Is Your Agent Advising You To Stay Away From Phoenix Short Sales Listings?
If so, they are hurting your chances of finding a home in the foreseeable future. Today, I received the most interesting phone call from a buyer on a Phoenix short sale listing in my inventory.
She was frantic, asking if I could get her in to see the home ASAP. I asked if she was working with an agent. Her response was, "I was working with an agent, but I fired her last week. She insisted that we only look at REO and "normal" (traditional equity) listings. We've looked at 50+ homes in the past 3 months, have made offers on at least 10 of them, and each time we were beaten out by another buyer".
I couldn't help but ask, "Why was she eliminating short sales"? Her answer was, "She told me that 90% of them never close, and the 10% that do close take 9-12 months". Oh, ok...
Let me start by saying that I understand that some (not all) buyers cannot wait 3-6 months to close escrow on a Phoenix short sale, for various reasons. I get it. I've been there, done that. What I can't comprehend is why an agent would intentionally steer a buyer away from Phoenix short sales, as they make up SO MUCH of the current limited inventory that is available today. I can only surmise that if a buyer is willing and able to wait 3-6 months to close on a home, and the agent is still pushing them away from short sales, one or more of the following is behind their strategy:
1. They are not educated on the short sale process, and don't know how to properly vet a Phoenix short sale agent in order to determine their chances of a succesful close.
2. They are reading articles/blogs from other agents that either detest short sales, or are agents as described above.
3. They cannot wait 90-120 days for their commission check.
Now, let's share some interesting statistics regarding Phoenix short sales:
There are currently 15,162 single-family active listings in the Arizona Regional Multiple Listing Service (ARMLS). Of those, 3,049 (20%) are short sales.
In the past 30 days, there were 8,036 total closed transactions within the ARMLS boundaries. Of those, 2,087 (32%) were traditional (equity) sales, 3,340 (42%) were REO's, and 2,087 (26%) were short sales.
The most staggering statistics deal with the difference in sold $/sf in the three categories over the past 30 days. Traditional sales brought, on average, $110.10/sf, REO's came in at $61.28/sf, and short sales averaged $77.08/sf. Yes, you read that correctly. SHORT SALES ARE SELLING FOR 30% LESS PER SQUARE FOOT THAN TRADITIONAL SALES! On a $200,000 home, this equates to a savings of $60,000 by going the short sale route.
Granted, a traditional listing will usually be in better condition than a short sale (but 30% better?). For those situations where the homeowner has vacated, this is particularly true. But seriously, how much does new paint/carpet cost, when it comes to the big picture? Experience tells me that in those cases where the short sale seller stays in the home, and has a vested interest in keeping it in good condition, it truly is the next-best-thing. Generally speaking, REO's don't hold a candle to short sales, in terms of condition.
Some will look at these numbers and ask, "Why not buy an REO? They are selling for 20% less than a short sale". My answer, "Try getting an REO agent to call you back (sorry, had to get that in there). Seriously, look at the condition of the REO homes on the market today. Can you afford to make it habitable? Do you think it will pass an FHA inspection? And, do you want to get into a bidding war with 5-10 other buyers in the first 24-48 hours the home is on the market because the listing agent priced it 20% below fair-market value in order to incite a bidding war"?
The bottom line is this... Phoenix short sale agents are getting better at getting short sales closed. A year ago, we had 9.2 months of short sale inventory. Last month, we had 4.9 months of inventory. As hard as it is for me to say it, MOST banks are getting better at approving them. As a buyer, the key is to find an agent that understands the short sale process, and knows how to "interview" the Phoenix short sale agent that has the listing.
Most importantly, if your agent insists on steering you away from short sales (and you have the patience to wait 3-6 months) GO FIND A DIFFERENT AGENT.
If you are a Phoenix buyer's agent that is truly looking out for your client's best interests, take the time to educate yourself on the short sale process. If you're not showing them short sales, you are eliminating 20% of the market for your clients, and most of the homes you are avoiding are very competitively priced AND are in pretty good condition (in most cases). You are also probably steering them towards over-priced homes (traditional listings) or bidding wars (REO's). Save yourself the time and energy of looking at 50+ homes, only to be out-bid on them. Think outside the box and show them some short sales. You'll be glad you did!
Until Next Time...
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Copyright © By Bob Hertzog 2011 *Is Your Agent Advising You To Stay Away From Phoenix Short Sale Listings?