Supply in the Phoenix Metro area is LOW right now, which makes the demand that is actually average, seem really high! This is good for sellers! When supply is low, sellers tend to aggressively price their houses.
However, be cautious. Just because a buyer is willing to pay a certain price doesn’t mean it will appraise for that value.
Why does this matter?
If your buyers have limited funds for down payment, the appraisal coming in at sales price is a big deal! Traditional lenders won’t lend based on the sales price, but based on the appraised value. So if the appraisal comes in lower, you as the seller need to come down on your price and/or the buyer has to come in with more money.The buyer’s coming in with more money may not be an option. If you aren’t willing to lower the price, then you have just lost time and potential opportunities to sell your home and it will have to go back on the market and now your listing can be stigmatized / seen in a more negative light if more days on market and the deal falls out.
This becomes a big deal when you are paying holding costs for the property (taxes, insurance, interest on a loan, maintenance, etc). The longer that property sits, the more costs you are incurring, and the less profitable you will be.
So yes, it is a strong sales market. But still try to price accordingly to help yourself be successful!
Important note to remember: if a buyer is paying cash, they probably won’t get an appraisal because they don’t have financing that requires one. Certain price points are more likely to sell to cash buyers. In a market like this, focusing on flipping that type of property or focusing on that type of buyer can be a successful strategy since you can price more aggressively.
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