"Impatient Buyers Target Homes Before They Go on Sale" by Jim Buchta, (MCT) - "House hunters frustrated with the market's supply of homes have shifted their search from the streets to underground. More buyers are targeting homes that haven't yet hit the market, a trend agents say will grow as inventory shrinks and the mismatch of what's available and what's desired continues." (full story)
This story, highlighted by RISMedia, immediately caught my attention. Just a few months ago I wrote a blog "Have Buyer, Need House: Where Did the Inventory Go?" describing the dilemma of shrinking inventory in certain areas and price ranges and waiting for the right listing to come along. Our pot did boil not too long after. My buyers and I jumped on a listing as soon as it hit the market, literally wrote an offer in the middle of the night, thus being the first ones in and beating out 2 other offers.
Very recently, a condo listing of mine was solicited by interested buyers long before I officially entered it into the MLS and an offer was presented as soon as I did. It's a small community with little to no active inventory, word traveled fast and good ol' fashioned networking procured the contract.
It's no coincidence, however, the last sale in that same community was such a "back-pocket deal" as described in the article. The buyer was waiting for a new listing and wasted no time as soon as he learned about it got the Intel! That condo never even hit the market! And therein lies a major problem with those shadow sales, something that the article failed to mention: APPRAISALS!
I had to learn the hard way, "behind the scenes" sales, or shadow sales, are not qualified comps! It does not matter if both, buyer's and listing agent, understand the dynamic of that particular market. Pleading the case lead nowhere and all appeals were rejected. Under no circumstances were the lender and appraiser willing to consider that sale as a comp!
The end of the story: a sale that will close below its market value in our opinion and a subdivision that will continue to be classified stigmatized as a declining development - never mind that buyers are waiting in the trenches, ready to pounce on any new listing like prey! Case in point, the next condo to hit the market in said development, under contract in 2 days as well!
Shadow sales - they may become the new trend and as such, a new problem!