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To say the Seattle real estate market is hot is an understatement!  For buyers who are not represented by a Realtor, it’s very difficult to compete in this very competitive seller’s market right now.  In fact, ZipRealty has recently identified Seattle as one of the top 10 markets for sellers.  So sellers, what are you waiting for?!!

10 Best Markets for Home Sellers

Daily Real Estate News | Friday, February 15, 2013

ZipRealty, a real estate brokerage company, is finding more housing markets starting to tilt in sellers’ favors. 

For the average home in the U.S., the gap between the listing price and closing price is narrowing with sellers able to get more than 98 percent of their home’s listing price back. Also, the median days a home is spending on the market also is falling, dropping to 44 days nationwide in 2012 — a 23 percent decline from 2011, according to ZipRealty’s report. 

“A limited inventory of homes on the market, combined with the extremely low cost of mortgage financing, has resulted in homes selling above asking price in many western markets, boosting the average listing to closing price ratio,” says Lanny Baker, ZipRealty’s CEO and president.

ZipRealty has identified the following 10 best housing markets for sellers, based on the list-to-close price ratios: 

  1. San Francisco (102.5)
  2. San Diego (101.3)
  3. Sacramento, Calif. (100.9)
  4. Las Vegas (100.7)
  5. Los Angeles (100)
  6. Orange County, Calif. (100)
  7. Denver (99.8)
  8. Tucscon, Ariz. (99.3)
  9. Portland (98.9)
  10. Seattle (98.3)

Source: ZipRealty

If you have been wondering about whether its a good time to sell or not, the MLS has a great summary of the market right now.  It has changed significantly since the Fall of 2012.

Brokers report brisk sales, but rising frustration for home buyers

Kirkland, WA, February 5, 2013 – Punxsutawney Phil’s prediction of an early spring is showing up in the latest housing activity report from the Northwest Multiple Listing Service. Its statistics for January showed a 14.4 percent year-over-year increase in pending sales and a 23.6 percent jump in closed sales amid a 31.3 percent decline in inventory. 

The MLS reported 4,289 closed sales during January, surpassing the year ago total by 820 transactions. Last month’s completed sales of single family homes and condominiums had a median selling price of $239,300. That’s up 11.3 percent from the year-ago figure of $214,990.

Supply has dwindled to less than two months in some counties close to job centers, spurring bidding wars. Some buyers are even resorting to writing “love letters” to win over sellers in these competitive situations. Brokers also report an increasing number of buyers have little or no interest in making offers on short sales.

“I personally have never seen the ratio between active buyers and available inventory in Seattle’s close-in neighborhoods so out of balance,” remarked Mike Skahen, owner/designated broker at Lake & Co. Real Estate in Seattle. Skahen, a real estate professional since 1976, said multiple offers and bids well over the list price are common. “Even homes that were hard to sell for various reasons are being snapped up so those sellers were wise to list,” he added.

Lena Maul, a new member of the Northwest MLS board of directors, and the designated broker/owner at Windermere/North in Lynnwood, agreed now is a good time for sellers to list. “Sellers who are considering a spring or summer listing may want to consider listing now as demand is outweighing supply,” she noted, adding, “This has given well priced sellers the advantage with the benefit of quick sales and multiple offers.”

With multiple offers on the rise, buyers are seeking an edge as they vie for a desirable home. Brokers are reporting an increase in the use of heartfelt letters from would-be owners who want to distinguish themselves and forge an emotional bond with the sellers.

Maul recalled a successful letter-writing effort last month by one of her office’s clients. Those buyers, who were using FHA financing, wrote a letter introducing themselves to the seller and explaining why they liked the home so much. After reviewing 13 offers, including one from an all-cash investor, the seller chose the letter-writer’s offer.

“Buyers should not forget the human element of appealing to a seller in this multiple offer market,” Maul emphasized, adding, “You just never know who is on the other side of a transaction and what might be important to them. In this case, selling their home to an owner occupant who appreciated special features of their home versus an investor sealed the deal, not cash.”

Brokers in the 21 counties served by Northwest MLS added 7,096 new listings to inventory during January. That total was just slightly more than the number of pending sales (7,016) that members reported last month and brought the total number of active listings at month end to 18,008.

Only two counties, Mason and Ferry, reported an increase in inventory last month compared to a year ago. The sharpest drops occurred in Snohomish County (down more than 51 percent) and King County (down nearly 48 percent). Both those counties have less than a two-month supply of homes for sale.

“Kitsap County is starting its spring market early this year,” reports Northwest MLS director Frank Wilson. It has 3.35 months of supply. Pending sales (mutually accepted offers) rose 23 percent in that market last month compared to a year ago, while closed sales surged nearly 40 percent. Prices in Kitsap jumped 32 percent, second only to Grays Harbor County where year-over-year prices jumped more than 54 percent.

“Often we don’t see momentum to really begin building until mid February to the first part of March. This year, I think due to the already low inventory and the continued low interest rates, the market feels like it started mid January” noted Wilson, the managing broker at John L. Scott’s Poulsbo’s branch.

Despite imbalance between supply and demand, Wilson said more and more buyers are opting not to purchase short sale homes because of the uncertainty involved. “It’s not uncommon for a lender to choose at the last minute to foreclose on a property instead of approving a short sale. When this happens it leaves the buyer high and dry with 2-to-4 months of time invested, only to have to start the process all over again,” he stated. That can leave them at a disadvantage considering the current pace of sales.

Sixty percent of homes close to job centers are selling within the first 30 days of being listed – twice the average rate, according to figures compiled by John L. Scott Real Estate. J. Lennox Scott, that company’s chairman and CEO, said extremely favorable market conditions have brought a surge of local home buyers into the market. Historically low interest rates and a shortage of inventory are creating an environment for multiple offer situations, he added.

Only two counties (Grays Harbor and Kittitas) reported a drop in pending sales last month compared to the same period a year ago, while 16 counties notched double-digit gains. The MLS attributes part of the improvement in sales to last month’s milder weather compared to January 2012 when a major snowstorm walloped the region. Nevertheless, even when compared to several previous years, pending sales were robust.

Northwest MLS members reported 5,548 pending sales during January in the four-county region (King, Snohomish, Pierce and Kitsap). That total surpassed the previous high for the month of January, which was logged in 2005 when members reported 5,426 pending sales.

Even though buyers are flocking to newly listed homes, sellers must be smart about pricing, emphasized George Moorhead, branch manager at Bentley Properties. “In my area, a home that comes on the market that is well priced for the area, style and condition is usually under contract within a few days,” Moorhead said, but he also noted homes that have been on the market for more than 20 days are subject to price reductions.

Moorhead, who is also a member of the Northwest MLS board of directors, said the current market defies basic economics for supply and demand. “Interesting factors include sellers who are still holding back for myriad reasons. Some do not have the confidence or equity to put their home in front of buyers, and that is creating even more pent-up demand.”

Skahen, a past chairman of the Northwest MLS board, said it seems like two houses are selling for every new listing coming on the market. “Buyers keep getting more desperate,” he reported, adding “It will be interesting to see if sellers start jumping in after the weather improves in March,” as is the usual pattern.

Skahen also noted buyers who purchased one or two years ago have seen at least a 10-to15 percent appreciation in their value. “Amazon hiring is having a huge impact, especially around Ballard, Queen Anne and Capitol Hill,” he commented.

Yet another positive indicator of the state’s housing market recovery came from the National Association of Home Builders and its NAHB/First American Improving Markets Index (IMI). Six markets in Washington appeared on the list, the largest number since that gauge was created in September 2011. The IMI is based on six consecutive months of improvement in housing permits, employment and house prices.

Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership includes more than 21,000 real estate brokers. The organization, based in Kirkland, Wash., currently serves 21 counties in Washington state.

Statistical Summary by Counties: Market Activity Summary – January 2013

Single
Family
Homes
+ Condos

LISTINGS

PENDING
SALES

CLOSED SALES

MONTHS
SUPPLY

New
Listings
Total
Active
# Pending
Sales
#
Closings
Avg.
Price
Median
Price
 

King

2,638

3,853

2,777

1,781

$396,949

$315,000

1.39

Snohomish

1,015

1,548

1,154

713

$259,612

$235,950

1.34

Pierce

1,260

2,841

1,258

700

$214,883

$190,000

2.26

Kitsap

354

1,201

359

183

$262,730

$235,000

3.35

Mason

102

584

68

35

$154,086

$138,700

8.59

Skagit

190

626

155

81

$205,934

$179,000

4.04

Grays Hrbor

124

679

60

44

$125,264

$120,300

11.32

Lewis

83

555

54

48

$173,065

$149,975

10.28

Cowlitz

118

437

94

54

$140,727

$133,450

4.65

Grant

73

415

58

47

$166,680

$139,990

7.16

Thurston

348

1,027

321

189

$224,210

$214,000

3.20

San Juan

19

249

24

10

$417,515

$339,950

10.38

Island

117

581

104

64

$268,010

$232,000

5.59

Kittitas

40

331

39

25

$260,414

$174,990

8.49

Jefferson

40

327

45

29

$249,265

$224,500

7.27

Okanogan

27

320

20

26

$183,235

$133,450

16.00

Whatcom

288

1,073

239

142

$267,120

$235,000

4.49

Clark

36

168

58

24

$218,739

$189,745

2.90

Pacific

56

314

26

13

$100,800

$100,000

12.08

Ferry

5

74

1

1

$60,000

$60,000

74.00

Clallam

58

314

38

32

$185,092

$170,000

8.26

Others

105

491

64

48

$229,983

$179,200

7.67

MLS TOTAL

7,096

18,008

7,016

4,289

$299,747

$239,300

2.57

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)

 

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

2000

3706

4778

5903

5116

5490

5079

4928

5432

4569

4675

4126

3166

2001

4334

5056

5722

5399

5631

5568

5434

5544

4040

4387

4155

3430

2002

4293

4735

5569

5436

6131

5212

5525

6215

5394

5777

4966

4153

2003

4746

5290

6889

6837

7148

7202

7673

7135

6698

6552

4904

4454

2004

4521

6284

8073

7910

7888

8186

7583

7464

6984

6761

6228

5195

2005

5426

6833

8801

8420

8610

8896

8207

8784

7561

7157

6188

4837

2006

5275

6032

8174

7651

8411

8094

7121

7692

6216

6403

5292

4346

2007

4869

6239

7192

6974

7311

6876

6371

5580

4153

4447

3896

2975

2008

3291

4167

4520

4624

4526

4765

4580

4584

4445

3346

2841

2432

2009

3250

3407

4262

5372

5498

5963

5551

5764

5825

5702

3829

3440

2010

4381

5211

6821

7368

4058

4239

4306

4520

4350

4376

3938

3474

2011

4272

4767

6049

5732

5963

5868

5657

5944

5299

5384

4814

4197

2012

4921

6069

7386

7015 7295 6733 6489 6341 5871 6453

5188

4181
2013 5548                      

Current Statistical Reports

__________

There’s a lot of disagreement about whether a seller should conduct a pre-inspection before they list their home.  Up until this past year, I myself was on the fence about is this topic.  Many Realtors don’t encourage their sellers to do a pre-inspection because of the disclosure requirements, as well as the added costs to the seller in these tight financial times.  Whereas some Realtors are adamant because they want their seller to have the home as perfect as possible before listing it.  I’d say most Realtors are in the former camp.  Here are some of the pro’s and con’s when it comes to conducting a pre-inspection on your home:

  • PRO’S:
    • Full knowledge of the current state of your home – no surprises!!  This works both ways.  If you tell a buyer the home was pre-inspected, and outline any items you fixed, they can feel more assured about purchasing the property.
    • You can feel more confident about your list price because you’ve either invested money to address any problems, or the price reflects the work the home needs.
    • Ability to address the more serious issues of the home before you list it so a buyer isn’t potentially scared away by it.
    • You may be able to move through inspection process with a buyer more quickly since you are already aware of any issues with the home.  And, hopefully, less negotiation needed because the home is well-prepared for the sale.
    • If repairs are made, your home will show better.
  • CON’S:
    • Whatever you discover in the inspection will need to be disclosed in your property disclosure form.
    • You may discover a serious defect that you do not have the funds to address without selling your home.
    • Not all inspectors are created equally.  There may be issues that a buyer’s inspector discovers that your inspector may not have detected.
    • People have different sensitivities about repair items.  You may feel an issue isn’t a big deal, but a buyer might feel differently.
    • The seller may cut corners in making repairs to save money.  This may come up later after the buyer moves in and discovers the ‘shotty’ work.

Even the most responsible homeowner can be surprised by what a buyer’s inspector discovers about their house.  One of the most common items a seller is surprised by is the state of their sewer line.  A sewer line can be broken without backing up into the home for years.  I also see a lot of problems discovered in crawl spaces, like rotted rim joists and other water penetration issues.  Just like de-cluttering and painting, a pre-inspection should be considered just another part of getting the home ready to maximize the sales price of the home.

If you choose not to do a pre-inspection, at the very least you should carefully walk through all areas of your home – especially taking a look into the crawl space and attic, which are areas homeowners rarely ever go into.  You may even want to consider doing a sewer line inspection (called a sewer scope).  This costs between $200-$250, depending upon who you use.  While the market in Seattle has shifted a bit, buyers are still sensitive to price and condition.  Why not spend a few extra weeks ensuring your home is in tip-top shape for sale?

When the real estate market crashed a few years ago, the biggest obstacle to a smooth closing was the home appraisal.  My experience over this past year is that appraisals are coming in fine (for the most part), but getting the buyer qualified is actually getting harder.  Don’t get me wrong, I’m all for ensuring people have the means to pay their mortgage every month.  But, it used to be that the only paperwork a buyer needed to have was some recent pay stubs and a few years of tax returns.  Boy, those days are over!!  The amount of paperwork a buyer now must provide to a lender is borderline criminal!  Here are some recent examples:

  • A buyer had miscellaneous checking account deposits over the span of two months in the amounts of $100 – $300.  (actually 9 total)  The lender required that the buyer explain every deposit.
  • Buyer #2 receives a large portion of their total pay in overtime.  While their W2 clearly states “base pay” and “other pay”, the lender wanted a break down of their overtime pay for the past two years!!
  • Buyer #3 had to write a letter stating that what they completed in Form ABC was accurate.  (even though they had to sign the bottom of Form ABC agreeing that the above-completed information was accurate)

These scenarios may seem minor, but when you add up all of the documentation a buyer needs, it gets overwhelming.  And, most of this stuff doesn’t make sense!!  It frustrates the buyer and often times leads to a delay in the closing date.  In fact, I have four closings occurring over these last two weeks of July and three out of the four have had to have the close dates extended because of road blocks with the lender.

To be clear, it’s not the loan officers the buyers are working with that are making the requests for this added documentation.  They are really just facilitating the paperwork requests of the underwriters.  In fact, many of the loan officers are just as frustrated by the need for the extra paperwork requests as the buyers are.  Unfortunately, the lending practices seems to continue to swing in the wrong direction, making it harder and harder for strong, qualified buyers to get a loan easily.

As a buyer, I’d recommend gathering as much paperwork as possible BEFORE you make an offer on a house.  Some of the things you should readily have available are two years of taxes, three months of paycheck stubs, two or three months of bank statements and investment accounts and a lot of patience!!  Sellers should make sure to review the buyer’s pre-approval closely and make sure the buyer is working with a reputable lender.  And, don’t be surprised if the close date gets pushed out a few days.  With interest rates so low right now, lenders are also dealing with a lot of re-finances which adds to the overall workload of their processors and underwriters.

Last month, I wrote about the changing market and the prevalence of multiple offers.  Since then, I’ve been through way too many multiple offer situations representing buyers where my wonderful clients have lost out on a home!  Yes, can I whine for just a minute???  It’s exhausting for all involved.  And, only one buyers wins.  I have clients that have lost out on 2, 3,  and 4 different offers because of this crazy market.  For buyers who are giving it their all every time they make an offer, it’s so emotionally draining to lose one house after another in bidding wars.  The stress, disappointment and frustration take over the positive, exciting feelings of looking for ‘the dream home’.   Then, the feelings of doubt about jumping back in and doing it all over again start to take over.  I really feel my client’s frustration and the worst feeling in the world is to have to make that phone call that they didn’t get the house (again!).

Don’t believe me that multiple offers are a normal part of the Seattle market?  Check out these examples that sold in the past 45 days:

  • 1703 N. 39th St:  listed for $569K, sold for $630K
  • 9856 41st Ave SW:  listed for $549K, sold for $590K
  • 1704 25th Ave:  listed for $375K, sold for $517K (wow!!)

And, it’s also stressful on sellers.  The overwhelming response to your home means that agents are calling you all hours of the day trying to get their clients in as quickly as possible.  You might as well just leave for a few days because you’ll pretty much be forced to be out of the home anyway.  Then, when you look at the 3, 4 or 10 offers in front of you, you have to decide if you focus on the money, or the one with the best personal letter.  (of course, 9 out of 10 times, money talks!)

I don’t mean to sound so negative about the market right now!  I really am glad to see the positive shift in the market (especially for sellers who have been so afraid of not being able to sell their house at all).  But the incredibly low inventory has made it a bit of a feeding frenzy and it’s certainly incredibly challenging at times!  (Ironically, the challenge used to be having too many houses on the market and too few buyers; now we have too many buyers and not enough sellers!)

I’ve been writing about the shifting market for the past few months now.  But, dare I say we’re in a seller’s market?  It certainly feels like it!  I am out showing and previewing houses every day – from West Seattle and Capitol Hill to View Ridge and Queen Anne.  What I’m seeing are many well priced, well prepared homes selling with multiple offers by the first open house!

Why the shift?  Put simply – low inventory!!  There are very few homes coming on the market, especially between $300k-$700k.  So,why aren’t more sellers listing their homes, you ask?? I think there are still assumptions that the market is  bad.  Up until this past month, national media portrayed a struggling real estate market.  However, real estate really is local and Seattle is doing quite well right now!  Another reason is that  for some, they haven’t found a house to move into and are holding off until that dream home comes available.

If you are one of these many buyers out there trying to buy a home in this market here’s what you can expect right now:

  1. Packed open houses – or multiple Realtors showing the house the same time you are walking through it.
  2. Multiple Offers –  think you are the only one to fall in love with the cute Wallingford bungalow?  Think again!  If it shows well, is in a good location  and is priced right, expect some competition
  3. Pre-inspections – this is where you have an inspector do an inspection BEFORE you make an offer.  If the inspection is good, you waive the inspection contingency of your offer.  This makes your offer incredibly competitive!  But, for desirable properties, they are having 3 or 4 pre-inspections.
  4. Escalation clauses – for those ‘hot’ properties, making a full priced offer just isn’t enough!  You’ll need to consider adding an escalation clause to your offer.  This essentially states that you agree to pay a certain amount (say $1000) over the highest offer up to a maximum purchase price (you set that number).

Even if you have done all of this, there’s still not a guarantee yours will be the most competitive.   I had a client recently make an offer on a house priced @ $309k.  We did a Pre-inspection and an escalation clause.  Unfortunately, we didn’t get it and the highest offer ended up being $355k -$46k above the list price!

Hopefully, all of this doesn’t scare you away from buying a house.  But, you do need to be prepared and have a Realtor advocating for you.

As for you would-be sellers out there, what are you waiting for???

For the past few months, I’ve been urging sellers to put their homes on the market sooner rather than later.  There is huge demand out there right now, and yet many sellers still seem hesitant to list!  There are homes going for $50K and up to $100K over ask price!  Buyer confidence seems to be back, partly to hiring picking up in the area, and interest rates remaining relatively low.

Clearly, there are sellers who can’t sell without losing money.  So, I’m mostly speaking about the sellers who have owned their home for at least seven or more years and are interested in selling.  If this is you, what are you waiting for??

While we don’t  have the statistics from the MLS of March sales, I can tell you March has been another ‘hot’ month!  In the Ballard/Greenlake/Fremont areas, inventory is down 43% the same time last year (Feb. 2011 vs. Feb. 2012).  West Seattle inventory is also down 44% for the same period.  And, even the downtown condo market, which suffered so badly over the past few years, has seen substantial declines in the inventory and increases in pending sales.  Inventory is down 38.6% compared to the same time last year, and pending sales are up 19% for the same period.  This is pretty much the trend throughout the area. (scroll down to see trend charts of these areas)

It should also be noted that the low inventory is pervasive at all price levels.  But, I do believe we are seeing many more ‘move up’ buyers entering the market, who are looking for a bigger house.  Yet, many are frustrated with the lack of options out there right now!

Why are sellers holding back?  Here are a few thoughts:

  • Fear — many sellers are still fearful that their home may not be worth that much.  A lot of this fear is just not having the knowledge to make the best, well-educated decision for themselves.  I say you don’ t know until you ask!
  • Can’t find a home to move into — many ‘move up’ sellers are waiting to list their house until they find their ‘move up’ house.  This strategy doesn’t work well in the current market with low inventory.  It is very difficult to compete for a desirable house with an offer contingent upon the sale of your home.  If this is you, I’d recommend listing your house – you can always rent until you find your dream home – and you’ll be in a much better position to negotiate for that next house.
  • Want their lawns to look better — I hear this a lot!  And, for some houses where the landscaping is the selling point of the home, this makes sense.  But, most homes look fine this time of year and a cleaned up yard will still sell a house!

Of course, just putting your home on the market without any preparation isn’t going to guarantee a quick sell.  Buyers are still sensitive to price, condition and location.  If you are off on one of these key factors, it can impact your selling time and ultimately, the price.   But, if you are seriously considering selling your home soon, talk to a trusted Realtor who can give you an honest assessment of your home and whether now really is the best time to sell.  I’m willing to bet it is!

Ballard/Greenlake/Fremont

West Seattle

Downtown Condo Market

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