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Buying a new home vs. a short sale or foreclosure, which is the most cost-effective, both in the long term and the short term?

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There is more than one factor affecting the real estate market today. Read today's article by Gary Edelbrock with guest Dan Shaw, and learn more.

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foreclosureThe real estate market is a pretty wild and wooly place these days, and keeping on top of what is happening in our local market is important for a lot of reasons.

I'm Gary Edelbrock, current president of PACT (Prescott Area Coalition of Tourism), and a local realtor with Kim Horn Realty here in Prescott. I also own the Prescott Log Cabin, a bed and breakfast situated in the Granite Dells.

In this weekly column, I plan to ask local experts to update current conditions in the real estate market, so you know directly what is happening in our community.

Today, Kim Horn is our first guest expert. She is a broker (actually, she's the broker I work for), past president of PAAR, the local association, and AAR, the state association. She is also a member of NAR, the national association and a past member of their legislative committee.

The Market and Foreclosures

It seems all you hear in the news these days is about record foreclosures. I will attempt to explain the market and foreclosures.

First: What is Foreclosure?

Foreclosure is the legal right of a mortgage holder or other third-party lien holder to gain ownership of the property and/or the right to sell the property and use the proceeds to pay off the mortgage if the mortgage or lien is in default. It is a concept that has existed for centuries. Today State laws and regulations govern the foreclosure process, which takes 91 days from the time a notice of trustee sale is filed.

Second: Types of Foreclosures:

The mortgage holder can usually initiate foreclosure anytime after a default on the mortgage. Within the United States, there exist several types of foreclosure. Two are widely used, with the rest being possibilities only in a few states.

The most important type of foreclosure is foreclosure by judicial sale. This is available in every state and is the required method in many. It involves the sale of the mortgaged property done under the supervision of a court, with the proceeds going first to satisfy the mortgage, and then to satisfy other lien holders, and finally to the mortgagor.

The second type of foreclosure, foreclosure by power of sale, involves the sale of the property by the mortgage holder not through the supervision of a court. Where it is available, foreclosure by the by power of sale is generally a more expedient way of foreclosing on a property than a foreclosure by judicial sale. The majority of states allow this method of foreclosure including Arizona.

Recent Activity:

November 2008 223 Notice of trustee sales recorded
November 2008 328 Sales Recorded (A.O.V.)
November 2008 114 Trustee Deeds recorded(Actual Foreclosure)

December 2008 329 Notice of trustee sales recorded
December 2008 438 Sales recorded (A.O.V.)
December 2008 160 Trustees deed recorded(Actual Foreclosure)

February 2009 397 sales recorded (A.O.V.)
February 2009 170 Trustee deeds recorded(Actual Foreclosure)

March 2009 359 sales recorded to date 3/27/09
March 2009 122 trustee deeds recorded ( Actual Foreclosure)

Approximately 50% of all recorded sales are trustee sales.

Third: With all this being said, there is good news for home buyers and investors. The sale prices seem to be slipping back to the home prices of 2003 approximately.

For several reasons this is an unprecedented opportunity to purchase a home whether it be your first home or an investor property. Interest rates are at historical lows around 5% and there are several programs out there under utilized. For example the 203K loan for stressed properties. This program allows the home purchaser up to $31,000 to refurbish the property with cosmetic items such as paint, carpet, appliances and such. Also several low down payment programs VA and FHA, 3.5% down, Rural Housing loans O down for Chino and Prescott Valley areas. But keep in mind lenders are reviewing files with a lot more scrutiny these days, your credit score must be a minimum of 620 and with verifiable income and job employment. Also keep in mind that motivated sellers will obviously have different requirements and should consult a lender for advise prior to offer to purchase a property.

In conclusion: While the market is in a state of constant change we can find opportunities to become a homeowner. The industry and the local market seems to change daily so consult your local Realtor and lender for the lastest information.

Kim Horn GRI, CRS

Broker/Owner
AZ New Home and Development Sales
dba: Kim Horn Realty
Arizona Association of Realtors Past President

A Quick Note from Gary

logcabinSince foreclosures have been in the news a lot lately, we hope this information from Kim will provide some insight. And in the meantime, should you have any real estate needs, please feel free to contact Kim Horn or myself, and we'll do all we can to get you some answers.

Of course, if you have out-of-town visitors, please remember to check into the Log Cabin.

Gary Edelbrock
Kim Horn Realty
(928)-778-0442 Home/Cell
(928)-778-7036 Office
mgarye@msn.com