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Impending Disaster in Phoenix Real Estate Market

Marty Boardman wrote an interesting piece on how FHA buyers in Phoenix are like 2nd Class Citizens.  Just yesterday I met a client for a showing and bumped into 10 other agents doing the same thing, and noted there were no less than 40 there before me (from the business card stack on the table).  Make no doubts about it, the market it on fire.  This weekend I wrote an offer, as I reviewed my intention with the Listing Agent, he asked if my buyer was FHA, to which I replied, cash.  He was very happy to help me after that.

Another problem that I see in the Short Sale segment is that the market is appreciating so fast.  Short Sales still make up a large part of closings.  So where is the problem?  I’m betting banks will stop accepting the short sale.  With the appreciation and the time to negotiation the deal with the bank, that when they order the BPO (Broker Price Opinion), the value of the home will have increased.  The systems that tell the banks how much they will make if the property goes into foreclosure will also indicate the offer is too low.

In a very short time, short sales can become a very small segment of the market as agents don’t want to work on them and buyers won’t trust them.

Of course this is just speculation on my part, but I’m watching for the signs now and gonna be prepared to change tactics with my clients as soon as the first red flags start to pop up.