The Phoenix Real Estate Blog

We haven’t stopped writing articles about the Phoenix area, the Phoenix real estate market, or why you should move to Phoenix, AZ!

No way!

We’ve just moved The Phoenix Real Estate Blog over here. Come, check out the new website where you can browse through even more articles about real estate and things to do around Phoenix, create your own custom property search, read reviews written and posted by our past clients about The Hill Group, and more…

See you there!

Have you heard??   Have you heard the exciting news?!   I, Doug Hill, of this humble blog and The Hill Group will be starring on tonight’s episode of “House Hunters” on the HGTV (Home and Garden Television) channel with our clients, Monica and Matt.   If you’re a regular viewer of the show, I know there are many of you out there, you probably already know the scheduled show time.   For everyone else, it will air this evening at 10:00pm EST / 7:00pm PST.   You can also click here to read the episode description.

CAN YOU GUESS WHICH HOME MATT AND MONICA CHOSE BEFORE THE EPISODE ENDS??

Thank you to our wonderful clients, Monica and Matt, who bought their home in Chandler, AZ with our assistance earlier this year in April.   Since closing on their home, we have enjoyed becoming friends with them, and being invited back several times to see all the impressive upgrades they’ve made to the property.   Speaking of friends, I should also say thank you to all of our other friends, family, and clients who have supported us over the years, especially during the filming and editing of this episode.   We are truly honored to have such an amazing group of people around us every day.

What: The Hill Group appearing on TV, Where: Your local HGTV channel, When: September 29, 2010 at 10:00pm EST / 7:00pm PST

as is: in whatever condition something happens to be, esp. referring to something offered for sale in a flawed, damaged, or used condition.

We all know what as is means, but does “sold as-is” mean anything anymore?   I ask this, because my clients have been asking it to me a lot lately, and frankly, I can see why they’re confused.   Sellers, mostly banks and real estate investors, have been adding as is forms and as is clauses to their contracts for probably as long as the real estate contract has been in existence.   Recently, however, the rules of “as-is” have been bent a lot.   And once a rule has been bent, eventually it’s going to get broken.   Let’s look at why home sellers typically ask to sell their properties as is, and how the definition of as is has been twisted over time.

Why would you sell a home as-is?

When a home seller, perhaps in a distress sale situation, feels that he, she, or it (in the case of a bank or company) cannot afford to make any repairs to the home because of the loss he, she, or it is already taking on the sale, the home seller may negotiate an as-is clause into the purchase agreement.   This is sometimes done on a separate form or addendum, or as a counter offer to the buyer’s original offer.   Here below is a sample of language from an As Is Addendum that was recently presented to a client of mine.

Seller and Buyer agree that the Premises is being sold in its existing condition (“AS IS”) and Seller makes no warranty to Buyer, either express or implied, as to the condition of the Premises…

Not all as is clauses will read exactly like this, but they will attempt to convey the same message: This seller is not interested in repairing anything once there is a contract in escrow.

When is “as-is” not as-is?

So you’re looking at the language from the As Is Addendum above, and you’re thinking, “That sounds pretty straightforward to me.   Are home buyers asking sellers to make repairs to these homes anyway?”   Absolutely, and sometimes the sellers give in.   And therein lies the confusion.

In one common scenario, the real estate appraiser of the home you’re buying will point out certain defects he or she spotted while on the property, and notate them on the written appraisal report.   These defects are most often related to the electrical or plumbing systems, and are frequently notated on appraisals for FHA financing.   The appraiser may even go so far as to require that these defects be corrected prior to the Close of Escrow.   At that point, the buyer will have no choice but to cancel the contract, or…ask the seller to make some repairs after all.   Put up against a wall like this, I’ve found that most home sellers will make those repairs so as not to risk losing the contract altogether.

In another scenario, you may find these defects during your Inspection Period, thanks to a general home or termite inspection you ordered.   Signing an As Is Addendum, by the way, does not preclude you from conducting inspections.   And if you’re not interested in waiting for the appraisal to be completed, you may say to the seller that he, she, or it must agree to correct those problems found or else you will cancel the contract and withdraw your earnest deposit.   This is a less-common tactic, but I have seen it work.   In some situations, often depending on the sales price and the desperation to sell the home, home sellers will go back on their as-is language, and make repairs anyway.

So why bother adding “as-is” language to the contract?

“Why bother adding “as-is” language to the contract at all?” is exactly my point.   Perhaps these as is clauses should read something more like this:

Seller and Buyer agree that Seller would really prefer to sell this home in its existing as-is condition.   However, if Buyer makes a strong case as to why certain repairs are necessary, and Buyer nicely says “please,” Seller may consider to make such repairs, because Seller realizes that if Seller doesn’t, Buyer may cancel this contract and put Seller right back on the market where Seller doesn’t want to be any longer than Seller has to be.

I can understand and empathize with a home seller who, financially, may not be able to make any repairs, no matter what the cost and no matter how important they may be to the buyer.   That seller really is in a distress sale situation, and some kind of upfront as is disclosure should be made.   But, if a home seller can realistically make necessary repairs, but would “rather not,” come on…

Inventory is up, but so are sales

While the active inventory of homes for sale in the Greater Phoenix Area has been on the rise since the beginning of the year, so too has the number of pending and closed monthly sales.   Fortunately for home sellers, the active inventory has only risen by 7.5% since January 4, 2010, while the number of monthly sales has risen by approximately 26% in that same time…both are trends very indicative of the residential resale market in the springtime.

Supply and Demand 101

With only 5.1 months supply now, we are a far cry from the bubble-busting days of 2008, when we were averaging a 13.6 months supply.   “Look how far we’ve come!”   Rather than be discouraged by the active list price per square foot which has been falling since at least 2007, I am encouraged by the sold price per square foot which has been on a steady incline since spring of 2009, and you should be, too.   Here’s why.   I see the falling list prices as a natural by-product of home sellers becoming more realistic about current market conditions.   I see the rising sales prices as the inevitable result of pent-up demand, still low interest rates, the looming expiration of the first-time home buyer and repeat buyer tax credits, and a dwindling inventory.   Eventually, not tomorrow, these two numbers will converge.

In the meantime, if you’re a current homeowner needing to upgrade to a larger home, I couldn’t imagine a better time to take advantage of the real estate market.   If you’d like to talk more about the conditions in your area, post a comment below or contact me.   I can prepare a graph similar to the one below for nearly any Phoenix area city, town, or zip code, with thanks to The Cromford Report.

A guest post by: George Phillips

My name is George Phillips, and I am the owner/operator of Paradise Carpet Cleaning.   I clean carpet, tile and upholstery all over the Valley of the Sun.   I was asked by The Hill Group to write a post on carpet cleaning, and how it relates to the wide, wide world of real estate.   So, here it goes.

I work with a lot of REALTORS, Property Managers, and homeowners, and they all ask the same question at some point: œHow can I make these carpets last longer?   Well, there is no silver bullet, but I do tell them a few things, which I will share with you.

First, vacuum your carpets as often as possible.   The carpet cleaning industry recommends you do it every day, but since that may not be realistic for most people/families, I say to do it at least once or twice per week.   Second, have an inside pair of shoes separate from your outside shoes.   Don™t wear your dirty, outside shoes on your floors, especially your carpet.   With that being said, don™t go bare foot on your carpets, either.   The oils from your feet will get left behind on carpeting, then attracting dirt and dust.   Third, to keep your carpets clean, you must keep your tile, wood, and linoleum floors clean as well.   Fourth, have your carpets cleaned every six months to year, depending on the type of traffic they typically endure (i.e., kids, pets, etc.), by a professional carpet cleaner with a truck-mounted steam clean system.

Next, I always relate carpet care to car care.   Most cars need their oil changed every 3,000 miles.   Most homes need their carpets cleaned every six months.   If you clean your carpets as consistently as most people change their oil, your carpets will show better, longer.   And during the sale of your home, that means a prospective home buyer will have a higher likelihood of seeing carpets that he/she could actually be happy with and live on, rather than another item in the home to replace.   After all, you don’t want a prospective home buyer thinking about what your carpeting may or may not cost to replace.

If I can be of any assistance, please don™t hesitate to contact me.

About the Author: George Phillips is the Owner/Operator of Paradise Carpet Cleaning.   You can read more of his thoughts on the carpet cleaning industry by following him on Twitter at AZCleanCarpet or by becoming a fan of Paradise Carpet Cleaning on Facebook.   You should, too, he’s a nice guy.

What did the Phoenix residential real estate community learn from 2009?   Sometimes I still look back and try to glean something new from the blur of a year that was 2009.   A lot of homes were sold, so with a data pool that large, there are plenty of statistics still to dissect.

As a REALTOR who represents home sellers often, and a fellow real estate investor, I’m always trying to get into the mind of a typical Phoenix home buyer.   So, after reviewing the chart below from The Cromford Report earlier today, one statistic jumped out at me: Average Square Footage.   From 2008 to 2009, a period of time when the sales of townhouses and condominiums nearly doubled, the average square footage of homes sold remained virtually THE SAME!   In a year when the average price per square foot fell by 30%, the average square footage of homes sold held nearly constant.

This may seem like a straight-forward observation, but if you’re a real estate investor, this is paramount.   Home buyers may be looking for lower priced homes these days, but that doesn’t necessarily mean they’re willing to compromise on the size of the home.   How can you attract more buyers to your recently renovated home?   Stainless steel appliances stuffed into 995 square feet might not cut it anymore.   Start by offering them the square footage they need.

Stop encouraging bad real estate agents.   If you do, they’re just going to stick around longer.

Now, I’m not here to single out any one agent today.   That’s not why I created this blog.   What I am here to do is point out some increasingly disturbing trends in the Phoenix residential real estate market and what you can do to stop them dead in their tracks…the trends, not the agents.

“So Doug, what are these disturbing trends?”   Well, if I took the time to list them all here in this post, you’d probably stop reading after #11.   Generally, most of them can be thrown under the umbrella of Bad Customer Service.   Customer service, by the way, was supposed to be the foundation of our industry.   Because if it wasn’t, then we real estate agents are just a bunch of walking housekeys.   And I, for one, can’t figure out how a key would walk…?

Over at least the last two years, I’ve witnessed some shocking acts committed by bad Phoenix area real estate agents.   Acts, which, originally, must have been self-defeating attempts to drive business away, but now are reluctantly tolerated, and therefore encouraged.   I recently read an agent’s comments on one of his listings in the Multiple Listing Service (MLS) that read, “Do not call me.   Do not leave me a voicemail.   The fastest way to reach me is by text message.”   Okay, fine, you’re busy, but you’re tech savvy; I guess you’re working the cool and cutting edge angle.   But then…a few sentences later…the comments said, “Call lister [meaning the listing agent] before showing the home.”   WHAT?!   That agent is either: too busy, too lazy to check his own work, or doesn’t care.   Either way, there’s a problem.   If you’re a home seller in Phoenix or a surrounding suburb, you might want to know if this is the kind of stuff your agent publishes, right?   Imagine the prospective home buyers and buyer’s agents that are fleeing in the opposite direction of this home every day.   DEMAND TO SEE A COPY OF YOUR LISTING IN THE MLS, THE COPY THAT THE PUBLIC SEES AND THE COPY THAT REALTORS SEE.   We must all stop encouraging these bad real estate agents.

Who will represent the state of Arizona in the 2010 national academic decathlon in Omaha, Nebraska this April?   Nine students from Mesa’s Mountain View High School!   After scoring the most points in the regional competition, they entered the state competition ranked No. 1, and defeated the defending state champions from Tucson’s Canyon Del Oro High School team.   As reported on the East Valley Tribune’s website, Mountain View High is no stranger to success in the academic decathlon arena.   In the past, its alumni have claimed 15 state titles, and continued on to place among the top five at nationals 13 of those times.   Mountain View High School and the City of Mesa have much to be proud of this spring.

Interested in learning more about the elementary, junior high, and high schools located in Mesa and surrounding cities?   Click here to visit The Hill Group’s website.

“Is it common for these kinds of delays to occur in a home purchase?”   I field this question…or some variation of it…nearly once a day, and I can see why.   No, it’s not because all of the transactions in which I’m involved turn sour, chuckle chuckle.   There are a variety of reasons, but they revolve around the fact that the real estate transaction is not lead by one conductor.   Conductors lead trains, and they either get to their destination at the end of the day, or they don’t.   Pass or fail.   Real estate transactions are more like an Indy 500 race.   I’ve never actually watched an entire Indy 500 race, but I believe I know the premise, so let me explain my analogy.

Generally speaking, with the right driver (your Realtor, me) and the right pit crew (the other players in your home purchase), you will get to the finish line.   But I realize that wasn’t your question.   Your question was, “Why does it take so long to get to the finish line and how do we prevent delays from occurring?”   First, remember how many independent parties are involved in the sale of real estate: at least two Realtors, at least one Buyer and one Seller (good luck if that Seller is a bank or a divorced couple now living in two different states), at least one lender (two lenders if the Seller has a mortgage on the property), a title company, an attorney (depending on the state where your transaction is taking place), the County Recorder’s Office, the Federal Reserve (if wire transfers will be sent, which they usually are), a home inspection company, a pest inspection company, and I could go on like this almost all day.   With that many people controlling the outcome of your real estate experience, delays and surprises are inevitable.   It is best to accept that fact before engaging in a home sale or purchase, and hire an experienced, full-time Realtor who knows how to change a tire and refill the gas tank (metaphorically speaking).

Title companies will make typographical errors, loan officers will accidentally input your income incorrectly into their computers, and the Federal Reserve may hold up a wire transfer until the following business day.   As your Realtor, I cannot prevent these things.   No one can.   What I can do and what I will do is review every document that is presented to you during the transaction and have any errors I spot corrected as quickly as possible.   I will also stay in regular communication with your loan officer to ensure he is progressing at the pace he needs to in order for you to close escrow on time.   If he is not, I will point this out to you, so we can address it together.   Lastly, well, there’s nothing I can do if the Federal Reserve takes an extra day to deliver your wire transfer.   Sorry, that’s the government we’re talking about.   However…at the beginning of the transaction, I will recommend to you that you order your wire transfer at least two to three business days prior to the scheduled Close of Escrow date.

In real estate, like in life, expect the unexpected, and you will not be surprised.   Oh yea, and if the title company and your loan officer each make an error on the same day, try not to think the worst of them.   They are probably not in cahoots to sabotage your deal.

Here in Phoenix, Arizona, there are countless causes to which you can volunteer your time and talents.   In my humble opinion, perhaps some of the most rewarding are those that directly impact our local community, whether it be through a school fund raiser, a soup kitchen, or…Tempe Cares!   Tempe Cares is an annual one-day work event, inspired by former Tempe City Councilwoman, Carol E. Smith, who suggested the Tempe Leadership Program sponsor Tempe’s equivalent of Christmas in April.   That suggestion resulted in the foundation of the Tempe Cares Project in 1991.

By gathering citizen volunteers together into teams of skilled contractors and unskilled laborers (like me), the project aims “to reduce blight and improve the appearance of Tempe’s neighborhoods and community spaces,” and thereby enhance the lives of all of Tempe’s residents and visitors.   Oh, and it’s also a lot of fun!   This is apparent in the turnout the event draws, which has increased each year since its inception.   The Hill Group will be there; thank you, Doug with Architekton, for inviting us again this year!

What: Tempe Cares Project, Where: Various locations throughout Tempe, When: Saturday, March 7, 2010, How: Call 480-736-4281, email Info@TempeLeadership.org, or visit the Tempe Cares fan page on Facebook