In the early 90’s it was commonplace to get offers subject to the sale of the buyer’s residence. When the market heated up in the mid 90’s contingency sales like this began going extinct, especially when investor’s entered our market and were making all cash offers and when multiple offers became more of the norm. An offer subject to the sale of the buyer’s home would not even be considered, and often it would not be considered even if the home was sold and in escrow waiting to close. Well, that’s no longer the case.
Now, new offers coming in that are in escrow awaiting the close are seldom refused just for the sale of the contingency. And lately, we’re seeing offers happening that are not in escrow. This is a real change to our market and is another positive sign of a “normal” market.
What should a seller do if they receive an offer with a contingency? Well, for one thing don’t toss it. If a buyer is really interested in your house, they will probably offer you full price, or close to it to make it worth your while. But price is only one consideration. Perhaps too, their home is an easier sell than yours, (i.e. less expensive, better location, better condition, etc). The bottom line should be which house will sell quicker.
Other considerations would include how long their house has been on the market? How is it priced? Your Realtor should do a Market Analysis on their home. If it’s not on the market yet, make sure you provide a clause in your counter offer that gives you and your Realtor a few days to examine the marketability of their home, then decide. And limit the time they have to find a buyer for their home, such as 30 days.
There are other considerations as well that your professional Realtor will advise you on, but today’s takeaway for our current market is for you to consider all offers, including contingency ones, if they make sense.
FORECLOSURE NOTICES OLDER THAN 2002
It wasn’t too long ago that a host of states were consistently in the news as leading the nation in huge foreclosure rates and right at the top of that list with Florida, Nevada and Michigan was Arizona.
Well the worm has turned! Now, Arizona is one of a few states leading the nation with the FEWEST foreclosures and new filings. In fact, since the foreclosure market peaked in March of 2009 with 10,712 foreclosures filed, the current number of new filings has dropped off the table to less than one thousand. Actual completed foreclosures are less than 500 per month now compared to the height of the market in March 2010, which saw 5450.
Local experts are expecting the foreclosure rate to continue stabilizing due to the stiffened underwriting standards now imposed.
NEW HOMES SALES DECLINE – NEW HOMES LARGER NOW
Although newly built single family home sales grew 4% from 867 recorded unit sales in August to 906 in September, the monthly total was 9% below the same month in 2013. The total dollar value of single family new homes closed in September was down from $311 million in 2013 to $302 million in 2014.
Closings increased month to month in both Maricopa and Pinal County. The average sq. ft. of a new home in August was 2,527 while the average sq. ft. of a normal re-sale was 2,024. This suggests the extent to which homebuilders have abandoned the entry-level market in favor of the move-up market. It also shows us why the median sales price of new homes is so much higher than for re-sales.
Thanks to Michael Orr of the Cromford Report for todays stats.