There’s no question that Seattle is one of the toughest housing markets in the country to buy a home. According to a recent article in Business Insider, the price of single family homes in the Seattle area has gone up 13.5% in the last year. Comparatively, the rest of the country has only gone up about 5.9%—which means that Seattle’s market is growing at more than twice the national average.
This isn’t all that surprising considering that Seattle is home to several large companies who employ thousands, including Amazon, Microsoft, Zillow, Starbucks, and more. As the tech sector specifically continues to grow in Seattle, many employees based in Silicon Valley are ditching California to move up to the Pacific Northwest where their dollar can stretch a bit further. But because of this boom, getting into the Seattle housing market can be brutal.
“The market is the toughest it’s ever been now. Whether or not it’s going to get tougher is subject to debate. The constrained inventory we have currently is likely to persist through 2018,” Tyler McKenzie, a realtor in Seattle says. “The reality is that historically there is always a market correction every decade. The question is to what extent Seattle will be immune to that market correction.”
As of right now, there’s not enough inventory (or land on which to build new houses) to accommodate the amount of people who are moving into Seattle. Because of the low amount of inventory, the market is dictated by sellers.
“A seller’s market is what they’re referring to when the market is ‘hot.’ Sellers dictate the terms. Many of the terms feel outrageous to buyers and they’re not fair,” Laura Brodniak, another realtor in Seattle says. “There are not enough homes for buyers, and the market times are short. We’re talking about days, not weeks or months.”
So if you’re thinking about moving to Seattle, or you’re a renter in Seattle who is thinking about buying a house, how do you get an offer accepted on a home in such a tumultuous market? Here are a few tips and some survival skills from realtors in the Seattle real estate market.
Know What You Are Getting Into
There’s no mistaking it. The Seattle market is just plain tough.
“It starts first with having a sober understanding of what the market is like. The biggest challenge is that the sellers are in the driving seat,” McKenzie says.
If you find that perfect house that’s in your price range in Seattle, you have to understand that it’s most likely going to be a highly competitive situation with multiple offers. You also need to be prepared for putting in a few offers and not coming away with a house.
Get a Pre-Inspection
One of the easiest and best ways to be prepared in the Seattle market is to do a pre-inspection on the house you want to put an offer on, McKenzie says. A pre-inspection is essentially what it sounds like: hiring an inspector to look at the house before the seller reviews the offer. This means that your offer will look more attractive to the seller because it won’t include an inspection contingency (i.e. that the offer won’t fall through because of any findings from the inspection).
The only downside of a pre-inspection is of course that hiring an inspector costs money, and if your offer doesn’t get accepted then that’s money that you can’t get back. At around $400 a pop for each pre-inspection, losing out on offers can start to sting financially after a short time. You also could find that the house has a lot of problems and that you may not want to move forward with your offer unless you are prepared to put your own money into the repairs.
It goes without saying that the Seattle market moves lightning fast. If, for example, a house comes on the market with an offer review date in place on Thursday, you are going to want to get in there and take a look on Thursday night or Friday and determine whether or not it’s a house you’re going to want to try and pre-inspect, advises Brodniak.
“If there’s no offer review date—and there will be an invitation on the MLS that says sellers will review offers upon receipt—you’re probably going to want to get in there pretty quickly. And your agent should be able to tell you based on the neighborhood what the average market time is, and that gives you a little bit of an indication generally what happens,” says Brodniak.
What this means is that if you see a house that you like online, you can’t wait until the next week to take a look at it because it’ll most likely be spoken for. This doesn’t, however, mean that you should put in an offer on a house you haven’t seen. Try to attend as many open houses as you can so you can get a good feel for whether or not you like the neighborhood and the house itself.
Present a Compelling Offer
Home buyers in the Seattle real estate market are doing a lot of crazy things to get the attention of the sellers, and not all of these are recommended. For example, waiving appraisal contingencies or offering large amounts of earnest money in a nonrefundable deposit can get the seller’s attention but they can also get you in trouble and should be avoided or viewed only as a last resort.
On the other hand, waiving something like a title review is not as risky and could make your offer more attractive and speedy if you are comfortable with it.
“This isn’t as big of a deal because boundaries aren’t usually in question. In certain parts of the East side where boundaries are more of an issue it may be more of a challenge. People don’t blink twice at waiving it typically,” Brodniak says.
Depending on how much cash you have in reserve, you can work with your real estate agent on a strategy for possibly waiving other contingencies in the contract if you are really ready to make a move on a house. Be aware, however, that this is always a gamble and should be considered very carefully in case you lose money.
Get More Purchasing Power
If you are finding that the homes you really want are just out of your reach, you may need to give yourself more purchasing power. There are a few ways to do this. You could wait and save up more cash for your down payment, which may or may not work depending on whether (and how quickly) home prices increase in the meantime. Or you can talk to your loan officer about programs that might help you get more bang for your buck.
One option to consider is the Unison HomeBuyer program which can match your down payment funds. With this program, Unison invests alongside you in your home, sharing in the future appreciation or depreciation of the home. When you get additional down payment funds from Unison, you can increase your purchasing power by 15-20%.
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