The Seattle housing market currently has the highest rate of home bidding wars among U.S. cities, according to a recent report. It’s just one more reason why home buyers should be pre-approved for a mortgage loan, before making an offer on a house.
There’s a high level of demand for homes in the Seattle metro area. That’s an understatement. In fact, demand is so high that many properties receive multiple competing offers within days of coming onto the market.
This is known as a real estate bidding war. And according to some new data published recently, Seattle bidding wars occur more commonly than most cities.
Report: Seattle Leads Nation in Bidding Wars in 2017
In the Seattle metro area, there are far more buyers shopping for properties than there are homes for sale. This imbalance has become more pronounced over the last couple of years, and it’s resulting in stiff competition.
According to data released in May 2017 by the national real estate brokerage Redfin, 90% of homes listed for sale in the Seattle area within the last two months ended up in a bidding war between multiple buyers. That’s the highest level recorded since they’ve been keeping such records.
Redfin tracks real estate trends for hundreds of cities nationwide, including many hot real estate markets like San Francisco, Portland, Denver, Boston, and Washington, D.C. Out of all the cities they track, Seattle had the highest rate of bidding wars.
Competition High Among Home Buyers
By definition, a real estate bidding war occurs when there is strong demand for a property listed for sale. This often coincides with housing inventory shortages, which results in an imbalance between supply and demand. This is the case in Seattle.
In these scenarios, homes receive multiple offers from competing buyers who try to outbid one another in order to get their offers accepted. In hot real estate markets like Seattle, home bidding wars can occur within days of a property being listed — or even the first day it comes onto the market.
All of those competing offers tend to drive home prices up, which is what we’re seeing in the Seattle real estate market. According to Zillow, the median home value in and around the city rose by 11.8% over the last 12 months (as reported in May 2017).
Within the city itself, the median price for a single-family is now above $700,000, when you exclude condos. Prices are expected to continue climbing through 2017 and into 2018.
A Good Reason to Get Pre-Approved for a Mortgage
In a hot housing market like Seattle, where bidding wars are common, home buyers need to bring their ‘A’ game. Among other things, this means having your financing lined up before you start shopping for a home.
Buyers making cash offers should have sufficient funds in the bank, with bank statements to prove it. Buyers using mortgage loans should get pre-approved by a lender.
Pre-approval is when a mortgage company reviews your financial situation to determine if you’re a good candidate for a home loan, and how much you’re able to borrow. Sellers have come to expect pre-approval letters from buyers, especially in active real estate markets like Seattle. If you make an offer to buy a house in Seattle, but you don’t have your financing lined up, the sellers will be more inclined to reject it.