Across the country, we are seeing various types of markets, although many face inventory shortages, but we will focus on the Phoenix Metro Real Estate market with this analysis. Having been in the business since 2003 and my business partner (and Father) since 1975… we’ve NEVER seen a market quite like this!
Why is that?
- Inventory has never been this low.
- Interest rates are historically low.
- Our population has never been higher (and is growing).
- New Construction cannot keep up with demand.
Back in 2004-2006, we saw quite a run up in pricing and frenzies with multiple offers, but it was very different than right now. Back then there were lots of sub-prime mortgages, 100% financing (1st & 2nd liens at closing), people were putting little or no money down and everyone seemed to be refinancing to take their equity and purchase a toy hauler or boat. Lending practices were often “shady”, super streamlined and appraisers were sometimes influenced to inflate figures. Also, during those three years over 1.5 Million new homes were built across the country. After the recession, many construction workers didn’t come back so a severe lack of trades has made it difficult to produce as many new homes as are needed to fulfil demand.
As of right now, there are about 2,500 total Active homes for sale across the Phoenix Metro area, any price and any size. That has driven some wild conditions. How wild?
“50+ showings and 30+ offers in 1 day is not uncommon.”
What should a Home Buyer have right now to find success?
- Patience… it can take some time and a few swings before connecting on the right opportunity.
- Money in the bank… sellers are not paying your costs or giving anything extra.
- A Good REALTOR® – without the right representation that is reputable, experienced, aggressive and creative, you might find yourself on the sidelines for a while.
- Realistic Expectations… If you’re qualified to $350,000 then you’re looking at homes priced $335,000 and under since everything will get bid up.
With that level of competition, what can a buyer do to make their offer appeal to a seller?
- Do not ask for Concessions / Closing Cost Assistance.
- Do not ask for a Home Warranty.
- Increase the Earnest Deposit amount.
- Offer Non-Refundable Earnest Money (up front or after contingencies).
- Release Earnest Funds to the Seller early.
- Shorten the Inspection Period.
- Waive Repairs / accept a property As-Is.
- Waive Inspections (not normally suggested).
- Offer the Seller Post Possession.
- Offer the Seller a Leaseback.
- Credit money toward the Seller’s Closing Costs.
- Waive the Appraisal Contingency.
- Pay “X” amount above appraised value.
- Seller Contingency for the Seller to find their next home or else cancel.
- Escalation Clause.
- Love Letter / Video / Photo (this one can be touchy due to potential discrimination claims).
Every situation will vary so by no means am I suggesting all of the above for every single buyer. We evaluate each unique client situation and property circumstances in order to guide in the right manner.
If you’re thinking about a move, let’s have a conversation. It’s never a bad thing to be informed on current market conditions so you can plan accordingly moving forward.
