The answer is at once simple and complex. The Phoenix AZ market is currently driven by the lenders selling foreclosed properties. In addition, there are many people who face foreclosure. Currently there are over 40,000 notices of default pending. These  factors depress listing prices.

Buying activity is centered on these foreclosed homes, with the dominant players being investors chasing these homes with CASH. It is very difficult for the traditional buyers to successfully compete in this market.

Sun City is slightly different, in that there are few foreclosed homes and buyer activity has been stable, if lower than normal, for the last few months. The problem here is that the prospective buyers who would like to sell the old family home and move into an adult community cannot sell because they are competing with the REO (foreclosed) sellers.

My analysis of the current conditions lead me to believe that sales prices will stabilize, indeed may have already stabilized, but cannot go up any significant amount for at least 2 more years.

It remains difficult to sell a traditional listing, but not impossible.

Buyers, it is no longer a buyers market, but the conditions remain good for the purchase of a new home, especially for first time buyers. A caution, interest rates are now creeping up, and traditional inventory is gradually being absorbed. The first time buyer credit is scheduled to expire in December, don’t wait too long.

Jim Little, Your Sun City REALTOR®
To search the MLS with NO Registration, click HERE

The lowest priced homes, under $100,000 are selling withind a few days, often with multiple offers.

Bank owned homes, (REO) ar also selling very well. REO new listings have been averaging 4,000 per month. Pending sales in this category are currently 6000. Obviously, even the older, stale inventory is now being absorbed. As a side note, this means if there really is a “shadow inventory” of foreclosures that haven’t been listed yet, the market seems to be standing ready to buy them.

On a more local level, homes for sale in the Sun City neighborhood have decreased in the last couple of months, and sales + pending sales have increased, a sure sign of a recovery in its early stages.

New appraisals are coming in at or above contract prices, and the Market Condition Report appraisers are now required to file no longer defines properties as being in a declining market.

Interest rates, while still at an artificial low, are starting to creep up. If you are thinking about buying a home, do it soon. Historically, when interest rates reach a low, they will rebound to prior levels quickly. This rebound can be very dramatic. Interest affects buyer costs much more than the sales price over the term of a loan. It also limits the home you can buy on any given income. Act soon to take advantage of these very attractive rates.

The government First Time Buyer Tax Credit is working, bringing renters into the market. HUD is now allowing lenders to provide bridge loans so the tax credit can be used toward closing costs. This reduces the out-of-pocket expenses for a home buyer. It is important to note that this is for closing costs, not for down payment purposes as some reported in error.

Another promising piece of news, Friday 6/19/2009, large banks began paying back the TARP loans. It is nice to see this program seems to have worked, but 75% of the money loaned has yet to be repaid.

And last, it is a small step, but GM announced Friday the company would be recalling 900 laid-off workers. Just a drop in the bucket, but the right direction anyway.

I live and work in Sun City AZ, and am honored to know some of the men and women who fought the battles of WWII.

It is my honor to know and serve these people.

Jim Little, Your Sun City REALTOR®

My own observation is in order here. The “shiny pennies” are sold as soon as they hit the market. So are the “steals”. We are now back to the times when we would say to a prospective buyer, “the house you want to think about today was seen yesterday, who thought about it last night, and is writing an offer today.”

Jim Little, Your Sun City Neighborhood REALTOR®

Jim Little, your Sun City Neighborhood REALTOR®

This post is inspired by 2 others on this forum. Lenn Harley’s MORTGAGE FRAUD THRIVES – THE PLAYERS ARE THE SAME and Broker Bryant’s You want my buyer to do what?

Both of these posts touch on the Buyer’s agent responsibility in the procurement of a home loan. I am just adding some of my thoughts to theirs.

Many problems in today’s real estate market have been caused by FRAUD! Often guided by the lending officer, who feels pressured to make the deal at any cost. Since most states do not require the lending officer to have a fiduciary responsibility to the lender, fraud may easily occur.

Buyer’s agents DO have a fiduciary responsibility to the buyer. It is their highest duty when representing the buyer. Why don’t they stop the fraud? Here are a few reasons.

1. Accepting a buyer provided lender. Sorry folks, this is my biggest fear. Many, if not most lenders don’t play well with real estate agents. They do not keep us in the loop, and often won’t provide us with the information necessary to protect and counsel the buyer. Make sure your lender will talk to your agent, or be prepared to accept the consequences.
2. Many agents don’t understand mortgage rules and procedures. I will bet most agents have never seen a buyer’s Good Faith Estimate. If your agent doesn’t know what is on this document, there is no way to help the buyer understand the loan they are getting.
3. In my state, most buyer’s agents do not attend closings. I have never seen a loan originator at a closing. It is at the closing, or a few days earlier, that you get to look at the Note. The Note defines all of the terms and conditions of the loan. Anything said or written prior to the signed note are null.
4. Many agents were "trained" to let the "mortgage professional" do the job without interference. This has often been justified as "preserving a buyer’s privacy". It is imperative the buyer’s agent be involved.

These are just a few of the things a buyer’s agent should do to protect their buyer, and make the real estate purchase a good one.

That is a teaser rate folks, YES IT IS TOO GOOD TO BE TRUE!

Many lenders in the past have offered rates like this and even lower. You see it on TV all of the time. Thes are teasers, meant to get you to call them. Even if you got a loan at that rate, you need to read the fine print.

Almost without exception, these rates are offered for a limited time frame (1 to5 years). After the introductory period the rate will reset, most of the time at a much higher interest rate, or to market rate but the difference between the teaser rate and the market rate is added to the principle or term of the loan.

Yes, your parents were right! Don’t sign anything before reading it.

For information on a Realtors opinion on Adjustable Rate Mortgages: click on the following articles.

• Adjustable Rate Mortgages, Good or Bad, Part 1
• Adjustable Rate Mortgages Part 2
• ARMs, Part 3, Pitfalls and Benefits

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

Benefits of an ARM include:

• Ability to qualify for  more house since the qualification is based upon the first payment level.
• Gradual increase in payments if the ARM is correctly selected. This increase will hopefully be made up by an increase in your earnings.

Pitfalls of the ARM:

• Teaser, or introductory rates. This is why so many people are in trouble today. These rates mean your payments will be abnormally low at the beginning. The loss to the lender is made up by resetting after the introductory period to a level greater than the market rate. The change in monthly payment isn’t gradual, it happens at once, causing monthly payments to be more than many can pay. Foreclosure is the result.
• High prepayment penalties and excessively long prepayment periods. These lock the borrower into the loan, as it is not possible to borrow enough to pay these. Recently I have seen prepayment penalties of 7% and prepayment periods of up to 9 years.
• Income fails to rise as expected, Even if your income doesn’t increase, your payments may. You are obligated to make payments based upon your index, not your income.

I hope this series helps to explain the Adjustable Rate Mortgage. If you have any questions, drop me a line.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!

Often vilified by the press as the cause of today’s mortgage mess, is the adjustable rate mortgage. (ARM)

The ARM was originally developed as an instrument to give people, often first time buyers a way to get on the property ladder earlier in life. These were often younger buyers, educated, in the early stages of their careers. These buyers typically had some money down and for their closing costs.

The ARM loan was often offered at a lower interest rate since the lender didn’t have the risk of inflation leaving the lender with a low return loan during periods of higher yields. These loans were typically limited to between 5 and 7 year terms, after which the loan would be renegotiated, refinanced to a fixed rate loan, or the property sold.

The advantage to the buyers is that they would be qualified for the loan on the initial rate, usually less than that of conventional loans. The initial payments were lower, and as their income increased, so did the payment.

The borrowers using these loans had every reason to believe that their income would increase as the loan interest and payments increased.

More recently, ARMs were used to finance borrowers who had minimal or poor credit records, and no real potential of increased income. Additionally, these buyers had little or no money to invest in the property, hence need to get their down payment and closing costs financed. As recent events have made clear, this is a recipe for financial disaster.

Jim Little, Your Sun City Realtor
http://jclittle.com/
Ken Meade Realty
17001 N Del Webb Blvd
Sun City AZ 85373
800-877-1776
623-977-1776

By the way…if you know someone who is interested in buying or selling real estate in the Sun City Neighborhood, Peoria, Glendale or Surprise, please call me with their name and phone number. Thank you!