If they are telling you to stay away from Scottsdale & Phoenix Short Sales, SHAME ON THEM! A recent study conducted by the Cromford Report shows that if you are avoiding short sales and only going after "traditional" listings, you are definitely missing the boat. Lets look at the following statistics for July....
Phoenix Short Sales vs. "Traditional" Listings
Number of Active Phoenix Short Sale Listings: 2,187
Number of "Traditional" (i.e. non-distressed) Listings: 2,621
Number of Phoenix Short Sales Closed: 212
Number of "Traditional" Listings Sold: 431
Obviously, Buyers and their agents are staying away from short sales. Twice as many "traditional" listings sold in July as Phoenix Short Sales. Here is the part that will make your jaw drop....
Average Price/Square Foot of Phoenix Short Sales Sold in July: $86.15 per square foot
Average Price/Square Foot of Phoenix "Traditional" Listings Sold in July: $123.02 per square foot
Folks, that is a savings of $36.87 per square foot when buying a Short Sale vs. a "Traditional" Listing!!! Put another way, a 2,000 square foot Short Sale is selling, on average, for $172,300. That same house, without distress, is selling, on average, for $246,040. This is a savings of almost $75,000!!!
Scottsdale Short Sale vs. "Traditional" Listings
Number of Active Scottsdale Short Sale Listings: 591
Number of "Traditional" (i.e. non-distressed) Listings: 2,350
Number of Scottsdale Short Sales Sold: 77
Number of "Traditional" Listings Sold: 234
Again, it appears that Buyers and their Agents are staying away from short sales, in favor of pursuing "Traditional" Listings. Three times as many traditional listings sold in July as Scottsdale Short Sales. Now, check out what Buyers are missing out on....
Average Price/Square Foot of Scottsdale Short Sales Sold in July: $155.06 per square foot
Average Price/Square Foot of "Traditional" Listings Sold in July: $210.07 per square foot
You thought the $$/sf spread in Phoenix was amazing? In Scottsdale, Buyers are saving a whopping $55.00 per square foot when they buy a Scottsdale Short Sale, vs a "Traditional" Listing!!! In other words, a 2,000 square foot short sale is selling, on average, for $310,120. That same house, without distress, is selling, on average, for $420,140. That is a savings of $110,000!!!
So, the question that begs to be asked....Why are Buyers buying non-distressed homes vs short sales? Great Question! Here is what we are seeing/hearing in the market:
1. Buyers need a home in the next 30-60 days. This pretty much knocks out a short sale, as the typical process is taking anywhere from 4-6 months. In cases like these, we've actually been putting our Buyers into 6 month or 12 month rentals, which gives them time to better evaluate the short sale market, make an offer, and wait for the process to work.
2. Buyers Agents are steering their clients away from short sales. Let's face it. Read the blogs that are being written everyday by bitter agents, and how they despise short sales. You'll hear things like "Short Sales are too much work", or "The lenders are idiots", or my favorite, "Chances are, the lenders are going to reduce your commission". I'd be willing to bet that these agents have had bad experiences with short sales because they simply do not know how to manage them, and took on listings they should have never taken on in the first place. Another factor in this equation is the time it takes for an agent to get a deal closed. Some agents don't like to wait an extra few months to get their coveted commission check, and a short sale is not a quick and easy process.
We frequently get calls from frustrated Buyers. Typically, it goes something like this..."I tried to make offers on 10 homes in the past week, and all of them already had multiple offers on them". The first question I ask is "What type of listing were they?". Nine times out of 10, they were either "traditional" listings or REO (Lender Owned) homes, most of which that had recently had signficant price drops. I simply tell them that they are competing with wayyyyy too many other Buyers (as evidenced by the statistics above). When I show them numbers like the ones above, it starts to make sense, and we begin looking at short sale listings and/or looking for rental homes.
Folks, patience is a virtue, and buying a home can be a very emotional process. If you are truly looking for a good buy in today's market (and there are tons of them out there), try taking some of the emotion out of your decision-making and think rationally. So what if you have to wait 6 months to move into the home of your dreams! Five years from now, when you want to sell that home, you'll think back and be very proud of your decision to have some patience.
I hope you found the information in this blog to be helpful. Ed Cheney and myself are partners at Summit Home Consultants. We are both CDPE (Certified Distressed Property Experts), and spend the majority of our time helping Buyers and Sellers with the Short Sale Process. Yes, it's a lot of work, but very rewarding when all is said and done. We help Sellers avoid Foreclosures, and we help Buyers get great deals! What more could you ask for?
Feel free to visit our website to learn more about what we have to offer. As always, feel free to contact us with any questions/comments. Until next time.
Designated Broker-Summit Home Consultants
Designated Broker-Summit Home Consultants