Have you heard the grumblings about *EEK* a recession. Don't say it too loud. People get very anxious when they hear that word.

Real estate is hyper-local. Even if other cities start to deteriorate, Phoenix may not be affected or it could be worse. If there is one around the corner, hiding from it won't prepare you. I prefer to be smart & ready. Here's what I tell my buyers who don't want to find themselves with their pants down if one comes knocking...

1. Put some money down.

Aim for at least 20%. Why? Having skin in the game insulates you from a lot. Unfortunately, the biggest barrier to home ownership is the down payment. There are many would-be buyers staggering under the weight of student loans, high consumer debt & large medical insurance premiums (or debt from being under/uninsured. How do you get your foot in the door??

Get a gift... there's always:

• Good ole Bank of Mom & Dad, if you're fortunate.
• Another trusted, generous relative
• Your 401K- Did you know that 1st timers can take out up to $10K penalty free for the purchase of a new home; it's where half the down payment for my 1st home came from.

Liquidate assets: (& be sure to check with your CPA or financial advisor first!!)

• Remember that non/underperforming stock that it pains you to watch? You could ride it to the bottom or cash in & take the loss on your bottom line at tax time.
• Performing stocks are also good if you don't have to liquidate the entire performing investment.
• CDs, Mutual funds, assets that won't trigger a tax implication are usually good options; the old: car, antique, jewelry, etc. collecting dust are also good options as long as they're yours alone to sell.

Raid the "rainy day fund":

Yes, I am a realtor. I will always have a good reason to buy a property. However, if you rent, there are few reasons to not bite the bullet & own if you care about building your wealth. If my little brother who doesn't give 2 sh*ts about all the warm & fuzzies of owning a home can nearly double the value of his & walk away with a ton of profit in under 7 years, you can too. If you can't get 20% together, should you still buy? YES! Buy with 15, 10 or 5% down and know you'll have a little less risk tolerance than if you had 20%.

2. Stay awhile. Really.

I tell my buyers try to stay at least 5 years. It takes about that long to recoup the money you spend during the purchase on: closing costs, inspection costs, moving, personalizing, etc. BEFORE you cozy up to the new digs, please do your homework! Ask:

• What the neighbors/neighborhood are like- Think of the changes in Arcadia & Arcadia "Lite", McCormick Ranch, North Central Phoenix, Sunnyslope & many other areas in the last 5 years. If you aren't familiar with the area around a home you're considering, please go spend time there.
• The proximity to work, the things you enjoy doing, other obligations (i.e. kids' schools, grandma's house); There are new freeways popping up all over the Valley, but I won't recommend anyone living in Buckeye or Avondale commute to Scottsdale Airpark. You could, but how much do you really enjoy driving.
• If the house has what you NEED to be comfortable. If you work nights and there are 30 skylights in your bedroom, is that OK?? Really?! I exaggerate, but you get the picture.
• Will you enjoy being there? If dinner/Superbowl/bible study parties are your thing, but the kitchen/living area/backyard suck, how will that affect you?
• What will it cost to fix said items that don't work for your lifestyle?

3. Do some work!

Roll up your sleeves. Even if you don't know a monkey wrench from an Allen wrench, you can still pay someone or (God forbid), learn. Pretty new homes eventually get wrinkles too. A home that needs a facelift if you're a pretty good make-up artist still benefits you. Reliable, quality contractors are hard to come by when the market is good, but it's still worth the wait if you need one.

Small improvements can make a BIG impact

Things like:

• Paint
• Flooring
• Lighting
• Energy improvements, like new thermostats, insulation, windows, doors, etc. reduce energy bills long-term and may offer tax credits too.

Big, planned improvements (major renovations) cost a lot, but may also pay big appreciation

• You may get a big discount- in pricey areas, it's a good rule of thumb to buy the shack on the block. It's most likely to appreciate up to its neighbors.
• Get several estimates BEFORE you buy, finish inspections & close; You do NOT want to underestimate the costs.

4. Get Money Smart.

Know your loan terms and understand what they mean. "Know before you owe" was created with educating consumers. An "informed" consumer is less likely to lose his shirt... That means know your loan terms:

• Adjustable? Short term rates are OK if your timeline is in sync with it.
• Interest only? Same as above, but be even more aware of these details. In fact, unless you consider yourself financially astute (& another person would agree), avoid this option.
• Follow rate trends & refinance if you can save. True story: My jumbo mortgage interest rate when we bought our home in 2009 was 6.5%. I was actually quoted in an article about how hard it was to get these loans. Today, it's 3.625%. Our home value has nearly doubled (appreciation & improvements), but our mortgage costs only a few hundred dollars more per month, despite being ~900SF larger than when we bought.

5. Stay Market Smart.

Know what's going on around you. Pay attention to what's happening: on your block, in your subdivision, school district, city, metro, etc.

What's going on around you?

If suddenly, there's a mass exodus or influx of residents, get with the program! Are there changes to:

• If the entire block has updated their exterior and you're the last one on the block with a decrepit roof, landscaping, etc., it's time to do some work. See #3.

Is there planned development nearby? What's the community impact?

• The new Ritz Carlton project in Paradise Valley on Scottsdale Rd between Indian Bend & Lincoln will be great... in a few years. In the meantime, nearby residents are dealing with construction congestion, dust, noise, etc. 
• Same for 7th St "Restaurant Row" and other areas where light-rail expansion is planned or was completed.

Are there changes to neighborhood schools?

• In Creighton Elem. School District, they have higher taxes than nearby Scottsdale Unified (SUSD) or Madison Elem. Dist. This area includes homes west of 40th St. from Lincoln Dr. to Thomas Rd. Last fall, I took a buyer to see a home in Finisterre (Paradise Valley) & another comparably sized/priced home near 32nd St & Stanford. The Finisterre home (SUSD) had taxes under $9K. The other home had taxes closer to $15K!! SUSD residents were already paying budget overrides to benefit schools. Creighton was not. When teachers got pay increases (after almost nothing for a decade) the balance went to taxpayers. Ouch!

Is there pending litigation in the community?

• It happens. Occasionally HOAs sue developers for shoddy work or other things. That can slow down sales & property values.
• I've seen it at: Bella Vista (North Scottsdale), 8 Biltmore Estates Dr., Villages North and other communities (***all years ago; I'm not aware of any pending litigation today).

Is there pending legislation?

• If your community has lots of seasonal buyers who pay big bucks for nightly seasonal rentals, with HB-2672 ("Party house" bill addressing short-term rentals) looming, if most homes on the block are AirBnB properties that may suddenly sit empty, it may not be the spot for you if you'll reside full time.
• SB-1070 (Illegal Immigration) decimated our economy years ago. I don't care where on the political spectrum you fall, the impact to Arizona tourism, the economy, schools, etc. was awful and at an awful time during the "Great Recession". The point is to do the research and know what's coming, hence the purpose of this post...

For the last 4-5 years, my advice for my buyers, whether they listened or not (most did), was seek:

• a SFR, single-level, no interior steps, in a great location/school district (YES- EVEN IF YOU HAVE NO KIDS), near a variety of: amenities, transportation, employment options. That was a mouthful, but it was viable given our changing demographics!
• I don't care how cheap that 2-story down the street is. If you can't resell it quickly and don't plan to stay where you're living for a long time, it's not a good deal at all!
• And yes a bedroom/full bath, enclosed, covered parking & some sort of outdoor living space DOES make a difference in the value of a home.

I hope that wasn't too overwhelming... When in doubt, reach out and ask me. My loyal clients know I will give an honest answer every time, even it means I don't sell them that house. I won't steer you wrong because I prefer clients for life...

Happy house hunting!

The holidays. It’s a time for celebration, a time for good food and good cheer, and - for many homeowners - a time for out-of-town visitors. And while gathering your loved ones from all corners of the globe to celebrate with you and your family undoubtedly brings holiday joy, it can also bring more than a bit of holiday anxiety.

"None of the experts are forecasting another big drop in Valley home values anytime soon.

But Tina Tamboer, senior housing analyst with Cromford, expects home prices to appreciate much more slowly and potentially flatten out this year.

She said Phoenix-area home prices could even dip next year, but only slightly.”

Source: azcentral.com

"It's not a tu-mah!" It's not a bubble! Really.

Raise your hand if you can *neatly* fold a fitted sheet! If you can’t, this one’s for you! #lifehack

Over the years, I've had friends, family & colleagues coming to me asking about appraisals.  Usually, it's to say that they just got one and the appraiser "clearly must have been smoking something"...  A lot of folks are looking to take advantage of the low interest rates that are teasing them.  If you haven't refinanced your house in the last year (or even last 6 months), it might be time to check your current interest rate against market interest rates because they've dropped substantially over the last year.  I personally have refinanced my home twice this year.

It’s 2018. Home automation has come a long way from uber expensive systems that took lots of wiring and money to harness. It’s easy to implement some of these tools for under $20. This video gives a brief overview of each.

When was the last time you asked "how are you" and didn't hear a response involving the word "busy"??

We're all wrapped up in the minutia of doing more with less, the endless imbalance of work/life & trying to achieve all of these things to feel good about ourselves. The end game is that we're all overworked, over-tired, stressed & probably not having as much fun as we think we should. Believe it or not, these sentiments creep into our home. When real estate was BOOMING, this was reflected in our homes with opulence- luxurious finishes like marble, onyx, travertine, scrolling iron, rich, silky textiles & all that... stuff. Our homes were literally bursting at the seams with THINGS. We all know where that time went...

In a nutshell, here’s a market recap of how real estate went down in April…

Cromford Report: April 2017 Recap

“Seller Concessions Have Risen Despite Buyer Frenzy

For Buyers:
Buyers continue to find themselves in a frenzy of competition for homes as March recorded the highest number of non-distressed sales through the MLS since September 2005.  While supply has dropped a significant 12.7% overall compared to this time last year, it’s dropped a whopping 22% in the Southeast Valley and 27% in Pinal County! Despite the extreme lack of supply under $300K, 30% of closings in this price range are showing some form of seller-paid concession at close.  Compare this to 27% in March of last year and it indicates that even as demand and prices are on the rise, a larger percentage of sellers are contributing financially to closing costs, home warranties and repairs in order to get top dollar for their home.

For Sellers:
March 2017 recorded the highest Listing Success Rate for normal listings since July 2005 at 81.8%, which means more homes are coming off the market because they successfully sold and not because they cancelled or expired. In a balanced market, the Listing Success Rate ranges between 60-65% for this time of year.  To compare, the lowest Listing Success Rate was recorded in December 2008 at 21% and the highest was in May 2005 at 87%.

Normal listings between $100K and $200K currently have the highest success rate at 90%, followed closely by the $200K-$300K range at 87% and $300K-$500K at an impressive 79%.  It’s a good time to be a seller!” – source The Cromford Report

The market is strong! At face value, this is all good stuff, but what the numbers don’t say is that supply is not evenly matched with demand at all price levels- namely the high demand for affordable homes (under $300K) & very little supply; conversely, there’s lower demand for luxury homes, and LOTS of supply. And seller concessions (sellers pitching in cash to help their buyers close)? Whaaaaat?! Stay tuned for more!

We're in a legit seller's market & have been through 2017 to this point.  This summer, typically our S.L.O.W. season, was so busy that I haven't had a vacation yet... The last 2 homes I've put in escrow sold with multiple offers after being on the market for a little while. It's enough to make sellers crazy! That said, there are a few things you MUST keep in mind and a few things agents do that separate the rookies from the pros, who're worth every penny you pay them.

Here's what you need to know...

DON'Ts:

1. Get bent out of shape! PLEASE. STAY. CALM. !!! I can show you scientific proof that your chances of making good decisions (i.e. wise choices- financial, far-reaching, irreversible, etc.) go out the window when your heart rate exceeds so many beats per minute (BPM). If you're not careful, you could lose the sale & blow your chances with other buyers too. I once had 20 offers on an REO listing I had in Laveen years ago. I had to make it through the top 6 or 7 before I found one that stick. Losing your momentum is the worst thing to happen to a listing that's hot out of the gate!! The next place to stay calm? After you receive the Buyer's Inspection Notice (AKA "the BINSR").
2. Be too demanding. There's a lot of emotion in selling a home, especially when 2 buyers want YOUR palace. It's easy to get a little opportunistic and start expecting the sun, moon & stars. Buyers are flaky- they are very emotional too. An emotional buyer & seller is a recipe for disaster! This town isn't that big (I grew up outside NYC) and people (read: agents & buyers) talk. In close-knit communities, like Arcadia & PV, sometimes I know exactly where buyers who walk away from my listings are headed.
3. Stop showing your house or keeping it show-ready. Just like take off & landing are the most likely times for an airplane to crash, the inspection period (typically the first 10-15 days) & the closing are the most volatile times during a home sale. It ain't over till the fat lady sings- the fat lady is the escrow officer or me telling you the escrow officer sang. I can spot things going sideways from a mile away. Sometimes I may just sound cynical, but I've seen a lot. And what I haven't seen personally, my colleagues have warned me all about already. Please stay on the straight and narrow if you want to cross the finish line with minimal drama.
4. Share details of the sale price or terms with- neighbors, friends, your agent friends... There's a reason the Realtor® Code of Ethics forbids us to share the details of a sale with anyone, without the seller's written permission! I had multiple offers on a listing I just put in escrow. I'd had 4 offers before finally reducing the price one more time and getting multiple offers. The 1st buyer to the table had a number that was substantially above a previous buyer who was sniffing around again. The next buyer knew of the first one on the table and came in with a VERY strong offer & terms. The next buyer was someone I showed the house to myself. He wasn't aware of the other 2 and verbally planned to come in MUCH lower. When it finally sunk in he wasn't alone, he wanted me to share "the number" with him. I refused. He said, "I'll match the offer you have." I said, "I can't tell you the number or terms. Please tell me what it's worth to you and I'll write it up". I wouldn't give in, but can say within an hour he was willing to go $25K ABOVE my initial list price! Funny thing though, this cash buyer was never was able to get me: his proof of funds, the details I needed to write up his offer, etc. Good thing I didn't give in, get my seller all wound up on an unrealistic number that never materialized anyway...

DOs:

1. Have a plan for a fast exit- rent, buy something else, move away. Nothing is worse than having no plan at all. In spring 2015, 2 clients' home sold in days (at the same time). Though one seller was in 85254 & the others were in McCormick Ranch and they were on different paths, they had to get out fast! The solution for both were fully furnished seasonal rentals. The couple stayed at theirs for about 6 weeks before relocating out of state and the other stayed for a month, and then another month and then scrambled to find something long term before the rent jumped up at high season! I've done that charade myself and it can be a bit scary, especially if you've got your whole house in storage and kids/pets trailing behind you. Whether it's Hotel Mom & Dad or a 6-month rental with a flexible termination, figure it out right away.
2. Make a list of what you need & want from the sale, then choose wisely from your offers! If you're a low-stress, low drama seller, a buyer who is a pain in the A$$ from the start, will probably be a pain in the EVERYWHERE in your body by the end. Trust me on this one. Pain in the a$$ agents are the same. If I had a nickel for every time a seller said "it wasn't worth the extra $X to deal with..." Actually, they never say it, but the sentiment seeps out of every pore of their body every time we speak...
3. Look at the ENTIRE OFFER & TERMS before you make a selection or counter. "Highest and best" offer isn't always the *best* offer for the seller!!! Even if you get an extra $10K, incurring an extra $5K in moving expenses for "rush" move & the hassle of figuring out how to locate a house that hasn't existed for 9 mos (IT HAPPENED TO ME!!!) may not be worth it. I can't emphasize how much the "little things" make a difference. Being able to lease back, buying all the furniture, cash sales with no appraisal, a fully pre-approved buyer with money already at escrow.
4. Pick a good agent who knows most of this ahead of time... like ME. Duh!. ;) All kidding aside, agents who've experienced the ups and downs of the market have good memory (or should). Making the same mistake over and over is crazy-making stuff. There's a movie about it... "Groundhog Day", coincidentally my birthday. Trust when I say, "don't do X", there's a reason for it. I won't say "I told you so", but knew it would blow up & really can't help with:
   • Buyers freaking out because the seller choose not to repair an item(s) the buyer's agent specifically said was a "big deal"
   • Expecting a fast sale on a dated home in Paradise Valley, DC Ranch, North Scottsdale priced over $2M (under-performing market), even though the rest of the market is "UP"
   • Not understanding why the house didn't appraise for the sales price, even though I told/showed/promised you I had nothing to support that value
   • Being surprised when some repair I brought to your attention before we listed, is suddenly a big deal *now* (i.e. a bad roof)

Trust me. NO ONE hates for a deal to fall apart more than me. In 12 years, I've been around the block though. Even when times are good, it pays to have a healthy dose of reality in your back pocket. When it's all over, we'll laugh about it over lunch/cocktails/coffee/whatever you want. I just need to get you get to the finish line... With that, I'm off to argue why ~$10K in repairs doesn't equate to a $25K price reduction for my sellers... (couldn't make this stuff up...).

Have a great week! ☀️

Related Reading:

Real Estate Wire Fraud- The Struggle is REAL!!

The "Schmoopier" Side of Real Estate

April 2017 Phoenix Real Estate Market Recap

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