An Open Letter to Phoenix-Area Home Buyers
I am a home seller.
I know there are less than 13,000 active listings on the Arizona Regional Multiple Listing Service. I know there are only about 10,000 single-family homes available to buy in the greater-Phoenix housing market. I know in the last 30 days 8,221 houses have sold. And I know there is a 1.5-month supply of homes for sale.
These figures make it painfully obvious that the greater-Phoenix area is a seller’s market. But, if you’re not into numbers let me explain it another way.
When I list my remodeled, 4 bedroom, 2 bathroom home for sale like the one pictured to the right – complete with refinished cabinets, granite counter tops, new carpet, paint, stainless steel appliances, window blinds, light fixtures and door hardware – I will receive multiple offers. More than likely, at least one will be all cash.
If I accept your offer and you ask for a long list of minor repairs I may refuse to fix them.
If you fail to close in 30 days I will require you pay a $50 per day late penalty. If you need more than 35 days to close I will require that you release your earnest money to me immediately. It will be non-refundable. And if you decline I will put the house back on the market.
Forget about your dream home. You’ll have to cancel the moving van and unpack all of those boxes. You won’t get the $400 you paid for an appraisal or the $450 for the home inspection back. Worst of all, you’ll have to start looking all over again for another house in one of the hottest real estate markets in the country.
You say I would never do this? I just did. Last week.
After 35 days the buyer of this beautiful Peoria, Arizona home asked for a one-week closing extension. I agreed to do this IF they agreed to release their $1,000 earnest money deposit to me.
They balked. I walked.
The house went back on the market the following morning and I had three full-price offers by the end of the day – one all cash.
Don’t believe what you read or hear on MSNBC, CNN, FOX or the USA Today. The greater-Phoenix area is a seller’s market. I am a home seller and I have the leverage.
For now.
The market will eventually shift. It always does. And when this happens you, the homebuyer, will have the upper hand and can write me a letter. You can remind me that there are hundreds, if not thousands, of other homes just like mine for sale. That the market is distressed and I need to discount my property, replace the HVAC unit and roof and re-plaster the pool. Yes, I’ll lose money. But at least the house won’t bleed me to death anymore. I’ll accept your offer, fix everything and throw in a bottle of $100 wine at closing.
I remember those days. Not fun.
The good news is, for both of us, prices and interest rates are about as low as they’ve ever been. We’re on the road to recovery. At least we’ll both benefit from that.
Wow, I guess I already know what to tell the buyer when we get the BINSR on Caribbean. And to think you gave me grief about being humble!!
JD, too much bravado?
I find it frustrating that a buyer expects me to fix every little tiny issue with the house and then fails to close in within the agreed-upon time frame. Then they want something for nothing (more time to close) – oblivious to the fact that every extra day is costing me time and money.
Boy did I need to vent. Feel much better now.
AMEN BROTHA!
I cannot believe how quickly the market has shifted….ok maybe not quickly(4 years isn’t exactly overnight) but it seems like it was just yesterday that the Phoenix market plummeted 40-60% in some cases. I feel like this is going to be one of those situations 5 years from now that I am kicking myself for not investing in the desert! Good luck on getting this sale to close!;)
Kelley, it really does feel like someone just flipped the switch. I’d prefer a slower transition from buyer to seller’s market. Values here are up 15% from last fall and Mike Orr predicts by the end of 2012 we’ll be up 25%. Meanwhile, inventory levels are at their lowest since 2006. The difference between 2006 and today is investors are paying all cash. If another dramatic shift occurs we won’t see nearly as many foreclosures.
Good stuff Marty, I agree 110% with you about everything. Homebuyers need the proper expectations set up front, I find that the vast majority of Real Estate agents lack the backbone to set the record straight with the buyer in fear of losing them, or possibly because they are not educated. None the less, these will be buyers who will be writing offer after offer until they figure out what the real problem is and why they dont have contract acceptance.
Look forward to more posts from you.
-Justin, The Electric Loan Officer/a>
Justin, even the best Realtors I know have a hard time helping buyers understand what is taking place in Phoenix. However, in this case the buyer’s Realtor and lender cost the homeowner big time by not explaining the process thoroughly. I’m sure if the buyer really understood the consequences they would have released their earnest money to me.