Right now buyers have a huge challenge trying to lock down a house w.ith the inventory shortage in the Phoenix, Arizona real estate market. As the lender-owned inventory on MLS has dried up, realtors and their buyers are left primary with short sales, followed by high-priced investor flips. About a year ago I started writing a ton of back-up offers on short sales for my investor buyers and I am still using that strategy for retail buyers as well. I have a buyer closing on a custom home in Queen Creek next week as a result of this strategy. This is just one of the 5 key strategies I've put together for How to Buy a Short Sale in Arizona AND Get a Great Deal:
How to buy a short sale home and get a great deal
- Hire an aggressive realtor who will out-hussle and out-smart the competition. Or hire a realtor who specializes in listing short sales.
- Get your offers in ASAP. While a bank-owned listing may stall and wait for multiple offers to come in, for many homeowners it’s a hassle to deal with the short sale and they are not receiving any proceeds from the sale so they often do not want to deal with multiple offers. It’s possible they will accept the first offer received.
- Make back-up offers. Since short sales take a long time and the bank sometimes counteroffers a higher price, many initial buyers of short sale homes walk away or they simply find another home before the short sale process is complete. I have had great success in buying short sales with back-up offers for both investors and owner-occupants, and I’m not shy about writing back-up offers for my clients.
- Your realtor must meet the BPO (Broker Price Opinion) agent who is valuing the home for the seller’s mortgage company and provide the BPO agent with comparable home sales that are favorable to you. Sometimes it works, sometimes it doesn’t, but it is a great opportunity that should not be missed. I and experienced investors I know swear by this. The bank will base its sales price off the BPO so this step is absolutely critical.
- If and when the bank counteroffers you a price, you must understand that most of the time there will be flexibility in this price. Depending on who the investor is will determine how much of a discount you can negotiate off of the BPO/Appraisal price. These investor guidelines are set by region and may change quarterly. One of my friends who is a local expert says that FHA guidelines are currently 88% net of the BPO price, so if the BPO was $100,000 they will go down to an offer with a net of $88,000. Other investor guidelines are different, so make sure you are working with a realtor who knows how to take advantage of these guidelines to save you thousands or tens of thousands of dollars!
Patience and perserverance are required, as always lol. It's also helpful to have a thorough understanding of the short sale process in Arizona.
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