 Ever heard of a seller carry-back? Quite possibly not. The house pictured here is offered as a seller carry-back.
The best way to describe it is when the seller of a property “carries the loan” instead of a bank.
So, imagine you are the buyer of a home. Instead of going to a bank to get money to give to the seller, you just pay the seller in installments. The seller and you figure out what your interest rate will be and how long he or she will carry the loan. Let’s say 10 years at 6% interest, amortized over 30 years.
Huh?
Let’s look at that again. You calculate the loan based on a 30-year term. You pay monthly installments as if it is a 30-year term, but the balance of the loan will come due at the end of 10 years.
So, let’s say you buy a $200,000 house with a seller carry-back, and you put down 10%. You amortize at 30 years and the seller charges you 6% interest. Your monthly payments will be about $1,100.
At the end of about 10 years the balance will be somewhat more than $100,000. At that point, you either come up with cash or you get a loan from a bank.
The entire time, a title company takes a small fee and keeps track of the payments for you. So, it is safe for the buyer.
If you can’t buy the house at the end of the 10 years, the house goes back to the owner. So, it is safe for the seller.
Who uses this?
1) People who can’t get a loan. In the early 1980’s the average bank loan interest was somewhere around 15%. So many people did seller  carry-backs and left the bank out of the equation all together. They made a private deal between the buyer and seller.
2) Co-op owners. A co-operative is kinda like a condominium, but you can’t get a loan on a unit in a co-op. Long story. So, it is either cash or seller carry-back only.
3) Family members. Sometimes families or trusts will do seller carry-backs so that they can sell something without the bank involved. That way the profit from the interest payments stays in the family.
4) Investors. I have met investors recently who buy homes, then do a seller carry-back with somebody, knowing that that person could get a loan later, but now now. This gives the investor a stream of income on their property.
5) Sellers who don’t want to sell in this market. If the market average is $140,000, you, the seller paid off your home a long time ago and you don’t want to sell at that price, you can sell at a higher price to a person privately. The price is higher than you can get right now, but lower than the buyer could probably get 10 years from now.
Why is this relevant?
I’m in awe that we are not doing more seller carry-backs. Hundreds of thousands of people who have lost houses due to foreclosure or short sale have bad credit but are not necessarily a risk to the seller. If you can’t deal with the bank deal with a human being!
I think the only reason we don’t see more is because so few people know about this tactic. It was 30 years ago that they were last seen commonly.
Could you imagine what the housing market would look like if we could get more buyers buying up some of the lost and forlorn homes? Many buyers can’t get it from a bank. But if an investor buys a home from the bank and a buyer can buy it from the investor on reasonable terms, why not? If you write a contract and have a title company manage the payments, then you are safer. (Never do a seller carry-back on a handshake!)
How do you find them?
The Multi-listing Service has a tag for homes where the seller is willing to do a seller carry-back. All I need to do is look for you. Please shoot me an email at realestate@kenclarkforaz.com and I’ll have a look.
In an era when we all feel pretty stung by the banks, I am surprised that we are not doing more of these. Maybe this is a great way to vote with our wallets and tell the banks what we think of them!
 Historic preservation “Grande Dame” G.G. George was highlighted in this spanning piece in Phoenix Magazine about the history of historic preservation in Phoenix.
Y’know, I like to think I have a good grasp on historic preservation. But comprehensive articles like this one really punctuate what a long struggle it has been to preserve our most unique neighborhoods in Phoenix. We have a way to go still in some neighborhoods. But we should all tip a hat to those who came before. They are the ones who presented us with this jewel in the middle of a creeping metropolis that we have come to take for granted.
It is in their name that we should go toe to toe against people like Sen. Linda Gray, who want to undermine historic neighborhoods in Phoenix.
Enough from me. Please read this article.
 Join your host committee for the annual Solstice Eve to support our friends on Roosevelt Row in Downtown Phoenix.
Friday, May 21, 2010
5:00-5:30pm – Hosts’ Reception
5:30pm til it’s over – Solstice Party!!
PTE Offices at 1017 N. Central Ave
Light Rail stop at Roosevelt
Tickets for this special event are $50 each and include food from Athenian Express, Four Peaks beer, fabulous Arizona wines, and an evening of fun.
This year we will have an incredible selection of artwork AND one-of-a-kind experiences in a silent auction.
Roosevelt Row Community Development Corporation started in 2001 as an informal affiliation of galleries and art spaces along East Roosevelt Street. A more formal corporation was established in 2005 to further the unique character and assets of the area, to advocate for the continuing role of the arts in the revitalization of downtown Phoenix, and to foster a dense, diverse and walkable urban environment.
This fundraiser allows them to build programs like Phoesitval’s on First Fridays, gRow House, Roosevelt Row Community Garden, Mural Match / Eyes on the Streets – a program matching artists and building owners, and Community Phoestivals.
Tickets are limited and your donation is tax deductible.
This from the Historic Neighborhoods Coalition…
Will Phoenix Abandon Its Historic Neighborhoods?
 Sources at City Hall indicate that the movement progresses to make the Historic Preservation Department a part of a larger department. An appropriate department combination would be Historic Preservation with Community and Economic Development. As a nationally recognized asset to Phoenix, our historic neighborhoods have proven their economic value with the Home Tours and the Historic Neighborhoods Map utilized by many in the community.
While the Historic Preservation Office (HPO) may no longer be able to be an independent Department, under no circumstances should it be combined with the new DSD/Planning. An attorney has said that his zoning attorney colleagues are basically “licking their chops” over this proposed combination.
Without a strong commitment to preservation on the part of the City Manager’s office and the Mayor and Council, the stability of the historic neighborhoods and the economic progress we have generated in the last decade will be lost.
Historic Preservation is good business, a proven Community and Economic Development driver, and should be recognized as such in any reorganization.
While there is still time, we are asking every neighbor to please send the above message by email or calling the following:
City Manager David Cavazos david.cavazos@phoenix.gov 602-262-7958
Deputy Manager David Krietor david.krietor@phoenix.gov 602-262-7957 or
His direct line for messages 602-262-6853
Executive Assistant to the City Manager Lisa Takata lisa.takata@phoenix.gov
602-262-6941
Mayor Phil Gordon mayor.gordon@phoenix.gov 602-262-7111
Vice Mayor Michael Nowakowski council.district.7@phoenix.gov 602-262-7492
Councilwoman Thelda Williams council.district.1@phoenix.gov 602-262-7444
Councilwoman Peggy Neely council.district.2@phoenix.gov 602-262-7445
Councilman Bill Gates council.district3@phoenix.gov 602-262-7441
Councilman Tom Simplot council.district.4@phoenix.gov 602-262-7447
Councilman Claude Mattox council.district.5@phoenix.gov 602-262-7446
Councilman Sal DiCiccio council.district.6@phoenix.gov 602-262-7491
Councilman Michael Johnson council.district.8@phoenix.gov 602-262-7493
Immediate action is necessary to protect our historic neighborhoods.
OK. I don’t have a degree in economics. I’m just a lowly real estate agent. But these guys over at ASU are only now saying that home prices are going up and I think they’ve spent a little too much time away from the light of day!
“The March figures also show the first monthly increase in the median price of non-foreclosure homes since the end of 2007,” said ASU Professor Karl Guntermann, who is the Fred E. Taylor Professor of Real Estate. “This may signal the start of price stability throughout much of the housing market.” (4/28; Phoenix Business Journal)
This is great news, but I still maintain that prices have been going up, albeit slightly, over the past year.
Here is the data, directly from the Multi Listing Service:
I think it might be that the folks at ASU are reporting prices for active listings, not what that actual sales prices were. Look above and you will see that Active Listings $/SF (price per square foot) shows $179.63 on this day in 2009, but $148.18 yesterday. Looks like things are going down.
But, wait! All that this is telling us is that people are listing them for lower now, not that they are selling lower. Probably because they are more realistic about prices when they list them.
Look at Monthly Sales $/SF. In April of last year they were $82.49 and now they are sold at $90.18. That is down from last month slightly, but up from 2009.
Even the Average Price – Monthly Sales is up.
I think these guys at ASU are running these numbers through some complicated and possibly unnecessary equation just to come to these conclusions.
I still maintain that they are dead wrong.
At least they might be starting to come around. As I said yesterday, watch for folks who have been hesitating to get back in the market in May.
I am happy to help you with any further analysis, listings or home searches. Please contact me at realestate@kenclarkforaz.com
 As you might guess, March was an insane month.
Everybody was jumping for that tax credit. There were almost 9,000 sales of homes & condos in the Phoenix metro area in March, which was the 2nd highest March sales month ever.
The median sales price in March was higher than March 2009, making it the first year-over-year increase since July 2006.
Let me say that again for all y’all (CNN!) who think price prices are still falling. That is higher than March 2009.
This is raw data from the multi-listing service. This is reported as it happens. When I close on a house, the system shows that close. Nobody can tamper with it. No third party interpretation. (CNN!)
As of April 20, there are 22,684 properties currently under contract, an all-time high.
Active listings in MLS are 34,064, down 24% since April 2009.
Want to see how things are going in your neighborhood? Check out this link to see this new feature I have. It is a free market trends analysis. After clicking on the image, you can scroll down to find your zip code and then it will show you active listings, sales per month, price per square foot, & foreclosure data for the past year.
Here is what I predict will happen in May: People will start getting back to normal buying patterns.
 Source: Businessweek We will spend the first three weeks of May waiting for this mythical “shadow inventory” to arrive, and it won’t.* Once we see that prices are not taking a downward spiral, people will start doing what they usually do. They will move if they need to move. They will buy a house if they need to buy.
There will be two types of buyers that come on the market first. 1) Those who have jobs but did not buy previously because they were afraid that they were about to lose their jobs. Now that economic indicators are turning up, they will feel more secure in their jobs and they will go ahead and buy. 2) Those who recognize that prices actually have been going up over the last year and that this is the best time to grab a new home or an upgrade before interest rates go up.
I’m happy to help you with your buying and selling decisions. Please give me a call at 602-561-5881 for more information.
*As you may recall from my previous posts, I don’t see this happening. There are many houses that are foreclosed or awaiting to foreclose, but the banks will not depress prices by throwing lots of inventory on the market all at once.
**Thanks, Leif Swanson (www.leifswanson.com) for contribution of market data.
 I remember standing in Melbourne, Australia a few years ago. This city has everything: live music, art, theater, gardens, food, etc. I was thinking about whether I should move there. Luckily I did not.
However, I got a strange uneasy feeling about the place. I could not put my finger on it until much later. I realized that I could never live there because it is finished. Somebody else, long ago, defined that city. There is very little to add.
This is why I love Phoenix and Arizona. Despite many of the challenges we face, this is our place to define and our identity to create. It is all ours if we want it.
In that spirit, I was particularly interested in the work of writer Joey Robert Parks and others with their 26 Blocks project. They describe it the best:
WHAT WOULD HAPPEN… if 26 of the best writers in Phoenix were paired with 26 of the best photographers in Phoenix?
AND WHAT IF… you asked them to create their work within certain boundaries (writers: 500 words or less, any genre; Photographers: up to four pictures in one image, any style) and to capture the past, present or future of 26 randomly selected downtown Phoenix city blocks?
There actually is a great deal of interesting history in Phoenix and so many stories to tell. Could there be some future “Phoenix sound”, like there was a Seattle sound? Will there be writers and artists who speak uniquely of Phoenix?
I think so.
Look for 26 Blocks to be a future feature of a Get Your PHX event, as they roll out their work over the course of this year.
This New York Times article is a very interesting demonstration of determining whether you should rent or buy.
This is for those of you who want to geek out on numbers a little this morning.
This is a great way to look at the situation without getting all hung up on predictions about where the market will go next. Because, as I’ve spoken about many times, you can never guess exactly when the market will be at its lowest point until that point is gone. But, if the conditions are right for you now, that is the best measure.
Basically, you take the price of the home for sale and divide it by the annual rent of a comparable rental home. If the resulting number is higher than 20, then continue renting. If it is below 20, then you are better off buying. Got it?
 So, I want to apply this demonstration to a case here in Phoenix. Let’s take, for instance, 2214 N 12th Street, which is my listing.
This beautiful historic property is listing for $189,000. It is a 4 bedroom, 2 bathroom, 1,600 square foot home in a popular neighborhood. Let’s say you buy it with 10% down at 5.5% interest and a 30-year loan. You are looking at about $960, principle and interest. Add $115 per month for taxes and $70 per month for mortgage insurance and $40 per month for home owners insurance (all rough estimates). This home costs about $1,185 per month.
So, what should we compare it to? I did a search of 4br/2ba homes, minimum 1,400 square feet that are also in popular neighborhoods in CenPho. I found no 4 bedroom homes. So, I found eight 3 bedroom homes in the area. The cheapest at $1,050 per month and the highest at $2,995.
Just so you know I’m not cherry picking an example that best makes the case for buying, let’s take the cheapest one, at 1805 E. Willetta, as a case in point. I’ve posted all of the homes in this study here for your reference.
$1,050 x 12 months equals $12,600 annual rent. (You could keep much of that money by owning –just had to say it.) Divide that in to the price for the home above and you get a factor of 15. So, even in this case it is better to buy.
On the high end, let’s take 902 W. Verde as an example. That one is renting for $2,750 per month. So, that is $33,000 per year going to a landlord. That results in a Rent Ratio of 5.7.
I think this is pretty accurate analysis, especially as you consider that these are all 3 bedroom homes, and any 4 bedroom homes would certainly cost more to rent.
So, what have we learned, besides how fun numbers are?
We’ve learned that you can divorce yourself from the daily back and forth speculation about where the market is going so that you can make a decision that is good for you.
Will the market go lower? I don’t know. I doubt it. Will it go higher? Probably, yes. How quickly, we don’t know. But we know that prices have been going up in more popular neighborhoods in CenPho.
But I’ll say it again: you can never find the lowest point until it is gone. If you buy when the market is generally low and sell when the market is generally high, you are in good shape. This ain’t the stock market, after all!
If you would like to get out there and explore the market, or if you have specific questions, please give me a call at 602-561-5881.
I just confirmed that t his Haver Home is now starting renovations and will be on the market for under $160,000. I do not represent this seller.
But, I am happy to represent you if you’d like to look at it. Please give me a call or email at realestate@kenclarkforaz.com if you want to know more.
The original Haver home, pictured here, is ready to be renovated. The owner/renovator intends to sell the home after renovation. He says that he is willing to work with the buyer to do at least some renovations to order!
This is a Haver Home, built by Fred E Woodworth. I’ve been in this home and it is perfectly preserved. Somebody took great care of this property for years!
This is a huge opportunity to grab a mid-century modern Haver home in a neighborhood that is bound together by their love of these homes.
All of this and the agreement could be made in time for the $8,000 tax credit!
This kind of thing simply does not happen that often!
 This MSNBC article is a perfect example of how waiting for some mythological, dramatic drop in prices might actually price you out of the market because interest rates go up.
In just a few weeks interest rates for new homes have gone from 5.0% to 5.3%. See the article for the reasons why.
The rule of thumb is that every 1 percentage point increase in mortgage rates reduces a buyer’s purchasing power by about 10 percent. So, accordingly, if you’ve been waiting, your buying power has eroded by 3% in the last three weeks.
Now, interest rates are still historically low. The best I got on my house in 2001 was somewhere around 7%, as I recall. In 1981, they were over 15%. Yeah, really.
But if you are on the fence, now is the time to get off the fence. You have three weeks to get an offer accepted on a house if you want both historically low interest rates and the $8,000 tax credit.
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