Houses here are strange. Its not a normal market so looking at houses is even more interesting. We’ll drive by a house for sale. We like to guess what its listed for and then we look it up using Zillow. What makes the market here so different is that the asking price doesn’t mean much. I don’t think we’ve seen a house go for listing yet. They always go over and by a decent amount. We’re not sure if the listing agent just lists it low to get more people in to look at it or what. Most houses will go about 10-20% OVER asking. You can almost guarantee paying at least 50k over asking on houses here. We like to save houses on Zillow so we’ll get an email when the house goes pending or sold so we can see how much it went for.
The area we were living in (Magnolia) is even worse. I’m pretty sure houses there go for around 80k-100k over asking. As much as we loved living in Magnolia we knew it wasn’t where we would buy a house (cheaper houses going for around $800,000) so most of the time we’ve spent looking is in a nearby city called Shoreline.
Shoreline still is a very competitive house market, but its not as crazy as Magnolia or other areas of Seattle. I like Shoreline. It feels more like home to me. I can go someplace and know I will be able to park. In fact most places have their own parking lots. (In Seattle especially in neighborhood downtowns there isn’t much parking. And lots of parking you have to pay for. (My grocery store had its own parking lot, but that was about it.) Shoreline feels more like Chandler. (Still VERY different.)
Shoreline is still a fairly easy commute for Chris as well. The bus ride from Shoreline isn’t much further than what he is doing now. (From the bus stop to his desk it took 24 minutes.about the same as Magnolia. The difference is the bus stop is just under a mile away whereas Magnolia it was 10 steps out the front door.) The new bus stop is a park and ride. We may get a cheap car for him to take, or he’ll bike. The past few days I’ve just dropped him off and picked him up.
Anyway, so we’ve been focusing looking around Shoreline. We’ve seen some houses we’ve liked and put offers in, but they didn’t get accepted. We’ve seen houses we’ve liked, but we knew they would go way over asking and what we were willing to pay. We’ve seen houses we haven’t liked at all. Its been fun just driving and looking around.
A few weeks ago a house popped up on Zillow that we hadn’t seen before. I sent the link to Chris and he liked it. (It was fairly cheap for the size…Seattle cheap, NOT Arizona cheap.) We had to do some errands in the Shoreline area so we thought we would drive by the house on our way home. We pulled up and strangely enough our realtor’s car is there and we can see him inside through the front window. Chris texted him and asked if he had time if he would let us in. The realtor was showing the house to another family but said he would let us in after they were done. We walked through it and we really liked it! It was built in the 1950s and the original owners were selling it. It looked like a very well cared for home. It did need updating, but it looked to be in great shape. The basement was rough and needs work, but it had great bones and a great feel to it. Chris and I liked the street it was on as well. Since it was priced fairly low we knew we could be fairly aggressive on it if we decided to put in an offer.
When we got home we ran comps on the area. (Basically look and see what similar houses sold for recently that helps determine what the house you are buying is worth.) We also looked at comps of what we could potentially sell it for if we put some work into it. It comped out pretty good so we decided to go forward with that house.
Like I mentioned before buying a house in the Seattle area is very different. Not only for how much over asking houses go for, but also on the offer in general.
When buying a house…any house its typical to get an inspection on the house. There is normally a 10 day inspection/back out period where if there is something wrong with the house you are able to back out without losing your escrow money. Lots of time there is also a contingency based on getting financing. If your financing falls through then you are also able to back out of the deal. Those things still exist in the Seattle area, but they make your offer look weak. Lots of people waive those two things. Most of the time once you are pre-approved for a loan it will go through as long as nothing major happens. (The appraisal can be an issue if it doesn’t appraise for as much as your offer and sometimes the bank won’t give you more than its worth so you will either have to pay more cash to make up for it, or you’ll have to pass. Luckily most appraisal come back for what you offered on the house.) If your credit changes for some reason your loan may not go through… if you open more credit cards, buy all new furniture for your house on credit, if you buy a new car, etc. Also different types of loans can be tricky (FHA, VA, etc.) Waiving financing is a little risky, but it shows the buyer you are all in and won’t back out. (You would lose your escrow money which is an amount your write in on your offer, going in with a higher amount also makes your offer stronger since it shows that if you back out you’ll be out that much money.)
Not having an inspection could also be risky. You don’t want to buy a house that has a lot of problems that you could have known going in. So in the Seattle area people get pre-inspections. You get an inspection on the house before you put an offer in. There are pros and cons to this. The biggest con being you have to pay for it even if you don’t get the house. An inspection costs a couple hundred bucks so you better know you will put an offer in once you have the pre-inspection, and make it a strong offer. (A friend told me that their inspector had a deal, get 4 inspections get the 5th free. They had inspections on 4 houses and ended up getting the 4th so they misses out on the deal.) Once you have the pre-inspection you can waive your right to the inspection period (back out period.) The pros are you know what you are getting and it can help you know what to offer on a house. If the roof is terrible you can offer a little less knowing you will have to replace the roof. etc.
The third thing that is different is you can write in an escalator clause in your offer. Its basically like ebay bidding. You offer asking as your starting “bid” and you also write in your max bid. So if a house is being listed for $100,000 you offer that amount. You also say that if there are other offers you will beat that offer by $1,000 and you will go up to $150,000. If there are no other offers you get the house at asking., If there are other offers, but the only other offer is for $125,000 (which you wouldn’t know.) instead of having to pay $150,00 (or best and highest) for it ($25,000 over what the next highest offer is), you’d only pay $126,000. For this to work the listing agent has to show you the other offer letter to show that indeed someone else was bidding. (If the seller didn’t get what they wanted or there are multiple similar offers they still may come back with best and highest.)Most houses will have at least 2 people making an offer. One house we liked, but knew we wouldn’t buy had 19 offers on the house. All the houses we offered on had about 5 offers. Since there are generally multiple offers on a house they will have a review date where the seller and listing agent go over all the offers and then pick one.
The house that we walked through and really liked we ordered a pre-inspection. (A few other people had oredered one as well so we knew there would be multiple bids….) We also knew it would go for a decent amount over asking so we decided on what our lowest we would offer and our highest. Our realtor encouraged us to put in an offer before the review date, and put in an offer without the escalator clause. He figured if the seller didn’t like it they would say no, and then we would resubmit on the review day and add in the escalator clause.
We submitted our offer two days before the submission date and asked to hear back within 24 hours. We put in a strong offer. (definitely not our highest offer, but we put in a decent amount in escrow and waived inspection and offered more than asking.) We figured that they would just ignore our offer and we would resubmit. Luckily for us our offer was strong enough and they accepted before the review date. (There were a total of 5 offers before the review date!) Come to find out the listing agent (the people selling their house’s agent.) received at least one more bid before he changed the status to pending. Their escalator clause beat our initial offer by about 20k. Thanks to our realtor telling us to put in a strong offer early, he saved us at least 20k on the house. (We were willing to go higher if needs be.)
We are happy to say that we bought a house! Its a cute house and I am excited to make it our own. I am excited to finally feel settled! Its going to be a big project, but a lot of fun!!!!