What Does "As Is" Mean?

Sometimes my buyers become alarmed when the seller says they want to sell their house "As Is". Many people assume this means the seller has something to hide. Not necessarily.

Sometimes a seller wants to sell a house "As Is" because they don't have money to make repairs or they don't want to be bothered making repairs. If the sale is a short sale or foreclosure, "As Is" is frequently a requirement of the seller's lender in the case of a short sale, or the owner/mortgage company in the case of a foreclosure.

When the buyer and seller agree that the house will be sold "As Is", they both sign the Arizona Association of Realtors "As Is" Addendum. Lines 23 to 24 of the "As Is" Addendum state the seller still has to tell the buyer about known problems with the property. This is required by Arizona law. However, lines 8 to 14 of the "As Is" Addendum state that the seller does not have to fix even the "Warranted Items" mentioned on lines 172 to 177 of the Purchase Contract. "Warranted Items" are heating, cooling, plumbing, electrical and mechanical systems, plus pool equipment, stove and built-in appliances. Without the "As Is" Addendum, the seller is obligated to fix "Warranted Items". With the "As Is" Addendum, the seller is not obligated to fix "Warranted Items". That is the only difference between "As Is" and "Not As Is". 

Lines 15 to 18 of the "As Is" Addendum state that the buyer is still allowed to do a home inspection, and the buyer retains the rights in Section 6j of the Purchase Contract. In other words, the buyer can cancel the Purchase Contract for any reason during the inspection period, and the buyer can even ask the seller to make repairs, but with the "As Is" Addendum, the seller is under no obligation to fix anything, even if the buyer's lender requires repairs such termite treatment or replacement of a broken water heater or window. If the buyer's lender requires repairs that the seller can't or won't make, usually the Purchase Contract has to be cancelled and the buyer gets his earnest money refunded.

Will Open House Signs Become a Thing of the Past?

 The Tucson Association of Realtors announced today:

The City of Prescott has banned all signs, including Open House signs, within the city limits in the public right of ways. This decision was made as a result of the U.S. Supreme Court ruling in the case of Gilbert v. Reed. Cities all across the country are looking at their sign codes and we could be dramatically impacted.

There are many people in Prescott who are working to change the situation and the final story on this has been written; however, it is a reminder for us just how much we can be impacted by decisions made every day in local town halls.

This pertains to the temporary, 18” x 24” signs that realtors put on public rights of way during an open house. The smaller, 9” x 12” signs that some realtors still drive into the ground on stakes in public rights of way are already illegal.

Exceptional Quality. Budget Price.

RARE Central Tucson home with garage, landscaping and updated kitchen. Dining area, master bathroom and bedroom expansion expertly added with PERMITS in 2005.

Spacious great room extends from the front door to the lovely back patio.

High quality features include recessed lighting, gorgeous cabinets, double pane windows in addition, tile flooring.

Upgraded guest bath and large guest bedroom.

Whole house water filter. Huge private lot with mature trees and desert-adapted landscaping.

Grey water from washer to irrigation tank. Nice shed. Great location near Tucson Botanical Gardens, Loft Cinema, Whole Foods, Sprouts. 2.5 miles along Pima bike path to UofA and modern street car. The interactive floor plan is here. Assessor records show 1,150 SF with addition. Offered at $150,000. Sold May 31, 2016 in a bidding war for $155,000.

I'm Proud to be Endorsed by Such a Lovely Person

Donna is a really excellent Realtor. Donna did a wonderful job of advertising my home. She posted 50 photos, taken by a professional photographer, online, and had a guy come do a complete floor plan, which also helped buyers visualize my house. She had me write a short explanation of what I love about my house and the neighborhood and what's available nearby, which she also put online. I highly recommend her. She is easy to work with and not fussy. A woman from Oregon bought my house, sight unseen, based on all the promo done by Donna. It sold in a week! She's a real professional. If you ever need to sell your house, I recommend her.
-Jan Kindwoman

A Really Sweet Desert Home

Welcome to this nature lover's paradise and its energy-efficient, well-maintained home. High vaulting ceilings and sunny rooms.

Tile floors everywhere except two carpeted bedrooms. Split floor plan with walk-in closet in the master suite. The floor plan is here.

Step-saving kitchen with pantry. Storage cabinets in the two-car garage. The owner has lovingly cultivated the yard over the years with desert plants to attract a delightful variety of birds.

Lemon and orange trees and a mature mesquite shade the large, private yard. Rainwater harvesting.

Huge back porch so you can comfortably barbecue, dine al fresco and gaze at the sunsets, monsoons and birds. Just block to trails in the desert. Convenient to Trader Joe's, Northwest Medical Center, Arthur Pack Golf Course & Regional Park, I-10, Tucson and Phoenix. No HOA! Lots of value here. Sold for $133,400 on April 4, 2016.

Vegetarian Suet

I think commercial suet is disgusting to handle because of the beef fat. What bird eats beef, anyway? Besides, if it's made in China, it's likely to be toxic. Here's my recipe for Vegetarian Suet.

Microwave for one minute

1 c instant oatmeal

1 c water.

Grind in food processor

4 c peanuts.

Put the ground peanuts in a large bowl with the cooked oatmeal.

Grind in food processor

1/2 c raisins.

Add to raisins and continue mixing in food processor

1/2 water.

Add raisin slurry to peanuts and oatmeal in the large bowl. Mix well and stir in

1/2 c sunflower seeds (optional).

Line 8" x 8" pan with foil or parchment paper. A plastic pan with a lid that seals tightly is ideal. Press the suet into the pan.

Cut the suet into four 4" x 4" sections to make it easier to break off a quarter of the suet after it is frozen.

Cover with plastic or the sealing lid and store in freezer until needed. Break off a 4" x 4" section for the suet cage.

Appealing My Tax Bill

Twice this year I have had conversations with the Pima County Assessor's office about the tax bills on two of my rentals. I am learning more about what they expect and how to file successful appeals.

The first time I went in with 28 pages of documentation to support my claim that the assessed value of one of my rentals was way too high relative to the assessed values of nearby rentals. The judge said she didn't have time to look at all that and denied my claim.

I had spent several hours preparing to demonstrate that my house wasn't worth the assessed value based on the gross rent multipliers and capitalization rates of nearby comparable rentals. She clearly had no idea what I was talking about, and told me my presentation was meaningless to her because I identified the comparable rentals in my analysis by street address, rather than parcel numbers.

The county appraiser gave me his spreadsheet showing the parcel numbers of the comparable properties he used in his analysis of my rental property's value. It was my job to look up the addresses on my own time, so I had no way to challenge his approach. His spreadsheet had many columns of numbers, with incomprehensible abbreviations in the column headers and no key to explain what it was all about.

Note to self: if I ever go to another assessment hearing, have a one page spreadsheet showing addresses and parcel numbers of the comparable properties, plus a map of the properties showing their proximity to my property. Anything else will be ignored. Forget trying to establish value based on return on investment. The judge has no interest in the only thing that an investor should consider when deciding what a property is worth.

I almost went to another hearing tomorrow, but thanks to a long phone conversation today with a very knowledgeable and helpful member of the county assessor appraisal staff, I got my questions answered and cancelled my hearing.

Here is what I learned today:

The full cash value (FCV) is reevaluated every year based on nearby sales of similar properties. A computer does the preliminary evaluation, and then the county appraiser looks at the parcels and discards outlier sale prices and sales that are not similar in age or condition to the subject property. The county appraiser who explained this to me used to be a real estate agent, and she said that when she sold houses, "everyone" thought FCV was 72% of market value. Many sellers have told me with confidence that FCV is 80% of market value. When she started working for Pima County, she was told it was no such thing. FCV is supposed to be market value, but it is usually a little less.

She said taxes are based on limited value, which can not be appealed. Only FCV can be appealed, but it's only loosely related to the limited value. The limited value can go up no more than 5% a year. If the FCV decreases, the limited value will probably decrease. At one time FCV and limited value were the same, but that has changed due to the annual reevaluation of FCV and the 5% annual limit on increase in limited value. 

If taxes are based on limited value, and a tax payer can not appeal the limited value, what is the point of appealing the FCV? The appraiser said there really isn't much point. 

To calculate property tax, first multiply limited value by assessment ratio, which is 10% for residential real estate. So if the 2016 limited value is $200,000, the assessed value is 10% of that, or $20,000. Then you have to multiple the assessed value by the primary tax rate (11.5%, for example) shown on your tax bill to get the primary tax ($2,300). The assessed value is also multiplied by the secondary tax rate (4.5%, or example) to get the secondary tax ($900). The primary tax and secondary tax are added together for the total property tax ($3,200). There are probably also override and bond rates to add to the tax bill.

The primary tax rate, secondary tax rate, bond rate and override rate vary by neighborhood and school district. And the secondary rate is higher for rentals than it is for owner-occupied houses. This is why I have to pay $2,219 in property tax, more than on any of my other houses, for my smallest rental, which is a simple 750 square foot, 70 year old house, located near the University Medical Center.