Late last year I received a call from a man who moved to Arizona for a job offer. He got my name from a prior client of mine in Illinois. He couldn't remember her name as it was from a series of friends and relatives that passed my name along to him because of my prior client's referral. I contacted my client to see if she was the one that referred him, and she confirmed. It was bothering me that he didn't know who it was since I always like to thank anyone that sends me a referral.
He was coming from my prior state of Illinois
In fact, he was coming from the same town we lived in before we moved to Arizona back in 2009. He and his wife owned a large house that they didn't have to sell. But even though they didn't have to sell that one to make a purchase, he still had a maximum price that he didn't want to go above.
His wife and youngest son were staying behind in Illinois until the son graduated from high school. The plans were that they would downsize in Arizona since their other son was already in college.
He knew that he couldn't find a home in Scottsdale that would work for them in their price range, so he was looking at other towns. He had already seen some homes with another agent.
He Had Been Working with a Part-time Agent
He liked his agent, but he realized that in such a fast-paced market he was missing out on seeing some homes because she wasn't available quickly enough as she had another full-time job. A serious buyer looking in such a crazy Seller's Market shouldn't be working with a part-time real estate agent. It's difficult enough to get an offer accepted in this market, but if your agent isn't available to show you a home in Scottsdale or any other town, you're probably not even going to get a chance to view it, let alone make an offer on it. Read why it's not in your best interest to work with a part-time real estate agent. The pic to the right shows what a full-time agent does, a part-timer just doesn't have the time.
There was one home he had seen with her that he wanted to view again. I told him to see it with her again and if it didn't work out then I'd show him other homes as they came on the market. He didn't even get that chance as the home sold before he could see it again.
Although I felt bad for him, I was relieved because he was trying to get me to show it to him. That could have opened a can of worms since she was what is considered the "procuring agent". She should have been the agent that wrote the contract and negotiated the offer and followed through until the closing. But because she wasn't available, he lost that house and I think it made it easier for him to move on to another full-time agent.
He Wanted to View a Home that Just Hit the Market
Since he knew he couldn't afford Scottsdale real estate, he found a home in Peoria he was interested in. He had a large area that he was searching in around Phoenix. I had set the appointment for the home and he ended up adding a couple of other places.
He had a few requests before we even saw the house he was most interested in. He wanted to view the Seller Property Disclosure Statement that we call the SPDS. Most agents upload this into the MLS (Multiple Listing Service) when they add the listing, but some don't. I've seen less uploaded paperwork in the current Seller's Market. I'm not sure why because with multiple offers it needs to be emailed to several buyer's agents, which would take more time.
He also wanted a detailed explanation for the $125,000 custom options done after closing. He couldn't see that amount by viewing the photos, and these sellers were the only occupants and chose $135,000 in builder upgrades. The agent told me she would send me everything but told me she was supposed to be receiving some offers soon.
I relayed that to my buyer, who didn't seem too concerned about the offers coming in, but wanted to view that information before he'd even consider making an offer. This was all prior to seeing the house.
The Home He was Interested in was Beautiful
We saw his number one choice first. I've shown a lot of homes in my 39 years in the business, and this was one of those resale homes that showed like a model. It was super neat and clean - you probably could eat off the floor. It had a nice floor plan and the yard and pool were amazing.
It was priced at $850,000, which was already his limit. He immediately asked me if I thought they'd take $20,000 less. I told him it was doubtful with other offers coming in.
We saw 2 other homes in the area that weren't as nice. So I drove home afterward preparing to write up an offer, even though he stated he wanted to offer under the list price.
We Spent Hours Talking About the Offer
He was still adamant that he wanted all of the paperwork he requested before making an offer. She even waited for our offer before her seller accepted something. And she did send us the paperwork we requested.
My buyer realized that he might not have a chance at the house so asked me to just call her with his offer vs writing it up on paper. I agreed that his chances were slim but I wanted to do it the right way by filling out a contract, and I felt it would help him understand our Arizona purchase contracts.
After being on and off the phone with him for 4-5 hours, I gave up and told him I'll send her an email (it was already around midnight) that she would see in the morning explaining our offer and to see if we'd even have a chance. This buyer was an attorney (not real estate), and he didn't like our contract. I told him it is what we use in Arizona and that he was protected as a buyer.
I'm not sure if he really wasn't ready to buy or he just couldn't wrap his head around the prices here in Arizona compared to Illinois. He owned a much larger house in IL that was probably worth half or less of what this smaller house cost in Peoria.
He sounded like he was getting angry, and I know it wasn't towards me but the crazy seller's market that was causing these price increases. He kept saying that he could find new construction for less and that he'll either build or stay in Illinois. He realized he wouldn't get a beautiful yard and pool for less with new construction, but it wasn't a requirement and he could do that later if he decided to.
Personally, we're pool people. I would much rather purchase a home with a pool than have to put one in after closing. When buying a house with a pool, you are financing the pool with the house at low rates (if there is a mortgage). Otherwise, you have to pay cash down the road or get some other kind of financing that could have higher interest rates. And like everything else, the new pool construction will cost more than a pool that is already built in an existing home.
His Offer Was Not Accepted
The house sold for $875,000 - $25,000 over the list price. He wanted to offer $20,000 less. He knew it probably wasn't going to work, but he wanted to try. This was our first time working together, so I was going to help him even though I didn't think he had a chance.
I tried keeping in touch with him but he stopped replying. He either did find new construction or he decided Arizona wasn't going to work out for them and decided to go back to Illinois.
I feel it's a shame because we love Arizona so much and would never choose to go back to Illinois with its high taxes, hot and humid summers, and horrible winters. I always said I was born in the wrong state. But with the equity in our current Arizona home, we could purchase an extremely nice place in Illinois.
Why are homes in the Midwest priced lower than in Arizona?
When we first considered moving to Arizona the prices here were a little lower than in IL. Then they started creeping up. When we purchased a Scottsdale townhouse, it was priced close to what a similar place would be in IL, although IMO there really wasn't anything comparable in IL.
While walking the dogs around our immediate area in Scottsdale, we always kept track of the prices of single-family North Scottsdale homes for sale as we knew we'd eventually be purchasing one. At that time the 2-story Scottsdale homes were in the $300,000's. That was around 2009. Now those homes are a million dollars or more. The prices of Illinois homes are also increasing, but not at the same pace.
So I think we're going to be losing our Illinois and other Midwest buyers as we gain more Californians. Although Scottsdale real estate seems to be rising to California prices, you can still get more for your money here. Plus, the home will most likely be newer than a similarly priced home in California.
Both of my brothers and their families live in California. I love the state but I wouldn't want to live there. My brothers have been through a few earthquakes (although they were on the outskirts, they felt it and the dishes flew out of the cabinets at one brother's house and the water came out of the toilets). One of my friends lived there and she hated it. She now loves living in Henderson, NV. High prices and taxes in California with earthquakes - no thank you.
We are also still getting an influx of Canadians. They are also seeing very high housing prices and although many of them purchase vacation homes here, some are moving here full-time for better home value and the weather.
There are No Bargains in the Phoenix Area
I'm not sure there are many actual "bargains" anywhere right now. Sure, you can go to some rural areas in almost any state and find cheaper living, but would you really want to live in those places?
If you're comparing apples to apples, you might have to give something up to purchase real estate in Scottsdale if you're coming from the Midwest or some other less expensive state. And it's not just Arizona, prices are going crazy in Florida too. That's another nice place to visit that I wouldn't want to live in.
The bottom line with my Illinois buyer is that if he made a better offer and purchased that house, he would probably have around $45,000 in equity now - less than a year later. I'm sure his Illinois house hasn't gone up that same percentage in such a short time.
If he is still looking in Arizona he is now facing even higher prices. If we hadn't purchased our current home when we did (about a year and a half ago), we would have been priced out. It has increased around 35% since we bought it.
I really feel sorry for the sticker shock that Midwesterners will be facing if they have dreams of moving to Arizona, especially if they are interested in homes in Scottsdale, Cave Creek, Carefree, and other expensive Phoenix areas. And it is doubtful that I will ever work with a first-time buyer in these areas because of the high prices.
We all have to adjust and either choose different, more affordable areas or cut down on our wish list. The other choice would be to stay where you are. Moving to Arizona was a dream of ours for many years before we were able to do it. I remember visiting Arizona and feeling so jealous of people shopping and dining outside because they lived here full-time and we had to go back to Illinois. Now we are those people and are so happy to be!
If you're interested in moving to the Phoenix area give me a call at 480-877-1549. I'll do my best to help you fulfill your dream of living in Arizona.Posted by Judy Orr on