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Buying homes in today’s Seattle Real Estate Market

This is the best buyers market we have seen in Seattle Real Estate since we started our Real Estate business over 20 years ago. Having said that however, there are many pitfalls that buyers need to be aware of.

1. Is the home priced correctly? Even though prices have fallen over the past 18 + months you have to make sure that you are paying the correct price today. There are a lot of homes that are overpriced even in this market. Pricing in Seattle is more of an art than a science and a complete understanding of the market and prices is essential in making a good buying decision today. In the past if you paid a little too much for a home that wasn’t a huge problem as prices kept appreciating almost every month. Today, we think that we may be at the bottom of the market but prices will at best stay flat for sometime, maybe 3 to 4 years to be on the conservative side. Don’t think you can buy a home today and sell it for a profit in a year to two, it most likely won’t happen, so plan on keeping that home for a minimum of 5 to 7 years. That being said however, Seattle will be on of the first cities for the real estate market to turn around and start to appreciate again, but we are at least 2 years from that point depending on what happens with the national economy. With the increasing debt our country is experiencing right now some experts are predicting that we could see some serious inflation and raising interest rates that will make it harder to buy properties.

2. Is the home in a good location? Location is usually the most important factor in making a smart buying decision. Busy streets, questionable parts of otherwise good neighborhoods, or being too close to freeways with high traffic noise are just a few things that adversely effect home values. Poor locations only sell in white-hot markets and we don’t think we will see another white-hot real estate market in Seattle for several years. There is a lot of truth in the old saying that the three most important parts of real estate are location, location and location!

3. Does the home have good bones? The original building quality of the home has a huge impact on the future value of a home. If the home was built poorly it will not age well and the value will not hold up well. Costly repairs or updates will need to be made to keep the value up. Homes that were built well even if they are currently outdated will hold their value much better than homes that are updated but not built well. Good foundation, homes with minimal settling and quality workmanship will always be the best investments over the long run. Always get a home inspection by a experienced home inspector before you buy.

4. Can you qualify for Financing? Qualifying for a home mortgage today can be quite challenging. The days of 0 down and stated income or no doc loans are gone. If you are getting a conventional or a jumbo loan today most likely you’ll need to put 20% down and may need additional assets that the lender requires. Mortgage rates however are at 50-year lows and if you have good credit, a good job and some cash, you can get a great mortgage rate. If the home qualifies for FHA Financing you can put as little as 3.5% down, but FHA has its challenges but is a really good way to go today fro many buyers especially first time home buyers. There are many lenders however that have very little or no experience with FHA. FHA is not that difficult buy you need to work with a lender that has experience with FHA loans. (And the good news is that FHA loan limits just went back up today from $509,000 to $567,000. Conventional loan limits should be going up soon as well.) There are also lenders out there that will tell you that you qualify for a loan only to find out a few days before closing that you don’t or they have to charge you a higher interest rate in order to close. That can be devastating to a buyer if that happens, so you have to make sure you are working with the right people. You have to work with a lender that knows what they are doing in today’s market and will be completely honest with you from the beginning. A good Realtor knows who the good lenders are.

5. Are you working with a good and experienced Realtor? Finding the right Realtor today is essential. Buyers need their own representation today now more than ever. Buyers need to hire a “Buyers Agent”, a Realtor that specializes in Buyer Agency with a proven track record and good references. As we said earlier there are many many homes today that are still way over priced. Never use the Listing Agent to write up your offer if you are a buyer. The Listing Agent represents the seller and will never tell if the home is overpriced. At best they might say that they can get you a really good deal and save you some money if you work with them. We have seen homes today sell for as much as $150,000 over their actual market value and the buyers thought they were getting a great deal because they paid $50,000 under the asking price. BUYERS NEED THEIR OWN BUYERS AGENT THAT IS REPRESNTING THE BUYERS BEST INTEREST AND NO ONES ELSES. There are a lot of real estate agents (well, a lot fewer now than a year ago) but there are only a few Top Seattle Real Estate Agents. There is no substitution for knowledge and experience in our Seattle Real Estate market today. Another thing to look out for today is that there is a lot of refinancing going on right now. People are then putting the home on the market and showing the perspective buyer the appraisal they just got on the home. Buyers need to be very careful of lender appraisals as they are usually done to justify a loan amount and may not reflect the actual market value. We just had a situation where the seller of a new construction did a refinance and the appraisal came in at $900,000 and the house was maybe worth $650,000 on a really good day.

6. Should I buy a Short Sale or Foreclosed property? These properties can be very problematic to purchase. Usually you don’t save that much money on them and they can take months and months to close. Lenders can be very difficult to deal with and many times they are not realistic about the actual market value. We have a lot of experience with Short Sales and it’s our experience that in Seattle you can get just as good a deal buying a home that is not a short sale unless you buy the home at auction for cash and that doesn’t always assure you that you are getting the correct price as many of those prices are based on the original loan amount and we all know what has happened to homes that were purchased at the top of the market with zero down.

There are excellent buying opportunities right now in the Seattle Real Estate Market. We may actually never see a better time to buy than now in Seattle. A buyer needs to be well educated on the market and well represented. It’s interesting how so many people think they know the real estate business and home values but unless they have worked this market for many years and have a proven tract record for results, smart people can make some bad decisions that can cost them a lot of money. The smart people today are buying real estate and they are getting some incredible deals right now.