Multiple Offers on Homes Priced below $350,000 (Phoenix, Mesa: hardwood floors, for sale by owner, foreclosed)

[MotleyCrew]

I had a realtor tell me yesterday that cash is no longer king. Were they misleading me?

[Rick Lee]

Well, we just lost out on another place yesterday. Price was $215k. We offered $255k and asked for 3% closing cost help. Six other cash offers beat ours, though we were headed for an FHA loan.

[sierraAZ]

Originally Posted by MotleyCrew

I had a realtor tell me yesterday that cash is no longer king. Were they misleading me?

What do you mean? Cash is ALWAYS a king if the quantify of it is enough. If you're trying to imply that bigger mortgage wins vs. less cash, that could be the case...

[roosevelt]

Finally closed on a lender sale house, Freddy Mac, for cash, 2500 square feet, minor faucet leaks, needs trim paint outside, $190,000 cash. There is not another house similar for miles. Perfect Schools, grammar school 2 blocks, high school 1/4 mile and both have city parks. Wonderful shopping and restaurant area; Deer Valley. Guess I was lucky.

[MotleyCrew]

The thing that is happening here in Vistancia is the multiple offer frenzy and it is driving prices up. Not nearly what they were, but up on the foreclosures. I am not sure I want to get into another rat race right now, cash or no cash.

[Rick Lee]

Might be a light at the end of the tunnel for us. We got a seller accept on our offer on a short sale tonight. We made the offer a week ago and suspect the listing agent ran it by the bank before he ran it by the sellers, just to see if we were in the ballpark. Asking price was $280k and we offered that, asking for 3% seller help. It's by far the nicest house we've looked at so far. It last sold in 2005 for $560k and then had a $50k pool added to it. I think $280k is a deal. So now we wait for the sellers' bank to pull the BPO's and hopefully give us the green light. I'm crossing my fingers.

[Captain Bill]

Originally Posted by MotleyCrew

The thing that is happening here in Vistancia is the multiple offer frenzy and it is driving prices up. Not nearly what they were, but up on the foreclosures. I am not sure I want to get into another rat race right now, cash or no cash.

Some time ago, when there were plenty of homes available, I wrote that the buyers at that time were doing the cherry picking. Many were looking at up to 100 houses until they found what was exactly right for them. They may have been paying a little more for the house, but they got exactly what they wanted, and in the long run will be better off for it because the prices will eventually come back and they will have been happy in their home.

(One of my clients, who became a close friend, bought a house in Nov 2007. He recently told me he doesn't care what his house is worth today. He said "I love the house and never plan to sell it." )

I also said that when the supply dwindled, the prices would be less, but the choices of available homes would not be there.

During the past year as I was showing the trends of declining inventory and increasing sales (along with continued declining prices) I said that at some point the prices would flatten out and reverse to be in line with demand.

I was severly criticized by a couple of people for making those statements. They couldn't foresee that happening. I was accused of just being a Realtor trying to tell people to run out and buy.

But what I said would happen is exactly what is happening today. I don't have a crystal ball; I was only stating the simple law of supply and demand, and how trends can give us a clue as to what will happen, although not exactly when it will happen.

The trends in 2005 of increasing inventory and decreasing sales was indicating that the price would eventually reverse and decline And it did in 2006. The trend builiding during the past 14 or so months of decreasing inventory and increasing sales indicated that there would be a reversal of price at some point. And now we're seeing it happen. (In the below $350k range)

Today, there are only a few choices for the buyers, and they have to accept some things in a house that they may not want. There are not 100 houses that meet a criteria for a buyer to choose from.

Consequently, we now have the multiple offer situation going on, because there are so few homes available for the number of buyers out there competing.

This is NOT an "I told you so" statement.

It is to emphasize why I think it's so important to watch and understand what the statistics and trends are telling us, in addition to watching and interpreting the economic conditions that will effect the RE market.

Rick, congratulations on your offer acceptance, and good luck with it. One of my clients has a verbal offer from the bank on a short sale, and we're hoping to get the signed acceptance soon.

[Captain Bill]

The waterfront townhouse that I mentioned that I had multiple offers on in 10 days is under contract now, (above list price) and I'm still getting calls wanting to put in back up offers.

My friend has a townhouse (he's the owner/agent) a few units down the street from mine, and he is now getting offers on his, which is priced a little higher than mine. And a couple of people that wanted mine are talking to him. His unit is a little larger than mine and has a dock, which mine doesn't have.

A few weeks ago there was another waterfront townhome in there that went under contract.

The reason I mention this is simply to point out something else that is happening in the market.

Townhomes and condos' are slower to sell than the regular single family homes. But now that the supply has declined so much in the sfr inventory, it seems that more people are looking seriously at townhomes and condos'.

I have a condo in Mesa that I need to get rehabbed and rented, or sold; but I got sidetracked on this waterfront property and a Mesa sfr, so I won't get to that one for another month.

We'll have the yard complete on the Mesa home today and the interior painting will be done Tuesday. Then it's on to the granite countertops, tile and carpet floors.

We've been pricing our rehabbed homes slightly below the market for a quick sale, but the Mesa home will be priced at the top of the market.

The reason is simple. These homes were built in 2002 and had laminate counter tops and vinyl kitchen and bath floors. We'll be adding granite and tile, plus new carpet, and upgraded baths. It will look more upscale, and there is no home in the community that can compete with it. Also, since the market has changed we don't have to price below the market. In it's upgraded condition we will expect multiple offers in today's market.

Also, I've said before that I believe the prices over corrected, and are too low, in the lower price ranges. So just as we will price our homes lower in a declining market, we need to price them higher in an increasing market because we will have to pay more for the houses that we buy.

[MotleyCrew]

Great information. A good realtor is worth his/her weight in gold today.

[azriverfan.]

Originally Posted by Captain Bill

Some time ago, when there were plenty of homes available, I wrote that the buyers at that time were doing the cherry picking. Many were looking at up to 100 houses until they found what was exactly right for them. They may have been paying a little more for the house, but they got exactly what they wanted, and in the long run will be better off for it because the prices will eventually come back and they will have been happy in their home.

(One of my clients, who became a close friend, bought a house in Nov 2007. He recently told me he doesn't care what his house is worth today. He said "I love the house and never plan to sell it." )

I also said that when the supply dwindled, the prices would be less, but the choices of available homes would not be there.

During the past year as I was showing the trends of declining inventory and increasing sales (along with continued declining prices) I said that at some point the prices would flatten out and reverse to be in line with demand.

I was severly criticized by a couple of people for making those statements. They couldn't foresee that happening. I was accused of just being a Realtor trying to tell people to run out and buy.

But what I said would happen is exactly what is happening today. I don't have a crystal ball; I was only stating the simple law of supply and demand, and how trends can give us a clue as to what will happen, although not exactly when it will happen.

The trends in 2005 of increasing inventory and decreasing sales was indicating that the price would eventually reverse and decline And it did in 2006. The trend builiding during the past 14 or so months of decreasing inventory and increasing sales indicated that there would be a reversal of price at some point. And now we're seeing it happen. (In the below $350k range)

Today, there are only a few choices for the buyers, and they have to accept some things in a house that they may not want. There are not 100 houses that meet a criteria for a buyer to choose from.

Consequently, we now have the multiple offer situation going on, because there are so few homes available for the number of buyers out there competing.

This is NOT an "I told you so" statement.

It is to emphasize why I think it's so important to watch and understand what the statistics and trends are telling us, in addition to watching and interpreting the economic conditions that will effect the RE market.

Rick, congratulations on your offer acceptance, and good luck with it. One of my clients has a verbal offer from the bank on a short sale, and we're hoping to get the signed acceptance soon.

What's the point of responding and providing evidence? You will just disagree with it as you always do. Even when Money magazine article contradicted what you said and even when we provided your own quotes in the past which turned out to be inaccurate, you still argued. You said in the Spring of 2008 that people should start buying and quoted the same things you are quoting now. You were wrong back then; we called you on it a few months ago and even pasted those quotes from 2008 and you argued and tried to rationalize it. You are doing nothing differently now. I didn't want to write this but if you are going to be brazen and starting saying "I told you so" well we can certainly remind readers of the flipside to that. I just don't see what the point is in arguing with you. The smart people are staying quiet and not arguing with you because they realize it's pointless. We are not going to rush to buy a home in this market. Of course, everyone will have unique experiences and we value that but I don't that applies to every buyer.

I think you are a very bright and knowledgeable investor and realtor. You certainly know a lot more than probably anyone on this forum with regard to this subject. I certainly respect your knowledge. That being said, I disagree with your approach and I feel like you do put your own spin on things by cherrypicking statistics that favor your view and by providing anecdotal tales that encourage people to buy. After all, you are a realtor. You do want people to buy now and not wait. I think the information you provide with regard to statistics is helpful but I would encourage any reader to take what you say with a grain of salt and to use your information to further do their own research instead of taking it at face value.

In my experience, nothing what you have said applies to my situation. I'm looking at houses in the 600K-1.1 million range, most of those houses are still continuing to decline in value yet the prices have not really changed. What I have noticed is the sellers of those homes are taking their houses off the market because they aren't receiving offers they like. It's either that or they standing firm on their price because they are in no rush to sell their home. And for the homes that are "steals" or too good to be true, well there is usually a reason for that. I have friends who bought houses for less than a 100K to use as rental properties, others are purchasing them in the 150-250K range and yes the market for those houses are fierce. However, these homes are usually on the outskirts or required major remodeling. There is no such thing as a free lunch