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If I buy a foreclosure in Arizona, do I have to pay back HOA dues?

Dru Bloomfield — Fri, 02 Dec 2011 00:40:28 +0000

Here’s a real estate question I get quite often from buyers contemplating buying a lender-owned home, “If I buy a foreclosure in Arizona, do I have to pay back HOA dues?”. While I have an answer for them, I always appreciate having an official response from the Arizona Association or REALTORS® Legal Hotline, that succinctly answers the question with the current legislative reference.

Question: The broker represents a potential buyer of a home at a foreclosure sale of the first mortgage loan. The HOA has recorded a $7,000 lien for delinquent HOA monthly fees. If the potential buyer purchases the home at the foreclosure sale, will the potential buyer have to pay off the $7,000 HOA lien?

Answer: No. After the foreclosure of the first mortgage loan, the HOA lien on the home is extinguished. A.R.S. §33-1807(B). The former owner, however, will still have personal liability in a collection lawsuit by the HOA for all HOA fees incurred prior to the foreclosure sale. The new owner of the home will have personal liability only for the HOA fees incurred after the foreclosure sale.

Reprinted from Arizona REALTOR® Magazine’s Legal Hotline with permission of the Arizona Association of REALTORS®.

Note: The above is for informational purposes only and is not intended as definitive legal or tax advice. You should not act upon this information without seeking independent legal counsel. If you desire legal, tax or other professional advice, please contact your attorney, tax advisor or other professional consultant.

Other HOA related information:

Scottsdale Real Estate: Now that Short Sales are “in”, where are they?

Dru Bloomfield — Sat, 12 Nov 2011 14:42:10 +0000

Banks have been shifting their focus from Foreclosures to Short Sales, and Scottsdale is not the exception.

Take a quick look here at the number of Active Short Sales on the market (for all housing types, including single family homes, town houses, and condos). The blue bars illustrate the number of Active listings that are short sales, and the orange bars show the number of short sale listings that have contracts accepted by the seller (and are listed in the AWC-Active with contingencies or Pending state).

Data source: Arizona Regional MLS (Click chart to see larger version)

As of yesterday, 11/11/11, there were a grand total of 241 short sale listings in Scottsdale, out of over 25o0 properties listed. Less than 10% of the homes on the market are short sales.

So while, buyers may be shifting their attention from foreclosures to short sales, the lack of actively listed homes for sale is still a gating factor.

And to answer the question, “Where are the short sale listings in Scottsdale?”, most of the active short sale listings are in the North Scottsdale zip code of 85255, with a grand total of 43. The fewest number of shorts sales can be found in North Scottsdale zip 85266, in central Scottsdale 85250, and in South Scottsdale 85257.

To take a look, at the MLS listings for homes for sale that are noted as short sales, click on: Active Scottsdale Short Sale Listings

Really? No short sales in Fountain Hills

Dru Bloomfield — Fri, 19 Aug 2011 15:15:00 +0000

(Click for a larger view.)

Had to do a double take when I looked at this Cromford Report Chart showing “Distressed Sales as a Percentage of Monthly Sales” for the month of July 2011. I was looking to see how Scottsdale was faring, and was startled to see that no short sales closed in Fountain Hills in July 2011.

Can it be true?

A Historical View of Distressed Sales:

Greater Phoenix Short Sale Update: Less than 6 months supply

Dru Bloomfield — Thu, 18 Aug 2011 13:30:00 +0000

Short Sale Snapshot - Click on chart to see a larger view.

From my perspective, short sales have gotten easier, overall. Still long, still tedious, still challenging. But, short sale properties are getting multiple offers, and selling.

Looking at the latest Cromford Report data from the Phoenix area, focusing just on short sales, it’s encouraging to see that the ratio of sales to active listings continues to increase, from 1 in 10 a year ago, to 1 in 5 this past month. The number of months of it would take to sell the current inventory has dropped to 5.5 months.

Price per square foot continues to drop, for the most part. Contract ratios have improved dramatically.

All in all, short sales are much more commonplace today than they were a couple years ago. Banks are improving their processes. Negotiations with second mortgage holders can still be difficult an opportunity for spirited negotiations. But with the added experience we are all gaining, and the overall shortage of homes for sale, short sales are selling.

Phoenix Real Estate: What’s Up (or Down) with Foreclosures and Short Sales?

Dru Bloomfield — Thu, 07 Jul 2011 13:34:00 +0000

Something very interesting going on here in the Phoenix Metro real estate market. Notice the striking changes in the first three days of July.

A spike up in short sales.
A slight decrease in normal sales.
And a drop in foreclosure sales, too.

And when you look at the longer six month view, you see:

Foreclosures dropping from just over 50% to a bit over 40% of all residential resale sales.
Normal sales increasing from 30% of all sales to 35%, but then dropping back down to slightly above 30%.
Successful short sales have grown from 20% to almost 30%.

I think it’ll be interesting to see if these trends hold and gain even more strength in the next 30-60 days.

Phoenix Foreclosures: Who’s buying them now?

Dru Bloomfield — Wed, 06 Jul 2011 15:01:12 +0000

The number, and percent, of third party purchases at Maricopa County Trustee (foreclosure) sales, held at various location around Phoenix, is on the rise. Third party basically means that the property is not going back to the bank holding the note.

After a huge drop off from 82.5% of the purchases being made by third parties (investors) in May 2005, to a low of 3.0% in October 2007, the percent stagnated at near that level for over a year. Starting in February 2009, the percent of surged to the 20% range, where it stayed for almost two years. Since March of 2011, a steady increase in the percent of investor purchases has been recorded. As of June 2011, 35% of the properties sold at trustee sales have been purchased by investors.

The other important aspect of these sales is the actual number of sales being made to third parties. Until late 2008, the number of sales was consistently under or about 200 per month. In the first half of 2009, that number jumped to well over 800 per month where it stayed mostly until earlier this year. Now the average number of sales per month to investors is around 1400.

Will be interested to watch these two metrics over the next 8-12 months. Seems quite possible that the percentage of foreclosures purchased by investors will go up, while the number of sales will stay about the same, or decrease.

I’m definitely seeing and showing a larger percentage of homes that are “fix & flips”. Fresh paint, new carpet, sometimes even an upgraded kitchen. These properties, while not foreclosures and short sales, are attractive to buyers who want to purchase in the next 30-45 days. Some are being sold “as-is”, and many come without a seller disclosure. However, the properties are often more attractive to a home buyer, who really wants a move-in ready home.

More on the Phoenix real estate and foreclosure market:

Scottsdale Real Estate: “Shadow inventory” on the decline

Dru Bloomfield — Tue, 05 Jul 2011 00:56:00 +0000

Mike Orr’s latest real estate update mentioned a new Cromford Report chart for the Phoenix Real Estate market so that we can track “shadow inventory”.

The chart shows that the “shadow inventory” has been declining since November 2010 and is relatively small compared to the monthly sales rate. Of course successful short sales contribute to this decline in the “shadow inventory”. We did not include loans that are delinquent but not in foreclosure in our graph, but instead we recommend an expert on these: Jay Brinkmann, Chief Economist of the Mortgage Bankers Association. You can find his press release on 1Q 2011 delinquencies here.

Shadow inventory for the Phoenix Metro area has been declining, and at a much faster rate in the past several months. From around 50,000 properties to about 38,000. Still a significant number, yet with over 10,000 homes selling last month and well over half those being distressed (bank-owned or short sale) properties, the numbers could continue dropping rapidly. Since March 20101, the Phoenix market has seen a 25% reduction in REO inventory.

Now, to take a quick look at each of the Scottsdale sub-markets, by zip code.

South Scottsdale 85257 – Big drop-off in shadow inventory, especially in the past four months. From a high of over 275 properties to a current inventory of about 200 units, equating to somewhere just over a 25% reduction.

Downtown Scottsdale 85257 – Very low inventory of distressed properties. From about 160 homes in April down 125 in July. A 20% drop.

Central Scottsdale 85250 – Huge drop-off in REO inventory since November 2010. From a high of 120 properties in January to just over 60 in July. Almost a 50% reduction in shadow inventory!

North Central Scottsdale 85258 – Again a drop-off from about 125 units in February to about 90 in July. Almost a 30% drop.

Cactus Corridor, Scottsdale 85254 – A much higher volume of REO inventory can be found here. Still a similar drop-off is seen. From almost 475 units in November 2010 to just under 350 units today. A 25% reduction.

Scottsdale Airpark 85260 – From a high of almost 275 units in February to a current level of under 200 properties. Another big drop of almost 40% in REO inventory.

North Scottsdale 85259 – A bit slower recovery here, with a peak in February through April of about 200 homes, dropping to 150 in July. Still a drop of 25%.

North Scottsdale 85255 – Not nearly as much change here as in the areas further south (and typically lower priced). From an inventory that’s consistently been in the range of 375 properties, a small reduction to 340 units was seen in July. A minimal reduction of under 10%.

North Scottsdale 85266 – A bit of an improvement here. From a peak of about 130 distressed homes to 110 in July. A 15% reduction.

Far North Scottsdale 85262 – More decrease in REO inventory here, too. From about 220 units in late 2010 to about 140 in July 2011, a 35% drop.

Besides the rapid decrease in shadow inventory in the Scottsdale real estate market, you’ll notice that Scottsdale really makes up an exceedingly small portion of the distressed real estate market. As of July, there are just under 1800 properties in Scottsdale’s shadow inventory, which equates to less than 5% of the total REO inventory market.

Fifty percent (50%) of the current shadow inventory can be found in North Scottsdale between Shea and Pinnacle Peak, in the zips of 85254, 85255, and 85259. These particular areas may be where some hidden values can be found in the next couple of months.

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