The Housechick Blog

No SPDS No CLUE.

Say what?

If you’re looking to buy a home in the Tucson area, I bet you’ve seen that more than once in the listing descriptions.  So what does it mean?

SPDS = Seller Property Disclosure Statement.  This is six pages of questions that a seller answers about their property.

CLUE = Comprehensive Loss Underwriting Exchange report.  A fancy name for an insurance loss history report.

Both are required to be delivered to a Buyer during the home inspection period per our standard Tucson real estate purchase contract.  But with the foreclosures and whatnot, there’s many a bank or seller that will not fill out and deliver those two documents.

So what do you do as the buyer? 

Well, for starters, I’ll give you a blank copy of the SPDS, so you know what a seller *would* have answered.  Maybe it will make you ask questions of the house you may not have thought of, or will prompt you to get that extra inspection NOW that you will have really wished you would’ve had when 2 weeks after close that one thing you didn’t look at or consider breaks/dissolves/lays eggs in your closet/is sucked into a gigantic earth crevasse in your back yard. 

We’ve talked briefly about short sales before.  A short sale is where the Seller isn’t going to make enough money at the sale to pay off all the loans on a property.

If you’re trying to buy a short sale property here in Tucson, be ready to be patient.  There can be lots of hurdles to jump before you can actually close on a short sale. 

If you ever do.

Close, that is.  It doesn’t always happen.  What I’m seeing more and more is that an agent will put a short sale into the MLS at well under market price.  Now, there’s no guarantee that a bank will accept anything remotely near that price.  If we look at the history and see that they’ve tried other prices over time, then maybe we’ve got a chance of getting it at that low price.  But more often than not, what initially looks like a fabulous bargain is just a teaser price.  The bank may never accept a contract anywhere near that list price.  Why should they, if they can just foreclose and then sell closer to market after foreclosing?

The local Tucson MLS system made a rule at the end of July 2007 that short sales must be disclosed in the Agent Only comments of a listing.  Out of curiosity, let’s see how many short sales were disclosed from the start of August to now, and how many of those sold.

In the greater Tucson area, there are 450 properties disclosed as a short sale.  6 are under contract, 81 sold, and 309 either expired or were withdrawn.  There may be some duplicates there, of course, as properties are withdrawn and re-listed, but let’s consider this a ballpark figure, eh?

So: 81 sales out of 81 + 450 + 6 + 309 = 846 possible short sales since August of 2007, when the disclosure rule was created.  That’s roughly a one in ten chance of a short sale actually selling.

Which ought to tell you that sometimes, trying to get a short sale is a massive waste of time.  Like I said, be ready to be patient.  There’s a chance the thing will actually sell, just not a huge one.

Photo via Flickr, courtesy of TT in the Desert

Oh you mean those valuable broken fixtures and piles of newspaper???

Often while walking through what is an otherwise empty and vacant home, I run across piles of junk left in the garage, or in a storage room, or piles of yard clippings in a heap over in the side yard.  And my Buyers always want to know: are they going to leave that pile of stuff there?

Well - one of my favorite parts of our Tucson real estate contract states that: “All personal property not included in the sale and all debris will be removed from the premises.”

Which means no, that stuff isn’t supposed to stay there.

And as a Seller, you need to make some plans to get any remaining personal property or debris out of there before closing.

If you’ve got a lot of trash type stuff, then maybe you need a small dumpster.  During my last home remodel, I made good friends with Jack, the dumpster guy, who has excellent rates - much cheaper than what the city or the big box stores charge.  Send me an email and I’ll pass on his information.

If you’ve got donate-able goods, we can call over the Habistore and Goodwill to take usable goods away. 

As a Buyer, you should always walk through a house a couple days before closing to make sure the piles have been removed.  If we find a lot of extra stuff in there initially, we might want to start addressing that particular contract clause earlier than that.

There’s a little section in the real estate contract here in Tucson where a Buyer gets to decide if they want to ask for a home warranty or not, from which company, with what coverage, and who will pay for it. 

A home warranty is different from your home owner’s insurance.  Home owner’s insurance protects your house and stuff in case of a loss, in general.  A Home Warranty is an annual service where if something breaks, you call the home warranty company and they send someone out to see if the repair is covered by the warranty, and if so, fixes it.  The service call (as of today in Arizona) is $60, regardless if the repair is covered or not.

Home warranties can be purchased at the time you buy the home, and can be renewed every year.

I tend to use American Home Shield, who’s base policy is $350 per year, and then you start adding on a couple hundred for things like pool equipment coverage, or refrigerator coverage, things like that.

There’s a whole booklet that gives an overview of what is covered and what is not. 

I’ve had clients with both very good and very bad experiences with home warranties.  Sometimes, people get a new air conditioner covered by their warranty.  And some people keep making service calls and whatever is broken is never covered by the warranty.

So should you ask for the home warranty when you’re negotiating to buy a home?  If you think you’ll use it or need it, by all means.  In general, the home warranty request isn’t a deal-breaker.  In fact, some sellers offer it up front in their listings.  It’s a side benefit for them as well - they get the benefit of using the warranty themselves (with some restrictions) while on the market, and then can pass on a full year of coverage to the new buyer.

To the person who tried to chat with me from the sidebar Plugoo feature while I was in the other room arguing with a fax machine:

There are plenty of houses with pools near the University of Arizona, depending on how ‘near’ you want to be.  Within about a 5 mile radius, I found 89 homes with pools, ranging from about $169k to over $1million, with plenty of homes between the low and mid $200ks.

I hear the accelerated nursing program at U of A is an excellent program.  Please let me know if there’s anything I can do to help.

I was exploring homes near the University of Arizona in the $150,000 range today.  It looks like there are actually a couple of good townhome options.  I’m looking at six units, all within 3 miles of the University or less, two bedroom, two bath (one is 3 bed, 3 bath!), more than a thousand square feet, with air conditioning - and they run between $120-$150k.

All but one of these has covered parking, but they each have a nice little private patio area for the unit. 

All are very close to bus routes and bike lanes to the University, and each is maybe a half block from a grocery store and shopping center. 

I don’t think my MLS rules allow me to post the actual homes here, but send me an email and we can go over them privately.

I got a call the other day from a woman who wants to open a Bed and Breakfast in Tucson.  We need a lot that is nice and large and secluded.  Privacy and views. And the right zoning.

A quick search through the Pima County zoning code turns up this in Chapter 18.09.L:

1. Bed and breakfast establishments are permitted in the TR, CB-1 and CB-2 zones and as a conditional use in the RVC zone and all rural and residential zones.

3. Bed and breakfast establishments containing up to four guest bedrooms shall require a Type I conditional use permit in all rural and residential zones. Bed and breakfast establishments containing five to eight guest bedrooms shall require a Type II conditional use permit in all rural and residential zones.

10. Except in the CB-1, CB-2, TR, RVC and ML zones, bed and breakfast establishments shall have a minimum lot size of one acre.

So we should be looking for at least an acre in the residential and rural zones.  If she buys a house and converts it, we really want 4-5 bedrooms, but not more as the type II conditional use permit is a bit harder to get than the type I. 

There’s other requirements about parking spaces and signage and business entrances to the home.  We’ve also got to be sure to check any deed restrictions. 

I’m thinking some of the large 3+ acre unsubdivided parcels out in the Northeast and East, nestled up against the Catalina and the Rincon Mountains might be just perfect.

There are some people who absolutely do not want to live in an area with an HOA - a Homeowner’s Association.  While the intended effect of an HOA is to preserve property values, some folks feel restricted by the rules and regulations that go along with an HOA.

In the Tucson MLS, there’s a searchable field where I can find homes without a listed HOA fee.  While information there is deemed reliable but not guaranteed, you should always investigate to find out if no HOA really exists.

Also, many properties have deed restrictions.  Deed restrictions can limit the usage of a property, but are not a formal HOA.  When the property was originally built, or a subdivision originally created, the developer can record restrictions against the deed: hence the name, deed restrictions.

If you really want to know what you can or can’t do with a property, you’ve got to examine the deed and any restrictions that may be recorded against the property.  A common example of deed restrictions without an HOA would be something like not parking a boat in the front yard.

It’s a common misconception, that having no stated HOA means you can do anything you want with a property.  It just ain’t so.  You’ve got to check for deed restrictions.

So you just negotiated for some repairs on the house you are buying, and we managed to get the Seller to agree to recoat the roof.  You can’t wait to move into your new home in 2 weeks.

But hold on - that roofer?  He’s booked until next month. 

So now what?  No one wants to wait a month to close escrow on this thing, and even if you know what an escrow hold-back account is, your lender probably won’t allow it.

Luckily, we can solve this one. 

Since the Seller has agreed to pay for the roof, the invoice from the roofing company should be placed into escrow, and escrow will cut a check directly to the roofing company at closing.  And then you can hold on to that check for the roofer until they’ve completed the job.  Voila!

Couple warnings:

• One - don’t lose the check for the repair company.
• Two - the payment to the repair person should be recorded on the settlement statement.  No one is passing money around under the table.
• Three - this may not be advisable for major repairs.  You only get the amount of money specified on the invoice.  If the repair person finds more damage, or has to do extra work to complete the job, that can raise the price of the repairs.  You may have a huge fight on your hands to get any overage incurred paid by the Seller.

I’ve worked with several home Sellers in Tucson that are moving up into different homes.  It can be a bit of a juggling act to coordinate a sale and a purchase of a new home.  Here’s what I usually recommend:

First, we get your existing home ready to sell, and put it on the market.  During this time, we’re not going to go look at homes, but I do want you to go talk to a lender and figure out how much you can buy or want to afford in your next home.

When we get an offer for your home, and successfully negotiate that contract, then we’re heading out to look at homes immediately.  In this market, we’ve got an excellent chance of getting your dream home under contract, contingent on your existing home closing escrow.

Some people want more time to find the right home, and don’t make those kinds of decisions well under pressure.  And that’s okay!  We can find you some short term housing for you to move into, and we can take all the time you need to find the next house.

The actual coordinating of the closing of both homes is where most of the trouble appears.  You want the funds from the sale of your existing home in order to close on the new home, but you usually don’t get to move into that new home until you own it.  There’s a problem of moving stuff - it just doesn’t happen magically and quickly! 

Usually, we’re either going to have to negotiate some kind of short term lease so you can stay in one home until the other closes, or move into the other one early.  The not-so-fun option is to find short term temporary housing in a third place if we can’t manage to get everyone coordinated. 

There’s several options and ways to handle selling your existing home in order to move up into a different one.  Take the time to have that conversation with your agent well in advance.