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Renovate Phoenix – Let’s get going!!

Phoenix, AZ – October 13 2011

I heard a statistic today that said there are 250,000 vacant homes that have not been foreclosed on (back to this later). In a related story I read that banks that had forestalled the foreclosure process will now start to accelerate the pace.

Phoenix currently has 17,000 active homes listed for sale. This is an unhealthy level. By all methods of measurement Maricopa County should be at 25,000 homes. What this means is that there is a shortage of homes for sale and that there is upward pressure on prices. MGIC’s Market Trend Analysis Report showed that at the end of the 2nd quarter 2011 year over year prices declined 13% from last year yet in the latest Cromford Report it states that home prices have been stable year over year if you look at month ending September 2011.  What does that tell us?

First off is that prices have been rising for about 3 months now. This is no surprise if you are currently listing or selling properties. The supply is short and each quality home is getting multiple offers all above list price. All of us actively in the business know this. We see it every day. We also saw it one year ago but then the market tanked again and so we are cautiously optimistic.

The second thing it tells me is that something’s got to give. and I believe that something will be the acceleration of foreclosures with more properties hitting the market by the first quarter of 2012.

Now back to those 250,000 vacant homes. With the extreme weather shifts in Phoenix these homes are going to be in pretty bad shape. Why not go back to the tried and trued? The FHA 203k. If you are a Listing Agent and you partner with the right Contractor and the right Lender you can market that listing with a pre-packaged renovation plan. The only thing the buyer will have to decide on his paint color, carpeting and appliance package. Take the worry and the decision making out of the equation. If there are no structural repairs required you can add up to $35,000 under the streamline program for repairs, closing costs and contingencies. the loan balance can go up to 110% of the after improvement appraised value. If the home needs more extensive work including structural (room addition for example) then the full 203k program will work.

This same concept applies to anyone buying properties as a traditional Fix and Flip. Shorten up your production cycle and close more quickly if you incorporate the 203k loan into your marketing plan. The home owner will be much happier when they buy a house that they have some control over what the final product looks like.

These programs were very popular in the late 1980’s and 1990’s so they are time tested. The processes have been streamlined and perfected. If you work with the right Contractor and Lender  and they are the perfect vehicle for today’s housing market. Are you ready to take advantage?

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About danielduckworthmortgagenotes

Senior Mortgage Loan Officer at Academy Mortgage Group in Scottsdale, AZ

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