Can Real Estate Agents Really Effect Homes Prices in Seattle?
The Seattle Real Estate market has been pretty much unaffected by the housing slow down nationally until…maybe now! Since 1995 we have seen almost double digit appreciation every year for most of the greater Seattle area. Last year when we all saw a substantial downturn in housing prices across the country, Seattle Real Estate continued to go up. The interesting thing however is that while prices continued to go up, home sales actually have started to decrease.
Being a Buyer in the Seattle market over the past several years has meant that you had to be ready to act quickly to make an offer on a home or be prepared to get in a bidding war with several other Buyers. Here’s what happens: A new Listing comes on the market for $600,000. The Listing agent is holding offers for a week. Maybe you can justify a price of $649,000 so the Listing Agent maybe under priced it. But they got 7 offers, all waiving the Inspection and most waiving Financing as well. Three of those offers are over $750,000 because these 3 Buyers had already lost out of 3 other homes they bid on. Inventory in Seattle is tight and for every 15 new Listings there are usually only 2 or 3 good houses. Now we were putting a home on the market the day after this other Listing reviewed its 7 offers. The home we were putting on was worth $595,000 tops…but there are at least 6 frustrated Buyers for the neighborhood so we priced the home at $650,000 but didn’t hold offers. We sold it the first day for full price to one of the Buyers that bid on the other house. OK, so we are smart and we are representing the Seller and we are obligated to get the highest price possible for our client. We are doing our job and doing it well and…Caveat Emptor.
Does this situation create an interesting philosophical situation for us, our industry, and Real Estate Agents as a whole? Does it actually help to over inflate the market setting it up for a big fall in the near future? You know, I don’t know, and looking back over the last 12 years I think that it’s ridiculous what you can buy now for half a million dollars, but prices are still going up or are at least stable in our current market. Home prices in Seattle are also about 70% of what they are in the Bay Area and we have seen that ratio remain consistent for years now. Do we as professionals have a greater responsibility than to just get our clients the highest price? I think not, but it does keep me thinking, which I guess is good. We have heard that there are Real Estate Companies that tell their agents not to give advice about price, the condition of the house, but to be facilitators only, that way they don't assume any liabilities. We believe that we should have that liability and we tell our Buyers emphatically not to pay over an amount we think they could sell the house for if they had to sell it in a “normal” not a “hot” market. We also look at the building quality of the home and the location and advise them if they should even buy it at any price. What we can say is that Buyers need to be well educated and aware of what is happening in the market and to keep at least one foot planted firmly in reality.
It’s going to be interesting to see what impact the current lending problems will have on our market here in Seattle. Already in the past month Listing that have been holding offers to a specific date, many now are not getting any offers. Seattle however has a very strong economy and it’s predicted that 100,000 new employees will be moving here by the end of the decade. Traffic is a huge problem however in Seattle and living close-in is highly desirable and they are not making any more land close in to the city. The next two months should be petty telling as to where our market is heading.
Being a Buyer in the Seattle market over the past several years has meant that you had to be ready to act quickly to make an offer on a home or be prepared to get in a bidding war with several other Buyers. Here’s what happens: A new Listing comes on the market for $600,000. The Listing agent is holding offers for a week. Maybe you can justify a price of $649,000 so the Listing Agent maybe under priced it. But they got 7 offers, all waiving the Inspection and most waiving Financing as well. Three of those offers are over $750,000 because these 3 Buyers had already lost out of 3 other homes they bid on. Inventory in Seattle is tight and for every 15 new Listings there are usually only 2 or 3 good houses. Now we were putting a home on the market the day after this other Listing reviewed its 7 offers. The home we were putting on was worth $595,000 tops…but there are at least 6 frustrated Buyers for the neighborhood so we priced the home at $650,000 but didn’t hold offers. We sold it the first day for full price to one of the Buyers that bid on the other house. OK, so we are smart and we are representing the Seller and we are obligated to get the highest price possible for our client. We are doing our job and doing it well and…Caveat Emptor.
Does this situation create an interesting philosophical situation for us, our industry, and Real Estate Agents as a whole? Does it actually help to over inflate the market setting it up for a big fall in the near future? You know, I don’t know, and looking back over the last 12 years I think that it’s ridiculous what you can buy now for half a million dollars, but prices are still going up or are at least stable in our current market. Home prices in Seattle are also about 70% of what they are in the Bay Area and we have seen that ratio remain consistent for years now. Do we as professionals have a greater responsibility than to just get our clients the highest price? I think not, but it does keep me thinking, which I guess is good. We have heard that there are Real Estate Companies that tell their agents not to give advice about price, the condition of the house, but to be facilitators only, that way they don't assume any liabilities. We believe that we should have that liability and we tell our Buyers emphatically not to pay over an amount we think they could sell the house for if they had to sell it in a “normal” not a “hot” market. We also look at the building quality of the home and the location and advise them if they should even buy it at any price. What we can say is that Buyers need to be well educated and aware of what is happening in the market and to keep at least one foot planted firmly in reality.
It’s going to be interesting to see what impact the current lending problems will have on our market here in Seattle. Already in the past month Listing that have been holding offers to a specific date, many now are not getting any offers. Seattle however has a very strong economy and it’s predicted that 100,000 new employees will be moving here by the end of the decade. Traffic is a huge problem however in Seattle and living close-in is highly desirable and they are not making any more land close in to the city. The next two months should be petty telling as to where our market is heading.
posted by David & Karen Bell at 3:20 PM
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