Part 1 of 2
The majority of people believe that all a Realtor does to find homes to sell is look in the Northwest Multiple Listing Service and when new listings come on the market the Realtor sees it, and if it’s close to what the buyers want, the Realtor shows it to them. To be successful in helping Buyers buy homes today in the Seattle Real Estate Market you need to do a lot more than that.
When we work with a new buyer first of all we spend as much time as necessary to really define and refine what a buyer wants to buy. We understand that in “all” price ranges there will be compromises a buyer usually has to make. Even if someone designs and builds their own custom home by the end they will wish that they did this differently or included that. When you are buying a home you have to get everything you need but like what Mick Jaeger said, “you can’t always get what you want, but… you’ll get what you need”. Understanding the total picture when buying a home is very important. We work very hard with our clients to make smart buying decisions by understanding the total Seattle Real Estate Market.
After we have a very good understanding of what our client’s wants and needs are, we then take them out to look at several different homes with different styles and in various locations. From this we gain a much deeper understanding of what our clients are looking for and what will actually satisfy their needs. Often times what people verbalize in the conference room is much different from they actually want after seeing different types and styles of homes. It’s not until we get them in different types of homes that they can truly evaluate and understand what they really like and don’t like. This is especially true and normal for first time homebuyers.
With this understanding we then search the entire Seattle Real Estate Market starting with NWMLS (Northwest Multiple Listing Service). We look for homes that fit within a specific criteria and price range. But we also expand that search with regards to price range because so many homes are overpriced in the Seattle Real Estate Market. We really evaluate a Buyers situation and goals and set up a plan that works. Here is a good example: A first time home buyer with no children tells us they want to spend up to $500,000, and they want a 3 bedroom 2 bath home with a garage in a good neighborhood location with convenient shopping and a bus line close by that will give them an easy commute to downtown Seattle. We, as Buyers Agents, really need to understand several things here first. First, why do they want a 3-bedroom home? Are they planning to have children soon, do they need a home office? Do they have out of town guests on a regular basis? Then very importantly what are their plans for the next 5 to 6 years? There are as many different circumstances as there are people and an effective Realtor in the Seattle Real Estate Market needs to have a full and complete understanding of their client’s situation to be as effective as possible. And sometimes the clients haven’t even thought about all this and how their situation and 4 to 6 year plans can effect their buying decisions.
Here’s the deal…if they really need a 3 bedroom 2 bath home and can spend up to $500,000 then the location of the home may be compromised somewhat. If they really only need 2 bedrooms and 1.75 baths, and they can use the Rec Room downstairs for guests when they come and they are not thinking about having a baby in the next three years, then maybe they would be making a better buying decision if they looked for 2 bedroom 1.75 baths homes in a better location. As a result they would most likely be able to buy a better home in a better location for $500,000 so, in the long run, they would be ahead because homes in better locations appreciate more over time and would be much easier to sell if we have a slow market at the time they would want to sell. If they truly need a 3-bedroom home, then we need to look for the best home in the best location and one that will have the best appreciation rate.
Just because someone is asking $600,000 it may not be close to the right price. If someone is approved to spend $500,000 for a home we will look between about $450,000 to as high as $600,000. We do that because there are many, many homes in the Seattle Real Estate Market that are overpriced. Agents overprice homes in a hot market and agents overprice homes in a slow market. We often walk into a home that we are previewing and say to ourselves “boy, they must have had some good drugs when they priced this one!” Yes, there are several homes that are way over priced but in a hot market it doesn’t matter that much because unsuspecting buyers buy them anyway. Believe it or not, there are many Realtors in Seattle that don’t have a clue on how to price a home in any market condition but especially in today’s market. The so-called “Comps” are difficult to analyze and many home sellers end up dictating the price anyway, and we all know how objective the homeowner is when it comes to the price of their homes. Pricing in the close-in Seattle neighborhoods is an art! There are not really good comps like there are in the suburbs for example. In the suburbs a developer will buy a large partial of land and build several homes. These homes are pretty much alike except they will flip the floor plan and put upgraded counter tops in the Model homes and they paint every other home a different color. These home are very easy to comp out based on what else has sold in the neighborhood in the past 3 months. You just look at what the 3 most recent sales were, then figure a price per square foot and you’ve got it…done deal. It just doesn’t work like this in the city so the Realtor has to have many years of selling experience and a track record showing that their listings have sold for very close to the asking price (our last 52 listings have sold for 99.8% of the asking price and our Buyers have purchased for 94.5 of asking price). We know property value in the Seattle Real Estate Market and our clients make well-informed buying decisions. Over the past 20 years not one of our clients has lost a penny when they have sold their house.
When we find a home that fits our clients needs, but is over their price range, we track that home. If that home doesn’t sell in about 30 days then we take a closer look at it. We will go out and physically look at it if we haven't seen it already. Say it’s priced at $625,000 and we don’t know the Listing Agent. We’ll look up what that Listing Agent has listed over the past year or two to see if there is a pattern of overpricing. Karen and I will then independently come up with what we each think the property is worth. If we both think it would eventually sell close to $500,000 then we’ll let our client know that there is a home that fits their criteria but it’s way over priced so we need to wait and watch to see what happens with that house. After about 60 days if there hasn’t been any price reductions we’ll talk with that Listing Agent to try to find out how motivated the sellers are, etc. If that property has had price reductions all along and has now been on the market for at least 60 to 90 days then we may be in a position to write an offer well below their asking price, but more importantly, below market value. What is usually the case is that homes sell for the most amount of money in the first two to three weeks. After about 30 days on the market you should expect about a 3% to 5% price reduction every 30 to 60 days. So for example, that $600,000 home that’s been on the market for about 60 days now, and we think that the home would have sold for about $525,000 if they had priced it there to begin with, we would now recommend making an offer on it for under $500,000, say $480,000 and hopefully settling at $485,000 or a maximum of $490,000. We should be able to save our clients between $30,000 and $50,000 on an overpriced home in the $500,000 to $700,000 price range and that's not $30,000 to $50,000 under the asking price that's $30,00 to $50,00 under market value. But stay tuned…that’s not all we do, more to come in Part 2.
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