Today’s question …
What are the chances that a bank owned home listed for $40,000 in more or less decent condition (taking into account its age and almost certainly writing off the appliances) actually will sell for that $40,000 or less?
Slim and none, and slim just jumped on Phoenix’s new Light Rail (which opens today, for those in the area.)
Second question, of course, is why? Pure market mechanics.
Though it’s possible, more often than not you’re not going to be the only person making an offer on one of these homes. The more offers the bank has in hand, and with some of them almost certainly above asking price to begin with, the higher the price will climb.
There’s no logic behind the bank’s price on the home, no deep-seated conviction about the value of the property. All that price represents is the bank’s best attempt to elicit one or more contracts on the house. That’s it.
This holds true at many price points in the Phoenix bank owned market, but especially at the lower end of the curve. If a property’s new to the market and your first thought is to low-ball the bank’s list price by 20 to 30%, you may as well save the gas and paper. The odds are stacked heavily against you.
There comes a point where there’s some flexibility in price – sorry, but I’m not sharing it here as that knowledge, earned by experience, is reserved for my clients – but early on, the odds are your lowball is going to die a quick death when buried by full-price-or-higher offers.
One other thing to keep in mind at some of the lower price points … there are investors back in the Phoenix market, looking for properties they can accumulate in bulk. Most are coming with cash.
Given the choice between a cash offer and a financed offer, which direction would you expect the bank to go?
Bottom line … if you’re looking at bank owned homes in Phoenix, get serious with your initial offer. Be aggressive – not to the point of stupidity (such as offering more on a house without an air conditioner than one with air conditioning intact, which I’ve seen) – and make your first offer your best.[tags]Phoenix real estate, bank owned homes[/tags]