This week I was contacted by a Lender I had done quite a bit of business with several years ago who told me about a new Lot Loan Program she now has available. Of course that got my attention as currently there is only 1 Lender in Tucson providing what I consider a viable Lot Loan. And that loan has a 20 year amortization which pushes the monthly payment much higher than many of my clients would like. So I was anxiously awaiting the details of this new program.

When I got the details I have to say I was pleasantly surprised, although we’re not back to where we were as recently as 18 months ago when land loans were still abundant and thus very competitive. On the plus side, the loan can be used for new purchases or refinances, has a choice of 15 or 30 year amortizations and can apply to finished lots or unimproved lots where utilities are close by. By the way, this is the first program I’ve heard about in a long time that is available for unimproved land. The best part is the rate as of today is 5.5%. I mention that with a little caution as I don’t  yet have all the fine points of this program, but will shortly. The loan has a maximum 70% Loan to Value, requires a minimum credit score of 680 and has a 3 year balloon. I’d like to see LTV’s a bit higher and balloon’s a bit longer. For someone planning to build their own home 3 years is more than sufficient but for an investor, it is the bare minimum.

So this loan is not perfect but may be the best we now have in Tucson. More importantly,  I hope that it is an indication that Lenders are re-thinking their participation in Land and Lot Loans and that we may be at the very early stages of a return to a more normal mortgage climate.

Here’s  a summary I just recieved from a Senior Loan Officer at Bank of America that I think is right on the money (so to speak). Doug Frisch has been in Tucson many years and I respect his periodic forecasts/reports.

Although he is referring to the single family home market, his remarks are exactly what I’m also experiencing in the Land Market.

” While positive reports are starting to pop up in the media, we are still in a very fragile economy. The large numbers of short sales and REO properties competing with properties that actually have real human sellers in them has created a scenario that makes it difficult for the real home sellers to compete; as these REO and short sales prices are creating a drag on home appreciation. On a positive sign, I am seeing strong sales activity in these in these REO and short sales properties with multi[ple offers in many instances. …The business that is most active is the lower price ranges. This is indicative of the market in all of Arizona.”

What do you think? Are you seeing positive signs or more of the same?

Lou Jewell, ALC is a reputable land broker practicing in North Carolina. Last year he wote an article listing 93 land Disclosure Issues that a buyer or seller might come across in a rural land transaction. Although most of my transactions are more urban than rural, I have run up against many of these same issues. For anyone interested in buying or selling land, here are some issues that may come into play. Are you aware of  any: encroachments, easements, endangered species, flooding, groundwater contamination, landfills, mineshafts, odors, pipelines, tunnels or wells? How about conservation easements, capped wells or burial sites? Has the land been tested for Radon or Methane gas? Is there a possibility that any type of underground storage tank has ever been present?  How about soil settlement, drainage, earth movement,erosion,  or fissures? Do you have a survey? Is it an ALTA or standard boundary survey? Is your land subject to CC&R’S and or Design Guidelines? How about local zoning, hillside, hilltop and floodplain regulations ?

Those were only 29 potential disclosure issues rather than 93. I guess the important point is understanding the critical issues involved in the transaction that you’re considering and going into it with your eyes wide open.

As I’ve said, I think EVERY LAND OWNER should file a tax appeal this year. We’re in a downward trending market that hasn’t hit bottom yet and there are plenty of sold comps out there (most likely some are similar to your parcel) that may justify a lower value than the Assessor has put on your vacant land.  On the 2011 Notice of Value you recently received you’ll see the Appeal Deadline Date. This is the drop dead, last date they will accept your appeal so note it carefully and DON’T MISS IT.

Start by going to the Assessors website at www.asr.pima.gov. Click on the button marked, ” Appeal Process” on the right of the screen. On the next screen click on ” Petition”. On the next screen click on ” Download Appeal Forms Here”. On the next screen click on ” Petition for Review of Real Property Valuation”.  That should get you to the 3 page downloadable form that you’ll need to begin.

The first line to be filled out is in the upper left hand corner. Remember you’re filing an Appeal to the 2011 tax year and that is the year to be entered.Items 1-6 are self explanatory and need no comment. In item #7 check the Market  Sales Approach box as this will be the basis for appealing the value of your land. And here is the most important part of the form; finding good comps that are close to your parcel in location, size, characteristic and most importantly have recently SOLD for a low price and/or already have been given a  low Full Cash Value by the Assessor. You can easily look up a parcel’s FCV on The Assessor’s website by entering the parcel ID in the Quick Search area at the upper right.  Active listings with low asking prices don’t mean anything to the Assessor. They will only use sold parcels in considering your appeal.The 2 best places to find these comps are at www.tarmls.com and www.zillow.com. You might also try some of the foreclosure related sites like www.realtytrac.com. or even the Assessor’s site where you can search your surrounding area by similar tax codes.  In item #9 you are asked to give your opinion of your property’s value. Be very aggressive here based on the comps you’ve found. The Assessor will never assign your property a value lower than what your estimate is.  Also, the Assessor will likely settle on a value somewhere between their value and yours.

Good luck and get started!

Most if not all owners of Property in Pima County received their Residential Notice of Value for 2011 in  this week’s mail. This shows the Full Cash Value ascribed to your land by the Assessor’s office on which your property taxes will be based. THIS BEGINS A 60 DAY PERIOD WHICH IS THE ONLY TIME YOU CAN APPEAL YOUR TAXES THIS YEAR. I’ve talked to so many land owners this past year who have complained bitterly (and in many cases rightly so) about the unfairly high value that the Assessor has placed on their land. NOW IS THE ONLY TIME YOU CAN DO SOMETHING ABOUT IT..

The first thing to do is look at your “Total FCV” for 2011 on the form. The change in value from 2010 should certainly be lower as I’m not aware of any land or lot in any part of Metropolitan Tucson that has increased in value this past year.  Secondly, look at the actual Full Cash Value amount. The Assessor sets this amount at approx. 70-80% of Fair  Market Value. For our purposes, lets use 75% as an average. For example, if your Total FCV in 2011 is  listed as 100,000, divide that by .75 to see that the Assessor is saying your property has a Fair Market Value of $133,333.  If you agree with that amount and believe that to be a fair price that you could sell your property you may not want to appeal.  If you know that comparable property has recently sold between $75,000 and $100,000, or perhaps less because of all the recent foreclosures and short sales, I strongly suggest you file an appeal. If you aren’t sure of the current Market Value of your land find out quickly so you can make an intelligent decision. You can do this in several ways. Go to the TAR/MLS site and search sold listings in your area; check values in your subdivision or part of town through the Assessor’s site and Recorder’s site or call a knowledgable Realtor to help. I  believe, however, that EVERY LAND OWNER should take the time, do the research and file an appeal if justified. You very well may have an inflated idea of what your property is worth versus actual sales.

I was recently showing land to a couple from Iowa who were put off by the idea of building a custom home on a parcel that had a regulated wash going through a portion of it. This led to a lengthy conversation about washes in Tucson and how they effect the value, desirability and buildability of a lot. Without getting too technical (I’ll leave this to the excellent staff of Hydrologists that are readily accessible to anyone by visiting the Pima County Flood Plain Dep’t), here are some brief thoughts.

Washes, also referred to by some as runoff, arroyos, riparian areas or flood plain,  are found throughout every area in Tucson. Generally, wash areas create wonderful habitat for both flora and fauna unlike other parts of the desert. We’ll see animals roaming and hunting in them, large shrubs and trees growing in them and thick, diverse vegetation, including big saguaros, growing on their banks. The more active a wash is, the more of a defined, sandy bottom you’ll see. Depending on the size and amount of water a wash carries, the County has established safe setback areas which determine how close  a home can be built to the wash. For small washes this distance is typically 50 feet but it is encumbent upon a buyer to find out the exact setback for any wash on a property they’re considering. Washes on property lines or just outside property lines are the best case as they provide shade, beauty, privacy  and a buffer from neighboring lots with no negative effect on the land. This type of wash will generally add value to a parcel and make it more desirable. When a wash traverses, or goes through a parcel, we have to be more diligent in understanding it’s impact on the value and buildability of a lot. This is when its time to make  a quick trip to the flood plain office. In general, I’m always more concerned about washes when buying unsubdivided land versus parcels in a platted subdivision as subdivision developers are required to do extensive engineering to identify any flood plain impact on the lots and disclose the results on the recorded plat map. Buyer’s of unsubdivided land must find this out on their own.

Many people prefer having a wash area on or next to their homesite and I’d put myself in that camp. I think they are a big part of what distinguishes Tucson Land from building lots in many of the places from around the country we all come from.

They let us live at close, but safe proximity to nature and help us appreciate the natural beauty of Tucson.

As I’m sitting in an eerily quiet office 2 days before the new year, my thoughts have turned to the difficulties everyone in our industry has experienced in 2009. A good friend who has been a home remodeler has just joined his third Real Estate Brokerage in search of a niche in which he can make a living. Practically all of Tucson’s  Custom Homebuilders, many of whom I’ve done business with,  have transitioned into other areas where they could or are still trying to figure out how to do that. Many of the agents whom I saw around the office in 2007 and 2008 are no longer here. Even some of the bank employed asset managers in charge of REO Properties that I deal with are starting to sound a little burnt out trying to administer the throngs of new foreclosures piling on their desks. And across the board, real estate agents who continue to be productive have adjusted to new marketing methods, new ”scripts” with sellers and buyers, more complicated  and longer transactions, more DFT’s (defaulted transactions), trimming expenses and lifestyles, and generally working harder while making less. And unfortunately, our industry is but one of many experiencing these same problems.

So what are the opportunities in this? For all of us to be more empathic to others as we all go through this recession together. For us to stay in touch with the lighter sides of life and look for things to laugh about with our family, friends colleagues  and clients. For us to volunteer more and forget about our troubles by helping others.  For us to take better care of ourselves, both mentally and physically whether that means longer walks, some meditation time, more time on the EFX , tennis court, golf course or local hiking trails, etc. To become more connected to and spend more time talking to the important people in our lives. To find things we enjoy doing that require less money to do them.  And of course, to spend more time with our animals as they are the ultimate source of continual, never ending love. Something no-one can get too much of.

I know we will get through these times as we always do.

I am simply wishing us all an easy landing.

If you haven’t experienced this wonderful  architectural and cultural masterpiece of Tucson in awhile or never at all, this is a terrific time of year to make the short trip down I-19. My men’s Choir, The Sons of Orpheus has the privilege to perform six,  annual Christmas  Concerts with the Tucson Boys Choir and soloists from the U of A to raise money to restore the Mission. Every year we perform there the we see the magnificent restoration process taking place. I’ve been told by concert go’ers that this concert is the real beginning of their Holiday Season. I’ve never sung in a venue that was so beautiful or acoustically perfect as this. It’s a very special place.

Here are a couple of pictures showing the “magic” that took place on tuesday evening, 12/8/09; both outside and in.

I’ve been putting off writing the concluding segment of this story for some time now and I just realized why. I have interacted professionally with the staff members of the Assessor’s Office on a regular basis for many years. They’ll call me or I’ll call them to discuss a variety of topics; current land sales, progress of new and existing land subdivisions, price trends in different areas, the appeal process of individual lots, changing tax rates,etc., etc. The great majority of time I’ve found the staff to be hard working, knowledgeable, concerned, accessable and most importantly fair in doing their jobs. Thus, I’ve been reluctant to criticize the appeal process and characterize it as unfair and one-sided by design, fearing it will be a reflection against the staff members who participate in it on a regular basis.  After all, most of their working time, which can be as much as 70 hours a week, for four months every year (July through October) is spent preparing for and testifying at these hearings. For the record, that is not my intent or belief.

The State Board of Equalization, is an independent agency, established by Arizona Statute. It is a quasi- judicial body that acts like a judge in that they make decisions based on the evidence presented at the time of each hearing. Their stated objective is to” set a fair and equitable value “on all property appealed to them. The Board members (the hearing officers) are appointees by the Governor of Arizona and members of the Board of Supervisors in both Pima and Maricopa Counties (5 in each). The Governor appoints 13 members and each Supervisor appoints 2 members for a total of 33 members.

As I mentioned earlier, I think the intrinsic structure of the Hearing Board leads to an unfair situation for the Taxpayer. In the three hearings that I participated in, each retired Assessor’s employee argued to approve the exact value recommended by The Assessor’s staff member, EACH AND EVERY TIME. Without fail, information, research and opposing discussion points fell on deaf ears. When these retired employees represent a majority of the officers at a given hearing, I believe a fair hearing is impossible. I think that the structure of the Board should be changed legislatively to eliminate past Assessor Employees from serving in this capacity. They are too steeped in the culture, have too many personal connections to the Assessor’s Office and their inherent  conflict of interest was apparent by the results. Both stakeholder’s in the process, the Assessor and the Taxpayer, should have an equal opportunity to achieve their very different objective. This is not possible  under the current system. There are many qualified professionals statewide to chose from with expertise in real estate values, appraisal, taxation and the appeal process who could insure a more  fair and  relevant outcome. At the very minimum, I would like to see a Panel of three members, with no more than one past Assessor Employee being allowed to serve. Unless and until this system is changed, the first appeal process of working one on one with an Assessor’s Staff Member becomes even more critical as perhaps the only chance a taxpayer has to really have his/her appeal be heard fairly. I’ll discuss this level of appeal in a future post. But that being said, every landowner in Pima County should mark their calendar for February 2010 as the critical date that the next annual appeal process will begin.

In a time of declining values, it is critical that an appeal be filed EVERY YEAR to give you the best chance of paying your fair share of taxes and no more.

As I’ve been telling both my land buyers and sellers for some time, I thought that the biggest impediment to a return of anything close to a “normal”  land market was the large number of pending pre-foreclosure and actual foreclosures that are still working their way through the system. As reported by the Wire Reports and seen in The Arizona Daily Star on 11/20/09, “The foreclosure crisis likely will persist well into next year as high unemployment pushes more people out of homes, pulls down housing prices and raises concerns about the broader recovery. “  The article sites the trend of fixed rate loans made to people with good credit (versus sub-prime loans) sinking into foreclosure in greater rates. Fourteen percent of homeowners nationwide with a mortgage were either behind in payments or in foreclosure by the end of September. The states hardest hit include Florida, Nevada, California and Arizona which account for a combined 43% of the nations foreclosures.

Even in the current market, there are very strong opportunities to both buy and sell. To sellers; there are a lot of cash buyers looking for price driven deals that are competitively priced with lender foreclosed lots. Additionally, sellers who can provide carryback financing will have a distinct advantage over those that can’t. The lot market for parcels under $250,000 is very active. Remember, these are the same properties that were priced from $350,000- $500,000 as little as 18 months ago. To buyers; there has never been an opportunity to purchase so much land for so little money. I’m convinced that people who buy land “right” in this market will look back in 5+ years and be amazed at the appreciation and returns they have received. We have heard for many years that Real Estate is the way most great fortunes are made. This is a chance for the small investor or purchaser to reap some of those same rewards.

Prior to beginning my research for the hearings, I knew the general trend of prices between January of  2008 and  January of 2009 was clearly in the downward direction. Anyone and everyone related to the residential real estate industry, from practioners to teachers, researchers, news media and the general public had been talking about it, and living it since mid-2006 when the trend began. Headlines in newspapers throughout Tucson and the Country were declaring this loss of property value, in all segments of the real estate market, in what seemed like a weekly barrage of bad news.  What I needed to determine was the extent of the trend. Was it different in different parts of Tucson. Did it effect all Subdivisions and land types in similar ways? Were there niche markets that were holding in value? Were foreclosed sales, which were starting to take place during this period, the exception or the norm? Did they establish market value for lots and land? In looking at sales velocity and price over a period of years, what did that tell us about each area of town and niche market value? As you can imagine this took a lot of preparation time and thought to come up with a realistic recommendation for current land values. In addition to my research, the taxpayer representative, Sage Tax Group, did extensive additional research of the land markets not only in Pima County but throughout the State of Arizona to see how Pima County property values compared. We were very prepared and armed with facts as the hearings begun.

The big question in my mind was would the Assessor be as willing to lower values during a recession as he was to raise values during the strong years of 2003-2006? The answer was quickly apparent. The first hearing was staffed by a single member who had recently retired after working for the Pima County Assesssor’s office for about 30 years. He politely listened to the Assessor’s staff recommendations, Sage Tax Group’s and my recommendations, which in all cases represented significantly lower and what I felt were more realistic values, and made the judgement to go with the Assessor’s numbers in EVERY case. The testimony presented to him was pretty much like this: we documented 2008 price drops, reduced # of sales, specifically addressed identical comps with low values,  showed multiple examples of similar property with severly reduced sales prices , and proved the lack  of buyer and investor interest in land and lots in the each sub- marketplace that we were discussing.  The Assessor’s staff  member would usually find an example or 2 where a purchaser had overpaid  for a similar lot (there are always aberrant cases in any market) and use that to extrapolate current trends and values. The third hearing I attended which was staffed by two hearing board members, one of whom was the  retired, past Pima County Assessor, went in exactly the same way. In the second hearing, staffed by two currently working, independant, MAI Appraisers and a 25 year retired Assessor employee, the process was as it was meant to be. The three hearing officers discussed the information before them, used some common sense,and came to a consensus. Interestingly enough, in every instance, the appraisers disagreed initially with the retired Assessor’s  employee who recommended accepting the exact Assessor’s value each time. Although influenced by it’s third member, this board settled on a value somewhere in between Sage’s and the Assessor’s recommendation. I still felt they were a bit on the high side given current conditions, but left believing that the individual property owners that we represented on that given day had been given a fair determination and outcome. Not a belief  I held at the end of the other two hearings.

to be continued.

In reflecting back about my summer activities, I spent an unusual amount of time working partly because I was still rehabbing from a persistent case of tennis elbow and couldn’t get on the courts at all. One of my more interesting assignments was to be hired as an expert witness by The Sage Tax Group to testify about land values in front of The State of Arizona Equalization Board, which is the body that hears individual cases where property owners have appealed the Assessor’s recommended valuation of their property and disagree with the Assessor’s “final” conclusion. It is the next, and last appeal procedure  a tax payer has before filing a lawsuit, which is too costly and time consuming for most individuals to endure. (I’ll talk about the entire appeal process in an upcoming post). Thus, this appeal process becomes critical in a taxpayer’s hope to establish a reasonable market value for their property, based upon current market conditions, and to wind up paying a fair amount of annual real estate tax. The impartiality of the Board is critical as it purports to mediate an opposing view of values; the Assessor’s and the taxpayers.

I attended three hearings, each dealing with high end vacant lots in distinct areas and in some cases whole subdivisions around Tucson. I was given the locations and the individual lots prior to the hearing allowing me to do the appropriate research. The assignment and the purpose of the hearing was to determine the full cash value of each property as of January 1, 2009, as compared to it’s value in January 1, 2008. The critical  focus and discussion was the real estate market during the 2008 calendar year and it’s effect on land values.   Full cash value is an Assessor’s term which is used to calculate the actual amount of tax to be paid and is usually 70% – 80% of the parcel’s market value. The format of the hearing was that an Assessor’s employee would  make a presentation, recommending a value; the tax payer representative would then make a counter proposal and suggest a value; questions would be asked by the hearing officers and then they (if there were more than one officer) would have a discussion and establish a value. Prior to the hearing, the tax payer representative and the Assessor had discussed values and in some cases come to an agreement. The cases heard by the Equalization Board are the cases in which they disagree.  As I mentioned,  this is a final determination short of filing a lawsuit.

In each of the hearings I attended the composition of the Board was different and became  perhaps the most critical factor in determining the outcome of the hearing.  In the first it was staffed by a single member, who I found out was a retired, 30 year, past employee of the Pima County Assessor’s office. The second hearing was staffed by a three member panel comprised of two, currently active, independant land appraisers and a retired, 25 year past employee of the Assessor’s Office. The final Board was staffed by a two member panel including the retired Pima County Assessor and a private real estate investor/owner. The make up of these Board’s was striking to me in the sense there seemed not to be an independance from the major stakeholder in the dispute; the Assessor’s Office. The deck appeared to be stacked against the taxpayer. How could an individual expect a fair, unbiased, interpretation of the market’s effect on their property’s value?

Wasn’t the purpose of the hearing to weigh the facts and make sure full cash value accurately reflected changing market conditions?

Could a career County employee or the retired County Assessor provide a ruling giving credence to both sides of the argument?

To be continued.

As October comes to an end I’m seeing a real increase in the number of people buying foreclosed land and lots from both public and private lenders in the Tucson market. I’ve sold 4, improved  parcels this month and I know of the sale of at least 4 other Bank Owned vacant parcels by other agents. Many prognosticators wonder what it will take to turn around local real estate markets and I think this trend of heightened  foreclosure sales is certainly an important part of the answer. As we begin to lower the inventory of “below market ” properties, we make room for new and re-sale properties which are the lifeblood of a normal market.

Who are the people buying these assets? Two lots I sold in Oro Valley were  to an Investor from Pennsylvania who has been following the Tucson Land Market for quite some time. He bought for Investment with no intention to build. His plan is to hold these for 2-4 years until he believes the market will return and sell them for a profit. They had been selling in the high $200’s and he purchased them in the mid $100’s.  They’re good candidates for investment as there are no homeowners fees and have reasonably low real estate taxes. One lot, in a high end subdivision, also in Oro Valley, was previously purchased in 2006 for the mid $500’s and resold in the mid $200’s. This was purchased by a couple wanting to build a home in this gated, golf community and they wisely followed land opportunities until a very fine lot at a bargain price became available. (I just learned of a similar lot at a similar price about to be available in the same subdivision). The fourth lot was a beautiful, ridgetop, 3.3 acre parcel with big views in northeast Tucson that was offered for sale in 2007 in  the mid $500’s and just sold in the low $200’s. Again, this was a couple moving from Texas who had been searching for existing homes but were unable to find what they wanted. They couldn’t have afforded to build their dream home on a lot like this a couple of years ago but with current land prices, excellent seller financing and lowered building costs they could do it.

As I said, these represent just a few of the deals being made right now but it is very clear to me that those of us dealing in the foreclosure and REO Market are very busy. This afternoon, I’m showing 3 contiguous, 12- 14 acre parcels of horse property to a Broker representing a California buyer considering a Tucson move. Three months ago they were priced at $650,000, $550,000 and $550,000 respectively and today are $569,000, $399,000 and $399,000. Although not bank owned, they’re owned by a seller who knows he must remain very agressive to compete in this market. Today’s market is characterized by an  oversupply of lots where  careful buying will produce terrific opportunities and future returns.

Those were the words that started a very interesting,  front page article by Josh Brodesky of The Arizona Daily Star on 10/25/09 describing the current market for large parcels of Development Land in and around Tucson. This is the type of property that is bought, entitled, developed and sold to national and regional companies such as Pulte, Dell Webb , A.F. Sterling, Pepper Viner and the like, to create large track home communities of what have been traditionally thought of as affordable homes. And the market, in a single word, is bleak. Very few sales (only 4 transactions in 2009 totaling $3.6 M compared to 42 in 2008 totaling $ 98.8 M ),  sales that take place for less than the cost of the improvements, tremendous supply far surpassing demand (23,000 platted, unimproved lots currently available and I am told 8,000 platted, finished,  unsold lots as well), all in a market where existing new and re-sale single family homes are abundantly available at prices lower than we’ve seen in years. Adding to this is an environment with high foreclosures, high unemployment and virtually no financing for raw land or to complete projects that developers have walked away from in the past couple of years. The article finishes on a high note, quoting the largest land developer in Arizona, Don Diamond, who points out the limited supply of good land and the inevitable absorption and cyclical nature of the market that always works in the favor of  those with patience and staying power.

In reflecting and comparing the above to  the state of the custom home land and lot market, which is my daily workplace, although clearly depressed, there is a  glimmer of hope which I can report. We are starting to see foreclosed lots  being absorbed quickly after they hit the market. Not only do these provide great opportunities for investors and people wanting to eventually build their own home, but starts “unclogging” the market of a large oversupply of buildable land.

I’ll go into the custom  home site  market more thoroughly in an upcoming blog.

Unfortunately, as I suspected, in Tucson we’re not yet close to seeing an end to foreclosures coming to market. As Josh Brodesky reported in the Arizona Daily Star on 10/16/09, we have seen roughly 1500 foreclosure filings a month since the beginning of 2009 with 1480 in the month of September. These filings include both notices of upcoming trustee sales (pre-foreclosed property) as well as trustee deeds (actual foreclosures).

This has far reaching implications for Buyers, Sellers and those of us who make our living as Realtors.

Buyers there will be continued opportunity to enter or re- enter the market and take advantage of previously unprecedented prices. Be careful. Do your homework. Negotiate hard, particularly where properties do not reflect current pricing reality. Get expert help from Realtors with experience in  REO property and short sales.

Sellers must be realistic in pricing and especially in land and lots,  offer extraordinary seller financing to set their properties apart. Be aware there are a lot of sales going on now; almost all of which are price driven. Agents must expect to work harder, actively learn more about dealing with lender owned property, know expertly all the comps in your sub-market and plan for lean times for the next year or two.

I hear many of my colleagues say they’re not having “fun” anymore referring to the fast and furious markets of 2004-2006 and the difficulty of making a living in 2008 and 2009. I agree, but also realize that its time to change our business model and realize the great sense of acomplishment we’ll  feel as we successfully guide our clients through the morass of current issues to complete transactions. We’ll plan to spend more time with our customers and clients and remember one of the primary reasons we chose this profession was because the business of relationships and service was so rewarding.

I guess I’m entitled to veer off subject occasionally and this seems like something I must do today. My companion and friend of 9 1/2 years, Shay, a male Blue Merle Aussie, was diagnosed with inoperable cancer of the spleen that has spread throughout his body. We can now explain the recent cough that came from nowhere and the limp that wouldn’t go away. Our vet will arrive at our house tomorrow morning at 11:30 and we’ll say goodbye to our beloved friend and teacher. We all know many people that have gone through this experience but when it is you, it is quite different. I can’t seem to swallow past the lump in my throat and when my eyes dry for a few minutes, there is a slight, constant sting that reminds me of my sadness and my love for him.

We are having a good night. A last trip to the golf course to meet our neighborhood pack, eat a little grass, briefly chase a ball and a quiet repose to enjoy the breeze and watch the sun’s reflection on the Catalinas.Meet some neighbors on the way home who ask Shay to find Bearman, their 5year old horse who was put down last Friday, and chase him, lick his nose and send their love.  Home to eat a frozen lasagna dinner instead of kibble and then a quiet nap on his favorite bed.

My mind wanders as I watch him nap. Is he in pain? It doesn’t appear so. But he’s no longer robust and alert and it’s hard to look at him. Tonight he is fragile, tentative and slightly misshapen. And I remember the hours of agility training that were never completed because of a valley fever diagnosis. Walking, swimming, playing and sneaking around with Silver and Pat, our favorite Weimeraner and human. He was so physically and spiritually bonded to me yet cautious and aloof with others. We were an important part of each other’s day. Not happy in the car, but always content to be near to his family. Always liked his own space and always happiest if he could hear us in the same room. So predictable, so loving, so content, so independent. Some creatures appear to be old souls. He is one of them and so like our first human lover, he is deeply etched in our being.

The thoughts keep coming but that’s enough for now.

I hope he has a restful night .

postscript: He did have a calm night. And after a wonderful walk and a special breakfast, he died peacefully while I held him and Holly fed him almond butter from her fingers.

There is an empty place in my heart which is Shay. A place that will never be filled and that I will  always cherish.

In speaking with bank officers recently, particularly those from solvent institutions with good cash reserves, I’ve heard complaints about the inability to invest funds and receive decent returns. One president told me he was reluctant to sell and convert his REO assets to cash and would rather wait until values come back because he could only get a 1-2% return on his funds.

How about using some of those reserves to bring back lot loans? I’m not talking about the type of lot loans that got banks into trouble like the 100% Loan to Value ,  3 year adjustable with a questionable borrower. I mean a 75% -80%LTV, 20-25 year amortized loan at a fair interest rate of say 7% to a well qualified buyer on a realistically appraised property.  At the beginning of 2009 there were 4 lenders making these loans. Today in Tucson I’m aware of only one institutional lot loan and it’s at 11% with 40% down and a 10 year amortization. Not a realistic alternative to a prudent buyer.  Private lenders are even worse, charging as much as 15% interest and 4-5% closing costs.  For years, lot loans were the staple of conservative lenders and certainly should be again. Today’s typical lot buyer wanting to build a custom home is business savvy with a strong job or retired, and excellent credit. Making a loan to this type of borrower is far from a risky loan.

A land buyer’s options are currently limited to paying cash, negotiating a seller carryback, or for someone planning to build immediately, delay a closing until a construction loan can be approved and put in place. (A few years back, before lot loans were available, closings delayed 90-120 days to accomodate a construction loan were the norm. So, until banks get back into the market, we’ll have to be creative and figure out ways to help buyers take advantage of some of the great land deals in our marketplace.

One of my pet peeves is how complicated and frustrating it is to buy foreclosed assets from a bank. According to The National Association of Realtors, in the second quarter of 2009, nearly 48% of Arizona sales were REO transactions. I just read an excellent article in the October issue of  Arizona Realtor Magazine that is a must read for anyone wanting to buy REO property, or a Realtor working in a REO transaction.

In summary if you’re a buyer’s agent:
1. Understand the listing agents challenges
2. Set your client’s expectations
3. Do your property homework.
4. Determine the listing agent’s preferred way to communicate.
5. Submit a complete offer.
6. Understand lender requirements and addendum.

If your listing a REO property:
1.Put yourself in the buyer agent’s shoes.
2. Include pictures on the MLS.
3. Spell out offer requirements
4. Be responsive.
5.  Assume you’ll see these agents again.

For a complete copy of this article, go to http://www.aaronline.com/AZR/Oct/09REO.aspx