If you are buying a home in the near future in the Greater Seattle area there are some things you should know about the current market conditions.
It’s an EXAGGERATED Seller’s Market
The numbers are off the charts. We have less than a 1-month supply of homes on the market, we are selling about 140% of the available homes and the demand for homes is growing. In simpler terms, there are way more buyers than there are homes on the market which drives competition through the roof.
Is it a bubble?
“A housing bubble is a run-up in housing prices fueled by demand, speculation and the belief that the recent history is an infallible forecast of the future.” ~Investopedia
Yes, no, maybe? What I think is not important, if you think this market is part of a bubble, you shouldn’t be considering a purchase. Regardless of how you feel, there are enough buyers who feel confident homes values are increasing and want to take advantage of low-interest rates. These buyers are willing to compete. If you are not willing or ready to compete, that’s okay. But what you should know is that the more buyers that do compete, the higher prices will rise. That’s why I think you should either be all in, or all out.
So what is happening?
Almost without exception there are multiple offers are being received. It’s not uncommon for homes priced under current market value to receive 8 or more offers. I’ve even heard of as many as 48 offers on one home.
What’s a buyer do to?
Believe me, I know it’s exciting to get out there. Beginning the search for a new home right away is tempting. The preapproval process can be daunting and even scary if it’s your first time around. But you need to be pre-approved in any market because it shows sellers that you can actually get a loan.
I cannot stress this enough. You simply cannot, under any circumstance, make an offer without at least a pre-approval letter. In some cases, you may have to waive your financing contingency or offer to pay more than you wanted to in cash if the home doesn’t appraise. You may also be asked to provide evidence of your funds to purchase.
To learn more about preapproval, watch this short video on Mortgage Lending.
Read as much as you can. Ask as many questions as you can.
Be the squeaky wheel.
Most brokers, myself included, are working long days and long weeks right now. We are doing the best to help you, but proactive calling may not be our strong suit. If you see a home you like, call me so we can get you on the schedule. Do not wait, the house will probably sell fast.
Know the risks.
You may have to waive the inspection, you may have to waive your financing contingency, you may have to offer to bubble wrap the seller’s belongings. Your broker wants you to have an inspection and do your due diligence, however in a competitive marketplace, you may have to make peace with some of these risks. This goes back to getting informed; learn what your risks are in order to minimize the chance of getting caught off guard.
How much should you offer?
I saved the toughest question for last. We are in an emotional market. Some homebuyers are desperate after making several offers and facing a serious homelessness problem, they may be willing to offer an amount that shocks all of us. Nobody, not even the listing agent, may be prepared for the amount some buyers are willing to offer.
You must make an offer you can live with. Whether you win the house or lose. You may not get a second chance to improve your offer and you may have to waive so many contingencies, that you will be stuck if your bid is accepted.
Work with someone who can help you identify a strategy that works for you. I can help, call me today.