Denise’s Home Selling Tip #2

What NOT to do…

I have been in contact with an acquaintance who had acquired the job of acting as trustee in the sale of a friend’s home.  The friend had passed on and was survived by 2 adult children, one of whom was living in the home.  The home is in a decent central foothills neighborhood.  There are luxury neighborhoods within the vicinity.  It was adapted for the handicapped and has a pool.  The home has a mortgage, and the surviving children can’t afford to make the payments, so selling it is a necessity.  My friend had contacted me and asked me provide some comps, so naturally I began to assume that I would be hired as the agent to sell the home.  I provided the information and followed up.

The trustee decided, because it was necessary to net the most from the sale of the home, to list it with a discount brokerage and price it nearly $30,000 above market.  The firm it’s listed with is merely a website and MLS listing service.  It has a contractor’s lockbox instead of an MLS lockbox for entry, requiring any agent to show it to call the trustee for the code.   

As if this scenario weren’t bad enough, recent statistic reveal there are currently 33 months of inventory in the home’s zip code area.

This home has been on the market (so far) for 90 days

Denise

Arizona Ballot Measures Would Affect Our Businesses

There are a couple of ballot measures you need to pay attention to tomorrow.  In particular, Prop 100 and Prop 201.  I wrote about Prop 100 in August; see “Support Protect Our Homes“. This initiative will prevent the government from imposing a real estate transfer tax on the sale of your Tucson Arizona home.  At a time when the real estate market is suffering, new taxes will further depress home sales and place a burden on lower income home sellers in particular.

Prop 201 is called the “Homeowners Bill of Rights”, but is more accurately a proposition which will promote lawsuit abuse.  I attended a Southern Arizona Homebuilder’s Association meeting in which we learned the source of this initiative.  Prop 201 is nothing more than union extortion.  The  The AFL-CIO, International Union of Painters and Allied Trades, Sheet Metal Workers International Association and Ironworkers International unions gave $25,000 each on Halloween.  (How appropiate–SCARY!)  Prop. 201 would give consumer more protections and the right to fivolously sue home builders for construction defects.  This initiative, if passed, will place a terrible burden on the already distressed new home market.  Real estate industry groups oppose the measure saying it would encourage more lawsuits. The National Association of Realtors recently gave $782,000 to oppose the proposal. For more information on this very bad law, go here.

Vote Yes on 100.  Vote no on 201.

Denise McCreary

Treasury to help Fannie and Freddie

Today the US government seized two of our nation’s largest financial institutions.  Treasury Secretary Henry Paulson annouced yesterday his plans to take control of Fannie Mae and Freddie Mac and replace the companies cheif executives.  The Treasury will acquire $1 billion of preferred shares in each company, providing no immediate cash and pledging as much as $200 billion to the companies to help cope with heavy losses on mortgage defaults.  The plan will put the two companies under a conservatorship with management control to their regulator, the Federal Housing Finance Agency, or FHFA.

With this bold move, the country’s mortgage crisis moves into previously uncharted waters, which could potentially saddle taxpyers with the losses from home loans made by the private sector.  The Bush administration argues that the cost of this policy is far less than the toll of doing nothing to help the economy and falling home prices and defaults in the $11 trillion US mortgage market.

I wrote about the subprime mortgage meltdown in my August 29th post, “Insights Into the Subprime Meltdown”.  Secretary Paulson noted that more than $5 trillion of debt and mortgage-backed securities issued by Fannie and Freddie is owned by central banks and other investors world-wide. “Failure of either of them woulld cause great turmoil in our financial markets here at home and around the globe.”

In taking this action, the government has seized control of the bulk of the secondary market for home mortgages, and with it, even greater responsibility for solving the “housing crisis”.  It also marks the failure of the public-private experiment created to prop up the real estate market; investors have long believed the government would bail the companies out in a crisis.

It is believed that the move is also likely to have a positive effect of lowering interest rates for consumers. 

Locally, KOLD New 13, reports in an interview with Tony Poe, a loan officer for Long Mortgage, that the Tucson real estate market has already been improving, and it has.  There were about 10,000 properties listed for sale at the beginning of this year, and now the number is down to 8,000.  Poe considered 5,500 to be the goal; he expects the Tucson real estate market to reach that sometime next year.

I have mixed feelings about all of this.  On the one hand, if Freddie and Fannie were to fail, it would have global implications.  The seizure, according to an article in the Wall Street Journal, is likely to leave a trail of billions of dollars in losses for stockholders.  On the other hand, is this something that government should get into—-bailing out businesses and consumers as a reward for poor money management?

To end on a positive note, I do believe that all of this has had the result of forcing needed changes in the way mortgage lenders do business.  Buyers must now prove that they can afford a home.  Lenders are going back to the basics by actually checking employment, income, assets and credit scores of consumers.  These practices will hopefully result in the future strength and stability of our local Tucson and national housing market.

Denise

Support Protect Our Homes

The Arizona Association of Realtors (AAR) is in support of C-18-2008, a ballot initiative which, if passed, would prevent our state government from imposing a real estate transfer tax.  A real estate transfer tax is a state or local government imposed tax that is collected when you trasfer ownership of your home, land or commercial real estate.  Once the tax is initiated, the rate can be increased by the state, county or city at any time.  This is bad news for homeowners for the following reasons:

• Double Taxation.  Governments already collect taxes on your property.  This new tax would unfairly impose a second tax to impact your home or property.
• Loss of Equity. Since the tax is assessed against the total value, including the amount owed on mortgages, the overall equity earned by the seller is decreased.
• Damage to the Real Estate Market.  Our market is already burdened with people struggling to sell their homes.  This new tax would make it more difficult to initiate sales due to higher overall costs.  It would also make the market less attractive for commercial real estate to recruit business to the area.
• Punishment of Homeowners.  People who move from one home to another shouldn’t be punished while others choose not to move.  This is considered discriminatory and harms access to the “American Dream: of owning a home.
• Negative Impact on Lower-Income Arizonans.  A transfer tax would impose a higher tax burden on lower income households that typically spend a larger percentage of their income on a home.

It was reported in the AZ Daily Star, that the group, Protect Our Homes, is going to court over a contention that Maricopa County Recorder Helen Purcell improperly disqualified 1,000 signatures on the more that 14,000 signatures randomly sent to here.  This action presents the risk that the ballot initiative will not make the November ballot.

To find out more about this important issue click here.

Denise

First Magnus and RESPA: If it looks like a duck and acts like a duck…

The Department of Housing and Urban Delvelopment reported on July 14 that now bankrupt First Magnus violated the Real Estate Settlement Procedures Act by providing incentives to lenders for making certain FHA insured loans.  HUD reports that First Magnus paid $58,571 in incentives from 2003 to 2006 to seven brokers for 169 FHA insured loans totaling 24 million.  The report recommended that HUD pursue administrative actions against the owners and management of First Magnus, in addition to other sanctions. 

The law, known as RESPA, is designed to protect consumers from paying undisclosed costs in real estate transactions.  Under RESPA, it is  illegal for a mortgage lender to give or accept any fee, kickback, or anything of value, to anyone–real estate agents, mortgage brokers, escrow companies–involved in a real estate settlement.  This can be very serious; HUD has the right to pursue fines, cease and desist order, and there can even be criminal charges levied. 

First Magnus, a mortgage company with a national presence, suddenly collapsed last August, and left 5,500 employees without paychecks and numerous other creditors unpaid.  Inspite of this,  former First Magnus chief operating officer Karl F.W. Young is reopening another mortgage company, StoneWater Mortgage, at the same location on Wilmot Road previously occupied by First Magnus.  He stated that “First Magnus did not believe the program to be a violation of RESPA.”  Interesting…

At the time of the First Magnus collapse, I can recall feeling sorry for the company’s demise.  Then the stories began circulating in the real estate community about the employees being stiffed by the owners.  It sounded too similar to reports of other big corporations such as Enron going belly up and leaving their own people holding the bag.  Now we learn that these deadbeats are opening up under a different name.  I would hope that Mr. Young will make good with the past before he creates another mess for our community.  Unless this happens, I won’t be sending any of my clients his way.

Denise

Is the Housing Crisis Really a Crisis?

CNBC’s Dennis Kneale crunches the numbers in this video.  I watched it a couple of times and took notes.  We have to remember that real estate markets are cyclical, and Dennis Kneale suggests the current downturn is, in fact, a much needed correction from skyrocketing prices and easy lending.  We are experiencing ”necessary pain for a return to rationality”. Consider there are 120 million homes in the US, 1/3 of which are owned free and clear. No need to worry about them.  Of the rest, half of those were purchased before the year 2000 and are enjoying a  net 34% increase in value. Is it possible that we can’t get anything done unless we call it a crisis?  Home values fell a mere 1.4% in a year! And inspite of the news that foreclosures are up 65% over last year, only 2% of all homes are actually in foreclosure. Congress is planning a $300 billion bailout, but by the time this actually comes to pass, the free markets will probably have taken care of the situation.

My beloved Dad, the eternal optomist, the guy who got me started in this business, passed away peacefully from this world on July 9th. He taught me to expect markets to rise and fall and to keep a positive mental attitude no matter what the circumstances.  Have we hit the bottom?  Probably not.  But let’s not get swept into panic, gloom, and doom.  Instead, let’s keep working hard, support the economy, and expect the best! 

Denise

New Homes Could Get New Warranties

Under the terms of an intitiative apparently headed for the statewide ballot, buyers of new homes would be entitled to a 10 year warranty, reports the Arizona Daily Star today.Backers of the measure filed petitions with more than 262,000 signatures, far more than the 153,365 signatures needed in order to put the issue before voters.  This measure would also allow for homeowners to help choose the contractors hired by the builders to make the repairs.  Additionally, buyers would be given the right to cancel within 100 days and get back most of their deposit.  The real clincher is this: homeowners would be allowed to sue without fear of having to pay a builder’s legal fees if they lose.  The big winners, obviously,  if this measure is passed, will be the trial lawyers.  I’m wondering how the homeowner’s responsibility of required routine maintenance will figure into all of this.  And what if the buyer chooses a not-so-reputable subcontractor to do repairs?  Who is repsonsible then? One person commented on AzStarnet, “Oh great…more litigation!  Sounds like the answer because lawyers need more work.”  My sentiments exactly.

Denise

Welcome to my blog!!!

This blog is geared at informing anyone who’s interested about what’s up in the Tucson real estate market. There are those that say the market is in the dumps, and it has definitely taken its hits, but I am still as excited as always about this industry. Tucson is a great market, and the custom home and luxury market is still doing well–and the area offers a lot.

Like all things, it pays to stay informed, up-to-date and with your ear to the ground for all the little murmurings that are happening. Continuing education is a top priority with me. A commitment to stay in tune with current industry standards, practices, marketing strategies, and “up to the minute” technology benefits everyone involved in the business of real estate.

Here I promise to pass along any tips I can think of, dig up or come across, whether you are buying, selling or just trying to learn a bit. Feel free to comment, interact or ask me any questions.

Denise