March 12, 2009 at 9:42 pm Leave a comment

Phoenix, Arizona, is one of the cities being hammered by declining home values. There are many foreclosed homes being offered at amazingly low prices — some are even priced below building cost.

But once you get serious about making an offer on any of these homes, you’ll find that getting the home you’d like is harder than you thought. Why is this so?

Banks and Realtors listing REOs have gotten smarter. They finally figured out what it takes for buyers to write an offer — they are pricing homes 35 to 40 percent below market value to generate bidding wars.

By doing this, they are ending up getting close to the actual price they want for the home, stirring up initial interest among buyers because they originally listed the price below market value.

On top of this, banks and their designated Realtors are giving competing bids two or more chances to increase their bids. It does get frustrating when you are the buyer’s Realtor to know that you made it through the first round of bidding but do not successfully get the home on the third and final round.

One of my clients recently made an offer on a nice lender-owned home in Chandler. The market value of the home is around $170,000. The home was listed at $124,900. Ours was one of eight offers on the home. The lender countered the multiple offers with highest and best. On this second round of bids, the offers were, of course, higher still.

Three days after the highest and best offers were submitted, the Realtor for the lender informed us that the seller (bank) would continue to negotiate with three other offers that were higher than ours. So, one of these three buyers will likely have to up their offer again to get the home. By the time the buyer wins the home, the price is no longer a deal. It’s an emotional roller coaster for an average deal.

Everybody is bidding on the same house that is move-in ready and priced ridiculously low. If buyers continue to go this route, this outcome will be repeated over and over again. It seems that these sellers (the banks) are taking control of the market.

So, how do you get a home you like at a price you can afford in this market? Look high and bid low. There are many nice homes priced realistically, that have motivated sellers with no offers on their homes. Chances are you will be the only offer. You can then negotiate down on your offer which is good for you as the buyer.

With the help of a qualified Realtor, look where other buyers are not looking. There are gems in this lesser-known territory waiting for you to discover.

Entry filed under: Arizona Real Estate, Chandler Real Estate, Foreclosures & Short Sales, Phoenix Real Estate, Real Estate Deals.

Home Buyer’s Seminar A Success A Positive Turn in The Arizona Real Estate Market

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