Is it 2005 all over again? It sure fells like it when it comes to the Phoenix’s real estate foreclosure properties for sale.
From AZCentral.com - Lenders stung by the housing bust are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars in some places that harken back to the market’s go-go years and may signal the bottom is near.
Just today I visited a bank owned home in Gilbert, AZ with a client that had been on the market for two days. The home had a very attractive list price and I knew it would get alot of activity from interested buyers. A short time later I found out that there were already 8 offers on the home. A few years ago it was the norm for a newly listed home to have multiple offers in a day, sometimes even hours.
This isn’t the first time I’ve run into this feeding frenzy on bank owned homes and I am sure it wont be the last. Many lenders are using what I like to call the eBay pricing strategy. Start it low and let the buyers bid it up, in some cases paying more for the home then other recent sales in the neighborhood. Phoenix area foreclosed homes are being listed at very low prices and buyers jumping to get in on the action.
A word of advise; Don’t get caught up in the bidding fenzy.
Be sure to review the recent comparable sales for the area and set your offer price accordingly. If you miss out because some other buyer was willing to pay more don’t worry another opportunity will come along shortly.
Keys to success
- Get to the home as soon as it is listed. I have had success putting in an offer for a client before anyone else does and getting it accepted by the bank. If you can be the first to the table there might be a chance to lock the home up and get it off the market before anyones else has a chance to see it.
- Have your financing lined up. Having your ducks in a row when it comes to being pre-qualified for a mortgage will allow you to get your offer in quickly. The last thing you want to have happen when you find a really good deal is to be waiting for a lender to pre-qualify you so you can write an offer. Remember, the clock is ticking and every minute wasted gives the competition the opportunity to submit their offer for the home.
If anyone is interested in buying a foreclosure/bank owned home I can setup you with a list of available homes and notify you as soon as new foreclosures come on the market. Just drop me a line (use the contact form on the right side of the page) and let me know what area you are interested in and specifics (# of bedrooms, minimum square footage, max. price, etc.) about the homes you would like to see.
“Please, submit your highest and best offer”. That is what the banks real estate agent said today when I asked about the status of an offer my client submitted on a foreclosure home in Buckeye, AZ. We were also informed that there were a total of twelve offers for the home.
As is the case with many of the foreclosured homes listed on the Arizona Regional MLS these days, this home had been on the market for less than a week and it had a flood of offers from prespective buyers. Banks have learned to use what I like to call the eBay method of selling; namely set the list price low and let the buyers compete with each other and bid it up. Not only do they get to sell the home for the best price but they get it sold quickly.
As a buyer’s agent, there is something that I have to admit I find very annoying about this process; namely that the seller is not disclosing what the current highest offer for the home is, even on eBay you get to see the highest bid. It could very well be that our current offer is the highest and the bank is using the fact that there are 11 other offers to provoke us and the other buyer’s into bidding higher. Additionally, not knowing what the highest offer is leaves us guessing whether it is even worth the time, effort and patience to play the bidding game. What if the current highest offer is above what is a resonable price for the home or higher then my client can get a loan for?
So what is a buyer to do? In this case, the original offer price was below the recent comparable sales in the area so there is room to come up on the price. There are also a lot of other homes available in the same price range and area of the west valley. So we are going to submit a higher offer but leave enough room to allow for a little more downside in this market just incase values continue to slide. If our second offer is the one that gets accepted then great, if not we will know that someone else paid to much for the house and we can look else where for a better deal.
I’ll let you know how it goes…
Saturday I had the privilege of visiting several homes with a client and we found a home they immediately fell in love with. The asking price is attractive, has a great floor plan, backs to an open area, very close to the neighborhood school and convenient to their workplace.
Sounds like the perfect fit, right? On the surface it is but there is a problem; the dishwasher and built-in microwave have been removed. Now you might be saying to yourself, “Big deal, just reduce the offer price and buy a dishwasher and microwave with the savings”, or “Ask the seller to install appliances before close of escrow”. But there is another wrinkle in the fabric of this deal.
The home is a short sale/pre-foreclosure listing. For those of you not familiar with short sales I will go in to more detail on these in a future post but to put it briefly, a short sale is what a seller does when they owe the bank more than they can sell the home for, which in turn leads me to believe they can’t afford to install a new appliances, never mind the fact that they shouldn’t have been removed in the first place. And since it is not yet a bank owned home (hence pre-foreclosure) the bank will not be willing to put the appliances in at their expense.
Now comes the real meat of the problem for my clients; FHA and VA loan guidelines require the dishwasher and microwave, since they are built in appliances, be in the home for the appraisal, final loan approval and funding. And since my client is using a VA loan to purchase the home there in lies the rub.
So there the house sits waiting for a buyer and the seller has dramatically decreased the chances of a successful sale by removing the dishwasher and microwave thus eliminating buyers who will be using FHA and VA loans to purchase the home from contention; stupid move on the seller’s part if you ask me. If the seller doesn’t get a dishwasher and microwave installed the only buyers who can even consider buying the home are buyers who are using a conventional loan and cash buyers.
So where does this leave my clients? We’ve submitted an offer and in it requested that a new dishwasher and microwave be installed in the hopes that the listing agent can track down the seller and get them to replace the missing appliances or get the bank to agree to do so. Now if only the seller’s agent would return my calls and emails, but that’s another post.
