Top secret inside information. Everyone in Scottsdale wants it.
Whether it is the neighbor in financial difficulty that has hinted it might be time to sell or the allure of the untapped gold mine of the foreclosure market, it is largely held that the best deals are found in the margins. Those hidden niches in the Scottsdale Real Estate market that are tucked away from competing buyers.
Foreclosures, pre-foreclosures, auctions, short sales ... anything which is hidden from the prying eye of the Arizona Regional Multiple Listing Service (ARMLS) is in high demand.
Why? Because this is where you find the smoking buys, right?
Right?
Not necessarily.
I find that the best values are typically hiding in plain sight. It is not simply knowing where to look, but more importantly, knowing what you are seeing.
You have no doubt heard the reports detailing the rampant rise in bank owned property. Homeowners not able to keep up with adjustable rate mortgage increases. Investors attempting to "flip" properties as values began to decline. Job layoffs or transfers which necessitate a sale shortly after purchase. There are countless examples of how people can fall behind and lose a property.
So the bank will be eager to slash the price and get rid of it, right?
Right?
Don‘t count on it, partner. Lending institutions are not unlike typical sellers. They will attempt to recover as much of their investment as possible.
Example:
You, the buyer, are looking for the best value in the market.
Property A has been financed to the hilt. Prior to losing the house to the bank, the previous owner, Mr. X, purchased it with little down in 2005. With prices taking off into the stratosphere, he proceeded to take out a line of credit after getting the home reappraised for $100,000 more six months later. He started to fall behind on the payments in late 2006. With the sag in prices, the home was now worth far less than what was owed. After trying and failing to sell it for a price that would have repaid his debt, he simply gave up and waited for the bank to foreclose in mid 2007. On the way out, Mr. X decided to take all of the appliances and cabinets with him.
Property B has been owned by the Smiths since 1968. They raised their children in this house. Had family and friends over every Sunday. Mr. Smith changed the A/C filter every month, and Mrs. Smith scrubbed the tile grout in the shower every Wednesday. They have all of their paperwork from when they originally purchased the home, including the floor plan. They feel terrible that the new owner will have to contend with the pencil marks on the wall in the kitchen denoting the children's height progressions, but they can't bear to paint over them. They will give the new buyer a $500 credit for the inconvenience. No longer needing such a large home, the Smiths have decided to downsize. They own the home free and clear. After originally purchasing it for about $16,000 and change, the house is now worth approximately $325,000. They would be thrilled with $300,000.
My question to you, the buyer, is this:
Who do you think will be in the better position to offer you a better value? The owner of the property that is upside down and backwards, or the owners of the free & clear gingerbread house?
Are there deals in the foreclosure market? Sure. There are deals in all segments of the industry. But the ones I run across in or outside of the Arizona Multiple Listing Service on a daily basis are very rarely what I would consider a "hot deal," regardless of the listing agent's proclamation that it is listed at 50% of its true market value.
Psst ... it's not!
And if you are eager to purchase a home at auction to get an outrageous buy, be prepared to compete against professionals and bring a suitcase of cash. They don't take American Express.
Don't get sucked in by the buzz surrounding "foreclosure" and "pre-foreclosure" properties. Know why those "Bank Owned" riders go on the sign in the yard? Because they know it will get you salivating over the potential theft to be had. Some of the biggest overpriced turkeys I have seen lately bear this little sign rider.
Evaluate each property's value on its own merits, not its label.
Paul Slaybaugh with Realty Executives is your Scottsdale AZ Real Estate agent. For the right home at the right price in Scottsdale, Phoenix and Paradise Valley, AZ, I'm your guy.
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I love this post, such good advise, agents need to have this discussion with their buyers