Buying A Home – Stage 4 – Negotiating
July 9, 2009 by Kristin LaVanway · 1 Comment
Despite continued reports that buying a home in the Phoenix real estate market is like shopping at a swap meet, there are just not enough homes on the market to satisfy the demand. Competition can be fierce, especially for the choicest properties. Keep that in mind when you submit your offer…
The inventory of homes in Phoenix has decreased by over 20% in just the last 3 months. Sales volume has increased by over 17% during that same 3 month period. Even as the number of foreclosures hitting the market has increased, buyer demand still exceeds the supply. All these facts and figures become very important when you are putting in an offer on a home. A lot of buyers come into the game with the mindset that they are in the drivers seat, but for most buyers, this just isn’t the case. Most areas, at prices below about $300K are Seller’s markets meaning there are more Buyers than listings. You need to come in strong and you need to come in quick.
Right now, there are three types of deals: REO’s (bank-owned homes), short sales and straight sales. In the lower price ranges, REO’s in most cases are selling in a matter of days – even hours – with multiple offers. Short sales, which used to languish on the market like zombie listings, are now receiving offers quickly too, within a few weeks. Be prepared to wait on these transaction as bank approval for the sale can take several weeks or months. A well-priced straight sale is the best deal of all since you are working directly with the Seller with no bank involvement…but often these listings are priced too high.
As you are considering what to offer. here are a few things to keep in mind. First, base your purchase price on market value, not asking price – and that goes both ways. Some listings are priced way below market value to incite a bidding war. Some are priced on the high side. And no matter what the listing price is for a short sale, it is up to the lender to decide what they will accept. Use the market value as your guide.
Next, keep the offer clean. In many cases, you still ask for a seller contribution towards closing costs, but not much else. Offers with contingencies will not work for REO’s or short sales. These offers need to be as clean as a whistle.
And finally, be ready to show that you are able to purchase the home. You will need documentation such as Loan Status Report (LSR) to show that you have been qualified by a lender or proof of funds if you are paying cash. You might need to show proof of funds for a large down payment or even for the earnest money deposit.
Submit a strong offer as soon as the property comes on the market and your chances of success are pretty good. Drag your feet, submit a low ball offer with lots of conditions and you will start to feel pretty frustrated, pretty fast.
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I am a Realtor in Gilbert, AZ, working with clients throughout the Phoenix Metro area. I am lucky to love what I do and appreciate the difference I can make in people's lives.
In a previous life, I was a rocket scientist - really! - but decided to step away from corporate America to be a Mom to my four boys. Found it hard to do bake sales, so I ran a small independent programming business instead.
Flash forward...I am now a single mom and I face many, many challenges everyday. I am living through the hardships that many are facing in this economy. These experiences have motivated me to help other people in my shoes.
I have teamed up with Dean Ouellette to form the East Valley Team - the best darn team in the Valley. Check out our site at http://www.EastValleyTeam.com. I spend way too much time on YouTube - check ou tmy channel at http://www.youtube.com/klavanway
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