Selling With Sarah

Current Market Trends and Pricing

Tucson real estate has experienced a roller coaster ride in recent years as prices rose sharply in 2004-2006, and have now declined sharply, and are hopefully on their way to stabilizing. The value of your home depends on current market trends, and whether it is a buyer’s market or a seller’s market. A home’s “market value” is determined by supply and demand, and is set by what other properties similar to yours are selling for. When it’s a sellers’ market, there is a shortage of available homes, and demand exceeds supply, so sellers can afford to price their homes higher than homes that have recently sold. When it’s a buyers’ market, sellers will need to price their home competitively to be the next home to sell, or they could end up having their home on the market and “sitting on it” for an extended period of time.

What many sellers may not realize is that the money they have spent on improvements may not be reimbursed on a dollar for dollar basis, adding on to the value of the home, nor is their home influenced by what they paid for it, or what they owe on it. It is therefore important to consult a professional Realtor® like Sarah Ley, who understands the dynamics of the market, and is able to take the current market trends into consideration when recommending a realistic listing price for your home. Remember, as a seller your goal is to sell, so don’t overestimate the market’s demand for a home like yours.

Whether it’s a buyers’ or sellers’ market, keep in mind that buyers have choices. If your home is overpriced relative to similar homes, you will be helping your neighbor sell his home, while yours lingers on the market. So, don’t get caught up in setting a certain price in your head, as it is the market determines that sets and determines the value of your home. Sarah’s favorite expression about the real estate market is: “The market is not always kind, but it’s never wrong!” Keep that in mind, and although it may be difficult, try not to take anything personally.

Favorable Negotiating

When buyers are interested in your home, they will send you an offer that includes the price they are willing to pay for your home, as well as the terms of the contract to purchase your home. You have the option to accept the offer as-is, refuse the offered price, or make a counter offer. It is not unusual for offers to go back and forth until a final price is decided. However, price is not the only factor that must be negotiated in a real estate contract. You must also take multiple factors into consideration, for example: the buyers’ credit, time frame for moving in, repairs that they might request after an inspection, and closing costs. Since negotiation is an art, it is crucial to have an experienced Realtor® like Sarah working on your behalf.

Sarah Ley has a proven track record of favorable negotiating. Sarah has participated in over 250 real estate transactions. She is very adept at looking out for her clients’ best interests, and will negotiate strongly to make sure that whomever she is representing in the transaction is getting the best possible deal.

For Home Sellers: Preparing For Inspection Day

As your Realtor, Sarah Ley will be your expert guide in negotiating the many possible scenarios that may occur once an offer is accepted. One of the most important considerations is the home inspection. Most buyers will choose to have a professional home inspection company inspect the home prior to their purchase of it. Taking this into consideration, you may wish to prepare your home by repairing any known issues. Some of these preparations include:

• Utilities- turn on ALL utilities, including: electrical, gas, and water. **this is especially important to double check if you have left the house vacant and have had any services turned off**
• Keys- make sure to leave keys to utility closets, back gates, etc. All spaces need to be open and available to the inspector.
• Pets- Make sure pets are secured or out of the home.
• Appliances- Plug in all appliances and check to see that they are set to function normally (are your pilot lights on and batteries replaced in necessary items?). Pay special attention to appliances that you may not be using in a particular season.
• Landscaping- Trim trees that are touching the roof. Remove rotting wood and brush that may appear to be a fire hazard.
• Windows- See that windows can open and close properly (especially those that may have been accidentally painted shut).
• Garage- Check your garage door safety shut off to make sure it is functioning.
• Electrical- Make sure all switch plates and outlet covers are in place. Leave the electrical box(es) unlocked and make sure all circuits are on. Replace burned out light bulbs, large and small, especially in utility closets.
• HVAC- Replace air filters and service the furnace and air conditioner, if necessary.
• Plumbing- Repair leaky faucets, fix caulking, and make sure all drains are draining properly.

Don’t look at the inspection as just a chance for the buyer to find problems with your home, think of it as an opportunity for them to learn more about it so they will be able to take good care of it in the future. This may be the biggest investment your buyer has ever made. The buyer has a right to do their “due diligence” about your home, and find out about it’s features, as well as its issues.

TIP: You may want to have an inspection of your own done before you even put your house on the market. That way, you can save time and stress, especially if you have an older home that you suspect may need more TLC than can be seen on the surface.

TIP: Make sure that you disclose any known issues with your home. These are known in real estate lingo as “material facts.” Any important issues that you know about, but do not disclose to the buyer, could come back to haunt you. Consult with your Realtor about disclosures, and your Realtor will help you make sure you’re making them the right way.

For Home Sellers: Completing the Buyer’s Requested Repairs

Should the buyer’s home inspection find items in your home that need to be repaired, the buyer will send you a written request of items or conditions that they would like to have you repair prior to the close of escrow. You have the option of accepting the conditions and performing the repairs, or countering if the buyer’s requests seem unreasonable. Be forewarned, should you decide not to accept the buyer’s requested repairs, or counter what they have asked for, the buyer has the right to cancel the contract, and receive a full refund of all earnest money deposited (assuming they are still under the time constraints of the inspection period designated in the contract). Repairs are a normal part of the sales process, and for this reason, it makes sense for sellers to consider buyer’s requests for repairs, so long as they are reasonable.

Depending on the the market, there are different ways to negotiate repairs. This is where your Realtor’s expertise comes in:

• Accept all or just some of the buyer’s requests: Sellers should anticipate requests for repairs and take them in stride. However, if you consider the requests to be arbitrary, you absolutely have the right to refuse them.
• Offer a sum of money in lieu of a repair: For example, if the inspector finds a door that needs to be replaced, you may want to offer the buyer a modest sum of money instead of replacing the door yourself so that they can pick out a door that they like.
• Split the cost with the buyer: If something needs to be repaired to the state of being brand new and is more than you had bargained for, instead of risking a deal-breaker, offer to share the cost of the repair with the buyer. That way you can avoid paying purely for upgrades. For example, putting on a brand new roof is an upgrade, but performing patching would be considered repairs.

TIP: If you go into the sale knowing that something will need repairs but are adamant about not fixing it, you should mention clearly in your listing that the feature is “as-is.”

TIP: Because repairs are one of the main reasons real estate contracts fall through, consider having your home “pre-inspected,” meaning that you have a home inspection company inspect your home prior to your agent finding a buyer for the home. You can fix any items that the inspector finds wrong with the home. Your agent can then market your home as being “pre-inspected,” which will set many buyer’s minds at ease, and in many cases it may make your home more saleable than a non-inspected home.

The Closing

Your home’s closing, also referred to as the “close of escrow,” is a date set forth in the purchase contract by which all of the necessary paperwork from the title company, the buyer’s financing, the seller’s repairs, everything agreed upon by both parties to the transaction will be complete. The close of escrow signifies the completion of the transfer of the property from seller to buyer. Recordation takes place, and the day of close of escrow officially belongs to the buyer. It is therefore essential that both parties have fulfilled their sides of the obligations, with the buyer making sure the loan is funded on time, and the seller making sure that all repairs agreed upon are completed, all personal property has been removed, and the house is physically and also legally ready for the buyer to take title of the property.

The buyer is entitled to do their final walk through three days prior to the close of escrow date, and the seller must have all repairs completed. If not, the buyer may execute the “Cure Notice,” which notifies the seller that there is a potential breach of contract. The potential breaching party has three days to remedy the problem before it becomes a breach of contract.  The role of your Realtor in the process cannot be minimized. The Realtor is responsible for making sure that all aspects of the contract have been completed successfully, and both parties are ready to close escrow.

The closing officially occurs when both buyer and seller sign all final paperwork at the escrow agent’s office. For the closing, don’t forget to bring a picture ID, and any paperwork that shows you have met all obligations in the contract (just in case something is missing).

The escrow agent will release funds to the seller, and keys (if applicable) to the buyer once the sale is recorded at the county recorder’s office.

1031 Exchange

When selling your income property, you will be taxed by the IRS on the profit, depending on the current capital gains laws. However, under section 1031 of the Internal Revenue Code, if you sell property and put the proceeds into similar property, the taxes on those earnings are deferred. This exchange must follow certain guidelines, including being completed within a strict 180-day time frame. For more information, see LandAmericaTM 1031 Exchange Services or Old Republic Exchange Facilitator Company. Sarah Ley can help you understand how 1031 Exchanges might be applicable in your investment situation.

Residential Income

There are several ways to profit from residential real estate. You could be looking to acquire property for a long term investment, buying rental property to lease for a monthly income or cash flow, or you may just be looking for a relatively quick profit from a rapid resale, a.k.a., flipping. Investing in residential property can be rewarding, but it’s not for everyone. Like any type of investment, it requires taking risks, and having a tolerance for risk. It is therefore essential to have an experienced Realtor® like Sarah Ley to help you find residential income property in Tucson that will maximize your desired objectives.

Purchasing property to lease can be  rewarding because it can provide steady income with appreciation at the same time, as well as providing housing to people who perhaps otherwise could not afford to own their own home. A few considerations when investigating income-producing property include:

• Are you prepared to become a landlord or hire a property management company to manage your property for you?
• What will the upkeep (including repairs and maintenance) of the property cost?
• Are you aware of the extra costs, such as taxes, repairs, and utilities?

Investing In New Construction

Investing in  New Construction can be a great way to benefit from future property appreciation. Look at it as buying tomorrow’s home at today’s prices! Many builders like to get the ball rolling quickly and will often sell the first few properties in a development at a discounted rate. Additionally, since most builders only release a small number of lots at a time, and then raise their prices for the next release, you can try to get in at the beginning. You’ll need to consider how long it will take to build the home, as well as factors affecting the local market. For example, if there is a high incidence of foreclosures, you may want to find a different real estate investment, like perhaps raw land, that you can buy and hold until the market normalizes.

Use caution when looking to buy new property strictly as an investment (as opposed to buying it for your family to live in). Some builders will include fine print in their contracts or governing documents/CC&R’s that can limit your ability to rent or sell your property. Some may even include clauses that require you to pay the developer for any profit from resale if it is within a given time period.

You may also consider purchasing the builder’s model home, as a model home leaseback from the builder. This can be a good, steady stream of income, as the builder will sell the model home to an investor, and the investor will lease it to the builder. Often times, it can take the builder two or more years before they are ready to close out a subdivision, and you can get in on the ground floor with pricing, have a steady income stream, and then sell the house for a profit once the builder finishes the subdivision.

At any rate, throughout the process of purchasing your investment, Sarah will work with you as your guide. Sarah’s goal is to make sure you feel confident that you are maximizing the potential of your Tucson real estate investment purchase. Sarah understands the ins and outs working with builders, and the intricacies of new construction, which will enable you to maximize your investment property’s price appropriately in the current market.

Building Your Tucson Dream Home

Building your dream home in Tucson can be a rewarding experience if you are adequately prepared, as well as funded. Unless you are buying a home in an already pre-determined building site, it can take a year or longer to go through the process of constructing a home from start to finish.

Steps to consider when constructing your new home:

• Budget: Know what you can afford to spend ahead of time. You may have to get different loans for different parts of the process: a real estate property loan for the undeveloped land, a construction loan, a mortgage, or maybe all three! Research this in advance so that there will not be any surprises. Expect that everything will end up costing a lot more than what you plan for!
• Land:(See Land Purchases, below) The lot you select to build your new home on has to accommodate the house you want to build, and vice versa. It is advisable that you select the building site first so that you can build the property to fit the site.
• Architect: If you are building a custom home, line up your architect early, because many are booked a lot farther in advance than you may think. Once you get an appointment with an architect, it may take several months for your home design to be completed, as there are many stages for your architect to go through when designing your home.
• Builder: It is important to choose a reliable, experienced local builder who has the resources and the tenacity to complete your project on time and on budget. Make sure you interview a number of builders to ensure that you select one that you feel confident in both their ability to finish the home to your specifications, and the ability to listen to you.
• Design:Once you have your building site selected, and you have chosen both your architect and your builder, you can start making design plans. When designing your Tucson home, make sure you select features and finishes that you will be comfortable for you and your family.  It may be relevant to hire the services of an interior designer. Again, check references and interview several of them until you find one that you will be comfortable working with.
• Contract: Once the planning stages are winding down, it is imperative to get everything in writing! A written contract needs to be detailed between you and each of the parties you are working with. If you have an attorney, or feel one is necessary, it may be a good idea to have your attorney review all of the paperwork before you take the plunge.
• Follow up!You will need to be “Johnny on the spot” while your home is being built. Plan to be there daily to check on the bulder’s progress. Take pictures, and be an informed owner. If you are not around to check on your new home, the builder, or one of the sub-contractors may miss an important detail. Although this constant vigilance may not seem like fun to you, it is imperative that you are there, and are informed during all the stages of construction to ensure that your home is being built with the quality that  was agreed upon. You can also help nudge things along by following up with all members of your home building team. If something seems like it’s not right, by all means- speak up and get things back on the right track.

Land and Lots in Tucson

Buying raw land or undeveloped property can be a great way to enrich your financial portfolio. However, choosing the right parcel can be very tricky. When considering your land purchase, Sarah will work with you to ensure that you take the following factors into consideration:

• Zoning
• Utilities
• General Location
• Engineering
• Accessibility (physical & legal access)
• Topography & site issues
• Environmental issues
• Title issues (easements & legal descriptions)

Don’t leave your Tucson land/lot purchase to chance. Buying raw land is a very complex matter, and it is essential that you have professional representation throughout the process to make certain that your goals for the property mesh with the specific lot you have chosen.