Contracts in 24 Hours? In Arizona? In This Day and Age?

By
Real Estate Agent with Utah Homes 9334967-SA00

I've said it before... there's no such thing as one market. [Q. How's the Market ... A. Which One?]

I like to focus on areas that show the most potential for those who bargain hunt. That means I spend a great deal of time finding properties for first time home buyers and investors. The first-timers want as much home as they can afford that is as close to work, family, friends, etc. as possible. The investors want a bargain home that they can rent or flip.

Since there is so much inventory on the market today, we usually have no problem finding properties that fit the needs. However, the bargain properties move briskly."Hurry Up!" by Melanie Kuipers

Last week one of my buyers, an investor, had to move very quickly.

We spotted a home in the mid-morning, made an offer that afternoon and received an acceptance the next day.

There were others who were scrambling to submit their offers, but we were first to the table.

The others were simply too slow. Ours was a full price offer... it could be re-sold today for much more... especially if the buyer fixed it up.

The media will tell you the market is terrible and no one is buying. In the market I work (the Phoenix metro area) the upper end is slow, the mid-range is somewhat slow and the low end is beginning to sizzle. Here's my reasoning on this phenomena:

  • Banking- Lenders are requiring higher down payments on homes that exceed the conventional loan limits. In the mid-range, purchases that exceed the FHA limits are less difficult, but still more costly than FHA loans. Homes being sold below the FHA limits are very easy to purchase. And the rates are fantastic.
  • Investors are Returning- Depending on your news source, there are those who feel that the market will bottom sooner in Phoenix than in many other areas. This way of thinking follows a certain pattern- our market has been bottoming longer than most other metro areas of the country- especially those that don't enjoy population growth. Arizona also has tended to recover sooner than other states (again... population growth being a factor). So... there are many who feel that history will repeat itself. Such talk is up for debate. Regardless- make no mistake about it- it's becoming easier to find properties that produce positive cash flow.
  • Unbelievable Low End Pricing- There are many homes being transacted at prices well below construction cost. The home my clients purchased last week is being bought for one-third of  2005 pricing. When you can buy a home for $70k that was purchased 13 months ago for $210k ... well... that's hard to pass up... especially when current rental rates are nearly $500/month above the mortgageable amount on the property.

So... while the traditional market is still in a lull, the low end business is brisk. If you're searching for Phoenix area properties, I'd love to discuss this in greater detail.

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Chuck Willman is an agent who specializes in the Phoenix metro area market.

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Photo Credit: "Hurry Up!" by Melanie Kuipers

Comments (11)

Mirela Monte
Buyers' Choice Realty - North Myrtle Beach, SC
Myrtle Beach Real Estate

Chuck:  Thank you for divulging our Reality.  I have more work than I can handle and people have a hard time with my statement that "business is GREAT", when they ask me about it. 

When correctly priced these properties DO SELL FAST!!!

I've had several multiple bid situations on several of my listings.  One is going on right now.  What to do, what to do?

1.  Be pre-qualified and have all lender paperwork in place, AND your down payment.

2.  Have a pro-active agent watch the market for you.

3.  When he/she calls and tells you he/she has found the property, go see it immediately.

4.  Pull the trigger, ASAP!  Ask for a short acceptance time.  Be ready to close.

This is Real Estate 2009, Baby!  Only fantasy priced properties linger on the market the way the media portrays it... 

FEATURED on the Optimist Board.  Thank you for another winner!

Jan 12, 2009 08:58 AM
Karen Hurst
RICOASTALLIVING.COM - Warwick, RI
Rhode Island Waterfront!

Chuck,

 I have to agree. That's the way it has been here for some time. The correctly priced (usually a "deal") properties are getting multiple offers.  The way it should be in my opinion:)  When I first got into Real Estate (not that long ago:) I was told that he who has the most listings wins!!  Hmmm, it seems to me that this statement clearly depends on the market and right now it would be "he who has the most buyers!" 

Jan 12, 2009 09:45 AM
Chuck Willman UtahHomes.me
Utah Homes - Alpine, UT
Utah Homes

Mirela- Thanks for your insight. It's nice when another agent who is working in this niche chimes in. I think the average person is surprised to hear that the low end is transacting very close to asking price... and, at times, above it. The investors who have re-entered the market in the past few months discover this phenomena after their first and/or second offer gets rejected. An agent who works the low end will usually have a handle on which properties are going to be price competitive.

Karen- It's one of the less known realities of the current market. Homes that are priced well below others in the neighborhood are among the few properties (as a percentage) on the market with a pseudo positive-equity condition.

Jan 12, 2009 10:03 AM
Mesa, Arizona Real Estate Mesa Arizona Realtor
Homes Arizona Real Estate LLC - Mesa, AZ
AzLadyInRed

Chuck, you're right. The news is what scares people away - unless the buyer is very savvy. Now is definitely the time to make the move. ;-)

Pepper

Jan 12, 2009 11:50 AM
Ann Cummings
RE/MAX Shoreline - NH and Maine - Portsmouth, NH
Portsmouth NH Real Estate Preferrable Agent

Hi Chuck - I've been saying for some time now that all real estate is local, very local, and your post is one more example of just that.   Good for you and for your buyer for recognizing and acting so quickly.  You snooze you lose - true in real estate all the time!

Ann

Jan 12, 2009 12:38 PM
Bruce Brockmeier
Internet Marketing Consultant to REALTORSĀ® - Yorba Linda, CA
Coached By Crouch

When you can buy a home for $70k that was purchased 13 months ago for $210k ... well... that's hard to pass up... especially when current rental rates are nearly $500/month above the mortgageable amount on the property.

Wow!!!  That's VERY interesting, Chuck.  I might have to take a drive over there.

Jan 13, 2009 07:48 PM
Sandy Shores FL RealtorĀ®, Melbourne Real Estate
M & M Realty of Brevard Inc. - Melbourne, FL
Brevard County Real Estate, Florida's Space Coast

Hi Chuck, I love the fact that the market has become so attractive to first time homebuyers and investors.  It's a great time to buy!  So, many great opportunities today!  Keep up the great job!

Jan 15, 2009 12:52 AM
Chuck Willman UtahHomes.me
Utah Homes - Alpine, UT
Utah Homes

Teri- I had a recent experience... are you seeing this also? I pulled 12 properties for a client two weeks ago. I looked at them yesterday- five are in contract. There is a segment of the market that is moving quickly.

Ann- Yes... some neighborhoods have a very quick turnover while others are languishing... yes... very local!

Bruce- Come on over... we've got a few of these gems right now.

Sandy- I love it too... I work both of these markets and it's nice that they're both favorable right now.

Jan 22, 2009 01:31 PM
Bruce Brockmeier
Internet Marketing Consultant to REALTORSĀ® - Yorba Linda, CA
Coached By Crouch

Soooo tempting!  However, with our two sons in college it's probably just wishful thinking on my part.

Jan 22, 2009 01:36 PM
Anonymous
Craig "The value guy"

You are right on.  I recently closed a deal for an investor client.  We did have to move fast on the good deals.  After getting beat to the punch on the 1st 2, we finally got them the 3rd one we found, & got it for less than 1/2 of it's 2005 price & about $30k or so under current value.  And for any of those investors thinking of getting back in, positive cash flows are potential again. It may not be the bottom yet, but it's a good time.

Jan 24, 2009 09:18 AM
#10
Chuck Willman UtahHomes.me
Utah Homes - Alpine, UT
Utah Homes

Bruce- I think we'll have this market for quite a while.

Craig- Your experience sound very, very familiar... especially in the past couple months.

Jan 24, 2009 04:12 PM