A Failed Strategy

By Larry Balboni

The reality of our current market is that short sales (seller owes more than current property value) and foreclosures/REO’s (bank owned property) are having an impact on property values. Foreclosure sales for 2008 were approximately 22% in Scottsdale. And while Scottsdale did fair better that Maricopa County which was at 43% of 2008 sales, these properties are driving down home prices. 

For the traditional seller this declining market brings many challenges. Overpricing a home with the idea that “you can always come down” or that you want “room to negotiate” is proving to be a failed strategy; and one that can cost you both time and money. Whether we like it or not, short sales and foreclosures are a significant parts of the real estate equation. So if you choose to sell your home, you need to price it to be the ‘next best one’.

The bright side of this declining market is that selection, price, and low interest rates make this an excellent time to buy. So if you are considering two transactions (selling one home and purchasing another), it is helpful to focus on the net of the two transactions. The benefits of a lower purchase price could more than offset the perceived losses on a lower sale price.