WHAT IS A SELLER'S MARKET?

Almost everyone has heard the term"Seller's Market" and wondered what that meant.  This term means what it says...it's a good time to sell.  Here are a few factors that helps to make it that way:

*Lower Inventory of homes for sale

*Lower or reasonable interest rates

*Strong local economy

*High population influx into an area

*Increasing home prices

*Diverse area economic base

*Increasing area employment base

Some of the reasons that can additionally contribute to when a Seller should consider putting their home up for sale are the following:

1.  Weather is generally better in the higher selling months because it is easier for potential buyers to be out looking for homes and moving. Conversely it is better to list your home during the winter months if you are in a sunny Winter Resort home area.

2.  Families prefer to move when the children are out of school.

3.  More homes sell between the months of May through September than are sold the other seven months of the year.

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Designing Your Home Office

First step is to draw the line between work and play with the computer.  A dedicated business-only computer will help you keep your office a business atmosphere only.  You might also have professionals install additional electrical, phone or cable outlets to accommodate your various office equipment.

Next divide your new office into three sections:  the work center, the reference center and the supply center.  The work center includes your desk, computer and things that you use on a regular basis.  The reference center includes dictionaries, books, binders, etc.  Consider placing  a small filing cabinet or installing shelves behind your desk for easy access.  Lastly, the supply center of your workspace holds all your office supplies.  Consider using shoe boxes for holding note cards and other small items and/or jars for keeping pens and pencils to save money on storage solutions.

Utilities - To Shut Off or Not to Shut Off

Almost every landlord has wanted to shut off a tenant's utilities for one reason or another.  Unlawfully shutting off utilities can result in severe consequences to the landlord except for a few unusual circumstances.

Normally utilities cannot be shut off and Arizona State Statute allows the tenant to sue for damages and/or terminate their rental agreement.

Here is the statute that protects the tenant:

A.R.S. 33-1374  Recovery of possession limited

A landlord may not recover or take possession of the dwelling unit by action or otherwise, including willful diminution of services to the tenant by interrupting or causing the interruption of electric, gas, water or other essential service to the tenant, except in the case of abandonment, surrender or as permitted in this Chapter.

BEING SUED BY YOUR LENDER

Some Arizona homeowners who have walked away from their homes have found themselves as defendants in lawsuits filed by one of their lenders.  These unfortunate borrowers wonder how that could have happened since Arizona has Anti-Deficiency Statutes.  Such lawsuits revolve around a type of loan called an 80/20 loan where one or two different lenders would lend the borrower an 80% first loan which would be secured by the residence.  The remaining 20% of purchase price was also financed & secured by the home in a second lien position.  The lenders that made these type of loans to borrowers were basically financing 100% of the purchase price of the home.  

When real estate values declined, homeowners stopped making loan payments and began walking away from their homes.  As one would expect, without payment, the holders of the first mortgage foreclosed on the homes.  Holders of the second loans were left with none or a small fraction of their 20% loan being repaid due to the declining value.  These lenders began filling lawsuits against the borrowers for the full amount of the second loan.  SURPRISE! SURPRISE!

While these homeowners should otherwise be protected from the deficiency lawsuits, their 20% second loans may not be the type that fit within the "Arizona Anti-Deficiency" laws...such as home equity loans that are made for some other purpose than to purchase a home.  Seeking legal advice to determine whether or not the lender has a valid claim against the borrower/homeowner is a MUST as many lenders are unaware of Arizona's "Anti-Deficiency" statutes.

WHY DO LENDERS CHARGE POINTS?

Whenever governmental regulation, state usury laws and/or competitive practices prohibit the lender from charging a rate of interest which would make the real estate loan competitive with other fields of investments, the lender must seek some other method of increasing the yield for their investors.  By charging "points" (a percentage of the loan amount being borrowed), the lender can bring the real estate loan up to those other investments.

Are Points Called by Different Names?  Yes.   Commitment Fee, Discount Fee, Warehousing Fee, Funding Fee

Do the Number of Points Charged Fluctuate?  Yes.  If rates on mortgage loans are lower than other investments (such as stocks, bonds, etc.) then funds will be drawn away from mortgage market.  Also when there is heavy demand upon the money market because of business needs, military requirements or other government borrowing, the result is that money for home mortgages becomes scarce and more expensive.  When this occurs, more "points" (a percentage of the amount being borrowed) can be charged.  Points balance the market.  Points are not set by government regulation but by each lender individually.

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What Does the Title Company Do?

Here's what the title company does in a nutshell:

*Opens the escrow and assigns a Escrow number.
*Requests a Title Commitment to determine the status of title to the property.
*Comply with the lender's requirements as specified on its instructions to escrow.
*Receive and handle purchase funds from the buyer.
*Prepare or secure the deed and documents related to the escrow.
*Prorate taxes, interest, insurance and rents.
*Secure releases of all contingencies or other conditions stated on the escrow.
*Record the Deed and any other documents.
*Request the title insurance policy.
*Close the escrow per the instructions supplied by the seller, buyer and lender if any.
*Disburse funds as authorized by the instructions including charges for title insurance, recording fees, loan 
  payoffs and real estate commissions.
*Prepare final statements for all parties involved that account for the disposition of all funds held   the escrow account.

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WHAT TITLE INSURANCE PROTECTS AGAINST

The matter of title insurance arises in every real estate transaction.  For the Seller, the title policy covers the insured for their loss up to the amount of the policy.  It assures owners that they are acquiring marketable title and is designed to eliminate risk or loss caused by defects in title for the past.


For the Buyer and/or Lender, title insurance is issued to guarantee to the insured party or parties "Free and Clear" title to the property being insured, from the beginning of time until the date and time the buyer acquires title to the property.  In the case of a lender's policy until the date and time the lender's loan document is recorded against the property.


"Free and Clear" is defined as there being no loans, liens, encumbrances, back taxes, easements or covenants, conditions or restrictions against the property that were not disclosed on Schedule B of the commitment for title insurance issued by the the insuring company.


Here's a few things Title Insurance protects against:
*False Impersonation of the True owner of the property
*Forged deeds, releases or wills
*Undisclosed or missing heirs
*Mistakes in recording legal documents
*Deeds by persons of unsound mind
*Deeds by minors
*Deeds by persons supposedly single but actually married
*Fraud
*Liens for unpaid inheritance, income of gift taxes

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WINTER VISITOR---TO BUY OR RENT A HOME??

Arizona vacation rentals have some of the most sought out space, especially for those who are getting away during the frigid northern winters.  Wintering way away from home by purchasing a home or your own vacation rental has its advantages but so does renting prior to taking the leap to buy.

If you are renting, you do not have to worry about any upkeep or maintenance of the rental home as there is always someone to call for that job. For instance with vacation rentals in the Gold Canyon, Mesa, Queen Creek, Sun Lakes or Scottsdale areas, most are going to have pools and spas for your use which don't require any maintenance by you the tenant.  All you have to provide is the money to pay for your rental.

On a positive note, you may still be motivated to buy after you spend some time doing your homework. Never overlook the fact that you can both buy and rent your own vacation home in one of the most popular vacation markets to date as well as have a second-home tax write-off.  Furthermore, since this is a second home, you can opt to migrate and head North for the summer. Any qualms about purchasing can be overcome by testing the waters first and spending time in an Arizona vacation rental to make up your mind. Give it a month and talk to local homeowners about their experiences and the local housing climate.  Since it is a buyer's market the housing sector will get it shot in the arm in due time.  AND, while you are visiting sunny Arizona be sure to apply SPF 32 sunscreen liberally and enjoy yourself.

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