by MICHAEL BODEEN | Nov 2, 2015 | Bodeen Team Blog, Real Estate News
For those who follow our weekly blog, you’re well educated that our Phoenix/Scottsdale residential real estate market has been and is still sustaining a healthy balance. For example, the most recent S&P Case / Shiller Home Price Index shows Phoenix running a 4.95% annual rate of appreciation – a number that’s positive for both buyers and sellers. Also, as we’ve reported, foreclosures in Phoenix are running at historic “lows,” whereas just a few years ago we along with Florida and Nevada were leading the nation in the highest foreclosure rates.
Our steady and solid market has now brought back into play what’s commonly known as the “Contingency Sale.” The contingency sale simply allows a buyer to buy a home with a “contingency” to close escrow on their existing home first so that their proceeds of sale can then be used to close escrow (down payment and closing costs, or cash) on their new home. This enables the buyer to get the best price they can on their existing home the without risk of losing a deposit.
You might think that that’s the way it should be, however, for the better part of the last decade, that’s not been the case. When we were in the throes of a rabid seller’s market, sellers did not need to give a contingency as there were plenty of buyers with cash or good financing without the need to sell their home who lined up to buy the home. It’s only been recently as our market has steadied that sellers figured out that this could be a smart tool to get their home sold and move into their next one without having to move twice. And it can be a smart tool as long as some precautions are taken to vet the buyer and what he’s selling.
Next week we will look at some contingency sale safeguards that a seller can take
to protect their interest and not get stuck.
by MICHAEL BODEEN | Oct 26, 2015 | Bodeen Team Blog, Real Estate News
And by the way, that may not be a bad thing…
My friends Brice and Sharon (not their real names) asked me a few months ago to come by their home in Scottsdale to chat with them about whether or not (from an economic perspective) it would be wise to add a wing onto their home so that their daughter and son-in-law’s family could live there – permanently. Yes, you did read this correctly, permanently.
On the drive over there, I’m considering if this is wise? Some background: First, the son-in-law, daughter and their two children are already living with them, and for the most part it seems to be working out ok, though in fairness, I haven’t spoken with the younger family, but I’m assuming it’s good with them too otherwise Brice and Sharon wouldn’t be considering spending $150,000 for this to happen. Another interesting note is that Brice’s mom already lives with the family in a detached casita. She has her own cooking facilities and it provides a nice separation, but keeps her close by too. That makes 4 generations under one roof!
In my boomer generation, it was considered a defeat if we had to move back in with the folks. I did that back in the early 70’s but looking back on it now I’m glad I did. Plus,attitudes are shifting, as a record 57 million Americans now live in some sort of multi-generational configuration. Multi-Gen is defined as two or more generations, above the age of 25, living under the same roof. That number has doubled since 1980, according to the Pew Research Center. Reasons why include failure to have employment, divorce, taking longer to get married, financial difficulties including student debt, and let’s not forget the hundreds of thousands who lost their home to short-sale or foreclosure.
Another trend that will doubtless add to this number will be immigrants relocating to the U.S. Many of these cultures already embrace Multi-Gen living so it will be more typical for them.
Getting back to Brice’s situation, Manny (son-in-law) is an underwater welder by trade, but unfortunately his occupation has kept him away from his family for weeks at a time, and sometimes longer. The plan now is to start a business that Brice had going a few years back.
So what was my counsel? I think this was a no-brainer. Go for it! Brice’s property is an acre, the family already has been living together so it’s not like no one knows what that might be like, plus now, with the addition, Manny’s family gets their space too. It becomes affordable for Manny, provides additional grandparent (and great-grandparent) nurturing, and the additional mortgage is acquired at less than 4%. I also reviewed their “draft” drawings which looked good with no red flags. The worst case scenario is what happens in the event they would have to sell? Well, knowing this family, that’s not going to happen for a long time, but if it did, I’m sure there will be plenty of takers for this ready-made multi-gen home.
So, this leads me to this past Saturday where I held an open house on
a listing I have in North Phoenix south of the Carefree Highway on 2
nd Ave. What an awesome home this is. I’ve attached a few photos below in case any of you might know of someone this home could work for. For a home priced at $644,500, we had an especially good number of serious folks visit the home. Three of the couples who came by were specifically looking for Multi-Gen homes. These visitors were boomers with aging parents who knew that sooner, and not too much later, they would be caring for them in some capacity.
Negative Edge Pool with Mountain Views
Main Living Area
This home qualified as a plus for Multi-Gen living because of a large separate room on the south wing that included a full kitchen and bath. There is also two nearby bedrooms and a bath for more folks if needed. You can enter this part of the home separately without interfering with the main part of the home, and it’s a pleasant french door access to the lavish backyard pool and patio area.
Separate Living Area with Full Kitchen and Bathroom
Separate Kitchen
So if you know of anyone who might be interested, there’s one number to call: 602-689-3100.
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.
