A news blog for Seattle's Phinney Ridge and Greenwood neighborhoods

 

Real estate column: It’s a sellers’ market, watch out for low appraisals

December 6th, 2012 · Comments

By Jamie Flaxman, Realtor with Coldwell Banker Bain

You probably keep hearing the Seattle housing market is hot. Well, it is hot.

“Real estate brokers expected some seasonal slowing during November, but last month’s falloff was less than what some industry veterans anticipated. Members of Northwest Multiple Listing Service reported 6,522 pending sales last month – the highest total for November in six years.” (NWMLS press release, 12/5/12)

Among the highlights of the November data for the Phinney Ridge and Greenwood neighborhoods:

  • Eighteen single-family homes (SFHs) and four condos came on the market during November. Twenty-three homes and four condos went into contract. Sixteen homes and six condos closed.
  • There is less than one month of inventory of SFHs available and 1.3 months of inventory for condos. Generally six months of inventory is a stable housing market, but in Greenwood and Phinney the inventory is much lower. Lower means we have a sellers’ market, higher a buyers’ market.
  • As an example of low inventory, in November 2011 there were 37 homes for sale and 20 condos; November 2012 only 15 homes and five condos. This shows that the market was not moving a year ago, but now homes and condos are selling extremely fast

Another sign the market has improved – in November there was only one short sale on the market for SFHs and one for condos. As for bank-owned (foreclosures), just two SFHs and no condos.

Here’s a graph for Phinney and Greenwood, SFHs and condos combined, showing the number of homes for sale, pending (moved into contract), and sold.

Phinney and Greenwood are currently a sellers’ market (as is most of Seattle and the Eastside). Because there are significantly more buyers out there than sellers, sellers control the market. A good proportion of SFHs and condos are selling above list price. The average condo sales price in November 2012 was $185,000, a 17 percent increase from the prior month. The average single-family home price in November 2012 was $451,000, down a little from October, but up 16 percent from a year ago.

Because there are many homes with multiple offers and accepted contracts higher than list price, we are now seeing appraisals coming in under the contract price. Lenders will require that the seller lower the purchase price to the appraisal and/or the seller will need to obtain a second appraisal, at a higher value. (Generally the buyer pays for the appraisal; this second appraisal would be paid for by the seller.)

If you’re a seller, the most important thing you can do is choose a listing agent who knows the market. Listen to the listing agent when he/she recommends a price. The listing agent will have done research on comparable homes to yours, focusing on recent sales, to come up with a price recommendation.

One of the most important things you can do as a buyer is to choose a local lender. The big banks and online lenders, particularly in a busy market, may send out a non-local appraiser. You live in Phinney and the appraiser is from Tacoma – market conditions and home values are quite different and the Tacoma appraiser may not understand the Seattle market. The second thing you should do is make sure your Realtor is also researching the comparable sales, and before selecting a Realtor, make sure that person is comfortable going to bat for you with the appraiser.

It is absolutely the right time to sell a home. With low interest rates and the market improving, buyers are out there looking and waiting to find the right home. You should be able to sell your home quickly and for market value.

The last item I want to mention is a new analysis from Coldwell Banker, which allows you to compare your home’s value to values in three different cities. You can also look at the national rankings which compare four-bedroom homes in 2,479 geographic areas. Seattle ranks 2,323, meaning that there are only 253 surveyed areas that are more expensive (including Mercer Island and Bellevue).

Jamie Flaxman is a Realtor with Coldwell Banker Bain. She can be reached at jamieflaxman@cbbain.com, or 206-790-0081.

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Comments

  1. Neighbor says:

    Why exactly would choosing a local lender beget you a local appraiser? Wouldn’t smaller lenders be more prone to hiring cheaper appraisal-management companies, which are more prone to using not-necessarily-local appraisers (who are not necessarily those at the top of the game)? That certainly has been my experience.

  2. ilovephinneywood says:

    How accurate is Zillow for Phinney Ridge and Greenwood? What is considered market value?

  3. appraiser family says:

    Banks can no longer choose their own appraiser due to new federal govt. regulations that have been in place for several years now. An appraisal request goes to a clearing house who chooses the appraiser.

    The regulation has severed any direct relationship between the bank and the appraiser. The idea being that appraisers were being pressured to inflate values in order to keep their relationships with the banks.

    While choosing a local lender might be a good idea for different reasons a local bank does not get you a local appraiser.

    We’ve had a couple in recent years and all from places that have no insight into city living which showed on the appraisals.

    An unintended consequence is that a professional appraiser can no longer build their business through reputation and quality of work. Therefore, you get what you get when a bank sends out for an appraiser.

  4. Eric Burgess says:

    So exciting! We bought in the peak of it all in 2006. We have a 2 bd/1 bath on 82nd St./Fremont that we’ve added so much to in the 6.5 years.

    This is really encouraging, especially now that it’s a 3 bd/1.75 bath!

  5. Al says:

    Instead of reporting average prices, which conflate changes in housing mix with changes in valuations, it may be more informative to filter transactions with something like a repeat sales qualifier.

  6. Chris says:

    Pended? Really? Credibility lost.

  7. Not the time to offer less than the asking price. People find it hard to believe, but the market has increased dramatically as of late. New construction has had price bumps in the burbs as well. It appears the game has changed.

  8. I’m the author, will respond to a couple of your comments.

    @Ilovephinneywood – Zillow pulls it’s data from the county tax assessors office, as well as looking at recent sales. County tax info is often wrong (it had the number of bathrooms in my house wrong), and is generally 2 years behind the market. Zillow also misses unique features of your home as well as condition. So obtain a true market value of your home, you need to have a Realtor see your home and then research up to 6 months of recent sales in your neighborhood.

    @Chris – typos happen (I’ve found a another one too, fiv instead of five – even though I proofed it and used spell check, these were missed). Pending is what was intended to be there.

    @Eric Burgess – happy to speak with you about your house, to provide a no-obligation market analysis as I referred to in the comment to Ilovephinneywood.

  9. Mark says:

    @Chris- past tense of pend. Great article Jamie!

    Pend \Pend\, v. i. [imp. & p. p. Pended; p. pr. & vb. n.

    Pending.] [L. pendere.]
    1. To hang; to depend. [R.]

    Pending upon certain powerful motions. –I. Taylor.

    2. To be undecided, or in process of adjustment.

  10. Dava says:

    @Jamie, enjoyed the post. Don’t know your market, but the advice is good.

    @Al, Two thoughts. If we stopped measuring average sales price it would be impossible to measure trends. Using a repeat sales qualifier would be great (In the past I’ve seen this type of logic used to support an upward trending market “paired sales analysis”) if there were sufficient sales of that nature to justify the numbers and the “pair” of sales would need to be static (in other words, changes improvements or decay over the course of time between the first sale and the second sale would need to be minimal). I can’t say if this methodology is currently in use (even in a robust market it was not a favored approach)

    There are a variety of ways to evaluate a market and I don’t think that national data (or even state wide data) can be applied directly to a specific neighborhood.

    I recommend avoiding applying broad based generalities to individual properties. However, measuring trends has value.

  11. Doree says:

    Jamie – The “fiv” typo was my fault. You had the numeral 5, but AP style is to spell out all numbers under 10, so I changed it. But today my very old computer started having the “e” button stick, meaning I’ve been misspelling stuff all day! I also changed “pended” to “pending” in the text, but couldn’t change it in the graphic.

  12. Mark says:

    I would second the comments about a local lender vs. national. @appraiser family it is correct about lenders not being allowed to select appraisers, however they can put parameters on appraisers that are hired. We went through three attempts to refinance in the last year and a half. The first two attempts failed on the appraisal. The last lender, a local lender, required that the appraiser was located within 10 miles of the originating office. Surprise, we got an appraiser who knew the neighborhood, didn’t give us comps from houses on Aurora Ave and we were able to refinance and take advantage of the lower rates.

  13. pegs says:

    @ Mark – if you were happy with your local lender for the refi, would you be willing to say who it is?

  14. Whopper says:

    A room full of real estate agents…. shoot me.