Do you want to win a multiple offer in Seattle in 2022? First off, do not despair. One of the methods we have used over the years is to over-educate our home buyers so that they always make smart choices. And one of the ways to make a smart choice is to know what you are dealing with in this market. Our team came up with a guide for you to quickly assess how you can best position yourself to win a multiple offer in Seattle in 2022.
Guide on How to Win a Multiple Offer in Seattle in 2022
Everyone on our team has won a multiple offer this last few months when many brokers have come up empty. And the reason why we are often in the winning seat is because of how we prepare many of our Seattle homebuyers to approach this market. Download the guide to help you get started.
Below are the quick hits of what it takes to win a multiple offer in Seattle in 2022. We will go into detail about the why behind this below.
Why is the Seattle market so hot this year?
There are so many factors at play it is a bit intense. But we will briefly break down why the market is this intense. First, we have a record low inventory. The inventory level is a holdover from the Great Recession. We simply stopped building enough homes to meet the needs of Millenials coming into the market. Millennials also are entering the market later in life partially because of the number of barriers it took for them to be ready to buy a house in the first place (aka student loan debt). On top of this, there are a lot of people like the Divas who bought their homes a long time ago but can’t find anything to buy in an area that interests them. Hence we sit in a massive five-bedroom mid-century home in Seward Park waiting for that perfect moment.
Winning a Multiple Offer Guide in Seattle in 2022
What Does It Take to Win a House in Seattle? Our experience is that buyers have to waive almost everything to win a home in today’s market. Also, there is always the risk of a low appraisal occurring. This means sellers focus on low to no risk financing as a bigger portion of their offer evaluation. Hence, waiving financing and appraisal contingencies is the winning way to go whenever possible.
Below are the steps it takes to win a house in Seattle right now
- Choose a Team That Will Prep You for the Market
- Size, Condition, and/or Location
- Pre-Inspect the Home/Waive Inspection
- Waive Title Review
- Put Down a Minimum of 5% of the Purchase Price for Earnest Money
- Release Earnest Money to Seller at Mutual Acceptance
- Starting and Final Price
- Escalation Amounts
- Waive Appraisal or Have a Plan for Coming Up With Cash In Case of a Low Appraisal
- Have a Plan to Waive Financing
Below we will dive into detail about the steps above and get you on track to win your next home in Seattle.
Detailed Guide To Win a Multiple Offer in Seattle in 2022
Let’s dig into the guide below and get you into your Diva Dwelling aka a fabulous home in Seattle.
Step 1: Choose a Team That Will Prep You for the Market
Most brokers just want to get the deal signed and don’t really care if you end up in a total junker. Choose someone who can help you win a house that won’t fall apart in a couple of months. You need a good lender and a good real estate broker who is going to go into detail and prep you to win a home in Seattle. Here is our guide on how to choose a good buying broker for your home buying journey.
Step 2: Size, Condition, and/or Location
You have heard us talk about this piece a million times. And it is well integrated into our home buying intake process. But really assess what you are willing to compromise on when buying a home. Do you want a house but can only afford a condo? Compromise on Size but do not compromise on Condition or Location. Do you need a larger home because you are now working from home and have run out of space? Size is your priority. If you can fix stuff then you can compromise Condition. Or if you do not have the resources to do a renovation then you HAVE to compromise on Location. Adjust your parameters to make sure you buy the best house in the best location you can afford. Here is our blog that details this whole process here >
For the last decade, many people were buying their forever home instead of buying a starter home. We had super-low interest rates coupled with the blowback of the Great Recession. Many of us have skewed our perspective of what a first home should look like. Read through the story of our super smart clients Alison and Joe about how they climbed the real estate ladder here in Seattle.
Step 3: Pre-Inspect the Home/Waive Inspection
In most of Seattle, the Seller is inspecting the home before they put it on the market. We strongly suggest that you hire an inspector if it is possible to do your own home inspection. And if not, have that inspector review the seller’s provided report. We are strong believers in pre-inspecting your home and making sure you understand what you are buying. But not everyone has that privilege in this market. Here is a blog Rocky wrote a while ago talking about how to prepare yourself for a pre-inspection. Prep yourself.
Step 4: Review and Waive Title Review
Review the title report in detail and follow up with the title representative on any red flags. One of the items that very few homebuyers review is the title report. It is the legal document concerning the property. And it is one of the most important things to dig into while buying a home. Take the opportunity to review what you are buying and prepare yourself to waive this contingency. Here is a quick blog to read about what to look for when reviewing your title report.
Step 5: Put Down a Minimum of 5% of the Purchase Price for Earnest Money
The earnest money is the first thing a seller sees on the purchase and sale agreement. Hypothetically the seller can only keep up to 5% in case a deal falls apart in Washington state. Anything you submit over is tough to keep. You really need to show that you are 100% committed to this house and this process. Now, remember that the earnest money goes towards your down payment and/or closing costs. This is your money. You will only lose this money if you suddenly walk out of the transaction.
Step 6: Release the Earnest Money to Seller at Mutual Acceptance
Some buyers are releasing all of the earnest money to the seller at mutual acceptance. And some are only doing 50%. Releasing the earnest money shows the seller you are not going to walk out of the transaction. You are so confident in yourself as a buyer for this home that you are going to close on this home. The earnest money also puts immediate cash into the sellers’ hands.
Step 7: Starting Price and Final Price Advice
Your starting price should be over asking right from the beginning. Sellers do notice these details. We have been recommending to our buyers that they start at least $50,000 over asking. It tells the seller you are serious and that you want the house. We have seen first hand our sellers dismiss an offer that starts below asking. Who wants to deal with this person?
What is the Final Offer You Should Make?
The final price you offer on your escalation form should be your max price. You literally have to go to your max to win a home right now. What we are seeing as winning offers is as follows.
Homebuyers who are looking at homes over $1,000,000 need to plan on bidding $300-400K above asking to be in the running. And for those looking at below $900,000 you need to plan at least $150-200K over asking.
This is the reason why we highly recommend that our homebuyers look at least $100,000 or more below what they can actually afford. For instance, you can afford to go to $1,000,000 with 20% down and extra in case of a low appraisal. Start looking at $750-800K homes if you want to be in a good position to win a home in Seattle.
Step 8: Escalation Amounts
There is a lot of cash in Seattle. We have high incomes and people are generally big savers around here. Hence you will be going up against someone who is making a cash offer or is putting down 40% or more on their loan. You have to think through what you can do to make your offer stand out.
We have been recommending making a minimum escalation amount of $7,500 for anything below $500,000. For anything over $500,000 the buyer needs to do $15,000-23,000 above the next best offer. The difference between you and a cash-heavy buyer has to be compelling. For instance what if you do not have as much money to waive an appraisal but you have a big fat juicy escalation amount. It helps to compromise on the weaker areas of your offer.
Step 9: Waive The Appraisal
Every buyer we have had for the last year we have had to have a long conversation about waiving the appraisal. What this means is that if the appraised value comes in low you are willing and able to make up the difference. Talk to the lender and determine exactly how much money you will need to come up with in case of a low appraisal. Every appraisal is going to be low until there is enough data for the current prices. Winning buyers know this and are prepped.
What if I am overpaying? Isn’t the appraiser supposed to know the market value?
The answer is no! Market value is what someone is willing to pay for a home. And the legal parameters for someone doing an appraisal are super restrictive. Meaning that the banks require at least two sample homes that have sold at the same price to be used in order to calculate the appraised value. The market value is determined by what the market can handle. And when you are in the middle of a 20 offer competition for a home in a low inventory market there are too few comparable properties for the appraised value to match the market value.
Step 10: Waive Financing
The majority of winning offers are won by the buyer willing and able to waive financing. Ask yourself “Do I have a stable income? Do I have money to come up with in case the appraisal comes in low?” And if the answer is yes to all of these questions then you are a good candidate to waive your financing. Talk to your lender about the risks. More on the appraisal and financing on this blog here.
Listen, we know this one is tough. And if you simply cannot compete on houses where this is what it takes to win the home then you need to go back to that Size, Condition, and/or Location conversation. Do you need to compromise on something?
Where to Start When You Need to Win A Multiple Offer in Seattle in 2022
We absolutely get this is a tough nugget to think through. You started off your homebuying journey with all the feelings. And to suddenly have to dive headfirst in an intense market is tough. But remember we are here to help you come up with a strategy that is going to best fit your needs.
Team Diva’s Seattle Home Buying Guides to Help You Win a House in Seattle
- Guide to Win a Multiple Offer in Seattle
- How to Buy a Home in Seattle
- Buying a Townhouse in Seattle
- Things to Know When Buying a Condo in Seattle
- What You Should Know About Buying a Vacation Home
- How to Win a Multiple Offer in a Hot Market
- Team Diva’s Method of Winning a Multiple Offer in Seattle in 2022
- Advice From The Team to Win a Multiple Offer
- Video Series – How to Buy a Home in Seattle
Now let’s get you winning your dream home.