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Thursday, June 30, 2011

Phoenix Feeding Frenzy.

For the last couple of days, after getting the requisite coffee brewing first thing in the morning,  I’ve logged into my email to uncover a plethora of contracts.  Yup, purchase contracts for a listing of mine in Laveen.  After the first 48 hours of the home being on the market, I have received five offers.  Two more expected in this afternoon.

Let me tell you a bit about the home: Built in 2006, this Ryland home is 1,802 square feet with 3 bedrooms, 2 baths, open great room plan near
51st Avenue
and Baseline.  My seller purchased the home from the builder for $220,000 and added some nice upgrades.  Custom draperies mounted from the ceilings, designer paint and fixtures, even synthetic grass in the back yard.  It shows better than any model.

We all know what the market has been doing since its peak in 2006 and my seller has decided to short sell the property.  Based on the most recent sales in the neighborhood, it’s priced below the current loan amount of $126,000 and it’s being offer for $79,900.

At that price, it’s a feeding frenzy. 

The Phoenix area real estate market is seeing fewer listings in the MLS, pricing has stabilized and actually moving upwards in some parts of the valley.  Demand is increasing, especially from the investor sector and days on the market are dropping.  As of this morning, there were 21,826 active listings in the system.  That’s about half of what we were seeing a year or so ago.  The latest statistics show that the majority of activity is in the $200K and under range – homes less than $100,000 are not likely to stick around very long at all.

The offers my client has been getting range from fair to pretty attractive and we’ve reached back out to the interested parties asking for their "best and final" offer with the hopes my seller can select one to then send on to his lender for final approval.  The winning bid is likely to be above asking price, compliments of an inevitable bidding war.  That’s when the real rubber hits the road. 

From there, we’ll face challenges.  The challenge of getting bank acceptance.  The challenge of holding on to the buyer and getting an answer sometime in his lifetime.  The challenge of an appraisal coming in at or above the accepted sales price.  Picking the "right" offer means more than just terms, price and conditions - it's the unwritten "gut feeling" of the buyer being able to hang on through what is bound to be a very long, stressful period where the agents are on the phone constantly with the seller's lender trying to get an answer. 

The fact of the matter is that there is a very strong possibility that the buyer with the winning bid may not be the final buyer of the home.  I've seen countless times the buyer giving up and movng on after playing the waiting game with the seller's lender.  Weeks are likely to drag into months.  Months and months undoubetly will pass before the lender rubber stamps his approval.  Urgh.  

Welcome to the new “normal” of the real estate industry.  It’s a different world out there.

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