At times, the Seattle metro area can be one of the most competitive real estate markets in the country. Demand from home buyers frequently exceeds the available supply, forcing buyers to compete for limited inventory.
This is why it’s so important to make a strong offer on a house when buying in the Seattle area. Making mistakes during the offer stage could result in the house slipping through your fingers or going to another buyer. That’s the last thing you want. So let’s talk about how to do things right.
Mistakes to Avoid When Making an Offer in Seattle
Sometimes, the best way to learn the right approach for a certain task is by examining the wrong approach. So let’s explore some of the common mistakes buyers make when making an offer on a Seattle home purchase, and what you can do to avoid those same errors.
Not getting pre-approved by a lender.
Getting pre-approved for a mortgage is one of the most important steps in the home buying process. It shows sellers that you’re serious about buying a house, and that you’re financially capable of doing so.
Of course, if you’re going to make an all-cash offer on a Seattle home, you don’t need to worry about this step in the process. But the vast majority of home buyers in the area rely on mortgage financing, and can therefore benefit from getting pre-approved.
Making an offer without a pre-approval letter is a common mistake that can lead to a rejection from the seller. And this makes a lot of sense, when you think about it from the seller’s perspective.
When you get pre-approved for a mortgage, the lender will look at your credit score, income, debt level, and other factors to determine how much you can borrow. They’ll also give you a pre-approval letter, which you can use when making an offer on a house.
Getting pre-approved before entering the Seattle real estate market can help you in two important ways:
- It can make your offer more attractive to the seller, by showing that you have your financing pre-arranged.
- It also gives you a better idea of how much you can afford to spend, which can streamline the house-hunting process.
These are important benefits for all home buyers, but especially those making an offer in a competitive real estate market like Seattle.
If you’re ready to move forward with this step, please contact our staff. We can review your current financial situation to determine how much you’re able to borrow.
Not making a competitive offer.
In the Seattle metro area, there are often more buyers than there are homes for sale. Because of this, sellers can be pretty choosy when reviewing offers.
If you don’t make your initial offer as strong as possible, you could end up losing the home to another buyer. This is another common mistake you want to avoid.
Begin by studying current real estate market conditions in the area where you’re looking to buy. Market conditions can vary widely from one part of the Seattle area to another. So you want to zero in on the specific location where you’re thinking about buying a home.
Look for information on recent home sales, average sale prices, and the average time homes spend on the market. This data will help you understand the competitiveness of the local market, based on supply and demand dynamics. It can also help you determine how much to offer for a particular property.
Look for properties that are similar to the one you’re interested in, in terms of location, size, condition, and amenities. Compare recent sales prices of these comparable properties to get an idea of their market value. This is what real estate agents refer to as a “comparative market analysis,” or CMA.
Skipping the market research is like walking into a business negotiation without performing due diligence. It could greatly reduce your chance for success.
Having too many contingencies.
In a home-buying context, a “contingency” is a clause in a purchase offer that allows the buyer to back out if certain conditions are not met. It can also help you recover your earnest money deposit, if you exit the transaction for a reason specified within the contract.
For example, a home inspection contingency allows the buyer to back out if the property inspection reveals issues or flaws they’re unwilling to accept. Some buyers also include contingencies for mortgage financing or the sale of their current home.
Contingencies offer important protections for home buyers, and in some cases it might make sense to use them. But they could also make it more difficult to get the house you want, especially in a competitive housing market like the Seattle area.
In a multiple-offer situation, where several buyers are competing for the same property, a seller might favor the offers with fewer contingencies. That’s because they know the deal is more likely to close, if it’s not contingent (or dependent) upon one or more conditions.
Having a lot of contingencies could also delay the closing process. If the home buyer and/or seller are unable to satisfy a specific contingency, the deal might have to be renegotiated or canceled.
As a home buyer, the best way to avoid these types of problems is by working with an experienced real estate agent knows the local market. He or she can advise you on which contingencies might work to your advantage, and which ones might work against you.
Additional tips for using contingencies effectively:
- Only include contingencies that are important to you.
- Be prepared to negotiate them with the seller.
- Be aware of the potential delays they can cause.
- Keep the big picture in mind and remember your goal: to get the house!
By avoiding these common purchase-offer mistakes, you could increase your chances of getting the home you want. And that’s the ultimate goal. Getting pre-approved for mortgage loan, making a strong first offer, and limiting your use of contingencies could help you succeed in the competitive Seattle real estate market.