We have had many cases over the last six weeks where a home for sale in Mesa or Queen Creek will have multiple offers placed on the home and even ends up going for even more than the asking price in many situations. How can that be if the market is down and this is considered a buyers market?
This may not be the case on every home, the homes this appears to be most relevant with is homes in move-in condition under $100,000. Buyers are in shock because they think they can swoop in with a low ball offer and the banks need to take it. Even though we may advise them against it, it usually takes two busted deals where the home gets multiple offers and sells above the asking price before the light finally comes on and they decide their agent may know what they are talking about.
One recent example was a 1984 Mesa 3 bedroom home that had just gone to foreclosure. The home was in great condition with granite counter tops, tile in the kitchen, halls and bathroom and newer stainless steel appliances. The home was move in ready and came on the market at $109,900. The fair market value for the home according to recent sold homes in the same neighborhood was closer to $118,000. This seems to be the case with many bank owned properties recently, get them on the market for a little below market and watch the investors swoop in and snatch it up quickly.
The buyers I was working with saw the home on the second day it was on the market. They wanted to make an offer and asked for my opinion. Instead of giving them an opinion of what I thought the home was worth I showed them comparables that placed the value of the home around $118K. They were excited and said great then let’s offer them full price. I informed them that I thought their chance of getting the home at that price were close to nil as investors would see the opportunity and bid this one up quickly. The decided they wanted to put in an offer for $112K.
I called the agent and told her the offer was coming. After being told the home already had three offers I asked if we were in the ballpark and she said if we added $10K we would be in the ballpark. The bank issued a highest and best and my clients stayed at $112K.
This is just one of many examples of what is happening right now in the local market. Buyers need to be educated if a move-in ready home is going for under what the current market price is, a low ball offer is not going to cut it anymore. If they want to make low ball offers they should be looking at houses that need work. If real estate agents give them the proper counsel from day one, even if the clients may not believe them at first, the real estate agents credibility will be boosted greatly when what they predicted would happen, happens.