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The $100 per square foot barrier in Tucson?

August 23, 2010

Every once in a while, I hear something odd.  There is so much bad information available, poor assumptions, and general misunderstanding.

For example. 

There is a mythical $100/square foot price barrier I’ve seen in more than a handful of home buyers in Tucson.  I have no idea where this one comes from.  Often, home values are much more than $100 per square foot.

Take the chart above.  That’s the average sale price per square foot for homes in Southeast Tucson, built after 1990, with at least 3 bedrooms and 2 baths – a very typical home for that area.  Can you get a home there for less than $100/square foot? 

Absolutely.  The data shows you can.  In fact, it looks like about half the homes sell at or below $100 a square foot.

Is it likely to be in fabulous condition? No.  It will be average condition.

Will it be on a huge lot?  Not likely.  The typical home in that region isn’t. 

Unless it is a short sale or otherwise a distressed property.  If you want an above average house in the area, for a below average price, then there’s going to be something wrong.  Otherwise, it’d sell for more.

If you want the above average house, you’re going to pay above average – and that’s appropriate.  There’s nothing magical about the $100 a square foot mark.  That’s just where some homes happen to sell at in this small sample of homes in Southeast Tucson.  But certainly not the best ones.

Dogs and Homeowner Associations

June 29, 2010

I love dogs.  Especially big dogs.  Unfortunately, big dogs and Homeowner Associations don’t always mix.

Especially those condo and townhouse homeowner associations.

It’s fairly common to find pet restrictions in HOA governing documents.  If you’ve got a large dog – say 50 pounds or more, you need to make especially sure you’re reading through those association documents carefully.  Often, the HOA will limit you to a certain number of pets, or to pets only under a certain size.

Typically, when you buy a condo or townhome here in Tucson, you get a copy of the association documents.  What normally happens is that the HOA moves very slowly, and you don’t get those documents until you’re nearly through with the home purchase.  So you could be well through your inspections, ready to close, and find out your 75 pound Fido isn’t allowed to live in your soon-to-be-new condo.

To add to the fun, those governing documents aren’t especially easy to get when you’re in the pre-contract stage.  Some of the larger HOA management companies in Tucson will provide you a copy – for a fee of around $250.  Sometimes, you can hunt down the person who does the association management and ask them directly.  Sometimes, the listing agent knows, or can get a copy of those documents from the Seller – assuming the seller kept their copy.  Often, they don’t have one anymore, and there’s no guarantee the rules haven’t changed in the meantime.

So just tread carefully, you Tucson condo buyers with large dogs.  And do your due dilligence carefully.

photo courtesy of the Digital Muzzle

Tucson Foreclosure Homes for Sale

June 21, 2010

Last year, I made this little map that seems to be popular! If you click on any of the colored regions, you’ll get a link to foreclosed homes for sale in that part of Tucson.

Of course, you don’t need the map, though it can be useful.  If you go to the Tucson home search on my site, you can enter whatever criteria you’d like and check the “Bank/Lender owned” box in the Foreclosures section.

View Bank Owned Homes for Sale in Tucson in a larger map

Home Buyer Tax Credit NOT Extended

June 18, 2010

There’s news flying around that the $8000 home buyer tax credit has been extended. 

It has not.

To qualify for that $8k credit, you had to be under contract to purchase a home by April 30, 2010.  And then the deal had to close by June 30, 2010.  These things have not changed.

What *did* happen is that the senate voted through a bill that would extend that closing date to to September 2010.  It has not passed the House.  It has not been signed by the President.  It is not yet a law.  It is only step one towards becoming a law.

A review of the process, inspired by today’s post over at the Mortgage Report.

Buying Rural Homes in Tucson

June 10, 2010

I’ve got this lovely new listing up at the base of the Tortolita Mountains, up in Northwestern Tucson.  It’s a really nice large rural parcel, but at the same time sits close enough to the city to not be a huge trek into town for a gallon of milk.

There’s a couple of things to watch out for when you buy homes like that.

This one is in unsubdivided Pima County – it isn’t in Marana or Tucson or Oro Valley.  This is important.  When someone sells 5 or fewer unsubdivided parcels in an unincorporated area, the Seller has to provide an Affidavit of Disclosure, which talks about legal and physical access, road maintenance, floodplain, water supply, and various other important issues.

Which ought to set off some alarms in your head.  If it is a dirt road – who maintains it?  Is there a recorded road maintenance agreement?  Is there a voluntary HOA that takes care of it with an annual contribution?

And then there’s things like septic systems and water supply.  Is the septic system sized properly?  Is it in good shape?  Where does the water come from?  Is there a private well or a shared well or some other water company?  Having water at the house would be a good thing.

How about easements and encroachments?  A title report should turn up the recorded easements.  But many times on older homes on larger parcels, previous owners have thrown up a shed or fence or other item that they assume is on or near the lot line.  Or there could be a walking path or bike path over the middle of the property that people have used for years and intend to keep using while you own it.

Buying rural property takes a little more consideration and investigation than buying a home in the middle of an established subdivision – but for some, the rural lifestyle is all worth it.

Home Buyers Spend More Time Shopping for a Car than a Home Loan

May 11, 2010

A survey by Zillow last week discovered that home buyers spend more time researching a car purchase than they do researching their home loan. 

Which astounds me.

A home loan is usually the biggest debt a person carries.  That sucker can last 30 years.  There are severe consequences if you don’t meet your obligations or if you agree to a home loan that you really can’t afford.  When you commit to such a large obligation, you really need to understand what you’re signing up for.

Sit down in front of your loan officer and ask a billion questions.  Ask as many questions as you need to ask in order to understand your loan options, and the pros and cons of each choice you make regarding your financing.  And if your loan officer won’t do that, find another one.  When it comes to financing your home purchase, the responsibility is yours to understand what you’re getting yourself into.

And I know – car shopping is a whole lot more fun than home loan shopping, and typically less confusing.  But the obligation of a home loan is too great to enter into one lightly.  Make yourself comfortable with the money part of the home buying experience, and the rest will go so much easier.

(psst – I know excellent lenders.  If you need a recommendation, email me.)

Why You Need a Pre-Approval Before Shopping for a Tucson Home

April 29, 2010

I’ve had a couple of calls recently from folks that seem to be leery of talking to a lender.  They want to go look at homes around Tucson, but aren’t willing to have a 20 minute conversation with a lender first.

So let’s dispel some fears and misconceptions.

First, having your credit pulled to see what kind of loan you qualify for doesn’t really hurt your credit score – estimates are that you’ll get dinged about 5 points.  But you’ve got to do it to get the loan.  Good news is that you can have as many lenders you want to talk to pull your credit score in 14 days, and it only counts as one time.  So whether you talk to one lender or ten, it all only counts once.

Second, you need a preapproval from a lender in order to make an offer on a house.  In 7 years practicing real estate in Tucson, I’ve never seen a seller accept an offer where a Buyer didn’t provide a lender signed loan approval. 

It doesn’t make sense to go out and shop for homes when you can’t buy the one you want when you find it!  Not having that pre-approval in hand puts you in a position where you can’t act on the right house when you find it.

And finally, until you’ve talked to a lender, you have no idea what kind of payment you’ll have.  Yes, you can go online and fill out loan payment calculators, but your interest rate is heavily influenced by how much you have to put down and what kind of credit score you have.  And only a lender can tell you what rates apply to you and your specific situation.

Getting a pre-approval is a relatively painless process for most people.  And it puts you in a position where you have the most power and knowledge and control over your home purchase.  If you need a good lender recommendation, contact me and I’ll share!

Can I Make Offers on More Than One Short Sale?

April 19, 2010

Buying a short sale property can be a test of your patience.  Often, you’ll come to an agreement with the seller and then wait months and months for the seller to come to an agreement with their lienholders.  Say 3 months, on the fast side, up to year for the long ones.

The short sale language I use with my home buyers gives them the opportunity to walk away from the purchase unilaterally at any time before the seller and bank come to an agreement.  That protects the buyer from being locked in forever to a single property.

As a side effect, since buyers are just sitting and waiting forever, they often find other properties that they like at least as much or better.  So can you make offers on a second property while still keeping that first deal, just in case?  What if the second property is a short sale too?

There’s a couple of problems with that – and a couple of solutions.

First, as a home buyer, you need to be acting in good faith.  Every home you make an offer on, you need to intend to purchase.  And you need the financial capability to purchase it.  So if you make offers on two homes, you’d better be able to purchase them both, unless you write that second offer very carefully.  If both sellers were to tell you at the same time that they’ve reached agreement with the bank, then you are now obligated to purchase two homes.  And that’s probably not what you intended.

There’s also a potential disclosure issue.  The typical purchase contract that I use says that you the buyer have told the seller anything that would prohibit you from completing the purchase.  Being under contract for another home when you can only afford to purchase one would certainly prohibit you from buying that second house.

In theory, yes, you can make an offer on that second house while being under contract with the first house.  But you have to disclose what’s going on, and your agent better write a very good contingency into your offer so that you’re never obligated to purchase more than one house at a time.

It’s possible.  I just can’t recommend it.

Offers, Counter Offers, and Multiple Counter Offers

April 9, 2010

Things are definitely picking up.  I compiled the raw data for my Tucson market reports last night and there’s a huge increase in sales in March.  More activity means a higher probability that we’ll run into more counter offers… and multiple counter offers.

So let’s review how each works.

Usually, negotiations start when a buyer writes an offer.  The Seller has 3 options – accept it, reject it, or counter it.  If they write a counter offer, it goes back to the buyer.  And the buyer has the same 3 options – accept it, reject it, or counter it.  And that goes back and forth until someone either accepts the counter offer, or until someone rejects it.

With regular counter offers, there’s only one buyer and one seller negotiating for the house.

Multiple counter offers are different.  By definition, multiple counter offers involve multiple potential buyers at the same time.

Let’s say you like a house and submit an offer.  Two hours later, the listing agent calls and says they’ve received a second offer on the house from another buyer.  So the seller now has 2 offers in front of them.  And THAT gives the Seller a lot of options.

The seller can accept one and reject the other.  The seller can counter only one of the offers – which brings up some interesting dynamics regarding timelines for the buyer that didn’t receive a counter offer.  If the seller response time is long enough, potentially the seller can counter one buyer, try to get them higher, while keeping the second offer in reserve.

But sometimes the Seller wants to give counter offers to both buyers.  And they make a multiple counter offer to each buyer. 

The multiple counter offer is unique in that the seller produces this counter offer AND they have the final word on which they’ll accept.  A multiple counter offer goes out to more than one buyer, each buyer gets to consider the terms and accept or change them again.  All the buyer responses all go back to the seller and the seller gets to pick which one he wants to take.

The multiple counter offer made to each buyer doesn’t have to be the same.  The seller could propose different terms and price to each buyer.  And each buyer can accept, counter, or reject that multiple counter offer.

Things get more complex, and fast, when there’s more than one offer involved.  Be sure you know your timelines and clearly discuss your negotiating strategy with your agent!

Are Wall Mounted TVs a Fixture?

March 19, 2010

A new twist in selling real estate – over the past few years, it has become more and more popular to have those flat panel wall mount TVs.  I’ve had a few myself, installed the TV mount to the wall, cut holes for cables to run behind the tv through the wall.  Those usually aren’t small holes created when you mount a TV to the wall.

The general rule of thumb is that fixtures stay with the house when it sells and personal property is removed by the owner.  So with flat panel TVs, what’s a fixture and what’s personal property?

Another general rule of thumb – if it would cause damage to remove it, then it’s a fixture.

So, in my humble opinion, the TV itself is clearly personal property.  You can remove that from the wall mount system without causing any damage.  But what about the mount itself?  Removing that from the wall usually leaves at least 4 large holes in the wall.  Which I think is clearly damage, which would make that wall mount a fixture.

Now, not every wall mount fits every TV.  And some home buyers will place their TV set in a different place than the previous owners, or may not have a wall mount set at all.  Some buyers will want the wall hardware to stay, and some Sellers will be expecting all that hardware to go with them when they move.

Best bet is to always specify.  If you’re buying a home with a wall mount TV and you expect the mount to stay – say so in your offer.  If you expect it to go, specify that the holes be patched and painted.

Avoid surprises and address it as soon as possible.  And get that agreement in writing!

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