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.