Summary: Are you thinking of becoming a homeowner in WA in the near future? If so, you’ll want to know everything there is to know about buying. In this article, we’ll go over some important rules when it comes to becoming a successful buyer in a seller’s market in WA.
By now, the housing recovery is much more established following the housing and economic debacle over a decade ago homeowners in WA who once were “underwater” (owing more than their homes’ value) now have enough equity to sell, and possibly move up.
Even with this obvious recovery, there is still a shortage of inventory in many areas. This means that home sellers are often in the enviable position of entertaining multiple offers on their homes. Many buyers, however, have been through the disheartening experience of finding their “perfect” home, only to discover that they completed unsuccessfully with two or three other buyers in a sort of bidding war.
While anything can happen over the next few months, buyers must adapt to the reality in order to succeed in this kind of market.
If you are hoping to buy soon, here are three things you MUST do.
#1 – Have a Solid Pre-Approval Letter in Hand
This means that your lender has reviewed your loan application package (including all the supporting documentation) and has issued a “credit approval.” Your realtor will include that pre-approval letter with your offer.
In effect, this pre-approval letter says, “We have already jumped through the lender’s hoops to get our mortgage. Now we just need the purchase contract and appraisal to complete the purchase.” Most sellers today won’t even consider an offer without some sort of assurance that the buyer will be able to get mortgage financing. The stronger the letter, the better your chances of beating out the competition of a seller’s market.
#2 – Make as Large a Deposit as You Can
When you make your offer, you must include an “earnest money deposit.” This money shows you are serious, and is a requirement for a valid contract (legally, it is called “consideration”). While even a dollar would technically qualify, a larger deposit is far more desirable in the seller’s eyes. You are not risking a penny of this money; there are clauses in the purchase contract, “contingencies,” that protect your deposit. If for some reason you are not able to get a loan, or if the appraised value is lower than the purchase price, you will get your deposit back.
#3 – Write a Personal Letter to the Seller
While this may seem corny and unnecessary, you should remember that buying or selling a home in WA is one of life’s most emotional experiences. The letter you write to the seller to include with your offer will show the seller that there is an actual person—perhaps a family—buying their home. Don’t be hesitant about mentioning the beautiful garden, or how much your 8-year-old daughter loved the kid’s room.
Will this make the seller accept your offer over the competition? Maybe, maybe not—but there is no risk at all to take the time to do this. One family we helped once wrote a letter like this (complete with photos of the five of them). The seller was considering no fewer than six offers. The sellers read the letter and said to their agent, “This is the family who should own our home.” Their offer was not even the highest or best of the six—but they won.
#4 – Go in With Your Best Offer
In real estate, there’s often the back-and-forth bantering between buyers and sellers. But in some cases when the market is tight and is in heavy favor of sellers, you might just want to offer the highest price you can afford according to market conditions to get a seller’s attention. This may be especially helpful if you find yourself in a bidding war and competing directly with other buyers for the same property.
Sellers want to make as much money as they can on the sale of their homes, so the more you can offer right from the get-go, the higher your chances of walking away with the home of your dreams. Just be sure not to offer more than you can comfortably afford or that is far more than what the home is currently worth according to market conditions.
#5 – Be Flexible With Your Closing Date
You may have your own closing date that is most convenient for you, but to stand out to a seller, you may want to practice some flexibility when it comes to the closing of the transaction. If possible try to give the seller what they want in terms of closing date.
Ideally, sellers will want the closing dates of their home sale and the purchase of a new home to coincide perfectly with no gaps or overlap, so whatever you can do to give them what they want can certainly help – just make sure you are not overly inconvenienced as a result.
#6 – Keep Contingency Time Frames Short
First of all, it’s important to keep your offer as clean as possible. This means not inserting too many contingencies that may turn a seller off. That said, there are some you will want to keep, such as a financing and home inspection contingency.
But even if you choose to keep these conditions as part of your offer, consider tightening the time frames within which they are to be completed. Sellers don’t like to see dates any longer than 10 to 14 days for contingencies, so consider keeping yours earlier than these time frames.
Succeeding As A Buyer in WA
There is one thing you should not do: do not get too attached to any one home before a seller has accepted your offer. With today’s competitive market, you should keep in mind that other buyers may prevail; but if you stick to the process and keep your goal in mind, you’ll succeed.
Remember that a house is just a bunch of sticks nailed together, sitting on a big piece of dirt. Once a family moves in and fills it with noise, energy and love, then it becomes a home. And that is what is perfect.
Need a Mortgage?
Are you both a buyer and a seller in the current market? Sammamish Mortgage is a local mortgage company serving the broader Pacific Northwest region, including Washington state, Idaho, Colorado, and Oregon. We are proud to offer a wide variety of mortgage programs and products with flexible qualification criteria. Please contact us if you have any questions or are ready to apply for a home loan.