There are some downright stupid buys to be had in the current Real Market here in Scottsdale. In the past two days, I have looked at three different properties that were $100,000-$200,000 under market in my estimation. Given they were located in my primary market, my estimation is pretty darn accurate if I do say so myself. And I do.
It seems that the investor activity on the fringes of the Valley is trickling into the more central locations like McCormick Ranch, South Scottsdale and the Kierland area. Why? Because of the outbreak of crazy values like these few I mention. While I have written at length about the pitfalls of the bank-owned buying craze, I must say that many of the better values as of late have been bank properties. Sure, most require some work, but we're talking tens to hundreds of thousands under market ... even in the current distressed condition. Now I caution that many of these homes are not going to be suitable for end users or amateurs. It will take a professional investor to see past the current grime and filth. In some extreme cases, the properties may even have trouble qualifying for conventional financing due to the condition. Picture a crack house where the owner's fellow crack addicts are concerned about how he really let the place go. Think banks are tough on properties in primo shape right now? Try running one with animal feces ground into the carpet and holes in the walls past them. Okay, they aren't all that bad, and some are actually in very livable shape, but the cash and/or private financing that many professionals operate with still gives them a decided advantage.
What I am having trouble understanding is why some of these prices are so incredibly low. I know that banks are eager to offload them, and the incentive to the buyer must be strong enough to look past the required fixup, but some of these properties are overshooting (or should I say undershooting) the mark by such a wide margin that it is simply staggering. My hypothesis? Out of area agents offering BPOs (broker price opinions) to out of area banks. I don't know of many institutions that are hiring specific agents for individual properties based on their locational specialty. They simply have a group of agents to whom the listings are funneled, and it's often luck of the draw as to who gets what. So they run their numbers, not knowing the neighborhoods, builders and specific submarket forces, and come up with an unenlightened evaluation. Taking it a step further, they will dutifully report the treacherous Valley wide market conditions, spurring the bank to lop even more off the asking price.
With this cheap inventory being pounced on immediately, it is not an easy prey. Like the supernova that erupted our market in '05, the current low end of the market is generating multiple offers and bidding wars, and selling within 48 hours of hitting the market. You don't want to bring American Express to one of these. Cash is king.
Even with the spring high season behind us, the sheer absurdity of some of these prices is bringing non-Phoenix residents back to town in the midst of 110+ degree heat. While there is ample competition for the very best deals, the odds of securing such a steal are significantly better than they were a few months ago when all of the seasonal residents were still in town and vying for their pieces of Scottsdale's pie.
I'm calling on the professional investors from Scottsdale, Arizona to Alberta, Canada and beyond. I see unbelievable values every day, and it's killing me not to have anyone to offer them to at present. Don't make me form an LLC with a few partners and start buying all of this low-hanging fruit myself. I really don't have the money and can't take on the added responsibility right now, but ...
Shoot me an email, and I'll put you on my watch list for the next investment opportunity that comes down the pike. I won't fill your inbox with clutter, but you'll need to be ready to rock and roll when I do forward something. As fortunes are unfortunately being lost in this market, so will they be made. You in?
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Paul Slaybaugh is Your Scottsdale AZ Real Estate Specialist
Whether Buying, Selling, Investing or simply burning my gas at $4.15 a gallon,
I'm your guy.
(480) 220-2337
paul@rayandpaul.com
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