Faqs

Some CA residents may believe those of us who were born and/or raised in Prescott may have a chip on our shoulder for our Golden State friends…this is not true at all. Although there may be some pockets of people who don’t like anyone new moving to town, most residents understand and welcome new neighbors.

Prescott is currently being flooded with buyers from California (Autumn of 2022). A recent buyer looking for a home in the subdivision we currently live sent me an email and indicated interest in the area. Because of the scarceness of homes in this particular community, I informed them they may need to move quickly on the property if their interest was high. They responded rather coarsely with “we don’t do anything quickly…” My thought on that particular and rare attitude is; “then you won’t be living in Prescott.”

The property was priced a tad under $400,000, which is a rarity in the current market. The home will likely not be on the market for more than a day. I’m somewhat familiar with this particular property having visited 5 years ago when it was last on the market for $139,000. So WHAT EXACTLY HAPPENED WITH THE AZ MARKET?

COVID happened and many people simple wanted out of the large metropolitan areas. Millions of people started shifting all over the country, and most of them have been sitting on an investment since the crash of 2008-ish. Prescott’s market was actually pretty perfect in 2018…not too high and not too low. The average selling price for a 3 bedroom, 2 bath home was just around $318,000 at $183 per square foot. In 2019 it jumped to $330,000. Still not too bad. If you remove a 2-car garage, the average price per square foot dropped to $175. In 2021 those prices jumped to $260 per square foot, and in 2022 it jumped to $300. 2023-24 it jumped to $317 per square foot. The real take away is the average listing price in 2022 was $295.00 per square foot…meaning people paid an average of approximately $10,000 over asking price for a typical 1,750 sq.ft. home. This is the market we’re currently in right now. That same house priced at $318,000 in 2018 is selling for $573,000 in 2024.

TIPS TO HELP YOU:
If you moving from California to the Prescott area, here’s a couple things to keep in mind.

1. Be ready to pull the trigger. If you’re sure Prescott’s your destination, have your “ducks in a row”. Have your lending or cash status already secured and documented. If you’re unsure where you want to land, spend some time in a particular town before reaching out to a local agent. You may save everyone some time. If you’re visiting Prescott, do yourself a favor and stay at least one night within walking distance to downtown. Book well in advance, rooms are scarce for last minute decisions.

2. Agents are very busy currently, especially the good ones. If you’re driving to town to “look around” and “get an idea”…feel free. However, you need to understand any home you look at will likely be gone by the time you return home with multiple offers. This is the current market for any home under $500,000. If you’re in the $500k – $750k range, you may have a few weeks. If you’re over $1-million, the average days on market is two weeks.

3. Find a good agent. Some of us are doing dozens of transactions per month and we want to help you…Help us do just that. We know what to look for and how our market is flowing. We know how many days on the market an overpriced house will sit before dropping its price. Be ready to adjust quickly.

4. If you need to sell your current home in CA to buy in Prescott, please don’t waste anyone’s time by believing a seller will accept a contingent offer…they simply will not. An imaginary line is forming at the door with cash, full-price, or over full-price offers right behind you. Have your home under contract, and completely through the inspection and appraisal period, or be willing to waive those contingencies with your offer. This means if you make an offer, and the home you wish to purchase does not appraise, you’ll be responsible for coming in with the cash to close the difference. Once you’ve jumped through those hoops with your current sale, then you’re ready to make offers.

5. If you’re looking for future investment, let’s say to retire in a year or so…let your agent know up front. At this stage viewing properties is a largely irrelevant exercise, instead have your agent tour neighborhoods and take good notes. If you really like a particular area, we’ll help you find the right home when the time comes.

My wife & I have made some dear friends over the years who were California residents. We’ve embraced many with open hearts and with some with built life-long friendships. We hope our next adventure is with you and your family…and we sincerely hope these honest approach helps you get on the right path whether you’re a veteran home-buyer, or it’s your first time.

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2024 Climbing Interest Rates

Buyers are finding themselves in challenging times in the Arizona real estate market not only with massive price hikes, but with rising interest rates.

Perhaps you’ve been thinking, “hey, maybe it’s time we purchased our home in Prescott, Arizona” only to find out our average home price is over $685K! Perhaps the price of the home isn’t the issue, but instead the rising interest rates.

With interest rates pushing into the 8% territory this could mean pushing some people right out of the market. Why? Because the same person who could afford that 30-year fixed at 5% is paying $600+ more a month at 8%. ($400,000 loan with 10% down). These massive increases in not only monthly payments are high, but overall expense for the life of the loan are tremendous. Kind of makes you pine for the COVID days again, eh?

What is a 2:1 Buy-down?

A 2:1 buy-down is paying up front cash to the lender to reduce your interest rate during the first two years of the loan. Sometimes other deals can be worked also (called “buying down points”) but the purpose of the 2:1 buy-down is to offer relief for at least two years, during times of interest rate hikes. A 7% rate becomes 5% year-1, and 6% year-2. Hopefully by year 3, things have dropped again and the owner can now refinance.

Sellers can often offer this as an incentive for buyers who are trying to get into a home. Perhaps a buyer is well-qualified regarding credit score, but doesn’t have the financial girth to withstand a high interest rate yet. Maybe they’re just getting established in a new community and could use some help.

The double-dip

This is where things get interesting. Should a buyer have some extra cash on hand, they can request to buy down points. Should the home sell at $500,000, purchasing 1 point would cost $5K up front. So for $10K, a buyer could buy-down his rate from 7% to 5%. Now the seller decides to kick in money from the proceeds of the sale to contribute to a 2:1 buy-down. Now the interest rate drops to 3% the first year and 4% the second.

Is it worth during the 2:1 buy-down timeline?

Yes, if you have the cash, the buy-down is very much worth it. On a $500K home with an interest rate of 7.5% a combined 4-point buy down would take the payment from $3,500/month to $2,250/month, and a break-even date at 16 months…meaning you would recoup the $20,000 in buy-downs with the lower payment.

This strategy could put buyers back in the game! Working with a good agent who understands this and has connections in the lending industry is imperative during times of high interest rates.

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Hire a Professional

1. List your home with a Realtor who will do all the things necessary to bring in qualified prospects, guide you in setting a good price, help you to show your home to your advantage and negotiate a contract that nets you the most money possible.

Outside

2. Invest in landscaping where it can be seen at first sight. A well manicured lawn, neatly clipped shrubs and clean walks create a good first impression.
3. An extra shot of fertilizer, in season, will make your grass look lush and green.
4. Cut back overgrown shrubbery that looks scraggly and keep light out of your house.
5. Paint your house if necessary. This can probably do more for sales appeal than any other factor.  If you decide against painting, at least consider painting front shutters or window and door trim.
6. Walks should be free of leaves, weeds, dirt and debris.
7. Inspect the roof and gutters, and replace any missing shingles.
8. Consider putting flowers outside the front door.
9. Repaint or stain the front door.
10. Put a bright coat of paint on your mailbox (or replace it).
11. Put a new doormat out front.

Kitchen

12. This is the most important room in the house. Make it bright and attractive.  Clean your cabinets inside and out.  Also new wallpaper pays dividends.
13. Clean the vent hood, the range/oven and the sink.
14. Scrub the kitchen floor.
15. Remove any extra appliances on the counters that you do not use every day.

Bathroom

16. Repair any dripping faucets, because they discolor sinks and suggest faulty plumbing.
17. Keep fresh towels in the bathroom.
18. Scrub the toilet, shower, tub and caulk if necessary.
19. Use drain opener to unclog any slow drains.

Living Areas

20. Have all drywall in good shape. Cracks and nail holes are easy to fix.
21. Check ceiling and ceiling fans for dirt.
22. When painting or re-decoration, stick to conventional colors.
23. Replace faded curtains or bedspreads.
24. If you have a fireplace clean it out and lay some logs inside.
25. Wash your windows inside and outside.
26. Replace any broken windows.
27. Replace or fix any torn screens.
28. Make sure all windows pen and close easily.
29. Check all light bulbs and replace if necessary.
30. Check light switches and plugs to make sure they work.
31. Make sure all floors are clean.
32. Straighten all closets. Well ordered closets show space is ample.
33. For sliding doors that stick, rub parafin wax in the tracks.
34. Clean the air return vents and put in new filters.

Garage, Attic and Driveway

35. Clean and organize the garage and attic, and dispose of anything you will not take with you.
36. Repair any major cracks with ready mix concrete.
37. Clean any oil stains.
38. Check garage door and oil if necessary.

When Your House is Being Shown

39. Keep shades open to let in light. This makes your rooms look larger
40. Turn on all interior lights
41. Have your home well-lit and interior doors open for showing
42. At night, turn on porch light and any exterior lighting
43. Make sure all beds are made and rooms cleaned daily
44. Make sure all dirty dishes are in the dishwasher, not in the sink nor on the counters
45. Keep toys in the kids’ rooms
46. Keep radio/stereo/TV off
47. Try to run some errands when the house is being shown
48. If you are home, do not negotiate directly with the buyers
49. Refer any inquiries about your home to your Realtor
50. Take your pets for a walk when your house is being shown
51. Let the Realtor show your house and do not tag along

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1. When do I get my sale proceeds?

On the date of recording, your escrow officer will have your proceeds available for your review.  At the time of closing, you may request that your escrow officer either cut you a check for your proceeds or wire the funds directly into your bank account.

2. Why do I have to pay interest on my loan pay-off past the day of recording?

Your lender continues to accrue interest to the date that they post your loan as being paid in full.  This could be one or two days from the date your escrow officer sends your pay-off check via overnight mail or wire transfer.

3. When do I get a refund from my impound account?

After your escrow officer sends your pay-off check to your existing lender, you can expect to get your impound account back direct from your lender within 30-60 days.  If you have any questions after that time, we suggest calling your lender.

4. When do I cancel homeowners/fire insurance?

Please do not cancel your insurance until you have received your sale proceeds.

5. Why does my escrow officer require that I complete a 1099 form?

A 1099 form is the reporting form adopted by the IRS for submitting the information required by law.  Under guidelines established by the IRS, sellers of real property are require to have their sales price reported on the 1099 form.

6. What is a statement of information?

Statements of information provide title companies with the information they need to distinguish the buyers and sellers of real property from others with similar names.  After identifying the true buyers and sellers, title companies may disregard the judgments, liens or other matters on the public records under similar names.

7. I don’t understand tax pro-rations. How do they work?

Each year on January 1 the lien of the following year’s property tax attaches to the land, pursuant to Arizona Law.  However this is a lien that is not yet payable and it becomes due October 1.  Pro-ration simply figures out how much of these taxes you owe, and how much the buyer owes once he/she becomes the owner.

8. What will I need to bring with me to Title to sign my papers?

Bring one of the following: Arizona driver’s license, Arizona ID card, valid passport, or military ID.

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Protecting your Prescott Valley home investment is your primary concern. You’ll likely go through all the same channels and jump through all the same hoops as buying a home. Both homes will need appraisals, inspections, title work, etc… Why? You’ll want to know that you’re getting a legitimate home in exchange for yours. In a trade it’s not about the “price”, there’s concerns of judgements, liens, encumbrances, maintenance, etc.

However, if you have a home with more square footage, and is of greater value, wouldn’t it be better to sell it and have extra cash in the bank when you purchase? Also, marketing your home properly will ensure its exposure to the world. Is your agent doing everything they need to procure a buyer?

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