There was a rather interesting thread this past week on Trulia Voices, all revolving around the concept of the earnest deposit.
In theory, once a contract is accepted, the buyer (or their agent) opens escrow and deposits a check as the earnest deposit - essentially a good-faith deposit representing the buyers' intent to purchase the home.
Amazingly enough, though, the Arizona Association of REALTORS Residential Resale Purchase Contract is extremely vague as to when the earnest deposit needs to be deposited into escrow.
Some agents on the thread argued that there's a 48-hour rule, or that 48 hours is the accepted practice. I can handle that except, when push comes to shove as seems to be happening for this seller, there's nothing in the contract that says the buyer had to make the deposit within 48 hours.
In fact, there's no timeframe at all. Guidance from the state real estate department also is vague, saying that the deposit must be made promptly. And on wording like that, attorneys are retiring to the Bahamas.
What was most interesting, at least to me, was the broker wading into the fray:
In Arizona the contract is clear, Earnest money has to be deposited as soon as possible, failure to deposit the money can mean there is no Contract.
As a matter of fact, the contract is so clear in this respect that the phrase "as soon as possible" cannot be found - no timeframe at all is given in any of the paragraphs in which the earnest deposit is referenced. As for the idea that not making the earnest deposit "can mean there is no Contract," again, there is no wording anywhere in the AAR contract to that effect.
My guess is this broker, who specializes in bank owned homes, is confusing the AAR Purchase Contract with the Fannie Mae addendum that voids the contract if the earnest deposit isn't made within a set time period. Fortunately for us, the Fannie Mae addendum doesn't apply to all real estate transactions here in the great State of Arizona and the ability to negotiate rather than be given marching orders by a data entry drone asset manager still exists.
All of this does make me wonder what will happen when the foreclosures finally disappear and these agents who only know what Fannie Mae tells them are forced to (gasp) re-learn the Arizona contract. It might come as quite a shock to learn that what seems so black and white instead blends into nine pages of gray.
Let's jump into the Wayback Machine to February 2009, when President Obama visited my alma mater, Dobson High School in Mesa, and unveiled the Home Affordable Refinance Program.
At the time I wrote:
The overall goal is to modify loans in manners that allow homeowners to remain in ther homes rather than face foreclosure. Eligibility is limited to mortgages on primary homes (no second, vacation or investment properties) and appears to be limited to situations where the first mortgage is no more than 105% of the value of the home.
You don’t need to be behind on your payments to be eligible.
Unless I’m reading it wrong, this leaves out buyers in the Phoenix real estate market’s hardest hit markets as homes there have decreased far more significantly.
Come back to the present day, and the President will be announcing a revised version of HARP that would allow homeowners who owe more than 125 percent of their home's value to refinance their home.
A home sector analyst said the change likely will impact few homeowners as they need to be current on their payments; I'm not so certain, though it could cause some who have stopped paying to kick themselves in the head and wish the program had been expanded much earlier than this.
In the Phoenix area, there still are a large number of owners making payments (and often wondering why) who may benefit from the revised plan. Time will tell.
Also of note from the CNN/Money article:
Fannie and Freddie will also reduce the fees they have charged in the past in order to enable borrowers to better afford the new loans. Among the fees that will be reduced or eliminated are those for appraisals, title insurance and closing costs.
Fees will also be waived for some underwater borrowers who refinance into 20-year or other, shorter-term loans. By doing so, it could help homeowners get above water faster.
A homeowner who has a $200,000 balance on their 30-year mortgage with a 6.5% rate and a home value of $160,000, for example, currently makes payments of $1,264 a month.
If they refinance into a 20-year fixed-rate loan at 4.25%, it will reduce their monthly payments to $1,238 and slash their loan balance to $160,000 in just five-and-a-half years. If they refinance to a 30-year loan at 4.5%, their monthly payments will be quite a lot lower, $1,013, but it will take 10 years to reach $160,000.
Getting back above the waterline on a home in Phoenix ... imagine that.
Imagine that ... some good real estate news coming out of the Northwest Valley. Money Magazine has named Glendale Arizona one the top 25 most affordable cities in the country.
The city of a quarter-million has long played second fiddle to nearby Phoenix. Now, however, it boasts two major league sports teams, the NFL's Cardinals and the NHL's Coyotes. These local arenas also host big-name concerts like Paul McCartney and Taylor Swift.
One more thing the city has over Phoenix: affordability.
For years I've told any buyer who will listen to look in Scottsdale and I can find them the same thing in the Hedgpeth Hills for a quarter-million less, simply by changing the ZIP code from 85254 to 85308.
Glad to see the national media's now agreeing!
Yesterday, the wife and I spent the day in Verrado helping friends move in the triple-digit heat. This, incidentally, is not the way to see Verrado, a subdivision in Buckeye on the north side of I-10 a couple of miles east of Highway 85 (aka the road to San Diego via Gila Bend).
Rather than moving vans, I’d rather link something like this to Verrado:
That’s the CVS Pharmacy along Verrado’s main street. Across the way is a Bashas’ supermarket, a local chain whose store looks from the outside like a small-town, mom-and-pop grocery.
Small town is the theme and the developers in Verrado pulled it off quite well.
And did I mention the towels? Play the Raven Golf Club in Verrado and you’ll discover the most wonderful thing ever for this climate … ice cold, mango-scented towels. Awesome. Even if you’re a duffer, the towels are immune to your slice.
Like most places built in the early- to mid-2000′s, Verrado has ridden the real estate value roller coaster. And like most of the Valley, inventory’s pretty thin right now. Unlike most places, there still are new builds available among the short sales and bank-owned homes.
Want more information about Verrado or any of the homes listed below? Drop me a line and I’ll be happy to help. Just don’t ask me to move your furniture. I’m still cooked.
Showing properties 1 - 25 of 58. See more Verrado community real estate.
(all data current as of 8/21/2011)
Listing information deemed reliable but not guaranteed. Read full disclaimer.
Want to derail a short sale in a heck of a hurry? Stop taking care of your home both ahead of and after receiving an offer to purchase the home.
You may me frustrated with the bank. You may be angry with the world. You may want to take it out on the house. But none of this is going to matter to a prospective buyer.
Reality is these are as-is sales, which means your home needs to be in the same condition at the close of escrow as it was at the time the contract was written. Even if this covers a span of several months, your home needs to be in substantially the same condition.
That's after a contract is received. Before that point, keep in mind your goal is no different than it is for any other seller - to get a buyer interested enough about your home to make an offer. And presentation of the property is everything.
Short sales often seem like short cuts for some, a way to avoid a foreclosure on the credit report and possibly put yourself into position to buy sooner rather than later. But that doesn't mean there need be no effort in trying to get your home sold in the first place.
You may be facing unusual circumstances but the buyer likely isn't interested in them.
Phoenix Real Estate agent, specializing in the areas of Westbrook Village, Arrowhead Ranch and the Valley's retirement communities. Search the Phoenix MLS at http://www.AllPhoenixRealEstate.com.
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