Homework and chutzpah: How one couple got an affordable Mercer Island home
If you put together a thorough market analysis, it is getting more and more possible to make a low offer for a house and have it accepted.
Special to The Seattle Times
Tips for buyersRE/MAX REALTOR
Reba Haas offers these tips to potential buyers:
Ask questions: Your real-estate agent should call the seller's agent and do a little sleuthing to learn more about the listing. Their agent may be willing to share tidbits that could help you decide on your offer price, such as whether the seller has bought another home and needs to move by a certain date.
Do your research: Search recent similar sales and present any hard evidence you can find that the house is priced higher than its current value. Also learn details such as how long the home has been for sale and how long similar homes are taking to sell, so you can point out how much longer the home might likely sit if your offer isn't considered.
Tell a story: Buyers bid low not just because they're hoping to pay less, but because the lower amount is what they can afford to pay. Telling your personal story — you're a young family with a single breadwinner, or a single mom — can help explain why your bid is appropriate.
Have an open attitude: If you send a low offer with the statement that it's your final offer, you may well find your offer quickly rejected. Your agent should express that you are open to a counterproposal.
Communicate: Don't fax over a low bid to an agent who isn't expecting it. Your agent should pave the way with a phone call of introduction and let the buyer's agent know the bid is coming.
High-end homesIN 2008, 196 HOMES in the Mercer Island School District sold for a median price of $1.5 million, making it the most expensive district in King County. The sale prices ranged from $10 million to $483,000.
Going, going, goneLAST YEAR, NEARLY 16,000 single-family homes changed hands — an average of 1,320 a month. The median price was $429,950 but 1,291 houses sold for between $600,000 and $699,999.
The couple ended up making two offers well below the sellers' asking prices. The first bid didn't work out. But in October the couple landed a Mercer Island home near the water for $125,000 less than the sellers' original asking price.
The Drummonds' house-hunting experience provides a look into the buyer's world of Seattle real estate, where listing prices change fast and sale prices are highly negotiable. As buyers, the Drummonds spent a lot of time thinking about what they should offer.
On the other side of the transaction are the sellers, who also face a tough choice: to accept an offer much lower than what they wanted, or wait for another buyer who may or may not materialize anytime soon.
Having sold a home in Orange County, Calif., before home prices collapsed, the Drummonds initially house-hunted from Queen Anne to North Seattle, hoping to be near Zach's work as president of downtown-based Limelight Development and Beth's job with the American Red Cross.
When they learned Beth was pregnant in July, they shifted their focus to Mercer Island, with its highly regarded public schools. With a target of paying less than $700,000, the Drummonds could find only one Mercer Island house listed under that price.
"And it was a complete and utter wreck," Zach says.
So the couple started looking at higher-priced homes to see if they could make an offer under $700,000 and get a bite. They soon found a 3,100-square-foot, five-bedroom home on Mercer Terrace Drive that intrigued them. It wasn't ideal, as it was on the south end of the island and farther from Interstate 90 than they wanted.
The home was 45 years old and needed repairs. But its listing price had come down over several months from $849,000 to $760,000.
"It was a really nice house, the neighborhood looked comfortable, and it had been sitting," Drummond says. "We thought it might be a good choice and said, 'Let's put a low number [bid] in there.' "
Re/Max Realtor Reba Haas, who worked with the Drummonds, put together a market analysis to demonstrate to the buyer that the price was still too high. The Drummonds offered $650,000. The offer was not rejected out of hand, Haas reports.
"They didn't just laugh in our face," Zach says.
But in the end it was no go. The seller received a second, higher offer at about the same time as the Drummonds' offer. The Mercer Terrace home sold for $745,000 in July.
The couple were braced for a turndown, Drummond says, and weren't deeply emotionally attached to the house.
"There was kind of an expectation that lots of people would say 'no' to us," Zach says.
The Drummonds continued scouring Mercer Island for listings for several more months, finding a few houses they talked seriously about bidding on. But each one turned out to have problems that made them lose interest.
Then in early fall they found a house on 96th Avenue Southeast that they fell hard for. It was smaller — two bedrooms and 2,200 square feet, not counting a large unfinished basement area — and older, dating to 1941.
But the home met two of the top items on their wish list: It was close to the freeway and in a more desirable, waterfront neighborhood.
The sellers' situation was also different, as the owners were anxious to move to a retirement complex they'd bought into nearby, says John L. Scott Realtor Glover Weiss, who worked with the seller. The home went on the market June 30 at $820,000, which soon got reduced to $790,000.
At that price, the owners got a nibble from a builder, Weiss reports, who offered $750,000, but was unable to get financing to make the purchase. The price was cut again to $749,900 and finally, to $719,000.
Haas researched comparable homes and how many days they were taking to sell. She saw similar-priced homes staying on the market up to 200 days before selling.
Based on that sleuthing, Haas recommended bidding close to $700,000, but the Drummonds decided to gamble again and bid lower, though not as far below the asking price as the last time. Their bid: $675,000.
Even though the builder's much higher offer had fallen through, Haas reports, the sellers were reluctant to accept such a substantially lower bid. She made the case that statistically speaking, the house might well sit for several months more if the sellers passed.
"There was a lot of discussion and emotional back and forth," Haas says. "Their agent would say, 'They have to live on this the rest of their lives,' and I was saying, 'That's not my client's responsibility. They're at the beginning of their lives, he's started a company and they're having their first baby.' "
The Drummonds were willing to come up in price, as they reasoned it had taken nearly 10 months to find this house and might take a long time to find another like it.
"The emotion of wanting the house definitely played into it this time," Zach says. "We really wanted to make it work."
Ultimately, a middle ground was found and in October, the Drummonds bought the house for $695,000.
They feel comfortable that even in a declining market for home prices, they will do well with the house.
They plan to improve the home's value by doing some renovations and finishing the basement.
"I just believe in the value in Seattle," Zach says. "I can't imagine we'll end up in a bad position."
Copyright © 2009 The Seattle Times Company
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