Making an offer on a home is an important step in the home buying process, especially in a hot real estate market like Seattle. But how much should you offer on a house in the Seattle area? Where do you even begin? This article explains how to make a “market-based” offer, in order to increase your chance for acceptance.
The Basics: Making an Offer on a Home in Seattle
The Seattle real estate market is hot right now. Home prices in the metro area rose by double digits during 2016. There’s a lot of demand for housing, but not enough inventory to meet it. This forces home buyers to compete fiercely. It also underscores the importance of making a strong offer when buying a home in Seattle.
Most sellers in the area know what the real estate market is like. After all, there’s been plenty of news coverage on the subject. They also know that they’ll get plenty of offers from buyers. Bear this in mind when making an offer on a home in Seattle.
If your first offer is weak (meaning it’s below the actual market value of the home), there’s a good chance the seller will reject your offer in favor of a higher one. This is how it works in an active real estate market with plenty of buyers.
Using ‘Comps’ to Validate the Asking Price
Sellers use all kinds of strategies when setting their asking prices. Some strategies are more valid than others. Some properties are “priced to sell,” which means the sellers have priced it at or below market value to sell it quickly. On the other end of the spectrum, you might encounter some homes that are priced above market value, for whatever reason.
How do you know whether the asking amount is reasonable, or far-fetched? You look at the market. Specifically, you look at recent sales of comparable homes in the same area. This is what real estate professionals refer to as comparable sales, or “comps.” This is a good place to start when shaping your offer.
The good news is that this kind of information is readily available, thanks to the internet. Visit websites like Realtor.com, Zillow and Trulia, and look at recent sales prices in the area (as opposed to listing prices). Look for homes that are similar to the one you’re considering — similar in size, style, number of rooms, features, etc. And make sure you’re looking at houses in the same local area.
Similar, recent and local: These are the ingredients for a good comp. Look for similar homes that have sold recently in the same area where your desired house is located.
Evaluating comps is easiest in densely populated areas, where there’s usually plenty of recent sales data for comparable homes. The process is trickier in sparsely populated areas with fewer sales. This is why it’s a good idea to work with a real estate agent, especially if it’s your first time buying a home. An experienced agent will help you decide how to much to offer on a house in Seattle. It’s one of their most valuable skills.
Offering Below Asking Price Risky in a Hot Market
The current state of the real estate market plays a big role when making an offer. In a buyer’s market, where there are plenty of homes for sale but not enough buyers, you could justify making an offer below the asking price. At the very least, the seller will probably come back with a counter.
A seller’s market is a different story. In this kind of real estate market, there are more buyers than there are homes for sale. So buyers have to compete — sometimes fiercely — for limited inventory. In this scenario, offering below the asking price might be a bad idea (especially if the asking price is reasonable). Multiple offers are common in a seller’s market. So there’s a greater chance that a seller will turn down offers that are below the asking price.
Seattle is more of a sellers’ market right now. In December, the Northwest Multiple Listing Service wrote:
“The seemingly inexhaustible supply of ready, willing and able buyers [in the Seattle area] continues to purchase available inventory. This imbalance in supply and demand continues to fuel multiple offers and drive prices upward.”
It’s important to make a strong first offer in this kind of real estate market, because you might not get a second chance.
Get Pre-Approved for a Home Loan
Being pre-approved for a mortgage loan can increase your chance for success when making an offer to buy a home. Sellers might be more inclined to accept your offer if it comes with a pre-approval letter. This is particularly important in an active real estate market where multiple offers are common.
Learn more about the benefits of pre-approval, or contact us to start the process. Just call (800) 304-6803, or email us at email@example.com.