AZ Central – Bidding wars complicate housing market

by Cathryn Creno – Sept. 4, 2009 11:55 AM
The Arizona Republic

It should be the best time to purchase a home in decades.

Prices are at record lows. Many, if not most, of the houses on the market in areas like the Ahwatukee Foothills are owned by banks – not emotional and capricious homeowners.

Instead, even seasoned real estate agents say it’s the most difficult market they have worked in decades. for sale in Ahwatukee right now. In a normal market there are 600. There also is a huge shortage of owner-owned well-maintained homes.”homesfamily single

And buyers say they are frustrated with the condition of houses they find on the market – plus they are getting caught up in unpleasant bidding wars with cash-rich real estate investors.

“I have six buyers who want homes in Ahwatukee, but we can’t find a thing.” said Pam Eagan, a long-time Ahwatukee real estate saleswoman who specializes in selling custom homes.

“There are 487

Eagan said the selection of attractive move-in ready homes is low because owners who are not having financial problems intend to hang on to their properties until prices rise again.

So instead of walking through their dream houses, buyers are looking at repos gutted by evicted former owners.

“You would not believe the condition some of these places are in,” said Nancy Nighswonger, an Ahwatukee resident who is helping her mother, Diane Moss, search for a comfortable home for her retirement years.

“We’ve researched 100 houses and looked at 20 since June. In one place all the appliances had been left out in the driveway,” Nighswonger said.

Buyers who want houses to live in must also compete with real estate investors who have deep enough pockets to pay cash for discounted properties. Banks are creating bidding wars on such properties by calling potential buyers and asking them to up their offers, real estate professionals say.

While that might sound similar to bidding wars for Valley houses at the peak of the real estate market, experts say there is a difference: In 2005 and 2006, home prices were set at market value and buyers could offer higher amounts, depending on the competition.

“Now sellers are pricing their homes 25 to 30 percent below the market because they want to take 8 or 10 offers to the bank (that foreclosed on the property),” said Pete Meier, who has sold real estate in Ahwatukee for 30 years.

“This is not the normal way things are done. “I have made five or six bids for some buyers and they have not been successful in buying a house yet.”

Mike Mendoza, another long-time Ahwatukee real estate salesman, said the upside to the situation is that “the market is starting to move again.”

Also, he said, buyers with the patience and fortitude to endure the bidding wars can wind up with great deals.

In some cases, houses in neighborhoods where houses recently sold for $600,000 are now at “FHA levels” — the $300,000 range, he said.

At the other end of the spectrum, houses that formerly sold for a million or more can be purchased for $500,000 now, he said.

Mendoza said he recently represented a house in Chandler that was offered as a “short sale” – the owners owed more on the house than what it was worth.

“I had nine offers on it,” he said. “It was a very nice house. A million-dollar property originally.”

The house sold for $449,000, he said.

Eagan was so thrilled by a similar success story that she posted a message about it on the day the deal was signed.

The family she was representing — Honeywell engineer Rudy Dudebout, his wife Tina Hynes and their three sons Eric, 6, Adam, 4, and Alex, 2 – had just paid $556,000 for a home that appraised for $1.2 million at the peak of the housing boom, she said.

The 1982 five-bedroom, 3,500-square-foot custom home backs to the South Mountain Preserve and has a pool, basketball court and a balcony overlooking a circular driveway.

“We had had our eyes on this neighborhood for a long time,” Dudebout said. “It does not have the uniformity of looks that you find in other parts of Ahwatukee. We also wanted a funner back yard for the kids.”

The Dudebouts wound up in two bidding wars for the house, one in December and another in April, when they signed the contract.

Right after they lost the house in the first bidding war, vandals broke into the house, stopped up the sinks and created a flood that destroyed a bathroom and the kitchen. Afterward the buyer pulled out of the deal.

“We were nervous about having to go through the remodeling but now I look at it as a blessing in disguise,” Dudebout. “If the house had not been vandalized (after the first sale) it might not have come back on the market.”