Tuesday, August 7, 2012

Phoenician Real Estate Contracts

The Phoenix Real Estate market right now is a very strange beast. The overall spread has changed from being heavily weighted with short sales and foreclosures on the listing side and investors on the buying side to a more balanced and wider mix of traditional sales, first time buyers and even move up buyers!

This is leading to a departure from standard contracts being presented during transactions. Investors are routinely denying buyers the right to SPDS (seller disclosures) and CLUE reports (insurance claim history). Flippers are requesting that buyers waive appraisal contingencies and come up with any shortfalls themselves in the way of cash. This is due to the speed of the rising market and the appraisers lack of ability to keep up with rising prices caused by bidding wars.

Other contractual lovelies in the market are listings requesting cash only offers (to get around appraisal issues), REO's that require you to pre-qualify with them (in an attempt to gain your financing business). REO's have their own total set of real estate forms that are presented in the form of seller addendum's and forced upon the consumer.

The other thing affecting contracts is the sudden change from a buyers market to a sellers market. Buyer concessions are almost impossible to get via the purchase contract, multiple offers and bidding wars have also made it harder to get an offer accepted with VA and FHA loans. Sellers are preferencing cash and conventional financing when faced with high levels of interest in their property.

There really are a lot of moving parts to transactions right now and its more important than ever to make sure the market overall is understood.

I for one will be glad when shortsales, REO's and flips are a little less present than they are today!!

Chris Spalding