Greater Phoenix Foreclosure Update
A recent article in the AZ Republic detailed a phenomenon that I’ve commented about recently in the AZ Real eStatesman. Specifically, we’re now seeing lenders become extremely aggressive with their price slashing to help unload their growing holdings.
This tactic often benefits the bank. Multiple bid situations and the ‘auction frenzy’ mentality can sometimes drive the price near or even over the market price of the home. I’ve commented that it’s common for lenders to send out a multiple counter offer to all parties asking them to submit their ‘highest and best offer’ before a decision is to be made. If 10 parties have submitted offers on a property, this request will no doubt result in at least a few increased offers.
An ancillary benefit of multiple offer scenarios is that the lender has the ability to select a buyer with good financial qualifications. Think about it. The bank has just been burned by the past owner, so finding someone with solid financial backing to complete the transaction is paramount. Even better if that party elects to pursue financing through the lender, allowing the bank to recoup even more of it’s costs.
As I discussed in my earlier posting, you need to be prepared for a potentially bumpy ride if a foreclosure or short sale purchase is in your future. You’re operating at the mercy and the whim of an Asset Manager or Loss Mit agent who doesn’t know the ‘rules’ of the state-specific purchase contract, nor do they care once you sign their “Seller’s Addendum.” Be sure to work with a Realtor who has experience with foreclosure and short sale transactions, as it will save you aggravation and potentially quite a bit of money once the property becomes yours.
This aggressive pricing trend in the foreclosure market indicates two possibilities: 1) The market is bottoming out or, 2) Lenders fear what’s coming down the line and are just trying to keep ahead of a continued inventory surge. Regardless of what the aggressive pricing may or may not indicate about the market, it undeniably serves to reduce our inventory, as evidenced by a recent jump in Pending sales. And a healthy inventory level is a great step in the right path towards a balanced market for Phoenix real estate and Scottsdale real estate.