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July 2015 Scottsdale Arizona real estate market update

August 17, 2015 Joe Szabo

As things really start to heat up in Scottsdale let’s take a look at how the real estate market faired in July 2015. New listings are down 3.3% from June with a total of 783 new listings vs. 810 in June. New contracts were down by 11.2% and closed sales were down by 3.7%. The median sale price is down from $377,000 in June to $399,000 in July. During these up and down activity months it is more important than ever to consult a real estate professional that knows the Scottsdale market.

Considering a purchasing or selling a property in Scottsdale? Call Joe and Linda Szabo – The Scottsdale Real Estate Experts! We hope that you enjoy reading and analyzing the Scottsdale Luxury Home Report and should you have any questions or comments, please feel free to Contact Joe Szabo at 480.688.2020 or email him directly at Joe@ScottsdaleRealEstateTeam.com. You can also visit https://scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results.

Move This, Not That: 10 Items to Get Rid of Before Your Next Move By Joe Szabo, Scottsdale Real Estate Team

August 14, 2015 Joe Szabo

By Joe Szabo, Scottsdale Real Estate Team When it comes to moving, deciding what to take with you — and what to leave behind — can be stressful. Spending a little time clearing out dead weight before the move will make settling into your new place much more freeing. Check these 10 areas of your home for items that aren’t worth the square footage in the moving van — or your new home.

1. Dine in

This may seem obvious, but food takes up a lot of space and often gets a bit lost in the moving shuffle. In the weeks before your move, eat anything that isn’t shelf-stable, brand-new or a specialty item. Don’t forget about the perishable foods in the fridge and freezer (steak for dinner, anyone?). Take a break and throw a pantry dinner party with friends who are helping you move.

2. Pass on low-quality furniture

Low-quality furniture, typically made of particle board, is very susceptible to being ripped and chipped in a move. Ask family and friends if they can use any of these pieces or bring them to your local donation center. Upgrade or replace when you get to your new home.

3. Clean closets

Anything old, stained or that no longer fits should go straight into the donation bin. Moving cross-country? Transitioning from a cold climate to Florida will allow you to shed even more weight as you let go of snowsuits and boots that won’t be of use in the Everglades. Donate to a local thrift store or have a garage sale to make extra cash.

4. Tame the bathroom cabinet

There is no sense moving 20 crusty nail polishes and every curling mousse you’ve ever tried and abandoned. Anything expired or unused lately should be tossed. Cull these and only keep your essentials, as anything else may spill in transit and many are flammable.

5. Make a pitcher of margaritas

While you’re throwing your pantry party, be sure to bring out the open bottles of alcohol. Chances are they’re in glass, making them a no-no for most moves, so you might as well enjoy them now.

6. Burn those candles

This may sound odd, but many moving companies won’t take candles. They’ll most likely melt and get misshapen anyway, so give these to friends or use them as décor at your clean-out party.

7. Donate excess kids’ toys

Toys take up a massive amount of space, even if they are lightweight. Anything that has been outgrown or unused should be donated or passed along to friends or family. Bigger items such as outdoor pools, sports equipment and bicycles should also be assessed.

8. Toss old linens

Sheets and towels are bulky to move, so anything that’s seen better days should be put in the donate pile. Choosing fresh sheets and towels after you’ve moved is a fun part of feeling settled in your new home.

9. Clear out garage clutter

This includes outdoor furniture, hoses, planters and trash cans. With garden items, it’s best to start new instead of moving a potentially invasive weed or insect species to a new area. Outdoor furniture often has glass, which is easily shattered, and flimsy outdoor fabric, which is easily torn in a move. Try selling these pieces and using the cash for a new set.

10. Hobby supplies

Excessive amounts of craft or hobby supplies are often not worth the space. Use this as a time to freshen things up and pare down your supply stash. Bonus? An excuse to buy new supplies in the future. Once you’ve tamed these 10 areas, you should be able to breathe a little easier and pack a little lighter. You’ll be left with high-quality furniture, sentimental pieces and daily-use items, all things that help make a house a home. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.

Staging Strategy: 5 Reasons Every Room Needs a Clear Purpose By Joe Szabo, Scottsdale Real Estate Team

August 11, 2015 Joe Szabo

By Joe Szabo, Scottsdale Real Estate Team When staging a house for sale, it’s crucial to consider every space with the buyer’s perspective in mind. Once you’ve accomplished the five basic staging steps, make sure every room in your house has one clear purpose. Defining how to use a room is incredibly important for buyers because it helps them connect to a home. Here are the top 5 reasons every room needs a clear purpose:

1. Buyers subconsciously feel lost if they don’t know what to do with a room

They will wander in and out of a room very quickly if they cannot easily tell what the room should be used for. The house will not feel comfortable, which will make it hard for them to imagine it as home.

2. Buyers don’t know how to place furniture in a room they can’t define a use for

When buyers walk into a room they feel comfortable in, they’ll start to picture their belongings where yours are now. A big comfy bed signals “This is a bedroom,” so buyers will be able to imagine their own bed in the space. This is exactly what you want them to do.

But if buyers can’t tell the room’s purpose, they won’t know if they need new furniture to fill it, or if they have something perfect for it already.

3. Buyers assume they don’t need a room they can’t see the purpose of

If a buyer can’t see what a room’s purpose is, they go one of two ways. They either assume they don’t need the space, or they decide your home doesn’t have a room that will serve a purpose they do need. Either way could cause them to pass on your house and go on to the next.

4. Buyers don’t have time or energy to figure it out for themselves

There is so much competition for buyer dollars – even in a seller’s market. Buyers have no time, energy or need to “figure out” a house. They can simply go visit the next one or go visit the new home builder they’ve seen advertised. You can bet the builder will show them exactly what every space is for and tell them why they need it.

5. Buyers can’t emotionally connect to rooms they can’t see themselves using

You want buyers to picture their sofa in your living room so they can start seeing themselves living in your house. This is when they truly connect with a house and decide they have to have it as their own home. This connection brings you the best offer possible.

Many homes today feature a “great room” that contains many spaces to be used as individual rooms. This is what the term “open concept living” refers to, and it is highly desired by modern buyers. Mixed purpose rooms can confuse buyers. They may think that if one room has to be used for multiple purposes, the home must be too small. If your house fits this description, be sure to clearly define spaces within the great room to serve only one purpose. For instance, define a family room space and a dining space separately so that buyers know how they can use these areas. Staging your house for sale is a lot of work. But as difficult as it can be, don’t skip it. The way you present your home makes a big difference in finding a buyer. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.

4 Local Factors That Impact Your Mortgage Process By Joe Szabo, Scottsdale Real Estate Team

August 7, 2015 Joe Szabo

By Joe Szabo, Scottsdale Real Estate Team If you’re like many people, you look online to find the best rate quotes when you first start shopping for a mortgage. Sometimes this can lead to selecting a lender who isn’t local to your area. This is fine, as long as your lender is familiar with mortgage processes specific to your area. Keep the following local factors in mind to ensure a positive mortgage experience once you choose a lender.

Local rate quotes

Often a friend or real estate agent refers you to a local lender. To get rate quotes for your profile before talking to that local lender, you can check mortgage rates in seconds by entering your purchase price, down payment and credit score range. You can also enter your ZIP code to tailor quotes to your area. Online lenders compete heavily on rates to win your business, so this search will usually represent the best rates available for your profile. You can use these rate findings to make sure a local lender is offering the best rates. This is a fast, safe way to screen rates without having too many lenders run your credit. Of course you always want to shop, but you don’t want shopping for a mortgage to prevent you from getting one.

Communication with local real estate agents

Local lenders will be known by local real estate agents. This can help when you’re writing offers to buy homes. Because real estate is so localized, sellers’ agents sometimes advise their clients to be cautious when they see an offer financed by an out-of-area lender. Likewise with your own real estate agent: Because agents specialize down to the city, neighborhood and street level, they often encourage their buyers to work with lenders who have the same local expertise and reputation. Local lenders also know title and escrow officers, insurance agents, inspectors and other specialists associated with your local property transaction. And because local lenders live in the same community they can offer useful advice about neighborhoods, schools or even good restaurants — just like your real estate agent. Non-local lenders can quickly win the trust of real estate agents and all other vendors, and you should ask them how they go about doing this. Make sure they’re using a proactive approach to working with all of the parties in your transaction, instead of waiting to be contacted by agents or other vendors.

Local settlement procedures and fees

All local markets have specific settlement procedures and associated vendors. For example, in California a financed real estate transaction is settled by a single escrow company, whereas in New York, it’s settled by separate attorneys representing buyer and seller. Additionally, each city and state has specific rates for various property-related taxes and local customs for how these taxes are paid by buyer and seller. The same goes for title, escrow and attorney fees. If you’re working with a non-local lender, make sure they know these local processes and fees. Failing to correctly quote or associate (to buyer vs. seller) these third-party fees on your loan documents can cause your transaction to be delayed or fall apart entirely.

Local property knowledge

Loans are made based on borrowers and properties. Any lender can do a pre-approval, but in the pre-approval phase, lenders are just pre-approving you as a borrower. The loan won’t be finalized until a lender also conducts a thorough review of the property’s title report, contractors and pest inspections (if called for by the purchase contract), and the property condition and value using an appraisal report ordered by the lender. A local lender will have the appropriate appraisal network in your area, and you need to make sure any non-local lender you use also has this network. Some neighborhoods, for example, have off-market sales that a non-local appraiser may miss. This could cause your appraisal report to come in lower than expected. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.

Pros and Cons of Buying a Foreclosed Home By Joe Szabo, Scottsdale Real Estate Team

August 4, 2015 Joe Szabo

By Joe Szabo, Scottsdale Real Estate Team Five years ago, a homebuyer could spot a bank foreclosed home a mile away. They were abandoned structures, stripped of all appliances and fixtures, with unkempt landscaping and falling down “For Sale” signs. Today, banks often renovate their REOs (also known as bank real estate owned) before listing in hopes of selling to end users, not contractors or investors who will capitalize off the bank’s loss. Banks know the market has improved, and they aren’t as desperate as they used to be. They want to minimize their loss on each sale — not simply sell as quickly as possible. This creates some potential risks and rewards for home buyers considering purchasing a foreclosed home. To help you make a smart decision, here are some pros and cons for buying a foreclosed home in today’s market.

PRO: They are still cheaper

Today, bank foreclosed homes are typically about five percent below a comparable house in the same location that is not a foreclosure. In previous markets, they were often in horrible condition and about 15 to 20 percent below market. While many new buyers set out in search of the deal that comes with these sales, many REOs should be left to more experienced home buyers.

CON: Foreclosed homes can be very risky

Even though they are priced higher today, REOs still come with baggage. Many banks will invest money to make the listings look nice and get the prices up. In return, they are less flexible on price and less eager to sell in general. Behind the scenes, these are still risky sales. You don’t know about the history, and there are no disclosures about leaky roofs, mold or crime. And you are forced to buy the home “as is,” without any recourse if things go wrong. Investors were once fine with this risk, but they are less interested today because the “deals” are gone.

CON: Many foreclosed homes are not in prime locations

Many of today’s foreclosed homes are in less desirable parts of towns or school districts. If you see an REO and the price looks good, remember that it may not be the foreclosure that makes it such a great bargain. It could be location, and you don’t want to get stuck unloading a home in a bad location in a few years. Foreclosed homes in good locations will sell quickly.

CON: Banks aren’t people

Consider that you are negotiating with a spreadsheet. Unlike a typical seller who may care about your situation, your personal background or market history, banks don’t. Your offer is likely submitted electronically and placed into a cell on a spreadsheet for an asset manager to consider. If the numbers don’t work, expect a big rejection. Never get your hopes up. Buyers today can’t assume that a bank-foreclosed home is a good deal. While you can still find a needle in the haystack, they are fewer and farther between. Banks want top dollar out of their foreclosure inventory. They are sellers just like anyone else. They watch the market and read the headlines. Foreclosed homes will be priced slightly lower than the market, but they are still as-is, take it or leave it with some risk associated. Do your homework and work with a good local real estate agent before signing on the dotted line. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.

Everything You Need To Know About Cooling Your Home By Joe Szabo, Scottsdale Real Estate Team

July 31, 2015 Joe Szabo

By Joe Szabo, Scottsdale Real Estate Team Summer may be lazy and hazy, but in many areas of the country, it’s also a time of sweating and sweltering in scorching temperatures. To cope, homeowners employ a variety of methods to ensure a steady supply of cool, fresh air. These cooling solutions include a wide variety of fans and in-home ventilation systems as well as some tried-and-true techniques from the days before air conditioning. Here’s how to keep your whole home cool this season.

The advent of air conditioners

By far the most common form of cooling in the United States is air conditioning, which can be found in more than 88 percent of new single-family homes constructed today. Keeping the house comfortable this way, however, can be a costly investment in terms of both equipment and energy use — we’re talking an average $400 household electric bill from June to August. So it makes good sense to carefully evaluate your home’s cooling options to select the right system to meet your needs.

Keeping comfortable and cost-friendly

No matter what unit or system you choose, how you adjust your thermostat determines your ultimate savings on your electric bill. Start by setting the temperature as high as is still comfortable, keeping the difference between indoor and outdoor temperatures as small as possible. Take advantage of the “energy saver” mode on window units, and use programmable thermostats for multiroom or whole-house systems so your machines don’t do extra work to cool the place when nobody is home. When you’re ready to cool down, don’t drop immediately to an extremely cold temperature — starting that low won’t speed up the cooling process, but it will make your machine work harder and expend more energy. If you want to offer your machine — and your energy bills — a little relief, proper ventilation in your home can certainly aid your cool-down efforts. Ventilation improves indoor air quality, removes moisture and odors, and allows fresh, cool outside breezes to be exchanged for stuffy indoor air. Start boosting your home’s natural ventilation simply by opening doors and windows, especially in the evenings. Encourage airflow by installing ceiling fans, window fans, and attic exhaust fans to push hot air outside and draw cooler air into your home. In the summer months, ceiling fans should be set to run in a counterclockwise direction, drawing cooler air up from the floor. A whole-house attic exhaust fan will pull hot air into the attic, where attic vents can dissipate the heat. Even positioning a few portable fans near windows or a basement door at night can draw the cooler air from these areas into the home.

Regular maintenance for maximum cool down

With a variety of cooling practices in place, you’ll want to maximize the efficiency of your efforts by performing proper maintenance.

Seal the deal. Make sure you have adequate insulation in the walls and ceilings to keep hot air out and cool air in. Caulk leaking windows and doors, and use draft “snakes” to cover the gaps at the bottom of these entry points. Adding aluminum blinds, insulated curtains, or window tint film can block even more sunlight from entering your home and heating up the place during the day.
Change your filter. This quick and easy chore reduces the burden on your air conditioner, improves indoor air quality, and helps you — and your air conditioner — breathe easier. Check the filter once a month and clean out any dust particles that might clog the system, forcing it to work harder and waste energy.
Clean the coils. An air conditioner’s coils and fins on the outside of the unit should be kept unobstructed and cleaned regularly. Use a soft-bristle nylon brush to gently remove any debris, and hose off any leaves or caked-on dirt. Clean the inside coils using the soft brush attachment on your vacuum cleaner, or wipe down with a soft, damp cloth.
Call in a pro. Even though much of keeping your home cool can be considered do-it-yourself work, it is still important to call in a reputable HVAC contractor regularly. An annual system tune-up can help ensure that your air conditioning system is working efficiently and will go a long way toward prolonging the useful life of the components.

Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.

Hot Liability Issues in the Summertime By Joe Szabo, Scottsdale Real Estate Team

July 28, 2015 Joe Szabo

By Joe Szabo, Scottsdale Real Estate Team Who doesn’t love summer? Hot fun such as waterparks, road trips, cookouts and boating generate part of the thrills. But for insurance providers, the word “thrills” translates to “risks.” And they hate risk. So do yourself a favor and reduce your risk — but not your fun — by following a few simple tips when taking on summer activities. The payoff: fewer claims can translate into lower premiums. Then there’s also the fact that you can defend your wallet from having to shell out deductibles — the amount you agree to pay toward a claim before your provider helps.

Keep kids safe in the water

Once school’s out, many kids head straight for the pool. But it’s important to reduce their risks of injury or drowning. More than 7.4 million pools are in residential and public use across the country, and there are more than 3,400 drownings each year, according to the Centers for Disease Control and Prevention. If you have a pool, it’s vital that your insurance company knows about it. That way, you can get help from your policy if you’re sued in connection with injuries — or worse — suffered by visitors. Want to decrease your liability risk when putting in a pool? Enclose the pool in a fence at least six feet tall, with a self-locking gate. Remember, you can be held liable for injuries suffered by children who trespass on your property. As for kids you invite to your pool, supervision is key. Chaperones should put away phones and other distractions to devote full attention to swimmers. Don’t leave kids alone in the pool even for a second. Make sure children who either don’t know how to swim or are not strong swimmers wear floaties or lifejackets when in the water. Finally, teach kids about the dangers of going near pool drains or filters, and educate yourself on how to turn these devices off in a hurry in the event of an emergency.

Watercraft wisdom

If you’re heading to the lake or beach this summer, you should make sure that the insurance policies protecting your possessions are adequate. If you have a boat, consider coverage that includes:

Bodily injury liability
Property damage liability
Uninsured/underinsured watercraft coverage
Property coverage
Watercraft medical payments coverage
Personal effects coverage

These coverages help protect you and your family members on the water much as you’re covered on the highway. Say you cause an accident that injures someone or damages their property, collide with a dock, or if your possessions or boat are stolen or destroyed due to a covered peril. Complete boat insurance can help. And your boat policy may also protect you if you have jet skis. Call your local agent to discuss your coverage.

Hitting the open road

There’s nothing quite like driving to the beach or a nearby city during the summer to get a little change of pace. However, when backing out of the driveway, keep in mind that summer often yields more fatal car accidents than any other season. A number of factors contribute to this statistic, including:

Construction. Municipalities plan most of their yearly construction projects in the summer. When you encounter construction, be sure to adjust your speed and drive cautiously.
Increased traffic. Great minds think alike, meaning that tons of people want to take some sort of vacation now, too. It’s basic math: the more people on the road, the more opportunity for wrecks.
Young drivers. More kids get behind the wheel during the summer when school is out. Because they’re inexperienced, they may make bad decisions on the road.
The sun and heat do a number on your vehicle. Your engine has more opportunities to overheat, and your tires could blow out because the air in them expands due to the warm weather. Get regular maintenance to ensure your vehicle is operating properly.
More two-wheeled drivers. There are only so many months that cyclists and bikers can use their preferred modes of transportation.

Speaking of bikes, if you have a loved one who enjoys motorcycles or bicycles, make sure that they take proper safety precautions such as wearing a helmet and thick, bright, protective clothing.

In your own backyard

Summer cookouts bring together friends and family. But did you know that grill fires account for an average $37 million in damage, 100 injuries and 10 deaths per year, according to the U.S. Fire Administration? While fire typically is covered by standard home insurance, you don’t want to deal with one. To prevent grill fires, ensure that your grill is properly

cleaned and stored. Check hoses for cracks, holes or other faults, store propane tanks away from your home if you have a gas grill, don’t cover or put away your grill until it has cooled, rinse charcoal with cool water before disposing of it, and keep a fire extinguisher nearby. Don’t grill in an enclosed area. While grownups man the grill, kids may choose to jump around on the trampoline. Nearly 105,000 children visited emergency rooms last year for injuries caused by trampolines, according to the Consumer Product Safety Commission. To prevent injuries, don’t take shortcuts when assembling the trampoline. Furthermore, pad the bars, springs and the surrounding areas, and get the trampoline as close to ground level as possible to reduce potential impact if a jumper falls. Always supervise trampoline use, and let your insurance provider know about this type of addition to your home. You need a fence around it for the same reason you need one around a swimming pool on your property.

Pup protection

Dogs love to roam the yard when the weather is pleasant, but with more people out and about, too, your dog may feel the need to protect you. The Insurance Information Institute reports that more than $530 million in claims were paid in 2014 for dog bites — with an average payout of $32,072. If you have a dog, you need to make sure you have enough liability coverage in case it bites a guest or passerby. Keep Fido on a leash or in an enclosed area to reduce chances of bites. This summer, don’t cut down on the hot fun, but be sure to take steps to lower your risks while enjoying the great weather. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.

Everything You Need to Know About Jumbo Mortgages By Joe Szabo, Scottsdale Real Estate Team

July 26, 2015 Joe Szabo

By Joe Szabo, Scottsdale Real Estate Team Jumbo mortgages are more flexible than many home buyers realize, and typically have lower rates than most other available mortgages today. The guide below will help you understand what a jumbo loan is, and whether it’s right for your financial situation.

Origin of the term “jumbo mortgage”

Jumbo mortgages are also called non-conforming mortgages. These are loans that lenders make when a borrower doesn’t “conform” to the guidelines of Fannie Mae and Freddie Mac. Created by Congress in 1938 and 1970, respectively, Fannie Mae and Freddie Mac provide stability and affordability to the mortgage market by buying “conforming” mortgages from lenders, giving lenders liquidity to make more mortgages. Fannie and Freddie only buy mortgages meeting their guidelines for down payment, credit score, post-closing reserves and, of course, loan size. In 2015, the conforming loan size limit is $417,000 nationwide, with exceptions as high as $625,500 in certain high-priced markets. Loans greater than these limits are usually called jumbo mortgages or non-conforming mortgages.

Jumbo rates lower than conforming rates

Historically, non-conforming loans had rates at least 0.25 percent higher than conforming loans because lenders were perceived as taking more risk making non-conforming loans that couldn’t be sold to government-backed Fannie Mae and Freddie Mac, and this risk translated into higher consumer rates. However, a conforming/non-conforming rate paradox has been in effect the past two years, making non-conforming loan rates lower than conforming rates. Conforming rates haven’t fallen materially because investors in mortgage bonds that underpin Fannie/Freddie conforming loans have been betting that the U.S. economy is slowly improving. Meanwhile the economy hasn’t improved enough for the Federal Reserve to hike the rates that ultimately impact how much banks must pay to depositors. So banks currently pay less to depositors, and can therefore offer lower rates on non-conforming loans. The result of this (greatly simplified) market dynamic is that non-conforming rates have been about 0.25 percent lower than conforming rates for the past two years.

Jumbo approvals have gotten easier

In addition to non-conforming rates being lower, non-conforming loan approvals have some flexibility that conforming loans don’t have:

Less than 20 percent down with no mortgage insurance. Down payments on non-conforming loans have become more flexible, and can now be as little as 10-percent down for loan amounts of $1 million and sometimes higher, translating into a $1.1 million purchase price or higher. Unlike conforming loans, these low-down jumbo programs don’t require mortgage insurance. The tradeoff for this flexibility is that most lenders will offer a rate that’s 0.25-percent higher and require 30- to 36-percent debt-to-income ratios for these low-down jumbos.
Higher debt-to-income ratio. For anything 20 percent down or greater, lenders will verify that your total monthly housing payment plus all other monthly bills doesn’t exceed 43 percent of your income. This is a hard limit on conforming loans, but there can be some flexibility on non-conforming loans. For example, if you documented substantial savings left over after the loan closed, you might be able to get a non-conforming loan with a debt-to-income ratio of 46 percent.
Flexible income calculations. Non-conforming income calculations can be more logical than conforming. For example, if you were in the same industry for 15 years and recently started your own business in that industry, a conforming loan would require you to show two years of filed self-employed tax returns. A non-conforming loan might only require one year of filed returns if you could demonstrate that the business was stable or growing.
Credit scores. The requirements are about the same for conforming and non-conforming. A credit score down to 680 generally gets you most available loan options, albeit with a higher rate than you’d get with a top-tier credit score of 780 or greater.
Money left over after loan closing. This is often called reserves or post-closing liquidity. Non-conforming loans will be more stringent than conforming. Typically, lenders want to see 12 months of reserves after the close, half liquid (in a checking or savings account) and half calculated from retirement assets — compared to about six months’ reserves for conforming. Non-conforming exceptions are available if your debt-to-income ratio is low and your down payment is high.

Lower your payment as you pay down your loan

Some large banks that keep their jumbo loans (instead of selling the loans after they close) have begun offering a re-amortization feature on jumbo loans over $417,000. Re-amortization means that your payment will decrease as you pay your loan down. Depending on the lender, a loan balance pay-down from $5,000 to $20,000 will trigger a payment recalculation. This feature enables higher earners to lower their monthly budget as they chip away at their loan balance using extra income such as bonuses or stock compensation. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.

Making the Most of an Open House Visit By Joe Szabo, Scottsdale Real Estate Team

July 21, 2015 Joe Szabo

By Joe Szabo, Scottsdale Real Estate Team Open houses are the gold standard in real estate. They’ve been around for decades and will be ingrained in the buying and selling of homes for years to come. But as a buyer, are you making the most of your open house visits? Here are some best practices for buyers at all ends of the home-buying spectrum.

Use the open house to learn the market without committing

For the most part, open houses are just that — open. They make it possible for anyone to see a property in a certain time period, without an appointment or even being a very serious buyer. New buyers should leverage the open house opportunity to get a feel for the market. In today’s world, using online search tools, mobile apps and the open house, a buyer can start to get a feel for pricing and the market before committing to an agent. Most importantly, open houses are some of the best ways for buyer and agent relationships to start.

You don’t have to sign in (but don’t be rude)

The biggest fear of some newer buyers is that a real estate agent at an open house will be all over them, ask for their contact information and then start harassing them for the next three weeks. It does happen, but it’s also common courtesy to at least recognize and say hello to the agent at the open house. Don’t forget, in addition to trying to sell the home for her client, for safety reasons, the agent is keeping a look out for who is coming and going. It’s polite to say hello and introduce yourself to the agent, but you can also politely decline to sign in. If you’re an active buyer, you should make yourself known to the agent. Let the seller’s agent know who your agent is and don’t be afraid to express interest. When it comes time to review an offer with a seller, listing agents like to put a face to a name.

Watch the other buyers

You can tell a lot about the activity and marketability of a home by watching the other buyers. If you observe a lot of people walking in and out quickly, the home probably has some issues. Are the buyers hanging around, asking questions of the listing agent and huddling in the corner talking to their spouses or partners? If so, it could be a sign this is a well-priced and “hot” listing. If you’re interested, too, observing other buyers at the open house could help you learn about the competition.

Ask the agent questions

The real estate agent is there for a reason. It’s his job. If he is the listing agent, ask him questions. He is a direct line to the seller. He should know more than anyone about the property and the seller. Your agent can funnel your questions to the listing agent. But if you’re there, ask away. Watch the agent’s facial expression and reaction to your questions. If it’s a competitive market, ask questions such as: “Why is the seller selling?” “Is there a certain day to review offers or have you had a lot of showings?” In a slow market, ask how long the property has been on the market and what the seller’s motivations are. A good agent will engage you because it’s good for his seller.

Be open to meeting your future agent

When considering a new doctor, lawyer or CPA, you don’t get the chance to see them in their element until you’ve decided to work with them. Not true for real estate agents. Some of the best buyer/seller/real estate relationships begin at open houses. A good agent is wearing two hats at the open house. In addition to watching the serious buyers and getting feedback for the seller, an active agent is also looking to interact with future clients. Face to face, informal and relevant, the interaction with an agent at an open house is important. You can get a feel for a person just from a brief meeting. If you sense the agent could be someone you could work with, ask some open-ended questions, such as “How’s the market?” and “What areas do you cover?”

Why open houses have been around for decades

At any open house, there are people at every stage of the home-buying game, from just testing the waters to looking at homes daily, making offers and working closely with an agent. For someone new to the market, it’s helpful to know the best practices for visiting open houses and interacting with the real estate agent. For more experienced buyers, the open house is an opportunity to make a second or third visit, getting a closer look at the details and uncovering things you may have missed earlier. There are lots of reasons why open houses have been around for decades — and why you should take full advantage of them. Please note that this Scottsdale Real Estate Blog is for informational purposes and not intended to take the place of a licensed Scottsdale Real Estate Agent. The Szabo Group offers first class real estate services to clients in the Scottsdale Greater Phoenix Metropolitan Area in the buying and selling of Luxury homes in Arizona. Award winning Realtors and Re/MAX top producers and best real estate agent for Luxury Homes in Scottsdale, The Szabo group delivers experience, knowledge, dedication and proven results. Contact Joe Szabo at 480.688.2020, info@ScottsdaleRealEstateTeam.com or visit www.scottsdalerealestateteam.com to find out more about Scottsdale Homes for Sale and Estates for Sale in Scottsdale and to search the Scottsdale MLS for Scottsdale Home Listings.

June 2015 Scottsdale Arizona real estate market update