Purchase Price Versus Selling Price (Phoenix: short sales, real estate, credit)

[66 Milano]

I have been corresponding with an agent and I would like to get some second opinions on what the average place in the Phoenix area is selling for versus the asking price; in particular on Short Sales and Sales where the house has been listed for some time.

He / She informs me that houses (let's say in the $175,000 - $225,000) range are selling for near asking price. This seems odd given the economy, but he / she should know better than me.

And yes, I have purchased enough homes to understand the Agent is working for the seller; not the buyer.

Would love to hear some opinions.

Thanks

[Skywayy2001]

Well it first depends if you're talking regular sales or short sales. Short sales throughout the valley are almost always listed under fair market value in order to generate offers and usually offers above asking price because the goal is to get a contract and get the packet of information to the bank. Thus, in regards to short sales, the answer is a resounding yes (and don't be surprised if you're first in line for a short sale when the bank comes up back with a counter for a lot higher than you offered). Any other talk about regular sales would have to involve where in the valley you are looking and some of the real estate experts on here could answer your question better. Generally in lower price ranges these days, there is fierce competition for homes (at least good ones) due to investors.

[asufan]

It would be meaningless to use the entire Phoenix market as an example. There's some submarkets that the Sales price to List price ratio is under 90%, and there's some submarkets that the ratio is over 105%. You can also narrow it down from there, for example narrowing down your square footage range in a particular subdivision. Any Realtor can give you this information. As a rule of thumb, lately I have seen the lower priced starter homes selling for 101-105% of list price. I have seen more of the higher end luxury homes selling for 95-100%. Much of that is probably due to the higher number of entry level buyers out there, and some trying to get in on this tax credit, and paying more than asking to be sure to secure the home they want. That may change here shortly as tomorrow is the last day to execute contracts.

[SOON2BNSURPRISE]

If you are ready to buy, just make an offer on the home and see what happens. If the home is worth 90% of asking price to you then don't offer anymore cash over that amount. If the home is worth 120% of asking price to you then make that your offer. Your agent gets a commision on the deal. The more you offer the larger the income to the agent. That doesn't mean that the home is worth what it is listed. Houses are worth what someone is willing to pay for them.

They could reject your offer. They could tell you that someone else has offered more than you. Maybe they have a minumum that they won't go under. Or they could accept your offer. If the home is priced right it will move, but only if their are buyers willing to purchase at that price.

[sh9730]

Soon2B,

Gotta slightly disagree with you on this one - to offer 120% "just because" its worth it to me isnt smart. My "final offer" may end up being that high, but there is no reason to pay that if I can get what I desire for less?

Now, with this tactic you do take a chance that a higher offer come in than yours, but most of the time (unless they say present your best and highest offer only!) you can come back to the game if you are willing to go higher.

[AZJoeD]

Trying to guage Selling price by % of asking price is useless. Asking price means nothing, especially when it comes to Short Sales. The only true value that means anything is the appraisal price which if you understand the market and the comps for the local area you can usually beat.

Houses on the lower end of the market sell quickly often with multiple offers, if you lowball in this area you will lose the deal.

The reason higher end properties appear to go for less than asking price is because most higher end Sellers have not come down to reality and are still asking way too much. Many do not have to sell so they are willing to wait longer, after sitting on the market for 9-12 minths they finally accept a lower offer because the are tired. You can probably lowball in this price range IF you know the market value.

[lyzzard]

Originally Posted by asufan

That may change here shortly as tomorrow is the last day to execute contracts.

This is the one exception to that rule:

Active-veterans who serve serve on an official, extended duty service outside of the United States for at least 90 days during the period of December 1st 2008 through May 1st 2010 will be granted a 1-year extension on the home buyer tax credit. In other words, any active veterans who served overseas for over 90 days between the the aforementioned dates can qualify for the same home buyer tax if they are in contract to purchase by April 30th, 2011 and complete the transaction by June 30th, 2011.

[SOON2BNSURPRISE]

Originally Posted by sh9730

Soon2B,

Gotta slightly disagree with you on this one - to offer 120% "just because" its worth it to me isnt smart. My "final offer" may end up being that high, but there is no reason to pay that if I can get what I desire for less?

Now, with this tactic you do take a chance that a higher offer come in than yours, but most of the time (unless they say present your best and highest offer only!) you can come back to the game if you are willing to go higher.

well I never said it was a smart move to offer more than you need to offer. My thought is to always offer less just to get an offer on the table. If the deal can only be made at 120% of the current price and that is a number that you can work with and the home is still worth it to the buyer then why not offer that amount? Like you, it would not be worth it to me to offer more than I need to offer for a home. My thought was strictly if the numbers make sence then go for it. For most people 20% over is not going to make any sence.