The Housechick Blog

Number Six in our series of Top Ten things to know about Tucson Real Estate:

Things You Are Unlikely to Find In Tucson Homes

• Basements: walkout, unfinished, or otherwise.
• Attics
• Lawns - okay, some lawns exist, but you’ve got to work hard for it!
• Storm windows
• Mud Rooms
• Three season porches
• Wooden Decks
• Steam and Oil Heaters
• Radiators
•  Vinyl and Aluminum Siding, for the most part.
• Ocean views or lakefront property
• Mello Roos
• Snow blowers and lawn mowers
• Shake shingle roofs
• Unfenced yards, at least for the average home
• Radon detectors
• Real hardwood floors - tile is easier to install over our typical concrete slab foundations
• I’m tempted to include “Florida Room,” but I think that’s an Arizona Room in disguise…

There are exceptions, of course.  A basement here and there, mostly in the historic districts around downtown and the University.  A neighborhood known for it’s green lawns, a shake roof occasionally. 

We do have other nice things: covered patios, tile roofs, gas heat and central A/C, lovely wire cut double red brick construction, adobe, dual pane windows, mountains, cactus, sunsets, all sorts of stuff.  Don’t worry, I can introduce it all to you!

Photos courtesy of lars hammar, via Flickr

To range price or not to range price, that is the question.

Earlier this week, Kris Berg of the San Diego Home Blog posted her findings with range pricing (Hi Kris, I’m Kelley).  She says she uses range pricing more often than not, but it is still a debated topic around the Tucson real estate water cooler. 

The idea behind range pricing is to set a low and a high value, a range in which the Seller is willing to respond to offers, where the low end is lower than perceived market value, and the high end is, well, higher than that.  The range price can also expose the home to more potential buyers.  If you search Kris’s blog for “range price,” there’s a plethora of information there that I don’t want to rehash here.

The issue is this: in our MLS system, the low end of the price range is the displayed number.  Our MLS rules state that the first line of the property description must indicate the house is range priced and state the range, but this isn’t highly enforced.  A buyer searching the MLS for properties sees the low number, and expects to negotiate down from there.  Of course, the seller wants the high end of the range, so you’re starting with completely different expectations from the buyer and seller.

However, I can see the other side of this story, that range pricing, properly applied, could be an appropriate pricing strategy.

Let’s look at numbers, shall we?

In the greater Tucson area, over the past 6 months, single family homes only:

• 434 listings sold were range priced, out of 5231 sales total
• 47% of those sold for more than the bottom of the range
• 38% sold below the bottom of the range
• 15% sold at the bottom of the range
• Average range size was nearly $15,000
• Homes selling above the low end of the range went for 3% more than the low end on average

Let’s look at a smaller area, so that we can make more appropriate comparisons between range pricing and traditional pricing.  The Northwest had the most range priced homes over the past 6 months, and has a large and varied inventory. 

 We see that the number of ranged price homes is a fairly small portion of the overall market, but is certainly a growing number.  I really wished we’d find that ranged priced homes were a representative sampling of the listings, but I see that ranged priced homes are $700k and less, and the traditional homes are listed up to $5 million.

Let’s look at the under $700k group:

Well, we see that range pricing gets a seller more per square foot on average.  With an average home Northwest under $700k being 1853 sq ft, that’s an extra $3224.

I’m still on the fence with range pricing.  I still feel that it sets up false expectations between buyer and seller - but that could change if range pricing becomes more commonplace in the Tucson market.  Regardless of the range, my buyers and I are going to write an offer based on what we feel is market value when we look at comparable solds, but maybe having a range price would get more people into my seller’s houses, and net more offers, more opportunities to negotiate.

Something to think about.

Released this afternoon, from Long CEO Rosey Koberlein:

“Our thoughts and good wishes go out to our colleagues at First Magnus Financial, which announced today that it would stop writing and funding real estate loans, effective immediately. We know the shut down will affect not only First Magnus employees but their many families, as well. We will be hoping for the best for them!

Long Mortgage Company has responded to the situation at First Magnus by working closely with its parent company, HomeServices of America, an affiliate of Berkshire Hathaway, to promptly arrange alternative funding sources to fund loans currently in the pipeline and to continue accepting loan applications for any Long Realty business.
Here are the steps we have taken today:

1. Loans that are set to close within the next 48 hours will be our highest priority. Such loans will be funded through our alternative funding sources.
2. Our alternative funding sources will also honor all current loan commitments and terms for our client’s loans now in the pipeline.
3. We are reaching out to other brokers with buyers of Long Realty listings, offering to process their clients’ loans with the same care and concern as for our own buyers, if their buyers’ loans are in jeopardy.
4. We are contacting other real estate companies to assure them that our own real estate transactions on their listed properties will close in a timely manner.
5. Finally, we have secured a commitment from our funding sources to continue with Long Mortgage’s Real Deal 1% Off Program.

We believe taking these important steps will add much needed calm and stability to the local market.

Long Mortgage and Long Realty are very fortunate to have the strong backing and support of HomeSevices of America during this difficult period. As you may know, HomeServices is the second largest, full service independently owned residential real estate company in the nation. Rest assured, Long Mortgage will continue to provide loan services to southern Arizonans seeking to fulfill the dream of homeownership. “

Poop hits fan this morning, as First Magnus announces they are no longer funding loans.

First Magnus, formerly Charter Funding, is one of Southern Arizona’s largest lenders.  I have deals with buyers using First Magnus right now - or were using, I should say.

Also, Long Mortgage is basically First Magnus under a different name, so we’ll have to see if the pending Long Mortgage loans are funding or not - I’m guessing not based on the emails being hurled around this morning.

I’ll provide an update when the smoke clears.

Ought to be an interesting day…

Each area of Tucson has a unique look and feel - at vastly different prices!

Click on the red markers to see Average Sales Price and Average Square Footage for a 3 bedroom single family resale home in that area of Tucson.

This data includes solds from the past 6 months, and is only resale single family homes.

Stats just released from the Tucson MLS today!

Quick Facts:

• Active Listings: 8692 units
• Number of Sales: 1098 units
• Average Single Family Home Sales Price: $295,399
• Median Single Family Home Sales Price: $235,000
• Average Townhome Sales Price: $202,050
• Median Townhome Sales Price: $182,000
• Average Condo Sales Price: $157,399
• Median Condo Sales Price: $145,888
• Average Days on Market: 65
• Citywide Months of Inventory: 7.9 months

Pending Sales and the number of Units Sold were down from last month - no surprise as they take a dip nearly every year in July.  Usually, both figures take a short trip higher in August, and begin a slow decline into the slow-down at the end of year holiday season.

The Average Sales Price ticked down to $268,983, down from $298,447 last month.  When the $298k figure came out last month, there was hubub about luxury homes skewing the average sales price figure, causing a big jump from May to June of this year.  Now we’re fluctuating the other way: I’m waiting for the reports of fire and brimstone for the Tucson real estate market based on this figure from the media.  Average price goes up, it’s just those darn million dollar homes.  Average price goes down, worlds collapse.  I prefer to watch the median sales price.

Median sales price came down to $218,750 in July, from $229,000 in June.  A little perspective: we’ve been bouncing between $210k and $229k since June of 2005.  A $10k drop feels like a lot, but we had a similar move between February and March of 2006, between August and September of 2006, and a $10k rise between January and February of 2006, with a bunch of little moves up and down inbetween.  However, the downward move in median sales price is certainly something to keep an eye on.  I think anyone buying or selling right now has felt the relative flatness of the market.  Was anyone expecting record citywide appreciation this year?  No?  Okay, me neither.  In fairness, some areas of town seem to be experiencing a small, healthy amount of appreciation.  We’ll break those down in a separate post.

We had 8692 active listings in July 2007, roughly the same as last month.  We had a nice little downward trend in the number of listings over the past couple of months - is this a plateau?  We’ll have to wait and see.

Average days on market for July 2007 was 65 days.  We’ve been in the mid sixties for 9 months now.  If you’re a regular reader, you know DOM isn’t my favorite figure.  We’ll do some months of inventory calculations in a separate post, which I feel is a more accurate assessment than DOM.

So that’s July 2007 market statistics for Tucson.  Give me a day or two to break down months of inventory and other interesting figures by area, and I’ll report back in.

Ah - the LSR.  Typically, the first nonsensical acronym a buyer encounters when starting to look for a home, in Tucson, and in all of Arizona.  What’s an LSR, you ask?

It’s a Loan Status Report.  Stupid name, I know: you have no loan yet so the status of the not-yet-in-existence loan is…?

Anywho.  Here’s what you really need to know:

• You need an LSR to make an offer.  Period.  Which means,
• You need a lender,
• Who has pulled your credit scores
• And taken an application
• And discussed loan programs with you
• And provided you with a Good Faith Estimate
• So that we can have them fill out the LSR form when you find a home you like,
• So that we can make a successful offer to buy that home.

Formally, the LSR is required by our AAR Residential Resale Purchase Contract, the typical contract an agent would use to write an offer on a resale home.  It’s really just a detailed pre-qualification letter, in a standardized form.

If you talk to a lender that says, “What’s an LSR?“, just stand up, turn around, and run away.  Please, for the love of all that is good, go find a lender that knows their business, and knows how to originate loans in Arizona.  I’ve got excellent recommendations, by the way, if you need them.

Go talk to a lender, and get yourself in a position where we can call your loan officer and have them send us an LSR when we’re ready to write an offer.  Some lenders will give you a couple of LSRs, with the address blank and the rest filled out at various price points in your range, so that we can make offers with those forms quickly when the right time comes.

For the nitty-gritty details, read on.

You can see the form itself by clicking on the screenshot, here.  It’s pretty easy to see the type of information we use to fill it out.  You can see it describes your loan(s): the amount, the LTV, the rate, the term, the type.  We also have to state if this will be your primary residence, what kind of home it is, if you need to sell another house in order to secure this loan.  The bottom section is filled out by the lender: all “yes” checkboxes checked is the best kind of LSR.

Can you have an LSR without the lender section filled out?  Yes.  Is it valid?  Yes.  Would a Seller ever accept an offer from someone who hasn’t talked to a lender?  That’s a big NO.

The Seller gets a copy of this form along with the offer so that they can evaluate your loan program, and decide if they think you’re a good risk or not.  High Loan to Value ratios or high stated interest rates on the form may indicate a loan that is a little more difficult to get than someone that has 20% down and is getting a great rate.  The Seller and their agent are also going to be evaluating your lender.  If my Sellers have an offer come in with an LSR from a lender that I’ve had multiple bad experiences with, I’ve got a duty to tell my Seller about that.

Fun language in the LSR: “Buyer agrees to establish the interest rate and ‘points’ by separate written agreement with the Lender during the Inspection Period or the interest rate provision of the Loan Contingency shall be waived.”

We’ll write in interest rate upper limits when we fill out an LSR: if your lender is quoting you 6.5%, then we’ll probably write in 7%, just in case rates fluctuate a little.  If rates go above 7%, then you don’t have to get the loan, and can walk away from the deal.

So, if you don’t lock your rate within your inspection period, typically the first 10-15 days of the deal, then you loose that contingency.  If rates go above 7%, you still have to get the loan, if you qualify for it.  Be aware that locking your rate may be at a cost to you, depending on the term of the lock.  Most lenders will lock 30-45 days for free.  If we’ve got a long escrow period, and you’ve got to lock your rate at the start of the deal, you may have to pay to get an extra long rate lock.

Lessons Learned

• Get your lending figured out early
• Use a reputable local lender
• Make sure you lock your rate in time to preserve your interest rate contingency

Happy Home Shopping!

In no particular order:

1. You don sunglasses, head out to the car, and as soon as you get in, the lenses fog.

2. The media recaps the stupid motorist law and

3. The weather stories lead the 10 o’clock news.

4. Weekly flash flood warnings, if not daily.

5. Unprecedented weed growth in the yard, followed by a fast blooming of the ocotillo and a rejuvenation of the I-thought-that-was-dead-eucalyptus tree.

6. Flip flops become “work appropriate” footwear.

7. You find yourself racing down the freeway, eyeing the black storm cloud in the rearview, trying to get home before the storm catches you.

8. Tucson Monsoon pictures proliferate on flickr.

9. All the rivers actually have water in them, as well as the washes, if only for a few days at a time.

10. Your open house gets rained out.  Also, picking up open house signs in the rain and mud in heels?  No fun.

Monsoon actually means “season,” so calling it “monsoon season” is redundant.  Technically, the monsoon starts when we have three days in a row with a dew point above 54 degrees.  Tucson gets most of it’s rain for the year in July and August.  We get a little rainy season in the winter, but nothing like the Monsoon.  These huge storms rip across the city, usually from Southeast to Northwest, with crazy lightning, just very violent.  Quite spectacular, if you’re into the storm watching. 

Since the ground is fairly saturated with water, all the bugs are out, which brings out the lizards.  Brown Dog is an avid hunter of lizards. 

Me, I’ve got some weeding to do.

Today, we explore Colonia Solana, in Central Tucson.

Colonia Solana sits in a rather prime central location, just South of Broadway and East of Country Club.  The Eastern and Southern sides of the neighborhood are bounded by Reid Park and the Randolph golf course. 

This puts Colonia Solana within a short walk to everything Reid Park has to offer: the zoo, the pool, Hi Corbett Field, and both North and South Randolph golf courses, not to mention the walking trails around the whole thing.

It’s also about 3 miles from downtown, and maybe 2 miles to the University of Arizona.  El Con Mall is right across Broadway, with it’s Home Depot, Target, movie theater, and hopefully more as El Con starts it’s slow revitalization.  Broadway is dotted with lots of restaruants and services as well.

 What I like most about Colonia Solana is the feel: this is a picture of one of the neighborhood roads.  With all the little winding streets and the big trees, it feels like a remote spot, but really you’re right in the city.

The houses tend to be big brick ranches, with a couple that have been stuccoed, or have a second story.  The homes themselves are on big lots, by midtown Tucson standards, and usually sit pretty far off the road.  Sometimes it’s hard to tell what is a driveway and what is the street!

Despite being in the middle of town, the place feels very calm and secluded.  The winding narrow roads keep out cross traffic.

Colonia Solana is in the TUSD school district, and is serviced by Robison Elementary, Mansfeld Middle school, and Tucson High.

Average home prices run from around $800,000 to roughly $1,300,000, so it’s one of our pricier midtown neighborhoods.  Homes in that area were built largely between the 1930s and the 1960s, with usually 3000+ square feet, and a typical lot is about an acre.  It’s a pretty small neighborhood, with very little turnover, so it can be difficult to get into Colonia Solana.

You can see everything for sale currently in Colonia Solana here.

So that’s Colonia Solana, one of my favorite places for Tucson real estate.  Pique your interest?  Looking for something classy in central Tucson?  Send me an email, and we’ll find the right neighborhood for you.

(begin atypical rant from the Housechick)

There was an article in the current issue of Broker Agent magazine for the Tucson and Southern Arizona area - admittedly a pithy publication, thinly disguised ads posing as real content, for the most part, with occasional interesting articles.

The article is about a new survey that shows 90% of appraisers feel pressured to “hit the number,” meaning they feel pressured to return an appraisal for the sale price of a home.

Of course, the point of the article seems to be to get you, the home buyer, to call your lender and request an appraiser that has been accredited by the organization who wrote the article, so there’s little actual information.

The first thing that stands out is that they call appraisers the ONLY independent objective third party involved in a real estate transaction.  (If you’re neutral, then you shouldn’t respond to pressure anyway, right?)  But let’s give the writers the benefit of the doubt here - maybe this article was written for a state where they do not use an Escrow account.  By definition, escrow involves a neutral third party. 

Regardless, here’s what really bugs me.  One of parts of the article selected for the big font highlights is “Homebuyers should ask their lender for a copy of the appraisal report.  It is a consumer’s right under federal law.”

Okay, remind me again, who typically pays for the appraisal?  Oh yeah - the BUYER.

And who gets a copy of it?  Oh yeah - the lender.

And who has to make a request to receive a copy?  After they paid for it?  Is there a disconnect here or is it just me?

Some of the lenders I’ve worked with given a copy of the appraisal to my buyers without a formal request, typically mailing it out to my clients after closing or bringing a copy to the signing table.  Every once in a blue moon, my buyers receive an email copy from the lender as soon as the lender has it in hand.

Is that enough though?  If appraisers feel pressure to hit the sales price, who gets to say whether they performed in a neutral manner or not?  Our contract states that the house has to appraise for at least the sales price by an appraiser acceptable to the lender - who, as far as I’m aware, doesn’t have fiduciary duties to the buyer.  So the buyer pays… for something that has to be acceptable to the lender… and not for something or someone acceptable to them?

Who does that appraisal really protect?  The buyer or the lender?

What percentage of appraisals come back at exactly the sales price?  80%?  90%?  You know the appraiser usually has a copy of the contract in hand when they do the appraisal, right?  Is that appropriate?  Are we looking for an actual value or are we just mitigating risk for the lender at the Buyer’s expense?

Sheesh…

(end rant)