The Scottsdale Real Estate Files: January 2009

When I first got into this business a decade ago, it didn't take long to encounter one of the favored pastimes of consumers and professionals alike:  Reveling in prices that once were.

Whether it was the colleague pointing out a development where he lamented not purchasing five units back when they could be had for $75,000 apiece, or the investor who regretted selling that rental property years before now that it was worth three times as much, the underlying wish was to turn back the clock to grab as much Real Estate as humanly possible at the never to be seen again values.

Of course, the downside to the markets that spawned the low price housing in Scottsdale in years past was diminished purchasing power due to elevated interest rates, and the speculative nature of our community.  Always a winter haven for the well-heeled, we were still very much a community in progress.  All the signs pointed to a city on the upswing, but with abundant raw land and subdivisions still in their infancies several decades ago, there was still a bit of a gambling aspect to home ownership in the desert. 

Flash forward to today, and those who rolled the dice on our bustling town hit paydirt, while those who were late to the speculative party (2005-2006) were the unfortunate ones who wound up with snake eyes.

The subsequent erosion of values has hurt many Valley homeowners, but it has also spawned an opportunity that many previously thought had been lost forever.  Affordable housing has returned to Scottsdale.

 

• In all of 2006, there were 39 total sales of single-family homes listed at or below $250,000 in Scottsdale.
• In 2007, that number rose slightly to 48.
• 2008 saw that figure rise dramatically to 247.

 

*As of today (1/25/09), there are currently 159 Active Listings for single-family homes under $250,000!

Okay, McFly, you've climbed behind the wheel of your DeLorean, coaxed the odometer to precisely 88 miles per hour, and now find yourself back in 2003-2004.  Of course, it is a parallel universe in which pricing reflects the period immediately before the boom while interest rates are lower, competition for properties is diminished due to tightened financing guidelines and the available home inventory from which to choose is infinitely greater.  Our little town is all grown up now, so who knows when the opportunity for the scaled back pricing in a destination city that is presented today will ever return?

 

 

 

 

 

 

Time to fix some of those investment laments or find that entry-level Scottsdale home that is back within reach. 

 

 

*Facts and Figures Gleened from ARMLS*

 

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For a Complete Guide to Affordable Housing in Scottsdale AZ

Paul Slaybaugh, Realty Executives

(480) 948-9450

 

 

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Not only is failure always an option, it is often the best one. 

Weightlifters will tell you that taking sets to failure, that point where you can no longer perform additional repetitions with good form due to muscular fatigue, is the path to increased strength and growth.

Shrewd businessmen will tell you that they seldom lament the deals they didn’t do.  Rather, the ones that got away, where there was a breakdown somewhere in the process, are often saving graces.  The failure to come to terms on ill-advised transactions saving them from future losses and aggravation.

In general, failure is the spawning ground of greatness.  There would be no need to improve without first tasting its bitter flavor.  What means do we have of fulfilling true potential in the absence of the adversity that draws it out into the open?  That challenges us to overcome the dreaded specter of defeat?

Too many times in my early life, I shied away from even participating in arenas where I didn’t immediately excel.  Or more to the point, didn’t believe I would immediately excel.  I feared failure.  I feared the ultimate revelation that even my best would prove inadequate to the chosen task. 

I still do to a degree. 

I like to write.  Until a year and some months ago, it was just another curio placed on a shelf of personal regrets.  With the standard methods of attracting new business beginning to languish with the sharp market downturn, however, I was forced to step outside of my comfort zone to secure new streams of potential buyers and sellers.  I began to actually write for an audience, opening myself up to the scrutiny and criticism that I previously avoided.

Lo and behold, I found a receptive readership in addition to new business.

I temporarily failed, I adapted and I rediscovered a lost love in the process.  Now, my business is steadily picking up while that of all too many colleagues continues to stagnate.

For those who are hanging onto their careers by the skin of their bicuspids, failure may prove to be a godsend.  You can use the opportunity to refocus your practices and ultimately improve your skill set.  And if you fail completely … perhaps Real Estate is not your true calling, or at least not yet.  There is no shame in that.  Fighting and losing does not make you weak.  It just makes you a fighter.  Regardless of where your professional journey next takes you, you have earned the newfound strength that you will take with you.  You are not a failure.  You simply failed. 

Know who make some of the best coaches?  Ex-players who never made it to the bigs. 

And what of the politicos who lack the requisite charisma to be electable?  Some become the biggest power brokers in the country, if not the world.

Every failing, a new beginning.

I relate the surging failure rate in the careers of Real Estate professionals due to my own myopic perspective, but it is a universal theme that translates to the hardships that are being experienced in every walk of life with startling frequency.

With people losing houses, jobs and wealth, we'd all do well to guard against mistaking a result for an inherent truth.  Acknowledge your defeat, but don’t accept that you are defeated.  The real test, and opportunity, begins at that point.

As they say in boxing, everyone has a plan until they get hit in the face.  You only discover your true constitution upon rising from the canvas.  So get up and fight.  And if you can't defeat the opponent in front of you, you can always get a gig selling hot dogs in the stands.

Congratulations, even putting yourself in position to fail constitutes the toe in the lake that many timid souls on this watery planet will never dip.

 

If you are like many potential home sellers I have spoken with over the past several months, you are leery of putting your home on the open market.  The crush of competition, the dirth of qualified buyers ... the constant state of panic that your home won't be in absolutely show ready condition when a buyer finally does show up after weeks of inactivity.  Perhaps you would like to move, but simply do not want the hassle associated with listing and marketing a home. 

Basically, you would sell if a buyer fell from the sky (or internet), but don't want to be bothered otherwise.

With you in mind, I am posting the needs of a few current buyers.  We've seen the current inventory for their criteria, but have yet to be blown away.  That's where you come in.

 

Buyer needs for the weekend of 1/16/09

 

 

 

 

 

 

 

1.  Buyer number one is looking for 5 bedrooms plus a den, 4000+ square feet, newer construction, on an acre in the Chaparral High School district.  The Town of Paradise Valley or along the Orangetree Golf Course are preferable, but we are open to other possibilities.  High ceilings are a must.  Will look up to $1.5 million for the right fit.  Must be an absolute show-stopper at that price point.  Will consider fixer uppers with the right bones in the $700,000 - $1,000,000 range.                                                                         

                                                                                                 *We were thinking something like this*

 

 

 

 

 

 

 

 

 

 

 

 

 

3.  Buyer number three is looking for a single-family home between 2500-3000 square feet in the Desert Shadows Junior High School District.  We will consider prices up to $400,000.  The critical factor is an owner willing to take back some paper.  If you are willing to hold a note in order to sell your home to a buyer with 20% to put down, I want to talk to you.                                                                 

 

*This should do fine*

 

 

 

 

 

 

 

 

 

 

 

4.  Buyer number four wants your semi-dilapidated McCormick Ranch home.  Currently looking at bank-owned properties, estate held properties and the line, we see no need to wait for the bank to destroy your credit through foreclosure before deciding whether or not a sale can be mutually beneficial.  If you have a home that is in either physical or financial trouble in the McCormick Ranch area, my investors are interested.  While 1800+ square feet, 3+ bedrooms and a pool are preferences, we will consider anything that has adequate upside potential.  Not looking to steal anyone's home, but the math must be advantageous to make it a possibility for these buyers.                                                                                 

*In the right hands ...*

 

 

I am always interested in properties in Hayden Estates as well.

 

If you are a local Scottsdale / Paradise Valley Real Estate agent with an upcoming listing that matches any of these criterions, give me a call.  We might be able to get that baby sold before you spend dime or calorie one on marketing it.

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Paul Slaybaugh

Realty Executives

Scottsdale, Phoenix and Paradise Valley Real Estate

(480) 948-9450

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*Reduced (1/14)!!!*

Unbelievable value in McCormick Ranch!  Ideally suited for seasonal residents or anyone looking for hassle-free living, Heritage Village patio homes combine the privacy of single-family homes with low maintenance living.  Enjoy your own private patio while allowing the HOA to cover your yard and common area maintenance. 

  

This 1938 square foot single-level unit is priced like a bank owned property, but it's not.  Impeccably maintained and recently painted, you can move right in, but list price reflects cushion for buyer to update to taste.  Located on an interior culdesac, with a prime South facing patio for soaking in the winter sun, this home sides and backs to the community greenbelt and walking path (eliminating neighbor on one side) and is a quick stroll from the banks of Lake Angela.

  

Heated community pool & spa, community tennis courts and walking paths.

   

Great community, great location, great property ... great time to buy.

Did I mention that it's PRICED UNDER THE LOWEST COMP?  Motivated seller wants to see offers!

 

8181 E DEL CAVERNA DR Scottsdale, AZ 85258

Was $369,000 ... Now $349,000!

 

Take a Virtual Tour!

 

 

Ray and Paul Slaybaugh

Realty Executives

Your McCormick Ranch Real Estate Experts

You want to buy a bank-owned property.  Your friends, family, mailman, dental hygienist ... even your Realtor have told you that the foreclosure market is where you pan for gold in this market.  Lo and behold, the hygienist might actually be right this time (bummer about that last hot stock tip, though).

 

 

I am actually a late convert to the bank-owned frenzy because I have long been wary of purchasing property that lacks the standard disclosures, maintenance ... and humanity, if you will.  Up until recently, it was often a mad rush for fool's gold, as well.  The allure of "cheap" often masked an unreported truth: many foreclosure properties were actually priced at, or even above, market value.

Well, the worm has certainly turned.  So much so, in fact, that I find myself seeking out the bank properties first in many instances as both the quality of the homes and value built into the prices have caught up with the hype.  As more and more homeowners lose properties, it simply follows that they won't all be meth labs with peyote smoking derelicts squatting in underground bunkers in the backyard.  Not all have had the A/Cs, appliances, cabinets, etc ripped out by the spurned former homeowner on the way out.  Some folks have simply fallen on hard times, and have lost a perfectly habitable home to a bank that already has too many on its books.  Thus the fire sale prices.

It can feel predatory, or at least akin to scavenging, to prey upon the misfortune of another, but buying up these lower end (pricewise) homes is critical to the health of the housing market.  Until the excess glut is absorbed, supply will remain hopelessy out of whack with demand and values will continue to stagnate.  As will the careers of countless professionals whose livelihoods depend on it.  Realtors (I know, I know, we're cockroaches who will survive a nuclear housing holocaust), mortgage brokers and bankers, contractors, home inspectors, marketing reps, the sign guy, title officers, escrow officers, affiliated vendors, loan processors, underwriters, document couriers, secretaries ... it is absolutely staggering when you consider just how vital the health of the Real Estate market is to the vibrancy of our economy at large. 

Buying a foreclosure home is a community service.

So, now that you have settled your qualms about purchasing a foreclosed property, there are a couple of things that you should bear in mind.  We all know about the big hurdles with bank-owned property, I even touched on a few.  Aside from the typical pitfalls, however, I'd like to address an area that most never even consider.

You may just get such a tremendous buy that you will get hammered unexpectedly on property taxes and homeowner's insurance.

Case in point, suppose your super duper agent finds a pocket of homes that were selling for over $1 million in 2006-2007.  You jump on a smoking deal in the $500,000 range.  Be prepared to pay property taxes based on the assessed value from the last year. 

 

In other words, you are paying million dollar taxes on your new half million dollar home. 

 

 

With the huge price drops, the tax evaluations have not caught up with the market yet.  New evaluations come out in February, but they still might not accurately reflect the current landscape.  As such, you must be prepared to ride out at least a year (this year's evaluation is prepared for next year's taxes.  The die is already cast for the current year) with seemingly excessive taxes.  You can bet that the county and city will act to offset the reduced property value with a higher tax rate as well.  With the budget depending upon our taxes, they are likely to decline, but perhaps not as much as one would expect.

Homeowner's insurance could prove to be a higher than expected expense as well.  The primary reason for this is the replacement cost of the structure.  Some properties, especially newer custom homes, are selling for such bargain level prices that the sales price is not reflective of replacement cost.  As such, while you might be expecting an insurance quote to strictly adhere to the sales price of the home, that is not necessarily accurate.  You can't rebuild a million dollar home for 500k.  Who said I slept through math class?

There are additional possibilities to consider such as HOA reserve/beautification impounds that may be required of a buyer at closing for high-end communities.

As with any purchase, value is dependent upon a confluence of variables.  The opportunity for tremendous savings in the purchase prices of bank owned homes will typically outweigh many such potential bugaboos, but they can be far from incidental if you discover unforeseen expenses while sitting around the closing table.

So dive right into the foreclosure market if you are looking for a buy, but buckle your chin strap and call your trained Real Estate professional.  You don't want to try this stuff at home.

Don't get bitten by what you didn't know you don't know.

 

Start your Scottsdale bank owned property search!

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