I have a saying that I use, “I don’t disappear at the Close of Escrow.” My clients know this and depend on me to help make their investments successful.
The Close of Escrow is simply the beginning. Many agents collect their checks and disappear. Technically at the Close of Escrow, the agent’s duties are done, EXCEPT for confidentiality. NOT ME!
I primarily work in the mutli-family space, There is the transition of the building along with the transition of the tenants. I wanted to help the client understand only a fraction of the items that I help to facilitate after the Close of Escrow.
At closing and if not before, I want to make sure that the new property manager has not only all of the leases but ALL of the tenant’s contact information. This includes their email if possible.
The Tenant’s move-in checklist as well as the tenant application. Please remember that it is illegal for the previous owner to provide the Tenant’s credit report.
I also place in the original contract that the Seller will provide LABELED keys-even to the mailboxes, laundry, storage and vending machines. Once I received a box of keys to a 100 unit property with NO labels. What a mess.
The Property Manager will need the entity documents and a copy of the final settlement sheet. I provide all of this information. They need this to do the utility transfers and laundry lease transfer as well.
The security deposits are not owned by the new owner but rather are held in trust for the tenant until they vacate the property. Only then may the Owner take possession of the deposits or disburse them. At close of escrow, I have the seller transfer these to the Buyer. On the same settlement sheet, the deposits are then transferred to the new property manager. This way it definitely shows the in and out of the deposits and where they are kept.
If there are repairs to be done to the property, or if repairs have been made, I make sure that this is passed on to the property manager as well.
In the State of Arizona, ALL tenanted residential property must be registered with the state showing the legal name of the owner (entity or individual) and the name of the current property manager. If the owner changes the name or the property manager it is imperative that this be updated. The new property manager should do this automatically but ultimately it is the property owner’s responsibility to see that these things are done. The cost is minimal and it is a State Law.
Many times as I drive around, I drive past properties that I have sold. I really look at them. If I see something that is not correct or needs attention, I snap a photo and send an email to the owner and the property manager. As a rule, towards the end of the year, I take a photo of EVERY property that I have sold that year and send it to the Buyer. Perhaps the Buyers have not even seen their property recently.
Remember that every property is different and while these are only a few of the items that I do AFTER the closing, there are usually many other items that I attend to.
Most importantly, I still answer my phone and my clients have heard me say, “If there is a challenge, call me before I cannot help you. Even if it is months later.”.
Remember that I answer my phone and am available. I either will answer or return your call VERY timely. 602-688-9270
Have a really good day!
I, like so many others in this crazy environment that we live in today am really tired of hearing the same doom and gloom over and over. So my goal to you today is to put some positive thought there for you. Let’s start the New Year off with what we have and be Thankful. Let’s look around us and garner the good from the bad (even evil). Let’s focus on the goals that we have and accomplish something that makes us happy.
My son and his wife are teachers and while this has been a really difficult time for them, they have stayed focused on spending time with my two young grandchildren. This is time that they will not get back and they have not missed the time with the toddlers.
How many times has someone told you to “Follow your passion”? Advice around this topic is given ALL the time. Today, I wanted to explore this advice and maybe dispel some lies and add a little clarity around what passion is.
First, people all the time say they don’t know what their passion is. The reality is most people do not find it, they cultivate it. Most people find something that is interesting and then simply works on whatever that is.
Second, I’m sure you have heard the phrase “Go big or go home.” I read Originals by Adam Grant and the research is completely different. Most people gradually ramp up and take small consistent steps on their interests over a long time. They don’t just quit their day jobs.
Third—Balance. Today, it is heard from a lot of young people that think they can have balance every day. Not true. A friend of mine has a GREAT book called The Fantastic Life. In this book are rules and Rule 18 of his book, The Fantastic Life, is Do Nothing in Moderation. Everyone wants to have clarity and focus so we can spend our most valuable asset, our time, on the most important things in our lives. Life is all about tradeoffs.
Make YOUR Fantastic Life happen!
Call me, I really do answer my phone. 602-688-9279
As many of my Clients are aware, I often write my Blog about real life situations and certainly about education. This is the case here.
I want to discuss the reasons that the Letter of Intent (LOI) is used and how this relates to the Contract.
First, let’s discuss the Contract often referred to as the PSA (Purchase and Sale Agreement). The Contract is a binding contract on ALL parties, namely the Buyer and Seller of the Property. The Contract spells out the legally binding Terms and Conditions of the deal. It’s important to obtain the Buyer and Seller’s signature. While it is important if for some reason, an initial is missed on a page-this is still binding. The only way that the Terms of the Contract can be changed is by an Addendum that is signed by BOTH the Buyer and Seller. Many agents present a counter to the Contract after this has been signed and this is NOT used. The rule of thumb is that you would use Counters before the Contract is accepted and addendums after the Contract has been accepted. Emails, Text Messages do not change any terms of the contract. Also, the Agent or Broker cannot change anything on the contract unless they are a party to the Contract and this would mean that they are either the actual Buyer or Seller named on the contract.
The Letter of Intent is sometimes used to define terms before the expense or time of preparing a contract. Let me clear that the LOI is nonbinding and is used only for guidelines with which to prepare documents. Often I see items in the LOI that the Seller may not want to agree to when the Contract is prepared. Then it is appropriate to prepare a Counter to the LOI. Even when these are signed by the Buyer and Seller it is still not binding.
Many times the Agent will write the LOI and then once the basic items have been agreed to the LOI is shipped off to the Attorney to actually write the contract. A good Real Estate Attorney will write the contract as close as legally possible to the LOI.
I do not always use an LOI on a basic Contract as the LOI is non-binding and if we are going to go to contract, then let’s do it. However, it does NOT mean that I will be discussing the Terms that my Client wants incorporated into the Contract with the Cross Agent.
I use the LOI always when the Attorney is preparing the Contract. In fact, usually I will send the LOI over to the Attorney for Blessing before presenting it to the other Agent.
The Letter of Intent is really used to define the outline of the final Contract. Sometimes this will prevent a long list of Counters to the Contract.
Remember that the LOI is only an outline and does not bind anyone to the Terms-only the Contract does this.
I answer my phone, feel free to call me. 602-688-9279
First and foremost, I am well on the road to recovery from Covid-19. Yes, both Tom and I had it. He first, then me. While he was nearly as affected as I was, he is still feeling the after effects of the general fatigue. He is back at work and should be fine. Many of you know that I was in hospital and am still recovering at home. I tire quickly and still (probably for some time) have a cough. However, neither of us are contagious anymore. This is something to take seriously and please be careful with distancing and using your masks.
I will say that many of my clients have given me great support and I want to thank you for this!
Real Estate continues to be very lively in Phoenix. Many investors are against multiple offers.
I wanted to share my thoughts when you may be in a multiple offer situation. As a Buyer’s Agent, I am seeing this quite often. I REALLY hate to get into a multiple offer situation. Here’s why, you are simply bidding against yourself. You and I have no knowledge of what the other offer is and we are simply allowing the listing agent to raise the price or remove contingencies. If this is what you want, I will certainly do my best. My recommendation is often, withdraw the offer and go on to another property. Many times the listing agent suddenly becomes much easier to work with and we still get an accepted offer. Did the listing really have another offer? Who knows? A few days ago, I wrote an offer for a client that had several offers. The listing agent wanted my client to pay 20K over listing price and remove appraisal contingency. Also to remove the inspection contingency. While I certainly spoke with my client to offer them the terms and conditions, my solid advice was to move on. In another case last week, we wrote a really good offer on a property and the agent called the next day that they had accepted another offer. She let it slip that the other offer was one of her own clients. Did she use my offer to encourage an offer from her client? PRobably. This is called “shopping the offer”. Hard to prove but highly unethical!
As a Seller, if you received more than one offer be careful. I usually recommend that we work with the best offer. If you use the multiple offer forms and it is done correctly, often you may lose ALL offers for the very reasons that I have outlined above. If we vet the offers on the table, while there is never a guarantee in Real Estate, most often we go to a successful closing,
I also wanted to touch base on the differences that I am personally using with Covid-19 and listing a property.
While I alway use professional photos and supply the due diligence upfront thus circumventing many buyers that are not serious, I have added other tools to the tool chest. I now have virtual tours done to all listings. I also am in the process of obtaining actual floor plans for each property. This way every potential buyer has a tour of the property and floor plans. Of course, I have always kept up with current books and records along with the most current rent roll. Some properties have 20 to 25 different pieces of due diligence provided on the more than 30 websites that I list on. Remember that this takes me almost 6 hours to update every month. I want to thank the property managers and the owners for helping gather all of this information. Without this timely help, this task would be insurmountable.
I hope that this Blog helps draw back the curtain to the job that I work on every day and again I want to thank everyone for their continued support while I am still recovering from Covid-19.
Remember that I do answer my phone and feel free to call me. 602-688-9279.
Feel free to call me, everyone knows I answer my phone 602-688-9279.
Have a GREAT day!
The BINSR is one of the most important but delicate items of the Escrow. I want to spend some time discussing this. It’s important that if the property is the right property that the Buyer and Seller walk away with a Win-Win situation. Too often the Agents get in the way of the BINSR. Ijust had a property cancellation and the inspection was not anything that could not have been overcome. Mostly small items!
When the Buyer has completed their due diligence during the inspection period it is time for the BINSR to be prepared and submitted to the Seller.
Please note that the BINSR is not part of the contract and when this negotiation is completed, there may and probably will be an addendum to the Purchase Contract will be signed. The BINSR is typically not sent to Title or the Ender but the Addendum to the Contract certainly is.
First, it is important to understand that no matter when the BINSR is submitted that the inspection period is now over. This means that the Buyer needs to have all of the due diligence completed. Remember that his DOES NOT mean appraisals or loan but rather books and records along with physical items. There is a list on the Buyer Advisory and the face page of the residential contract.
Secondly, when the BINSR is submitted (either Commercial or Residential) the Seller has five days to respond. IF the Seller does not respond, this means that the Seller will not do anything. Once the Seller responds (unless they agree to everything) the Buyer has five days to either continue to negotiate, accept or cancel the contract with full refund of the Earnest Money.
When submitting the BINSR for multifamily, often we are looking for the Buyer a credit at cose. One of the important items that our referral partner provides is a SOPC which can help give the Buyer the number to work from. I cannot stress how this is helpful for two reasons. First, this gives me a number to place in front of the Seller that is a third party. This also delineated Health and Safety and Immediate needs. The Seller thereby has material knowledge of the Health and Safety and Immediate needs. IF they will not agree to the number or the repairs and the Escrow cancelled due to this, the Seller and the Listing Agent now have to disclose this knowledge going forward.
A word of caution,do not wait until the very last minute to respond. Last year a Buyer’s Agent who was self representing himself, waited until 11:59 to send the BINSR to me. His email failed and he sent it at 12:01 AM. The inspection period was up and his Earnest Money was at risk-clearly. His 10K was either forfeited or he had to close. He closed. If he had sent this earlier, he could have cancelled and gone on.
It is important as in any negotiation that the Buyer be reasonable as well. Last year, I had a Buyer that asked for very unreasonable items to be repaired. Remember that if it is not broken the Buyer cannot ask for replacement, especially on items that according to the inspection would last at least another 5-8 years. Here is a saying that I think about-Pigs get fat and Hogs get slaughtered. Something to think about.
Also, on all of my transactions, the Title company issues a Critical Dates Letter. This is important to review and it will give the dates of the end of the inspection period.
I hope that this helps and if you have any questions, remember that I answer my phone!
Have a great day!
I wanted to take a few moments to really explain some of the processes that I use to make Investors successful.
First, I answer my phone. How important is that?
When a person first connects with me, we have an automated procedure that I use. I place the person on an MLS search for 2 or more units. This allows them to start becoming familiar with the market. It is only sent out twice a week and is an opt in program. If you have not opted in, you are missing information. If you need me to send this to you again, let me know. If you want to be added, let me know.
I use Salesforce as a CRM. Once the person is in Salesforce, they will get an email from me to explain my background.
Also, if the person is on LinkedIn not only will they receive an invitation from me to connect but also an invitation to the closed investment group that is updated with market stories in real time once or twice a week. Another great way to understand the Phoenix Market.
Additibally, remember that I am a member of the Tucson MLS and can (by request only) add you to the Tucson MLS as well.
I keep a massive spreadsheet containing all leads and current clients. This is tracked as to when I have spoken to you and your comments. It also tracks when and how often the MLS searches are opened. Two of my referral partners Tom and JC) help me with getting these people qualified for a loan. If the person is just looking that’s great. What about if they are interested in more than 4 units? No problem, but then I can help find the right commercial lender for the task at hand.
When I find a deal that I think is worth getting serious about, I send out a constant contact. I do not play favorites, the first Investor that calls me and wants it-gets it!.
When we go to Escrow or Contract, I have an online portal system that we store all executed documents and due diligence and you will be invited to this as well.
Did I mention the website? I know that you are on this now but have you registered for the back side-more information. I have spent over $30,000 on this website. You can access it easily from your phone as well.
How about my book on Amazon? Just google my name and it comes up!
How about the 10 hours of education on the site? I paid almost $25,000 to make this a GOOD educational program for the investor.
Don’t forget the classroom workshop on May 2nd.
Below is a bit about the market last week.
According to the Information Market, residential sales in Maricopa County were up 14.8% in January 2020 when compared to January 2019. That’s 7,922 units vs. 6,898 units. Resales accounted for 6,768 of the sales in January of 2020 compared to 5,954 in January of 2019. Median resale prices were up 10.1% over that period to $285,000. New build sales rose to 1,154 vs. 944. New median sales prices rose 6.7% to $365,706.
Feel free to call me, I answer my phone and return calls as soon as possible! 602-688-9279!
Hope your day is amazing!
The first quarter of 2020 zooming byand I am going to share my research and thoughts on the market for the Phoenix area and in particular MultiFamily.
First and foremost one of the questions that I am continually being asked is how long until we see a correction in the Phoenix Market. Let me be clear-I do not have a crystal ball and will not set specific times or dates.
Here is what is happening now. There are over 250 major companies relocating to the Phoenix Market and this means jobs and building growth. One of the reasons that we see this is really two fold. One, California is almost impossible to build in and the laws that DISCOURAGE growth are rapant. My phone is ringing constantly with California Investors. I am meeting with several Californians that have given up and moved here. Many are liquidating their assets on the coast and moving their investments here. The second reason is that our State has a VERY friendly legislature for growth and are incentivized to make this happen. What is really interesting is that I am receiving quite a bit of interest from the East Coast as well.
Remember that our cost of living is low as well.
So the next question is what about jobs, tenants and places to live?
In reference to jobs, our unemployment rate is below that National average and our workforce is robust. Tenants are interesting right for two reasons. The first is that the amount of rents are keeping up with the wages and rents are on the increase there is no doubt. We had a multi unit property that the tenants needed the rents raised. The Property Manager raised the rents $200 across the board and not one tenant left! One of my clients in Tucson wanted to rent a small apartment here so he could manage the rehab on one of his properties. He could not find an apartment or at least one that he felt was affordable for his needs. The second part of the Tenant situation is that the younger tenants (millennials) do not want home ownership, they do not seem to want the responsibility of maintaining their own property.
Places to live are really interesting and probably the main reason that we see NO vacancies to speak of.
About 10 years ago, Elliot Pollock who is probably the foremost economist on the PHoenix market projected that in 2020 we would need 525,000 more dwellings and that 35% of this would be new multifamily. I went to a conference two weeks ago on the economy that he was one of the featured speakers. Not only have we not met these numbers but now he believes that we need more units and that he projects that our growth will remain strong for at least another 4 years.
Here is a link for some breaking news that happened yesterday check it out Historically low inventory continues driving home prices higher
I want to quote and give you directly from the horse’s mouth Elliott Pollack’s last Monday projections. I respect him a great deal and you should go to his website and sign up for his weekly updates. See below.
Also, remember that I am on the ground and digging deals out. Call me I want to speak with you and help you understand the market and what is going on.
ELLIOTT D. POLLACK & Company
FOR IMMEDIATE RELEASE
January 27, 2020
The Monday Morning Quarterback
A quick analysis of important economic data released over the last week
It was a slow week for national economic news. Leading indicators were essentially flat. Monthly existing home sales increased substantially from a year ago in December but were up only modestly for the year (2019 over 2018). And the supply/demand imbalance in the country caused resale prices to increase at four times the overall rate of inflation and more rapidly than wage gains for the December over December measure but were up more modestly for the year as a whole. This is because when interest rates declined during the year it allowed more of the pent up demand for housing to manifest itself. Other than that, it was political. The impeachment trial got underway in the Senate. And according to the Washington Examiner, the death of Mr. Peanut, the Planters Peanut symbol for the last 104 years, overshadowed the first day of impeachment arguments on Twitter. Is the public telling us something?
On the local level, the latest Arizona, Greater Phoenix, and Greater Tucson employment data shows that the state and its major metro areas are continuing to do well economically. Arizona remained the third most rapidly growing state in 2019 and Greater Phoenix was the third most rapidly growing major employment market in the country in 2019. Thus, the state and Greater Phoenix are going into 2020 with a full head of steam. The same can be said for the single family, apartment, office and industrial real estate markets in Greater Phoenix.
- The Index of Leading Indicators fell modestly in December to 111.2. This is a 0.3% drop from November’s 111.5 and a 0.1% increase over December 2018 (see chart below). It is worth noting that leading indicators have modestly declined in four of the last five months. The manufacturing indicators are pointing to continued weakness in the sector. However, financial conditions and consumers’ outlook for the economy remain positive.
- Existing home sales grew by 3.6% in December when compared to November. They were up 10.8% over December 2018. For 2019 as a whole new home sales were flat for the year and single family sales were up a modest 0.5%. This indicates a significant rebound in housing the second half of 2019. The declines in mortgage rates helped free up some of the huge pent up demand for housing. The lower mortgage rates help offset the effect of higher prices on affordability as home prices increased by 7.8% December over December and 4.8% when comparing 2019 to 2018.
- Employment figures for both December and full year 2019 came out this week. The numbers show continued solid growth in the state as a whole, Greater Phoenix, and Greater Tucson.
- For the state as a whole, December employment was up 2.9% from December 2018 or 84,400 jobs. And for the year as a whole, employment in the state was up 2.6%. While this is somewhat slower than the 2.8% growth in 2018 over 2017, it is still strong. And while the rate of growth in employment has modestly slowed in the second half of the year, the state is entering 2020 on solid footing. Arizona remains the third most rapidly growing state (percentage terms) in the U.S. behind Utah and Nevada.
- For the year as a whole, employment was up 74,800 jobs. The sectors with the biggest gains in absolute terms were Educational and Health Services with 19,300 jobs, Construction with 16,000 jobs, Trade, Transportation and Utilities with 10,500 jobs and Professional and Business Services with 10,000 jobs.
- In percentage terms, the employment sector leaders were Construction with 10.1% growth, Manufacturing at 4.4% growth, Educational and Health Services at 4.3% and Natural Resources and Mining at 4.3%.
- Greater Phoenix employment growth was up 3.2% from December 2018 to December 2019. That’s 68,800 jobs or more than 81.5% of all the jobs created in the state over that period of time. When comparing 2019 with 2018, growth was 2.9% or 61,800 jobs. That’s 82.6% of all the jobs in the state. The 2.9% for 2019 compares to 3.3% in 2018 and 3.0% in 2017. The 2019 number is likely to be revised upward when revisions are released in March. The present numbers paint a bright picture for Greater Phoenix. It is now the third most rapidly growing major market in terms of percentage employment in the country. Only Dallas at just under 3.1% and Orlando at just under 3.6% grew more rapidly in 2019.
- Greater Tucson grew by 8,800 jobs or 2.3% on a December over December basis. On a year over year basis, Tucson was up 1.9% or 7,300 jobs. This was the best year for Tucson since 2006.
- According to CBRE, the Greater Phoenix industrial market continues to do well. In the 4th quarter of the year, 2.6 million square feet of industrial space was absorbed while 3.3 million square feet was brought on stream. Thus, vacancy rates increase modestly from 6.1% in the 3rd quarter to 6.3% in the 4th quarter. This is still very low by historical standards. For 2019 as a whole, 10.7 million square feet was absorbed while 9.1 million square feet was delivered. Vacancy rates for the year as a whole declined from 6.5% to 6.3%. Rental rates were up almost 8%.
- According to CBRE, the Greater Phoenix office market also did well in 2019. In the 4th quarter, absorption of office space was 830,401 square feet while change in inventory was 558,731 square feet. Thus, vacancy rates dropped from 14.4% in the 3rd quarter to 14.1% in the 4th quarter. For 2019 as a whole, 3.2 million square feet was absorbed 2.8 million square feet was delivered.
Elliott D. Pollack & Company (EDPCo) offers a broad range of economic and real estate consulting services backed by one of the most comprehensive databases found in the nation. This information makes it possible for the firm to conduct economic forecasting, develop economic impact studies and prepare demographic analyses and forecasts. Econometric modeling and economic development analysis and planning are also part of our capabilities. EDPCo staff includes professionals with backgrounds in economics, urban planning, financial analysis, real estate development and government. These professionals serve a broad client base of both public and private sector entities that range from school districts and utility companies to law firms and real estate developers.
I want t post an article from my referral partner Rick Wittstock of IPX 1031. Rick has been a valued REferral Partner of mu firm.
Since so many Investors are looking towards 1031 Tax Deferred Exchagnes this article cam out at the right time. Please go to our Referral Partner Page to contact or learn more about Rick!