The dynamics of the market are certainly changing on a monthly and sometimes even a weekly basis. There are new issues you need to stay abreast of when buying property in Arizona. As is usually the case, I will try to do my best to keep you informed of the latest traps and pitfalls.
Lenders are notorious for giving the least they possibly can in every transaction. They do so by preparing their own contracts that buyers must submit to where the terms are slanted to the lender - it’s very similar to the way builders do business in Arizona (and why it’s especially important to have professional representation). One term involves the type of title insurance provided to the buyer. Lenders offer only a basic policy of title insurance. It has recently come to my attention that some buyers are successfully requesting lenders to upgrade the title policy to what’s called an ALTA homeowner’s policy. In some cases, lenders are agreeing. It’s certainly worth asking as it provides greater protection to the buyer.
Another potential pitfall involves HOAs. They are also now getting wise to the game and some have figured out ways to collect delinquent dues from previous defaulted owners - they are getting them by strong-arming the buyers. How? By charging incoming buyers a ‘community orientation fee’ which can be in addition to normal closing costs and transfer fees. Beware! You can certainly ask the HOA up front what all the community closing costs are, but better to be prepared for the worse. Remember, many HOAs are hurting because all the the defaults and delinquencies mean that many HOA are financially strapped and not collecting the revenue they need to keep the community in tip-top shape. Make sure to check all the HOA financials and docs during your inspection period to avoid surprises later.
Here’s another funky situation - banks are writing their contracts with language shifting all financial risk to buyers - including previous tenants. As hard as it is to believe, if a previous tenant comes knocking on your door after you move in and tells you that they were kicked out of the property by the foreclosure and didn’t get their security deposit back, you MAY be liable for it. Very unlikely to actually occur, but possible.
All this is basically to inform you that you need to tread carefully. There are reasons why lender-owned properties and short sales are so well priced. There is more risk associated with buying them. Keep informed and have a some money set aside for possible ’surprises’ is the best form of defense.
And now a quick market update - The land market is changing. Drastically in the 30 days. Builders are gobbling up lots for future building in 1.5-3 years on lower- priced lots for lower priced homes. New home inventory is drying up. What does this mean? It means that the low end of he market is turning around and builders are starting to become more competitive with the resale market. Builders may be ramping up building, ever so slightly and seeing the light at the end of the tunnel. This is a great sign for the overall market and another indicator that it’s time to get in before you miss the boat. I’m hearing that Canadian buying activity is heating up as we close in on another mild and beautiful fall and winter season.
Stay tuned to this channel and www.CanadiansBuyArizona.com for the latest news and information.