Interested in buying a new home without leaving the comfort of your couch?

Absorption rate is defined as the number of homes sold in a certain time period divided by the total number of homes available. The rate is determined by dividing the number of homes sold in a certain time period by the total number of available homes. The output is then identified as percentage or a # of months. In other words, what absorption rate shows, is the amount of inventory on the market. For instance if the absorption rate is 3 months, that means if no other homes come on the market, all the homes would be sold (absorbed) by the end of 3 months, and there would be 0 homes on the market. Industry experts vary on what they consider to be a seller's market, a buyer's market or a balanced market but one example uses an absorption rate of 6 months. A 6 month absorption rate would spell a balanced market. Less than 6 months would be a seller’s market and a rate above 6 months would be a buyers market. What does that mean for Phoenix Metro - At the end of June we were at a 1.5 month absorption rate. That is an extremely low number! It displays just how limited the inventory is - 14,382 active listings for all of Phoenix Metro. Even through the COVID-19 pandemic we have seen the Phoenix stay a seller’s market because of the lack of new inventory that has come online. There are many reasons that could be causing less listings going live; some would be sellers are worried if now is the right time to sell, some would be sellers don’t want to move during the pandemic, some would be sellers are re-financing at historically low interest rates and are happy to stay in their current homes, there are countless other reasons. So if you have been waiting for the right time to sell, this could be a great opportunity for you, but of course, every situation is unique! So in your next zoom meeting go ahead and drop in a line about the absorption rate in the Phoenix Metro area and do it with confidence! As always we are here to help answer any questions and make sure you have all the knowledge you need for your real estate journey!

Out with the old [tenants] in with the new! How do we prepare tenants and owners for the turn of a property When looking at property management, typically what comes to mind first is often finding a tenant or handling the daily maintenance requests. But in reality, the crux of the tenant and owner experience is often how the turn of the home goes. There are several aspects that come into play. Overall we want to make sure the outgoing tenants leave the home in good condition (or are held responsible for not leaving in good condition), we want to make sure the incoming tenants are moving into to a well cared for home that is prepared for them, and of course we want to make sure we are good stewards of our homeowners property(s). What makes this a hard needle to thread is that each of these parties have different expectations and perspectives. At E&G we work very hard at setting proper expectations all the way around. For the outgoing tenant: We visit the home 45 days before their move-out and we prepare them with lists of preferred vendors for carpet cleaning and professional house cleaning, we also review if there are any major items that should or can be addressed before move-out. We remind them of lease language in regards to how the home should be left. We then provide them with all of the move-out documentation and make sure they know if they were charged, why they were charged and what they were charged. For the incoming tenant: It is always important that we minimize vacancy, but we want to have enough time to get the home prepared for the new tenant. We set the expectations that a few minimum criteria will be met for the home at move-in. This includes: Professionally Cleaned Carpets Cleaned (and/or replaced when deemed necessary) Touch Up paint completed Landscape cleaned up If the incoming tenants have additional requests before move-in we present that to the owner during the application process. After move-in we then give the tenant 7 days to report anything we missed so that we can have everything taken care of in just one handyman visit where appropriate. For the owners: After visiting the property the first time, usually 45 days before the tenant vacates, we will reach out to the owner if there are any larger ticket items that need to be prepared for. In addition when the leasing agent is preparing to list the home, one HUGE thing we do is provide our homeowner multiple options with appropriate suggested rental rates. So if we see an opportunity to increase rental rates by doing certain repairs or upgrades we will lay out the specifics and better prepare the owner for the turn. We always keep in mind and remind owners of the expectations we set for our tenants that the home will be: Professionally Cleaned Carpets Cleaned (and/or replaced when deemed necessary) Touch Up paint completed Landscape cleaned up We are transparent and have all videos, photos and invoices available for review for the entire turn process! Overview We have created some unique practices and procedures to set up the Turn Process and to make it fair and equitable for all. The most important thing for us is to make sure expectations are set and that all parties involved are equally prepared for the process so that all come out feeling like they had a great experience. In the end we want to make sure we are leaving people AND properties better than we found.

How did one made up word become so important to millions of people? One made up word has encouraged people to buy, sell, cancel contracts, disagree with Realtors and so much more. I first want to take a moment and appreciate that Zillow and other online algorithms have put in countless hours of work to get their calculations to where they are at today - a great accomplishment in its own right and kudos to them! But when it comes down to it, a local expert, a real life agent, a trusted advisor will consistently be more accurate and be able to truly assess the home in its current condition. After all, an algorithm can’t visit your home in person, an algorithm hasn’t sold 100’s of homes in the area, and an algorithm hasn’t lived down the street for years. Zillow does actually publish their estimate accuracy and it’s actually fairly decent in the Phoenix Area, the large amount of homogenized developments certainly helps. For instance in the Phoenix Area over 92% of the homes sold are within 5% of the estimated sales price (not bad!). But in San Francisco, where there is a large variety of homes and many years of highly competitive offers, Zestimates are within 5% of sale price only 63% of the time. There are some factors that affect the algorithm and can throw off the Zestimate as well. Some can be edited and then updated through Zillow, and some can’t. Inaccurate Basic Information Sq. Footage Beds Baths Upgrades since you’ve owned it New Kitchen New Flooring New Pool Limited data points (if there aren’t many sales in your neighborhood, Zillow will have less data to use and this can throw off some numbers) Now, even with all of that being said, me and every other Realtor would be lying if we said we never looked at the Zestimate in helping us get a value of the home. But it is important to remember that the Zestimate should be a starting point or simply a data point to help you determine the value of a home. An experienced real estate agent and/or an appraiser will always be a better more sure fire way to get a true assessment of your home.

First comes Love, then comes.. The rejection of your purchase offer. In this time of increasingly limited inventory, this is a love story Realtors see far too often. It’s heartbreaking for us agents as well. Whether we are representing buyers or sellers, we feel your pain! I recently had a listing that received many offers above list price, and as I would send the personal letters over to the sellers, they would get emotionally attached to each buyer making their decision even more difficult. At one point the husband said to me, “I wish I had more houses like this one to accept all the offers!” As a buyer, it may seem like you are helpless if you don’t have enough cash to buy the home outright and you aren’t willing to pay tens of thousands over list price - that’s it, no home for you. BUT I’m here to tell you there are ways to make your offer more appealing.. sometimes even more appealing than a cash offer! Here are some techniques our agents have used or seen applied on our listings: Escalation Clause - This essentially tells the seller, “show me a higher offer you’ve received and I’ll beat it by $XX up to a certain dollar amount.” Limited Appraisal Waiver - It’s one thing to have the higher offer, but will the house appraise? With the Limited Appraisal Waiver, we typically use language like, “in the event the home does not appraise at the purchase price, the buyer will pay an additional $XX amount above appraised value out of pocket.” Personal Letters - Selling a home can be just as emotional of a process as buying home. Sometimes these personal letters can really make a difference when the seller decides what offer to accept! Communication from Lender to Listing Agent - Sellers like to know that their buyers are qualified and they like to know that their deal isn’t going to fall through at the last minute. Any communication from the lender to the listing agent helps, whether it’s a simple phone call or an email. Higher Down Payment - Can’t afford to pay for the entire home in cash? Maybe put more money down instead. Sellers love to see a buyer that is able to put more money down. This typically means there is less of a chance of the sale falling through after the appraisal. Buyer’s Concessions - This creative option needs to be cleared through the lender first, but this allows the BUYER to give the SELLER a credit at close of escrow. This can be beneficial because the seller can net more money without raising the purchase price and jeopardizing the appraised value coming in low. Long story short - don’t give up on your love story. We as a team have creative solutions to help you get into the home you love. Call us today to learn more!

For decades we have been encouraged to invest in real estate. Nearly 90% of all millionaires have been created by investing in real estate, so it’s a no brainer right? But some of us need that extra security before investing - whether that be more examples of actual results or a helpful hand to guide you in the right direction. In an upcoming blog (stay tuned!) we will talk about how to pave the way to how you can invest in real estate, but today I want to share one of our most profitable secrets that has been consistently successful for us. Whenever we talk about investment opportunities we always seem to mention the city of Tempe. Over 25% of our rental properties are within the Tempe area and we even moved our office to Tempe in Spring of 2019. It has been a repeatable and successful avenue for real estate investment that we can’t get enough of! Due to COVID-19, we saw some atypical results this year and while we are keeping an eye on it to see if any of those effects linger, we are still aggressively pursuing Tempe rental properties for our investors. In the example below, we break down the costs and income for one of our clients. In July of 2016 we helped him purchase a home for $307,000. It was a 4 bedroom 3.5 bathroom home with a pool and easy access to the ASU Tempe campus, making it the perfect home to use as a student rental. We immediately leased it out for $2,650 a month & increased to rent to $2,750 a month the next school year. (That’s an easy additional $1,200 a year!) As a full 45 months went by, the owner collected $128,843 in rental income with only around $17,200 worth of expenses — In that time, he earned $111,643 in net rental income! In May 2020 we helped the owner sell the property for an appraised value of $395,000. After escrow costs and fees, the owner's proceeds were $372,140. When you remove the initial investment amount, you are left with a net return on the sale of the house of $65,140. Now combine the net rental income with the net return on the sale of the home and the owner made a total of $176,783 in just 45 months. (That equals out to almost $4,000 a month!) He made an annual return on his cash of 14.4%! Over the life of the asset (45 months) he made a profit of over 57%! There aren’t many investment opportunities where you can see that type of return on your money. If you’re interested in learning more, stay tuned for more posts on how to get into real estate investing!

Mortgage Relief • Fannie Mae - https://www.knowyouroptions.com/covid19assistance • Freddie Mac - https://myhome.freddiemac.com/own/getting-help-disaster.html • Save Our Home AZ - https://housing.az.gov/save-our-home Check back for more!