In many facets of life, a little healthy competition can bring out the best in us. When it comes to real estate, however, too much competition can lead buyers to scrap their plans or take risks they weren’t planning on taking.
Ever since the pandemic struck, the greater Seattle area has seen its housing market tilt firmly in favor of sellers, with buyers urgently looking to take advantage of historically low interest rates and find the ideal work-from-home space.
Drastically low housing inventory means buyers and their brokers are navigating unprecedented levels of competition. From rapid-fire “buyout” offers and hefty earnest money commitments to precarious escalation clauses, serious buyers are pulling out all the stops to get a piece of the market.
In the midst of all this competition, brokers are having to coach their buyers through potential rejections and the possibility of being outbid by others. It’s a delicate balancing act, and one that some brokers and most buyers have never experienced on this scale before.
To help Windermere-represented buyers manage the competitive market they’re facing, the W Report reached out to some of Windermere’s local leaders for tips on navigating today’s complex real estate landscape.
Joe Easterday, owner of Windermere’s Mount Baker office, says that because it all comes down to the details of hyper-local markets, the best way for a buyer to be prepared is by getting real-time market intelligence from their Windermere broker. “Our brokers pay attention and know the differences in the specific markets. For example, the condo market on Capitol Hill is going to be different than the townhouse market in North Seattle or the residential market in West Seattle,” he says. “Additionally, our brokers are constantly communicating with other brokers on microtrends and getting different perspectives so they can be aware of acute market changes and trends.”
For D’Ann Jackson, of Windermere’s Bellevue office, the key to success in this market is creative thinking. “You need to think outside of the box,” she says. “Maybe look for canceled listings and reach out to the listing brokers to see if the owners are ready to sell. We’ve had a couple of success stories with that. We’ve also had some success with honest letters to sellers that aren’t on the market when you have a qualified buyer for a certain neighborhood or condo complex.”
In terms of competition, Jackson and Easterday agree that the townhome and condo market are easier markets for buyers to break into, while Jackson has noticed that single family homes are most likely to be the subject of bidding wars among buyers.
Patrick Chinn, owner and designated broker of Windermere Midtown, reminds brokers that sometimes the optimal outcome for a buyer isn’t coming out ahead in a bidding war. “Sometimes, the best advice a broker can give a buyer in a market as heated as this is about not overpaying,” he says. “The broker’s critical perspective about value is key. Can you do better? Should you be paying this? People don’t need agents telling them to ‘write your highest number.’ Instead they need perceptive and proactive counsel. That critical advice part is crucial to ensuring the client’s wellbeing.”
For those who are dealing with multiple offers and trying to beat out the competition, buyers need to be prepared for any outcome, and they need to be clear on their goals so they can look past any heartache along the way. “I heard of one listing with 47 offers.” Jackson says, “And that’s stressful on everyone. In that situation there will be 46 buyers who lose. So while pursuing offer strategies to win, our brokers are also preparing their buyers for the reality of what is happening. Helping buyers realize from the outset that they will have ups and downs can make it easier on them in the long run.”
Chinn echoes this sentiment. “Ultimately, we can’t mitigate for all emotions and we don’t want to. For one thing, we as agents are agonizing right beside our clients because we want them to succeed so badly,” he says. “So we understand and accept the emotions that come with this market. That said, the one emotion we do work hard to prevent is surprise.”
“We coach our buyers to try to keep in mind that an offer they don’t win will simply become someone else’s prize and will fade in their own consciousness with time,” Chinn continues. “At some point in the future they’ll drive by the home and not see it as a lost opportunity. Instead they’ll be able to say dispassionately and with zero regret, ‘That’s a house we almost bought back in the day.’”
Laura Smith, Co-Owner of Windermere Real Estate, points out that early education is the key to a successful buyer journey. “Now more than ever, brokers are doubling down on educating their buyers to make sure this is a market they want to enter, as opposed to waiting a bit. They’re having proactive conversations about the market’s intensity and pace, as well as about the buyer’s financial tolerances,” she says.
“This early education gives buyers a deeper understanding of the contractual nuances of the written offer, a better feel for the challenges of today’s fast-moving market, and greater awareness about how the market may adjust the price band they should be searching in,” says Smith.
Not only is early education key, but helping buyers prepare ahead of time for the realities of buying a home is crucial as well. “In this environment, brokers need to be having conversations with a buyer (or their lender) about their financial capacity before writing an offer,” D’Ann Jackson says. “Especially regarding the benefit to the buyer of only writing offers on homes that are below their funding threshold in the event of a bidding war. Multiple offers can push up the purchase price of a home quite significantly, so it makes a lot of sense to focus on homes in a lower price range than the one at which the buyer is qualified or comfortable. This way they can be in a position to compete with the highest offers.”
Smith concurs with this, and also advises brokers to help their buyers be okay with taking their time as they enter the market. “Two thirds of a broker’s most important work with buyers right now takes place before they tour their first property together,” she says. “A lot of buyers just want to start seeing homes right away after connecting with their broker. There’s often a snowball effect once buyers begin looking at actual spaces and they start becoming attached to the product. But understanding the best techniques to artfully put together a strong offer is key before entering the market.”
“So, we’re pretty intent on slowing down the process enough so our buyers can jump into a historically competitive market and stick the landing with feet firmly planted on the ground,” says Smith. “Due to COVID protocols and the size of the buyer pool, some buyers may get only 15 minutes to see the inside of a home. That’s barely enough time to be able to make the decision to write an offer, so our brokers are motivating their clients to have their ducks in a row.”
Joe Easterday also highlights the importance of patience in this market. “Our agents coach their buyers to be patient and prepared. We educate our buyers on the process, so when they see a house they like, they feel confident proceeding with their terms. It is super competitive, but clarity on the process helps buyers feel good about the decisions they are making.”
No matter what the circumstances of the sale are, communication is key in everything. From being honest with buyers about the reality of outbidding the competition, to advising them on their most effective price bracket, trust between buyer and broker is the secret to mastering the competition.
For D’Ann Jackson, there’s one final secret to success. “Being with Windermere helps, too, I have to say. When you are up against smaller companies, listing brokers like working with us. Having a good team, and a good lender that will communicate with the listing broker — that really does help.”