On March 22nd, 2012 I signed an offer to sell my house, I think that was the day before the Seattle real estate market became a ‘seller’s market.’ I now find myself frantically looking for a new place to call home but am faced with an unexpectedly frothy market, where multiple buyers are bidding for houses.
I am not very picky in terms of neighborhood, anywhere from Blue Ridge to Leschi. In these past few weeks I have probably walked through close to 30 houses that are listed; driven past many, many more. I have friends who live in my target neighborhoods posting on their neighborhood listservs and calling me immediately when they see a new sign posted on an attractive house. I’m not looking for much. A three or four bedroom home for my two pre-adolescent sons and myself to live, work and play in for the next many years. We’d like to get a dog so a fenced in yard would be nice. One of us wants to garden and one wants room to play video games from time to time. We are massively down-sizing so some storage in the house would be good.
One would think that this would be fairly straight-forward. I’m not looking for a view, or a killer yard or an amazing master suite. However, what I am finding is very little inventory is on the market and the houses that are priced right and are ready to move into without extensive remodeling needs, or structural issues, are FLYING. There is a clear strategy with the smart brokers: put the house on the market a little below the perceived neighborhood value, go on early in the week, hold an open house over the weekend and let everyone know that offers will be reviewed on Tuesday evening. The result is prices getting bid up over what anyone would have expected going in to the sale. There is little inventory in the mid to upper price range. Houses that are well-priced are receiving multiple offers.
On Monday, I went back to a house that went on the market Friday and that I saw Sunday at the open house. At the open one buyer already had an inspector on site doing the inspection. When I went back Monday with my agent we agreed to get an inspection done that day in time for offer reviews on Tuesday. During the afternoon inspection another agent was there supervising a sewer inspection for her buyers. My agent asked if we could just be efficient and pay the sewer inspector to do back to back inspections so I could have mine done. The other agent apparently unhappy about the competition, made clear to the sewer inspector that his business from her powerful brokerage office was at risk if he worked for me. So, it was off.
That may be more about brokerage office politics than the sellers’ market but in a time when all the service professionals in real estate are finally getting work again to have to forego a job for something as banal as the above seems a bit extreme.
One factor that is impacting this market situation is that the small business builder or contractor has restricted access to lines of credit. Before this economic downturn, when access to capital was easier, small business builders could buy houses in bad shape, repair them and then sell the houses for a decent profit. Even today, there is no shortage of houses in Seattle that are in need of bathroom and kitchen remodels, but without more small business loans, few contractors will be able to take on this kind of work. This creates a market where the homes that need to be remodeled are going to sit on the market or wait for the buyer willing to do that work while the few homes that are ready to live in now are going to receive multiple offers. The good news is that if you are a buyer that is willing to do a remodel there is more inventory to choose from and available contractors to do the work.
In terms of information flow the internet makes it fast and furious. In addition to my seeds planted, i.e. friends in targeted neighborhoods, I have searches set up on the website that I find easiest to use, John L. Scott. There I can easily state my criteria, tag my favorites, receive daily updates on specific neighborhood activity, organize my open house visits and email to my agent. RedFin is the other site I use for new listing information. Both are great iPad apps. Zillow I use for history and good street views. Sadly, the Windermere site continues to be dismal on many levels. However, nearly all homes I visit that are the “frothing” homes; extremely appealing prices and houses, are listed by Windermere agents, shown by Windermere agents and bought through Windermere agents. I’m not in the real estate business but I’m sure many great minds are thinking through this phenomenon: does Windermere really have to care about its website effectiveness to retain its market position?
The convergence of low interest rates, limited builder engagement, pent up demand, high rents and time of year are making this selling season in Seattle one that indicates that there is market confidence. Or people just really need a new house after these past years of the economic downturn in which children are still born, deaths occur and life changes happen.
Patti Brooke is Principal Consultant at Sound Thinkers