Episode 29 | PropertyLens Reveals Hidden Costs in a Flipped Arizona Home (Arizona Home's Dark Secrets Revealed)

Bob Frady (00:00.94)
Ladies and gentlemen, boys and girls, ships at sea, it is time for this week's episode of Property of the Week from Property Lens. As always, in case you don't know, I'm Bob Frady, founder and CEO of Property Lens, and with me as always is...

John - PropertyLens (00:19.094)
John Sigman, president and co-founder of Property Lens.

Bob Frady (00:22.808)
So John, one of your friends said, hey, I'm going house hunting in Phoenix this weekend. You know, what can you tell me? Scottsdale. So what we decided to do was just to pick a random property, something that looks nice and say, I wonder what property lens has to say about this property. So if we go into our little screen share here and we pick out East Cortez.

John - PropertyLens (00:31.104)
That's it,

Bob Frady (00:52.45)
drive in Scottsdale, Arizona. Don't know this from a hole in the wall. Just picked it somewhat at random because, you know, looks like the kind of house that might be nice to buy. You know, it's all redone and all that good stuff. Looks cool. Been on the market for a long time, but it looks pretty cool. So, so that, I know. Well, I don't know what the story was, but you know, and you look down in the description and what does it say?

John - PropertyLens (01:11.968)
Well, it's almost a year.

Bob Frady (01:21.262)
incredibly rare brand new sparkling, blah, blah. Nice. Entertain as paradise, you know, community amenities, Scottsdale luxury. And you go down to all the, all the stuff and there's price decreases and there's taxes, permits and no weather except for heat. So that's what you get from realtor.com. Question is now.

John - PropertyLens (01:44.937)
it.

Bob Frady (01:50.956)
What do you get from propertylens.com? So let's do this. I don't know either. Let's go and share the screen and pick out the property lens report. Now, for those of you who've seen this before, this is what your my property lens portal looks at. We look at a lot of different houses. So there's a lot of different houses in here, but here it is. Normally you would put in an address. It would go through all the rigmarole, but we're going to cut to the chase here. East Cortez drive Scottsdale, Arizona.

John - PropertyLens (01:54.636)
I don't know.

Bob Frady (02:18.668)
the exact same property that we saw before. And we're going to go and view this report.

John - PropertyLens (02:26.603)
2.67 bathrooms.

Bob Frady (02:30.059)
Okay.

John - PropertyLens (02:32.821)
First thing we would do is we would make it bigger for the folks at home.

Bob Frady (02:32.885)
What do you see?

That's for John who has as blind as a bat. So we'll make it bigger. Can you see that? Okay. There, Mr.

John - PropertyLens (02:42.284)
You should make it one more size bigger.

Bob Frady (02:44.448)
Okay, Professor Magoo. All right, you got, there you go. Okay, what's the first thing you notice about this house, John?

John - PropertyLens (02:46.409)
There we go.

John - PropertyLens (02:52.404)
It has had four owners in the last 15 years. It's in a blood zone.

Bob Frady (02:56.17)
Okay, what else? Ta-da!

John - PropertyLens (03:01.035)
had six possible damaging events. Those would be my three key ones. Hey, property taxes went down. That must be a fluke. It's a flip. Whoa, there we go. That's another cause. But look at this, your repair costs are estimated to be very low over the next two years. So if the work was done right, not necessarily a bad thing.

Bob Frady (03:13.153)
It's a flip.

Bob Frady (03:22.466)
Yup.

John - PropertyLens (03:28.203)
but a 10 % increase per year over the last six years for homeowners insurance? I caramba.

Bob Frady (03:35.906)
Then you're in Bob Freede territory there. Because we'll talk about that at some other point. All right.

John - PropertyLens (03:38.699)
and

John - PropertyLens (03:43.381)
We got a science, let's grab and see.

Bob Frady (03:46.754)
What's that telling us?

John - PropertyLens (03:48.747)
Well, I'm saying that the listing square footage and what the county assessor has for square footage might not necessarily be the same.

Bob Frady (03:58.1)
Now in some places that's because of Finnish basements, but what don't you have a lot of in Scottsdale, Arizona?

John - PropertyLens (04:05.119)
finished basements or any basement.

Bob Frady (04:06.412)
Finished basements. Correct.

John - PropertyLens (04:11.349)
So I'd want to find out what's going on there. That might be unpermitted, might be permitted. Given the age of the house, something may have been permitted along the way, but they don't have permit records going back that far and they never updated it. So there's a couple of questions you want to ask.

Bob Frady (04:34.178)
But what are some of the nice things about this house?

John - PropertyLens (04:37.301)
Well, you got the mountain view, low crime, it's in a community with amenities, Scottsdale Country Club, you know, water and golf course views, water might be the one thing to be concerned about there, especially if that view comes into your living room. You know, it's in the burbs, so it's convenient to things.

it's got its own pool. Ooh, you got a petting green. this, this screams Bob Brady all over it, quite honestly. Lock in line room.

Bob Frady (05:11.416)
I know that's why I picked it because I saw the picture I'm like, Ooh, I'd like to have something like that.

John - PropertyLens (05:16.459)
hip roof. mean, you know, it's, the roof's in good shape. You're in a golf course community. I don't know. I, I'm, this is, people write this down. You may send Bobby's retirement cards to this address.

Bob Frady (05:31.79)
There you go. This is, there's about $1,700 of repair costs estimated very low because it is a flip. So they've done a lot of improvements, but we do see the annual insurance premium to be estimated to be about $6,000 a year. Uh, lots of increases in, um, uh, cost for, uh, Arizona and about six K a year, which is, which is fairly high compared to a lot of other places.

John - PropertyLens (05:48.509)
Yep.

Bob Frady (05:58.902)
So you know, you get to walk into this place for some of the questions that you want to ask.

John - PropertyLens (06:03.307)
Well, you gotta ask about flood. You gotta ask about permits. What was done to make this a flip? What did all the things that they do to it and how much of it required a permit? How much was, you know, like for like so it didn't require a permit? What did they do to the plumbing system? How deep did they go with this? Is it just a cosmetic flip or did they get into some of the bones?

Bob Frady (06:33.236)
Exactly. Okay. So when you look at the buyer lens and the expected two year costs, the one thing that sticks out is the water heater. And that's the question we would ask is has the water heater been replaced? Because if it is, then you take $1,400 off of your estimated repair costs.

John - PropertyLens (06:52.042)
Yep.

Bob Frady (06:52.194)
And then the other is, has it been tinted? Because termites love the desert Southwest.

Bob Frady (07:02.336)
And everything else looks good. Now what's interesting about this is this is a FEMA 500 year flood zone, not a FEMA 100 year flood zone. You are not required to report a FEMA 500 year flood zone. If you're getting a mortgage, you're only required to report a hundred year flood zone. So what happens in the real estate listing? Nobody's, nobody's saying it.

And we says anything about it. So, but you do have, what do they call them? Hey boobs or something like that there in Phoenix where the clouds come in and in the winter time and tremendous amounts of rain in short periods of time. And a lot of stuff that normally would be dry as a bone flash floods. And that's where you're going to find a lot of the five year flood zone indicators. So this place does have some risk of flood.

John - PropertyLens (07:39.786)
Yep.

Bob Frady (08:00.45)
which is not disclosed anywhere else in questions you should be asking to say, what's, what are you doing about this risk? Have you done anything to help prevent the risk of flood?

John - PropertyLens (08:13.535)
Didn't you have a friend who moved to Houston and moved into a 500-year flood zone?

Bob Frady (08:20.128)
Yep. And we said, should get flood insurance for this house. And she said, okay. And then the rains came and their house flooded and they recovered because of the information that we gave them about that house.

John - PropertyLens (08:37.427)
and they were the only ones in their neighborhood with blood insurance.

Bob Frady (08:41.398)
Yep, everybody else is like, there's no danger of flood. like, yeah, there is. some people would say every house is susceptible to flood, but some are much more susceptible than others. So that's something that is, isn't disclosed anywhere on the real estate listing. we've got some, arsenic in the groundwater. so you want to make sure that you're getting your groundwater tested just to make sure.

You know, yeah, it's a little bit extra test, but hey, listen, I didn't get my groundwater tested and it's full of arsenic. boy. Now what do I do? I wish I'd spent the 250 bucks on a water test before I spent that million three on the house. It's like, or 300,000 on the house because now I've got our stick poisoning. No one loves that.

Bob Frady (09:39.918)
High risk of hail. John, what do do about hail risk?

John - PropertyLens (09:44.608)
Well, you definitely have a fortified roof. This house has a tile roof. That's about as fortified as you can get. So, you know, the real risk here is a number of events and the size. Size is what matters. I know a lot of people say it doesn't, but yes, it does, at least in the case of Hale. And...

Bob Frady (09:51.811)
Yep.

Bob Frady (09:55.299)
Yep.

Bob Frady (10:11.041)
you

John - PropertyLens (10:13.259)
You have to think about, you know, if it's pea-sized ale and it happens once a week, nobody cares. But if it's golf ball-sized ale or baseball-sized ale and it happens once every other year, that's a lot to deal with. So you want to check that and we give you those stats right there in the report.

Bob Frady (10:36.842)
Yep From an insurance standpoint, there's quite a range of insurance costs So you want to make sure that you get a quote before you decide to buy this house? It's 5,850 958 is a midpoint As low as 2,100 as high as 9,300 depending upon carriers filed rates in that area with a replacement cost which is approximately the same size as the property cost so

a 1.3 million replacement costs, which is higher than you would normally expect for a house that costs 1.3 million.

or 1.399.

Bob Frady (11:21.708)
Here's the description that we saw earlier, lots of features and conditions. Here's the ownership. it was sold in July of 2024. It looks like a flip and, now it's listed in November of 2024 and has been sitting on the market since that time.

John - PropertyLens (11:41.555)
That's a long time. They're looking to make 400k. I hope they put 400 into it.

Bob Frady (11:46.594)
Yep. there's your property taxes and a lot of that is because we don't have property tax data, for 2025. So that does throw off the, that does throw off the, the calculations for the system. Here's all the pictures. It looks pretty, you know, looks pretty, all that good stuff. Here's the neighborhood. Here's damaging events. August, 2022.

John - PropertyLens (12:14.709)
Win, win, win, win, there's hail. One and a quarter inch.

Bob Frady (12:17.005)
HELL.

John - PropertyLens (12:20.821)
But you know, if that's it over the last 14 years, it's not that big a threat.

Bob Frady (12:29.806)
It's not too bad. So the roof is, looks like the same roof. You can go back in time and look at multiple images of the roof. It looks like, it's original to the house, but the lifespan for this tile roof is 80 years. So you're, you're good to go when it comes to this roof. it's in really good condition. it's got relatively low exposure outside of some hail risk. it is tile roof in a hip shape.

John - PropertyLens (12:35.456)
Yep.

Bob Frady (13:00.396)
Let's see, structurally check. get a little bit of water hardness here, which can lower the life of your electrical, excuse me, your plumbing stuff. So maybe you want to get a water softening system. Maybe you don't. But it's something you want to keep an eye out on. Otherwise the soil is good. No mines nearby. You're not going to get a lot of frost heaving. Yeah, it's all good. The last.

John - PropertyLens (13:21.131)
It's not good.

John - PropertyLens (13:26.323)
Hey, they got some permits.

Bob Frady (13:28.43)
Yep. I've got a building permit in October of 2024. The valuation was... Yep.

John - PropertyLens (13:33.611)
Okay, so the remodel was permitted. They did something with the pool and spa. So they probably either installed that or redid a pool and spa that were already there.

Bob Frady (13:39.561)
Yep.

Bob Frady (13:48.11)
Let's go back to the house and see it. I don't know if we can see it from an older version of the house, but let's go. Let's see. Let's go way back and see if we have a old, old picture. Come on. Dang. So-and-so. I can't see it from here.

John - PropertyLens (13:53.71)
Can't see it in those pictures.

John - PropertyLens (14:08.277)
Scroll it, scroll it, scroll it. Yeah, you can't see it from there.

Bob Frady (14:12.494)
Nope, unfortunately not. Okay. So let's go back to updates and repairs. There's the modifications. Um, and they add solar, uh, a green permit was issued in 2010. It looks like it's not on there anymore. So here's a flood. Not in a hundred year flood zone is in a 500 year flood zone. We do recommend that you get insurance. Now listen, the risk may be low, but it's in the zone.

You can roll the dice if you want to, but be prepared that some water might be coming into your house.

John - PropertyLens (14:46.251)
Well you got the lake right there and lots of golf courses are actually in floodwaves so you know it's close you'd have to make the call but if your house is sitting significantly higher maybe it's not that big a concern

Bob Frady (15:06.386)
Yep. No Lomers or Lomers. The risks that you get are hail. Now what's interesting about this is the expected annual loss is high. The frequency is relatively high, but the historic loss is very low. We saw this recently in a wildfire in California where it had the same basic grades as this does right here. And the historic loss ratio was low. And people go, never happened here before as long as I've lived here.

And this is exactly why they're not prepared. It's because they just look at what's happened in the past and not what the formations are for this area. So it's relatively high risk of hail with the relatively low loss experience.

John - PropertyLens (15:47.081)
Are you saying past performance does not necessarily indicate future performance?

Bob Frady (15:51.828)
Your mileage may differ. Absolutely. relatively low earthquake, excuse me, mild earthquake. don't be surprised if you feel some shaking. It is near the, the mountains in, Scottsdale and wherever there's mountains, there's some earthquake risk. and again, low, prior, experience, but everything else pretty good. Do you know pretty straightforward? What's that?

John - PropertyLens (16:17.525)
Pretty clean.

It's pretty clean.

Bob Frady (16:22.306)
Pretty clean. Crime is okay. You know, it's not bad. It's moderate. America is a very safe country, but you know, it is relatively moderate. No sex offenders nearby, which is nice. At least none reported.

Bob Frady (16:39.278)
You're not going to be walking to the supermarket from this house.

John - PropertyLens (16:42.355)
Well actually that might be the only way you're going to get there because you can't take the bus. Disaster resilience low. Most cities aren't prepared. It's just the way that it is, especially in areas where you don't get events. They don't necessarily need to be prepared for them. Walkability is actually okay. There is some airport noise. So you know when the wind is blowing.

Bob Frady (16:45.742)
Exactly.

John - PropertyLens (17:11.185)
towards you, probably in the flight path, but on that, it's pretty clean.

Bob Frady (17:18.316)
Here's the neighborhood points of interest. There's a seminary nearby, not too far away at all. And your Tesla supercharger is only eight tenths of a mile away, which is lovely.

talking exposure, there's a little bit of elevated rate on, know, it's not probably much to worry about for this location, low mold and low PFAS scores. This is one of the places where we see actually low PFAS scores or PFAs, excuse me. So that does exist. There are some contaminated sites nearby, but nothing too crazy. Nothing really nearby.

John - PropertyLens (17:46.805)
There you go. I it.

Bob Frady (18:02.86)
Emergency response, law response, medical response, all pretty good. You've got proximity to fire departments only a mile away, as well as hospitals are close to nearby. Estimated electricity costs are relatively high. It's Phoenix. Come on, what do you expect? And you can, yep, you can save money if you haven't done it yet.

John - PropertyLens (18:22.483)
You're using it.

John - PropertyLens (18:29.225)
Now's your time.

Bob Frady (18:29.39)
Times are wasted, now is your time, and this is a six year payback on solar, which is really low. Your utility uses all sorts of different electricity sources. Here we go for insurance. know, hail is a little bit of a concern. And if you want to get a quote, look at that. We got lots of people who want to quote you.

John - PropertyLens (18:54.815)
That's the people who want to quote you.

Bob Frady (18:56.878)
And then we're finally into the timeline. So John, given all of this information, what are the top three things that you would be looking for at 8133 East Cortez Drop?

John - PropertyLens (19:12.875)
Well, in looking at 8133 East Cortez Drive, the first thing that I would want to know is what are the comps in the space? Is my house outsized from the pricing? Because it previously sold for $900. Maybe it was a little bit in disrepair, don't know.

But 1.3, maybe 50 % over current market. And so the first thing I want to find out is what the rest of the neighborhood looks like it's selling for. Because that one is going to be important to me. Why is this house sat on the market for almost a year? That's not typical of a flipped property.

So, you know, the idea behind the flip property is not to open it for a long time. And they're owning it for a long time. So that would be my first concern. My second concern would be, okay, 500 year flood zone, one in 500 year chance, which doesn't mean it's going to happen every 500 years. Could happen three years in a row and then not happen for 1500 years. That's how statistics work, people. So

I would be looking into the cost of a flood insurance policy. It's going to be cheap, just because it's not in a flood zone. But that would be, that'd be the number two thing for me. And then number three, you know it's Phoenix, so you know it's hot. That's not telling you a whole lot. I think I would just want to...

make sure that I hired, you know, I might even hire a contractor for this and have a contractor walk through, look at everything that was new and make sure that it was really done up to snuff. I think this is a little bit, you know, I'm still gonna have my house inspector come through and do all the things that they do and, you know, check everything, make sure everything works.

John - PropertyLens (21:32.415)
But I'm going want to bring in a contractor to take a look at the work that was done.

John - PropertyLens (21:41.269)
Those would be my three things.

Bob Frady (21:43.222)
Okay. So when I look at 8133 East Cortez drive from a property lens standpoint, I kind of love this house. You know, it's relatively clean. You know, it's a recent renovation and it's, it's nice. looks beautiful. The question is, is it's a flip. So number one for me is.

Like you said, why has this been on the market so long? Is it too highly priced for the marketplace? So that's number one. Number two is what's the quality of the work that's been done on the flip?

You know, it looks pretty, but is it covering up things that haven't been done before? Because, know, a lot of times when people do a flip, they'll brag about what's been done. And I don't see a lot of bragging on the listing in this one. You know, when was the water heater replaced? Was the electrical system replaced? You know, what, what actually was done in the flip? so that, and then the third thing is, you know, how close is the nearest hospital because it's Phoenix and you're basically in heaven's waiting room.

So I want to make sure I'm close to a facility when it's about a mile away. want to do the drive just to make sure I can make it there. But otherwise I kind of love it. This has Bob Frady house written all over it. It's nice. It's near a country club. It's got recently renovated. Yeah, maybe you can handle on the price a little bit. But it looks really good. There is some minor league flood concern for sure.

You know, is there a drain around the property that can help to drain some of that extra water away? But otherwise I think it looks good. I would be very confident walking in here saying, I love your house. I don't love the price. We'll offer a lower price and see where you end up.

John - PropertyLens (23:41.649)
Alright, well, tune in next week when we find out if Bob's bought this house.

Bob Frady (23:46.35)
If it wasn't for my better half not liking the desert, I'd be down there visiting this place in no time at all.

John - PropertyLens (23:55.881)
Well, you know, desert in the winter is not the desert.

Bob Frady (24:00.046)
It's cold in Phoenix in the winter time. So it's chilly. You got to wear a sweater and stuff like that. It's like fun. Fun wearing.

John - PropertyLens (24:06.507)
is from a guy who's sitting in Minnesota, which apparently is a paradise during winter.

Bob Frady (24:12.448)
Hey, listen, one layer versus four, you're still wearing layers. All it means is you do a little bit more laundry. So there we go. 8133 East Cortez drives, Costale, Arizona. Good luck to the sellers on this one. It looks like a beautiful property. Yeah, it's got a few issues on it. Stuff you might want to be aware of and ask them about, because here's the thing. If you walk in asking these questions, I bet you you're going to get a better deal than if you don't ask these questions and just rely on price negotiation.

Cause you can say, Hey, these are the things that lead me to a lower price. So for this week's episode of property of the week, I'm Bob Freddie.

John - PropertyLens (24:52.818)
I'm John Sigman.

Bob Frady (24:54.23)
And if you haven't yet, make sure you click the subscribe button. makes us feel better about ourselves until next.

John - PropertyLens (24:59.517)
And if you want to see a certain property, send it to us. We're happy to run it. We'll bring it up in the next show.

Bob Frady (25:04.342)
All right. All righty. Till next time.