Scheri, a real estate appraiser, had sized up a three-bedroom, two-bath house in Santa Ana, Calif., for $30,000 less than what the buyers offered to pay. A typical deal-killer for a seller.

The agent urged the lender to force Scheri to consider several other properties that could back up the original $310,000 sale price. Then he tried good old-fashioned guilt, telling Scheri her appraisal was going to ruin the buyers’ shot at the American Dream.

“That’s what he laid on me,” Scheri recalled. “And I said, ‘Don’t you care they could be potentially spending $30,000 too much for a house?”

Across the country, agents and homebuilders are complaining too many appraisals are coming in low, scuttling deals.

The National Association of Realtors says nearly one in four of its members has reported clients losing a sale due to botched appraisals. The National Association of Home Builders, meanwhile, said low appraisals were sinking a quarter of all new home sales and argues it’s not fair to compare distressed properties to brand-new homes.

And that gets to the heart of the problem.

Roughly 40% of all home sales this year were foreclosures or short sales, meaning the property sold for less than the mortgage. In some markets, like Las Vegas and Phoenix, they’ve hit more than 50%.

Appraisers determine the value of a property by looking at recent sales of comparable homes. They take an apples-to-apples approach, excluding or making adjustments for certain features, such as a swimming pool. And generally, a foreclosure isn’t used as a comparison for a standard sale.

But in some areas, appraisers like Scheri contend they are only sizing up homes according to the reality of the market, though they concede its becoming increasingly harder pinpoint what a home is worth.

Home prices in many large metro areas, including Los Angeles and San Diego, hit bottom earlier this year and are recovering, data last week showed. Yet there are many neighborhoods across the country where foreclosures and other financially distressed sales are still rising.

“It used to be a very infrequent thing that you did an appraisal and the value wasn’t supported,” says Scheri, who is based in San Diego. “Now, it’s more common than not.”

So, if you’re trying to sell your home in a neighborhood where foreclosures and short sales are predominant, an appraiser could determine your home is actually worth less than what some buyers may be willing to pay.

Part of the problem, critics contend, is that many real estate appraisers are now hired under new industry rules. Designed to limit conflicts of interest that can bias an appraisal, the rules bar mortgage brokers from ordering appraisals themselves, forcing them to do so through a mortgage lender.

Lenders may order appraisals through in-house staff or appraisers hired by outside firms known as appraisal-management companies. But neither may talk to the appraisers about the value of the property they’re evaluating.

The result, however, can mean that low-cost appraisers are hired from outside the area and don’t have the local knowledge to find homes that can be a better benchmark for regular homes.

Chris Heller, agent-owner of Keller Williams Realty in northern San Diego, recently had the sale of a home nearly botched for the second time because of a low appraisal.

The three-bedroom, two-bath house in the Poway suburb of San Diego was appraised for $55,000 less than what the buyer agreed to pay. The seller wasn’t willing to drop the price down to $400,000, but knocked off $20,000 when the buyer agreed to come up with $35,000 in cash.

“The seller is taking less because of the appraisal,” Heller said, noting that almost all of the comparable homes used to gauge the property’s value were distressed sales.

Still, the buyer is paying a premium not to have to deal with the risks involved in buying a foreclosed home or a short sale, which can take several months to close.

So, should distressed homes sales be compared with other homes? Is one inherently worth more than the other?

A new analysis of foreclosure and non-foreclosure sales by Zillow.com found that even when most of the market is made up of bank-owned homes, non-foreclosures sell for as much as 30 percent more. Another study by Harvard’s Joint Center for Housing Studies came up with a similar conclusion.

In Las Vegas, which has one of the highest foreclosure rates in the nation, the median sale price for bank-owned homes sold in September was about 23% less than other types of properties, according to the Zillow study.

“There are two markets, two very distinct markets,” said Zillow economist Stan Humphries.

That doesn’t mean foreclosures don’t weigh down the value of nearby homes, although there’s loud disagreement on how much.

The Joint Center for Housing Studies examined home sales over 20 years in Massachusetts and found that a foreclosure within less than 100 yards of a home lowers the price of that home by 1%.

So it appears that in neighborhoods with high foreclosure rates, values for all homes are being pulled lower than in areas where there are few or none. That means you can live in one area of Las Vegas and values can be down twice as much as they are in another neighborhood just a few miles away.

When it comes to appraisals, that leaves a lot of room for interpretation.

Jan. 4, 2010 Associated Press

Motorola site brings in $18.5 million

The prime 152-acre Motorola site on Price Road in Chandler has sold for $18.5 million in cash and is poised to provide the area with worldwide recognition, city officials say.

There is interest from renewable-energy companies, including solar, as well as firms in semiconductors and nanotechnology. The last Motorola employees on the site moved out in September.

“It could be a true employment hub for Chandler,” said Chris Mackay, the city’s director of economic development.

She envisions what she described as a world-class business park to integrate business and technology.

“The Motorola campus is one of the identified innovation zones for Chandler, and it allows us the opportunity to get away from only large-campus users,” she said. “We can put smaller, knowledge-related users there.”

Karl James is managing director of the company that bought the site, Austin-based Capital Commercial Investments. He said there is great interest from national and international companies.

“We certainly see (the site) as a great opportunity for the state of Arizona,” James said.

“We think there certainly will be some good things to come from it.”

The site could be leased to one large user, he said, but he didn’t preclude several smaller tenants.

“As far as what direction, we are still exploring all the options,” he said. “It’s a very open question at this point. We don’t have any vision for it now other than to say we want to look at all of our options.”

The zoning along the Price Road Corridor requires at least 15 acres for any one company.

The campus, between Germann and Queen Creek roads, contains a two-story, 512,000-square-foot building that had been used for offices and research.

Goodyear will house a new factory for he world’s second-largest producer of solar panels, Chinese solar-panel maker Suntech Power Holdings Co., which development officials said paves the way for more factories and raises hope for a more diversified Arizona job market.

At least 54 renewable-energy companies are looking at the region for possible factory sites, said Barry Broome, president and CEO of the Greater Phoenix Economic Council, which helped lure Suntech to the state.

He said he is hopeful Arizona sees at least three more factory announcements before April and at least six for the year, which would help the state recover from the current recession and housing crisis.

“We need to be aggressive about this, you have to execute,” Broome said, citing state tax incentives created last year that helped attract Suntech and other companies to Arizona.

Suntech’s decision to open Goodyear plant will bring 75 immediate jobs

Among the attractions that brought Suntech to Arizona were tax breaks passed by the Legislature and signed by the governor last year. Those incentives offer renewable-energy equipment factories income-tax credits and lower property taxes based on how much they invest in their factories and what they pay their workers.

Suntech could get $1 million to $1.5 million in state tax breaks based on its plans, Broome said, although the investment is not large enough to trigger reduced property taxes, and Goodyear will provide Suntech with a $500,000 credit for job training.

Suntech also could get a $2.1 million federal tax credit from its investment in the Arizona facility. Five other companies could get those federal tax credits for new or expanded factories in Arizona, according to a recent report from the Department of Energy.

Some of the new companies scoping out factory sites are suppliers for Suntech and Tower Automotive, a Michigan company that recently announced plans for a $50 million solar-component factory in the area, Broome said.

“These are the elite companies in the industry,” he added. “This gives real legitimacy to Arizona’s position in the solar marketplace.”

Suntech will spend $10 million to $15 million setting up an assembly factory for solar panels in an existing building in Goodyear, Goodyear Crossing, 3801 S. Cotton Lane, that it will lease, officials said.

The factory initially will employ 75 people and turn out enough solar panels a year to power about 7,500 houses at once. Officials want to expand the plant over time to four times that capacity, employing 250 people.

“Jobs, we all love the sound of that song,” Gov. Jan Brewer said when announcing the factory’s location at a forum sponsored by AZ4Solar in Phoenix.

The Arizona Suntech factory should be in production by September, allowing the company to serve the Southwest with panels made in the U.S., said Steven Chan, chief strategy officer.

“It has always been a trend to have manufacturing go east to Asia from the U.S.,” Chan said. “There is demand for products made in Arizona, made in the U.S.”

Chan said Suntech will strive to match the cost efficiencies of its factories in China because while customers want a domestically produced product, price is more important to U.S. consumers.

“U.S. customers are not willing to pay more for something made in the U.S.,” he said.

The new factory will be a small part of the company’s operations and not process silicon wafers into silicon solar cells, as Suntech does in China. Workers will assemble the premade cells with glass and frames into the panels used on roofs and in large fields for power plants.

In 2008, Suntech’s existing factories produced 498 megawatts of solar panels, most of which were sold to Europe.

The Arizona facility will have an initial capacity of 30 megawatts, with 120 megawatts of capacity if and when it expands.

One megawatt of power capacity is enough to supply about 250 homes at once.

Suntech spent more than two years on a nationwide site search, surveying more than 28 properties in Greater Phoenix, Chan said.

Jan. 28, 2010 The Arizona Republic

Arizona’s first wind farm creating power for Valley

Federal dignitaries tout cleaner energy, creation of green jobs

Northern Arizona dedicated the state’s first wind farm, which sends power to Salt River Project customers in the Valley when the wind blows on the turbines between Holbrook and Snowflake.

The Dry Lake Wind Power Project has 30 wind turbines standing more than 400 feet tall, catching every breeze of 7 mph or greater and turning it into pollution-free electricity.

The project employed about 200 construction workers in the past year and will have about 10 full-time workers.

In a steady wind, the turbines can generate enough power for more than 15,000 homes.

Dry Lake will offset some of the power SRP gets from natural-gas-burning power plants.

An analysis from SRP shows that, while the Dry Lake region is windy and the plant will provide thousands of megawatt hours to the utility each year

“The message this plant sends to Arizonans is as important as the power it generates,” SRP General Manager Richard Silverman said.

“Today isn’t only about a power plant, it’s about a more sustainable future for our customers and all of Arizona.”

Bob Abbey, director of the Bureau of Land Management, said the agency supports more wind projects.

“As the steward of more land than any other federal agency, the BLM is proud to support the development of this clean-energy source, one that will help reduce our dependency on foreign oil in uncertain times,” he said.

The Dry Lake farm sits on private, state and BLM land.

Although 15 miles of roads were cut across the landscape to connect the towers, cattle still graze under the turbines, and few people live within sight of the towers.

The BLM will earn about $87,255 a year from the project. The state has a deal tied to the energy generated by the turbines on its land that could earn $4 million during the 50-year arrangement.

With such lucrative deals possible, landowners across the region are hoping to attract many more turbines to the high desert.

Iberdrola Renewables, a Spanish company with U.S. headquarters in Oregon, built the $100 million project and plans 209 more turbines at the site, which will stretch 15 miles across Navajo County.

And right next door, SkyMall founder Robert Worsley, who opened a biomass power plant nearby, has proposed building hundreds more wind turbines and enough solar generators to match the maximum power output of Palo Verde Nuclear Generating Station.

Other wind farms have been proposed from the Navajo Reservation and near Flagstaff in the north, to Bisbee in southern Arizona, and to Kingman on the state’s western line.

First, some interesting facts:

In the United States, buildings account for:

72 percent of electricity consumption.

39 percent of energy use.

40 percent of raw materials use.

30 percent of waste output.

14 percent of potable water consumption.

Source: U.S. Green Building Council

A Quick glossary of green terms

Green building - A building that conforms to environmentally sound principles of construction practices, resource use and operations.

LEED - The Leadership in Energy and Environmental Design (LEED) Green Building Rating System is the nationally accepted benchmark for the design, construction and operation of high-performance green buildings.

Smart growth - Urban-development strategies to reduce sprawl that are fiscally, environmentally and socially responsible.

Triple-bottom line -Measuring the economic, social and environmental performance of a project. This method of assessment aims for synergy among these three aspects rather than compromise, or “trade-offs,” among them.

Source: U.S. Green Building Council

So, how is the greater Phoenix area doing their part?

Whether it’s a new high-rise in downtown Phoenix, or new solar companies moving one to Chandler and another to Goodyear, green architecture is taking root here.

Intel commits to solar systems in Chandler

Intel Corp. said it will build two rooftop solar-power systems at its Chandler facilities that will tie as the fifth largest in Salt River Project territory as part of a plan to add solar panels to eight of its buildings in the Southwest.

The Santa Clara, Calif.-based company also is increasing its commitment to purchase renewable-energy credits, and ranks as the largest purchaser of those credits in the country, according to the Environmental Protection Agency.

The systems should be complete in the next seven months.

Jan. 26, 2010 The Arizona Republic

Al Gore speaks at Greenbuild International Conference in Phoenix

About 25,000 green-building enthusiasts from 90 countries came to explore these and other sustainable designs in Arizona as part of the Greenbuild International Conference and Expo held at the Phoenix Convention Center at the end of the year.

Former Vice President Al Gore answered some questions when he spoke with editorial writer Kathleen Ingley by phone in advance of the conference.

Q: How do we get around the challenge that a lot of environmentally sound investments pay off over time but have high upfront costs?

A: If those who make the day-to-day decisions are rewarded for much shorter-term profits, it should not be surprising that their decisions will reflect that reward structure.

Q: Your new book, Our Choice, offers a far-reaching blueprint for solving the climate crisis. In the context of the Greenbuild conference, what is the message you hope the average reader will take away from it?

A: I hope the readers of this book will provide support – including with their decisions in the marketplace – for the powerful movements among architects and builders to integrate green features into new construction and the retrofit market. They save money, protect the environment and enhance our national security by helping to reduce our ridiculous overdependence on imported oil and carbon-based fuels generally.

Q: How much is the current recession setting back progress on green development?

A: I don’t really think that it has. Construction of buildings is one of the oft-used initiatives to put people back to work quickly. Those jobs can’t be outsourced. When we face this planetary emergency, and the need to reduce our dependency on an oil market dominated by large reserves controlled by sovereign states in the Persian Gulf, it makes sense to integrate green elements into all facets of it.

Q: What is the coolest feature in green building these days, in your view?

A: I guess it’s in the eye of the beholder. Photovoltaic panels often capture the most attention. But the new windows are big energy savers.

And, of course, features that often seem more mundane . . . can save enormous amounts of money on both heating and cooling. Lightbulbs are going to become even more exciting as money-savers when the new LED systems are available early next year.

A recent report from the Pew Research Center found that older adults feel younger out west. Fully 78% of adults ages 65 and older who live in the West say they don’t feel old, compared with 67% of older adults who live in the rest of the country.

Not that we’re tooting our own horn out here (we are based in Scottsdale, AZ, after all), but we’re not surprised by the numbers.

If you have clients debating where their next move will be, share the following statistics:

• Two-thirds of Westerners ages 65 and older say they feel younger than their chronological years, compared with 57% of older Americans in other regions.
• Among older Westerners, half say they feel 10 or more years younger than their actual age and one-in-five say they feel 20 or more years younger.
• Older folks living in the West also feel healthier than older folks elsewhere. Among adults ages 65 and older, some 72% of those living in the West say they are in excellent or good health. This compares with 63% of those living in other regions of the country.

So, celebrate 2010 and all the possibilities it brings. Don’t worry about that extra candle on the birthday cake. Embrace the future and remember you can always join us out west. We welcome you here!

Go West, Old Man…

Internet messages started with a crash 40 years ago today, and life hasn’t been the same since. “We transmitted the ‘L’ … and the ‘O’ — and then the other computer crashed,” says UCLA’s Leonard Kleinrock, who helped send that first message on the university’s campus on Oct. 29, 1969. He was trying to type the word “login.”

“We knew and we didn’t know that it was going to be a big deal,” he says..

Kleinrock, celebrated at a scholarly symposium at UCLA today, built the Internet’s method of breaking messages into “packets” and shipping them across networks. He was awarded the National Medal of Science last year.

The 1969 crash wasn’t due to the “LO” message itself, but a memory problem with the receiving computer, Kleinrock says. “I actually took part later in the first denial-of-service attack on the Internet as well. We sent the first spammer in 1984 so many messages, complaining, that we shut him down.”

Early Internet (then ARPANET) users operated on an honor system, Kleinrock says, which has led to problems later. “If we had to do it over again, we would have built more controls into the Internet to keep the ‘dark side’ of things out. But it has been an incredible time.”

This year could bring significant changes from 2009 for those seeking home loans. Over the last year, home prices fell to 2003 and earlier levels in many parts of the country. In addition, home loan rates declined to the lowest levels on record and this combination led to the highest home affordability levels ever recorded. Here’s a recap of what happened in 2009 and what you need to know for the year ahead.

Would You Like a Sweetener with that Rate?

Interest rates throughout 2009 were artificially low. That’s because in late 2008, the Federal Reserve put into place a program for purchasing Mortgage Backed Securities with the intention of lowering mortgage rates. They were successful with reported rates by Freddie Mac falling below 5.00% several times in 2009.

Without this program mortgage rates would have been at least 1.00% higher, and potentially even higher than that. Did you know that a change of 1% in a home loan rate impacts the amount someone can borrow by roughly 10%? For example, if rates are in the low 5.00% range today and they shoot up to the low 6.00% range, $250,000 home buyers may become $225,000 home buyers.

Look for rates to return to 2008 and previous levels as the Fed ends the program on March 31, 2010. While rates will not immediately increase to 6.00% or higher, know that without additional intervention, rising rates are inevitable. Expect that under worst case scenarios, rates could dance around the 7.00% range.

Show Me Your Docs

Contrary to what you may see or hear in the media, money is widely available for people who want to finance their homes. There is one caveat, though. People need to be able to demonstrate that they qualify for the loan amount they are pursuing and that they have been willing to repay debt they have accepted in the past.

To obtain financing today, a borrower needs to supply the lender with all documentation pertaining to their income, liquid assets and potentially items related to their credit reporting. The best preparation path to follow is to gather most recent paystubs for 30 days of earnings, two years W-2s with complete tax returns and three months statements, all pages, for any liquid assets used for qualifying.

The free wheeling days of borrowing whatever people thought they could repay are gone. While some exceptions may be granted for strong compensating factors, total debt to income level will be capped at 45%.

If you haven’t checked out your credit reports recently, now is a good time to do so if you plan on seeking financing in the next 12 months. You can pull up your reports for free at AnnualCreditReport.com. Examine your reports for any inaccuracies and work to get them corrected prior to seeking financing. You can also seek assistance from your mortgage professional.

Have We Hit a Bottom in Housing?

If you simply look at the data that is reported, one could surmise that the bottom in U.S. home prices was hit in 2009. One nationally respected index for home price reporting, the S&P/Case-Shiller Home Price Indices, indicates that home prices turned for the better around mid-year in 2009.

While all markets are different and some may continue to show signs of weakness, most communities have demonstrated strength and should continue to do so. However, some potential headwinds do exist for the second and third quarter of 2010, following the expressed expiration dates of several stimulus programs: The Mortgage Backed Securities purchase program and home buyer tax credits, both of which are directed at the housing and the mortgage markets.

Foreclosures and short sales will also continue to influence many of the hardest hit markets as unemployment and resetting adjustable rate mortgages weigh on distressed homeowners.

Dates to Remember

Two dates lie on the horizon that will impact interest rates and potentially home prices. The first program scheduled to end is the Federal Reserve’s program for purchasing Mortgage Backed Securities. Announced in November of 2008, the Fed began purchasing $1.25 trillion in mortgage bonds in 2009 which will culminate at the end of March. As the intention and result of this program was to lower rates, mortgage rates will likely begin to rise after the program concludes.

In addition, April 30, 2010 is the last day to enter into a home purchase contract and still potentially qualify for a federal income tax credit of up to $8,000 for first-time home buyers and up to $6,500 for repeat home buyers. The credit can be claimed only on contracts that close by June 30, 2010.

Act Now…Not Later

While no one knows for certain what the future holds, one thing does appear clear. Home loan rates and home prices both will be higher in the future. If you or anyone you know is looking to purchase or refinance a home, waiting could be costly!

• A lease agreement was in place before the notice of trustee’s sale was recorded

• The tenant is a bonafide tenant.

• The lease agreement calls for a fair market rent.

If these conditions are met, tenants cannot be evicted upon the short sale or foreclosure of the property. This means buyers are required to respect the pre-existing lease agreement, and step in as the landlord on the property. This could be rental property, because it eliminates the need to find a renter.

Buyers looking to use the home as a primary residence, on the other hand, are required to give the tenant at least 90 days to vacate the premises.

Buyers who wish to take possession before the lease ends may be able to come to an agreement with the tenant and the seller to shorten the lease.

However, because the law affords tenants 90 days to look for new living arrangements, buyers should be prepared to delay possession when purchasing one of these homes.

Aaron M. Finter is a real estate lawyer at JacksonWhite Attorneys in Mesa and Peoria. He can be reached at dweed@jacksonwhitelaw.com

Tenants Caught in Foreclosure

Under federal law that took effect in May, a tenant is generally entitled to stay in the rented premises after the foreclosure sale until the term of the lease expires. The lender or third-party buyer at the foreclosure sale, however, has no obligation to refund your security deposit to you when lease expires.

On the other hand, your landlord not making the mortgage payments for several months is probably an “anticipatory breach” of your lease. Therefore, you may not have an obligation to continue making rent payments to the landlord.

I would suggest that you negotiate with the landlord for the return of your security deposit in exchange for your continuing rent payments to the landlord if you stay in the property.

The bank has the right to have a receive appointed by the court before the foreclosure sale to collect the rents and, in that event, you would have to make the rent payments to the bank’s receiver and not your landlord.

Christopher combs is a real-estate attorney with Combs Law Group in Phoenix. Reach him at azrep@combslawgroup.com

Experts now believe you should start by looking at a home as the place where you live, as opposed to the investment that is going to bring you financial freedom. One important lesson is to look for a home you can afford if times were to get tough, and at that point search for the best long-term loan you can find.

After you purchase your home, concentrate less on paying off the mortgage and more on using any non-essential income for the following goals: saving for retirement, paying off high interest/non tax-deductible debt, creating a 12-month fixed-expense rainy day fund or investing into diversified investments that carry some form of liquidity.

There are two perspectives every family and business owner should focus on.

The first plan is called the offense… the use of your income directed at financial goals such as buying a home, sending a child to college, and ensuring a comfortable retirement.

The second plan is the defense… in the event of injury, layoff, or premature death, what measures can you put in place to protect against the interruption of your financial goals? According to financial experts, not having adequate insurance coverage and retirement resources are examples.

During this recent downturn, “It’s been all about going upside-down on their mortgage.” This type of worry only occurs when people view their home as an investment, rather than a residence. Experts want us to think of our homes like we do our cars, choosing them for lifestyle and need, not as our investment accounts.

“The myth,” these experts say, “is many people think they will need less income at retirement. The reality is they would want to maintain their same lifestyle and often experience little change in expenditures.”

Experts are urging people to not give away their liquidity by prepaying their mortgage. Instead of focusing on debt elimination, turn your efforts toward wealth accumulation, but without trying to predict the future of the market.

Manage your mortgage. Make sure you have a competitive rate and that you are paying it on time. Don’t think of your mortgage as the lump sum bank debt. Rather, think of it as a monthly bill. In terms of refinancing, pay attention to the net monthly after-tax savings in relation to what the refi will cost and how long it will take to break even. If the refi can pay for itself in less than one year then it’s a good deal.

Financial security has nothing to do with not having a mortgage payment. If you can’t sell your home or get money out of it when you need to then what good is it?  One expert said, “I’d much rather have a big mortgage and a big bank account than no mortgage and nothing in my bank account.”

Our parents didn’t have investing tools like IRAs, 401Ks and 529s like we do. All they knew was to use their house as an investment, so paying it off made sense. The rules have changed, but somehow the mantra didn’t.

Experts Terrence Meyer, Jr. and Ed Conarchy.  Meyer is a financial representative for the Strategic Financial Group, Northwestern Mutual, in Los Angeles. Ed Conarchy is a nineteen-year veteran of the mortgage industry outside the Chicago area. He is also the founder of National Advisors Network, a registered investment advisory firm.