by MICHAEL BODEEN | Oct 20, 2015 | Bodeen Team Blog, Real Estate News
Well, we had wonderful news last week regarding Barb’s young clients negotiating and getting the home of their dreams. We also had their dream home inspection a few days ago. Wish we could say the results of that home inspection were also a dream.
Out of all the myriad problems that arise from our home inspections, there are several major issues we don’t want to see. Each one can be a deal killer. All are mostly preventable. The purpose of this article is to help a homeowner / seller correct these items (hopefully affordably) before putting the home on the market. And, by the way, all issues are maintenance items which if watched and remedied regularly will in fact be money saved down the line. This week we will look at our number one concern, the roof, particularly, the tile roof.
For the most part, Ben and Benita’s (not their real name) home inspection was very good. The number one item that they are dealing with however is the most feared of all inspector findings: roof problems. Like most Arizona homes built in the 80’s and since, the home has tile on the pitched roof portion and composition roofing for the patio roof. This home was built in 1994 and both roofs appear to be original. These owners have owned the home for four years. The reason why this is the numero uno concern is that it is usually the greatest expense to repair or replace.
Their report stated broken and cracked tiles, plus the roof paper around the edges was brittle, in other words, nearing the end of its useful life, as inspectors are fond of stating. The patio roof was shot. The roof composition material was buckling, cracking and had loss of granules. Evidence of leakage was apparent underneath the patio and at the eaves.
Some folks mistakenly think that tile roofs don’t require maintenance, but this is absolutely not the case. Tile roofs, whether concrete or clay “can” have a life expectancy of 20-25 years in the desert, but it can also be more or less depending on the maintenance.
We must first understand what the roof is. Think of your roof system like clothing. The tile is the outer garb, which protects the felt paper (the real roof) underneath. Tile sheds water and helps protect the felt from sun exposure, plus it looks nice. Regular inspections and maintenance are critical to maintaining the integrity of the roof. High winds, walking on it incorrectly, foliage build-up (which can damn up the water runoff) and yes, even golf balls can crack, break, or displace the tiles. When tiles are displaced, you lose that UV protection which will expedite felt paper deterioration, which leads to roof disintegration and before you know it, rain water has found an opening inside your dream home.
The tiles themselves, especially if concrete, can last for many years, but it’s the replacement of paper under a tile roof that can get pricey, because you have to first remove all the tile, repair or replace damaged wood or other sheathing, put on the paper, then put the tiles back on. Not cheap. Many thousands.
It’s wise to have a roofer, or handyman knowledgeable about roofs, or even yourself (if you know what to look for) perform an annual inspection, to see if any tiles have shifted, cracked or broke and to clear away excessive foliage, such as pine needles which can prevent rain water from shedding off the roof. I recommend a licensed, bonded, insured roofing contractor to replace or repair. Don’t like to walk on roofs? That’s good, you shouldn’t. You can, however take binoculars to view the tiles from a safe distance. If this is done annually, or after a windstorm, and your roofer can rectify any problems soon thereafter, your roof will maintain its integrity. Then, when you have that home inspection, the report should encourage a buyer, rather than having them cancel the deal, or negotiate a large credit off your bottom line towards replacement.
There are other types of roofs that deserve mention such as composition style for sloped roofs, and flat roofs, such as foam or “built-up” roofs. We’ll talk about those down the road.
by MICHAEL BODEEN | Oct 12, 2015 | Bodeen Team Blog, Buying a Home, Real Estate News
Barb (one of my team members) called me yesterday as she was going to write an offer for some young clients who found that proverbial “perfect home.” Our football Cardinals had already demolished Detroit earlier in the day, so I was good to go. For my real estate team, I help our agents prepare the contract paperwork. I would prefer it wasn’t on a Sunday, but hey, it’s our job!
The home they wanted to buy had been originally listed at $315,000, and was then reduced in $5000 increments until it hit $299,500. And that’s where Ben and Benita (not their real names) saw the home as the listing info had been automatically e-mailed to them. Now the price had fallen within their buying parameters which was under $300,000.
Barb showed Ben and Benita the home immediately, and they both loved it, and wanted to buy – NOW! In their words, this was the only house they found that they both agreed on the location and home.
There was, as we so often say in our business, some issues. First, we needed to get the PQF (Pre-Qual Form). Very fortunately our lender Sandy who they had been working with answered her phone. She agreed to prepare the PQF and e-mail it to me. Secondly, they were only pre-approved up to $285,000 and this home seemed like a deal at $285K. On top of that, they needed to get an FHA loan as they were just coming out of their three year wait penalty due to a previous foreclosure. To complicate matters, another buyer had submitted an offer earlier that day as well. There would be a competing offer. This deal was no slam dunk!
After discussing with Barb and the buyers, we decided to meet at our office to write the contract. Barb called the seller’s agent to see if an FHA offer of $285k would even fly. She was informed that the other offer had not been accepted and would not be addressed until Monday morning. Further she told Barb the other offer was for $285,000 AND was FHA also. So get this! This house was on the market for 66 days, had three price reductions, and two offers come in on the same day for the same price and both FHA. Wow, we had a fighting chance.
Obviously, multiple buyers/offers benefit the seller. We prepared the buyer that the “normal” thing would have the seller countering the offer on a “multiple counter offer” form and that if the other buyer raises their price, they will probably get the home. And typically, the seller says to the competing buyers, “give me your highest and best deal.” Usually this is how a seller will get their best price. And considering that Barb and the buyers felt this was a strong value at $299,500, it would seem logical that the seller could easily get more than $285K. In other words, we needed to temper our client’s expectations.
But here’s the thing. We usually never really know what’s really going on in the personal life of the seller. I’ve seen unbelievable things in over 35 years in this biz!
We were however limited by their $285K PQF. Well, all we could do was to make some small adjustments within the contract to try and rise above the other offer. So Barb found out that the seller would prefer to close in 60 days which is long by today’s standards, but in this case, this worked out great for the buyer as well. Then, we agreed to use the title company of the listing agents choice, which was also a national reputable company. The buyer also agreed to pay for a home warranty themselves, rather than having the seller pay for it which is customary. And finally we reduced by two days the “Due Diligence” (inspection) period. Ben and Benita signed the contract.
Oh and lastly, we had Benita write a letter directly to the seller letting the seller know how much they loved their home – and their dogs! Hello, personal!
I wasn’t really prepared for Barb’s phone call this am to say that the sellers accepted Ben and Benita’s offer! No multiple counter offer. No raised price. Acceptance. Incredible.
Why did the seller accept their offer? According to the seller’s agent, there were a few things in the offer that worked better for them! According to Benita, she had asked everyone she knew to pray they could get this home. Hmm.
by MICHAEL BODEEN | Oct 5, 2015 | Bodeen Team Blog, Real Estate News
The recent 3rd Quarter downward trajectory of the stock market has been taking a large portion of our nation’s business news lately. After all many homeowners are invested in stocks, bonds, etc.
This makes for the always interesting question: Do you see your home as “Home Sweet Home” or as one of your investments? Let me just say right away that either way or both are ok!
How you view your home is important however. If you view it as an investment, then you’re apt to want to read articles supporting the rise in property values and you will most likely judge the value of any improvement you make by how much it will increase (or decrease) the value of the home.
If you view your home as your castle, your refuge, or your long term abode, then articles about market pricing trends may not appeal to you that much. Also, you may not give a rip that adding “aging-in-place” features such as grab bars may hurt the value of your home (hey, you just don’t want to fall) or that painting the interior your favorite colors of pink and green may raise the eyebrows of friends and family. After all, they’re YOUR favorite colors, anyway.
Most of us however seem to fall in the middle camp where we want to see our home appreciate in value, but also care about enjoying it day by day. I guess that would be the “having your cake and eating it too” option.
I recently discussed this very issue with my client Pam before she went all in on buying her dream home she calls the “This is the ONE!” home. Pam had come to a place where she felt she was buying at the very top end of her affordability range and it was beginning to make her nervous. According to her, she had always been pretty tightfisted in her expenditures, and from what I could tell, it had served her well.
After knowing Pam for 3 years however, I knew something of her financial situation because she had shared some of it with me. She had a California State Retirement pension, another home in Long Beach with good equity that she would be renting out, and her own mortgage advisor had told her she was in great shape to qualify for the conventional mortgage she was getting. Knowing these facts helped me to encourage Pam to feel blessed about her financial situation AND to enjoy her new Phoenix home at the same time.
by JONATHAN BODEEN | Sep 28, 2015 | Bodeen Team Blog, Real Estate News
Not What You’d Expect
I’ve had an upsurge of millennial clients in the last few months. My dad (The famed Mike Bodeen) asked me the other day, “So what’s your generation looking for in a house?”
Most of us have watched the HGTV shows featuring a young professional couple cooing over beachfront property or seeking an “urban lifestyle.” For these it seems a long list of must haves come into place, like views, built in barbecues, fancy kitchens etc. They seem to be all about an experience. To be honest I haven’t met any millennial clients like this yet.
The clients I have worked with so far in this age group have much more practical guidelines. The first andmost important piece of the puzzle for these is price (which of course you could see about pretty much any buyer). They ask the question what’s our top price we can afford? Without exception, each millennial I have represented so far has been under the $200k price range. For most of them, this has been their first home purchase.
While there is a lot available for under 200k in the phoenix Metro Area, it can be limiting and push buyers to certain areas of the valley. Three of these clients of mine have bought on the west side in the Surprise area, a tremendous value.
Beyond price, the second thing they are looking for is space. Will this fit my family? I should also mention that most of the millennials I have represented so far have had young families. I think there is a big difference between those who have children and those who do not when it comes to criteria.
For example I’ve seen a few studies that suggest that by in large people in my generation want to live in downtown areas. I think that may be true for single millennials or those without kids, but my experience is that most of the ones who are actually serious about buying a home don’t fit that category.
The third thing they look for is location, aka time it takes to get to work. After that, the list of must haves are usually very slim because in this price range, once you have found all of the above, it’s like striking gold and you better put in a good offer before someone else steals it from you.
I will say that there is truth in this idea that millennials are looking for experiences and a certain lifestyle. Many clients have been very excited about the idea of a wet bar in their home, or about being close to downtown. But I think the truth is that once these folks are actually ready to settle down, a lot of that just goes out the window in favor of practicality.
Ultimately many may be surprised how similar the desires of millennials with families are to those of other generations.
The real difference (in terms housing wants) between millennials and other generations is, I think, that we are on average “settling down” much later than our parent’s generation did. Once a couple of kids get hitched and have a bun in the oven, they begin to act much more like any generation before them in their house buying habits.
by MICHAEL BODEEN | Sep 21, 2015 | Bodeen Team Blog, Real Estate News
What $350,000 Gets You in San Francisco!
765 Square Feet in Need of Work – $458 Per Square Foot
This tiny one-story abode is being showcased as a single family home. The listing describes the property as a“distinguished home in need of work.” Built in 1906, it looks minute and outdated compared with the other homes in the neighborhood.
In many cities across the country, $350,000 is enough to buy a nice sized home with all the trimmings. Check out below what 350K buys in three local cities, Phoenix, Scottsdale, and Surprise. But in America’s most expensive city, San Francisco, that amount of money is only enough to land a person in a wooden shack.
The home is located in the Outer Mission neighborhood of the city. The two bedroom one bath California dwelling sits on a 1,633-square-foot lot on 16 De Long Street in the city.
What $350,000 Gets You in Scottsdale, AZ!
1763 Sq Ft Move-In Ready – $198 Per Square Foot
This $350,000 home is in the Phoenix (Ahwatuckee area)
2851 Sq Ft – $123 Per Square Foot!
Finally, Surprise has this 7 Bedroom gem, also priced at $350,000
3684 Sq Ft – $95 Per Square Foot
by MICHAEL BODEEN | Sep 15, 2015 | Bodeen Team Blog, Real Estate News
Last week we quoted our local real estate number crunching guru, Michael Orr,(ASU/Cromford Report) who stated that, “Appreciation of around 5% (Phoenix Metro area) seems to be the order of the day. This may not appear to be a big number but in a deflationary climate a 5% climb should be interpreted as rather impressive…indications are that sales prices will move moderately higher over the next 4 months. We expect rents to move higher more quickly.”
Then yesterday, the Arizona Republic wrote a short story about Housing prices having slipped during the summer. Their source was the Arizona Regional Multiple Listing Service (ARMLS). This article showed that the median price in Metro Phoenix was $214,900 in June, slipped to $212,000 in July and fell again to $208,000 in August. Finally, the article stated that the median price this August was 5.7% higher than the same month last year. This number does in fact agree with Orr’s 5% annual appreciation numbers.
As we’ve mentioned numerous times in the past, all real estate is local. The same is true for price appreciation. What happens statistically in one community will not usually do the same in the next community or town or county. Seeing the big picture of 5.7% is certainly helpful in terms of trends, but we need to be careful about how broad of a brush stroke we make for any given community.
This week we’ve included two charts for your review to see just what we mean about “all price appreciation is local.”
The first chart shows zip codes in the Northeast Valley. As you can see they range in appreciation rates of +12.7% to -2.8% measured from this date last year.
|
Rank
|
ZIP Code
|
% Change in 1 Year
|
Median
|
| 1 |
85263 |
+12.7% |
$450,000 |
| 2 |
85253 |
+5.9% |
$1,425,000 |
| 3 |
85257 |
+5.2% |
$255,000 |
| 4 |
85268 |
+5.1% |
$415,000 |
| 5 |
85258 |
+5.0% |
$525,000 |
| 6 |
85251 |
+4.4% |
$321,500 |
| 7 |
85255 |
+4.0% |
$810,000 |
| 8 |
85254 |
+3.4% |
$529,900 |
| 9 |
85250 |
+2.5% |
$346,500 |
| 10 |
85266 |
+1.2% |
$893,000 |
| 11 |
85377 |
+0.8% |
$750,000 |
| 12 |
85259 |
-0.3% |
$595,000 |
| 13 |
85331 |
-0.6% |
$400,000 |
| 14 |
85262 |
-2.4% |
$760,000 |
| 15 |
85260 |
-2.8% |
$427,500 |
The second chart then shows 43 Phoenix zip code neighborhoods. These neighborhoods had annual price adjustments from +100% (Sky Harbor Airport area) down to -5% in the Ahwatukee neighborhood of 85045.
|
Rank
|
ZIP Code
|
% Change in 1 Year
|
Median
|
| 1 |
85034 |
+100.0% |
$90,000 |
| 2 |
85009 |
+31.7% |
$84,950 |
| 3 |
85006 |
+29.3% |
$179.950 |
| 4 |
85021 |
+22.0% |
$275,000 |
| 5 |
85016 |
+21.3% |
$295,705 |
| 6 |
85018 |
+20.6% |
$524,800 |
| 7 |
85019 |
+20.2% |
$124,450 |
| 8 |
85020 |
+20.0% |
$108,000 |
| 9 |
85035 |
+19.8% |
$115,000 |
| 10 |
85004 |
+18.1% |
$319,000 |
| 11 |
85051 |
+16.7% |
$147,000 |
| 12 |
85031 |
+15.8% |
$110,000 |
| 13 |
85008 |
+15.4% |
$165,000 |
| 14 |
85007 |
+14.6% |
$214,900 |
| 15 |
85033 |
+12.9% |
$118,556 |
| 16 |
85015 |
+12.0% |
$168,000 |
| 17 |
85043 |
+10.6% |
$146,000 |
| 18 |
85012 |
+10.3% |
$505,000 |
| 19 |
85014 |
+10.3% |
$255,000 |
| 20 |
85042 |
+10.3% |
$182,000 |
| 21 |
85037 |
+10.0% |
$140,000 |
| 22 |
85087 |
+9.9% |
$310,000 |
| 23 |
85040 |
+9.1% |
$120,000 |
| 24 |
85027 |
+8.9% |
$172,000 |
| 25 |
85003 |
+8.8% |
$369,500 |
| 26 |
85029 |
+8.4% |
$155,000 |
| 27 |
85022 |
+7.5% |
$245,000 |
| 28 |
85032 |
+7.3% |
$220,000 |
| 29 |
85013 |
+7.0% |
$262,250 |
| 30 |
85023 |
+7.0% |
$207,250 |
| 31 |
85053 |
+6.5% |
$165,000 |
| 32 |
85024 |
+6.4% |
$250,000 |
| 33 |
85041 |
+6.3% |
$153,000 |
| 34 |
85086 |
+6.0% |
$293,000 |
| 35 |
85054 |
+5.9% |
$458,000 |
| 36 |
85044 |
+5.0% |
$255,000 |
| 37 |
85028 |
+4.0% |
$315,000 |
| 38 |
85083 |
+3.4% |
$302,000 |
| 39 |
85048 |
+0.8% |
$312,000 |
| 40 |
85050 |
-1.0% |
$292,000 |
| 41 |
85085 |
-2.6% |
$314,990 |
| 42 |
85020 |
-5.0% |
$270,000 |
| 43 |
85045 |
-5.0% |
$325,000 |
As you can see from the two charts, there are huge disparities in annual price movement. Out of about 60 communities, only a small handful of communities actually showed 5%+- appreciation. So the next time you see an article about whether or not values are rising or falling (even our articles) consider that it may be a trend for the broader market, but take it with a grain of salt, because locally, that may be all it’s worth.
