Yes, we are in a buyer’s market in Seattle – that is obvious as the inventory has increased and the buyer pool is smaller. In addition, short sales and foreclosures have increased so much so that the NWMLS has had to come out with new rules for short sales. Buyers who are well qualified are out there looking for the best deal and I am noticing that the trend is to look for a Seattle short sale or foreclosure. Although the chance to earn instant equity may be appealing and there are many wonderful aspects to purchasing a short sale or foreclosure, this may not be your best deal.
These properties are in many cases distressed in more ways than one ranging from appliances that have been pulled out and sold to deferred maintenance issues, and even thousands of dollars in unpaid bills that run with the property. Short sales in addition have a very low percentage of success rate as far as making it to close before the bank sends them to auction. Unfortunately, from what I have seen recently, the banks are still unwilling to be reasonable in many cases. On top of that, there are usually more than one department at the mortgage company involved and the left hand doesn’t speak the same language as the right hand. It is great that the MLS has tried to put a system in to make short sales a bit easier, but I really think that until the mortgage companies put a clear system in place, there is going to continue to be a low percentage of them that actually reach the closing table. This is bad news for both buyers and sellers – and the banks, but so far, I am not seeing the banks concerned enough to change this.
I think the better deal out there right now is new construction. These properties are out there sitting costing somebody something to carry them. There are perks galore being offered on them and the cost of maintenance up front is very low. The cosmetics are perfect and the builders are able to play ball when it comes to negotiating. In fact, I am seeing that when it comes to negotiating price, new construction has a much better potential for getting the better deal! New construction isn’t for short term flippers – the price is right, but be prepared to sit on the investment until the development is sold out or mostly sold out. With all of the perks and special pricing going on, there is no appreciation until the builder is out of the neighborhood. For the owner occupied buyer, though, this purchase can be ideal for earning equity.