Are you considering buying a home in 2023? The Seattle and Eastside real estate markets have shifted considerably since the beginning of 2022 when bidding wars were the norm. In early 2022 we only had about two weeks of inventory, which is the amount of time it takes to sell all the homes in a market. Later in the year our local market served by the NWMLS had two months of inventory – signaling the end of bidding wars creating record sales prices in many areas. Interest rates also jumped from approximately 3% to 7% during this time. While the higher interest rates aren’t a positive for prospective buyers, the softened market has reopened the door for many home-shoppers who were put off by the multiple-offer frenzy of early 2022.
To help my clients be in the best homebuying position possible, my company has analyzed the data on thousands of offers that The Cascade Team agents have written. The good news for home buying in 2023 is that while the analysis on this page holds true, sellers in the current market will be more amicable to contingencies and buyer concessions. In 2022 it was all about presenting a high price while waiving every contingency, and this is no longer the case. The following analysis is a high level review so feel free to contact me to discuss any specific offer scenarios or home buying questions you may have. The goal of the analysis was to see how the various strategies affected our buyers’ odds of winning a bidding war:
Findings and Offer Approach
The biggest finding might not be a surprise: all cash offers were by far the biggest determining factor when creating a competitive offer. With everything else equal, offering with all cash nearly doubles a buyer’s chance of getting an offer accepted when facing a multiple offer situation. In fact, for the luxury market, (which my company defined as the top 10 percent of the market by list price), an all-cash offer increases a buyer’s odds of success more than fourfold.
Cash is king and gives buyers a leg up in the negotiation because it ensures a faster and lower risk transaction for the seller. Without the involvement of a loan, underwriting or appraisal, a seller can expect a quick close and rest easy knowing the buyer’s proof-of-funds were presented in their offer. While cash gives you an upper hand, I have still won bidding wars against all-cash offers. Strategies such as appraisal waivers, financing contingency waivers, and how the overall offer is structed can put a non-cash offer in the top position.
Even though the market is softening we’re still technically in a sellers market and multiple offers are still happening on appropriately priced homes in popular neighborhoods. The Puget Sound area has about two months of inventory currently which is a more balanced market than the two weeks of inventory we saw during parts of 2021 and 2022. That said, a balanced market is 4-6 months of inventory which means the Seattle and Eastside areas remain a seller’s market as has been the case for many years now. In response to the ever-changing market, real estate agents like myself have honed our ability to read the current market and know what is happening this week or even today. So that means I know under what conditions an aggressive multi-offer strategy is required vs. an offer with seller concessions to give my purchasing client the best possible value for their investment. Many times I find it is not just about the offer amount, and it is my job as an agent to figure out what that edge really is on a per-transaction basis.
Buying Strategies – Multiple Offers
When looking at winning a multiple offer presentation, it begins with understanding how buyers can put their best foot forward. There are many ways to make an offer look attractive and not all sellers care only about the price; many of them care about time and convenience. I also keep it simple and begin with communication. I consider myself, the listing agent, and lender a team and make sure all lines of communication are open long before an offer is presented. Through communication I gain as much knowledge as possible to have an assessment of the underlying motivations for a sale and custom tailor an offer with my buyer to meet the seller’s needs.
Buying Strategies – Seller Concessions
For a home that is sitting on the market or not seeing lots of initial action the offer will look a lot differently. When a client is interested in a home that just hit the market I like to use my tools to see how many showings a home is getting. We can also visit any open houses to see how busy they are. These data points helps me advise my clients on points such as offer price and contingencies such as financing and inspection. Even when adding contingencies, communication is key and this is one of my biggest roles as an agent. I want the seller to feel assured we’re committed to completing the deal as quickly as possible. That means appropriate turnaround times for things like inspections and putting the seller’s agent in touch with my client’s lender for assurance that everything is ready to move forward.
Key Considerations for an Offer
Below is a list of other considerations that come into play any offer scenarios. I’m not expanding beyond the list here because my advice on each point may vary depending on the listing my client is bidding on. For example, an offer I prepare for a home that has been sitting on the market for over a month will look very different than an offer for a “hot home” I’m trying to take off the market a few days after being listed. Here is the list of core considerations:
- Escalation clauses
- Down payment/earnest money
- Buyer letters/love letters
- Misc. considerations such as appliances and cleaning
- Rent-backs/delayed possession