Saturday, May 9, 2009

Too good to be true Phoenix MLS prices

Actually, the MLS isn’t wrong. It’s correct, technically. But it’s also deceiving. And the MLS data that’s viewable on public websites via a data feed is even more deceiving.

Take this ad for example. Yesterday, a buyer asked us to show him this home which he’d found online.

49k house MLS ad

(for all pics in this post, click picture to enlarge; use browser’s back button to return to post)

Yes, you read that ad right – it’s a Phoenix home with nearly 1400 square feet, 3 bedrooms and 2.5 baths, built in 2004 for $49,900. And it’s showing up on real estate websites as a “For Sale” home.

Here’s the interior photos. It’s looking better and better!

49k house KIT

49k house EIK

49k house BA

1400 square feet that look like this? For $49,900?!

Hold on. This house isn’t really for sale. Not anymore.

First, it’s a short sale. Meaning you send the seller an offer, s/he accepts it and then your offer goes to the seller’s lender for their approval. That could take 2 to 3 months. Could be less, but could be longer. Nobody knows. Essentially you set the price at today’s market rates, then wait months for acceptance of your offer. Meanwhile, you’re likely watching the market prices continue to go down.

Second, the fine print in the Realtors-only data field (yes, there are data fields that only Realtors who login to the private, paid-for, and meant for Realtors and appraisers only MLS database, can see – go back and read this) says “AWC-C” is the status. That means Active with Contingencies-Contingent (on buyer selling an existing home).

So they’ve got an offer already? Yeah, but it gets worse.

The sellers of this home accepted an offer on April 7, 2009 and sent it to the sellers’ lender for approval. (more data only available to paying Realtor/appraiser subscribers to the “real” MLS)

At first this house looks like a once-in-a-lifetime investment opportunity when you see it on Realtor.com, Trulia, Yahoo, Dwellicious, AZCentral.com or any of a million other real estate websites. The truth is, it’s already under contract, but there’s no telling how long it will take the seller’s lender to decide whether or not they’ll accept that offer or just take the home to the foreclosure auctions.

To rub salt in the wound, tax records seem to indicate that the original buyer (the current seller) put less than 20% down on the home at purchase. Which means the lender who’s contemplating accepting a short sale actually might get more money if they let the house to auction because then they’d get the insurance money payoff.

Still reading? There’s yet more salt for your wounds. A quick check of the satellite maps available to anyone who can spell GoogleEarth shows the house backs up to a commercial building and sides onto Roeser Road which is a pretty major road in this part of South Phoenix:

49k house sat map

Today more than ever, it’s buyer beware when you’re surfing real estate websites.