Phil's Real Estate Blog

2009-06-15T15:42:00.000-07:00

I just reviewed some statistics from the Washington County Board of Realtors that are showing interesting improvements in the Southern Utah real estate market. We are in the last month of the second quarter of 2009. Spring is often a good market around here. The weather is great. The summer heat isn't settled in yet. We have to compare this market to historic markers for comparison.
The average sale price has been trending up since the first of January this year. In Washington County the average sales price for May '09 was $234,252. That is the highest month performance since September of 2008. So far the second quarter sales volume is up about 4.2% from the same two months last year.
The number of active listings in May was down 14.5% from May of 2008. We are averaging about 20 months of inventory, which is the lowest since July/August of 2007. The peak inventory level was 44.12 months this past January.
The market for homes is looking very good. The charts suggest pricing is at (or past)the bottom and improving in this area. It is a great Buyer's market, but with the improves sales, the Seller are happy too.

Property for Back Taxes?

2009-06-13T12:16:00.000-07:00

I received an interesting question recently:
"Hi Phil, Thank you for the list of homes for sale here in St. George. I heard a rumor that sometimes homes are for sale for the price of back taxes. Is this true and are there any in St. George?"
I hear this occasionally, and it is not all urban legend.
Utah law includes a doctrine of Adverse Possession. This is probably what the the writer may have heard about. It is a means of acquiring title to real estate by paying taxes and assessments on property where an occupant (the one wanting to get the property) has been in “actual, open, notorious, exclusive, and continuous” occupancy of property for a period of time; which in Utah is 7 years.
The claim for title is a hostile action to the claims of the first owner. The claim can not be hidden and must be "open and notorious" so that the other person is put on notice of the claim for possession of the real estate. Each of these items (actual, open, notorious etc.) has its legal description but needless to say it is a long process that is hard to achieve.
It can be done, but it is not a reliable or easy way to acquire property. If Adverse Possession was an easy way to aquire property savvy investors would jump all over it to flip property for a quick profit!
I am not a lawyer. This is a specific process and unusual process, so if you want to succeed in an Adverse Possesison Claim I would suggest you retain one!

Short Sale and Foreclosure Risks!

2009-06-12T11:51:00.000-07:00

A Short Sale occurs when a property is sold for less than what is owed on it. Usually the bank does not know about it until after the Buyer and Seller send them a REPC (in this case a signed but not binding contract). The bank then approves or modifies the REPC and the Buyer and Seller agree to the changes. Short Sales have risks and rewards. I believe REOs to be a better safer approach though they have problems as well.

Both Short Sales and foreclosure properties provide you with the opportunity to get more home than you might otherwise get for the same money. But there are risks.Often foreclosed property and Short Sale property has not been maintained. People are having hard times and are often mad at the bank and don’t want them to benefit from their bad fortune. I have seen a lot of them that have been neglected to the point that the landscape plantings are dead. I have seen kitchen and bathroom appliances, light fixtures, vacuum systems, carpets, wiring, speakers, and volume control switches stripped out. A month ago I went into a home that had water running across the master bath from the plumbing in the wall that had not been tended to. I have seen hole punched in walls. When you calculate your savings remember to add for the materials and repairs you cannot do yourself.

I suggest that you first look at the foreclosed (or REO) properties. The nature and risk of the sale is closer to that of a conventional resale purchase. You know the price that the bank will accept and they can give you a thumbs up or down pretty quickly. You still are buying it generally “as is” and should have it inspected. But it is pretty straight forward. Depending on who owns the property you may have to use the Seller’s contract addendums. The worst typical thing I hear is that the banks “approve” an offer via email but hold out for higher offers before confirming in writing to an enforceable contract.

The Short Sale is another animal. First the price on the listing is not approved by the bank or other lien holders. They are usually estimate that are contrived to bring in offers. They (the banks) then take a long time to consider those offers, a process that is often going on for several months. During this time you will need to prepare to accept the contract. You will hear almost nothing from the bank. When the bank approves the offer will then give you a very limited time to close; 10 days to two weeks is not unusual. If you have an appraisal done the appraisers will want to be paid. If you have a home inspection done they will want to be paid. Even if the bank accepts the deal roughly 50% of the Short Sale REPCs fall apart at the closing. In that case you are out the appraisal and inspection fees.

These are risks you have to consider. You may do this more than once. Multiple offers can be considered by the bank although some will not allow submission of a second offer until the first file is closed. You also often have multiple lien holders. The second position lien holder is negotiate with separately and is unpredictable.

I have not heard of banks accepting many lowball offers just to get them off the market. They know most of the clients who are losing their homes have nothing to go after to make up the deficiency; so they hold out for as much as they can get. The prices are still, however, usually much lower that non-distressed sale prices. The lien holders do ask for a promissory note in most cases, but I suspect they do not expect to get paid that money. Some cases the deficiency is forgiven, but there are so many out there it is happening less often. This is where a lot of closings fall apart. Also, liens are discovered that must be paid at closing. Banks have asked for price adjustments from the Buyers, money from the Sellers etc. Often no one is happy.

I represent Buyers and Sellers in Short Sales, so I am actively involved in them, but I try to discourage Buyers from going that route. It is a slow, laborious process that does not pay off in most cases. Go for the REOs (foreclosures) to save money, reduce risk, and retain your sanity!

2009-06-11T10:41:00.000-07:00

Southern Utah is a beautiful place to live and raise a family. The climate, culture and natural beauty all combine to make this a great place to work and play! As with much of the Southwest one of the primary limits to development is the ability to provide adequate clean water for private as well as industrial use.
Yesterday I toured the Quail Creek Water Treatment Plant Northeast of St George. The facility takes the river and resevoir water and cleans and prepares it for public consumption. The technology is impressive, you should stop by and ask for a tour!
Even though we realize we live in a desert area, too often we take for granted the planning, the facility development, and commitment required to provide us water at the turn of a tap!
If you want more info on the water issue take a look at the Washington County Water Consevancy District web site; http://wcwcd.state.ut.us/ . It's a good source for Lake Powell Pipeline project info as well.