Buyers need to adjust their idea of an ideal home
Buyers in the hot real estate market driven by increased demand and reduced inventory have been forced to lower their expectations and learn a new strategy of negotiations, according to one realtor experienced with property in Mill Creek.
Cassy Reichelt, who works out of the Windermere office in Alderwood, said education has become one of the most important services she provides to prospective buyers who hope to live in any of the more desirable communities in South Snohomish County.
“We are still seeing multiple offers for homes in every price category under $1 million. That’s not new,” Reichelt told The Beacon. “What is new are the actual price above the listing price that buyers are offering to secure a home.
“Above. Way above.”
According to the Multiple Listing Service (MLS), homes in Mill Creek sold for an average of 103 percent of the original list price during March, a jump of 1 percent compared to sales in February and 2 percent more than the same month one year ago.
That amounts to an extra $22,500 on the price of an average-priced home in Mill Creek.
Figures released this month by the MLS indicate that the asking price of a home in Mill Creek increased by just over 1 percent in the past month, while the average price that a home sold for jumped by more than 5 percent. The average list compared to one year ago jumped by 15 percent, while the sales price topped out at just under 14 percent.
According to the MLS, the average price of a home sold in Mill Creek during March was just under $600,000. That figure is a jump of more than 5 percent compared to February and almost 14 percent more than the same month in 2016.
Reichelt said prospective buyers have flocked north of the county line when they find themselves priced out of properties in Seattle or cities on the Eastside. The number of bids and the prices being offered for homes for sale in good school districts have shocked the veteran agent.
“I try to educate buyers who have a budget of $600,000 for a new home to start looking in the $500,000 range because that house will probably sell closer to the higher figure,” she explained. “It’s much easier to outline the realities of the market upfront than to have a client become discouraged over losing out on multiple offers.”
Reichelt said she had one buyer lose out on a home in the Mays Pond community that had 10 offers on the table after only one weekend on the market.
The MLS figures for Mill Creek indicate that the average time on the market is down nearly 30 percent compared to one month ago, and an astonishing 43 percent compared to the same month in 2016.
The demand for homes in Mill Creek extends to condominiums. The competitive market in the city, said Reichelt, left her 85-year-old client frustrated after the woman had cashed in on her home and was unable to find a unit in a complex to buy.
The usual incentives
Anxious buyers have been offering incentives beyond money to help in competition situations for 2-3 years, said Dan Faulkner Jr. with John L. Scott Realty.
Buyers have offered extended escrow or free rent to sellers as an incentive. It is not unusual for buyers to waive the inspection or financing contingency to make their offer more attractive to the seller.
“Sellers want the cleanest offer possible,” Faulkner said. “It’s not enough to be just pre-qualified by your lender. Cash is always the best incentive because it means fewer possibilities the deal will fall through, a shorter escrow and faster close.”
What is new, according to Reichelt, has been buyers who have agreed to waive the appraisal contingency, which leaves the buyer responsible for any difference between the amount a lender will loan on the property and its actual selling price. The Snohomish County specialist said she has seen buyers having to come up with an extra $85,000 to guarantee the transaction.
She also emphasized that the incentives are coming from buyers (and their agents) and not from sellers who are being greedy with outrageous expectations or unrealistic ideas of what their house is worth in the market.
The surge in prices has been created by a combination of increased demand and lack of homes for sale. Reichelt said the two weeks of inventory is something she has not seen at any time during her career.
The situation is especially tough for first-time buyers, she said, who are being forced to look further away from desirable communities and hubs of employment.