Market Turn/Crash:

1. They sky is not falling and the market isn’t turning or crashing. 
2. Inventory numbers in ARMLS (Maricopa and part of Pinal County) are running about 7000 homes.  That’s up over 100% from a few months ago but nowhere near “normal” of about 20,000.  It would have to go up another 400% just to be “normal”.
3. Some of this is due to buyer fatigue (“I’m sick of this S#$@!) and some is from additional homes coming on the market as the moratorium for forbearance is starting to end for some homeowners.
4. If you have clients currently selling or thinking about selling a home, tell them to be patient and temper their expectations.  Not every deal is going to be a blood bath with multiple offers on it.  You have to have the right house in the right area at the right time. 
5. The market may flatten or even pull back in some areas but there’s no crash coming.  For those of you who remained awake during Econ class, you all know that prices don’t come down when demand outweighs supply. 
6. Also, remember that market prices and interest rates ARE NOT connected.  For example, if you have a .5% rise in rates, you would need about a 10% fall in prices, just to be even on a 300k deal.  So if you know people waiting  for “prices to come down”, they better also hope that rates don’t go up during the same time or they gained nothing on payments/debt service affordability. 

2nd Homes and Investment Properties:

1. These still tend to be a little tenuous depending on your buyer’s profile. 
2. The more down, higher fico and less risk (rate and term vs. cash out; 1 unit vs. 2-4; etc.) along with going on a shorter term (15 vs. 30) can give your buyers some advantages in pricing.
3. Over half of these types of files are being brokered out to nonQM lenders due to the price hits (LLPA’s) on the agency paper. 
4. Brokered files will, typically, take longer to close so keep that in mind with your contract closing times.

Appraisals/Inspections:

1. We’re definitely seeing higher costs and longer turn times the further you get out of town. 
2. These can be upwards of $1000 and take up to 30 days to complete, if you can even find an appraiser at all willing to take the order. 
3. Remember that appraisers are 1099 contractors so they don’t really report to anyone. 

Seller Concessions:

Seller concessions seem to be coming back if you know how to structure a deal right.  Just closed one VA last month and one this week with $7000 in concessions each!  Both of these we ADDED $7k to the asking price.  This WAS NOT a seller reducing their proceeds.  They netted exactly what they wanted to had we offered them full price with no concessions.  Do your homework on closed comps, pending sales and current listings. If there’s room, take your shot at the title. 

Guys, shoot for the stars in your offers.  If it doesn’t appraise, the concessions are the first thing to go so you’re really not in any worse shape than when you started.  And many of you are waiting the appraisal contingency anyway.  All I know is that if you don’t ask for them you won’t get them! 

Great job by Penn Washington (C-21) on getting our Veteran, who works for the State of AZ, into a home with a 56% DTI and $7000 in concessions in the hottest real estate market in 50 years!  That’s being a great agent and an advocate for your client!  (PS:  That’s big time lending too.  LOL).

Your Personal Loans:

With the refis going again, I’m getting more calls from you guys on how to structure your own deals.  One quick strategy that you can all start with if you haven’t already. 

All agency guidelines all for debts to be omitted from the borrower’s debt ratios if paid by a business if already expensed on the business return or Schedule C.  For example, if you have a $500 car payment, to meet a 50% debt ratio on that we need $1000 in income. However, if your car payment is paid out of your business account, we can omit that from your debt ratios.  That means you need to show $1000 LESS in income.  What’s your job when filing taxes?  Show the LEAST amount of taxable income! 

Reimbursing yourself doesn’t count.  Make sure you have a business account opened and pay everything out of there.  That will give you the best chance at qualifying for a mortgage with the least amount of income shown.

If you have questions on what you’re seeing out there or want to run scenarios, reach out anytime. I am really good at giving you ideas and options to make things work that you might not have thought of before. That’s my job.  

Have a great rest of the weekend and let’s make some money in the back half of 2021!!!

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6909 W Ray Road, Bldg. C, Suite #115 | Chandler, AZ 85226