-- March 3rd, 2008 --
The Mendoza Team Takes Home Awards
By: Josh Mendoza
Recently the Mendoza Team attended the 10th Annual Keller Williams Realty Sonoran Living Awards Gala and was recognized on numerous occasions throughout the evening.
Multiple members of our team won awards and I’d like to take a moment to congratulate them.
Mike Mendoza, Dan Brown, Marlene Nanney and Joshua Mendoza all won individual production awards putting all four of them in the top ranks of our 300 person Market Center (which focuses its services on Ahwatukee, Scottsdale, Tempe and Chandler but also ventures out to Maricopa, Queen Creek and other Metro Phoenix Cities).
Mike Mendoza won the distinction of being the top-producing agent in the Market Center for 2007.
The Team itself was the top-producing team in our Market Center for 2007 with over 38 million dollars in team volume sold and closed.
Congratulations to The Mendoza Team and here’s to a successful 2008.
About the Author: Josh Mendoza was born in Chandler, Arizona and was raised in the Ahwatukee Foothills. He is a graduate of Stanford University and holds a degree in English with an Emphasis in Creative Writing. He joined the Mendoza Team in 2006.
BRINGING HOME RESULTS®
www.MendozaTeam.com
-- February 13th, 2008 --
The Deal with Dual Agency
By: Josh Mendoza
In Arizona, it is legal for a real estate agent to enter into what is known as dual agency, where the agent represents both the Buyer and the Seller. And just recently I had questions arise on one of my listings where I brought a Buyer to the home, showed it to them; they liked the home and decided to make an offer. Well, now I’m representing both sides of the deal – how does that work?
First of all, there are forms and documents to authorize this type of representation. When I took the listing, I told my Sellers that I was going to have them sign the “Real Estate Agency Disclosure and Election” form, and that I would be checking that I would be their “Seller’s Broker” with all of the fiduciary duties of “loyalty, obedience, disclosure, confidentiality, and accounting in dealings with the Buyer” which that implies but that I would also be checking that I may fall into the realm of a “Broker Representing both Seller and Buyer” known as “Limited Representation”. They were amenable to that because one of the reasons they hired me and the Mendoza Team is our strong community presence, multitude of Buyers in all price ranges and our ability to not only sell homes on the listing but also the Buyer side – they were hoping that in our efforts of marketing that we might be able to sell their home ourselves.
Beyond that simple break down where I may be representing both sides myself, there is another way that Dual Agency occurs. In Arizona, real estate transactions are between Brokers not Sales Agents. Now, two real estate agents who don’t even know one another may enter into a real estate transaction but they have the same brokerage thereby the same broker. In this instance, that too is Dual Agency and would fall under the guidelines of the above mentioned form.
When I take my Buyers out I make the same disclosures to them that I am going to show them all of the houses that fit their criteria and some of those may be my own listings or listings my brokerage has on the market; in this case, there may be Limited Representation and if they are alright with that they sign the same form as the Seller did and we get in the car.
Now when I drew up the Purchase Contract for my Buyers to purchase my Seller’s home, I had the two “Real Estate Agency Disclosure and Election” forms but we aren’t done yet, there is an attachment to the Purchase Contract which must be signed in Arizona, as well. This form is called “Consent to Limited Representation”. This form outlines for the Buyer and Seller that they are entering into an agreement in which one Broker represents either one or two licensed agents.
There is an outline of Duties and Limitations which I will outline below:
a) The Licensee or each Licensee represents both the Buyer and the Seller with limitations of the duties owed to the Buyer and Seller, such as:
1) The Licensee(s) will not, without written authorization, disclose to the other party that the Seller will accept a price or terms other than stated in the listing or that the Buyer will accept a price or terms other than offered;
2) There will be conflicts in the duties of loyalty obedience, disclosure and confidentiality. Disclosure of confidential information may be made only with written authorization. This does not relieve each Licensee of any legal obligation to disclose all known facts which materially and adversely affect the consideration paid by any party to the transaction.
3) Pursuant to A.R.S. §3202156, Sellers, Lessors, and Broker/Licensee(s) are not obligated to disclose that the Subject Property is or has been: (1) the site of a natural death, suicide, homicide, or any crime classified as a felony; (2) owned or occupied by a person exposed to HIV, or diagnosed as having AIDS or any other disease not known to be transmitted through common occupancy of real estate; or (3) located in the vicinity of a sex offender.
b) The Licensee(s) shall exercise reasonable skill and care in the performance of their duties.
c) The Licensee(s) shall be obligated at all times to deal honestly with all parties.
d) The duties of the Licensee(s) in this transaction do not relieve the Seller or the Buyer from the responsibility to protect their own interests.”
Those are the outlined duties. Basically, the real estate agent must approach the transaction ethically and carefully and make sure that both sides are represented to the fullest of their abilities.
Both forms I have mentioned in this blog put some of the onus back on the Buyer and Seller that they must read the documents they are signing. Good advice for any individual in any large scale transaction in writing.
About the Author: Josh Mendoza was born in Chandler, Arizona and was raised in the Ahwatukee Foothills. He is a graduate of Stanford University and holds a degree in English with an Emphasis in Creative Writing. He joined the Mendoza Team in 2006.
BRINGING HOME RESULTS®
www.MendozaTeam.com
-- January 31st, 2008 --
A Week of Short Sale Questions
By: Josh Mendoza
Terms of Acceptance for a Short Sale
The before mentioned Short Sale Addendum has some clear outlines for how a deal should proceed when dealing with a short sale.
Agreement Notice: This is simply when the Seller’s creditors and the Seller enter into an agreement to sell the property short. Once this occurs, the Buyer must be immediately informed.
Time Periods: In Arizona we have very clearly defined timelines for inspections, closing dates, etc, that if not adhered to, Buyers and Sellers alike waive certain rights. Now, as we’ve discussed before, these deals don’t happen over night and the Short Sale Addendum quite clearly states that it could take weeks even months for approval. Now, what about my 10 day inspection period which started ticking upon acceptance of the Purchase Contract? Good question. The Short Sale Addendum defines timer periods as beginning upon delivery of Agreement Notice from Seller to Buyer.
Earnest Money: Same as time periods. You, the Buyer, do not have to deposit Earnest Money with an Escrow Company until the Agreement Notice is delivered to you. Upon this delivery, Earnest Money is to be deposited “promptly”.
Loan Costs: Buyer’s are to be responsible for all loan costs according to the Arizona Short Sale Addendum. Those Seller’s Creditors aren’t going to be paying for your loan and they won’t be doing any repairs either. Be prepared for that as a Buyer when assessing the value of a property to you.
Seller Warranties: Again, the Arizona Purchase Contract outlines certain warranties which convey with the property from Seller to Buyer and certain warranties on items within a home which must be in working order upon conveyance of property to Buyer. Well, according to the Short Sale Addendum you waive these; quite simply, the lender is already taking a hit and they will not do repairs the home is being sold in “As-Is Condition”, however, the home must be in the same condition as when you, the Buyer, wrote your Purchase Contract.
Close of Escrow: According to the Short Sale Addendum: “Close of Escrow shall occur thirty days or (BLANK) days after delivery of Agreement Notice.
Side note: in may of the short sales I’ve taken part in, the bank, in their Agreement Notice, lays out their own Close of Escrow date which often does not match this afore mentioned 30 day Close of Escrow push out. What can you take from this? The Seller’s Creditors are in the driver’s seat and they often outline terms that fit their needs more so than fitting the Buyers or the Sellers. Be prepared.
About the Author: Josh Mendoza was born in Chandler, Arizona and was raised in the Ahwatukee Foothills. He is a graduate of Stanford University and holds a degree in English with an Emphasis in Creative Writing. He joined the Mendoza Team in 2006.
BRINGING HOME RESULTS®
www.MendozaTeam.com
-- January 30th, 2008 --
A Week of Short Sale Questions
By: Josh Mendoza
The Short Sale Addendum
In Arizona, we have an attachment to the Purchase Contract which must be included with short sale contracts. It’s sharply entitled: “Short Sale Addendum” and is provided to Realtors by the Arizona Association of Realtors (AAR). It concretely outlines the process for Buyers and Sellers in a short sale and outlines common items that are different in short sales than other real estate transactions.
First of all, the deal is “Contingent Upon Acceptable Short Sale Agreement”. What does this mean? Well you’re the Buyer and you submit a Purchase Contract to the Seller. They send you back a signed and executed Purchase Contract with an attached Short Sale Addendum. You bought the house, right? Not really. Because a short sale is a negotiation between the Seller and their lender, should the lender reject the offer, it’s dead.
The roll of this form is very important. Without proper delineation and disclosure of the short sale to the Buyer from the Seller, complex legal matters could and would ensue. The form quite clearly outlines the roll of Seller and Buyer: “Buyer and Seller acknowledge that there is more debt owing against the Premises than the purchase price […] Buyer and Seller acknowledge that it may take weeks or months to obtain creditor(s) approval of a short sale. That last part I definitely wanted to get in there: weeks or months. If you’re a buyer thinking about entering into a short sale then you have to be prepared for a marathon. These transactions do not close in a traditional 30 day escrow. They sometimes take multiple months to even obtain approval, let alone close. If you aren’t willing to wait, don’t waste the seller’s time.
About the Author: Josh Mendoza was born in Chandler, Arizona and was raised in the Ahwatukee Foothills. He is a graduate of Stanford University and holds a degree in English with an Emphasis in Creative Writing. He joined the Mendoza Team in 2006.
BRINGING HOME RESULTS®
www.MendozaTeam.com
-- January 29th, 2008 --
A Week of Short Sale Questions
By: Josh Mendoza
How Do I Qualify for a Short Sale?
A lot of people think they can simply put their home on the market, list it well under market value, get an offer and they’re a short sale. Not only is this wrong but it is a dangerous course of action if one is racing the clock of a foreclosure.
You have to be in communication with the bank. I cannot stress this enough. If you are a Realtor and are taking a listing that is a short sale, you must have written consent from the seller that you may access the account and have full permission to negotiate with the bank. That’s what’s this is, it’s a negotiation with the bank to take less money – don’t think they’re happy to just lose money.
So you’ve hired your real estate agent, and if you’re in Arizona you’ve obviously hired me to handle your sale with the Mendoza Team (shameless plug – I have to have a few of them), you’ve granted that real estate professional in writing the right to speak to the bank and we’re on the market, the sign is in the yard and we’re selling the home at a competitive price that is lower than what you owe.
The lending institution will have a lot of paperwork for you to fill out discussing your taxes, other properties you own, how much money you make, etc. If you have the money to bring your home current and not take the loss when selling then they’re going to want you to do that. So if you’re in a short sale, they want to know why. That’s why one of the items that must be included in your short sale packet is a “Hardship Letter”. This is where you discuss why you’re having to move, why you can no longer afford the property’s payments and why it is necessary to sell your home at a depreciated price.
And the part that a lot of people don’t know and when they find this out think twice about the short sale process: you have to be behind a few months on your loan payments. Through the process of having your home on the market you will receive letters and the bank will start the foreclosure process. It is entirely possible that in taking this course of action, you will be on the market, get an offer (you have to get an offer, you can’t sell your home short if no one wants to buy it), the bank may reject the offer and your home will be foreclosed on because you have defaulted on your loan and they’re repossessing the home to try and sell themselves whether it be on the market with a Realtor or through auction.
This is serious stuff, everyone. You don’t just sell your home short because it’s in vogue. This is a last resort for people who have had an unfortunate set of circumstances befall them. That’s why I stress discussing it not only with a real estate professional who aggressively markets homes and knows what they’re doing (don’t think everyone knows how to do these either, they’re complex, long and arduous processes that not all Realtors are adept at handling) but also with your financial advisor and possibly a lawyer.
About the Author: Josh Mendoza was born in Chandler, Arizona and was raised in the Ahwatukee Foothills. He is a graduate of Stanford University and holds a degree in English with an Emphasis in Creative Writing. He joined the Mendoza Team in 2006.
BRINGING HOME RESULTS®
www.MendozaTeam.com
-- January 28th, 2008 --
A Week of Short Sale Questions
By: Josh Mendoza
What’s a Short Sale?
I’ve been getting the question a lot lately: “What’s a short sale?”
It’s a good question; in the last couple years, with the retraction of home prices we’re finding a lot of people in a position where they need to sell and their home is worth less than what their mortgage value is (i.e. what they owe the bank to make good on their debt).
So, we receive an offer on your home for $300,000 and based on market conditions this is a strong offer and you should take it. Unfortunately you owe $325,000 on your note and you do not have the financial wherewithal to bring the note current. One option is to enter into a short sale where you, the seller, negotiate with the bank to accept an offer for less than they are owed. This is not as easy as it sounds but that’s the general gist of a short sale. When the home closes, the seller does take a credit hit but it is less than one would incur by allowing the bank to foreclose on your home. Because of recent legislation (discussed in an earlier blog) this debt is also forgiven on your taxes if it is a primary residence. If you’re short selling investment properties, the forgiven debt is still taxable income.
You should speak with a financial consultant and lawyer to make sure that this is the best option for you before pursuing it. And the bank is under no obligation to forgive your debt but it is sometimes in their best interest (banks lend money – they don’t want to own real property but if they believe they can garner a higher dollar on the auction block, they will do so).
About the Author: Josh Mendoza was born in Chandler, Arizona and was raised in the Ahwatukee Foothills. He is a graduate of Stanford University and holds a degree in English with an Emphasis in Creative Writing. He joined the Mendoza Team in 2006.
BRINGING HOME RESULTS®
www.MendozaTeam.com
-- January 11th, 2008 --
The Mortgage Forgiveness Debt Relief Act of 2007 (HR 3648)
By: Josh Mendoza
First of all, let me start out by stating: I am not a CPA. I do not hold a law degree in tax law. And that my statements, contained in this blog, are my opinions and gleanings on The Mortgage Forgiveness Debt Relief Act of 2007 based on my readings of newspaper articles, online publications, governmental websites and the watching of C-Span. If you have questions regarding how this Act can help you and your family, you should contact a certified accountant or tax lawyer.
This law was recently passed in Congress and signed into law by President George W. Bush on December 20, 2007. The law's intent, according to the President, is that it "will help [the effort to alleviate the housing crisis] by ensuring that refinacing a mortgage does not result in a higher tax bill" (whitehouse.gov).
According to the House's Ways and Means Committee (Ways and Means), there are four main focuses of the law:
- Permanent exclusion from gross income of discharged home mortgage indebtedness
- Long-term extension of the deduction for mortgage insurance.
- Modification of the qualification tests for cooperative housing corporations.
- Modification of exclusion gain on sale of a principal residence.
A more in depth description of each bullet point is provided in the above link, "Ways and Means". The reader's digest version is as follows: this law ammends the current law which requires that any debt forgiven by the bank (such as in a Short Sale of a home - selling one's home for less than is owed the lender to avoid a foreclosure) cannot be taxed. In the past, all debt forgiven was taxed as 1099 income. This exlusion only applies to an individual's personal residence. It extends an individual's ability to claim a deduction on morgage insurance out to seven years. The law simplifies qualification standards for CoOp housing. Finally, it broadens the use of an individual's free taxable income from a primary residence (and loosens the parameters to qualify a home as a personal residence). An individual has, for some time, been able to transfer $250,000 profit and $500,000 profit for married couples, respectively, from a sold primary residence to their next primary residence and not incur a tax bracket increase and a loss of said gain. This bill widens the interpretation of that preexisting scenario.
The President is optimistic in what these changes will do for the United States and hopes that "by taking these steps, we can help our homeowners -- and we'll help more Americans become home owners. We want people to have a place they can call their own. After all, it's an essential part of the American Dream. And we want that dream to extend throughout our nation" (whitehouse.gov).
This is not a fix to the housing market but it is a help to the families who must suffer and endure the hardship and stress of possible foreclouse. Also, it creates an instance where it is more desirable for the bank to negotiate terms and extend out mortgages rather than refusing to change the terms of an individual's loan.
With recent changes in the housing market, a continuation of the rise of foreclosures, and the collapse of multiple lending firms, this bill is a positive step to end the 2007 year. With recent news of Bank of America set to purchase Countrywide Mortgage (cnn.com) for $4 billion, there is optimism in the market. There is also negativity, Bank of America obviously plans to take a loss with the hope of future profits and has plans to become the nation's leading and premier lending firm. Howerver, there is a horizon and hopefully this law will help families rebound from troubled times and they try to alleviate the strains of a saturated market with the necessity to sell their home.
About the Author: Josh Mendoza was born in Chandler, Arizona and was raised in the Ahwatukee Foothills. He is a graduate of Stanford University and holds a degree in English with an Emphasis in Creative Writing. He joined the Mendoza Team in 2006.
BRINGING HOME RESULTS®
www.MendozaTeam.com
-- January 3rd, 2008 --
2008 Ahwatukee / Foothills Real Estate Market Update
By: Josh Mendoza
First of all, Happy New Year.
Now that that’s been taken care of: on with the show.
Currently in the Ahwatukee / Foothills (which is defined as the area West of the I-10 freeway, North of Pecos Road, South of South Mountain and, until Pecos does or does not become the 202 freeway, the end of Pecos Road and Chandler Blvd) there are 665 active single family homes for sale. Now, some of you may be panicking and thinking this is more of the same from 2007. Well, you would be partially correct in that thought but knowledge is power and since mid-Summer of 2007 the Ahwatukee / Foothills has been fluctuating between 750 and 850 homes for sale at any given time. So with that in mind, a drop in the Real Estate inventory leads one to be optimistic for the New Year.
There are 19 homes that are Active with a Contingency in the Ahwatukee / Foothills area. This simply means an offer has been placed on these homes and they are Contingent on an inspection being completed, the sale of a home, or some other item that gives the Buyer the ability to cancel the Purchase Contract without fear of jeopardizing their earnest money. Of these 19, 14 are pending an inspection – which, in Arizona, is quite common. In Arizona, a Buyer is given a 10 day “free look”. What I mean by that is the Buyer can put an offer in on a home and have 10 days to inspect the Real Estate and cancel the Purchase Contract for whatever reason they see fit.
As I type, there are 61 homes that are Pending in the MLS system. These homes are homes that will be closing sometime in the next 30-60 days (on average) and which have passed their inspection period. This number by itself does not mean a lot but when taken in conjunction with our Active listing number we can calculate a consumption rate of our current market. The ratio of Active homes to homes Pending sale is 665 to 61. That calculates down to approximately 10.9, give or take a few decimal points. In real estate, we say that currently there are about 10.9 months of inventory on the market. Basically, if everything remains the same as it currently is it would take us 10.9 months to remove the current inventory from the market. A neutral market has 6 months of inventory. Now, we can be slightly more optimistic and take the ratio of Actives to Pendings and the Active homes with Contingencies - one could argue that these homes do have offers and may sell in the next 30-60 days as well. (On a side note, I would argue one should never take a Contingency that is longer than 30 days. And really, in the market we are experiencing in Phoenix, Arizona, I would say that it should be less than three weeks. Anything longer takes your home off the market for too long and, quite frankly, prices are competitive and are dropping to meet Demand. My argument would be to tell our would be Buyer of said property to go complete their contingency (which is most likely to sell their own home) and if we’re still on the market when they complete that transaction we’ll sell the home to them then. Beyond that, in this market, do not take an offer which is contingent upon the successful sale of a home, if the would be Buyer is not already under a Purchase Contract for their home you’re simply waiting for them to sell their home rather than trying to sell your own. It’s simply not good business). Anyway, the more optimistic ratio is 661 to 80 which calculates down to about 8.3. 8.3 months of inventory is starting to bring our number closer to 6 months which is what one would consider a normal market.
Another interesting statistic is that the Average Days on Market (ADOM) of the Pending listings (remember there are 61 of them) is 169 days, or just under 6 months (180 days). Which is what you would expect in a normal market (i.e. if you have 6 months of inventory it would take your home just under 6 months to sell your home). One could argue that the homes which are finding Purchase Contracts and going to the Pending status are finding a price in the market which allows them to lean towards a normal market. In any market there is an equilibrium point of price to demand. Many people blame the Phoenix market for their Real Estate not selling but inevitably it comes back to the fact their home is overpriced and, if anything else, most likely does not show well. The correctly priced "nice homes" sell in any Real Estate market.
All in all, 2008 seems to be getting off to a decent start. Hopefully now that we’re through the holidays (our slow time in any market) we’ll start to see more pick up in Buyers and a higher ratio of Pending Real Estate. The bottom line is that we will not be able to see a huge rebound in the market conditions until we are able to get the number of homes on the Real Estate market to drop. With such a high inventory, even with a lot of Buyers, there are simply too many choices and it drags out the process and allows homes to linger.
My New Years resolution for 2008: get the number of homes on the market to drop. And every REALTOR should aspire to price homes properly within the Real Estate market – even if Sellers don’t want to hear what their home is truly worth.
About the Author: Josh Mendoza was born in Chandler, Arizona and was raised in the Ahwatukee Foothills. He is a graduate of Stanford University and holds a degree in English with an Emphasis in Creative Writing. He joined the Mendoza Team in 2006.
BRINGING HOME RESULTS®
www.MendozaTeam.com
-- November 28th, 2007 --
The Rise of the Real Estate Blog: BlogDoza
By: Josh Mendoza
In honor of the quintessential essay format, it seems only appropriate to define a “Real Estate Blog” in this my first entry of the Mendoza Team Real Estate Blog (more fondly known as BlogDoza).
Merriam-Webster’s online Dictionary defines a blog as “a Web site that contains an online personal journal with reflections, comments, and often hyperlinks provided by the writer” (Merriam-Webster, http://www.m-w.com/, 2007). Furthermore, real estate is defined as “property in buildings and land” (Merriam). (I thought it only fitting, seeing as we’re online, that this blog use the online dictionary to cite from and throw a hyperlink in there for good measure). Fittingly, this website will be my musings, observations and opinions on property, buildings and land. More specifically those opinions, while sometimes broaching into the national arena, will focus more predominantly on the Metro Phoenix real estate market here in Arizona.
Now that that’s out of the way, I’m sure some of you are asking another obvious question: what is the Mendoza Team? Well I’m glad you asked. The Mendoza Team is a real estate group that has been selling homes in the South East Valley of the Metro Phoenix area for the last 25 years (for a more detailed account of the Mendoza Team’s history, stay tuned for future blogs). Our concentration is mainly in Phoenix (specifically the community of the Ahwatukee Foothills), Chandler, Gilbert, Scottsdale, Tempe and Mesa. We do move outside of this geographical setting but those cities comprise our omphalos of business.
I’m excited to be launching this Real Estate Blog in conjunction with our revamped website at http://www.mendozateam.com/. And I look forward to sharing what I glean from my everyday experience in selling real estate here in Arizona.
About the Author: Josh Mendoza was born in Chandler, Arizona and was raised in the Ahwatukee Foothills. He is a graduate of Stanford University and holds a degree in English with an Emphasis in Creative Writing. He joined the Mendoza Team in 2006.
BRINGING HOME RESULTS®
www.MendozaTeam.com
