Kent Simpson 520.302.5368 Tucson Homes Land & Investment

HUD could be causing prices to tumble further as an unintended consequence of its attempts to be fair in assigning properties to listing agents in some communities.

While a particular community may be geographically close to another city, that city may belong to an MLS system that doesn't really serve the market area that the community belongs to. Case in point: Red Rock, Arizona.

Red Rock is a master-planned community north of Tucson by about 30 minutes. It really is a bedroom community for the Tucson region. Residents shop in Marana & Oro Valley in the NW sector of the Tucson Metro. Nevertheless, there is about a 50/50 split with agents in Casa Grande (which belongs to ARMLS - really serving the greater Phoenix region for the most part), and agents belonging to the Tucson MLS (TARMLS).

From a geographic standpoint, it looks like a fair division of property allocations. Casa Grande is about the same distance/drive time from Red Rock as Tucson is. HOWEVER, by doing so, putting these properties into an MLS that really serves a different region causes these properties to languish on the market much longer. People looking for properties in Red Rock generally see them through Tucson agents...so the homes listed in ARMLS usually go ignored or unnoticed.

We all know that longer time on market results in price reductions. Appraisals use hard data to help determine value - a government agency directing properties to the wrong market isn't a mitigating factor...it just produces lower appraisals. People don't see it (agents too), so they don't even know that a property is for sale! Nothing wrong with the house, nor with the agent listing it - the languishment is simply because it isn't being seen!

I've noticed in the last several months that HUD listings of the same relative size are selling within 30-70 days (depending on condition) for a price in the $60-$75k range when listed by agents working in the Tucson MLS. Properties listed by agents in Casa Grande have typically lasted 110 days or more before going under contract...and the prices are in the mid-$40's to mid-$50s & $60's. All because they are handled in an MLS where Red Rock is on the extreme southern end...and not a viable commute for people working in the Phoenix region. This is NOT because the Casa Grande agents are doing anything wrong - in fact, the ones that I have done business with are working harder to sell Red Rock homes at a lower price, and are relieved when someone finally shows one!

Luckily, TARMLS & ARMLS have a "data share" agreement that allows agents to see info on properties belonging to the other MLS (without agreement of compensation). When looking on behalf of my clients, I use both systems in order to ensure that they can have all of the choices in Tucson real estate available to them. When I can find price anomalies similar to the ones in Red Rock, my buyers are happy to save the money.

I know that HUD is trying to be as fair as possible - and applaud that desire. Unfortunately, an unintended consequence is that they are driving down prices because the asset managers don't understand what region actually serves the market their properties may be in.

There's enough factors contributing to price declines in outlying regions...it is Unfair to have a simple policy accidentally cause more damage to the market.

Buyers often ask me "Can I put in a really low offer on this house?" The short, simple answer to that is that anyone can offer whatever they wish on a property. What really matters is if the offer will be looked at...and even considered. A few times I've had clients who really, really liked a particular home, but ended up heartbroken because, in their attempt to "get a steal" because "it's a buyer's market," they either poisoned the seller against them or wasted time in a competitive foreclosure market by offering w-a-a-y below asking price.

Lets take a look at a typical scenario:

Buyer A is approved for a loan that will allow them to buy a home priced up to $200,000. The question comes up about the possibility of offering say $200,000 on a property priced at $225,000 (which is a 12.5% discount).

There's absolutely nothing wrong with offering that, if comparable properties in the area are going for the lower price.

In reality, chances are, that offer won't even get a response. Generally speaking in the Tucson market, prices being asked nowadays are fairly close to what the market is bringing. If the seller is asking more than what the market is showing, you can just about guarantee that asking for a discount like this is going to be met with rejection instead of a counter-offer back. If it is a bank-owned house, you don't have to deal with the "human factor" i.e. "ego" like you would with one that is owned by a human being - there's nobody that would take personal offense or get cranky about a "lowball" offer - but they have their bottom line too, and a rejection is a rejection.

In the Tucson real estate market of today, many bank-owned homes (aka REO, foreclosure) are underpriced and seeing multiple offers in the first week or two. Taking the time to submit a lowball offer and wait for a response can often be an exercise in futility - with a more realistic offer (many times OVER the asking price, but within comparables for the area) snapping it up before another offer can be made.

Most often, a home priced above market IS owned by a real-live person who is still attached to their property emotionally, and either can't or won't face the reality of the marketplace. Many times, the home will have been sitting on the market quite a while (DOM or, Days On Market), and will probably remain there for quite a while until the seller either takes it off of the market or comes to grips with it & eventually lowers the price.

If you see a home that is priced at $225,000 and want to offer $200,000 on it - I have no problem putting together the offer...just realize that the likelihood of positive results are close to nil in today's market. We could get lucky, just don't count on it!

Something else to factor into an offer is whether you want the seller to help pay your "closing costs" which generally run about 3% of the purchase price ($6000 on a $200,000 home). Typically, sellers in today's market are willing to help out that way, but not with a large discount on the asking price included...it is like asking them for 2 discounts at the same time - similar to showing up at a resort offering "Locals Only Summer Rates" and wanting a AAA discount on top of it. You might get one, but not both.

I also work with investors who are market-savvy, looking at capitalization rates, market saturation ratios, historic vacancy rates & projected growth patterns...the principles work the same way: If the property works for you, and you want it, messing around may cost you a good property.

Smart investors know where the market is & are willing to pay the price because it is right. Amateurs, blowhards & wannabes "paper the town" with offers looking for "the steal of the decade" while others make money.

Yep - the announcement is true: I'm opening an office right in the heart of Downtown Tucson. Tierra Downtown is a going to be a branch office of Tierra Antigua Realty...and the TucsonKent Group is one of the founding partners!

We're located in the historic Pioneer Hotel Building (could be haunted!), on the top floor with views that can't be beat. The best part of being located downtown is that we're right in the thick of the community that is revitalizing Downtown Tucson - Congress Street, Pennington Street, Broadway, Stone Avenue...the Modern Streetcar and much more.

We're having a Grand Opening Celebration on November 12 from 3PM to 6PM, with wine, women & song (at least the wine part is a go), munchies & a lot of fun. If you're in Tucson that Friday afternoon - come on up & help us celebrate the beginning of what portends to be a very exciting beginning in Tucson history as Downtown continues to grow & come alive again.

Downtown Tucson has quite a few murals adding a little spice to the walls and construction sites in the area.  How often do you get to watch the artists at work?

Often it seems that these works spring up "overnight" or perhaps we get so used to seeing the same old monolithic walls on buildings or drab plywood "safety barriers" around construction sites that we don't notice the art until it stares us in the face!

Just the other day, I was fortunate enough to see local artists Rock Martinez & Ed Muren work on their temporary canvas in the heart of Downtown Tucson - at 50 E. Broadway Boulevard - as this building gets renovated.

If you haven't been to Downtown Tucson in the past year...or even in the last 6 months...you'll be amazed at the entergy, vitality & transformation that is happening.  The downtown area is coming alive with new investment and a sense of destiny in becoming a showcase of promise in The Old Pueblo.

Yet one of many reasons my partners & I have decided to locate our office in downtown...right in the thick of things!  Stay tuned for photos & updates on what is happening in the heart of Tucson.

Search Downtown Tucson Residential Real Estate

Downtown Tucson Commercial Properties

This photo is of Sombrero Peak, which is a landmark to help point out where Continental Ranch is in Tucson. It is on the northern end of the Tucson Mountains - and stands out visible for miles and miles. If anyone needs to know where the community of Continental Ranch is, you can simply point out Sombrero Peak & say,

"Head that way, you can't miss it!"

I was driving to an appointment late in the afternoon when I saw this combination of clouds & light with Sombrero Peak silhouetted beneath them. Seeing the rays of sunshine defined like this doesn't happen very often, so I knew I just had to try to capture this scene!

Continental Ranch is a large, master-planned community west of I-10 in the northwest part of the Tucson Metro. Begun in the early 1990s, the community is still growing as it matures - new subdivisions are still being built, new commercial space is supplementing that which has been serving the area for the past 2 decades and more.

Late this fall, the Twin Peaks Interchange will add direct freeway access to the northern end of the community, which will ease traffic on Silverbell and make things much easier for those living on the northern end!