Further proof that there’s never a dull moment in Phoenix real estate sales…
I spent 2 days this week showing properties to a couple of Canadian investors. On our second day, we found a great condo in a really nice community close to the PV Mall.
The property is a foreclosure with all the features they’re looking for. It was priced aggressively, even by foreclosure standards, and in surprisingly good condition with a great location just steps from the pool.
I called the agent to find out how many offers were in and was surprised to hear that no offers had come in yet. Only 8 days on market, I guess anything’s possible. Still, it didn’t seem right. We knew the developer had fallen short on selling units and had converted back to rental status to cover the remaining inventory of unsold units. We speculated that maybe people were turned off by owning in a community that would definitely have a high proportion of tenants.
Upon further investigation, we determined that the developer still held 65 units and was recently served with a Notice of Default with the foreclosure scheduled for September. That threw a wrench into things.
At $82,000, the condo is a steal. However, what are the risks of buying a condo that’s part of a well-done conversion project that never fully ‘converted’ before being ‘reverted’ to residential rental status? What if the project is foreclosed on and languishes on the market for months? What are the lien holder’s obligations in terms of property care and upkeep? Of management and fee collections? How will the new owner’s possible uses for the property affect the values of currently-owned units?
The reality is that there are probably very clear laws that cover many aspects of this situation, but I am quite confident that legal precedence hasn’t been established for other issues that will undoubtedly arise.
In so many ways, from lending to sales to appraisals to legal concerns, the real estate industry is in a state of flux, perhaps more so than ever before. It may not always be pleasant, but it’s always exciting.