For months, home buyers in Pierce County have needed big wallets as home prices continue to rise far faster than inflation or wages.
Now they need quick reflexes as well.
Earlier this month, the local housing market passed a milestone. The average home in the county is being listed for only 20 days before it sells.
For homes priced between $249,000 and $350,000, the number of days on the market drops to just under two weeks.
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In Pierce County, a typical home priced at $351,000, for example, sells in 12 days. In Thurston County, it would usually go in 11 days. King County homes sell in a median of eight days, according to data from the Northwest Multiple Listing Service.
It’s a breathtaking pace, even compared to the months leading up to the 2008 recession, when credit flowed and lenders didn’t look too hard at the income of people looking to buy. Back then homes sold in an average of 50 continuous days on market, the data show.
In today’s conditions, hesitation of even a day can cost a buyer a home. More often than not, sellers have multiple offers to choose from, and those who have lost a bidding war for one home often come armed for the next.
This means buyers must be on their toes when they wade into the fray, said Margo Hass Klein, managing broker with Coldwell Banker Bain in Tacoma.
“These buyers have missed out on other deals because there’s been multiple offers,” she said. “The minute a house is on the market they are on it. They check it out and call their agent. … They don’t want to miss out on it.”
To compete, buyers need to do their legwork before they start seriously shopping, said Dick Beeson, principal managing broker with Re/Max Professionals.
Among things to factor in:
▪ Pre-approved loans are almost mandatory. Buyers need to have a bank verify their employment, income and that they have the money for a down payment so that they have a loan ready for up to what their credit and income will allow.
▪ Some buyers are paying for a “pre-inspection” on a home before a deal is settled. In softer markets, an inspection is usually completed after the seller accepts an offer. That can trigger more negotiations to fix problems with the home. Pre-inspections can cost hundreds of dollars — and they add up if a buyer loses out on multiple homes — but they’re convenient for the seller and help a home close faster. Some buyers are even waiving a home inspection altogether.
▪ When making offers, buyers increasingly include escalation clauses to automatically outbid the competition.
▪ Buyers with means are bringing more cash to the table. In a quickly moving market, there can be a gap between what the buyer initially promises to pay and what the appraisal eventually says the home is worth. The buyer can promise to bridge the gap with what’s called an additional down payment.
If you lose a bidding war, don’t count yourself out just yet, said Kevin Mullin, owner-partner and designated broker of Windermere Professional Partners in Tacoma.
“Backup offers are quite common right now,” he said.
With a backup offer, Mullin said, the losing buyer “says, ‘We will give you $10,000 more’” in case the first offer doesn’t close.
One group still at a disadvantage are veterans and active duty military members. They often are left out in hot markets because the federal process for getting a loan and a home appraisal can take much longer than those using conventional financing.
Still, buyers of all kinds and incomes shouldn’t despair. Some relief might in sight.
In a sign of what might come to Pierce County, King County’s market is “tapping the brakes a little bit,” Mullin said. Instead of 20 offers on a home, a Seattle area seller might see five instead.
In Pierce County, more homes are for sale now than a year ago, Hass Klein said.
One of her buyers has homes that meet her price range and other parameters sent to her in an automatic feed.
“She said to me the other day, ‘Gosh, it’s so nice to have choices finally,’” Hass Klein said.