Of course you want a smoking deal on a home. All the cool kids do.
This morning I decided to take a quick gander at what is happening in the Scripps Ranch market; specifically, I wanted to see if the data supports my theory that short sales and foreclosures are not bargain basement opportunities living up to the hype.
My inspiration was the summer months Steve and I have spent showing a truckload of buyer clients homes in nearly all price categories. Of our current active buyers, their budgets range from $150,000 to $900,000, and finding a good home at a good value is like competing in the X Games without the proper safety attire. We are routinely being beat bloody in multiple offer situations, and I mean “multiple” in the “more than twelve” sense. In one case, first-day offers on the object of our client’s desire totaled more than twenty. It just takes one guy with a wad of cash to eliminate our 20% down contestants from the lightening round with nary a parting gift.
The best homes in their price range seem to be mostly short sales and foreclosures. The reality, though, is that these properties aren’t really in their price range, because the homes are typically listed artificially low to generate enthusiasm and the full-combat buyer frenzy that invariably results. It works. Overbids abound, and “full-price” is list price plus some five-figure number.
Let’s start with the current Scripps Ranch listings (detached homes courtesy of the Sandicor Multiple Listing service). Here is how the offerings break down:
And, here is what has sold in the past 30 days:
Buyers are gravitating for the “deals” indeed. But, are they deals? Now, let’s compare the average listing price per square foot to the average 30-day recorded sale price per square foot.
Presto! What looks like a killer opportunity ends up costing, on average, about the same price as the traditional market offering (slightly more, actually). The difference is that with a short sale or bank-owned home, the buyer is usually required to wait through at least one change of the seasons to hear the lender’s verdict. Add to the equation the fact that distress sales usually come with a whole lot of baggage (like no repairs, no home warranty, and a cavalcade of submission and processing requirements and checklists seemingly drafted by a pack of angry poodles on amphetamines using an Etch-a-Sketch), and one could argue that any perceived advantage is toast.
The moral to the story? If you are looking at short sales or bank-owned properties, search below your price range, because these will invariably float to find you. More importantly, forget the flavor of the offering. Find a home that meets your needs and negotiate your very best price. That is where your “deal” is to be found.