Real Cost of Housing

A variety of factors have led to a shortage of rental units, especially single family homes, and as a result, rents have been steadily increasing nationwide. In most markets, it is considerably less to own than to rent.

In some cases, the total house payment is less than the rent for a similar size and condition home which supports a purchase. However, when you factor in some of the financial benefits like principal reduction, appreciation and tax savings, the difference becomes even more dramatic.

Let’s look at an example of a $250,000 home with 3.5% down payment and a 4.50% mortgage for 30 years. We’ll assume a 3% annual appreciation, 25% federal tax bracket, $1,200 annual maintenance and current rent of $2,100 a month.

The total house payment with property taxes, insurance and mortgage insurance premium would be $1,834 a month. Once the principal reduction, appreciation, tax savings and maintenance have been considered, the net cost of housing is about $673 a month. It costs a tenant over $1,400 more a month to rent than to own which would amount to $17,000 in the first year alone. That’s almost twice as much as the down payment to get into the home.

In this example, the down payment of $8,750 grows to almost $94,000 in seven years due to appreciation and amortization of the loan. Owning a home is one of the few investments available that allow these personal and financial benefits.

One of the obstacles in the past five to seven years has been a borrower’s inability to qualify for a mortgage but new programs and relaxed requirements have allowed more people to be eligible for mortgages. The important step is to talk to a trusted mortgage professional very early in the home search process. Your REALTOR® can make recommendations based on experience from actual closed transactions.

Use the Rent vs. Own calculator to see what the benefits might be in your price range.

6 Reasons for Rentals

Rental homes have several distinct advantages compared to alternative investments. These advantages coupled with the opportunity for a higher yield make it a clear choice for some investors.

1. Most investments must be paid for in cash. Stocks can be purchased with 50% cash but if the value goes down, more cash has to be used to keep the margin at 50%. Rentals can readily be financed with only 20-25% down payment.
2. Most loans made for business or investment purposes are at a floating interest rate compared to the prevalent fixed-rate mortgage on non-owner occupied real estate.
3. Terms for investment loans if possible are generally six months to a year with a possible renewal but real estate commonly has long term loans up to 30 years.
4. Real estate has a long-term history of appreciation.
5. Real estate enjoys tax advantages like long-term capital gains treatment, cost recovery and tax deferred exchanges that are not available to many other types of investments.
6. Single family homes and similar properties give the investor a reasonable amount of control to make improvements and manage the property which are limited to simply determining when to buy and sell for other investments.

The ins and outs of stocks, bonds, mutual funds, commodities and other investments are unfamiliar with most people. It is obviously possible for anyone to invest in them but the lack of knowledge about how they work could make it more difficult to have a successful outcome. On the other hand, homeowners can use their experiences to select, manage and sell with much more confidence using a single family home for rental purposes.

To find out more about investing in rental properties, contact your real estate professional.

Your Best Investment

According to a Federal Reserve report on Consumer Finances, homeowners' net worth is 36 times greater than that of renters. Building on that study, the National Association of REALTORS® believes that by the end of 2015, the factor will grow to 41 times greater.

There can be several factors that contribute to this disparity but an important one is the forced savings that is achieved due to an amortized mortgage. A portion of the payment goes to the reduction of the principal balance of the mortgage which increases equity in the home.

Appreciation is also a major contributor to homeowners’ equity. Homes, in most areas, have consistently increased in value over the long term and during the past four years have experienced solid growth. Many economists expect home prices to increase in the next five years.

Let’s look at a scenario where a qualified buyer considers three different options to see what their investment would be in five years: purchase a certificate of deposit, invest in the stock market or buy a home. The following assumptions are made: a $250,000 home with an $8,750 down payment with a 4.5% mortgage for 30 years and 3% annual appreciation; CD rate at 2% and a 5% return in the stock market.

The $8,750 would grow to $9,661 in the certificate of deposit, to $11,167 in the stock market and to $69,900 in equity with a home purchase. That is over a six times growth in the same period of time due to the amortization of the loan and the appreciation.

Check out Your Best Investment to compare possible differences in your price range.

The Cost of Co-Signing

It seems fairly innocuous; a friend or family member wants you to co-sign on a loan because they don’t qualify. They assure that they’ll make the payments; they’re quite convincing and very appreciative. You don’t want to disappoint them and after all, it’s not like it’s going to cost you anything…is it?

Think of it this way. They couldn’t get a loan unless you co-sign for them. If they don't make the payments, the lender is going to look to you to repay the loan plus late and collection fees. The lender may be able to sue you, file a lien on your home or garnish your wages.

And it’s not just money that you could be losing, it could be your credit too. Co-signing a loan is a contingent liability that could affect your debt-to-income ratio and your ability to borrow.

Co-signing is an obligation to repay the debt if the other signer is unable. You could be out the money and unable to recoup the loss because you don’t have control of the asset. The impact on your credit could take years to recover.

Before you obligate yourself, consider all of the ramifications involved in co-signing a loan for someone.

Finding the Best Mortgage

As rates are inching up but still very affordable, buyers should remember that there is an alternative to a fixed rate mortgage that can provide the lowest cost of housing for the homeowners who understand the parameters.

A $300,000 fixed-rate mortgage at 4% has a principal and interest payment of $1,432.25 per month for the entire 30 year term. A 5/1 adjustable mortgage at 3% has a $167.43 lower payment for the first five years and then, can adjust, up or down, based on a predetermined index.

Another interesting fact is that the unpaid balance on the ARM at the end of the first five years is $4,624 lower than the fixed-rate mortgage. The total savings in the first five years on the ARM is $14,669.00.

Adjustable rate mortgages are not the right choice for everyone but buyers should at least consider the options based on their individual situation. It could be an obvious choice for a buyer who is only going to be in the home for five years or less.

Use the ARM Comparison worksheet to see what possible savings you could have based on your actual numbers. A trusted mortgage professional can help you to understand the advantages and disadvantages based on your situation. You need the facts to make the best decision.

Staging Your Home To Sell

 

One of the most important things you can do to get your Phoenix real estate ready to sell is to stage it properly. Staging is the process of cleaning and preparing the property with the goal of selling it quickly once it has been listed. Performing this step of the selling process correctly can significantly shorten its time to sale. Here’s what you should know about staging your home.

Staging Professionals

For sellers who do not have a lot of time or who may not fully know what to do to appropriately stage their home, it may be a great return on investment to hire a staging professional. This specially trained individual will assess the home and provide a list of items that must be corrected prior to listing. He or she understands how to optimally place furniture and accent pieces to create the most appealing first impression. You have literally seconds to impress a potential buyer when they walk through your home, and this trained pro knows exactly what to do to get the highest possible offers. If you have already moved into a new home and the sale property is vacant, your staging consultant may use rental furniture to create the perfect atmosphere.

Cleaning and Purging

Regardless of whether you stage your Phoenix real estate by yourself or you hire someone to do it, you’ll need to take care of some tasks during the process. The home should be empty of all clutter and immaculately clean. Counters should be free of nonessential items. No objects should be left on steps or in corners. Clear out cluttered closets and garages.

Renting a storage unit for a short period of time can be very helpful in the decluttering process, since excess furniture and all of those boxed holiday decorations can be neatly stored offsite and out of the eye of critical buyers. As you pack your nonessentials, place the boxes in your offsite storage as well. The more open, spacious and clean the home looks, the more likely you are to obtain an offer after a showing. Don’t forget about cleaning carpets, windows and window blinds. 

Maintenance

Upkeep of a property is always important, but never more so than when selling your Phoenix real estate. Repair any cracks in the walls, both inside and out. You’ll want to touch up any paint scratches or scuffs, oil squeaky hinges, tighten doorknobs, replace spent light bulbs and make any small repairs that have been lingering. Dripping or leaky faucets or toilets detract from the perception of the home and may cost you in the long run. Make sure that the landscaping is well done and the yards look clean and fresh. Your realtor can help you identify things that should be addressed before listing. 

Staging is critical to successfully (and rapidly) sell Phoenix real estate. Our extensive experience will help you complete your home sale efficiently and at the highest price possible. Contact us today for your pre-sale consultation! 

Cut Mortgage Insurance

Making additional payments toward the principal of your mortgage will do three things for the homeowner: save interest, build equity and shorten the term on fixed rate mortgages.

These things should be beneficial enough to justify the extra payments but another huge advantage is available to those who have private mortgage insurance on their loan. Mortgage insurance rates vary but can range from seventy-five to two hundred dollars a month on a $200,000 mortgage.

Lenders are required to automatically terminate mortgage insurance when the principal balance reaches 78% of the original value of the property. It is important for homeowners to monitor their balance because sometimes lenders may inadvertently fail to terminate the coverage.

Mortgage insurance is a necessary but expensive requirement for many people who are limited to a down payment of less than 20%. Eliminating the need for it can save thousands of dollars over time.

The Consumer Financial Protection Bureau, CFPB, issued a compliance bulletin on August 4, 2015.

The Life of Luxury

Real estate in Phoenix encompasses a wide variety of different home types, neighborhoods, lifestyles and price tags to suit just about any buyer. Some very special homes on the market right now offer the best in Phoenix living, without a multi-million dollar price tag.

845 W. Edgemont Avenue (5232236)

This gorgeous 3-bed, 3-bath golf course home will take your breath away! Located in the historical Encanto Manor neighborhood, this house has been carefully renovated to update the home without losing the significant parts of its storied past. Shining granite greets you in the sunny kitchen, which also features new cabinets and modern appliances. Throughout this home you’ll find rich wood floors and all of the perfect touches you could wish for. You’ll spend many mornings gazing out of the glass-walled breakfast nook at views of palm trees and green fairways. Last but not least are the luxurious bathrooms, immense walk-in closet and a gorgeous large patio with stone accents.

3,026 square foot ranch style home; large lot. $609,000.  

  

31 E. Orange Drive (5262116)

This practically new 4 bedroom, 3 bath is located within minutes of downtown and within walking distance of fantastic restaurants and shopping. Built in 2012 in Historic Windsor Square means you’ll have the perks of a newer home with the charm and allure of a culturally significant neighborhood. You’ll enjoy many nights on the back patio after enjoying a wonderful dinner in your gorgeous modern kitchen. Truly a stunning home, the split floorplan means you’ll have privacy and space. Double sinks in the master bath accompany a jetted tub you’ll love sinking into after a busy day.

2,775 square foot ranch style home; 2012 built. $676,000

2016 N Alvarado Road (5308528)

The highly coveted Alvarado Historic District is where you’ll find a gorgeous 4-bed, 3 bath gem of a home. The spacious (and breathtaking) kitchen is suited for both family dinners and gourmet dinner parties. The large butler’s pantry has room for all of your sundries and partyware. The home has new flooring throughout and it is very well maintained. You’ll love the immense open rooms, walk in closets, and dazzling back yard with sparkling swimming pool. This exquisite home has plenty of room for children, pets, and social gatherings.

3,094 square foot ranch style; pool with covered patio. $795,000

1620 SW Palmcroft Drive (5260838)

We’ve saved the best for last in this Palmcroft Historic diamond. The stone touches throughout are complemented by the beautifully arched doorways, wood and tile floors. The crowning jewel of this unique piece of real estate in Phoenix is the 10-bay garage and carport, perfect for the car collector needing a place for their treasures. A separate guest house is a great place for in-laws or guests while you enjoy your privacy in this charming homestead.

3,100 square foot Tutor style home; large lot; 10-bay garage and carport. $950,000.

Real estate in Phoenix has a lot to offer those looking for a more upscale living environment. Tell us about your perfect home so we can help you live the life of luxury!

Lower the Rate & Deduct the Interest

A home can easily be a person’s largest personal asset and it can be a powerful tool to increase financial stability also.

Since most mortgages are amortizing, the loan becomes a forced savings account that reduces the unpaid balance with each payment. The equity could be used to improve a homeowner's financial position involving other loans.

While every homeowner recognizes that they can deduct the interest paid on their mortgage, it is surprising how many don’t know that they can write-off the interest on up to $100,000 of home equity debt assuming there is sufficient equity in the home.

The real advantage to a homeowner is that the money borrowed can be used for any purpose and the interest is still deductible. Homeowners could payoff high-interest rate credit card debt or student loans with a considerably lower rate on a mortgage and deduct the interest on the home-equity debt.

Replacing debt with lower rate loans that have deductible interest can be a strategic decision to financial stability and a debt-free environment. A trusted mortgage professional can help you analyze your individual situation to determine if it would be better to refinance with a cash-out first-mortgage or a dedicated home equity loan.

Things That Kill Your Credit

Some people take their credit for granted and don’t start paying attention to it until they need it. The problem with this is that it could delay if not altogether cause the loan to be denied.

The most common issue is not correcting items on your credit report. A large majority of credit reports have errors but not all of them are critical. Since it takes time to remove them, it is a good practice to review your free credit reports from each Experian, TransUnion and Equifax once a year at www.AnnualCreditReport.com.

Another problem is making late payments. One 30-day late payment could be enough to cause a borrower to pay a higher interest rate or even be denied a loan. Payments have a due date and even when they allow a few days before a late fee kicks in, if it isn’t on-time, it is late.

Maxing out credit cards is another big problem. Ideally, a person wants to have an outstanding balance of no more than 30% of their available credit. As the percentage of available credit decreases, the credit score will go down.

Bad credit can not only keep you from getting the loan you want, it can raise your rates on the insurance you buy. In a study released by the Consumer Federation of America, people with good credit paid less than people with average and poor credit. Their results indicate that some customers with poor credit scores were charged about twice as much as those with excellent scores.

A prudent idea if you are going to be moving to a larger home is to get pre-approved with a trusted mortgage professional before you sell your current home. Occasionally, sellers find out after they’ve sold their home that they can’t qualify for another mortgage.

5 Downtown Phoenix Restaurants to Try

One of the best parts of Phoenix living is the nearly limitless access to outstanding food and drink. Truly a culinary city, there doesn’t seem to be an end to the list of superb restaurants. We’ve picked a handful of amazing haunts for you to try.

Bliss/Rebar

This hip bar/restaurant combination is a fantastic meeting place, especially for happy hour and their late night reverse happy hour. Upbeat music doesn’t drown out your conversation as you enjoy signature treats like Garfield Grilled Cheese with bacon and apples or the Cheesy Mac Balls! The Drink of the Day allows you an opportunity to try new cocktails for a low price. Don’t miss Chillaxin Sunday Phunday!

FEZ

Recently relocated, FEZ is now an even better spot to enjoy weekend brunches, dinner or late night festivities. The Mediterranean-inspired menu features favorites such as lamb sliders, the bleu cheese balsamic burger, or a delicious FEZ lemon & pomegranate grill plate. The menu is very flexible and includes kid-friendly options as well. You won’t want to skip the FEZ gooey brownie!

Switch Restaurant & Wine Bar

The atmosphere at Switch is just one reason you’ll love to go there. The fun drink specialties (including the sweet and spicy “Ombre” cocktail) will keep you coming back for more. The Switch House Burger receives rave reviews due to its wonderful combination of flavors including Angus beef, creamy goat cheese, crispy onion strings and house-made fig dressing. Phoenix living would not be as excellent without frequent visits to Switch! 

Corduroy

Whether you are after drinks and socializing or a delicious dinner, Corduroy will not disappoint. The cheese and bacon board alone is enough to make your mouth water! Speaking of bacon, the bacon-wrapped Mission figs are a blend of peppery-sweet goodness that you’ll love. The scallops and pancetta is another must-try dish. The great service, phenomenal desserts and extensive list of aperitif offerings will add to a sensational experience at Corduroy.

Pizza People Pub

Phoenix living would not be complete without a great go-to pizza place. You’ll find it at Pizza People Pub. Their expanded menu is a gastronomic dream of from-scratch doughs and fun topping combinations. Gluten free and vegetarian diners will also find plenty of temptation at PPP. If pizza isn’t on your favorites list, the house burgers and customizable mac and cheese are sure to please.

Phoenix living means that you are in range of the most delectable dishes you could desire. If you’re not lucky enough to reside in this beautiful valley yet, talk to us about starting your home search!

Checking for Water Leaks

An unexpected, larger-than-normal water bill could lead a person to think that they might have a leak. Before incurring the cost of a plumber, it is fairly easy to run your own test.

Locate your water meter. They’re usually in the front of the house, near the street. In some cases, you might need a meter key to open it; they can be purchased at Lowe’s, Home Depot or other hardware stores.

Step One - Write down the numbers on the meters to get a current reading. Don’t use any water for thirty minutes. If the meter shows water usage during the test period, proceed to step two.

Step Two - Shut off the valves to all of the toilets. If you have a pool with an automatic filler, it has a similar device. Repeat the test again for the same thirty minute period. If the numbers haven’t changed this time, it indicates that the toilets probably need servicing.

If the numbers have changed during step two, it is an indication there may be a leak and it will need to be tracked down. This could be the time to call a plumber or plumbing leak specialist. Your water department may have a consumer help line that can offer suggestions also.

What to Expect with Property Taxes

As a current or prospective owner of Phoenix real estate, there are many important details you’ll want to know regarding your financial responsibilities. Property taxes are one of those details, and planning for them appropriately will help you stay financially healthy. Here’s what you should know about paying property taxes in our fine valley.

Payment Schedules

The most important thing you’ll need to know about your property taxes is when they are due. Maricopa County, which governs most of the valley, typically has two due dates per year. At least half of your total property taxes are due on each of these dates. Of course, you may pay them in full to get them out of the way, but otherwise your half-year taxes are due no later than October 1 and May 1. If your taxes are not paid in a timely manner, the county may place a lien on your property or even sell it to recover past-due tax debts so it’s important to stay current.

Escrowed Taxes

Many buyers of Phoenix real estate are required to pay monthly into a savings (escrow) account that is then used to pay property taxes and homeowner’s insurance. Your loan lender holds this fund and then disburses the payments according to their due dates. Some lenders will send the check directly to you to forward to the county, while others will pay the county directly for the property taxes you owe. Ask your lender in advance how they handle tax payments, so that you can be aware of your responsibilities.

Assessments

Owners of Phoenix real estate obviously hope for their property value to increase. This can help build equity in the property and ultimately provide a higher return on investment. While these are positive things, one drawback to increasing property value is potentially higher taxes. When purchasing a home, the previous year’s tax rate is used to calculate what you should owe in the future. However, it’s very common for the county to reevaluate home values on a periodic basis.

Typically, you’ll receive a postcard from the county prior to a reassessment. Once it’s been completed you will also have the opportunity to appeal if you feel that the assessed value is higher than the true market value. In the case of an increase notification, you’ll want to sock away the difference to either your escrow account or separate savings account to manage the shortage when the bill comes.

Property tax is an obligatory part of owning Phoenix real estate and one that you should seek to understand. Working with an educated and experienced realtor can ensure that you know your responsibilities and what your financial future may hold as it pertains to your home and land.  

More Home for a Lower Cost of Housing

What if you could live in a larger and possibly newer home for less than you are currently? Would you consider moving? Do you want to hear more?

Interest rates, while they’re expected to go up, actually took a small dip and are still hovering at the 4% or below mark for a 30 year mortgage and almost one percent less for a 15 year term.

Let’s assume that you have a $225,000 mortgage currently at 6% which has a principal and interest payment of $1,348.99. With a 4% rate, you could have a $282,561 mortgage with the same payment. A $57,000 more expensive home could help you get what you need most such as more square footage or a different location or a newer home.

If you’re going to be making that payment for years to come, why not allow lower interest rates to help you get the features you want without having to necessarily pay a higher payment. Taking that logic a little bit further, let’s see how utilities can make a difference too.

A newer home could easily have lower monthly utility costs than your current home due to being more energy efficient. Construction materials, windows, doors, insulation, modern HVAC systems and energy efficient appliances all contribute to lower utility costs. A new home with these advantages could easily save a homeowner up to 25-50% on utilities for the same size home.

The concept is simple: get the most home you can for the amount you spend on the payment and utilities. It will take some investigation and your real estate professional can help.

Top Restaurants in Scottsdale

Scottsdale living comes with a number of distinct perks, one of which is the delicious dining throughout the city. No matter your food preference, you’ll find a wide array of tasty options to satisfy your cravings. Be sure to check out the following shining examples of culinary excellence in the Scottsdale area! 

Franco’s Italian Caffe

Even the most selective Italian diners will adore Franco’s for the robust flavors and authentic offerings. Scottsdale living has never tasted as good as your first bite of spinach, fontina and prosciutto bruschetta! Franco’s pasta dishes are inspired and you’ll be delighted with the outstanding service. No dinner experience is complete without a little vino and dessert, and Franco’s selections will not disappoint.

Eddie V’s Prime Seafood

This beautiful restaurant and lounge provides an exceptional experience for special occasions. Eddie V’s dinner menu focuses on not only the freshest and most artfully prepared seafood, but the chef also makes a mouth-watering premium steak and a wonderfully moist roasted chicken. Don’t miss out on dessert features like the sinful Hot Chocolate Godiva Cake or the decadent Butterscotch Panna Cotta. Finish off your meal with the perfect Italian espresso for an amazing evening.

Toro Latin Restaurant and Rum Bar

Located in the luxurious Fairmont Scottsdale Princess, Toro promises and delivers sultry Pan-Latin options from cocktail to entree. Toro’s rum bar boasts over 110 different rums and a strong wine collection. The suviche experience is not to be missed!

Cholla Prime Steakhouse & Lounge

One may not normally consider a casino experience to include fantastic dining, but Casino Arizona does it right with Cholla. Cholla has mastered the craft of preparing a steak that will melt in your mouth. For more adventurous diners, the lamb chops or elk tenderloin are both scrumptious choices. Don’t forget the lobster mashed potatoes for your side, and conclude your superb adventure with apple galette or chocolate coffee mousse. 

The Mission

Serving Latin fare, The Mission is a wonderful example of the uniqueness of Scottsdale living. The Himalayan salt wall provides a beautiful ambience while you enjoy some of the tableside guacamole that this establishment is known for. Seafood, shortribs, tender pork and more are infused with pecan and mesquite flavors during cooking, sure to please your tastebuds.

Be sure to make a reservation for these fantastic establishments due to their immense popularity. For those who aren’t fortunate enough to yet experience Scottsdale living, don’t hesitate. Contact us today to start your search!   

Get Ready for College

One of the important things as a parent is to plan for their children’s education. Let’s look at two different approaches: a savings account or investing in rental real estate.

Assuming your child is five years old and you start putting $250 a month in a savings account earning 2%, in 13 years you’d have $44,497.41 to pay for their college. Anticipating that isn’t going to be enough, you’d have to save $500 a month to end up with $88,995.

Another way would be to make a lump sum contribution of $20,000 today in a mutual fund earning 5% that would be worth $37,713 in 13 years. You’d have to make a $47,196 initial contribution to end up with the same $88,995.

An alternative to savings would be to invest in a $100,000 home in a good area. Assuming a three percent appreciation and rent of $1,000 a month, an initial investment of $23,500 could have a future wealth position of $83,838 at the end of 13 years.

Obviously, this is just an example of why rental homes are the IDEAL investment providing Income, Depreciation, Equity build-up, Appreciation and Leverage. While rentals certainly have more risk and management than a savings account, they do provide an opportunity for a higher rate of return.

If you’re concerned about paying for college tuition in the future, it is certainly worth investigating the possibility of investing in rental homes today.

3 Pet Friendly Condos

Pet lovers who are looking for condos for sale often have a challenge ahead of them. With so many properties that have restrictions or are just plain not pet-friendly, finding one that welcomes your sweet furbaby is a relief. The following are a few condo associations that roll out the red carpet for your four-legged friend.

Artisan Village

Truly a beautiful community, Artisan Village offers flexible floor plans and large living spaces in the heart of the Arts district. The enclosed dog park is just one of the wonderful amenities that AV provides. You’ll also find open greenbelts, a refreshing pool and spa, appliances and private balconies. Highway access is very handy to the properties but you’ll also find many great shops and restaurants within walking distance. Garage parking is another perk you’ll enjoy at AV.

Tapestry on Central

This 280-unit urban-loft property boasts easy access to public transportation and all of the luxuries you and your furry friends will ever want. Museums, historic districts, culture and sports are within a stone’s throw of these condos for sale. Owners may have two pets up to 40 lbs. each in their residence and there are lots of places in the surrounding area to exercise your pet. You’ll love the gourmet kitchens and wonderfully large homes.

Biltmore Jewel

One look at Biltmore Jewel’s condos for sale and you’ll be asking when you and your fluffy buddies can move in! This gated community feels more like a resort due to its upgraded interiors and sparkling pool. The Biltmore Jewel is adjacent to a plethora of fantastic restaurants, retail stores and entertainment destinations. Downtown Phoenix is quickly and easily accessible for those who wish to commute. Up to two pets are permitted in a residence in this very walkable area.

Pet lovers rejoice! These are just a few of the Phoenix condos for sale that will embrace both you and your cherished animals. Talk to us today to start searching for your perfect home!

What to Expect With A Foreclosure

Foreclosures can be an enticing way to leap into real estate in Phoenix but also quite complex. This realty scenario has many rules and best practices to be aware of before jumping in with both feet. Here’s what you need to know for a successful foreclosure-buying experience!

Banks

Foreclosures are owned by financial institutions and each will have its own set of rules governing the sale. Some want a tight deadline for closing otherwise the sale could be forfeited or require their own proprietary forms as part of the offer or purchase paperwork. An easy way to make sure you are complying with any process rules is to work with an experienced realtor and obtain pre-approval for the loan before making offers. 

Offers

Making an offer on any real estate in Phoenix can be exciting, but a foreclosure may be even more so. The market is hot and foreclosures do not last long, typically selling within 48 hours of listing. If you love the property, work with your realtor to submit a competitive offer without hesitation. The idea of submitting a “lowball” offer is not likely to be successful in Phoenix today.

Be Prepared

Most foreclosure real estate in Phoenix is sold on an as-is basis. That means that you are buying the home in its current condition. Be sure to do a thorough walk-through before making an offer. While some issues are hidden, some are quite obvious.

If you make an offer that is accepted it is important to purchase a home inspection from a licensed home inspector. A structural, general and pest inspection should be performed and a full report provided. While the bank may or may not choose to remediate problems or apply any discount to offset repairs, you’ll be prepared for the expense or can back out of the sale without financial penalties.

The same should go for purchasing an appraisal, even if paying cash or if your loan company does not require one. Paying more than the home is worth could mean that you may not ever see a return on your investment.

Purchasing foreclosure real estate in Phoenix can get you a great deal on wonderful property. Navigating these challenging waters is just one of the things that RooPho Realty does. Contact us today to get started on your search!