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Plan on Buying, Selling or Working in Real Estate: A must read on the changes from TRID as of OCT 3

This post is for anyone who plans to buy, sell, or work in Real Estate for the state of AZ as of Oct 3rd 2015.  It is based on new national legislation.  It effects everyone!  TRID (Truth in Lending, Real Estate Settlement and Procedures Intergrated Disclosure) has made changes to lending practices and thus AZ Real Estate Contract and forms have changed.

In this article you will quickly learn how the changes effect buyers, sellers, agents and brokers for the foreseeable future.

Buyers, great news for you!  These changes are aimed at protecting you and giving you better information.  With that, however, you have a couple additional requirements, and some things to make sure you do to avoid breech of contract situations.

First let's take a look at the sample form posted below of the AZ Prequalification (PQ) Form.   Any agent worth their time will tell you that you need a pre-qualification prior to showing you properties. Lenders in AZ will be well versed in this form, and will have it on file for you when you schedule a visit with them.  If your lender is out of state, ask them if they have the form, or would be willing to use it.  If so, make sure to get them a copy.  (hint, most agents will do this for you, just send them your lender's contact info- they will need it!)  Second hint for buyers, make sure to research your lender. Consider checking to see if they have had disciplinary actions filed against them.  The CFPB publishes articles and a simple google search will yield this information.

Now, for the changes.
Lines 3-5  This is all new.  If you do not have a PQ you will fill this section out.  To submit an offer on a property you will have to have this completed document with-in 3 days of your offer.  As a real estate agent, I would advise my client to refrain from accepting any offer without this form completed, unless it was a cash sale.
Line 6, refers to lines 36-37 of the lender information section.
Lines 36-37 have changed in that they now include the license numbers of your lender.  I speculate that this is to help CFPB (Consumer Finance Protection Bureau) investigate any lenders for misconduct.
Line 23 has changed in that is specifies the loan features.
Line 31, informs the buyer and lender of their new responsibilities.  For a buyer, you will have 10 days to shop, select and instruct your lender that they have been chosen.  The buyer will need to provide their lender with the necessary documents to proceed with the loan they have chosen,  and make sure their lender sends their real estate agent a Loan Status Update(LSU) form.  Agents, both buyer and seller agents, need to make sure they are receiving the updated LSU forms from the lender involved.  Seller agents, if you haven't seen a form, I would be contacting the buyers agent!

The Residential Purchase contract has changed as well.  For the purpose of time, I have only included the related changes and not the entire Residential Purchase Contract.  The first change occurs on page 2.

Line 2a, specifies that the contract is submitted with the AAR Pre-Qualification Form.  There is no longer a check box.   It is a requirement. 

Line 2b, specifies changes in closing documentation time frames.  3 days (days are defined as "substantial work days") buyers will need to sign all loan documents, and sign that they received closing disclosures. Real estate agents and brokers, a working relationship with the lender for your buyer will need to be established in order to make sure a.) the lender has the appropriate AZ contract forms b.) you know their work schedule to determine substantial work days c.) you can keep them abreast and vice versa for the new timelines and document delivery.   In the event that the loan was not successfully obtained, the buyer will need to deliver to seller or escrow company notice that the loan was not obtained.  If there are issues with closing documents or loan documents and corrections need to be made, then the three day time period will need to be restarted.  Please note that the time frame of three days starts at delivery of the documents.  Some lenders may chose e-mail, but if the buyer does not review and acknowledge those documents within 24 hours, they may choose to send the documents via the mail.  If documents are sent via the mail, it will add to the time frame, an additional 3 days.  These time frames are a portion of what will be extending Close of Escrow time frames, hopefully temporarily until the new system runs smoothly.  

Line 2 c, the LSU must be delivered by the buyer with in 10 days of contract acceptance.  In this case 10 days are calendar days since we are referencing the AZ contract.  Just a side note, buyers must also instruct their lender to provide loan status updates to broker and seller upon request.

Line 2 f, outlines a change in lending as well.  Buyers will need to provide their lender, with in 3 days of contract acceptance ("substantial work days"), 6 pieces of information as included in the lines referenced.  

Line 2 g, informs the buyer that with in 10 days receiving the Loan Estimate the buyer will inform the lender they intend to proceed with the loan, provide the lender all requested documents, and will work to obtaining the loan promptly.  This 10 day window ("substantial work day") is to allow buyers to compare loan estimated from different lenders, allowing them to shop the best rates or packages that work for them.  Since the loan estimate forms have changes this process will be much easier for the buyer.  

Line 2 l, specifies that if the buyer should chose to use a different lender, during the escrow process, they must first provide prior written approval from the seller.  If this consent is not granted the buyer proceeds to change the loan, this would be cause for breech of contract.  

Sellers, why should you care?  Well mainly because these changes effect your timeline for closing. The Arizona Association of Realtors is recommending agents create contracts with a 45 day Close of Escrow until the "kinks" are worked out and the timeline can be reduced.  

The last page of the Residential purchase contract has been changed as well

This page is a change that effects real estate agents and brokers.  The most noticeable change to the form is the inclusion of license numbers.  Again, I speculate this will help the CFPB keep track of any investigations they may wish to pursue against agents who fail to follow TILA and RESPA disclosure practices.  

The last two documents I am including below are really the prize for consumers.  Buyers will now be able to easily compare Loan Estimates from a variety of lenders, and will be able to easily compare their Closing Disclosure to make sure that the numbers match up.  These new forms are easy to read, and should help buyers know exactly what they have "signed their life away" for.  Please see sample copies below.  I personally think that these documents are awesome and look forward to being able to use them in my personal real estate purchases.  

In summation, these are important changes in real estate and especially will be helpful for the buyer, but effect everyone in the process.  Of course if you have any questions please call!  We'd be happy to help.

Three Ways to start buying Real Estate like an Investor

This is the first in a three part series on real estate investment

Part One: 

See Potential in Properties

Finding the Deal

                Finding distressed properties is an important part of finding a priced below market value.  Many of you may remember the abundant foreclosure and short sale market from a couple of years ago.  While there are still some of these properties that exist, the numbers are much lower than they were, and banks have started to do some basic fixes that they were not previously doing, making these properties more marketable and therefore the profit potential much slimmer.  Instead of finding a deal in the foreclosure market, look for properties with the 3 D’s.  Death, divorce, and disease are three types of situations that may force the hand of a seller to take a reduced price on a property with the hope of a quick sale.  This can be a major factor helping you to negotiate and score a great price on a property.  Another great strategy would be to find a property in distress may be searching tax records on properties.  Finding properties that have tax liens through the county assessor’s office due to delinquent taxes is potentially a longer term procedure, but could yield high profit margins. 

Location, Location, Location

                The old real estate adage still rings true.  Property located in desirable markets is worth more than less desirable areas.  Make sure that the location fits the intended purpose of the property.  If purchasing a property for a business, how much foot/car traffic passes by the property on a daily basis?  When purchasing a residential investment, find out the neighborhood market values.  It is best to purchase the least expensive home in the best neighborhood versus the most expensive home in the neighborhood.   Have your real estate agent run a CMA (comparable market analysis) to determine market values for the property.  If the property is selling for below market value, you MAY have a good investment. 

Is the property worth the risk?

                Determining the risk factors of your investment will mean doing some more research on the property.  There is most likely a reason the property is priced below market value.  If the property will need remodeling, it is best to contact a contractor to have them walk the property with you.  They can help you determine what the costs associated with improving the property would be.  Make sure to have all permits and license labor costs upfront.  Unless you have a cash project, you may need to look at your carrying costs while remodeling as well.  Having a timeline and deadlines will help keep your project and budget on track.   Many savvy investors like to earn their profits with a little “sweat equity”.  Our next topic in this series will be focusing on the changes you can actively take a part in and when it might be best to hire some help.  

Falling in Love- Online: Beware!

It's true, just like a bad match from E-Harmony,  a property posted online that looks "too good to be true," may be just that.

As a real estate agent when I list a home, I like to hire a professional photographer.  Why?  I know that most home buyers start their searches online.  Pictures are a great way to visualize what a home has to offer.  A professional photographer uses their skills and knowledge to highlight the homes the best way possible.  They take pictures at the right time of day for the best lighting, they use wide angle lenses making rooms appear larger, they Photoshop or other editing software.  The results are amazing and often a home can look even better than it does in person.  So while it is fine to start your search online, make sure that you actually have an agent preview the home with you before "moving in" mentally.

Looking online provides aspects of the home that the listing agent or homeowner want you to know about.  It does not give you a sense of how the home flows from room to room, or how it might fit your lifestyle.

In short, once you have identified a home that you think may have potential, it is best to give us a call and take a quick tour.  It may reveal that the home really is your dream home, or that it was just smoke and mirrors!

Thanks Great Colorado Homes for the wonderful info-graphic.

We DOUBLE DOG DARE YOU- Join our Prescott Fun Challenge

There are so many amazing things to see and do in the little town on Prescott and summer is the perfect time to get out with friends and loved ones and experience what our town has to offer.  With the recent completion of the Prescott Circle Trail, Amy and I would like to challenge all of you to get out of the house and hike, run, or bike a section or the whole ginormous trail!  It is 68 miles from start to finish!
The section we are highlighting today is from the Peavine Trailhead at the intersection of Sundog Ranch Rd over to the Turley Trail Head.  It offers lots of fun climbs, breathtaking views, for you bikers, wicked fast descents(be careful for other trail users).  From Sundog to Turley, it 8.3 miles and a little over 1200 feet of climbing and it took me about an hour to ride with another 10 minutes back to the trail head via Yavpe Connector.  I've done the trail as an out and back, and it took me about 2 hrs.
Hope you enjoy this trail as much as I did!!

The line in the map indicates the Turley Trail Head.  Also, the elevation gradients are 5000 - 6200 feet
at 200' each.

Not into biking- try hiking a section.  A group of our friends recently hiked the entire trail and backpacked along the way!  Way to go Carlisi's!!
Take a quick Selfie- or Groupie and post it to our FB page or Instagram with the #PrescottFun

620 ft

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Top 3 Reasons for you to love Productive Landscape

Productive landscape- just what the heck is it?  According to Team Maneely, with Homesmart Fine Homes and Land, productive landscaping is anything added to your landscape that produces a benefit for the homeowner.  It can be as simple as a fast growing shade tree creating a little relief from the intense mountain sun, or as involved as a floral arrangement used to attract hummingbirds.

For Team Maneely, we prefer to have a landscape that helps produce food for our family.  Our backyard contains six different fruit trees.  We have two peach, two cherry, an apple and a pear.   And this year our cherry crop is amazing, and it looks like the apple and peaches are well on their way too.  The poor pear just never seems to grow beyond microscopic size.  Along with our fruit trees we have an herb garden complete with rosemary, thyme, and mint, a large section of arugula, and a thorn free blackberry shrub .  We have been busy preserving our cherry harvest by canning. 

TOP THREE REASONS TO LOVE PRODUCTIVE LANDSCAPE

3.)  Give your property an edge and added value by having your landscape serve a unique purpose.  Love butterflies?  Make sure to incorporate the flowers they seek.  Enjoy bird watching? Include a feeder or bath to attract them.  Fancy yourself an Italian foodie?  Plant some tomatoes and make a sauce to knock the socks off your guests.  If you enjoy it, it is likely that others will too!

2.) Productive landscape creates a unique space.  I remember watching Dennis the Menace as a child and his affable elder neighbor Wilson spent a great amount of time with his prize garden.  At some point he even had created an award winning space as deemed by the garden society.  If you have a productive landscape chances are you have created a unique space that can be used as a selling feature for your real estate agent to highlight in marketing your property to others.   

1.)  Landscape that is productive serves a greater purpose.  We a little thought and ingenuity, you can have space that is even "brown thumb" friendly and easy to maintain but still serves a greater purpose.  For instance, here in Prescott Arizona, we conserve water.  Maybe your productive landscape are plants that are drought tolerant.  Perhaps you have added a water cistern to help collect rainwater for landscaping.  Both the rainwater collection and drought tolerant plants are productive landscape and will serve a greater purpose for potential buyers.  

Looking for a deal?

Head over to StoneRidge this weekend for the annual community garage sale.  The sale takes place Saturday May 16 from 7 a.m- 2 p.m.

One of my favorite parts of spring and summer are all the yards sales!  I have included some quick tips for both sellers and buyers to help you enjoy "sale-ing"

Seller Strategies

1.) Prep work:  Lots of work goes into a garage sale.  Make sure to remember old grocery bags for purchases, and change from the bank.   I generally get change for $100 in all denominations.  We save our change, so coinage is easy for us.  If you don't save your change, make sure that you have some of that on hand too.

2.)  Keep pets away from the sale.  Sure Fido is super cute, but some people are afraid of pets or may have allergies.  Safety is also a concern since there will be extra traffic.

3.)  Have a "Free" box at the end of the driveway.  Everyone loves something free.  I typically have mismatched items, small toys, etc in my free bin.

4.)  Lure traffic.  Put your best items close to the street.  Many people will drive by if they don't see items worth stopping for.  

5.)  Price appropriately-  Items should be about a third of their value.  Make sure large items, like a couch, have a large price sign.  

6.)  Consider allowing your kids to host a lemonade stand.  Often times, their lemonade stand is the most successful portion of our yard sale!  Plus with summer on the horizon, it gives them a little "mad cash" to spend on summer fun.

Buyer Strategies

1.) Dress appropriately, wear comfy shoes, and use sunscreen.  Bring your own sturdy shopping bag.  Make sure you have small bills and change.  You may wish to have newspaper in your car to wrap fragile items.  Tape measures are a good tool to have as well.

2.)  Arrive early for best selection, later for best deals.

3.)  If you are shopping for kids sporting equipment like cleats, draw their current shoes on a piece of paper to take with you.  

4.)  Let your kids pay for their items.  This is a two fold strategy.  Often kids will get a better price than a parent.  And it is a great learning opportunity for budgeting, math, and checking for correct change.

Tips and Tricks for a Smoother Loan Process VLOG #1

Welcome to our first Vlog!  Watch this video for some quick tips on lending.  Buying a home can seem like an overwhelming process and this is a good place to start.  There are many lenders to choose from, but they are not created equal.  Give us a call and we will help you find the best in the business while purchasing a home in the Prescott area.  You can check out more video on our YouTube channel "Mr. Prescott Real Estate", while you are there subscribe and keep up-to-date on real estate related news.

Have a great day and enjoy spring break!

Jason and Amy Maneely                                     
Team Maneely@gmail.com
928-925-6050-Jason
928-830-8282-Amy
www.TeamManeely.com

Home Inspection 101

When you buy a Prescott area home, you need to know exactly what you’re buying. Imagine how frustrated you’d be to find out that the hot water heater wasn’t working—in the middle of a shower! This is why you should have a home inspection before you buy your home. A home inspection is an important part of buying your home. Before you hire a home inspector, ask candidates a few questions to make sure you hire a trustworthy inspector.

1. What does your inspection cover? Not all inspections are the same. Ask for copies of previous home inspections so you can see exactly what they will check inside a Prescott area home. If you are concerned about something specific, like a leaky faucet in the bathroom, mention that to the inspector so they can check it out.
2. Are you licensed or certified? If you live in a state that licenses home inspectors, ask to see their license. At the very least, choose a home inspector who belongs to American Society of Home Inspectors. This shows a level of professionalism and education that you can trust.
3. What kind of report will you give me? You should expect a written report detailing what the inspector found. Most inspectors will give you a typed report within a week of the inspection. Make sure the inspector will be available to explain anything on the report that doesn’t make sense to you.
4. Will I be able to attend the inspection? If the inspector refuses to let you be present during the home inspection, find someone else. This is your chance to know exactly what you are buying and what potential repairs you or the seller will have to make.

As your real estate agent, I will guide you through the home buying process. Let me help you find your new Prescott home. Call me today at 928-925-6050 or email me at teammaneely@gmail.com.

Invest with the Best!

   Years ago, we advertised this as a great investment, just hoping to sell it.  We advertised it on FB, we blogged about it .  We tried to sell this bad boy ourselves to no avail.

Duplex exterior before 

Duplex living room before

Duplex bedroom before

Then, it happened! It dawned on us, why don't we buy this funky little duplex.  It was a banked owned property.  Bank was asking about 70 K and we eventually settled on 55K.  Cash sale, quick close, as-is.  The diamond in the rough was now ours.
We did some quick renovations since the property was vacant.  All new paint on the exterior.  I think Jason must have chalked for two weeks straight!  We had a couple contractors over to fix up the stucco on the exterior where AC units were installed.  Ripped out all the carpets, installed new laminate and painted the interior.  Some newer appliances rounded out the reno and we were ready to rent. Wham- bam- thank you mam!

Laminate flooring after (did this in all carpeted spaces)

Having previous experience both as commercial and residential landlords, screening your tenants is a must.  This little property was easy to rent and was fully rented for the entire two years we owned the building.  As time went on our rents increased from the low $500 to $625. (Just between you and I, our secret to high rent is that we allow dogs.  This is the major reason we use hard surfaces on our units)  We just closed escrow yesterday.  We sold our property for 135K, cash, 21 day close.  A great deal for both of us.

Breakdown:

55K for one funky duplex
+7K in renos, repairs
62 K invest

127K cash return on sale (135 k minus Realtor and Escrow Fees)
+25K in rents
152K

90 K Profit!  (not including tax depreciation write offs)

Stay tuned, we have another investment project coming up that will be taking us in a new direction....