go. Here’s a quick review, thanks to Michael Orr, of the Cromford Report. It is generally agreed that a number of issues contributed to the current real estate malaise, including:
Where Have all the Buyers Gone?
• Investor activity dropped 36% from September 2013 (our peak)
• Millennials are not buying homes like their parents did (more of them are living with their parents, sharing or renting)
• One in four former homeowners are in the “Penalty Box.” (The “Penalty Box” is where these former homeowners have to wait before they can buy a home again. Typically, this wait runs from 3-7 years, (2 years if VA) no matter how well their fico credit scores rise)
• 367,000 owners lost homes to foreclosure, short sales
• Large Lenders are holding back as they are very much risk averse and so buyer qualification standards are still pretty rough
• Demand is currently favoring Renting
A Closer Look at the Millennial Buyer:
• Starting families later than earlier generations
• Lower birth rates
• Many Still living with parents
• Higher preference for urban lifestyle
• Tendency to share accommodation and transportation
• Not convinced home ownership is good for wealth
• Expect to own a home one day – Not a high priority for them in 2014
• Mostly renting, creating demand for landlords.
A Closer Look at the Penalty Box:
• 232,767 (19% of Maricopa homeowners) have been foreclosed since 2008
• 83,849 (7% of homeowners) completed short sales since 2008
• 26% of former owners have credit issues
• Peak foreclosures were from 2008 – 2011
So What’s the Good News?
In this case, what goes down should go back up. As there were peak foreclosures and short sales in 2008-2011, the penalty box release phase begins in 2015 and continues through 2018, meaning that these buyers, assuming their regular credit is good, can qualify for conventional and FHA loans again.
If only 5% of these Boomerang Buyers (18,000+-) bought a home in each of the next four years, each of those years, save one, would make a record sales year. And if that happens, look out, we could see the wild, wild west all over again.
by MICHAEL BODEEN | Nov 1, 2014 | North Scottdale Zip Code Information, North Scottsdale News, Real Estate News
85254 – Zip Line Report
Active and Pending Listings are virtually unchanged from one year ago. Sales are down while the median price has risen 10%.
Currently Last Year Change
Active Listings: 256 vs 257 Down Negligibly
Pending Listings: 38 vs 36 Up Slightly
Sales Per Month: 61 vs 63 Down Slightly
Sales Per Year: 716 vs 932 Down Significantly
Median Price: $425k vs $385k Up Significantly
85255 – Zip Line Report
This premier North Scottsdale zip code is showing active listings up and Pending listings down. Sales increased this last month versus last year, but are down 17% from last year.
Currently Last Year Change
Active Listings: 563 vs 468 Up Significantly
Pending Listings: 46 vs 69 Down Significantly
Sales Per Month: 71 vs 68 Up Slightly
Sales Per Year: 861 vs 1,036 Down Significantly
Median Price: $637k vs $617k Up Slightly
85258 – Zip Line Report
Including the Ranches of McCormick, Scottsdale, and Gainey, listings are down 11% over last year, while the median price is showing an 8% gain over 2014.
Currently Last Year Change
Active Listings: 127 vs 154 Down Significantly
Pending Listings: 13 vs 22 Down Significantly
Sales Per Month: 35 vs 29 Up Slightly
Sales Per Year: 385 vs 410 Down Significantly
Median Price: $500k vs $465k Up Significantly
85259 – Zip Line Report
Listings are up 15% from last year, while Pending listings are the same. Annual sales are lower as well and the median price has dropped 10%.
Currently Last Year Change
Active Listings: 242 vs 211 Up Significantly
Pending Listings: 21 vs 21 No Change
Sales Per Month: 34 vs 41 Down Slightly
Sales Per Year: 409 vs 522 Down Significantly
Median Price: $556k vs $585k Down Slightly
85260 – Zip Line Report
Sales are doing very well this year, and are up 7% over last year. The median price however has dropped 9% from one year ago.
Currently Last Year Change
Active Listings: 199 vs 192 Up Slightly
Pending Listings: 24 vs 29 Down Slightly
Sales Per Month: 47 vs 30 Up Significantly
Sales Per Year: 504 vs 470 Up Significantly
Median Price: $415k vs $457k Down Significantly
85262 – Zip Line Report
North Scottsdale’s most expensive and one of its nicest community’s, the median price is down 24% from last year. Pending listings are down as well.
Currently Last Year Change
Active Listings: 445 vs 402 Up Significantly
Pending Listings: 24 vs 35 Down Significantly
Sales Per Month: 22 vs 32 Down Significantly
Sales Per Year: 405 vs 558 Down Significantly
Median Price: $654k vs $860k Down Significantly
85266 – Zip Line Report
These very popular and upscale communities which are the North of North Scottsdale, and which is home to the newest zip code being added to Scottsdale, has seen appreciation of 8% from one year ago. Pending sales are down slightly and homes sales have dropped significantly from one year ago.
Currently Last Year Change
Active Listings: 201 vs 166 Up Significantly
Pending Listings: 17 vs 27 Down Significantly
Sales Per Month: 20 vs 16 Up Slightly
Sales Per Year: 266 vs 356 Down Significantly
Median Price: $722k vs $668k Up Significantly
85253 (Paradise Valley) – Zip Line Report
The Valley’s most upscale, prestigious, and expensive town currently has 347 homes for sales compared to 299 one year ago – an increase of 16%. Closed and Pending sales in Paradise Valley are off slightly from one year ago.
The median sales price is currently $1,763,000 having jumped significantly, as in 55%! Paradise Valley has recorded the largest median home price gain of any Arizona city.
Currently Last Year Change
Active Listings: 347 vs 299 Up Significantly
Pending Listings: 22 vs 23 Down Negligibly
Sales Per Month: 28 vs 30 Down Negligibly
Sales Per Year: 341 vs 386 Down Significantly
Median Price: $1.763k vs $1.138k Up Significantly
85268 (Fountain Hills) – Zip Line Report
Scottsdale’s most immediate eastern neighbor is accurately named for its mountain slopes and town fountain. For those wanting a small town feel, it doesn’t get much better than here. Listings and Pending listings are up over one year ago. The median price adjusted 3% lower.
Currently Last Year Change
Active Listings: 302 vs 271 Up Significantly
Pending Listings: 26 vs 14 Up Significantly
Sales Per Month: 38 vs 24 Up Significantly
Sales Per Year: 450 vs 514 Down Significantly
Median Price: $402k vs $415k Down Slightly
85331 (Town of Cave Creek) – Zip Line Report
Cave Creek has done a great job of standing strong in value. The median sales price of $461,000 is up 16% from 2013 and pending sales are down slightly from last year.
Currently Last Year Change
Active Listings: 320 vs 290 Up Significantly
Pending Listings: 33 vs 39 Down Slightly
Sales Per Month: 41 vs 56 Down Significantly
Sales Per Year: 604 vs 705 Down Significantly
Median Price: $461k vs $398k Up Significantly
85377 (Carefree) – Zip Line Report
The delightful and small town of Carefree is almost too small to accurately compare year to year stats. Having stated that, sales are way down at 73 this year compared to 110 one year ago. The median sales price increased 23% over one year ago.
Currently Last Year Change
Active Listings: 85 vs 79 Up Slightly
Pending Listings: 7 vs 4 Up
Sales Per Month: 5 vs 7 Down
Sales Per Year: 73 vs 110 Down Significantly
Median Price: $732k vs $595k Up Significantly
85086 (Anthem – North Phoenix) – Zip Line Report
These communities remind me of North Scottsdale back in the mid 90’s – newer homes with beautiful mountain views in an unspoiled northern environment. These are the bargains of the valley. Prices are so affordable and only a 30 minute drive time to Sky Harbor Airport. Prices are virtually unchanged from one year ago, with sales being down 23%.
Currently Last Year Change
Active Listings: 350 vs 344 Up Slightly
Pending Listings: 63 vs 67 Down Slightly
Sales Per Month: 71 vs 64 Up Slightly
Sales Per Year: 932 vs 1210 Down Significantly
Median Price: $273k vs $269k Up Slightly
*With thanks to Michael Orr and the Cromford Report for the Statistics used.
by MICHAEL BODEEN | Oct 31, 2014 | Bodeen Team Blog, Real Estate News
I received an e-mail today from a prospective buyer from Minnesota who was coming out to Arizona to purchase a second home in the North Scottsdale area next month. Her e-mail sadly explained that due to an unforeseen economic event, they couldn’t qualify for a mortgage and would have to delay any consideration of a purchase. This was confirmed by their lender as well.
The buyer is the niece of a wonderful client of mine and she and I had been communicating for several months via e-mail about their upcoming visit here. Jon and I initially set them up on a local real estate search using our automated MLS system which sends them property updates twice per day according to the parameters of the type of home they’re looking for. They were really getting excited about buying – very much looking forward to getting this second home in North Scottsdale as they have much family here and LOVE Arizona. It’s been my experience that ALL Minnesotans love Arizona!
This situation is a very good reason why professional Realtors make it a mandatory practice to make sure a buyer is qualified to buy before looking at homes. In the “old days” (as in the 80’s and 90’s) we just took it for granted that someone could qualify to get a loan, and they most always did – except in the heyday of 17% -18% mortgages.
Lending requirements have changed a lot, especially with the Dodd-Frank Act in 2009 and signed into law in 2010. Some have changed for the better, but for many, not so much. (Side note: Chris Dodd and Barney Frank are no longer in office, having retired from their positions last year. Hmm, as we now feel the full farce, uh, force and effect of this legislation, I’m not surprised)
Now this doesn’t mean that we don’t show homes to prospective buyers who are considering buying and want to get a “feel” for the lay of the land, or summer temps, or various neighborhoods, etc. This is a part of what we do. We will however have a pretty good idea of where the buyer is at in terms of their financial ability to buy so there are no dashed expectations.
We met with our Minnesota clients yesterday and they remain as enthusiastic as ever to get a piece of the Arizona real estate pie. We sat down with a lender who has access to portfolio loans that don’t have the same stiff waiting period as regular conventional loans, however they also cost more so the client will need to weigh the cost vs. benefits. We also discussed some other alternative measures to move them sooner rather than later. We’ll see.
So if you or someone you know wants to check out buying a home in the Valley, please give them our contact info. We’ll be happy to provide an excellent buying experience for them…and that makes us and you look good!
by MICHAEL BODEEN | Oct 30, 2014 | Bodeen Team Blog, Real Estate News
(A Short Sale Miracle Part 1)
Most residential deals are fairly predictable. Buyer sees home. Buyer falls in love with home. Buyer gets approved for a conventional loan, inspection results are negotiated successfully, buyer gets formal loan approval, and we go to closing. That’s the norm. The typical.
Sometimes, however, we complete a deal that when we ponder each step that got us to the close, we end up in a delighted state of wonderment. This has just occurred. We now call this recent closing, which was two months following our most recent story where we thought we were closing, the Vistancia Miracle!
The miracle that some of you may recall, was that this short sale in the upscale Vistancia community in North Phoenix, was never supposed to happen. It took an “I won’t take no for an answer buyer” and the grace of God to put together a wild and I might add, exhilarating finish which did indeed close this last week.
The short story recap is that after many months of time, energy, and money expended by all involved, Freddie Mac (Freddie) turned the short sale deal down stating that the seller made too much money. This was true. Once Freddie turned down the deal, it’s as good as dead. They are the ranking authority for this short sale.
The buyer however did not throw in the towel so easily. Immediately following the Freddie rejection, he called me – mind you I’m not his agent, but he called me direct nonetheless. I explained the sad story which he had already heard. “But I’ll pay more than our ‘negotiated’ price of $273,000. I’d pay over $300,000!” Can’t we do something?” To pacify him, I told him I’d make some calls.
I did, to a fellow HomeSmart professional who gave me the direct line to Freddie’s CEO and the numbers of three underlings who report to him. He said, “Call Samantha first.” I called the number. She personally answered. After explaining to her my sad story she said she’d check it out and get back to me. She did.
Simone put me in touch with a Freddie Manager and within days, Freddie was reconsidering the loan. For no other reason, that attitude of Freddie was a miracle in itself.
To further condense this down, Freddie did approve it. Once this occurred, the buyer’s lender sent out their appraiser. The buyer’s lender, who just happened to be the same mega lender who was foreclosing on the loan, said that the home was only worth $240,000 – $33,000 less than our negotiated price. Oy Vey!
The amazing thing is that the buyer would probably have come up with the extra funds anyway, but instead we went back to Freddie to appeal the appraisal. They had a second appraisal done. This one came in at $256,000. And now we waited while Freddie decided what they were going to do. In one paragraph I just explained this process which actually took a month of laborious communication and decision making and then they made their decision that they will sell it to the buyer for $240,000! Whoa!!!
At this point since Jon and/or I had been on the phone each day with Freddie, or the servicers, I think they were tired of hearing the name “Bodeen” and we really think they may have wanted to do us a good turn (or get us off their %#*) considering all the ups and downs we went through.
The best part of all this was the very appreciative phone call I got from the buyer a few days later while he was physically moving into his “dream home.”
And now you know the rest and best of the story!
