Is The Seattle Real Estate Market Shifting, For Real?

For the past couple of years, home sellers have been laughing like a blood-thristy Dracula in the Seattle area. "Muhahaha" they shrieked, as they received 900 offers (over-exaggeration) on their listed home from desperate home buyers. In some areas, sellers have been fortunate enough to sell their homes upwards of 15% over asking price (sometimes way more), with unbelievable terms.

Until now. *cinema guy voice*

Well, sort of. There are a couple of components to this, it's not really one cause. Recently, the city of Seattle has slapped a "head tax" on big business, taxing them on each and every employee. Outraged, Amazon cancelled their plans to build a new complex that would've added 6,000 jobs to our area.

Why is this such a big deal?

It's kind of a big deal because the Seattle real estate market has caused the outlying markets to also increase in value. Also, home buyers are burnt out to the max. Many buyers have turned to rental options due to not being able to compete with foreign investors with expendable cash.

For the first time in a while, our supply of homes have leveled-out in King & Snohomish County. Here is a chart straight from the MLS:

Does this mean the market is going to crash?!

No. What? No. I mean, anything can happen, but you have to realize that we have had an insane number of jobs added to our local economy the last couple years. At one point 54 people were moving here every day. When you have more need for housing verses number of homes on the market, this naturally will create higher demand. Just because less jobs will be added in the short term doesn't equate a crash. The last time we had a crash lenders were lending to people that weren't nearly well qualified to buy, on top of other reasons.

Selling & Buying in the current Real Estate market

I'll give it to you straight. No one knows what is going to happen for sure in 2019. It's still a fantastic time to sell, but it does seem like the days of crazy bidding war situations are starting to close out a bit. If you want the highest price possible for the near future, you probably don't want to hold off selling at this point. For buyers, this is great news – inventory is going up, which means less leverage for sellers. You will have more options as you hunt for your dream home, and in many situations not have to bid as high as you would've had to in 2017 & early 2018.

The market is still competitive. If you are buying, you will most likely still be competing with other offers on a home, so make sure to hire great representation that can help you stand out. If you are selling, you could lose thousands of dollars if your home isn't priced or marketed right. If you'd like a consultation, please contact us!

Remember this – it's a shift, not a permanent change. Nothing is permanent. Every market is different for different reasons. The future is very bright economically for our area, so either way you are swinging (buying or selling), buying back in to this market is a smart move that will pay off for many years to come.

Just don't wait to sell unless you really don't have to, unless you want to sell in 5+ years. The ship is preparing to sell (sail) – super pun intended.

What to look for in a mortgage lender & Realtor® when buying a home in the Greater Seattle area

Buying a home in the Seattle real estate market seems daunting nowadays. With more demand than ever, who you choose to work with will either make the process a breeze or a total nightmare.

A couple bullet points from the video:

  • A great lender is not just a lender that will give you a good interest rate. You want to work with a lender that can complete the home transaction fast, sell themselves to a potential sellers agent on your behalf, work outside of normal 9-5 hours, and is transparent & responsive. Also look for a company that is more local or smaller. These types of mortgage companies tend to use localized appraisers and can close quicker than big banks, giving you a bigger advantage when competing against offers with big bank financing. These traits are just a couple things that will help you win over a seller in multiple offer situations - even if your offer isn't the highest price wise in the pool.
  • A great Realtor is not just a real estate agent that finds you the perfect home that fits all your needs. In fact, you have the same access to listings as an agent does (for the most part). You want to work with a Realtor that knows how to execute a clean error-free contract, can effortlessly build rapport with a potential sellers agent, can expertly determine the range of which a potential home will sell for based on comps & data, ensures that the selling side is well prepared for appraisal, sets proper expectations, and the list goes on. These traits are just a couple things to look for in an agent when starting your home search. Beware of hiring close friends or family to help you buy. If the deal goes south the relationship could be hindered. 

Shoot us a message if you ever need any help. We'd love to help navigate the home buying or selling process with you!

Escalation Clauses and How to Use Them in the Seattle Real Estate Market

Home buyers in the Seattle/Eastside real estate market are in for a competitive treat nowadays. Placing a offer is sometimes an act of crossing your fingers and hoping for the best. It's tough to compete with the multitude of cash buyers and foreign investors with expendable income.

Many homes are receiving 5 or more offers. Homes with 30+ offers? The stories are true.

Many homes are receiving 5 or more offers. Homes with 30+ offers? The stories are true.

Escalation clauses are used frequently in our market. These type of clauses are used when there is a likelihood of other competing offers on a home. Here is an example of how they work taken out of my Official Guide:

  • Let's say you offer full asking price on a $550,000 home (your initial offer price). You add an escalation clause saying you will beat any offer by $5,000 (incremental value), until the number hits $640,000 (your cap). If someone else offers $597,000, your offer would stand at $602,000 if the sellers chooses to accept your offer. If someone offers $637,000, your offer would only increase by $3,000 to $640,000, since that is your cap. 

The beauty of an escalation clause is that you won't pay higher than your initial offer price unless there is another competing offer that is higher than yours. The seller must prove the existence of another competing offer, so you don't have to worry about being lied to.

The incremental value you set to beat another competing offer is just as important as your cap amount, especially if you are financing your home as opposed to buying it with all-cash. The reason behind this is because you will need to create an incentive for the seller to take your offer over another buyer.

Let's say your offer is only $1000 higher than another offer - your offer is using financing and the other offer is all cash. The seller in most cases will take the all cash offer because the funds are already there, whereas your offer still needs to go through the loan process, which means it's contingent. All-cash offers also can close much quicker than financing offers, sometimes within days. Financing offers usually need at a minimum 21 days to close, and sometimes more than 45 days.  

Make sure your incremental value is a higher amount. Each home will be a different story, so ask your agent what the best strategy would be. The point is to further motivate the seller to take your offer because of a higher price difference. Beating an offer in price is not usually enough - you need to be a good amount higher.

If you want to win the home of your dreams in Seattle or its surrounding suburbs, you will want to devise a winning game plan. An escalation clause is just a tiny part of creating a strong offer. You will need to decide whether or not to waive contingencies, how you will be writing the offer, rapport building, and much more. My guide to beating multiple offers is totally free and covers every single step to winning against even the most motivated buyers. Luckily, many people don't have the best representation while house hunting, so your chances of beating multiple offers without overpaying is higher than you think!

Please reach out if need assistance with buying or selling a home in our hot market. Who you choose to represent you as your agent matters, and in many cases a good agent is the missing link between you and your dream home. I would love to answer any questions or help in any way, no matter what stage you are in!


 
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Kevin Boroumand
Realtor / Real Estate Broker
(206) 734-1053
boroumand.kevin@gmail.com

Client Success: Shane & Nathalie

When I met Shane & Nathalie, they expressed to me how crucial it was that they lived in the Phantom Lake area of Bellevue, WA. The nearby elementary school was the prime candidate for their kids, and living within a certain proximity of the school would allow them to send their kids there.

One problem.

This neighborhood was extremely competitive. It wasn't going to be easy winning against the strong all-cash buyers here. Just like many other buyers, we lost a couple times due to intense competition. Bellevue is one of the hottest real estate markets in the entire country. No matter how great of an offer you write and how much rapport you build with the listing agent - you are more than likely to lose a couple times. Your motivation to win is sometimes just not as strong as another buyer.

We quickly realized that we needed to change our strategy. We just had to wait for another perfect home to come up in that exact neighborhood. A very tall order, considering how low the inventory is for homes in general in our area.

Boom - a gorgeous home becomes available:

Not too long of a wait either. We all realized that we had to jump on this opportunity quickly. Like many homes in the area, this home had an offer review period. This basically means that the seller has set a predetermined date to review offers after the home gets listed. In theory, we would see the home and write up the offer to be sent on that day. In our market, many buyers are writing strong offers to entice a seller to take an offer earlier than their proposed review date. It would have been too risky to wait.

I called up the listing agent and had a chat with him. Nice guy. I asked if the seller was willing to accept an offer before the offer review date. Agents here it all the time: "Well, if it is strong enough, maybe my seller would consider it." I heard this. It isn't clear on what they would accept of course. I was happy with the rapport that was built, and we decided to write an offer. We felt good about the offer... until I talked to the listing agent that night.

Someone put in an offer that was considerably higher than ours. I couldn't believe it. It was so much higher. 

But to my surprise - the listing agent wanted us to win. He told us to come up to the offer price of the other offer and they would accept out offer. This never happens.

The rapport I built paid off. We came up to the offer price of the competing offer - and won. They are now enjoying their beautiful home!


 

Kevin Boroumand
Realtor / Real Estate Broker
(206) 734-1053
boroumand.kevin@gmail.com