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.
Our latest tale comes courtesy of Windermere broker Ted Dietz and a recent sale in Mountlake Terrace.
Neighborhood/City: Mountlake Terrace
Year Built: 1963
Size: 3 bed, 1.5 bath, 1,056 sq ft
Listing Price: $319,900
Sale Price: $382,000
I sold my clients their Mountlake Terrace home in the middle of the last market boom in 2005. We won in multiple offers, and for the record, they weren’t the highest bidder. That said, $282,000 was good-sized chunk of change for that area back then (the lesson there is that you don’t always have to be the top price to be the top offer… and also, sometimes people are just nice).
They greatly enjoyed their home for several years but, as with a lot of first time home owners, life happens and there comes a time to move on. So, three years ago they were ready. Just one problem, the market wasn’t.
Local real estate values had hit bottom in late winter/early spring of 2012 and by 2013 the market was taking off again. That is, the Seattle market was taking off.
We analyzed the Mountlake Terrace market in 2013. Not ready.
Then again in 2014… still not ready.
By the summer of 2015, we were seeing sales that indicated the market was starting to turn our way. We decided that they would move out and rent it for a year and put it on the market in the summer of 2016. Before they left, they were able to paint the house as I recommended. This ended up serving them very well.
Come January, plans changed. The renters were leaving in April and we needed to get the house ready for sale. So we looked at the market again. There was a small bump in price and there was also the continuation of a trend we had noticed the summer before. There were a lot more flipped homes selling in the area.
My client’s property was unique in that it had a very cool, private backyard that featured a Koi pond and excellent layout for flower and vegetable gardening. It also had a sun room built off the back of the home that was accessed from the master bedroom. The sun room was the feature that had sold my people on it back in 2005!
There were budget limitations and my clients were out of the country, so getting the property ready was challenging. My son and I rolled up our sleeves and did dump runs, painted window sills, re-caulked some areas, edged and mowed the lawn, etc. After my landscaper and cleaners were finished, we finished staging and had the photos taken. The house looked great.
Even so, the market upturn in Mountlake Terrace was fresh. We weren’t sure how strong we would look next to the glitzy, new kitchens and bathrooms of the flipped homes that were selling in the $350-$400K range. So we decided to price it conservatively at $319,900. (As an aside, based on what I’ve seen over the last year, I would say it’s in the seller’s best interest right now to be a little conservative. Many sellers who are pricing their homes slightly lower rather than listing aggressively are garnering more buyer interest and selling at higher prices. But that’s a topic for another time.)
We also decided to give a slightly longer review period of eight days knowing that buyers are often being forced to line up their pre-inspections, financing and everything else that goes into an offer within a four-to-six-day window. Sometimes you’ve got move on a property within hours. It’s insane! We wanted to give buyers room to move.
So, we hit the market and my broker’s open house is slammed. I knew we’d draw a lot of traffic but honestly the immediacy, volume and consistency of visitors was shocking. The traffic was like what you would see on a Saturday or Sunday in Columbia City or Ballard, but this was lunchtime on a Wednesday in Mountlake Terrace. That isn’t where the similarities with hot Seattle neighborhoods ended. We had an offer sent over that night for over asking price. The sellers and I had talked about this scenario ahead of time and decided that we would honor the review date unless someone came in way over asking with cash. Honestly, most of the time the buyers who make early offers stick around for the review date anyway.
I will say that submitting an offer that exceeds the asking price before the review date does work for buyers occasionally. In fact, another client of mine successfully beat the multiple offers game using this strategy and closed on her new house a few weeks ago in Lynnwood. That too, is a story for another time.
When we reached the offer review date, we had 11 pre-inspections and 18 offers. That’s right, 18 offers in Mountlake Terrace! Only one all-cash offer. Well...technically cash, they had to re-fi another house and pull out cash. It was really more like a contingency. It did not win. We had two offers at $400,000, one of which offered to make up what ended up being a partial difference on the appraisal. That was the winning stroke and it proved to be crucial. I knew that the house was not going to appraise at $400K but hoped that it might come in around $375 or $380K. I created a report for the appraiser to supplement his information. No dice. It came in at $362,000.
I created another report for the underwriter/former appraiser, this time with help from the buyer’s broker. No dice again.
Because these reports contain a ton of targeted, property-specific data as well as relevant, anecdotal information about the home and offer situation, they almost always positively influence the appraiser’s estimate. It was disappointing that the work did not produce the desired response.
The only good part about the appraisal situation was that my client and I had talked about this possibility ahead of time. We knew that given what the purchase price had escalated to, there was a good chance that we would actually sell for less than what we were in contract for. If things went our way, we’d get an appraisal back around $380K and the buyers would make up the difference. If not, the sellers would have still made far more than they had expected.
The buyers were in a bind. They had put up significant earnest money and they only had the funds to cover a $20K deficit but not the $38K we were looking at. It wasn’t a hard decision. We settled at $382,000.
The buyers were happy to get into their new home and my sellers were thrilled to do so exceedingly well with their sale! It sold for $100,000 over what they bought it for in 2005.
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