This is officially the wildest housing market I have seen in my 15+ years in the business! 2005-2007 was wild too but the exuberance wasn’t quite as high, especially outside core Seattle. Now, bidding wars are escalating home prices significantly (sometimes 10% or more) over the asking price nearly everywhere. However, overpricing your home will still backfire! My clients have been most successful by pricing fairly and letting buyers fight over it.
While it may seem “easy” to sell your home, it is still a complicated process. Some sellers are finding buyers themselves and selling it off market. That sounds good, except I would argue that you will get more money, and/or better terms, if you expose your home to the whole market, especially right now. How can it hurt to have a dozen buyers interested instead of just one?
I am also seeing a frustrating trend of sellers (and their agents) who are willing to accept the first offer that comes in, sometimes on day one on the market. I believe it always benefits the sellers to wait at least a few days and then review offers on a set advertised date. I’ve had 3 cases recently where a great offer came in early, but per my advice, the sellers respectfully declined it and waited until the scheduled review date. In two of those cases, the same buyers submitted new offers that were significantly better than their first offer! In the third case, the buyer did not submit a new offer but we received two other much better offers that were $50k over the asking price!
This extra enthusiastic market really just started in February and prices have increased a lot since January. So, if you are thinking it might be time to sell or if you would just like to update a 3-month-old market analysis, please contact me today for a no-obligation consultation!
Since multiple offers are so common right now, I thought I’d throw out some key tips for when you are sitting down with your broker to write an offer on a home. These aren’t exactly secrets, but it’s surprising how often one or more of these steps aren’t taken which can easily lead to buyers losing a home of their dreams. Now don’t get me wrong, it is almost impossible to guarantee a win in multiple offers because there often seems to be someone willing to either pay more, or willing to risk too much to get a house. But, following these few tips should at least guarantee you the best chance at a winning offer, even if you are not necessarily the highest priced offer.
- Get pre-approved! This is critical before any offer, but you obviously need to know exactly how much you can afford so get a pre-approval letter from your local mortgage broker and give it to your agent ahead of time. Do keep in mind that many homes are selling over their list price right now so consider looking at homes slightly lower than your max budget just in case you need to make an offer higher than the asking price or if you want to use an escalation clause.
- Be ready to pounce! Generally, you’ll want to take a look at new listings ASAP so be as nimble as you can with your schedule. Many new listings are postponing offers for several days to give as many buyers as possible the chance to view it and make offers, but don’t count on that extra time.
- 85% rule! Sorry, but the perfect house is probably above your budget. This is kind of a downer, but true. Most of our tastes tend to be out of our price range, so if you find the “85% house,” that’s likely to be as close to perfect as you’ll get. The sooner you can embrace that idea, the less frustrated you’ll be.
- Don’t over think it! After looking at a few homes and taking the 85% rule into consideration, you’ll know if one “just feels right,” so try not to wait until the last minute to decide to make an offer. This does not mean that you shouldn’t do your due diligence and make sure the home and neighborhood are what you expect, but the sooner you can start that process, the better.
- Pick your buyer’s agent wisely! When I’m a listing agent reviewing multiple offers with a seller, you’d be amazed at how often I either get hand written or sloppy contracts with pages missing, etc. In this computerized day and age, there is no excuse not to have a clean well written contract that hasn’t been scanned or faxed 15 times to the point of illegibility. Unless there is something extraordinary about the terms of the offer, all things being equal, these will definitely fall to the bottom of the list. Essentially, the listing agent may penalize a disorganized buyer’s agent (and therefore you) if he or she thinks choosing that offer could lead to challenging closing process.
- The fewer contingencies, the better! Most buyers need to have a financing contingency, but many of the others, such as inspection, title, neighborhood review, etc., are not always necessary. Again, I’m not saying that you should skimp on your due diligence, just try to do as much of it upfront as possible prior to submitting the offer. That is not always practical, but talk with your agent about what you can do to make your offer stand out.
- Personal letter? Consider writing a personal letter to the seller of the home. If the owner has lived there a long time, there is undoubtedly an emotional attachment to the home so it never hurts to try and appeal to their sensitive side. One caveat: be sincere! If you make stuff up and sound too cheesy, it may do more harm than good.
Remember, these are tips for buyers who know that they are going to be up against competing offers. In a slower market, or less active price ranges, you may not need to limit your contingencies, for example. But, if you visit an open house and there are 20 other families looking at the same time, you may very well need to dig into this bag of tricks. Happy house hunting!
Happy almost spring! As far as I’m concerned, it can’t come soon enough! In this post, I thought I would talk a little about mortgage interest rates and how, as rates rise, affordability decreases. Rates for a 30 year fixed mortgage are currently hovering around 4.32%. In the first quarter of 2013, the same 30 year fixed rate averaged 3.5%. According to the Mortgage Bankers Association, rates are projected to be about 5.2% by next spring. Fannie Mae and Freddie Mac forecasts are also in that range at 5.0% and 5.3%, respectively. If you are thinking about making a move and can’t decide whether to do it this year or next, let’s look at an example of house payments with the different rates.
A $400,000 loan last year at 3.5% would have equaled a monthly principle and interest payment of $1,796. That same $400K loan right now would be $188 more per month at $1,984. A year from now, if the projections hold, that same payment at 5.2% will be $2,196 per month, which is $212 per month more than right now. In other words, it will cost you $2,544 more per year if you wait until next year, and that equals $76,320 over the life of the loan, if you hold it the full 30 years. And to put icing on the cake, the price of homes between now and the spring of 2015 are projected to increase 3.8%-5.6% as well, thus further decreasing your purchasing power.
First and foremost, it is most important to make a move when the timing is right for you and your family. But if the timing isn’t as critical, you may want to consider making that move sooner than later if you will be financing the purchase with a mortgage.
I hope everyone enjoyed our beautiful Pacific Northwest summer! While I've been able to enjoy some of it myself, I've also stayed very busy as the housing market continued to be strong over these past two months. I thought it might be a good time for a market update so below you will find a few data charts for King and Snohomish Counties combined. These charts are a good representation of what's going on in north King and south Snohomish Counties including cities like Lake Forest Park, Kenmore, Shoreline, Bothell, Brier, Mountlake Terrace, and Edmonds.
The inventory of active homes for sale is finally higher than at any point last spring or summer. However, it is still historically low at only 2.2 "months of inventory" which means it technically remains a seller's market. New listings and closed sales fell off a bit compared with July, but pending sales (homes placed under contract) did increase slightly from last month.
This graph shows the pop up in months of inventory to back over 2 months. Will it stay there or fall back down like it did last year going into the fall months?
Sold prices have appreciated very slightly from July to an Average of $466,000. This is up 12.8% compared to last August. More interesting is that the average Active asking price is coming down into more reasonable territory after a somewhat irrational exuberance by some sellers in the spring.
The average dollar per square foot value held basically flat since last month at $210/sqft.
The average selling price as a percentage of the original listing price is holding steady at 99%. There are still many multiple offer situations but that trend is cooling a bit.
The average consecutive days on market remains steady as well at 34 days.
To conclude, the market is still very strong, although it did level off in the late summer. The early fall months typically bring a new crop of buyers and sellers out who want to make a move before the holidays and the end of the year. It'll be interesting to see if that trend holds true once more. Stay tuned!
Is it just me or does it seem like there are more leaves to clean up this year?.?.? I suspect it's about the same, but I probably just selectively forget the countless hours of raking every October and November. Anyway, this time of year does give me a reason to remind myself about some preventative home maintenance tips. Here's a great Windermere Blog post by Tara Sharp with some good reminders. Happy autumn!
Is the housing market in a state of rational exuberance? Since the beginning of this year, activity, sentiment, and even prices, have taken a turn for the better. And it does seem that a solid case can be made that the housing market finally bottomed in late 2011 into the beginning of 2012. BUT, let’s not get too far ahead of ourselves and let’s not get too excited that prices are going to skyrocket and go up at a bubble inducing 10% per year again. However, if you look at the past 2 months in King County, “asking” prices are indeed skyrocketing up while sales prices have only increased a modest amount. Take a look at this chart for average For Sale and Sold prices in King County over the past 15 months:
The average listed price (the green line) is currently $693,000. That is up 5.5% over last month alone and up 19.5% from May 2011! The red line is the average sold price and you can see that it has bumped up a bit since the beginning of the year, but it is only up $1,000 from April and is still actually down nearly 2% from last May. Here’s the same chart over the past 9 years:
To me, that recent blip in asking prices seems a bit irrationally exuberant to me, given what we’ve been through. However, if you dive a little more deeply into the numbers, inventory numbers are very low under $500k and staying low up to the $1million mark. So it looks like a good part of this widening of the gap between bid and ask is that the lower priced and more affordable homes are just selling quick and often. Higher priced homes are staying on the market longer and therefore the average price of “for sale” homes is simply a higher average price. If you’ve been looking to buy a home lately, you’ll know that inventory is very tight, to nonexistent, under $500k and when something does come on the market, especially in desirable neighborhoods, it’ll often be met with a bidding war.
It is essentially a sellers market in the Seattle area right now, especially in the lower price ranges. However, that does not mean you can ask 20% more for your home than you could have last year, it just means that you can lean toward the top end of your price range rather than have to settle at the bottom of the range to undercut your nearest competition like we’ve had to do the past few years. Right now, you may not have any competition in your neighborhood because it has all sold.
The moral of the story is that sellers can be rationally exuberant about selling right now, but just don’t be too irrationally exuberant when it comes to pricing your home. The same laws apply: if you price it fair, present it right, and your home is in top condition, you will sell quickly.
So far, the theme of 2012 is that there is definitely a lack of inventory. The housing market has been extremely busy in the low to median price ranges, but the upper middle to higher price ranges are starting to pick up steam too. The fact is, many buyers literally can’t find good homes to buy! Low prices and extremely low interest rates have pulled a lot of buyers off the fence in the first two months of the year. More homes will come on the market as we get into spring but that should be met with more buyers as well. So, it is reasonable to expect brisk activity for at least the next several months.
Since pictures can often tell a better story than words, take a look at this “heat map” for King and Snohomish Counties. It shows how most every MLS area has gone from a “balanced market” with 3-6 months of inventory in February 2011 to a “seller’s advantage” with less than 3 months of inventory as of the end of February 2012. Ignore most of the national news when it comes to housing because real estate truly is local. If you’re thinking about making a move, Call a Realtor with experience who knows your neighborhood to get specific professional advice for your situation.
When we think of selling a home, the services a REALTOR® can provide usually seem worth the cost of their
commission, but what about as a buyer? What can a REALTOR® do for you as a home buyer, and is the commission
worth the services they can provide? Remember, even though the commission is usually paid by the seller, hiring a REALTOR® as a buyer’s agent means your interests will be represented and protected.
Here are five great reasons you should hire a REALTOR® when you are in the market for a new home!
- REALTORS® Can Help You Determine Your Budget—With a few simple pieces of information, a REALTOR® can help you pre-determine what kind of budget you may be looking at for your new home, and can match you with potential lenders that are right for you.
- REALTORS® Have Access To Resources You Don’t—While a lot of real estate listings are available online, there are still
resources and listings that are only available through a REALTOR®. If you are looking for something very specific, having their insider knowledge may be crucial to finding that perfect home.
- REALTORS® Can Read Between The Lines Of Listings—There are a lot of catchy phrases that often appear in home listings, and your agent can tell you what they really mean.
- REALTORS® Increase Your Negotiating Power—A REALTOR® can not only increase your ability to negotiate things like price, they can also give you advice on things like contingency contracts and required paperwork.
- A REALTOR® Can Help You Navigate Through The Closing Process—The closing process can be a complicated process, and a REALTOR® can make sure all the details are addressed and that you are making a good financial investment.
Purchasing a home is a huge financial investment, and having a professional REALTOR® looking after your interests through the process is very important.
December is a great month to cozy things up at home. The brighter and warmer a house looks and feels, the happier you will be. Here are a few tips to make your house as cheery as possible as we head toward the shortest day of the year!
Fix it up: The light fixtures in your home are a reflection of your personal style and taste. Adding additional fixtures or replacing ones that aren’t your favorites can be a fun and creative way to brighten up your home!
Candlescaping: Candles are generally inexpensive and are extremely versatile. Adding various candle arrangements to different rooms in your home will instantly create an atmosphere of warmth and style. Get creative! You might also favor scented candles to add a pleasant aroma to different areas of the house.
Mirror, mirror, on the wall: Mirrors not only create the illusion that your rooms are even more spacious than they already are, they also reflect light! Make your house warm and cozy by adding a few inexpensive mirrors in hallways, bedrooms, and living spaces.
Light the way: Lighting isn’t just for indoor decorating—it’s also a valuable addition to the exterior of your home. Line your walkway or garden with cost-efficient solar light fixtures (no electricity needed!) to create a brilliant nighttime landscape outside your home.
Open up: During daytime hours, keep your draperies and window coverings open. This will not only allow your home to absorb heat, but it will brighten up the winter days that you spend at home.
November is a great month—the holidays are fast approaching, we get to visit more often with family and friends, and colder weather makes us feel like getting cozy in our homes. Since you’ll want to keep warm in the coming months, here is a list of tips for you that will help you to save money on your energy bill, while still staying warm and cozy!
Set the timer: Program your thermostat to reach lower temperatures while you’re sleeping or out of the house. This simple action can save you a lot of money—and will ensure that your house stays at a comfortable temperature at all times.
Open and shut: During daytime hours, keep your blinds, draperies and other window coverings open. This will enable your home to absorb the warm afternoon sunshine and will effectively add heat to the entire house. Close all window coverings at
night to keep the heat in!
Insulation time: If you have a window or two that feels drafty no matter what you do, consider installing tight, insulating shades to those particular windows. You’ll be surprised what a little bit of extra insulation can accomplish!
Light a fire: A fireplace is an easy solution to add extra heat to your home without adding to your energy bill. Capable of warming the entire room, you and your family can relax at home while keeping the thermostat at a lower temperature.
No leaks allowed: Check doors and windows for drafts and places where air might escape. Weatherizing windows and doors is a simple task that you can perform; your local home improvement warehouse will have all of the materials you need.