• The supply of existing homes on the market is at the second lowest level in 11 years.  New listings have dropped by 30,000 units from 2010
• The median price is lower than 2010.
• The number of units sold is the second highest in 11 years and second lowest in price.  Supply and demand are becoming more in balance.
• The average days on the market for homes dropped 13% in 2011.
• Foreclosures have slowed dramatically because the lenders are looking at short sales to resolve underwater properties.
• The most underwater owners have largely been through sale or foreclosure already.

All this, coupled with higher numbers of jobs creation, is signaling the bottom may have been reached. Arizona was 3^rd nationally in jobs creation for 2011. Many were hi-tech jobs.

Homes have become more affordable and the cost of homeownership is lower for every household after the market adjustment of the past 5 years. Costs have come more in line with income.

The Phoenix MLS reflects mainly Maricopa County. However, as Maricopa County goes, so goes the State of Arizona. Sales in the Valley will allow those sellers to relocate to the secondary markets in the state. Jobs will follow in those areas.

Another factor that is beginning to take effect is that homeowners who had to short sell, goes through foreclosure, or file bankruptcy during the Great Recession are beginning to have their credit healed by the passage of time. They will become a wave of buyers.

As we see a turn strengthen it is likely that interest rates will start to climb. Those who have been on the sidelines may decide to buy now rather than risk the market and interest rates rising out of their reach.  Now is the time to buy and lock in a low rate of interest.

What does that mean? If you own a property free and clear (no mortgage lien on it) you have a distinct advantage in selling it compared to other homes that are on the market and that are your direct competition. That includes all price ranges too.

It also means that you will not get paid off at the close of the sale. You will receive monthly payments from the buyer with interest. Consider it cash flow income. If you do not need the cash out of the sale, you can earn a lot more interest than if you were put the money into a savings account or certificate of deposit. Banks are paying 1-2% interest. These financing arrangements pay an average of 7%. On a $100,000 bank deposit you would receive $166.67 per month interest. With Seller Financing at 7% you would receive $665.30 per month for 30 years. Sometimes a buyer may only need some time to repair their credit or have a job position long enough to qualify for a loan. In those cases we can have the entire loan balance payable as a balloon payment in 3 or 5 years.

The Seller Financing is accomplished using the Account Servicing Department of the title company. They receive the monthly payments from the Buyer and send you a check. They take care of the accounting and provide monthly statements to you and the buyer. We have the Buyer pay the set-up fee of about $200 for the servicing. They also pay a small fee every month as part of their payment.

You no longer own the property so you have no responsibility for the taxes or the other liabilities of ownership. The taxes and insurance can be collected by the Account Servicing Department monthly. They would then pay the tax bills and insurance premiums on behalf of the Buyer.

What is the risk? If the Buyer pays late there is a late fee added. If they default on the loan, you can foreclose and get the property back and sell it again. You even get to keep all the money they paid in before defaulting. The downside is some risk of damage to the property if you had to foreclose and take it back. The other risk is taking it back after a value decline. We minimize the risk by having the Buyer provide the Seller with a copy of their credit report. The Seller can deny the loan or accept it based on that credit report. Yes there are risks. However, the risk is usually outweighed by the return.

We recently sold 2 homes and have three contracts on another property by offering Seller Financing. All have found a buyer within 2 days! The phones are ringing. Seller Financing does not require an appraisal. They are sold “As IS”. One sold for over the asking price because of competition to get the deal by solid buyers who did not fit within the criteria required by a lender for a bank loan.

If you own a property “Free and Clear” you definitely should consider offering Seller Financing. It could quickly get you more for the property, more return on the money you have in equity, and provide a home for someone who is able to make the payments but can’t get traditional financing. There are a lot of those people out there that would love to buy your home.

If you have a loan on the property you cannot provide Seller Financing. Some agents structure a “Contract for Sale”. Those contracts give equity to the buyer and will cause your lender to call the loan immediately due.

Just make sure you are working with a Real Estate Agent who is knowledgeable in Seller Financing and can guide you through the process. We are experienced and knowledgeable. I have written many Seller Financing deals over the years. Be sure that the down payment is sufficient to cover all the closing costs of commission, title and escrow, so you come away with some cash. It may be the only way for you to dispose of the property in this economic time.

Jerry Germansen, Associate Broker

eXp Realty Arizona

928 632 3906

www.AllofPrescott.com

Negative Aspects:

• Requires a cooperative effort between neighbors to conserve water.
• One party could be viewed as using a disproportionate share of the water.
• There is less self freedom
• Requires collecting of electric costs and periodic maintenance costs.

Although a cooperative effort is required, conservation is good for the well and the community. Disproportionate use can be accounted for by metering usage and charging for the water as part of the maintenance fund for future repairs or upgrades. This may include drilling deeper in the event of a well going dry or a new well. Electric costs can be metered. A separate electric meter can be installed on the well and direct payments arranged with the utility company from the maintenance fund.

Positive Aspects:

• Reduced initial cost per household
• Guaranteed water if an existing well is shared
• Monthly budgeting toward maintenance
• Shared costs of maintenance
• Well monitored for operation by multiple parties

Weather there is 1 straw in the ground or 5 straws in the ground, the same aquifer is being used for drawing all the water. There is not a lot of difference having more than one household on a well.

A good shared well agreement prepared with legal assistance should contain the following:

• The legal description of the well site and waterline easements.
• How monthly costs and the maintenance reserve will be collected and any cap amount?
• How the electric bill is paid?
• Is the usage metered or is the usage electric split equally?
• When does payment begin if one party is a vacant lot owner?
• How are decisions about maintenance and upgrades reached?
• How is the agreement amended and by what percentage of the participants?
• What happened if one party does not contribute?
• What happens if one party vacates the well and drills his own?
• What happens if municipal water becomes available?
• Does the maintenance reserve stay with the property in the event of a sale?
• Is there a hold harmless clause?

Shared well agreements can be arranged for up to 13 properties. In Arizona 14 or more shared well properties are legally considered a water company which requires monitoring for water quality standards and reporting.

All this may appear to be complicated. However, once an agreement is in place, the benefiting parties can save a lot of money and have a good water source. These agreements are particularly valuable in areas of spotty water when a good well is found.

I personally lived on a 4 party shared well and enjoyed the benefits.

Why do the maps change? development upstream from an area can cause more rain and snow melt to flow into an area. Every parking lot and roof and road changes drainage. FEMA is charged with keeping the maps up to date.

I live in the Prescott Country Club and back to a golf course. The Clipper wash seperates the property from the 12th tee. It provides a nice buffer and keeps golf balls from attacking us. FEMA just upped the flood status of the Clipper Wash. I am expecting the mortgage company to require flood insurance or a waiver of the need for flood insurance by a licensed surveyor. One of the owners in the Prescott Country Club received a letter from their mortgage holder stating that unless they provided flood insurance, The mortgage company would purchase it and charge them $350 per month for coverage on a home worth $189,000. The bill for that insurance should cost about $50 per month.  He owner also has the right to dispute the requirement by certifying that the property is not in the flood zone. A surveyor charges about $500 for the certification and you pay regardless of his findings.

If you receive a notice from your mortgage company you had better attend to the business. Good agents in the real estate business check the status of the flood maps with their local county at the time a property is listed for sale. A seller has the ob ligation to disclose a flood zone if they know about it. However, as you can see, the maps change. What once was considered out of the flood may now be in the zone and require flood insurance.

Here is a link to FEMA for your use.

Jerry Germansen

eXp Realty Arizona

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Rate each property from 1 to 5

Date:                      Property 1     Property 2     Property 3     Property 4     Property 5        Property 6

Location

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Floor Plan

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Amenities

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Style

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Condition

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Price Value

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Finance Ability

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Personal Use Fit

Total Per Property

Notes:

Jerry Germansen 928 632 3906 www.AllofPrescott.com

Loan Modifications may be available if you qualify. You should speak to your mortgage company to see what they have available as there are many government backed “Loan Modification” programs and each mortgage company decides what program they will participate with. This can be a time consuming process.

What if you don’t qualify for a “Loan Modification”? You should always seek professional advice from a lawyer, tax advisor and/or a CPA as again you are unique. Some of your options may range between “Short Sale, Bankruptcy, Deed in Lieu or a foreclosure”.

Is a short sale better than a foreclosure? It could have less affect on your credit then the foreclosure. But there are requirements for a short sale, such as the seller must have a hardship (i.e. loss of job, divorce, illness etc.) and other paperwork involved.

How much time do I have before a foreclosure? Most mortgage companies do not do anything until you have missed your 3rd payment. Some may wait longer. But at some point they will serve you with a Trustee Sale notice. The foreclosure is scheduled 90 days after the notice has been filed. There are many different ways you may receive this notice including receiving it certified return receipt or posted on your property.

Short sale is when the bank agrees to accept less than what is owed on the property. Property values have plummeted in the area and the bank must accept market value for the property. If it goes into foreclosure it will be more expensive for the mortgage company and the home will probably sell for less than it would have as a short sale.

Who qualifies for a Short Sale? A homeowner must qualify for a short sale by having some kind of hardship that put them in a position where they can no longer afford to live in their home (ex. Loss of income, divorce, illness etc.). A homeowner will also have to provide several months worth of bank statements and other financial information.

Who pays the Real Estate commission to sell the house? The commission and most of the other sellers cost are usually taken from the mortgage company’s proceeds. The owner will not get any proceeds from this sale.

Will my debt be forgiven? Each situation is different. In many cases your mortgage company will agree to accept the short sale as full payment.

What about a “Deed in Lieu”? A “Deed in Lieu” is when the mortgage company agrees to take back the home. Most banks do not do this, although it’s becoming more accepted. This has the same effect on your credit as a foreclosure but the legal expense is less for the mortgage company.

It is important that you seek professional help from a lawyer, tax advisor and/or CPA as they will review your individual circumstance and be able to advise you on your options. When looking for aa Realtor find one that has experience doing Short Sales.

What are you earning on the money you have in the bank? Not much? Here is a solution: If you are selling property and will take your money and put it in the bank just change your strategy. Buyers are having a difficult time securing financing today. That is especially true of the self employed. As a seller you could offer terms to the buyer and be the bank for them. You would earn a lot more than the 1/2% the bank is paying these days. And your investment is pretty secure. You have the property as collateral.

Buyers are willing to pay not to use traditional bank financing. The interest you will earn may be much more than market interest rates for mortgages. It is not unreasonable for a seller to ask for 2-4% over the current market rate.

Not only will you earn more, but you will increase the chance of selling your property because you make the money available for the buyer.

This may also be a good investment even if you are not selling anything. You could be a private lender and earn high rates of return instead of leaving your cash in a bank.

Payments for these arrangements are made through the account servicing department of a title company. They track the payments and provide statements. The buyer /borrower pays the fees.

In the event of a default, you get the property and keep all the payments that have been made along the way.

Jerry Germansen, eXp Realty Associate Broker, 928 632 3906

The Prescott Quad-Cities, as well as the rest of the State of Arizona, needed the information made public to protect the consumer. The REALTORS of Arizona have delivered.

If you are looking to sell or buy under a short sale, you should check the link and beware of the mortgage scams and mortgage fraud that is going around.

We strongly advise that you talk to your accountant or lawyer before deciding on what to do with your property if you owe more than the present value. These are serious decisions with far reaching consequences. A mistake can be very costly.

The program has beed places in businesses in Prescott, Prescott Valley, and Phoenix, Arizona. We are going coast to coast with our benefits package including not only employees but their friends and family too.

See why other businesses have embraced this employee benefit at a time when businesses are struggling to provide employees with compensation they deserve.

Just call C’Ann at 928.848.1818 and see what we can do for you.

We live in a desert depending on ground water for survival. City water wells and private wells alike depend on what has collected in aquifers over the ages. Are we using it faster than nature is replenishing it? I’d put money on that especially with our current drought conditions and the population growth of central Arizona. At this time nobody really knows. However, there is a finite amount of water on earth. It does not disappear when used. It goes into the septic systems, the sewer systems, runs down your driveway when washing your car and back to the earth in many ways. It evaporates and returns as rain. This is a complex issue that remains under study.

We can predict what water usage will be based on statistics. The national average for water usage is 75 gallons per person per day. We know this to be fact.

Wells are rated by what they produce or make in terms of gallons per minute. The true production of a well is not the capacity of the pump. It is the amount of water the earth is releasing into the well after the water stored at the well is pumped out. A true and accurate reading would require a well be pumped until the production dropped off and that the pumping be continued for an extended period of time. That time could be days. The amount of water that is constantly pumping after this pump down period would be considered accurate enough for determining the gallons per minute a well is making. Most wells are not tested that accurately. The pump down period is greatly reduced to either a few hours or even minutes because of the expense and time involved.

Let’s explore what you need for a good supply for a home well. One gallon per minute is equal to 60 gallons per hour or 1440 gallons per day or 43,200 gallons per month. However, not many people want to wait a minute for that gallon to come from a faucet. We need storage to make water more available for immediate use; that storage comes 2 ways. First is the amount of water in the well shaft itself. There are about 1.5 gallons per foot of water in the hole. If your well is 300 feet deep and the “static” is at 200 feet you have 100 feet or 150 gallons sitting in the hole as storage. It will be pumped out at the full capacity of your pump regardless of how much your well is actually making until it is drawn down. A second storage is a holding tank. Some wells that do not make large amounts of water or that do not have a good static level may need a storage tank. A tank can overcome a week producing well.

A family of four will use 300 gallons per day based on the national average. With good storage, a well producing just one quart per minute is sufficient and will make 360 gallons per day. The pump will run longer but steadily make enough water for your usage requirements. A five gallon per minute well will make enough water for almost 100 people or 216,000 gallons per month.

The well is only one part of your water system. Storage, a proper sized pump, a pressure tank, and the faucets and fixtures are all part of it. You too are part of it because you create and control the demand. A water system should be designed considering all the parts. Use it wisely here in the desert. Save some water for tomorrow and others.

We can get the specifics for wells in the area through our network of vendors. Although each well is different, the general area and depth can give you a good indication of a well’s production. The Prescott, Prescott Valley, Dewey-Humboldt, and Chino Valley towns that make up the Quad-City area is our area of specialty and knowledge.

C’Ann Simpson 928-848-1818

Special thanks to B&M Well Drillers for their contribution