Phoenix City Living

Playing a smart investment game while your kid heads off to school

As university prices increase and the market is prepped for great buys in housing maybe it's time to consider a better investment in your child's future. It's been no secret to purchase a house or condo near the institution that your kid is heading off to. But now, when the market has never been better for buyers and will remain so for the next few years, perhaps this is the time to jump in, find your kid(s) the perfect home, and walk away with a few bucks to shave off the spiraling costs of university or college. Assuming a flat market for a few years, this is the perfect time to find that "steal" while knowing that during the period of market price stabilization before the inevitable migration upwards in Phoenix (Phoenix Metropolitan Market is rated amongst the fastest market turnarounds once the credit crunch has abated in 2009) you've got the perfect tenant (insomuch as you can control your teenage child!) watching your investment. Why pay the university when the market can pay you. Barbara Corcoran gives her assessment of a market choice whose time has definitely come.

The one word you never want to hear after you close: Lien

Although liens on a property are typically very easy to search out, do not use the excuse of naiveté when closing on a property. Liens are a matter of public record so simple searches and title insurance, can take care of any potential financial and legal nightmares after closing. Here are some options:
1.    Contact your agent to direct you to a reputable title agency. Title representatives are very astute at searching for anything that can cloud up your sale and title. Secondly, title companies offer Title Insurance which can protect you from liens, even hidden or "last-minute" liens. Old Republic Title defines title insurance as follows:

Protecting purchasers against loss is accomplished by the issuance of a title insurance policy, which states that if the status of the title to a parcel of real property is other than as represented, and if the insured suffers a loss as a result of title defect, the insurer will reimburse the insured for that loss and any related legal expenses, up to the face amount of the policy.

Title insurance differs significantly from other forms of insurance. While the functions of most other forms of insurance is risk assumption through the pooling of risks for losses arising out of unforeseen future events (such as death or accidents), the primary purpose of title insurance is to eliminate risks and prevent losses caused by defects in title arising out of events that have happened in the past. To achieve this goal, title insurers perform an extensive search of the public records to determine whether there are any adverse claims to the subject real estate. Those claims are either eliminated prior to the issuance of a title policy or their existence is excepted from coverage.

2.   Visit the county recorder, clerk, or assessors offices online or in person. With the minimal amount of information you can research the property including the status of any liens.
3.    Talk to your real estate agent. If you expect professional representation, it can start here. Helping you research and understand a property before you purchase should be the goal of every experienced agent. And in today's market, every little bit counts.

Buyers and Sellers Continue the Pricing Standoff

First a Fleche.  I'll expect a Parry.  Then finally I'll counter with a fatal Riposte.  The deal WILL be mine (add appropriate pirate swaggering and push body over side of deck).

Ok, perhaps not all real estate negotiations are ending in such dramatic conclusion, but many sellers aren't moving far from the prices set in the heady days of the 2005 bidding wars and unsustainable appreciation gains.  Buyers, on the other side, see the effects of the slower market conditions and high number of listings and are feeling confident of their increased leverage in the negotiation game.  Stated Jay Butler, director of the Arizona Real Estate Center at ASU's Polytechnic, "The housing market is confusing a lot of people right now, but the price increases last year were crazy and couldn't go on."

Is it time to furl the sails in this churning sea of confusion?  Hardly!  Sellers are always slow to give in to the changing market conditions of a slowdown.  Who wants to give up "paper" wealth?  The "I could have made a mint on the prices I think I could have got last year if I had bought faster, fixed up sooner, and sold right away to an out-of-state investor who was coming to Arizona on one of those buses from California packed with real estate newbies fresh from a get rich in real estate yesterday seminar" dream dies hard....and the reality of the "Hello, the market has changed" kick in the pants will typically travel slowly up to the seller brain.  The first sellers to figure this out are in the "Must Sell" category.  The investor that overpaid and is getting buried by payments.  The seller that needs to move by a certain date.  The owner on a set salary whose ARM just adjusted. 

The next category is the seller who was initially not challenged by a date, but needs to sell and expected the market to swing back to his favor "sometime soon".  Keep waiting.  The market has a blunt stick by which it educates the seller.  The fools that rushed into the market at its peak are gone. 

The final category is the sellers that just can't let the past paper profits go.  Convinced of the superiority of their real estate, they feel compelled to wait out the market.  When reality strolls by, these sellers will hide in the bushes ignoring even the best advice.  They're still setting up their chairs and the parade has already gone home.

My advice.  Simple.  Start looking for the right purchase for your needs.  Lots of listings means a lot of choices and pricing competitiveness.  Ignore the fools and negotiate in earnest with those sellers intent on fostering a realistic sale.  And we'll all look back at the sellers holding overpriced real estate and ask, "Just how are those payments making out for you?"

The market is shifting back to pricing determined by demand, inventory, and regional and national trends and competitive influences. What we'll see is market pricing determined by realistic historic appreciation and therefore going back to sustainable levels from its lofty pricing "bubble" of the past few years.

Choosing the right home inspector

When purchasing a home, whether it is new or resale, you should always have a professional home inspection conducted during the due diligence process.  If you are using a REALTOR, then your contract will be the standard AAR (Arizona Association of Realtors) Purchase Contract, which provides you the right to obtain an inspection during the due diligence period.  A home inspection give you an impartial, physical evaluation of the overall condition of the home and items that may need to be corrected.

If you are purchasing a new home, your options may vary from builder to builder, so discuss this with your real estate agent and/or builder BEFORE writing a contract.  Remember....the home may be new, but you should still have an inspection!  If a new home builder refuses to allow you the opportunity to have the home inspected during the construction process and/or at completion, I suggest looking for a new builder.

Note:  The standard time period for the home inspection is 10 days in the AAR Purchase Contract, but this period can be negotiated between you and the seller.  When writing an offer on a home, be sure that you consider the time period you will need to conduct due diligence and inspections based on your schedule.  If you feel you will need more than the standard 10 days, be sure to discuss this with your REALTOR to include in your original offer to the seller.

I believe that it is important to choose an inspector BEFORE you make an offer on a house.  I recommend to my clients that as we begin looking at potential homes, they also begin the process of choosing a home inspector in order to be prepared once a contract has been agreed to.  Too often a buyer will receive the referral of just 1 home inspector either from their real etate agent or a friend and simply use that home inspector.  Like most things in life and business, it is best to compare at least 2-4 potential home inspectors to find one that best fits your needs.

I provide my clients with 3 recommended home inspectors and encourage them to talk with family or friends for additional recommendations.  Also, home inspection companies can be found in the yellow pages under the heading "Home Inspection Services" or by visiting American Society of Home Inspectors.

I recommend that prior to hiring a home inspector, you inquire as to the inspector's qualifications and business practicies.  Confirm that the inspector is certified with the Arizona Board of Technical Registration and insured.  You may want to inquire as to the inspector's training and experience.  You should also find out if the inspector offers a written inspection guarantee and request a copy to review.

Another important element is the inspection report.  Many inspection companies provide online access to your inspection report which can save you time and hassle.  Ask to see a sample report so that you can determine the level of detail the inspection report will cover.

There may be additional information that is important for you when comparing.  The important thing is to ASK questions.  Your real estate agent should help guide you through this process, but YOU need to choose your home inspector.  Knowing and trusting your home inspector is necessary for a successful and smooth home buying process, so take the time to find the inspector that is best for you.