What Happens To Underpriced Phoenix Homes In a Busy Seller's Market

So far twice this week our clients and I were part of a heard of people to visit a home that just hit the market.  Both homes were in Central Phoenix, but this phenomena is prevalent throughout the valley. 

Inventory of homes is exceptionally low at just over 3 months and those 3 months includes a bunch of over priced and mis-marketed homes which are really on the market rather then in it.

So when a nice property in any of the three popular flavors of traditional, bank owned or short sale comes on the market the market comes in to even out the score. When the home is priced for the market there is less of a pull, but when the homes are under-priced then the market floods in to quickly fill the void.

One of the homes is near a historic district. A nice home, clearly, but surrounded by other homes which recently sold in the range of $38,000 to $69,000 so this agent must have based the price on these recent sales: it's an agent from California who happens to have a license in AZ.  The subject  home is superb, on a double lot, ready to move in and with lots of artistic touches: a home that will meet that needs of a lot of people in the market right now.

So when we drove up I was at once not surprised and also in shock. It's been on the market only a couple of hours. When we got there it was like going to a wedding party with the streets a lined on both sides with cars and lots of Realtors all holding a clean white MLS printout of this home. I expected maybe 1-2 cars, but t here were over a dozen.

We still put in a nice clean offer at 50% above asking price. I know it would be too low and it was. The listing agent had a, "bunch" of other offers well above ours. Will this be a bidding war? Maybe. Is someone likely to overpay? Maybe, but then again this was a rare type of home and values are subject to opinion.

Another home furhter  up north, near the Phoenix Mountains, was priced just right for what it offered, but it was the lowest priced home in a very nice area. When we got there pen and contract ready there were 2 people when we got there and 6 others who viewed during the 40 minutes we were there and 1 other that drove up as we left.

These are not outliers: this is an everyday occurrence in this very busy real estate market.