Right now is a tedious time to be trading Seattle real estate. While the nation at large is experiencing a deflation in housing values, the Seattle market is stubbornly fluctuating between plateau and boom days.
A large number of properties are going unsold for 90+ days [zillow.com] while others are subject to irrational bidding wars. Part of me wants to sit it all out for another six to twelve months, but my better half insists that we need a house.
And so, we are in the market for a house.
House #1 was an estate sale for a beautiful, large fixer-upper with an entirely unfinished basement and asbestos throughout. Not afraid of building a little sweat equity, we placed a very attractive no-strings-attached offer slightly over the asking price of $350K.
We tried very hard not to get wrapped up, but being the first house we’d made an offer on, it was difficult not to get emotionally invested. It attracted a lot of attention including two offers that ended up beating ours, both with automatic re-bid triggers that pushed the final cost to well over $400,000.
In the end, the most stressful part was waiting for that call from our agent, but we were certainly disappointed when word came that it wasn’t meant to be. Perhaps I shouldn’t have spent all of those hours making a detailed scale Google Sketchup diagram of the entire house.
The buzz was that some of the other bidders had family ties to the house, so I imagine their own emotional attachment added considerably to what they were willing to spend.
Lesson learned: Remember not to lose your head over the first house you fall in love with. Better yet, don’t fall in love with a house if you can avoid it. Best of all, stay away from family affairs if at all possible.
House #2 was FSBO (for sale by owner). While outside of our primary search area, it had a nice location that made it worth considering the extended commute. Not wanting to be consumed in a bidding war like the one we’d just witnessed, I did an extensive amount of number crunching to find the true market value of this house.
Just looking at the raw numbers for the neighborhood, a house of its stats is valued at $315K-$325K. Excluding the outliers on both ends brought the house down a couple thousand, but in real estate it may be best to leave that data in since those are your neighbors, after all.
The killer feature that this house has which few of its neighbors could claim was the wilderness reserve directly across the street. I factored that in at a $20K bonus to the property value. That bonus brought the estimated value right in line with the more contextual housing valuations such as Zillow and an appreciation-adjusted comparison of the houses on the same block that have sold in the past year.
Unfortunately, the house turned out to be FSBSO (for sale by sentimental owner) and they had been given advice by someone that the house was worth $365,000; 75% more per square foot than even the nicest of their close neighbors. Perhaps self-conscious of the high price, they even misrepresented number of bedrooms and square footage.
The owner was quite galled when our agent presented the initial offer of 9% less than the asking price. In fact, this FSBO wrote off the possibility of a counter offer until I called them directly to discuss the situation. Still quite ruffled, they agreed to counter, but only after flat refusing to pay the buyer’s agent’s fee at any price.
The sad part is that this house may have quickly fetched a similarly inflated price a year ago, but I believe that more buyers are getting wise to the fact that they could buy a larger condo near downtown Seattle or a little mansion in the midwest for similar money. 2007 may shape up to be the year of the self-informed house buyer due to the online revolution in market information.
With any luck, this mixed-up market may yet produce a buyer who doesn’t do due diligence and pays full asking price just because they love the house. Then again, this un-motivated seller may still be living there months or years from now when it finally appreciates to the price they want. This person has very little to lose by just waiting until the right buyer comes along.
Lesson learned: Some FSBO sellers don’t want to know what their house home is really worth. They certainly don’t think you’re doing them any favors by butting in with your know-it-all offers. Don’t let yourself think you can convince them otherwise. Don’t let any of that stop you from trying.
Photo credit: Lance McCord
Last weekend Washington state just upped its liquor prices an average of 13% per bottle in a bid to help fill its 6 billion dollar budget gap. The estimated proceeds from the increase in liquor tax should cover about 1.3% of the budget shortfall. The problem is, I don’t think they will take in nearly as much as they have estimated.
I should preface this by saying that I normally do my home improvement shopping at Lowe’s. Historically, they have had better customer service and have a higher likelihood of carrying the oddball things I require for my more unusual projects.
Congratulations to Redfin on their big 4.0 release yesterday. They have updated their look, added a new logo, made the maps expand with your screen size, and added several other new features that housing shoppers will enjoy.
