Check the title again. That is a direct quote from a buyer’s agent that just called on one of our listings.
I won’t show your listing until your seller justifies the price!
Interesting tactic, particularly in what is the current seller’s market in Phoenix.
Here is my take:
1) It’s not the sellers job to justify the price to your buyer. That’s your job as their agent.
2) If you or your client feels the price is too high, you have a couple of options:
- Don’t look at the home. There are plenty of other homes out there. Oh, wait. That’s not really true any more. But still, you don’t have to look at the home if you think it’s priced too high.
- Take a gander, and if you like the home, submit an offer at what you feel it is worth and what you are willing to pay for it.
Should you decide on option 2.2 and want to submit an offer, just keep in mind that this is an “equity sale” (not a short sale or foreclosure), in a well-regarded area, priced right in the sweet spot of homes that are flying off the shelf, and the home is in perfect condition. Given that, you the buyers agent are surely aware that in the current Phoenix market such a home will quite likely receive multiple offers very quickly.
This particular home has been listed for 24 hours. It has been shown several times, and agents have already indicated that their buyers will likely be submitting offers.
So if you are a buyers agent who thinks calling and making demands of the seller to justify their list price is a good idea, you are in for a whole lot of frustration.
Imagine how your clients are going to feel…
Phoenix home buyers – forget what you read in much of the mainstream media. Many segments of the Phoenix home market are on fire. Take a peek at this chart:
The green line represents the number of current homes listed for sale. It is at half of what it was in November 2010. At this moment in time there are currently 24,251 homes in the Multiple Listing Service (MLS) is a status of either “Active” or “Active with Contingencies” (AWC). “AWC” indicates a home that has had an offer placed on it but something (a “contingency”) needs to be completed before the listing is moved to a “Pending” sale state. Most often the contingency is bank approval on a short sale. Some of those move on to Pending and then Sold status, some do not.
Removing the AWC listings leaves us with 16,534 homes available and actively for sale.
That may sound like a lot of homes, but in a city the size of Phoenix, and given a current monthly sales rate of roughly 7,000 homes sold per month, that is less than a 2.5 month supply of homes. Generally speaking, a market crosses over from a buyers market to a sellers market when there is less than a six month supply of available homes.
We’re at less than half of that.
The bars on the chart represent months of available inventory. As you can see, we have been below that six month mark since this time last year.
It is a sellers market folks.
Of note, the numbers in the chart represent the entire Arizona Regional Multiple Listing service, which includes all of Maricopa County and part of Pinal county. That is a BIG area, and lumping numbers together from a market that large and varied can be problematic. What we really have in Phoenix is a bifurcated market (oooh, fancy word!)
Adj. 1. bifurcated – divided into or made up of two parts; “socially bifurcated populations”
In less fancy words, we have a market that is divided into two parts. We see from the chart that overall Phoenix is in a sellers market condition. But if you were to look at higher end homes (say $500K-ish and up) you would see those homes are not selling nearly as quickly as low and middle range homes. That’s bifurcation. But because there are not nearly as many homes either listed or sold, that high end data tends to get drowned out by the low and mid range homes.
(I could probably make a reasonable argument that we’re actually in a trifurcated market — the low end, medium and high end home markets all behave differently, but you get the idea.)
The lesson here is pretty simple. If you are looking to buy a home in Phoenix priced at under $500K, expect stiff competition from other buyers and investors, and be prepared to pay list price, if not more. No, that’s not the case for every single home in that price range, but there is zero question the mid/low end market is Phoenix is generally speaking hot and getting hotter by the day.
UPDATE: The listing this agent insisted on having the seller justify the price on is now under contract. After less than 24 hours in the MLS. The offer is for over list price. And no, the seller didn’t justify anything. I can only assume the agent in question and their client are still looking for a home…
Data / Chart from ARMLS. Data believed to be accurate but is not guaranteed.
Love it Jay. You tell ’em! Minneapolis/St. Paul’s inventory is only down about 27% from a year ago with 4.7 months of supply so we’re not nearly as strong as you are right now but even at our levels sellers are finally getting a little leverage in the market and buyers are finding out that they just can’t steal houses anymore. If the agent has any response to you/this post I bet we’d all love to hear it!
Roch StGeorges says
Great response Jay. I would of probably said something similar. By the way congrats on your win in the Zillow’s blog contest. Keep up the great work.
Phil Boren says
Jay: We are seeing similar stats her in Boulder, with overall inventory at very (even historic) low levels right now. In this case, the buyer’s agent needs to hear the sound of Mr. dial tone . . . those kind of stubborn tactics rarely work in any market!
Jay Thompson says
@Phil Boren Mr. Dial Tone. I like that…
John Slocum says
Jay, it would seem the buyers agent (and perhaps the buyer, too) is a good candidate for the Geico ads where the luddites live under the rocks! Our Vancouver WA market for resale homes is at 4.8 months however, homes in the currently more popular price-tiers, once stripped of the “AWC’s,” puts us much lower.
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