A quick reminder of the definition of close of escrow for the Arizona Association of Realtors Residential Resale Real Estate Purchase Contract.

Close of Escrow: Close of Escrow (“COE”) shall occur when the deed is recorded at the appropriate county recorder’s office. Buyer and Seller shall comply with all terms and conditions of this Contract, execute and deliver to Escrow Company all colosing documents, and perform all other acts necessary in sufficient time to allow COE to occur on [MM/DD/YYYY] (“COE Date”). If Escrow Company or recorder’s office is closed on COE Date, COE shall occur on the next day that both are open for business.

There’s a lot to do to get to the close of escrow date, as we described the closing process and even what cleaning should take place prior to closing. What often (and understandably) drives the detail-oriented buyer nuts, however, is not knowing what time the close of escrow will occur.

According to our definition of close of escrow, it is to occur on a date, but NOT at a specific time. So for those who like to plan out their move to the minute, or even the hour, my apologies, but it’s not going to happen.

Because there are so many moving parts, particularly as an escrow wraps up, it is nearly impossible to predict the hour of closing. Here are just a few of the wrap-up details that take physical time, but are out of the hands of either the buyer or seller:

• Delivery of the loan documents to the buyer’s lender by the escrow company
• Buyer’s lender funding approval
• Buyer’s lender ordering the funding wire
• The Federal Reserve Banking system transmitting the wired funds
• Escrow account receiving the wired funds
• Escrow officer verifying the received funds meet the terms of the contract
• Escrow officer sending the deed to record at the county recorder’s office
• Escrow officer confirming the deed has recorded
• Escrow officer contacting the buyer’s and seller’s agents to inform them the escrow has closed
• Buyer and seller agents contacting each party to let them know

My advice for buyers as they are preparing to close is simple:

• Plan everything for the days following your close of escrow date, not for the closing day. You’ll save the aggravation of scheduling, then rescheduling, your moving van, appliance deliveries, and new furniture deliveries.
• Schedule utilities turned on and put in your name as of the close of escrow date so that utilities are available when you do own the home.

I’ll say it again. Closing escrow on your Arizona home is an exciting time. By keeping in mind that everyone involved has the same goal as you and that timelines are not etched in stone, home buyers and sellers will have a more satisfying home sale experience.

During the negotiation, one of the first additional documents the lien holder will request all parties to complete is the Affidavit of “Arm’s Length Transaction.” The Affidavit of Arm’s Length Transaction has two principle purposes.

1. Disclose any relationships between the parties of the contract. Specifically, the affidavit wants to ensure two types of relationships do not exist. First, that the seller, who is the Mortgagee, does not have any type of relationship to the buyer, whether it’s  a family member, co-worker, or have any other common financial interests. Second, that  all relationships, understandings, or “deals” have been disclosed to the approving lien holder (lender).
2. The seller is no longer going to benefit from the real estate. Benefits to the seller might come in one of two forms, both of which are covered. First, the seller may not continue to use the property following the sale, whether as a tenant, future buyer, or any other form of occupancy. Second, the seller may not receive any proceeds from the sale. They are selling at a loss to the bank, therefore, they are not to gain financially from the arrangement.

Disclosing all the terms and conditions of the short sale is the easiest way to avoid any issues with fraud. Whether it’s a business relationship described in an addendum or any relocation assistance from the Home Affordable Foreclosure Alternatives (HAFA) program described within the approval letter and on the HUD-1, all terms of the sale must be disclosed to the approving lien holder. Keeping things above board will help the short sale process to move as smoothly as possible.

Casteel Real Estate Professionals | 480-694-0662

Improving one’s credit score can result in lower interest rates on credit cards and other debt. So what are some ways consumers can improve their credit score to begin to break the cycle?

• Pay your bills on time. Delinquency can make a big, negative impact on credit score. Likewise, on-time payments can slowly raise credit.
• Keep balances low. If you must maintain a balance on your credit card, keep it low. Do everything you can to lower the balance to below 30% of your credit limit.
• Keep old credit accounts open. Even with a zero balance, a mature credit history improves your score.
• Shop for auto or home loans in a small period of time. If you are inquiring about financing for that new car or a home, do your shopping for your lender within a two week period of time. By doing so, the credit inquiries that are generated will appear as a single inquiry, which is not as negative as multiple credit inquiries over a broader range of time.
• Review your current credit report. At least once each year you should pull your credit report for free from annualcreditreport.com, a no-gimmick site where consumers can request their credit report. You are looking for errors, such as reported open balances of accounts which you have zeroed out, inaccurate late charges, or accounts for which you have never opened. Any disputes should be accomplished in writing to the credit bureau and the creditor. Include any and all specific details with any dispute.

A great resource for more tips is MyFico.com

Credit is an important tool, especially for financing large purchases such as a home loan. But the responsible use of credit is essential for your fiscal well-being and your long-term success. A wise man said, just as the rich rule the poor, so the borrower is slave to the lender. It’s so true.

• A friend of mine, Jeanne, gave her husband a heart attack. No, not the medical kind. She cut out dozens of heart shapes from red, pink, and white construction paper and wrote something special on each one. Little things about him that she notices and appreciates about him. She then taped them all around their bedroom for him to find later in the day. How thoughtful!
• Create a CD/play list of music that has meaning to both of you. Something reminiscent of your first date, your wedding song, a funny moment. Listen to the music together as you remember those great times.
• Rent a movie that the other will enjoy, then watch it together. Hint: Don’t allow any distractions during the movie (phone, iPad, kids, etc).
• Do you have a need for speed? Take her go-karting! I recently took my wife to K1 Speed and she had an amazingly great time. It’s all-electric (no fumes and little noise), fun, competitive, and sure to pump up the adrenaline.
• Still not fast enough for you? You can give the gift of being a fighter pilot for a day at Mesa’s Fighter Combat International. Pull some Gs, challenge yourself to a real dog fight, or just put on your own aerobatic show. It’s a gift that’s sure to impress.
• Make a meal or dessert together. You can start by going to the grocery store together and picking out the ingredients (the produce aisle can really be an adventure if you haven’t spent much time there). When you’re back in the kitchen, divide up the tasks and be sure to sample some of your work along the way. For an extra romantic touch, offer tastes of food to one another.

Whatever you chose to do, make it memorable. Regardless of how much you do or don’t spend, the best gifts are the ones you can remember for years to come. As I’ve written before, it’s the thought that counts. And don’t get a Hoodie-footie.

Banks are large financial institutions with the purpose of making money. Credit unions, which are often not-for-profit, are built with the intention of protecting the assets of the members. Either way, they are not in business to be your buddy, so much so that  I’ve even written about some ways you can stick it to your bank and shared some pictorial humor about banks foreclosing on your home.

One of the most devious ways that many credit unions protect their assets is the practice of cross-collateralization, where one loan, say a credit card or home equity line of credit, is secured by the collateral of another loan–your car purchased using an auto loan, for instance.

Here’s a piece from Fox Business News

Many consumers may not realize that the car they’re financing through their credit union also could be used as collateral not only for their auto loan, but for another debt, such as a credit card.

So if you borrow money from your credit union for that new Toyota Camry today, then run into financial trouble two years down the road and stop paying on your credit card, the credit union can have someone come and “tow your car away,” says Terry Duncan, a bankruptcy attorney with Duncan Law in Charlotte, N.C.

It’s a practice called “cross-collateralization,” and while banks also may have such clauses in their loan documents, the practice is much more typical with credit unions, Duncan says.

“It’s a fairly common clause in credit union loan documents” as the credit unions try to “make loans less risky for them,” says Mike McClain, assistant general counsel and senior compliance counsel with the Credit Union National Association (CUNA).

Don’t think it will happen to you? Don’t be so sure. While working with clients to secure a short sale of their property, I watched as their credit union repossessed their truck. The home sellers were behind on their home equity line of credit (HELOC), which was through their credit union, but were current on their payments for their auto loan, also through their credit union. Through the cross-collateralization clause of their HELOC, the credit union towed their truck away to make good on their home equity line.  The threat–make that the promise–of repossession is real.

Continuing with the article

At the least, Keith Leggett, senior economist and vice president for the American Bankers Association, suggests asking the financial institution if a cross-collateralization clause is involved.

And you may want to think hard about borrowing money from the same place you have bank or credit card accounts. While there’s nothing wrong with it if you have your financial house in order, and you may receive better interest rates on loans, it could become problematic if you run into financial difficulties, Dorothy Barrick, group manager and financial counselor at the nonprofit GreenPath Debt Solutions says.

“Sometimes it’s not a good idea to bank where you’re borrowing money,” Barrick says.

I agree with the last statement, particularly when it comes to dealing with home mortgages, although I must say I’ve not seen any financial benefit to financing through one’s bank as Barrick suggests. Use a lender that specializes in home mortgages, not your bank. Think of it as diversifying your credit lines. It’s best to not have all your eggs in one basket, especially if the bank or credit union can take your basket.

1. You’ve been waiting for the bottom of the market. Well, it’s here. The median price of homes in Mesa bottomed out in August and prices are now recovering.

Median home values and number of sales in Mesa, Arizona

2. Interest rates have never been lower. As of today, the rate for a 30-year fixed rate mortgage is under 4%. So for a $150,000 loan, your monthly mortgage payment would be under $870/month, including taxes and insurance. That’s less than rent!

3. With that $870/month, you can get an 1,800 square foot 3- or 4-bedroom home in the East Valley. In fact, there are nearly 300 single-family homes  available for sale under $150,000 in Mesa, Arizona, right now.

The market is recovering, interest rates are great, and there are homes available. What are you waiting for?

For more information about the Mesa, AZ, real estate market , including if you are thinking of buying or selling a home, please contact us at 480-694-0662.

A very fair question, to be sure, so let’s break down the question.

According to the news

I always take what is reported by any news agency with a grain of salt. For example, local news stations are just now reporting that the inventory of homes for sale is declining and the market is swinging towards a seller’s market. Ask any real estate agent and they would have told you that six to nine months ago. Good homes have been hard to find for quite a while. And the data supports this trend.

The use of singular values

Secondly, the media is looking for a simple summary to provide to their geographically-broad viewing/listening/reading audience. As a result, they tend to report over-simplified values. In this case, they reported a single number that is supposed to represent the the value of every home within the fifth largest metropolitan area in the United States. To be fair, I’m sharing the number that my client shared with me, but I’ve seen this trend before. Saying the value of every home is represented by a single value is like suggesting the salary of every employee in a company can be summarized by one amount. Good luck with that one!

Real Estate is Local

I didn’t make up the phrase, but I’ll continue to repeat it: Real estate is a local business. Not only do values vary by city, as shown in the chart above, but they vary by zip code, community, and even within each community. It’s simply inaccurate to compare homes using a simplistic measure such as price per square foot, a topic we’ve discussed numerous times, including here, here, here, and here.

So the next time you hear a reporter on the 6 o’clock news saying that the values of homes are such-and-such, just giggle to yourself and remind yourself that you know more about  real estate than they do.

First, the contract says you’ve got to remove all personal property and debris from the real estate. Resist the temptation to leave anything behind. Contractually-speaking, the seller is obligated to remove all personal property that is not included in the sale.

All personal property not included in the sale and all debris will be removed from the Premises.
Arizona Association of REALTORS Residential Resale Real Estate Purchase Contract, Paragraph 5a (iv)

It’s easy to justify wanting to leave something behind. “Oh, they’ll need that toy baby crib. It’ll be perfect for the new buyers! Besides, we don’t have room for it in the truck.” Please don’t. If in doubt, clean it out.

My second response is simply the Golden Rule – Do unto others as you would have them do unto you.

Ask yourself how you would like to find the home were you buying it? In the case of most buyers, they’d like to see everything out of the home and that it has been cleaned. Think of the very basics:

Kitchen

• Counters wiped down
• Cabinets and drawers wiped out…even your old junk drawer and especially the area where you kept your garbage can
• Refrigerator (if it conveys) cleaned out and wiped down
• Floor swept or mopped

Bathrooms

• Counters wiped down
• Sinks, tub, and toilet cleaned
• Floor swept or mopped

Bedrooms

• Closets cleared out
• Floors vacuumed

Living areas

• Floors vacuumed
• Check that ceiling fan remotes are left behind

Outside

• Ensure lawn is mowed and rock areas are free of weeds
• Clean up any “Contributions” your pet may have left behind
• Remove all trash and recycling…when you move, it should be gone, too.

Going the extra mile

If you’d like to make the experience all the better for your new buyers consider these ideas:

• Leave behind paint cans for colors and finishes in the home
• Label any speaker pre-wiring (example: Rear left, rear right, etc.)
• Place all user manuals for appliances, pool equipment, and garage door openers in a box or folder. I’ve even had a photo album left behind with pictures of the home as it was being built so I’d know were studs and wiring were located…top notch!
• Replace air conditioning filters

I always recommend asking the agents to find out what the buyer’s expectations are. If a buyer is planning on re-flooring and/or painting, they will often tell the seller so they don’t spend time and energy cleaning those areas.

If the buyer and seller consider the transaction to be a cooperative arrangement, both will have a better experience from beginning to end. Think of it as your own “Pay it forward” moment. You’ll be glad you did.

It’s an innocent enough of a question, but the answer is usually a question in return:

Which market?

Markets are not just a product or geography–they are also a price.

The market for a home is made up of existing and potential customers who need it and have the ability and willingness to pay for it. Because there are more who can and are willing to pay for a lower-priced home, the market is larger and more competitive at the lower price ranges.

So in real estate, the market consists, in part, of a group of people who have the willingness and ability to purchase a home in a particular geographic area. Remember, unlike the car or clothing market, real estate is uniquely local.

So how’s the market?

Comparing the absorption rate is the best way to answer the question. If we’re talking about the greater Phoenix-metropolitan real estate market, it’s a seller’s market below $300,000, it’s a transitional (balanced) market between $300,000 and $400,000, and it’s a buyer’s market above $400,000.

In my home area of Mesa, Arizona, the real estate market is similar, with a seller’s market below $300,000 and a buyer’s market above $300,000. Note that it’s technically a transitional market above $1,000,000, keeping in mind that it could be moving up or down.

Now the real gotcha…it’s still not enough to ask how’s the market by city. Mesa, for example, is the 38th largest city in the U.S.; larger than Atlanta, Georgia (#40), and Miami, Florida (#44), and just a quick observation will tell you that there is quite a bit of variety within the city limits.

If you really want to know what the market is like, we would respond by knowing the part of town you’re talking about. Typically, subdivisions have fairly well-defined price boundaries which articulates the market. And if you want the answer to how your subdivision is doing, you’ll need to give me a call! I’m happy to work it up for you.