Yesterday I was doing some research to prove to my partner Mitch Greenblatt, “I bet every deal that has closed in South Seattle has waived inspection.”
Much to my surprise, that was not the case.
In the last 60 days, there were 32 closed transactions under $400,000 in 98188 (basically the zip code around Seatac, Tukwila, Burien).
15 listings went to Pending Inspection status. 17 listings went straight to Pending (meaning the buyers either waived inspection or did a preinspection).
So in this hot zip code where these listings on average barely lasted 2 weeks, I was surprised at how many still had inspection contingencies.
Then how come some of our clients (who are uncomfortable waiving the inspection contingency) keep losing out on deals? And how can we help them write stronger offers?
- The number one factor when it comes to putting a strong offer together is always going to be price. When a seller sells their home, you have to wonder, “If two offers had the same purchase price, would a seller sell to a family who wants to live in the home forever, or to a developer who will tear that home down?” In most cases, the seller will want to sell to a family, right?
- But what if the developer is bringing all cash and can close in 7 days? What if the developer raises their offer price so the family can no longer match the offer? What would the seller do? They would probably take the higher offer. And no one can blame them for that.
- If a home has lingered on the market for 20+ days (which is a lot of time in the Seattle market right now, circa 2018), then you may be able to offer less than asking price on a home, but in most cases, sellers seem to expect multiple offers and a bidding war.
- The second factor; contingencies. Once the market started heating up again about 5 years ago, I noticed more and more buyers were waiving inspections. Then we started seeing people waiving financing contingencies. These days, we’re seeing people waive low appraisals and releasing earnest money to the seller early and offering free rentbacks to the seller. The details may seem minor but when offers are identical, these details are going to stand out to the seller.
- If waiving the inspection is not an option, I would strongly suggest doing a preinspection. Most inspection contingencies take 5 to 10 calendar days and sellers aren’t willing to wait for those results. If you could squeeze an inspection in prior to making an offer, then the seller will feel more confident about your offer and will realize that you’re serious.
- The next factor; set a game plan. It’s a little like playing poker. It’s tempting to ask the seller on the day of listing, “Would you take X amount right now before any other offers come in?” But at that point, the seller is either thinking, “Woah, that’s way more than I thought would be offered,” or “Hey, so we know at least one person is willing to pay that amount, lets see if anyone else can beat it.”
- So the game begins. You can wait til the last minute to submit an offer and hope you have the best offer. Or you can try to submit first and pressure the seller to accept.
My advice to all the frustrated buyers out there; get preapproved for a loan, get your finances in order (have proof of funds ready in case someone asks), get in touch with some home inspectors, talk to a real estate agent or two, and go to some open houses to get a gauge of the traffic and to hear what others are talking about.
From our experience, there’s no pattern for success. Some buyers get lucky and visit one home, make one offer and get their offer accepted. Others we have been working with for months.
Best of luck to everyone.