Phoenix Real Estate Market Keeps Tanking (purchases, inspections, legally)

[elwood58]

People who make decisions based on a sound bite from the morning news deserve what they get. Research of the deeper numbers show Phoenix heating up a bit (pun intended), and well worth a look for those interested in this market.

I think the real tough decisions at present are for those looking to invest, but not occupy. Buying something to live in is an easier decision in the present market, as that rationalizes a big chunk of the sunk cost.

[Ponderosa]

Originally Posted by jimj

While watching the news this morning I almost spit out my coffee when they cited the new Case-Schiller report saying home prices will drop this year and "may" hit bottom and stabilize by the end of 2012.
Hmmm, nice generalities to tell the public. Keep everyone believing that it's NOT the time to buy anywhere.
No disclaimer that markets are specific to the area.

I guess AZ didn't get the memo?

Well, I think CS is wrong on this. Phoenix is ahead of the curve on recovery, but then circumstances like non-judicial foreclosure and continued population growth favored us. I think the US in general will proceed along the same recovery line as Phoenix has. What we saw here was that there was a very significant lag between absorption of inventory and a rise in prices. When supply/demand finally reared its head, prices jumped dramatically in only a few months. Absorption had to reach shortage levels to overcome buyer trepidation and trigger the rise. If you looked at PHX in August from a distance, you would not have seen this coming. It was the anecdotal reports of strong interest and sales of low end properties that foreshadowed our nascent recovery. Those anecdotal reports are now happening across the country.

[Zippyman]

Originally Posted by Captain Bill

An appraisal is never needed if one is paying cash.

If getting a mortgage, then the mortgage company requires the appraisal, and the purchase contract is contingent on the home being appraised at the purchase price.

I have a new search on my website that will show all the Solds now. That's good for people who are checking comps for themselves. For those who prefer my old search, it's still there for awhile. The link is on the bottom left of the page.

On a Fannie Mae "homepath" home, Fannie is the lender, and they don't require an appraisal, in fact, the description of the loan indicates getting one may kink the deal. Most of those homes seem to be priced high, but Fannie already owns them, so taking another over-value loan doesn't seem to hurt the taxpayer IMHO, at least they're trying.

[jdahunt]

Our appraisal came in $11,000 less than the owner was asking, we made our offer contingent to the appraisal.

From the comps we saw it was right at about what the appraiser said....the owners realtor said he was very surprise....not sure how with what the comps were showing.

We are going to eat $3,000 of it and the owner the rest....not sure if the realtors gave any back or not.

I think this is probably more common now....so you better be ready to pay some out of pocket if you want to close.

I was surprised how quickly the owner took the house off market once we made our offer, if I was the seller I would have waited a couple of days for more offers.

Whats normal now especially with all the multiple offers, a couple of days at least I would think to allow a biding war.

[ReadyFreddy]

Once they agree to a sales price with one buyer, aren't they supposed to change it from Active to A-WC (active, with contract)? Usually your offer requires a response within x days, too. So there's not a lot of time in there for collecting other bids. I'm guessing they can structure a listing various ways, like put in "collecting offers until 5/3" or something.

[Captain Bill]

Originally Posted by Zippyman

On a Fannie Mae "homepath" home, Fannie is the lender, and they don't require an appraisal, in fact, the description of the loan indicates getting one may kink the deal. Most of those homes seem to be priced high, but Fannie already owns them, so taking another over-value loan doesn't seem to hurt the taxpayer IMHO, at least they're trying.

You're correct.

Fannie Mae gets their own appraisal before they put the home on the market. The buyer can get their own, however, Fannie will still go by their own appraisal. So if the buyers appraisal comes in lower, Fannie Mae will not adjust their price.

[Captain Bill]

Originally Posted by ReadyFreddy

Once they agree to a sales price with one buyer, aren't they supposed to change it from Active to A-WC (active, with contract)? Usually your offer requires a response within x days, too. So there's not a lot of time in there for collecting other bids. I'm guessing they can structure a listing various ways, like put in "collecting offers until 5/3" or something.

When there is an executed contract by buyer and seller, the agent is required to change the status to either Pending or AWC (Active With Contingency).

In AWC they can still show the home and accept back up offers. The seller won't sign any backup offer unless the buyer with the executed contract has to back out.

In a short sale, AWC means that the contract is contingent on the sellers lender accepting the short sale.

In a traditional, or REO sale, it just means that the contract is contingent on something else.

There are several contingencies in a contract; inspection, financing, and appraisal, although a cash deal there is no financing and appraisal contingency unless the buyer wishes to make it contingent on appraising. Most cash buyers don't.

[rjrcm]

Originally Posted by ReadyFreddy

Once they agree to a sales price with one buyer, aren't they supposed to change it from Active to A-WC (active, with contract)?...

AWC = Active With Contingency (e.g., contingent on short sale approval, or buyer selling their home), and backup offers are taken.

Normally, status is changed to Pending upon offer acceptance and start of escrow.

[jdahunt]

My post was about how long should one should wait before accepting an offer, in our case it was very quick and the house went off market.

Whats a normal time in this market before a seller has to make a decision....with the multiple offers going on I would think they would want to stretch it out at least a little.

[Captain Bill]

Originally Posted by jimj

While watching the news this morning I almost spit out my coffee when they cited the new Case-Schiller report saying home prices will drop this year and "may" hit bottom and stabilize by the end of 2012.
Hmmm, nice generalities to tell the public. Keep everyone believing that it's NOT the time to buy anywhere.
No disclaimer that markets are specific to the area.

I guess AZ didn't get the memo?

I think the media didn't read the article because their information is not correct.

Here is part of what CS said:

...“Phoenix and Atlanta stand out this month in terms of their contrasting relative strength and weakness in the early 2012 housing market. At one end of the spectrum, we have Atlanta posting a double-digit, and lowest on record, annual rate at -17.3%. Atlanta has now recorded five consecutive months of double-digit negative annual rates and seven consecutive monthly declines. On the other hand, Phoenix has posted two consecutive months of positive annual rates, with its latest being +3.3%, and five consecutive positive monthly returns.”...

..."Phoenix stood out as possibly turning around, with a +3.3% annual rate of change and a monthly return of +1.2%"...

Of course their data is smoothed out and 3 months old, so I can understand why they would say "possibly" turning around instead of "has" turned around.

Here's is a snippet of what Lee Adler has to say about the Case-Shiller report in his rather long report:

Due to its peculiar and excessive smoothing methodology, the housing Case Chiller is always behind the curve. It uses a 3 month average of sale prices closed in the 3 months up to the last reported month, in this case December, January, and February. That means that the data represents the average price of contracts closed over a 3 month period with a time mid point of mid-November. Need I remind you, it is now the end of April. The Case Chiller data represents the market more than 5 months ago.

This would be like the Wall Street Journal reporting only the Down Jones Industrial Average 65 day moving average as of November 16. Really, who gives a crap about what the 3 month average of the Dow was 5 months ago? Do you? I didn’t think so. So why pay attention to the Case Chiller?

This is totally worthless data, yet the media continues to report it as if it means something.

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