What every hot market home buyer should know about "review date" home sales
It used to be that buying a house meant making an offer, then proceeding with the home inspection and financing once the offer is accepted.
But thanks to market conditions in Seattle and other parts of the Puget Sound region, "bidding wars" are making that a thing of the past.
More home sellers are listing their homes, scheduling open houses, then waiting until multiple home buyers make an offer so they can compare.
It's called the "review date" process. Local real estate brokers say in the hottest communities, as many as 9 out of 10 homes are being sold that way.
For buyers, it means being prepared like never before.
For starters, making an offer with contingencies - once considered standard procedure - can quickly lower your chance of getting the home.
"Sellers today, since it's their market, want your contract to come across with zero contingencies," explained Seattle-based real estate broker Kelley Meister.
Meister and her partners say as diligently as they prep the homes they list for sale - they are equally diligent about preparing their buying clients for homes where the sellers set one date to go over all the offers that come in.
"We sit down with all of our clients and really advise them on the front end before we even get them in the car," said Meister.
Their advice? Be prepared to waive as many contingencies as possible - especially contingencies on financing and inspection.
"Because you're going to have ten buyers, for most homes, and if you come in with an inpsection contingency, sellers are not going to accept it," Meister explained.
Meister and other agents acknowledge it's hard on buyers.
Bidding wars mean buyers must budget potentially thousands of dollars for multiple pre-inspections knowing their bid might not be accepted.
Waiving the inspection contingency means you're willing to buy the home as-is. So it's critical to do you research on home inspectors (don't feel obligated to go with an inspector recommended by an agent) and find a reputable, highly-qualified inspector you can hire to pre-inspect the home before you decide whether to make an offer.
It's also critical to do your due diligence and research the property through public records. At the very least, city or county building records will reflect permit activity.
If the property shows structural improvments but no permits have been pulled, that may be a sign you need to ask more probing questions.
Prospective home buyers should also have their financing buttoned up before the house hunt begins. And pre-approved financing, might not be enough.
"That means it's not a pre-approval, or pre-qualification, it's a full credit underwriting approval from their lender," said Meister.
In Snohomish county, broker John Simmons also coaches his buyer clients before the home search begins.
"So that when we're out looking at these homes, and there are review dates on there, we've already talked about it. We already have kind of an action plan," said Simmons.
"Of course it's frustrating," Simmons added. "It's frustrating for us agents when we're representing buyers and we're in limbo waiting, you know. Ten offers come in. We're one of ten. That's a ten percent chance."
Simmons said he strives to provide buyers with information about all of their options so they have some knowledge beforehand, and know what to expect, including the risks.
"Try to have your offer as strong as possible," said Simmons
At the same time, making too strong an offer can come back to bite you. For example, if the appraisal comes back too low after your offer is accepted - you have to come up with the extra money. If you're not able to close the deal - you lose your earnest money deposit.
In the tightest real estate markets, most agents see the review date process remaining the rule rather than the exception.
Agents say if you're looking for homes under "review date" conditions, you're wise to shop for homes near the bottom of your price range, so you can afford to sweeten the deal.
But make sure you also have a hard top line. A walk away number. Be okay with it and don't get too emotionally attached.