While there are a number of factors that determine where a buyer is going to purchase, the main two seem to price and location. Which leads to the question that sounds almost circular in nature … should a buyer bend his or her price to meet the location they want, or do they need to alter their location to fit their price.
This, of course, assumes that the property a buyer wants isn’t necessarily available where they want it to be for the price they want. Which, given the state of the Phoenix real estate market, seems to be the case fairly often. It all starts with Scottsdale, which boasts some of the highest per-square foot prices in the Phoenix market, but can be found in almost any community in the Valley.
What exacerbates this issue is the many, many short sale listings with list prices far below the prevailing market values … if a buyer sees the same price in enough locations, even if he knows how short sale listings really work, there’s a tendency to believe that price is the market value. And everything gets measured against that mark.
Short sales are the ultimate wildcards … I’ve finally changed the way I discuss those few that get documented correctly when an offer is sent to the bank and now tell buyers that the seller already has accepted an offer and is waiting for approval from the bank. That tends to sound a bit more final and helps to stave off questions about making higher offers (a relative term, since we don’t know what the offer price was) since most buyers know once a seller accepts an offer the ballgame is over. (Except with short sales, it’s not over … picture an NFL replay review that lasts 2 or more months and you get the idea.)
Back to the original premise, what should a buyer adjust – price or location? Sadly, kids, I don’t have an answer for that as it will vary from buyer to buyer. At the end of the day, if a buyer is dead set on a certain spot then they’ll need either to resign themselves to the prevailing market value or wait until the moment when that value hits their price, if the two ever meet.
Otherwise, the location or other features are going to have to be adjusted. If homes are selling for $100 per square foot in a given area, you can’t expect to find a fully updated, tricked out home for $75 per square foot. If a home’s at that great of a discount, there’s almost certainly a reason and it almost certainly relates to condition (unless it’s a short sale, at which point the price was set with a dartboard.)
You can want the cuts of meat at A.J.’s, the ones that go for $15 a pound … but you’re not going to get them for the same $2.99 that ground round is going for on sale at the Walmart Neighborhood Market. It’s just a fact of life.
At some point, you either have to pay for the quality and pay for the location or not pay and accept that steak can’t always be had on a hamburger budget.[tags]Phoenix real estate[/tags]