Here’s what it takes to buy a home in Seattle’s competitive real estate market
By Josh Potter
Competition to buy a home in Seattle is fierce. Prices are high and most homes get multiple offers. But there are steps you can take to give yourself a fighting chance. In this article, you’ll find some of the things you can do to stay competitive in Seattle’s homebuying market —beyond spending more. We’ll discuss how to plan ahead, budget and make a great offer so you can buy a home in the Seattle area.
With more people looking to buy homes in the area, there aren’t enough homes on the market to meet demand. That means a single home can get 8 or more offers. And that’s the median. The most popular homes climb quickly into the double digits.
With that many offers, it’s natural that prices will skyrocket too. At the peak of the market, homes in Seattle regularly sell for as much as 5 percent over asking or more. With the average list price topping $850,000, an extra 5 percent isn’t exactly pocket change.
So how do you compete against all these other buyers if you don’t have all that extra money lying around? It takes strategy, planning, and creativity. But we’re here to tell you that it’s possible! Here’s how.
Before the house hunt
Find a winning agent
In the last few years, there have been a lot of developments in the real estate space. That means there are a lot of options when it comes to brokerages, agents, and real estate business models. So do your research and make sure you find the right agent for you and your goals.
We’ve got a helpful article that outlines what to ask your agent to make sure they’re the right one for you. But it boils down to making sure you have an agent looking out for your best interests who’s ready to go the extra mile to help you win a bid.
The fact is, anyone can fill out forms and give you recommendations. But in a competitive market, things move fast. A great real estate agent should be able to juggle touring, getting funding, finding listings, making an offer, negotiating, and all the extra details all at once. That’s why you need an agent who is responsive, honest, experienced and who works for you—not just their commission.
Make a budget
Do this early. You don’t want to get to the offer phase of the process and be unsure of how much you should—or can—spend. Remember, buying a home is more than just making a down payment. Luckily, there are ways to spend less than 20 percent up front but you’re still going to need to consider how much your mortgage payments and closing costs will be.
We can help you figure out your potential mortgage and property tax but there are usually additional costs along the way. Knowing ahead of time how much you’re willing to spend will help you navigate getting a mortgage loan and avoid the sticker shock when it comes to actually wiring money from your bank account.
Secure a loan early
The sooner you have a lender lined up, the better. But what does it mean to have a lender? It means you’ve already gone to a bank, credit union, or mortgage lender of your choice and started the process of securing a loan for the price of a home in your budget.
If you wait until you find the home you want to buy, it’ll be too late. We give you some pointers on how to secure a good mortgage rate here. Some lenders offer things like pre-approval so that a seller is confident you’ll have the money when it’s time to close.
But, these days, it’s better to go even one step further and get pre-underwritten. This means the bank has dug even deeper into your finances already and has already determined just how much money they are willing to loan you when the time comes.
No matter what, the process of securing a loan can take a while, especially if you have complex finances so, by the time you have a lender willing to hand over the money, someone else will have already bought the home! If you start the process early, you’ll have that much of a head start on the competition.
While you search
Go beyond the list price
As we’ve already mentioned, homes in Seattle are almost guaranteed to sell above the list price—between 3 and 10 percent more depending on the neighborhood, square footage and age of the home. It doesn’t sound like a lot, but at a median price of over $850,000, a Seattle home’s sale price could be as much as $100,000 above what the list price was.
So when you’re looking for homes, we recommend you look for homes that are below your budget by at least 5 percent. That way, when it comes time to make an offer, you can join the party and offer more than the list price along with your competition.
Tour a lot of homes
Touring is how you visualize all the different options you have in different homes and it will keep your mind open in the process. The trick is to go on tours without expecting to find the home you love right away.
Touring homes is a way to collect information about different neighborhoods, price ranges, layouts and square footage. If you start with too narrow a focus, you might not find the right house for you.
Go on tours before you decide what you want because there’s no way to know for sure until you see it. There are so many different layouts, price ranges, neighborhoods and square footage, why rule any of it out before you even start?
We can help you figure out what to look for on a tour. Then, you’ll narrow it down to the one you really want while keeping your search field wide open in the meantime.
Decide what you want, compromise on the rest
We’ve already talked about how there aren’t enough homes to go around, so keep your mind open to different versions of your ideal home. It helps to figure out what you can’t do without—we call these your nonnegotiables—so you can let go of some of the other details.
If you know you want a certain square-footage, you may need to compromise on the budget. If you know you want to be in a certain neighborhood, you may need to buy an older home. The more detailed you can be about what you want, the more you can compromise elsewhere.
For example, you can probably find a home with a fireplace and a fenced yard in a top-tier neighborhood but, likely, only if you’re willing to sacrifice some square footage or some more money. Once you know what the most important thing is to you in a home, ask yourself what you’re willing do without.
Making an offer
It’s not necessarily a guarantee that you’ll win your bid just by being the highest one. Waiving certain contingencies can give buyers an advantage because it makes the sale all that much more simple for the seller.
When there are contingencies in an offer, it means that you’ll only buy the home contingent on certain conditions being met. But not all contingencies are made equal.
Inspection contingencies are popular but there are plenty of ways to waive it without taking on extra risk. For example, you can bring an inspector on a tour or use the Flyhomes Guarantee.
Talk with your real estate agent about what contingencies you feel comfortable waiving so the seller knows the sale will close without any speed bumps.
With all this competition, homes can get snapped off the market in a matter of days. Sometimes, even, in a matter of hours. Most listings have an offer review date, but particularly popular or valuable homes won’t even make it to the end of the offer period.
Once you know you’ve found the home you love, act quickly. Your real estate agent should be able to get an offer to the listing agent right away and if you’ve followed the previous steps, there shouldn’t be any reason to slow down now!
Make it a sure thing
Sellers know they’re going to get top dollar for their home in this market, no matter what. Your offer will have to stand out somehow. One of the best ways to stand out is to give your seller certainty that the sale will go through without a hitch.
Sales can—and do—fall through for a number of reasons from financing snafus to cold feet. If you’ve been pre-underwritten by your lender, your financing is all but guaranteed. Another way to provide your seller financial certainty is to make a cash offer.
With developments in real estate and new, innovative companies in the field, you don’t need all the cash yourself to make a cash offer anymore. We’ve got all the resources you need to make a strong, guaranteed cash offer to give you confidence that your bid will be the one that stands out.
Summing it up
It’s tough out there if you’re a homebuyer. Fierce competition, rising prices and declining housing inventory make buying a home seem impossible. But it’s not! There are simple, common sense things you can do to give yourself a leg up and make home offers that beat the competition without breaking the bank. When you’re ready, Flyhomes will be there for you to help you from home search to home sweet home, every step of the way.
About the author: Josh Potter works for Flyhomes. He is a writer and journalist based in Seattle.