I went to the Suns game yesterday (vs Philly) with my buddy Walter. He has owned Suns season tickets since the Steve Nash era, the last time the local team was a championship caliber team, besides last year. I usually drive to these games, and they’re most always at night, but yesterday Walter graciously drove and it was an afternoon game. Now, why does this matter, and what’s it got to do with real estate?
Glad you asked.
Not driving, and being able to be an observer, I was blown away with the upward growth (literally) of downtown Phoenix. Numerous high-rise cranes were building modern commercial and residential structures. Former run-down neighborhoods (not all) were sprouting economic vitality. The arena (Footprint Center) was like no other arena event I’ve ever attended. It was a sellout (and it’s not even the playoffs) and the fan/arena noise was an amazingly fun assault on the senses. Of course, it does help to have the best pro team in the nation😉
“…the Phoenix Metro community as a whole, saw more population growth than any other metro community…”
According to Census data, Arizona’s population gained almost 100,000 this past year. And 99% of our resident growth is attributed to migration, rather than the “natural change” of births and deaths. Of the 98,330 new residents, only 832 were attributable to natural change. Check out this article from the Business Journal:
Maricopa County alone, added more residents (58,246) than any other County in the country. Further, the Phoenix Metro community as a whole, saw more population growth than any other metro community, behind only Dallas-Fort Worth-Arlington area. Arizona ranks, per the Census, as the 3rd fastest growing state in the U.S.
What was just a few years ago never really discussed, but is now the most oft question of the day for The Bodeen Team:
When will this (price escalation) end? Based on the above local and statewide story, not real soon. Seemingly, our demand for a limited supply of housing will continue unabated for the foreseeable future. This will further increase values locally, and statewide.
Caveat: Having said that, in 46 years of residential real estate experience, I’m no stranger to market changes. And when they happen, they can happen quickly.
The North Scottsdale real estate market is killing it! The seven zip codes which comprise North Scottsdale are currently showing a monthly median sales price of $715,000. One month ago, the median sales price was $650,000. This is a median increase of $65,000 in one month! Yes, you heard me correctly, the North Scottsdale median sales price rose $65,000 – 10% – in one month.
Listing inventory in North Scottsdale has plummeted. One year ago, North Scottsdale home inventory was at 1409. This year, there are only 1044 homes currently for sale in North Scottsdale – a 26% drop!
How about North Scottsdale rentals? Rising to record lease prices, North Scottsdale home rental prices just hit $1.45 per square foot (psf) this September. This is .06 cents psf higher since last month and a rise of .17 cents psf in one year – a 13% rental price increase.
The 85254 zip code is one of North Scottsdale’s great central locations, however there is a not-so-dirty little secret about what’s known as the “magical zip code.” The 85254 zip is not in Scottsdale but is in the City of Phoenix and includes Phoenix city services. And the school district? It’s in the Paradise Valley School District. So why is it called Scottsdale? Mailing only. Talk to the postal service.
All of that doesn’t change what a cool place it is for many who call it home.
It’s also exploding in value, with prices up 22% in one year! The supply of homes for sale has dropped in half from 170 one year ago to 112 this month – a 34% inventory drop.
||1 Year Change
|Sales Per Month
|Sales Per Year
|Months of Supply
|Appreciation – Median*
|Average Price – Sales**
|Median Price – Sales***
All Data courtesy of the Cromford Report
Considering Buying or Selling in North Scottsdale or the Northeast Valley. Give Mike a call at 602.689.3100 or send an email to: [email protected]
Alternate Title: The Importance of a Good Pricing Strategy
“We can always come down,” says the confident seller. This is a true statement, but there can sometimes be unintended consequences that can have a serious impact to the overall goal of selling a home for the best price and terms and in a timely manner.
“How long has this been on the market?” asks the interested buyer. In my personal and professional experience, the buyer usually wants to hear one of two responses. Either long or short. If long, the buyer’s thinking; “low-ball offer.” If short, the buyer’s thinking, “I better see this soon!”
What we know for sure:
1) More buyers will see the listing in the first 2-3 weeks of its commencement compared to any other time during the listed period.
2) If there are going to be multiple offers on a home, they usually occur in the first few days of the listing, or the first week after a good price reduction.
3) The longer that a listing is on the market, the greater the distance between the selling price and listed price.
The Phoenix Metro real estate market is currently one of the most well balanced markets in the country, which has not always been the case. In July of 2005, which was the peak of our blistering seller’s market, the average time it took to get a contract on a home was just 24 days. Contrast that with the ugly market downturn in February of 2008, where the average market time for a home to sell shot up to 140 days!
Today, the average market time is 78 days. Bear in mind that the amount of days on the market very much depends on what price range you’re in. If you’re priced under $200,000, your home should sell quickly, depending upon location. If it’s over $500,000, the length of market time increases dramatically. It’s not strange to see the million dollar+ homes sit on the market for a year or more.
For these reasons we always prefer to list the home competitively up front, so take what I’m about to say with a couple grains of salt. If you want to “test the market” with a price that is above what a professional says the home is worth, there may be away you can do so and not get burned. Well, no one can say for sure because it’s a gamble. The method we’ve used to do this, is to list a home with an automatic pre-agreed price reduction that takes place after 3 weeks down to our original recommendation. This way the seller can feel confident he/she isn’t underselling his home, but still get to a competitive price point while interest is still relatively high.
In the technologically advanced age we live in, the world of interested home buyers will see your home online before they ever decide whether or not to go see it in person. If not, they will either file it in the trash never to see it again, or perhaps save it to keep an eye on it. If the home is reduced they will then take note of it again, that is, if they haven’t already decided on different home. The best course of action for the seller is to get the home under contract during the first 3-4 weeks. In this situation the seller will most likely not be “low-balled” and still be able to obtain the best possible price.
Over the years we have seen too many sellers waste time and money because they fail to price their home correctly in the beginning, and worse than that, not reduce the price in time to still capture that initial wave of market interest. This is especially important in our current $500k+ market range where demand is low and supply is high.
Last week’s blog discussed the increasing use of contingency sales where buyers’ offers are coming in “contingent” on the successful close of escrow of the buyer’s residence. This practice should not be automatically shunned as it has been over the past decade, but neither should it be readily agreed to without doing our homework.
This week I look at how the seller and their agent can diminish the negative risks of the contingency sale. Here are some basic safeguards that sellers can take to prevent getting stuck in a losing situation.
Mike’s best seller practices in order of safeguard:
- Should you take a contingency sale? The answer lies in the “honest” assessment about which home (yours or the buyer’s) has the greater likelihood to sell first. If your home has been languishing on the market with few or no offers and the buyer’s home that they need to close on will be a slam dunk quick sale, then certainly consider their offer. In all instances, you and your professional Realtor should do a thorough investigation as to the facts of the buyer’s current deal.
This includes interviewing the related parties to the transactions including agent, lender, and Title Company to determine the viability of the deal hanging together. Because if their deal falls apart, your deal falls apart and you get nothing (except angst) plus you‘ve lost time.
- Consider taking a contingency on a home if the buyer’s home is already in escrow, and through its “Due Diligence” (inspections) period including the negotiating period which can stretch out to 10-15 days or more. This assumes the buyer’s buyer does not also have a home to close on. You can allow this, but it’s very tricky. Much investigation needs to go into the quality of the other deals. This includes interviewing all other affected Realtors, lenders and title company officers and reviewing sale documents to make sure there’s no hidden hooks that can pierce the deal. I’ve been in escrows that have had up to four other homes that needed to close before my client’s home could close. These are possible, but harrowing and not for the faint of heart.
- Consider taking a contingency if the home just went into escrow and has not yet gone through its Due Diligence period. This can also work, but a few more questions need to be addressed about their property itself to determine if it should pass an inspection from the buyer. Again, this is a duty of you and your professional Realtor.
- Consider taking a contingency if the buyer’s home is NOT in escrow, if in your opinion and that of your Realtor’s, the buyer’s home is more likely to sell before yours. Is their home well priced, not unusually odd, in good condition, good location, etc. It’s still a matter of the odds. Your Realtor is usually best suited to make this determination.
Question: How long should you give the buyer’s to sell their home? It should be within one-two days of their closing. They will need to transfer funds to close on your home. The problem with #4 above is that it’s an unknown until they get their home in escrow. There should be a definite cut-off date.
Question: Can I accept another offer while under contract to sell to another? Usually not, unless you include a clause known as a “Contingency Release Clause.” This clause allows the seller the opportunity to take a new buyer’s offer after first giving the existing buyer the right to eliminate their contingency (72 hour right of refusal) and proceed to close escrow. This needs to be set up when the deal is first structured.
There are a number of other issues that should be addressed as well, but as you can see this is not something that should be either lightly accepted or rejected by a seller. There are a number of benefits in this package, but each deal needs to be weighed on its own merits. And as always, we recommend that buyers and sellers consider having legal counsel review these documents.
If you or someone you know would benefit from our expertise, by all means have them contact us. We’ll be happy to help. It’s what we do!