Competitive pricing has always been an important factor when selling your home. Now, more than ever, it is an essential component when marketing your home in the Valley of the Sun.
Traditionally, the summer has been a time when the real estate market begins to slow down in Phoenix, AZ. Partly due to snowbirds returning home, and partly due to our high temperatures which make us less inclined to search for a new home. However, and regular readers know that I am more realistic than I am wildly optimistic, I feel that this summer season is beginning to show some signs of life.
Recent FHA loan limit increases, coupled with dramatic price reductions across the board, have opened up the possibility of home ownership to a whole new bunch of people. Many of these folks thought their chance to become a homeowner had evaporated forever, but are now being presented with a second chance. Good for them.
Unless you have been living under a rock, you will likely be aware that many homes on the market are either R.E.O.S or "short sales". Let me explain. An R.E.O. (real estate owned) is a property that has been foreclosed upon and is now entirely owned by the bank. A "short sale" is where the current owner owes more than the home is worth and, in order to sell it, will ask the bank to forgive some of the debt in order to complete the sale.
For various reasons, many banks are dis-inclined to offer debt relief so, very often, the attempt to purchase a "short sale" ends in frustration I advise buyers that if they find a "short sale" that they like, by all means make an offer. However, as response times can be long, do not let it deter you from looking at other homes. In other words, if you find another home that suits your needs, do not pass it up whilst waiting for a response that may never come. It is a simple matter to rescind an offer before it has been accepted.
R.E.O.s, on the other hand, are an excellent source for the home purchaser. I doubt that you will find a more motivated seller (a much-abused and cliched term) than a bank. They have no desire, whatsoever, to own the home and best of all, they are emotionally detached from the property.
I have been tracking one home in an upscale market that started out very well priced. Within in a month it went from "fair price", to "somewhat of a bargain", to "that seems cheap", to "is there something wrong with it?", to "sold!" A successful result occasioned by a combination of a smart realtor and an astute bank ending with a happy buyer.
Recently, I have also been seeing some spectacular reductions in the million dollar range. Some clients have even asked me whether prices are still crashing. In my opinion prices are flat to slightly soft. What we are seeing is overpriced homes, some of which have been on the market for a long time, getting introduced to reality. I see many homes priced at, or above, $1,000,000. That in reality are worth around $850,000. The owners hope against hope that some rube, preferably a cash buyer, will miraculously appear and fall so helplessly in love with their home that they must buy it. Meanwhile, back on planet earth, few buyers pay cash and there is a person called an appraiser who has to share your opinion of the price, before the bank will part with its money; so, I think you know the ending to this little story.
It seems like a good time to buy a home, or trade up to a larger home. Truthfully, no-one knows where prices will go and this is an election year, but it is certainly a better market for buyers than the past few years.
