The Instant Offer. It seems to be a great marketing concept for some deep pocketed real estate firms. Basically, they provide the “Easy Button” and you get to sell your home with “no hassle.”

You hear the commercials, get their mailings and see their Facebook ad campaigns that tell you not to move on Christmas Eve or do any repairs, and to take control of the selling process. Want to sell quickly and have no hassles? Great! They have the answer. Right?

I’ve got to say, in 25 years of selling real estate, I’m pretty sure I have never had a closing on Christmas Eve. Sell quickly? How about going from contract to close in just four days? Yep, we’ve done it. We’ve also been through many real estate markets. Some have been “better” than others. The truth is, the market has been pretty good for sellers for a while now. Fortunately, it is also a pretty good time for buyers with the low interest rates! In my humble opinion, a traditional real estate agent can typically put more money in your pocket AND represent your best interest while doing so.

The Allure of the Instant Offer:

The big allure with the instant offer seems to be quick and easy. You know, instant gratification. These companies come in and offer to take the home off of your hands for a few bucks less than what you’d get on the open market. Selling your home at a discount apparently gives you the ability to pick your closing date and sell the home “as-is.” Of course, that discount could very well cost thousands of dollars. Here’s the rub: No one can force you to close on a day you don’t want to close on, and no one can force you to do repairs you might consider too much of an overhaul like foundation repair to your home that you do not want to do.

How about when they say “And you don’t even have to put it on the market!” Sure, that makes sense. Why would you want to make it available to the greatest number of qualified buyers, letting the market decide that your home is worth more than some institutional investor is willing to pay for it? Call me crazy, but my money is on the market and my money says it IS possible to sell without “a lot of hassles.”

For some, selling at a larger than necessary discount is worth it. Maybe they like giving away money as a hobby? For others, hiring someone to represent their best interest and doing some close comparisons might just help them make more money AND have a smooth transaction.

Remember, when you sell to these large corporations, you typically have no representation. I can assure you that they are very experienced in maximizing their bottom line. Make sure your bottom line is protected, as well!

And don’t be fooled by promises of no commissions. Fees for selling to many of these institutional investors tend to range from 6 -16% of the sales price of your home – far more than what you might pay to a really good real estate agent who will be happy to represent YOU!

Options are great. Here at the Phoenix Real Estate Guy, we want to remind you that your best option very well could be to hire us to sell your home. Don’t be fooled by these companies who try to make everything sound so easy. There’s typically a large and unnecessary price to pay for their services. They are institutional investors, they will never look out for YOUR best interest. Make sure to give us a try. We’re happy to help you sell your home quickly, and we’re confident that we can sell your home for more money than what they will offer you.

Please contact The Nick Bastian Team today at 602-803-6425 for a free, no obligation consultation.

Last week we told you about Courtney Hoogervorst and her fellow Phoenix Condo homeowners being forced to sell their Phoenix Condo units. Courtney purchased her condo for $93,000 cash last year, has put in over $15,000 in updates and is being forced to sell her unit for less than she has into it. Another thing to take into consideration is the value of most properties in Phoenix has gone up around 9% over the last year.

The Buyer and a real estate representative for him have both contacted me. They told me that the information I provided in the first article is wrong and should be corrected and I have agreed to look into it further. The numbers contained in the previous article for sales of those units came straight from the tax records. I will give their side of the story as it was relayed to me, but I will also let you know why I still do not agree with what is being done to Courtney.

Their first claim is the units that were sold for $160,000, $124,500 and $118,000 should not be listed because Mr. Karl overpaid for those to make the Seller’s whole on what they owed.Of course, if I owed $160k on a unit that may be worth only $110k and I could sell it for what I owed I would jump on it. Who wouldn’t? I would ask, If Mr. Karl is willing to overpay to make them whole, why would he not be willing to pay the money Courtney has into her unit in the last year to make her whole?

They also thought that the picture I painted was unfair because I only showed the top of the sales list which was the most expensive. That is true, but these units were also the larger 1066sqft units like Courtney has, and with Courtney’s updates hers would be considered towards the top of the list.

The next complaint they had was I showed a bunch of units that Mr. Karl purchased in a bulk sale that are shown in the screen shot from the tax records as selling for $108,154 per unit. These units are the same exact floor plan as Courtney has. Mr. Karl states he did not purchase these for $108k, but they were a part of a bulk sale and that he paid $90k per unit.

Here are the details of his bulk sale according to the tax records:
Mr. Karl purchased 135 units at $12,150,000 total price.
That works out to $90,000/unit.
The units that sold broke down in the following way:
There were 29 units that were 1066 sqft, which is what Courtney owns.
There were 33 units that listed as 969 sqft.
There were 32 units that listed as 794 sqft.
There were 9 units listed as 720 sqft.
There were 16 units listed as 649 sqft.
And there were 16 units listed as 449 sqft.

If you take the total price, divided by the total number of units, this would indeed show a total purchase price of $90k per unit, but does anyone believe the 449 sqft unit is worth the same $90k as a 1066 sqft unit? I believe that is why the tax records show the 1066 sqft units at the $108k price in the tax records.

Let’s take Mr. Karl at his word that the $108k number in the tax records is just made up and not correct. That could be true, and I have no evidence to say it is not so that I will concede that point. What we do know is Mr. Karl paid a little over $12million for 112,347 sqft of condo units. That works out to $108.15 per square foot. So if Courtney has a unit that is 1066 sqft, then her unit would be worth a little bit over $115k.

I will also concede that the cost per sqft is not the same in a 449 sqft unit as a 1066sqft unit so this is not an exact formula that should be used either. But when we consider Courtney paid $93k for the unit, values have risen, let’s be conservative and say 8% since she purchased it, that would put it right around $100k, and then you add in her upgrades she has done. Well, you can see where this is going.

The system is flawed. Homeowners are being forced to sell at a loss with no moving expenses. Courtney is getting screwed. Now is what he is doing illegal? No, it appears not, and I stated that several times in the first article. But just because something is not illegal does not make it right to do. Courtney and the other homeowners deserve some protection. An accurate appraisal was never done as the appraiser never even stepped foot into Courtney’s unit. Again, not illegal, but not right either.

Is there a Phoenix real estate market crash happening?

The Phoenix real estate numbers just released show closed house sale prices per square foot dropped over the last month, and it is projected they will drop again next month. Does this mean there is a correction coming from the recent run-up in home values?

No, that is very unlikely.

According to the Cromford Report, the 30 day period ending July 15th, 2017 showed the average price of all home types in the Arizona Regional MLS database dropped to $150.52/sqft, down from $151.10 the month before. That is a .4% decrease. Cromford also projects, based on current listings and under contract properties, that over the next 31 days the price may drop again to about $149.67/sqft.

Why are prices going down?

People have been proclaiming for months that this recent run-up will result in the next Phoenix real estate market crash. But many close to the situation, including the Cromford Report, do not believe that is a likely scenario. This is something we see almost every year. The numbers used for this market average take into accounts all sales including traditional sales, REO properties, and short sales. This also includes everything from multi-million dollar mansions to inexpensive $50,000 condos. (What you need to know before you buy a condo).

One reason we are not concerned is that we almost always see a decrease in prices during this time of the year. We will usually see a slowdown in the market during the hot months. The biggest impact is usually in the luxury market where the market comes almost to a standstill during the summer months. The whole market in general usually sees fewer sales this time of year because of the weather, but the luxury market is especially hard hit, which causes these numbers to seem worse than they usually are. Cromford expects the upward tick in prices to resume again late in September.

Where are the Canadians?

The Phoenix real estate market has continued to do well over the last couple of years despite Canadian buyers almost completely pulling out of our market. How bad is it with Canadian buyers? Here is a list of total sales in Maricopa County to Candian buyers in the last seven Junes:
2017 = 44
2016 = 36
2015 = 70
2014 = 126
2013 = 185
2012 = 326
2011 = 421

Notice a trend? Currently, Canada is going through their own real estate market crash. The big factor though is the current value of the Canadian currency. As an investor I work with has said, with the current $0.70 “Canadian Peso” it is a hard calculation to overcome.

So there is no Phoenix real estate market crash happening?

No, not yet. While we are not fortune tellers and we do not have the ability to predict the future, there is still no sign of the market softening anytime soon. Demand is still mostly stable; inventory is still low; there have not been any changes in lending laws that have loosened the money flow. We see nothing right now that is a sign of a weakening market. When there is, we will let you know.

I have been hearing for a few months now how the market is out of control and prices are going up too fast, and we are going to have another crash like a decade ago. There is a difference in what happened then and what is occurring now. Then we had lending loosening to the point that anyone with a pulse and ability to sign a loan doc could buy a house for any amount they wanted. Home ownership rates went to an all time high. Right now, home ownership is much lower than a decade ago, and some would say it is too low. I am not one of those who believe it is too low. While it may sound un-American, not everyone should own a home. Homeownership, while great in the long run, can be a costly endeavor. Not everyone is in a position to afford the cost of homeownership.

How is this different?

Prices went up like crazy a decade ago because anyone could get a loan for any amount, and many did. When the number of people entering the home buying market goes up as fast as it did, it is a basic supply and demand, and the pool of buyers, compared to the pool that could traditionally buy, became too much for the market to handle.

Now, while prices are going up, we do not have a huge pool of buyers driving up the demand. The demand is fairly normal compared to historical numbers. The issue is we do not have enough houses for sale. I will use Chandler as an example. A typical month in Chandler historically would have around 1000-1100 active properties for sale. As of today, there are currently 680 active properties on the MLS in Chandler. That is down at least 30% over what is typical in Chandler. So while the demand is normal, it seems a lot higher because those looking have fewer properties to look at, and it causes competition for the properties available and drives up prices.

So there you have it. I would not worry. Will there be a correction some day again in the Phoenix housing market? Sure. There always is, but right now there are no signs that is coming soon.

Copyright: <a href=’https://www.123rf.com/profile_tdoes’>tdoes / 123RF Stock Photo</a>

I just want to get this clear right up front. This is my opinion. This does not necessarily represent the opinion of others on this site, our brokerage, or anyone else. If you have problems with what I write here, contact me directly. – Dean Ouellette

Do you really own your Phoenix Condo?

Can you imagine this scenario? You are a first-time home buyer. You find the perfect condo you want to live in. Over the next several months, you put over $15,000 of upgrades into your new home and out of nowhere, you find out your condo is being sold and you are going to lose money. The worst part is there is nothing you can do to stop it.

Is this legal? Yup, 100%. But when you dig into the facts of this case, things get a little tricky. This article will show you how this happened, and why I think the Arizona Legislature needs to look at the current laws and make changes to protect the homeowners. STAT.

Let me introduce you to Courtney Hoogervorst. She is a Phoenix Condo homeowner who reached out to me about the situation. Courtney graduated from ASU and was raised in the Valley and has always dreamed of owning her first home. Courtney started saving her money with her first job when she was just 15. A decade later the hard work paid off, and she purchased a Phoenix condominium she fell in love with in 2016 for $93,000 cash.

Courtney began investing in her home in late 2016, and with help from her boyfriend, she spent over $15k and countless hours working on remodeling the home and making it her own. Most of us remember that first home we owned. We had big dreams and spent time and money making it a place we were happy to call home.

That dream came crashing into a brick wall at high speed on June 22nd of 2017.

Courtney states that she received a letter from a Mr. Travis Karl (Mayfair Investment Group/Prosper Investment Group) which stated that he was now the new Owner of the Solstice Condominium Association and that he was terminating the condominium she owned. The letter stated that she had 60 days to move out and she would receive payment for the fair market value of her unit.

If you are a homeowner, especially if you are condo owner, you are probably saying, they can’t do this. Well actually, according to A.R.S 33-1228, they can.

A.R.S 33-1228 states a condominium can be sold/terminated but only if 80% of the current owners agree. Courtney stated she was relieved because she knew 80% of the current owners wouldn’t agree to selling their condominium.

And this is where the story gets interesting. Grab a cold one and read on.

Courtney started doing some research and found out that Mr. Karl had been approaching individual owners at the Solstice Condominium property for the last several months offering to purchase their units off market. Mr. Karl paid over $100,000 for many of these units. It appears his goal was gaining ownership of 80% of the complex. As his ownership percentage grew, he knew he needed one more unit to push his ownership over 80%, so he paid over $160,000 for one remaining hold out that he needed.

Again, he has done nothing illegal. As long as Courtney receives fair market value for her unit, while this may be unfortunate, correction, while this may suck for Courtney, there is nothing she can do. This is just a sad story that we luckily do not hear often.

This is where it gets ugly for Courtney. Remember, she paid $93k a little under a year ago and had put over $15k into upgrades into her unit. While Courtney states that it was becoming crystal clear there was nothing she could do to stop the deal, at least she had a glimmer of hope that she would be compensated fairly.

Who determines market value

Courtney states “Mr. Travis hired an Appraiser to come look at the Solstice property last month to give his fair market value assessment on what the units were worth. This Appraiser didn’t set foot in my unit but valued it at $95,000, disregarding any remodeling that was done.”

There are several units that Mr. Karl has paid well over $100k for, including paying up to $160k for one unit that is an exact floor plan match as the one Courtney has. This is where Courtney seems to have a very valid complaint. When you consider the amount Courtney paid, the property inflation over the last year, plus her upgrades, you would assume the value would be well over $95k. Courtney should have the right to appeal the appraisal. The law says that 50% of the homeowners would be needed to appeal. With Mr. Karl owning 80%, that is impossible, and this is where the law needs to be changed to protect the homeowner.

NOTE: Mr. Karl and a representative of his have contacted me disputing some of the claims in this article. I have posted an update here.

I took a look at the appraisal. I saw the subject properties used. Two of the units used were not even in the same complex. With all of the properties sold to Mr. Karl over the last few months, there were plenty of comparable properties in the same complex. It appears that the many properties recently acquired by Mr. Karl were not included. If I was an agent selling this unit, and this appraisal came in on the unit I was selling, 100% of the time I would call B.S. and appeal the appraisal.

Phoenix Condo owners need more protection

No one is saying that Mr. Karl does not have the right to do what he is doing. Courtney and the other home owners in the Phoenix condo complex deserve to receive fair market value for their units and a way to appeal the value.

NOTE: Mr. Karl and a representative of his have contacted me disputing some of the claims in this article. I have posted an update here.

The first quarter of 2017 has certainly been a busy month here in the Phoenix area. With spring training and the Final Four to solid economic growth via more new job announcements, things have been hopping. Of course, we also saw a nice increase in home sales here in the valley, which is great for us here at the Phoenix Real Estate Guy!

As AZ Central reported, residential sales were up 12.5% over the previous year. If you remember correctly, 2016 was a pretty solid year, as well!

As we know, many are looking at the Phoenix real estate market to lead the country in 2017. While some areas and price ranges are doing better than others, the interest rates and relative affordability of homes during this “spring buying season” seems to have people out shopping for homes in droves.  Homes under about $300,000 or so are seeing multiple offers and a very short time on the market.

Here’s a great example of what occurred this past weekend. The photo below shows four properties, all priced less than $300,000. We put all four of these homes under contract and not one of them was on the market for a week!

March Madness – Market Gladness

While these homes all sold quickly, we feel like overall prices are moving upwards at a healthy pace. BUT, if you are in the market to buy a home right now, we strongly suggest that you work with an agent who has experience and market knowledge. A couple of these homes received multiple offers, and it was interesting to see how the more experienced agents did a much better job in getting their offers accepted for their clients. We have the market knowledge and experience to help you make solid decisions when choosing which property is best for you, how much to offer and how to structure the contract in competitive situations.

Buying a home is often a big decision for most people. Real estate markets go up, and they go down. A good agent should be able to guide you through the entire process to help you make solid decisions. Stop the madness, work with an agent who sincerely cares about your best interest. For excellent results, work with a Phoenix Real Estate Guy… (or Gal) We can always be reached at 602-803-6425.

Here’s a sample list of single family homes currently listed for sale under $300,000. Let us know if you’d like to start shopping. ( or selling!)