In today’s real estate market, some Scottsdale home buyers assume that they are going to be able to make a low offer on any property and “steal” a house. However, the realities of the situation are different, and actually a bit more complex than they might first appear.
The following charts all use data for September 2010 from the Arizona Regional MLS (ARMLS), which is the common database that all REALTOR® pay to contribute and subscribe to. It is the most accurate and up-to-date source for property listings in Maricopa County.
In this first chart, you will see that I’ve broken the 475 Scottsdale sales into price ranges, from low to high. The figures shown are the average of the price range, so form homes price from $100,000 to $199,999, the average sales price was 95% of the current (or most recent) listed price. You can see that most homes in Scottsdale sold for 95% or more of the current list price. Homes on the low and upper end of the price sale varied and average a couple of percent less for homes priced under $100,000, and more than 10% less than list price on homes price at $2,000,000 and higher.
When I started selling real estate, before the big “run-up”, I was told that homes sold (on average) for 95-97% of the list price. You can see that not much as really changed in that regard.
Now that I have this new tool, Tableau, and I’ve discovered how much easier it is to ask more detailed questions, I’m finally getting some answers on the specifics of Scottsdale real estate prices that I can share with you. Some of this may be more than you want to know, or it may be just the question that you want answered.
For instance, in this next chart, I was able to determine that single family homes in McCormick Ranch (zip code 85258) sold for 92% of asking price (on average). I also see that patio homes in 85255 (DC Ranch, Greyhawk, and McDowell Mountain Ranches) sold for 106% of list price (on average). Scottsdale home owners can use this chart to get a feel for how their particular property type is actually selling in their zip code.
Home buyers can also use the chart above to get a sense of the market, but do need to know that crafting an offer is more complex than the generalities that can be drawn from the information in these charts.
This next chart shows that sales price as a percent of the original list price. For instance, single family homes in 85254, sold for 96% of list price (from the chart above), but when you look at the sales price as a percent of the original list price, it is 90%.
What happens is a seller will list his house higher and do a series of price reductions until a savvy buyer sees that the house is priced at value, and then make an offer.
Many buyers are uncomfortable making low offers and will wait until a house is priced more closely to where they thing the value is. The danger with waiting is that once the house is listed at the right price, multiple buyers often appear and suddenly the value of the property has gone up, just due to the competition.
Investors and some home buyers who really do make their buying decision strictly on the numbers, will go ahead and put a low offer out, and will walk away if the seller will not accept, or counter with an offer that shows that they are willing to come down significantly.
Sellers need to know that today’s buyers are savvy, doing their research on-line and getting out and looking at properties. They are not willing to pay a dime more than they think a house is worth. Their biggest fear is that they will purchase a house and the market will continue to depreciate. Anyone who is purchasing a property with a mortgage also has to have some sense as to the whether the house will appraise at the purchase price, too.
So, while this data is all very helpful, it is a generalization, and the comps I talked about in yesterday’s post are critical information that must also be considered both to price a home to sell, and to help a buyer make an realistic offer that is high enough for the seller to consider, while at the same time being in line with the current real estate market. As I remind home sellers, it is not the seller or the listing agent that determines the market value of a home. It is the home buyer who is willing to make an offer and come to terms with the seller on the actual purchase terms and conditions.
To get a more in-depth view of the current Scottsdale real estate market for September 2010, you’ll also want to read:
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