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Phoenix Real Estate Buyers – Are You Adjusting to the Current Environment?

Phoenix Real Estate Buyers – Are You Adjusting to the Current Environment?

In my spare time, such as it is, I usually find myself playing Diamond Mind baseball, a computerized baseball simulation game akin to the old-fashioned tabletop dice games like Strat-O-Matic or APBA. It’s relaxing to me to play past seasons – sometimes it’s a season from the late 40s, sometimes from the 1960s and now and again I forget I’m a curmudgeon and I play a more recent season.

One of those is 2004, which could be argued was the final year of the steroid era. Strategy is non-existent – why try and steal a base when everyone in a lineup seems capable of hitting a three-run homer – pitching is thin and no lead is safe. The other day, for instance, the computer took a 9-0 lead two innings against the Boston Red Sox I was managing; the Sox ended up scoring 11 straight runs and won 18-14.

Contrast this with a season such as 1968, the real Year of the Pitcher (can we stop calling this season the Year of the Pitcher? Show me the 1.12 ERA and all the 1-0 games and maybe I’ll believe it.) If you’re fortunate enough to get a runner on base, you bunt him over, move him over and hope for either a grounder up the middle or a fly ball to bring the rare run home. If your opponents gets a runner to third, you bring the infield in because one run just might be enough to win a game.

Same game, two very different environments and two very different strategies required.

The Phoenix real estate market isn’t much different. Selling strategies that worked in 2005 are as worthless as the low-ball offers that were being made with some success on bank owned homes through late 2007 and into the early months of 2008. Offering 70 cents on the dollar rarely has been successful but at least was in the realm of possibility … three years ago. These days, however, it’s an excellent way to kill a tree for no apparent reason.

There still seems to be a line of thinking that says since the bank didn’t really want to foreclose on the homes and their REO inventories are far higher than they want them to be, then they’ll be willing to accept virtually any price to get a house off their books. Nothing could be further from the truth. I’ve run the numbers from the Arizona Regional MLS time and time again and the reality is less than one percent of bank owned homes sell for that 30 percent discount or more. And the vast majority of bank owned homes sell at 90 to 95 percent of list price (this excludes sub $70,000 homes, where it’s not uncommon for the sales price to exceed list price because of demand.)

Following outdated buying strategies isn’t much different than trying to play a 1968 baseball game with a 2004 mindset. You can wait and wait and wait for that game-changing home run (or the four game-changing home runs.) But odds are, it’s just not going to happen.

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