By Gary Shapiro | Point of View
I’ve seen it all during the past 52 years as a Scottsdale real estate broker. During various cycles, certain things were popular for a while but ultimately ran their limited course.
Sometime ago, mortgage interest rates hit intolerable levels topping off at 18 to 21%. The market seemed stuck in a rut but responded with the practice of short-term seller carry-back financing as an alternative. Today, seller carry-backs are not popular even though interest rates are temporarily unattractive to buyers.
Sometime ago, sellers enjoyed a relatively small chance of being successful as a “for sale by owner.” Some sellers chose not to list their homes with traditional real estate brokerage firms. For a short period of time, alternative real estate firms cropped up offering limited representation to “for sale by owner” sellers in an effort to capture that share of market. Today, for sale by owners are not popular because they are highly unsuccessful.
Sometime ago, some sellers were willing to consider offers from buyers who were contingent on the sale of the buyer’s current home. The market was strong enough so the actual risk to the seller was relatively low. Buyers were able to sell their homes fairly quick, so the contingency was removed, and the escrow closed on time.
Today, contingent offers from buyers are not popular with sellers.
Short term or vacation rentals used to be wildly popular. Interestingly, consumers may have been happy to book them while they’re away on vacation but never wanted those rentals to be next door to their full-time primary residence.
Licensing authorities, municipalities, and homeowner associations across America are increasingly unhappy with short term or vacation rentals. Like other temporary phenomena, their popularity may soon be a thing of the past.
Currently, the market is flooded by “bottom fishers” and “opportunists” trying to purchase homes across metropolitan Phoenix and elsewhere.
Existing homeowners are inundated by direct mail, texts, TV commercials and phone calls from investors, flippers, and wholesalers offering to pay cash for their homes, and waive commissions and inspections. They all claim to be making reasonable offers at fair market value.
Opportunity knocks amid tried-and-true practices of selling Scottsdale real estate
Recently, I received an offer on a house my firm had listed for sale. The property was listed for $550,000. The flipper’s offer was $315,000. There’s no way their offer was at fair market value. Instead, the offer represents their interpretation of the market, their firm’s business model, and their expectation for profit.
The “opportunists” fish the market aggressively. It’s a numbers game for them. If they cast their bait across a wide enough target area, some desperate or anxious seller may take their bait.
That’s a business decision buyers and sellers are free to make. But I’m here to tell you, most sellers can do better with representation by a traditional broker who has accepted a fiduciary duty to look out for the seller’s best interests.
Even though the buyer may be a licensed real estate agent, they’re looking out for their own best interests, not the sellers.
Opportunists and bottom fishers may be today’s “flavor de jour,” but I hope their days are numbered.
There is one reason why they are in business today. They know the future of residential real estate in Metropolitan Phoenix is bright. The experts all agree. Property values will continue to rise. But they prey on vulnerable sellers.
That’s the reason why they may be a temporary blip on our long-term radar screen. Sellers will ultimately recognize they can do better.
Frankly, these disruptors are a nuisance and a distraction. They consume valuable time and energy that could be devoted on a more productive basis.
In an effort to protect my seller clients from offensive and predatory practices, I’ve adopted a written supplement to my listing agreement to curb the bottom-fishers’ practices. My sellers are delighted and we’re getting better results with less aggravation, risk and wasted time.
There’s always someone coming up with a new angle or approach. History tells us the tried-and-true historical methods are still the best.