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A home seller’s market from the seller’s POV

A home seller’s market from the seller’s POV

It’s a seller’s market. If you haven’t sold your home recently, you might be interested to hear a bit about what that experience is like in the Seattle market these days.

Once a home has been prepped for sale — which takes very little work in such a strong seller’s market — the agent and homeowner agree on a list price based on sales of comparable properties. This is easier said than done when homes are selling so quickly at ever-escalating prices. If the agent and seller anticipate multiple offers, they also set an offer review date. That date is usually 5-7 days after the home goes on the market. This strategy typically nets a higher sale price for the seller than if they accept the first offer that comes in. Appropriately priced homes in West Seattle usually receive anywhere from 3 to 15 offers that meet or exceed the list price and are not contingent on inspection; buyers have either pre-inspected the property or waived inspection. This essentially results in “As Is” sales. It is not unusual to receive all-cash offers and/or offers with down payments of 30-50%. The agent then prepares an analysis of all the offers to determine which are the strongest. You may be surprised to hear that the highest offer price doesn’t always constitute the strongest offer. A “strong” offer is one that has the best chance of closing quickly and without incident. I.e. if there is a loan involved, the lender has a good track record for closing on time, and the contract includes few, if any, “outs” for the buyer. Once buyers and sellers have reached Mutual Acceptance — and disappointed 2 to 14 buyers — the sale will usually close in about 30-45 days.

After that, the seller often gets to experience the process in reverse!

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Should homesellers shun requests for pre-inspections?

Should homesellers shun requests for pre-inspections?

Now that homesellers are back in the driver’s seat, pre-inspections are re-emerging as a tactic for strengthening a buyer’s offer. This time around, however, some homeowners are refusing to allow them.

What is a pre-inspection? It’s a general structural inspection of a home (usually by a professional home inspector) that takes place before the seller has accepted an offer.  This generally only happens in multi-offer situations, but those, too, are becoming commonplace again as a result of low inventory.

Since nearly every offer these days is conditioned upon the results of a structural inspection, real estate brokers will sometimes suggest that their clients invest in a pre-inspection as a way of making their offer more attractive to the homeowner.

Few homeowners pay for an inspection of their property before putting it on the market, so they can be justifiably nervous about hearing the results of an inspection performed by a professional hired by a buyer. Having already negotiated a purchase price, the inspection results often trigger another round of negotiations involving requests for repairs which will further reduce the net proceeds to the seller. To eliminate this concern for the seller, a buyer can pay for a pre-inspection and then submit an offer for a purchase price that will not (theoretically) be further reduced because they already know the condition of the house.

This strategy was common practice a few short years ago when Seattle last experienced a  seller’s market. Like the song says, “Everything old is new again.”

This time around, however, some sellers are saying “No” to pre-inspections. Why? Mostly because it is a major inconvenience for owners to open their home to strangers multiple times for several hours at a time (inspections usually take 2-3 hours). Occasionally, some minor damage can result from the inspector’s poking and prodding as well.

One alternative to allowing pre-inspections is for the seller to pay for an inspection (an average of $400) and then make the results available to all buyers who write an offer. Most buyers, however, will not be satisfied to accept the results of an inspection performed by someone who has been hired by the seller.

It’s worth mentioning that a buyer who pays for a pre-inspection and then either decides against making an offer or submits an offer that is not accepted by the seller, is out the $400. That can get pretty costly if you are a buyer making offers on several multi-offer properties.

What’s a buyer to do?

Are you a frustrated buyer? This is a great place to vent.