Snow in Phoenix?

Snow in Phoenix?

snow 11-98 a

Today, I was out showing houses and several small snow flakes hit my windshield. My passengers, home buyers who’ve lived in the Phoenix area for 30 years, were so excited. And then, a few minutes later, as I was opening up a house to show them, a guy driving down the street stopped to make sure we’d seen the snow flakes, too.

Occasionally, we really do get snow in Phoenix. Like on December 6th, 1998.  It melted within an hour, but was beautiful while it lasted!

snow 11-98

Rent or Buy? A Comparison for Greater Phoenix Real Estate

Rent or Buy? A Comparison for Greater Phoenix Real Estate

desperate seller
photo credit: TheTruthAbout

Fletcher Wilcox from Grand Canyon Title Agency recently emailed me a report for the Phoenix Metro area, Should You Rent or Buy a Single Family Home?, where he has analyzes and answers the question:

Is it cheaper to pay rent on a single family home or pay a mortgage on a single family home?

While there are many reasons to rent or buy, as a starting point this report compares the average monthly rent paid to rent a single family home compared to how much the mortgage payment might be to purchase an average priced single family home in Greater Phoenix.

Fletcher’s report is a quick 12-page read, covering the costs of buying a home vs. renting.  He also includes the time impact of short sales, foreclosures, and bankruptcy on a credit history, as well as another comparison of the costs of FHA, VA and conventional financing.

Click here to open report: “Should You Rent or Buy a Single Family Home?

Related Reading:

Thousands of Voices Sing Hallelujah Chorus in Scottsdale Mall Flash Mob

Merry Christmas! 

I love hearing the Hallelujah Chorus and seeing so many join in at this spontaneous event feels so good to me.  I hope you enjoy.

Scottsdale Arizona ‘Hallelujah Chorus’ Flash Mob, grows like wildfire

On December 22, 2010, Scottsdale, Arizona was home to one of the most inspiring flash mob performances around the country.  A Phoenix choir director was inspired by a youtube.com video of Hallelujah and decided to organize her 100  member choir to do a similar flash mob scene at  the Scottsdale Fashion Square.   The performance grew like wildfire to include at least 1,000 participants. with some estimates as high as 5,000 participants.  

(You’ll find a couple more videos in the article, Scottsdale Arizona ‘Hallelujah Chorus’ Flash Mob, grows like wildfire, too.)

Related Video:

I suspect this is the video that inspired the Scottsdale event.  It’s a true performance and very fun to watch. I hope you enjoy!

The State of Real Estate: Short Sales, Foreclosures, and Bankruptcy

I took yet another short sale class yesterday. The first short sale class I took two years ago focused on explaining what a short sale is, and over the years content has evolved to how to close short sales, along with all kinds of tips, tricks, and tools.

Yesterday’s class was an eye-opener.  The title was “Keeping Your Home & Reducing Your Principal Balance”.  In reality, it was more about bankruptcy.

I’m going to share the notes I took in class. Hopefully, they will contain enough detail to be helpful.  If not, call or email, and I’ll clarify my notes the best I can.

The Current Situation

  • About 40,000 listings in Arizona
  • About 8,000 REO’s (lender owned properties)
  • About 17,000 Short Sales

Tens of thousands of property owners are facing the decision of how to deal with under secured properties and mortgage liabilities.

Options:

  • Loan modification
  • Foreclosure
  • Short sale
  • Negotiate
  • Bankruptcy

Loan Modifications

Banks typically start with reducing interest. If they can’t get the payment down low enough, then they look at term, extending to up to 40 years.  Rarely will they ever do a principal reduction.

Deficiency liability after foreclosure in Arizona

Pretty good anti-deficiency statutes protecting home owners in Arizona.

Requirements:

  • Qualifying property (residence, < 2 1/2 acres, utilized as single or 2-family dwelling)
  • Qualifying loan (purchase money, not a line of credit, not refinance)
  • House has to transfer hands, via trustee sale, short sale

Second lien holder still has the right to go after the deficiency if first forecloses.

Arizona doesn’t require home owner to be living in the property, like many other states.

Usually no tax liability, because of the Mortgage Relief Act, which expires at end of 2012.

Benefits of short sale vs. foreclosure

  • Public record notice (foreclosure could impact future employment)
  • Credit scoring (about the same)
  • Future home loans (much faster with short sale)
  • Waiver of deficiency liability
  • Market effect
  • Bankruptcy effect – automatic stay

Using bankruptcy as an option

  • All deficiency liability is gone.
  • Tax liability can be wiped out. Timing is important.
  • Gives the property owner more time in the property and legal protection, to continue loan mod process.
  • Reduction of principal balances on secured personal property
  • Eliminating junior liens on real or personal property

Bankruptcy basics

  • Gives honest debtors a “fresh start”
  • What bankruptcy can do: eliminate unsecured debt (credit card, medical bills, deficiency claims), usually allows you to keep the personal property, protect retirement accounts, stop creditor harassment, can delay a foreclosure possibly giving more time to work out loan modification
  • What bankruptcy cannot do: discharge child or spousal support, fines, recent tax dept, debt incurred by fraud or fiduciary capacity, student loans

Types of bankruptcy

  • Chapter 7 – quick and dirty, least expensive, fastest, in AZ about 80%. Two ways to qualify: 1) income level and 2) predominately business debt. For businesses or personal. Cannot affect the rights against real property (but can eliminate personal liability.)
  • Chapter 13 – wage earner or payment plan bankruptcy. To qualify you have to be able to propose a feasible payment plan in 3 or 5 years, and you have to be below debt limits. Primarily for individuals, not businesses.
  • Chapter 11 – better for huge companies. Very complex. Must qualify based on ability to fund part of reorganization. Good potential for investors to reduce principal balances on investment properties.

Depends on on income and expenses, assets and liabilities, goals.

Timing is everything in a bankruptcy.

The sooner a person explores their options, the more options they have.

Effects of Bankruptcy

  • Credit score – see below
  • Ability to secure credit – can actually get right after bankruptcy
  • Employment – bankruptcy code prohibits employers from discrimination, except it job applies to ??? (could be an issue if working in the banking industry)
  • Stigma – changing because of the current environment
  • Moral – everyone has to decide for themselves
  • Mental / emotional – pretty much positive from his perspective and experience

Credit score impact

The following chart was shared showing what estimated credit score consequences are for various scenarios:

     
    Prior Score 680 780
    Max out credit cards 10-30 25-45
    30 day delinquency 60-80 90-110
    Settle account 45-65 105-125
    Short sale / Foreclosure 85-105 140-160
    Bankruptcy 130-150 220-240

 

Ballpark costs to file bankruptcy in Arizona

  • Chapter 7 – $2000-2300, as low as $1695.
  • Chapter 13 – $3500-4000. Lien strip adds $700
  • Chapter 11 – $15,000.

Closing remarks

Short sales, foreclosures, and bankruptcy have become much more common place, and the stigma that is associated with it it lessoning.

Sometimes best option is to do nothing. Wait it out and see what happens.

 

This class was taught by Kenneth L Neeley, Esq. of Neely Law Firm, PLC. He has a web site, a blog, and shared the following information about costs:

  • Free 45 minute bankruptcy consultation.
  • Strategic default consultation. 1 hour. $200.
  • Short sale consultations. $200.

Please call Mr. Neeley first to confirm that these services and fees are correct.