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Tales From the Seattle Housing Market: $335K Over Ask in Phinney Ridge

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You've heard how nutty the Seattle housing market is, but here's a real-world example of what it's like for buyers

Between the soaring housing prices, plummeting inventory, and insane bidding war stories, we keep hearing about how crazy the Seattle housing market is. So we've asked local real estate agents, sellers and buyers to share their nutty stories about a recent home sale or purchase to prove just how true it all is. Do you have a crazy story to share about prices gone mad or ludicrous offers? Let us know and we might share it.

For the next story, we turn again to Windermere's Mark Corcoran and Mike Gusick for the recent sale of a Phinney Ridge home.

Neighborhood: Phinney Ridge
Year Built: 1918
Size: 3-BR, 3-bath, 2,567 sf.
Listing Price: $975
Sale Price: $1.31M

"When we were initially discussing the pricing we weren’t sure whether we should have it start with a one or a nine. After we looked at all of the comparable sales it was evident that we needed it to start with a nine and we decided that $975,000 was a good price...By listing at $975K, we were able to expose the home to all buyers looking up to a maximum price of $975K as well as buyers that had their minimum price at $975K. Pricing on the "bridge" is better than pricing it right below (like $999,000). A price of $999,000 will not be sent to those buyers with searches with a minimum of $1,000,000."

If you look at the numbers our price was right on. Our clients purchased the home at the top of the market (January 2008) for $803K. When they bought it they paid $83,000 over asking. So, if they had put nothing into the home while they lived there it would be reasonable to think the home was worth a bit more than that today. However, they put about $200,000 into the home, so the improvements definitely added value."

On Monday during the broker’s open tour I had more buyers through than a "good" Sunday open house. This has been a trend, where buyers are showing up to the broker’s open houses to get a jump on the inventory. I had a young couple at the broker’s open house and they stayed for nearly an hour. I received a call from their agent later that afternoon and they scheduled a pre-inspection for the next day (Tuesday). The plan was to wait for offers until the following Sunday after the public open house."

So, Wednesday morning I get a call from the agent who did the pre-inspection the day before. She says she is submitting the offer with the hopes that the seller will take it and not wait for Sunday. This is another strategy buyers are using to try to avoid competing. They will submit an offer early for over asking in the hopes sellers will think they may not get that if they wait. Sometimes it works. In this case, the agent sent us an offer of $1,150,000.This was nearly $200K over asking and I wasn’t sure how the sellers would react. I explained to them that if they are making this offer now, the odds are they would still be in the mix on Sunday and it probably would be a good idea to hold off until Sunday like they said they were going to."

In the end, it is the seller’s decision and in this case they decided to wait. I asked the sellers if there was a number that would make them take an offer before waiting and they jokingly said, "$1.3M."

After Wednesday we had four pre-inspections scheduled. By Sunday we had a total of five. I expected five offers."

The offers started coming in on Sunday. I did receive an offer again from the original couple that toured the home. They increased their offer to $1.17M (up $20K from Wednesday). Then we received three offers in the $1.1-1.2M range. I then received an offer for $1.3M. This sounds great but in order to actually sell it for $1.3M there needs to be another offer at least at 1.285M. The $1.3M offer had a $15,000 incremental bump to the next highest offer. So, if there was another offer that escalated to $1.285M, it would have sold at $1.3M."

However, about an hour before the deadline for offers, we received an offer for $1.31M with a $10,000 escalation bump. Both offers had waived their financing and had zero contingencies."

The $1.31M winning offer was from buyers coming from the Bay Area. Prices here are a fraction of what they are there."

So, what did we learn? You don't have the winning offer until the clock strikes zero. Also, if you find out some Bay Area buyers are competing...gird your loins.

Read the previous Tales From the Seattle Housing Market here.