ComeBuyAHouse.com

Click here to view my profile at BIZNIK, a social business networking site. 

Lynette Hensley
Associate Broker
BuyerTours Realty

Here are my notes on buyer and seller activities in the current Seattle housing market:

Buyers:

1. There’s more inventory, so:  Buyers want to see them all, and with so many homes on the market, it takes longer for folks to decide which house to buy. 

2. Buyers want the best bargain, which is always true, but in this market, more likely to happen, depending on the seller’s situation.

3. Buyers are having more challenges with financing, which is why it’s more important than ever to have that pre-approval letter from the lender.

Sellers:

1.  The situations are so varied for sellers. 

Banks that are selling homes are interested in their bottom line and getting the collateral/bad loan off their books.

New construction deals depend on the financial strength of the builder, how close they are to the due date on their construction loan, and if they have money to cover the payoff.  Also early sales in a condo complex or plat are not usually discounted, but the last few may be.  They have to preserve their sale price because the sold units or homes become comps for the subsequent sales.  If they discount early sales, they discount the whole project.  The way to get a good deal is to ask for closing costs, upgrades, appliances or other perks like homeowner dues paid for a specific time instead of price.  Is it the last one?  You may get a screaming deal if the builder wants to be done with the project–and they usually do want that.

Sellers/homeowners:  we look at time on the market, price drops they’ve already made and how leveraged they are in a mortgage.  The seller will be easier to work with if the offer doesn’t cause a short sale of course, as then we add the lender into the negotiations.  The lender will not okay a short sale until the seller is distressed and has missed some payments. A seller that doesn’t need to sell but can hold on and rent the house is not going to budge as much as a seller in dire straits.  A seller with lots of equity has room to dicker, but may or may not be willing.

2. Relocations are often a pretty good deal, and often the seller has two mortgages or a mortgage and rent in the new location, so they are anxious to sell.

3. If the house has been on the market a long time and the price has dropped, the seller has already done alot of the price hacking for the buyer, and it’s best to honor that and offer near the asking price as long as the sold comps support it.  They will be relieved to be working with a reasonable buyer and the buyer will be getting a good deal.

We work with buyers from all over the nation and world who have their own local real estate conditions and culture that they bring with them.  One of our clients said that buyers ALWAYS offer 20% less than the asking price and then they usually end up somewhere between 3%-10% below asking price.  Seattle is different.  Statistics show that even in this buyer’s market the average sold price/list price ratio is within 0%-5% of the listed price, and an offer 10%-20% low often doesn’t even get countered. 

This has frustrated some of our clients coming from other areas of the country, but the good news is that the real estate market in Seattle is still strong, and that as the nation recovers from the current financial turmoil, Seattle housing market will lead the way back up.

Lynette Hensley — Associate Broker

This article and letter to a customer (from March 08 with subsequent updates) are a brief collection of my thoughts on Seattle’s ability to ride out the current national economic storm.  As with all research, anyone can tweak any data to mean what they wish, so I have tried to find the most balanced perspective possible. I do believe in Seattle Real-Estate as a sound real-estate investment in comparison to other parts of the country. When to sell ? When to buy? That’s as individual as yourselves.  Where to buy? HERE as soon as you find a place that’s comfortable.  How much to buy, what percentage of your debt to income ratio?  Likely up to somewhere around 41% of your gross income, including all your debts is the “old standard” before this last unregulated splurge that got many in trouble.  Well here it is, hope this is of some help.

info added 11/19/08
Forbes where to invest in real-estate
(specifically commercial but homes follow that market closely)
http://realestate.msn.com/buying/Article_Forbes.aspx?cp-documentid=12808843&GT1=35000
 

Info added 10/30/08
New US home price comparative graphs 1990-2008 US as a whole and select markets Seattle  SanDiego, Miami, etc
http://mysite.verizon.net/vodkajim/housingbubble/

Seattle is an area of excellent opportunity in real estate. The most stable is King County. Currently, home prices are down 1-6% + - over last year in King county (the area Seattle, Bellevue and Redmond are in), each micro area has its own story most readily explainable.  Most stable are the areas just north of Seattle’s city core and then east through north Bellevue and Redmond.  These areas are home to Microsoft, Amazon.Com, Zymogenetics, UW, and their employees.  Many Boeing management employees also live in these areas.  Boeing plants are south and north of town and while the areas around the plants are susceptible to air tanker, and dream liner, sales and losses (causing housing to fluctuate) the management core doesn’t fluctuate as much.

The historical charts show somewhere between 3 to 5 years for the average slump which is usually fairly flat then turns upwards. By my count we’re at about 18 months in and hopefully near the bottom of the curve but who really knows.  My family has been in real-estate in WA state since 1914.  My Grandmother was a real-estate lawyer in a downtown Seattle office. She always said real-estate was a sure deal, but always buy it knowing “it could be a 20 year investment”.  You might be able to sell it at 5 or 10 years at a profit but who can tell?  At somewhere between 10 and 20 years it was her feeling you would always have an opportunity to net a sizeable gain.  Choosing just when to sell was the art … I guess some things never change.

I think right now or fairly soon is a good time to invest.  How much?  That depends on your available funds .. Properties at the $250-350k are “affordable housing” and every house flipper/investor or newlywed/first time buyer are eating them up.  Many of the GREAT deals seem to be in new construction town homes $500-600K or you can look for the last $700K house on the cul-de-sac because the builder wants to be done with that plat.

This article (admittedly from March 08) excepting the new US market comparative graphs at http://mysite.verizon.net/vodkajim/housingbubble/

These links are some of the best I have found on defending Seattle’s ability to ride out the current national economic storm.  Obviously, there is no crystal ball, but next is one of the best single sources of a fairly balanced view that I’ve found, as well as a couple of links to some graphs I found interesting:  http://seattlebubble.com/blog/2006/09/03/seattle-times-we-are-immune-so-says-history/
 
http://seattlebubble.com/blog/2008/02/19/king-county-home-prices-1946-2007/ http://seattlebubble.com/blog/2008/02/28/king-county-affordability-1950-2007/#more-1621

Larry Baumgartner  |  Realtor