Paul Slaybaugh, Scottsdale AZ Real Estate

You want to buy a bank-owned property.  Your friends, family, mailman, dental hygienist ... even your Realtor have told you that the foreclosure market is where you pan for gold in this market.  Lo and behold, the hygienist might actually be right this time (bummer about that last hot stock tip, though).

 

 

I am actually a late convert to the bank-owned frenzy because I have long been wary of purchasing property that lacks the standard disclosures, maintenance ... and humanity, if you will.  Up until recently, it was often a mad rush for fool's gold, as well.  The allure of "cheap" often masked an unreported truth: many foreclosure properties were actually priced at, or even above, market value.

Well, the worm has certainly turned.  So much so, in fact, that I find myself seeking out the bank properties first in many instances as both the quality of the homes and value built into the prices have caught up with the hype.  As more and more homeowners lose properties, it simply follows that they won't all be meth labs with peyote smoking derelicts squatting in underground bunkers in the backyard.  Not all have had the A/Cs, appliances, cabinets, etc ripped out by the spurned former homeowner on the way out.  Some folks have simply fallen on hard times, and have lost a perfectly habitable home to a bank that already has too many on its books.  Thus the fire sale prices.

It can feel predatory, or at least akin to scavenging, to prey upon the misfortune of another, but buying up these lower end (pricewise) homes is critical to the health of the housing market.  Until the excess glut is absorbed, supply will remain hopelessy out of whack with demand and values will continue to stagnate.  As will the careers of countless professionals whose livelihoods depend on it.  Realtors (I know, I know, we're cockroaches who will survive a nuclear housing holocaust), mortgage brokers and bankers, contractors, home inspectors, marketing reps, the sign guy, title officers, escrow officers, affiliated vendors, loan processors, underwriters, document couriers, secretaries ... it is absolutely staggering when you consider just how vital the health of the Real Estate market is to the vibrancy of our economy at large. 

Buying a foreclosure home is a community service.

So, now that you have settled your qualms about purchasing a foreclosed property, there are a couple of things that you should bear in mind.  We all know about the big hurdles with bank-owned property, I even touched on a few.  Aside from the typical pitfalls, however, I'd like to address an area that most never even consider.

You may just get such a tremendous buy that you will get hammered unexpectedly on property taxes and homeowner's insurance.

Case in point, suppose your super duper agent finds a pocket of homes that were selling for over $1 million in 2006-2007.  You jump on a smoking deal in the $500,000 range.  Be prepared to pay property taxes based on the assessed value from the last year. 

 

In other words, you are paying million dollar taxes on your new half million dollar home. 

 

 

With the huge price drops, the tax evaluations have not caught up with the market yet.  New evaluations come out in February, but they still might not accurately reflect the current landscape.  As such, you must be prepared to ride out at least a year (this year's evaluation is prepared for next year's taxes.  The die is already cast for the current year) with seemingly excessive taxes.  You can bet that the county and city will act to offset the reduced property value with a higher tax rate as well.  With the budget depending upon our taxes, they are likely to decline, but perhaps not as much as one would expect.

Homeowner's insurance could prove to be a higher than expected expense as well.  The primary reason for this is the replacement cost of the structure.  Some properties, especially newer custom homes, are selling for such bargain level prices that the sales price is not reflective of replacement cost.  As such, while you might be expecting an insurance quote to strictly adhere to the sales price of the home, that is not necessarily accurate.  You can't rebuild a million dollar home for 500k.  Who said I slept through math class?

There are additional possibilities to consider such as HOA reserve/beautification impounds that may be required of a buyer at closing for high-end communities.

As with any purchase, value is dependent upon a confluence of variables.  The opportunity for tremendous savings in the purchase prices of bank owned homes will typically outweigh many such potential bugaboos, but they can be far from incidental if you discover unforeseen expenses while sitting around the closing table.

So dive right into the foreclosure market if you are looking for a buy, but buckle your chin strap and call your trained Real Estate professional.  You don't want to try this stuff at home.

Don't get bitten by what you didn't know you don't know.

 

Start your Scottsdale bank owned property search!

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Dios Mio and Holy Guacamole! The Scottsdale Foreclosure Value of the Week ... is in ... well ... Phoenix. So I am violating the rules of my own construct, sue me. When I tell you about this week's obscene value in the Valley of the Sun, you'll understand why I am willing to commute.

I spent the better part of the day yesterday looking at property in the South Mountain area for a specific buyer. Odds are that we are going to move on one in a gated community in which properties were selling in the $1-1.5 million range just a couple of years ago. When I say the South Mountain area, I mean it. The backyards of some of these properties are the preserve. The homes are beautiful, but it is the lots which are irreplaceable.

Between 3000-4100 square feet, these homes had lot premiums in excess of $500-600k in many instances when these were built in 2005-2006.

There are about 8 currently bank-owned and priced between $400-500,000. Several need appliances, a couple need even more, virtually all have had the A/C's stolen, but there are some otherwise move-in ready properties in the bunch as well. Priced at 1/3 of original value, these are incredible bargains for anyone looking in this part of the Valley. Trust me, I've covered the area for the better part of 6 months looking for such deals for a specific client. I've uncovered some good buys, but nothing like these. Now that we found ours, I'm eager to find buyers for a few of the others.

Remember, when it comes to the outright theft of a bank-owned property, there is no honor amongst thieves. Give me a call or drop me an email if you'd like more detailed information. Better yet, hop in your car and meet me over there ... before Johnny Crowbar does!

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Let’s face it, if you are in the market to buy or sell a home as we approach 2009, you are either the hunter or the hunted. You are in financial disarray or you are seeking to exploit the struggles of another. I say this without judgment. A transaction which involves the antithetical goals of two or more parties is replete with advantage seeking in the best of times. Amidst unyielding economic turmoil, that truth is only exacerbated.

We all want leverage.

With apologies to Jennifer Allan, you might call it the age of "Selling with Sole." We use the foot of information to kick the other guy's chicklets out.

Buyers who may have already had their noses bloodied as sellers, look to bloody the nose of the next guy to bring a certain “circle of life” equilibrium to their experience. Sellers eschew the fistful of comparable sales of similar properties at considerably lower prices because they are “distress situations.” Rather than acknowledge that buyers do not care whether a bank or an actual person owns the home if the condition is up to par, they would create their own version of value by completely disregarding the vast majority of recent sales. They cling to the one sale down the street from six months ago which has been obsolete for 5 and a half months now.

Doesn’t work.

Real Estate agents leverage their branding to make themselves crucial to the process. Some lean on their experience and past production, while others repackage themselves into the “short sale” or “foreclosure” experts who own the only skill set in town that will produce the desired result.

Banks sit on the offers they receive … on second thought, forget about the banks. These bozos live in a zero gravity bubble. Just when you think they will yield to the laws of science and common sense, they get a direct cash infusion from our depleted pockets. Gee, that should really provide an impetus for speeding up their approval/disapproval process. Cash comes in as the losses pile up. Why do I feel like I have been washing my toes in the prison shower for the past six months?

It’s a jungle out there. It’s dog eat dog. It’s Real Estate.

Nothing really changes in this industry except that the shiny, happy facade of all parties standing around a lukewarm campfire singing Kumbaya has been supplanted by overt motive. What we have always known to be true is exposed in the light.

There are winners and there are losers. The “win-win” scenario may not be an outright fallacy, but one party wins more than the other. Always.

Now that we have that little Utopian misconception out of the way, the question becomes, how does one gain the leverage necessary to produce victory?

Knowledge.

Nothing more, nothing less.

How long has the seller owned the home? Does the seller have multiple liens on the property? What banks hold the notes? Does the listing agent submit one offer at a time to the bank upon seller acceptance or all at once?

Is the home really a good value, or is the buyer getting in over his/her head by the allure of the promised grift to be had in a short sale or foreclosure scenario? Can the buyer reasonably expect to knock 10% off of a list price that already has the bulk of its value built into the price? Is it a great buy to knock 20% off of a home that is priced 25% over market?

Bottom line, folks, is to ingest the stats that we are all force-fed by the papers and market watchers, and then completely disregard these misleading “rules of thumb.” Every single property is unique and is surrounded by unique factors.

The seller gains traction by enlisting the professional service of an agent that is as familiar with the product (the home, community, etc) as with the actual process. It does little good to hire the fast talking “short sale specialist” from the other side of town simply because he hires a third party to actually negotiate with the bank for him.

The buyer gains leverage by enlisting the professional service of an agent who recognizes the difference between price and value. “Cheap” does not always translate to a “good buy.” A buyer’s interest is likewise not served by frittering away valuable time on pie in the sky short sale offerings which don’t have the least modicum of chance at actually closing. Only when the wheat is separated from the chaff should you look to remove more chaff.

The agent gains traction in this market by acquiring the knowledge which will help buyers and sellers reach their goals. Slick new designations and branding/labeling efforts add little, if any, value to the actual service. Become more familiar with the product you wish to sell and with the rocks that need to be turned over to deliver more accurate assessments of value and negotiable strength. Good agents are more necessary, and charlatans more dangerous than ever. With people losing their houses and buyers leery of jumping aboard a sinking ship, this is no time for the prototypical salesman, nor the "happy, happy, joy, joy" delusionist who would harm their client by being too empathetic and amenable to the needs of the other party. We owe the other party fair, ethical dealings, but we owe our clients our undying loyalty.

Protect your clients or leave the business.

*I don't know if this was a mission statement, industry confessional or a rant. Thanks for reading the rambling, disparate thoughts of a market addled mind. ;)

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If you are planning to buy or sell a home in the Scottsdale, Phoenix or Paradise Valley area in the near future, drop me a note or give me a call. We’ll see if my skill set and knowledge are sufficient for your specific needs. If not, I'll be the first to point you in the direction of a better weapon for your impending battle with a post-bubble world.

It’s hard to imagine improving upon the kids and ice cream concept. You say, “Want to go get ice cream?” They say, “ICE CREAM!” You take that as a yes, drive them to the local parlor and there is much rejoicing.

Looking for that elusive next level of frozen fun, however, we stumbled across Yogurt Builderz in Scottsdale. Tucked in amongst the businesses on the Northwest corner of Scottsdale & Thunderbird Rds, Yogurt Builderz offers a more interactive experience.

Given cups and directions, Brandi, the boys and I were loosed upon various flavors and toppings (including a couple of unusual selections like pomegranate and kiwi/strawberry). We were free to grab any size container we wished, and as many flavors/toppings as our imaginations would hold. The cost is based purely on weight. After perfecting our concoctions and taking them to the register, we saw our creations weighed to determine the extent of the damage that the boys’ outsized gluttonous eyes would inflict upon my wallet at a rate of 39¢ per ounce.

I was pleasantly surprised by the lack of debit devastation. Seems that piling on mini M & M’s, sprinkles, marshmellows, etc is far more economical when you aren’t getting whacked at the borderline usurious norm of 50¢ per topping. In this economy, you take the good news where you can.

-Victory!!!

-This one too, please.

-Damnit... too fast again.

The boys had a great time making, and more importantly, devouring, their treats. While the reduced fat content of the yogurt was more than offset by the sugar-infused madness we heaped upon it, we can still pretend that we have found a healthier alternative to the heavy creams that comprise the real mccoy.

That’s our story, and like dessert to our ribs, we're sticking to it.

Store Info:

14202 N. Scottsdale Rd, Suite 167

Scottsdale, AZ 85254

East Thunderbird Square – North Plaza

(480) 607-5146

mail@yogurtbuilderz.com

Put that down! That's nacho cheese!

Well, in this case, I suppose it is yours. In this economy, who isn't interested in holding on to as much of their cheese as possible? As such, many Scottsdale home shoppers are passing on the pricier properties and heading straight to the bank-owned aisle. With values such as the ones I encounter on a regular basis, who can blame them?

The Scottsdale Foreclosure Value of the Week is located in the prime McDowell Mountain Ranch planned community in North Scottsdale. Originally developed in the early 1990s, this community is nestled at the base of the majestic McDowell Mountains and features some of the finest amenities (including community pools, walking paths, rec center, etc) in the entire Valley. Boasting million dollar plus properties in a few of its exclusive subdivisions (Trovare, Sonoran Estates, etc), point of entry cost into McDowell Mountain Ranch is typically prohibitive to many.

Today's steal is a 5 bedroom Ryland home of approximately 2600 square feet with a pool. On an interior lot which backs to one of the natural arroyos that define McDowell Mountain Ranch living, this bank-owned steal is listed at just under $430,000.

Folks, this property sold for $675,000 in May of 2006. I have not physically viewed this property as it just hit the market, but it appears to be in decent condition and includes upgrades such as stainless steel appliances, granite kitchen counters and pebble-tec pool surface.

For more information on this and other Scottsdale foreclosure bargains, contact me at paul@rayandpaul.com. To search the Scottsdale MLS, visit me at Scottsdale AZ Real Estate.

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Ray and Paul Slaybaugh, Your Guides to Value in Scottsdale AZ Real Estate!

(480) 948-9450

paul@rayandpaul.com