Out of Town Buyers, Lenders … a Phoenix Real Estate Three-Dot Bonanza

avatarthumbnail.jpgAre you looking for a second or vacation home in the Phoenix real estate market and are you going to need financing? Make sure you’ve got at least 20 percent for the down payment and at least another three percent for closing costs (or be prepared to ask the seller for closing cost help.) Had one of my lenders spending the morning looking for a 10 percent option but none currently exist (these did exist as recently as last December.) …

The above is subject to change. The same lender, Justin “King of the Blue Shirt” McHood, says the rumor mill is abuzz with the possibility of 10-percent products coming back. My own take … if there’s money to be made, one lender or another will find a way to do it. …

I can’t emphasize enough how important it is to talk to a lender before getting too far into looking at homes. This is the second buyer in the last four months who was certain all was set as far as financing went only to discover the down payment was going to be more than they expected. …

Which also means I’ve got to be a lot more strict and specific in the questions I ask. …

One of my out-of-town buyers recently complimented me on the detailed instructions I sent along with the purchase contract he was filling out. Two things help: first, I was a state-certified contract writing instructor when I was back at Century 21. Second, about half of my business comes from out-of-town buyers who often don’t make their decision until they’ve returned home. Better to overexplain than leave questions unanswered. …

We’re on day three of the underwriting saga and I keep coming back to this thought. When all is said and done, all the underwriter rejecting this loan will have accomplished is to keep qualified first-time buyers from purchasing. If my buyers are forced to back out, this very same home will sell and likely for cash. And even if there’s an appraisal contingency, the appraisal has come back at the agreed upon contracted price. This new sale will then be the comp that this same lender and underwriter might later view and not question. It’s just silly. …

True, market value is determined by where buyers and sellers agree but the seller in the case of a trustee’s sale has next to no interest in what the final number might be. There are sales such as this happening every day as investors snap up severely damaged homes, renovate them and put them back on the market at prevailing market rates. Instead of letting this function take place and the market to run its course, an underwriter somewhere who probably never has set foot in a home in Phoenix is deciding the auction sales price is the final word on value, even with contrary evidence staring him in the face, and artificially attempting to undercut the real market value. …

One last note on this underwriting fiasco, at least for today. Here’s the sales price chart for the city of El Mirage as compiled by Altos Research:


Prices for EL MIRAGE

The market in this city has been flat for the last two months and virtually flat for the last four. Go directly to the Altos site and look at the 7-day average and market in this city has been flat for six months. SIX MONTHS! Yet this underwriter maintains the market is declining rapidly. Sigh. …

Read your addenda carefully if you’re purchasing a bank owned home. Fannie Mae, for one, starts the 10-day inspection period the day a verbal acceptance is received – not the date the executed contract comes through, as with traditional sales. With a near-one week turnaround on docs, you might find your inspection period’s over before you knew that it had started.

[tags]Phoenix real estate[/tags]

About Jonathan

Jonathan Dalton is a 30-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.