Bidding wars, cash heat up Eastside’s real-estate market
Would-be buyers in Bellevue and other Eastside communities are going above list prices, waiving inspection and writing flowery letters to sellers. And if they can pay in cash, all the better.
Seattle Times business reporter
CASH OFFER: Buyer has the money in hand, isn’t waiting for loan approval or to collect down payment from relatives.
NO CONTINGENCIES: Buyer doesn’t need to sell current home first. Waives any haggling over who would take care of any defects found during inspection, if there is one.
ESCALATOR CLAUSE: Buyer determines how high they will go to match/beat other offers.
LOVE LETTER: Buyer writes persuasive letter to homeowners to tip scale.
EARLY BIRD: Buyer aggressively seeks out properties before they hit the market with mass mailings, personal appeals.
OUTBID: Buyer offers less than asking price and fails to offer to match/top other bidders.
INSPECTION: Buyer loses out by asking for opinion of the property’s condition first.
NEEDS FINANCING: Buyer fails to line up preapproval for mortgage loan or hasn’t come up with a big enough down payment.
Leslie Son receives an alert on her phone every time a house is listed for sale in the Somerset neighborhood in Bellevue.
Son and her husband have lost out on three houses since May in the hillside community with views of Mercer Island and Seattle. Renting now in downtown Bellevue, the couple wants to buy their first home and move in before their 14-year-old son starts the new school year.
Somerset homes sold for an average of almost $1 million in May. The last offer Son and her husband put down was for $985,000 with a 30 percent down payment, and they waived the home inspection. She said they are willing to pay that much for the neighborhood schools and the easy access to interstates 90 and 405 — for her husband’s commute to work at Real Networks in downtown Seattle.
“We thought the house prices would keep going down after the market collapse” in 2008, she said. “But now prices are going back up and we want to get a house before they get any higher.”
When a house hits the market on a Thursday, the open house is on Saturday and dozens of offers are in by Monday, buyers and their agents must move quickly, presenting their “highest and best” offer, said Daria Krukjy, an Eastside broker for Seattle-based Redfin.
Bellevue homes averaged seven days on the market in May, according to Redfin.
When Kirk Neibert and his wife finally found a house in the Woodridge neighborhood of Bellevue that they liked, after actively looking for a month, their agent advised them against making a bid — not competitive.
The house already had multiple offers, and they needed to sell their condo in Texas first.
“It worked out because the house ended up going for $100,000 over listing, and we couldn’t have afforded that,” said Neibert, who is a product manager at T-Mobile with two kids and two dogs.
Brokers on the Eastside say 15 or 20 offers on a house have become typical. Georgia Wall of Re/Max on the Lake said she has not sold a house without a bidding war since February.
What’s driving flurry
Several factors are at play in the red-hot real-estate market:
• Prices are rising. The median price of a home — house or condo — sold on the Eastside last month was $535,000, 7.2 percent more than a year ago, according to the Northwest Multiple Listing Service (NWMLS). The Eastside market hit a median low of $360,000 in February 2012 and has not seen a median price this high since January 2009.
• More houses and condos are sold in April, May and June than any other three-month period of the year, according to the NWMLS, as families time their moves with the school year.
• Mortgage rates have gone up. Wannabe buyers missed the historic low 3.25 percent interest rate on a 30-year loan available last year. But they can lock in somewhere around 4.25 percent now.
• Low inventory. For whatever reason — homeowners may still owe more than their home can fetch, they can’t afford to move up to a bigger house, can’t find a new home or don’t want to move at all — people are hanging on to their homes.
• The Great Recession is over. Has been for years, but the jobless rate for the Seattle metropolitan area dropped to 5 percent in April.
Dozens of offers
Tomas Vetrovsky and his wife offered $650,000 for a Lake Hills one-story house listed for $580,000. The couple paid for a preinspection, as did five other couples on the same day, he said.
After seeing more than 100 brokers’ business cards on the kitchen table at the open house over the weekend, Vetrovsky said he knew the house was popular, but he did not expect to be up against 46 other offers.
Even with an escalation clause up to $715,000 — $135,000 above listing — the Vetrovskys lost the house to a higher, all-cash offer, he said the listing agent told him.
Vetrovsky said he and his wife are emotionally drained by it all.
“We are going to take a break from looking for a couple weeks. Viewing houses takes a lot of time and energy, and time away from the kids,” Vetrovsky said.
In the first three months of this year, 39 percent of Eastside homes sales were all-cash, according to market researcher RealtyTrac.
“Those hurt because you do everything right, but when there are 17 offers and there is cash ... there is nothing you can do,” said Michael Link, an Eastside broker with Windermere Real Estate.
Nidhi Doshi and her husband closed on their new Redmond home on May 11 — their 10th wedding anniversary. It was the first house the couple made an offer on, but they did everything they could to set their offer apart from the rest.
The couple offered the $665,000 list price with an escalation clause of up to $700,000.
“Initially we were not comfortable with that ... we felt like because we already told them our max that the price would go up to that,” she said. “But we knew they had to show us the matching bid, and they did.”
The seller told her what set them apart was the letter Doshi and her husband wrote, complimenting the sellers on their choice of décor, and describing how they could see themselves living in the home with their two young boys.
“The wife really felt connected to us; she said she was sure she wanted to sell it to us,” Doshi said.
One other tactic the couple used was to allow the sellers to live in the house rent-free for two weeks after closing, while the sellers waited for their new house to become available, Doshi said.
Sometimes, buyers just get lucky.
After multiple home tours, Kevin Jungmeisteris and his wife found a house in the Eaglesmere community of Bellevue listed for $775,000. The couple has a 6-month-old baby and likes the area for its schools and easy commute to their jobs at Groupon in Seattle. They offered the listing price with no preinspection or cover letter, and they got it.
When they met with an inspector on Wednesday, Jungmeisteris said as long as there was no massive structural damage, they would close in early July.
“We were really not in any hurry,” he said about buying their first home. “But it is nice we found a place sooner rather than later.”
Leslie Son, who is looking for a home in Somerset, said she’s now willing to try writing a cover letter with her next offer.
“I wasn’t sure how much difference it would make,” she said. “But now I think I have to try anything I can.”
Coral Garnick: 206-464-2422 or firstname.lastname@example.org. On Twitter @coralgarnick