Navigating the New Year: Strategies and Stories from Seattle's Real Estate Roller Coaster

Happy New Year, dear listeners! Aaron Maro here, with my partner-in-podcast Brian Laflame, and we're starting off the year by unpacking the ever-twisting saga of Seattle's real estate market. With a special look at King, Pierce, and Snohomish counties, we've got the lowdown on how recent shifts in interest rates are shaking up the housing inventory. Brace yourselves for a ride through the complex terrain of a market that can't seem to sit still, and get equipped with the insights you need to make your mark in the world of real estate. 

As the pandemic's dust settles, we reminisce on the once-unthinkable tactics buyers pulled off to snag their dream homes. Remember when forgoing appraisal contingencies was as normal as rain in Seattle? Brian and I dissect these adrenaline-fueled strategies and share war stories from the front lines of real estate negotiations. If you're thinking of entering the fray, this episode is your shield and sword, offering wisdom to combat the market's unpredictability.

Finally, don't miss our treasure map to unearth hidden real estate gems in a cooling market. From leveraging extended-on-market properties to the alchemy of mortgage buydowns, we're here to transform your approach to sealing the deal. And because we're all about connecting with you, join us live on Fridays for a weekly rendezvous where real estate meets real talk. Until the next episode, keep your negotiations shrewd and your investments savvy.

👋 Considering a move to Seattle, Washington or its dynamic suburbs like Tacoma, WA & Bellevue, WA? Dive deep into what living in Seattle and its neighboring areas truly feels like.

Explore through neighborhood vlog tours, city pros and cons videos, and get unmatched insights into relocating to the Greater Seattle area! Transition confidently with guidance from a native Realtor® who's eager to help you settle in your perfect home! 🔑

Whether you are moving in 9 days or 9 months, give us a call ☎, shoot us a text 📝, or send us an email 📨 so we can help you make a smooth move to the greater Seattle, WA area! 

Aaron Morrow Realtor Serving (King, Peirce, & Snohomish counties)
📱Call or Text: 206-451-3771
📨Email: aaronmorrow@livinginthegreaterseattlearea.com
📅Schedule a Zoom Call So We Can Meet "In-Person" 
https://calendly.com/aaronmorrow/1-on-1-zoom-meeting 

This is my Intro to every Podcast and YouTube video 

This is my Outro to every Podcast and YouTube video 

Transcript

Speaker 1: 0:12

Hey everyone, Happy New Year's. It's Aaron Maro here and Brian Laflame, my co-host and awesome Washingtonian lender.

Speaker 2: 0:24

Nope, that's it, awesome Washingtonian is.

Speaker 1: 0:26

What I mean is yeah, yeah, there you go. Yeah Well, we're here, you know, right after a restful holiday season, you know, took the holidays off. We took one week off from this live stream to be with our families, Enjoy the crazy shenanigans of the holidays. Real quick, for anyone that's following Tango's story, tango has officially been adopted and he's with us. Forever Adopted family.

Speaker 2: 0:53

Yeah, oh.

Speaker 1: 0:54

Bittersweet. You know all that. Anyways, I'm going to move on from that, but we're here, we're back to, and today we're just going to talk about a smorgasbord of stuff, including just what's going on with the current market stuff and you know, just tips on what you can do as this market in the Seattle area starts to heat up right now with why these interest rates start to come down. Brian, any takes right now Anything to mention right off the bat, right from the get-go.

Speaker 2: 1:27

The market is being the market. We had a really nice rally in the year, which we've talked about in the last two podcasts, and, as expected, the market took some of those profits. The past week or so we had some really, really, really big economic reports that really move the markets, mostly doing jobs that come out the first week of every month, ending with today's Euro-Liber Statistics, non-farm's Payroll Report and some other. So the market is, I mean, without getting too technical, we've given back some of the gains, but we're holding nicely well below our October highs. We're still about 100 basis points in the 10-year, which is about 1% below our October highs in the 10-year Treasury.

Speaker 1: 2:12

Got it Okay. Okay, Definitely I have. Let me save hold on. I'm going to pull up actually a slide here because I have some statistics to show of what has sold. It's not super recent, but from MLS I like to bring up what has been kind of going on since November for King Pierce and Snowmish County. So let me put this in here real quick. Let's see here. Let me kind of get this in here real quick, let's see if I can get that in there. Okay, so check out this chart real quick. So these statistics, according to the Northwest MLS Service data, are of single-family homes and condos from November of 2023. So when we're getting the statistics to be able to show you, sometimes I like to go for a little bit a one or two month lag, just to be able to provide all the numbers from all three counties.

Speaker 1: 3:12

But notice here, with the trend or with all that we've got going on here, I could show you. Let me see if I could find what we've got going on from last time. So, a couple of things to note here. So, according to recent Northwest Multiple Listing Service data, interest rates eased by approximately 6.62% as of December 15th 2023. So that's down a full 7.8% in October of this year.

Speaker 2: 3:51

No 2.62 from 7.8%.

Speaker 1: 3:54

Yes, yeah, correct, and it's a substantial 17% decrease in inactive property listings compared to the same period last year.

Speaker 2: 4:05

So I want to stop on that, because we've talked about this a bit in the other podcast. When interest rates go down, inventory also goes down. People think more people will be listing their house, so more inventory is going to come on the market. The reality is those sellers are buyers, but low interest rates bring first-time home buyers who don't have a house to sell. First-time home buyers are over a third of all buyers in the market and first-time home buyers don't have a house to sell. So inventory decreases as rates go down, not the inverse.

Speaker 2: 4:34

Right yeah, I'm not going to. Let you just say that.

Speaker 1: 4:39

Yeah, and then it creates a cluster situation because you've got more buyers entering because they're like we less interest rates, I can afford more house but then you've got less sellers coming on the market and now you have more demand coming into a situation. So now it's creating more of a competitive situation, more of a bidding war situation, Like we've been talking about in this podcast.

Speaker 2: 5:06

Yeah, november to December King County went down almost 18.5% in homes for sale. That's inventory, that's down. Number of homes on the days in the market went down 9% year over year. Over 58% of homes in King County sold within 30 days.

Speaker 1: 5:23

That doesn't help inventory. That hurts it. No, it doesn't. It means there's competition.

Speaker 2: 5:27

These houses are people that want to buy them. There's more competition.

Speaker 1: 5:31

I think you mentioned this time last year is that 40 days on market?

Speaker 2: 5:35

41,. He were way off 41 days, yeah, 41 days Way off by one day.

Speaker 1: 5:39

Yeah, super embarrassed. I need to cut this live stream right now. Cut it, cut it. Give up your license, moro. Yeah. Yeah, I'm going to go back to working at T-Mobile or doing my other jobs.

Speaker 2: 5:56

Don vacuum cleaners door to door on the houses that are on the market.

Speaker 1: 5:58

Well, I was the mall cop for a bit there too, oh are you serious?

Speaker 2: 6:03

Can we do the?

Speaker 1: 6:03

rest of the time, the villager firefighter. The mall cop stories. Gosh, no, you don't want to hear my mall cop stories. I don't think it's our target audience on this one. Okay, can we move on the live?

Speaker 2: 6:15

streams who wants to hear?

Speaker 1: 6:17

If we get enough comments, if we get enough people actually commenting that they're interested in that, we will start slipping some of those stories. Another thing that I wanted to mention is NAR, so National Association of Rulter. They foresee that there's going to be a 13.5% increase in existing home sales and anticipates that the new home sales, which have defied market trends by rising approximately 5% this year, they could see another substantial increase of 19% by the end of the upcoming year, so through the end of 2024. So I don't know. We're definitely here for it. That's why we kind of titled the thumbnail New Year, New Market. It's definitely obviously like you've been talking about. Everything's been trending downward on the interest rates, as they've been going down and the activity is definitely starting to show.

Speaker 2: 7:20

Yeah, we talked about this time last year. People home purchase applications went up by their largest week over week increase in history. Last January, January 2023, as rates dipped down and we have seen fewer. We haven't seen quite the growth that we had last year because last year the market gained busters out of the gates with rates going down. Here we saw that happen in November and December, moving into January, but we're still seeing to your point earlier a lot more demand and a lot more people out. I got to tell you, man our phone is ringing off the hook that there's no rest for any of us in this industry right now, because people are seeing what we told them that was going to happen before and they're seeing it happen for their eyes and now they're acting and it's happening?

Speaker 1: 8:06

Yeah, it's happening. Yeah for sure, 100%. Yeah, I totally, I completely agree. One of the apps that us realtors use, or a lot of us realtors use. Some realtors boycott it, and that's a completely different story altogether, but it's showing time. Yeah, showing time is an app that a lot of listings use.

Speaker 2: 8:29

I would say it's so easy.

Speaker 1: 8:31

I mean, that's a whole different ballgame about how Zillow owns it, zillow owning the data to showing time anyways. But with showing time we're able to when I have buyers asking me when they want to see a property or at least the last year is pretty easy to book something, almost sometimes even like a week out. Now it's getting to the point where I'm watching it because I remember when you go into showing time during the pandemic things would be like just booked out, solid, you know and stuff, and you're like you buy a site of seeds sometimes.

Speaker 1: 9:09

You were a magician trying to fit in, showing where you could like if you had it like, for instance, if I had a relocation buyer come in from out of town and they wanted to line up and stack up like 15 different properties in one one outing or one weekend During the pandemic.

Speaker 1: 9:30

It was like, oh my goodness, how do I fit them all together? And then they would be like, hey, we only need like 15 minutes at each property. And then you're like figuring out the drive times. So then it would almost take a full two hours to really like figure all those out, because half the properties are not vacant where they're scheduling conflicts, with the sellers being like, no, don't want that time. So you're trying to figure that out Now. Now I'm starting to see them fill up. That was kind of my whole point is I'm not seeing crazy like booked out solid, but I'm starting to see more black spots, is what I call them in the time out where there's more actually yeah.

Speaker 2: 10:11

Yeah, I don't know if you know this, but I actually have a live picture of you scheduling those 15 showings. I don't know you're going to talk about this, I just happened to have it up so.

Speaker 1: 10:27

Oh, okay, yeah, Do you want me to bring it up?

Speaker 2: 10:30

Yeah, hold on, I all right. Yeah, I'm going to share my screen and this is a live looking you guys, of Aaron scheduling those 15 showings over one weekend during the pandemic.

Speaker 1: 10:44

Yeah, definitely. This is just an average. Just an average weekend for me, right? Yeah, okay.

Speaker 2: 10:52

It's an average weekend. This is Aaron Go at the show time, with all that Connecting all of the hot, I mean like, but we can shave off four minutes of drive time if we go this way.

Speaker 1: 11:04

And then you know what would always ruin the whole schedule is if the client was like sorry, we're going to be 15 minutes late because of blank, and then it just threw the whole scheduling off the whole thing that means we're not seeing the details.

Speaker 2: 11:16

So I guys, ah.

Speaker 1: 11:19

So I can talk about my anxieties as a realtor as far as like having to reschedule.

Speaker 1: 11:23

I love that as we're going on the fly, because then what we're doing is now we're in a whole situation where I've got like let's even be more realistic where it's like, let's say, relocation bar that only wanted like eight properties in one go, but still eight solid properties. If they were going to see it in 15 to 20 minutes segments, it takes an average of 10 to 15 minutes to get to each property and they're seeing it. You know like a radius of you know they're looking at everything within like a 15 mile radius. That's a full five to eight hour day, you know. And if we're off by 15 minutes, when we've perfectly crafted that scheduling and all everything's booked out, you can like it's perfect chaos, because now they've been a little bit more lenient.

Speaker 1: 12:14

Where you've seen some of these rotors put in there where now you can do overlapping showings. That's like back now, but during the pandemic there was no overlapping showings there was. You had to have your own time due to COVID protocol, you know. So if you missed your showing, it's done. You know what I mean. Like you'd have to go in there and reschedule it and then try to fit it in. So then I'd be like okay, well, we missed number one. We're on our way to number two. Now where can I fit number one? So then we get back on course. And then I'm doing that live while we're at number two to try to get us back on course, and then I have other clients that what is this? Hold on, I want to see this one. Yep, oh man.

Speaker 2: 13:06

That's you, but yeah, you're doing all that while driving to a place you've never been to.

Speaker 1: 13:11

Yeah, talking to the agent, talking to the buyers.

Speaker 2: 13:14

Yeah, that's tough 100%.

Speaker 1: 13:16

And then sometimes it's the opposite direction, where it's the opposite problem, where you have a client that's so efficient and they're so ahead of schedule that they just dipped into a house five minutes later and we're like we saw it, it's good, let's head to the next one. It's like, okay, well, it's cool, we're just gonna have to wait outside for 15 minutes till it's our time, you know, because it's not our time yet you know, but you can go grab coffee or whatnot.

Speaker 1: 13:40

So it's just it's been flexible in figuring out all those you know things. It's never I've never had a disaster situation where it didn't work out, but it's definitely taken some finesse to figure out.

Speaker 2: 13:54

There's a lot that could seem to do.

Speaker 1: 13:55

I've had it one time where a client had me book everything and then they got sick and they're like never mind. So then I was like, well, there went three hours of booking, but you know, that's probably the worst of it, you know is is well-crafting three hours of looking for a client.

Speaker 2: 14:16

Yeah well, yeah, I don't have clients go out when they're sick, so no, but that's part of it that, I think, is it's good insight for people who aren't behind the curtain that one small change has a ripple effect, and it's not that that change isn't going to happen You'll make it happen for them but the ripple effect that that causes and it's not as simple as just I'm going to be a little bit late or I'm going to be a little bit early there's a whole lot more that goes into it, especially when you have five or 10 stacked up. You're showing a house, you know, in September of 2023, you're probably fine.

Speaker 1: 14:52

Yeah, it was totally fine. Yeah, when September 2023, it was like take your pick when you want to see it, you know.

Speaker 2: 14:59

I can get you. You could stay there all day if you want. They don't care. Yeah, oh yeah. What do you think is going to happen in this market going through into 2024? Any predictions you've been working on?

Speaker 1: 15:13

Well, first off, I think interest rates are going to play a huge effect on it. Do you see us getting into realistically? Do you see us getting below six? Yeah, I do.

Speaker 2: 15:28

Absolutely, if we get into the fives.

Speaker 1: 15:30

If we get into the fives, I think it's going to be a bloodbath, Because I feel like the fives is going to be the new reality of. That is what the markets knew, what the three and fours were.

Speaker 2: 15:45

Because just people do not want to miss that again.

Speaker 1: 15:48

No, well, because we're never going to get the twos and threes back ever. Like that was a unicorn, you know what I mean?

Speaker 2: 15:54

Yeah, it was? Yeah, it was. We got there under false pretenses. We got there because of Fedceptinus, such a large buyer, and now we're seeing part of the effect of that no, this inflation, and is it directly? It isn't only because of Fed intervention, but housing prices going up so quickly and the housing market being so competitive and pushing so many people out. That is a direct reflection of the Fed jumping in at the beginning of the pandemic and keeping rates really low. I don't see them making that same mistake again.

Speaker 1: 16:28

Yeah, yeah, I don't foresee it either, so but I think if we, when we go sub six, it's really, it's really going to be picking up and taking off. I think in some areas, especially like on the east side Issaquah, you know some of those areas we're probably going to start seeing the some of the stuff I didn't like too much come back, like the crazy additional down payments you know, back on the table or talk about that for people who are new and never heard that before.

Speaker 2: 17:09

What is additional down payment?

Speaker 1: 17:10

Yeah, yeah. So yeah, it is a big deal. Well, and you know what the additional down payment is like. The better it's, the better alternative to what you could do, Right, but let's talk about that for a sec. So, when the market was crazy and I've never seen this before this like started during the pandemic, where it was so competitive that people started waving their appraisals Just flat out.

Speaker 2: 17:46

What does that mean? To wave an appraisal?

Speaker 1: 17:47

Yeah, yeah so. So normally when you purchase a property and you have some sort of financing on your property, you know this right your lender is going to have the property appraised right and the appraisal is there for to make sure that the property is a professional opinion of that.

Speaker 2: 18:10

It's worth what you are paying and what the lender is going to finance for you right, it's an independent third-party opinion of the value of the collateral of the bar.

Speaker 1: 18:19

Exactly exactly. So, with that said, it's important to have those. It's important to have that in place because it's a market check, it's a market protection to help make sure you're not overpaying for the home in theory, and your lender also wants to make sure that you're not overpaying for the house. With that being said, there were buyers out there that were just waving this contingency, and what that would mean is, if the appraisal came in less, that buyer was on the hook to pay, whatever the difference was. Because, traditionally speaking, what would happen is, if an appraisal came in less on a deal, you, as a buyer, get a second opportunity to renegotiate terms with the seller, where, if the seller doesn't come down to the appraisal price or you don't meet the seller halfway or come up with some out-of-pocket to figure out how to come up with the difference between whatever you and the seller are agreeing on the purchase price and what the appraisal amount is, the deal's done. It can't move forward. So that protection was in place for you, as a buyer, to not be on the hook to buy a house that you couldn't pay out-of-pocket for in a situation where the appraisal came in less than that value. So that protection is in place for you as a buyer to be able to let you walk away from a deal that a seller is not going to negotiate or work with you in coming to a resolution on that if the appraisal comes in less than that.

Speaker 1: 20:04

Now, what we were seeing a lot during the pandemic is a lot of houses were still absurdly coming in at value Like you could just throw out the wall of price and the appraiser was appraising at that, which was nuts.

Speaker 1: 20:21

But still there were plenty of people out there that were taking the risk of saying, look, I'm just waving my appraisal protection. I don't care what the difference ends up being, whether it's 20,000 difference, whether the appraisal comes in 200,000 difference, whatever the difference is, contractually I'm on the hook to pay the difference or else I lose my earnest money if I walk away from the deal as the buyer which was nuts. I mean some people. I'm not going to say like it wasn't right for those people because they obviously clearly won the deal and they got into houses. But I was very careful over the pandemic to properly educate and consult with my clients on what the ramifications would be for doing these extreme moves in their purchase prices to win the deal and we would go over what could happen, what's the worst case scenario, and we needed to make sure they were okay with the worst case scenario being an actual possibility, like a reality that could happen.

Speaker 2: 21:34

Yeah, yeah. Your job is to advise them. Their job is to say it's worth it to me or it's not Of course you just got to let them know the risk.

Speaker 1: 21:43

Yeah.

Speaker 2: 21:43

The risk and from a seller, it's amazing If I have 10 offers and my houses are sale for $500,000 and I have 10 offers and one of them comes in at $575,000 or $600,000, but I'm like well, my realtor and I, we did our research before listing the property and we think that it will appraise at $500,000. We think that's what the market says. So I want some protection from taking this $575 offer. I'll give it to you, but if the appraisal comes in anywhere between $500,000 and $575,000, you're on the hook. Mr and Mrs Byer, that's great for a seller.

Speaker 1: 22:12

Completely agreed. If I have like 30 offers on the table and the two best offers are where, like, let's say, my house is priced at $1,000,000 and I know it's probably going to appraise for $1,000,000, not much above that, and one person is like saying, hey, I'm going to offer you $1.5 million, right. But then there's like they have a normal appraisal contingency in there. There's nothing extra about their offer that stands out. But then the other offer over here says, hey, I'm going to offer you $1.25 million and I'm backing up the $2.5 million by saying I'm going to pay that out of pocket if it doesn't appraise. I'm going to go for that one, as long as my I'm confident in my realtor that we've done our research, that it's not going to appraise above the $1 million. You know, because Bill Linder would appraise that property for one and a half million if we've done our research.

Speaker 1: 23:08

You know, that's the better offer to go for Now. This is obviously as long as we've looked into the financing and you know your listing agent has actually called the Linder, fact checked.

Speaker 2: 23:20

Well, a lot of times, a listing agent would need proof of funds. Hey, do you have the money to cover this? And then we'll accept your offer, which is there to do I want to see it.

Speaker 1: 23:28

I want to see it too. I don't want to just take, I don't like to just take the Linder's worth for it when we're dealing with that much money, you know.

Speaker 2: 23:35

Yeah, and I also. I want you guys to watch this, if. I don't have to if we have multiple offers you can ask for more protection for your, for your salary you know, I want you guys to realize, watching and listening, wherever you're watching or listening, the difference between Tacoma and Seattle is a quack For me. My example is $500,000, right to a million Very different clientele between the King County line and the Pierce County line.

Speaker 1: 24:01

Well, and I think that's that's the thing for our show. We're covering on both ends of the spectrum here because, that's the thing we deal with greater Seattle area. So like that's, and I deal with the different clients. You know I'm working with the clientele that's looking all the way down to Olympia than all the way up deep snowmish to then. You know up in Everett.

Speaker 1: 24:22

So I've got, I've got them all across the board there, you know, yeah, yeah. So I think I think the price it definitely varies as far as how aggressive they got. But like to share an actual story, for instance oh, let's, let's tie it in though. Let's talk about what that additional down payment was like five minutes later, right, or 10 minutes later.

Speaker 1: 24:45

Right, I haven't even answered that yet. So the additional down payment form is actually like a, in my opinion, a better solution for a buyer to offer if they're trying to make a competitive offer, but they still want some protection, compared to just flat out waving their appraisal.

Speaker 1: 25:02

So what the the additional down payment form says is it basically has you as the buyer, pre agree upfront to a certain amount out of pocket that you will be on the hook for to pay if the appraisal comes in less than so. On that form you're telling the seller or you are holding to yourself contractually to the seller saying Mr, mrs seller or Mr seller or whoever, I am bound by this contract. If the appraisal comes in less on your house by whatever, I will pay up to blank amount out of pocket to cover the difference. Now it also has in there still your protection, because if there's any if it, if there's any more above that amount, now we have to negotiate, you know. So you're only pre agreeing to a certain amount out of pocket, you're only on the hook for that amount.

Speaker 1: 26:06

So what I had a lot of clients do, that they could do and they were comfortable with and we were properly consulted them with, I had clients, you know, in the lower price range. They were agreeing to 20,000 out of pocket when they could, or they're agreeing to 30,000 out of pocket. I had clients in the higher price range. So someone were like, hey, when it was a bloodbath, they're like, hey, I want this one meal property. I can do 100, 200 K.

Speaker 1: 26:31

You know that I want to get in you know, because I want that 2% interest rate right now. You know like um it made sense to them.

Speaker 1: 26:40

Yeah still had some clients. After I advise them, we walk through everything pros and cons, they just flat out leave the appraisal. Um, but we went over what could be. Even I have them sign in writing that they understood everything that we talked about. You know, um, yeah, but uh, yeah, so that's what. The additional down payment. So I think we're going to start seeing the additional down payment forms creep in more. Um, come on, let's see here. So we actually have a couple of questions on LinkedIn. I love this. Okay, some people are coming here. So, um, I think we've actually asked. So looks like a couple of questions here. Sorry, guys, that I've been so enthralled with Brian and I'm learned new to this multiple live stream, so I'm trying to figure out where the comments are coming from. But, um, let's see here.

Speaker 2: 27:32

I'm sorry if I bought your name.

Speaker 1: 27:34

but Mahesh here asked do you think interest rates will go down? Yes, they are starting to actually go down. Why didn't you mention to Mahesh how much they've gone down, even just in the past couple of weeks, right now, yeah, so um.

Speaker 2: 27:48

We have gone down from our um, our highs of around 8% down into the mid sixes. We've settled into the mid to high sixes. Right now, uh and and this feeling is different this time as the economy starts to show the cracks that the Fed has been talking about, the Fed starts to change the um, the demeanor, uh and um, the vocabulary that they're using about what they see moving forward. The market is pricing in a lot of federal um, federal Reserve interest rate cuts. The Fed thinks they're going to cut about three times the market saying between six and seven in the next year, and what that means is the Fed is going to try to reverse its course, thinking that it has gotten inflation under control, and now try to repair the damage is done to the economy, to get in and the control, which, in my opinion, it's a little bit too late. We'll be moving into a recession and interest rates always do really well in recessions.

Speaker 1: 28:40

Yep.

Speaker 2: 28:40

So yeah perfect answer.

Speaker 1: 28:42

We also have one more for Mahesh Uh you know, how is the house market for the next six months? Um, which we've kind of sort of been touching on this? Um, I think it was a little bit late on this because this was 18 months ago.

Speaker 2: 28:55

So I hope you're still watching, right when we locked in that new.

Speaker 1: 28:58

Sorry guys, I'll be a little bit more Johnny on the spot and the next one on this, just because, uh, LinkedIn audience is starting to pick up on this. Um uh, yeah, uh, hold on. There's something in each side. Which area is good? Oh?

Speaker 2: 29:10

yeah, yeah.

Speaker 1: 29:12

Here's the new. Here's the new one. Uh, are you local? Yeah, yeah, mahesh. So, um, brian is local Washingtonian lender, but I am a local realtor here. Um, I work with a lot of clients through LinkedIn and YouTube, but I cover King Pierce in Snowish County, including the East side area. So, um, I I've got your first and last name. So, buddy, after I get off this live stream, when we get off this, I'll go right on to LinkedIn and try to make a connection with you. Get connected so I can reach out to you and chat with you about where you're looking for and talking about what the market's gonna do in the next six months.

Speaker 2: 29:52

I want you, erin, to talk about the local market. I'm just gonna talk about the seasonality of real estate and how it's changed post pandemic. So seasonality used to be fall and winter. Real estate, some sales and real estate listings would fall off. Spring and summer is the real busy seasons for real estate as, for the most part, houses show better. People wanna move when their kids aren't in school. There's a lot of reasons people move in the spring and the summer. Now we are completely interest rate dependent on our seasonality. You can see demand wax and wane as interest rates go up and down, not just seasonally in April or May or August or down. In December. We had a deluge of mortgage purchase application and applications and people looking out outlooking at houses in November and December that we hadn't had before because interest rates had gone down. So the next six months, as interest rates continue to tick downward not in a straight line they're gonna go kind of, you know, underlaid up and down as they're on their downward trajectory, we're gonna see a much busier market.

Speaker 1: 30:54

Yeah, no, absolutely so. Locally right now I still have a lot. I have some clients that are looking on the East side right now that are still getting some really good deals, but it is starting to pick up. So I'm seeing shorter marketing times on some houses and there are still some unicorns out there that are getting napped like that Now do.

Speaker 1: 31:15

I think it's still a better time to buy right now than it's gonna pick up over summer springtime. There's always pros and cons because, based on your seasonality, there are gonna be probably the most amount of inventory on that late spring. Summertime is gonna be when you're gonna see the most inventory on the market. But you know what there's gonna be the most amount of buyers looking at that time too, because everyone has been getting off the couch now that has been looking, said they're gonna just start the process now. You know from last year over the holidays. They're getting with their lender, they're getting qualified and they're in research mode right now and they're out looking but they're not seriously about to pounce on anything. So you're getting some of these people that aren't ready to nab the deal yet, but they're looking to grab something when the market's super hot over that summertime period when they're finding the right property. So I've had buyers be able to get good deals in any part of the market. But to answer your question, mahesh, as far as the six month period and the next six months, because right now gosh, we're in January, so six months would put us right at that towards the, you know, summertime period. It's usually it's gonna be super hot towards that end of that six month period, but it's just gonna be a ramp up from here. It's literally just gonna be an uphill from now till that summertime.

Speaker 1: 32:47

Usually seasonality it starts to roll off right around back to school season is what we typically see. Now. The market was a little weird over the last year just with everything going on with how high interest rates were last year and it was doing some a little bit funny stuff. But if we're looking at how it's been over historically over several years, you know, like over the last 20, 30 years, right, brian, cyclically I'd say, for even locally to our region, we see it's just gonna be a inventory, is slowly gonna creep up for seasonality, for the area, for their pockets, like if you know, if I was doing a deep dive, for instance, mahesh, or any clients that I'm working with that's looking on the East side, like, let's say they're looking in Kirkland, kenmore, bothell or whatever they have. They tell me these four cities are looking in.

Speaker 1: 33:49

What I do is I actually give them the data on what's showing them what was six months last year versus what is six months, what we are at currently. So then we can have a good prediction of the trend, and it's usually following a similar model. I'm guessing what we would find is probably less inventory than we saw last year for those time frames. So, for instance, if I were to pull the data for you for on the MLS and it told me there was a total of I'm just throwing a number out there because I don't have my MLS in front of me right now but let's say there was a total of, you know, 800 homes that sold specifically in Kirkland for the month of July, right, I'm guessing I'm gonna see less, probably like closer to six or seven this year compared to what we saw last year.

Speaker 1: 34:53

That would be kind of my trend is what I would guess for year over year, based on the interest rates going down and the buyer activity going up is what I'm thinking. But it's gonna lead to more sales. So that's the interesting thing Listings go down but sales go up. So because the buyer is more, buyer demands gobble up more of the houses. So the demand, the supply, cannot meet the demand. As much is what we run into. Brian, looks like you have a chart that you wanna see. Let me pull it up here.

Speaker 2: 35:25

This is inventory and we're talking about the seasonality of inventory and how historically it is looked. You see these undulations, vacillations up and down, and that's recent real estate seasonality as we continue to move down in active inventory where I like to point out pre-financial crisis and the mortgage meltdown look at inventory going up and then spiking way up to its highs right before 2008 when the real estate market crashed, and we have not gotten out of this inventory like downward spiral and we haven't gotten out of it because interest rates have been moving down for the past 40 years. So this is a look at the seasonality in real estate historically up in the spring and summer, down in the fall and winter.

Speaker 1: 36:17

Yeah, definitely, yeah, exactly that's what we see. So, but I'm just like Brian, I'm a numbers geek when it comes to looking at the data. I love to do this with all my home buyers and get a good idea of what's going on in the market and get a holistic approach on what my buyers are looking for so we can talk about how we can go all about that. I really go into what we're doing and strategies on how to help our clients be able to get into houses, so how we fight I know I even put in the description what we can do to help clients right now, with the market picking up, how they can get some better deals on this market. So there's a couple of things that we can do. I know Brian will have maybe some loan products that we could talk about. Like I know some buyers were doing what are called like two one buy downs and rate buy downs and they're having sellers ask when we were in a situation where we could get a seller to negotiate these terms, if we found property that aligns. Oh, by the way, mahesh said he'd like to connect with both of us. So thanks, mahesh, we definitely will connect with you after we get off our live stream, anyways.

Speaker 1: 37:42

So during the over the last year, when the market kind of cooled a little, this was a lot of fun. We were able to get buyers more stuff, so we were able to ask sellers for more closing costs. We were able to get price reductions on houses. We were able to get what are called rate buy downs, where sellers put money towards basically paying for the rate to come down on their product and it could either be a permanent buy down for the course of the 30 year product or, if you wanted to yield a better short term result, you could have it to be a more temporary rate buy down, like a two one buy down. I can let Brian go into kind of what those works, and these are things that we could still ask for if we find the right properties that don't have everyone in their grandma's a bajillion people bidding on them.

Speaker 1: 38:36

So my strategy to tie in for buyers out there, especially as the market heats up, look for the houses that have still been sitting. There's gonna be houses that as we go through this transition period, as the market gets hot, there's still gonna be leftover houses that other people did not buy that are gonna transition into this more competitive market right now and those houses that have been sitting on longer. There might not be anything inherently wrong with them, but due to the fact that it's just been longer days on market, there seems to always be stigma that just buyers aren't interested, or all the buyers looked at them so a lot of people overlook them. I've had so many buyers get really good deals on properties that have sat on the market forever. So those are properties that you can come in and if you see it and you like it and you can make it your own. Usually you find a seller that if it's been on market for 90 days, half a year, the seller's ready now to actually start talking shop, make a good deal happen.

Speaker 2: 39:46

Yeah, we talked about in King County 58% of houses sold within 30 days. Under 30 days, that means 42% of houses. Are these aged houses you just talked about where you can get a better deal on them? Maybe because sellers put their house on the market for a reason. They have a thing that they're doing, that they need to sell this house to do Whatever it is. There's a reason and they don't put it. I can tell you what the reason isn't. The reason isn't for it to sit on the market, so if you can find one of those 42% of houses that have been on the market for a while.

Speaker 2: 40:15

You absolutely can still jump in and negotiate.

Speaker 1: 40:19

Yeah, for sure, there's other strategies that we implement, so I don't like to divulge all of the secrets on my live streams just cause I know there's other like.

Speaker 2: 40:30

Those are from the cash after.

Speaker 1: 40:32

Yeah, I like to. Well, I talk to them with my clients, you know, just cause to give them a leg up. But I'll just talk about the general ones, cause there's some super easy ones that I do for my clients, cause they're super easy and any agent can know about doing them, but it's just they're difficult, Like meaning like it's super easy to know and find how to do these strategies but they're difficult to implement properly.

Speaker 2: 40:59

So Easy, but hard.

Speaker 1: 41:01

Yeah easy, but hard, simple but hard. So I go about. You know, I'd say about 99.9% of all the sales happen through the MLS, that's the multiple listing service. But I would say you know, out of the several dozen clients that I work with every year or home buyers I work with every year, I get a couple or a few that I can find an off-market deal or an off-market property and we get them a really a good, a sweet deal on an off-market deal.

Speaker 1: 41:34

So what I mean by off-market is these are houses that aren't for sale on the MLS. So that's whether you consider a for sale by owner on Craigslist or a for sale by owner on Zillow or a for sale by owner just on some mom and pop not well-known website. You know that I go perusing and look around for that is local to our area. That's also we're talking about. If I know your specific style of what you're looking for or I can put together a list of what's called expires and cancels. So what those are is those are properties that were for sale on the MLS up to like maybe I'll do up to two years ago. I'll make sure they like. I'll clone your active search that I got going on, but then I'll create a list of expired and cancels and then what I got to do is I sift through that list first before I send it to you, because it's like I consider it a dirty list at first and I got to clean it up because what I have to do is actually have to check the tax record on each one to make sure that the house actually wasn't sold off market and make sure that the same owner that was trying to sell it up to two years ago still owns the property, because I want to make sure that there was a reason they were trying to sell up to two years ago. You know they had their hand raised. They're like I'm interested in selling.

Speaker 1: 43:08

At one point Maybe it just didn't sell because they were unrealistic on the price at the time. But maybe now the price is caught up to the market, so now the price that you would pay for it is reasonable to what they want. Now, you know, maybe we can make a win-win here. So I get you that list. You know, maybe I start with like 100 or 200 and I whittle it down to like 25 for you to look through. So it takes me a while. But I do that for my home buyers because we're able to sometimes get them a good deal on an expired, canceled, off market deal. These are just examples of off market properties that we can go in there and make a deal to a homeowner that wasn't thinking about putting their house on the market but would still be open to selling to the right person. You know Well also.

Speaker 2: 43:59

then you as a realtor who's you know, wearing the leather out on your shoes and running up your phone minutes and working like in the mines, working hard for your client you're able to circumvent other competition. The thing about the Northwest Multiple Listing Service that maybe people do or don't understand is that NMOS those listings are sent out to every single realtor. There's tens of thousands of people in Washington, yeah.

Speaker 2: 44:27

Yep, so every one of their buyers can see this house or sale. When Aaron goes and works for something that is not on the NMOS, that means those buyers aren't seeing it and you, as Aaron's client the buyer are able to negotiate on your terms with the seller, not negotiate against other buyers trying to get as many of your terms as possible. The benefits are incredible and it's done because Aaron works so hard I know because he takes me all the time- and those were just.

Speaker 1: 44:55

Those were just the easy public ways that I'm completely fine sharing on this live broadcast, just in case any of my other realtors are listening where it's like you could do this too easily. But then let's chat any of my buyers. They know the other ways that I go about sourcing off market properties. It will blow your mind with how we can connect you with some off market homeowners and make that connection.

Speaker 1: 45:25

But I yeah, not to, not to to, but I mean I would love to eventually have a private MLS database in the next like 10 years of here's. Who wants to sell? I have this person they want to buy the right person. But yeah, it's gonna be called the Northwest Moral Listing Service, the NMOS stuff the Northwest don't list your home, but if you ever wanted to sell to this specific person in this so you never had to get off your couch to list it, I found you the right buyer, here you go.

Speaker 2: 46:01

Yeah, yeah, so that database, whatever that is, that's what we're going to give them that one strategy you also talked about doing temporary or permanent buy downs.

Speaker 2: 46:08

I don't recommend temporary buy downs right now as rates are going down, but I will talk about them a little bit. Yeah, permanent buy down is you're going to pay the investor who is going to pool investors who end up purchasing this mortgage a set amount of interest upfront for the right to pay a lower amount of interest to the life of the loan. So say the, the, the rate for the day that's not going to cost you anything and they're not going to get any credits for this is 7%.

Speaker 2: 46:34

You can buy it right down to, say, 6.75% and maybe that costs you 1% of your loan amount, half a percent of your loan amount. That's a permanent buy down. The inverse is true, where you can take a higher rate and you can get a little bit of a credit from those investors, so they're going to pay you interest upfront to help pay your closing costs for the right to have higher interest payments throughout the life of your loan. That's a permanent buy down Right. A temporary buy down means you're going to have a 30 year fixed mortgage. We'll use the same 7% interest rate and if you do what Aaron talked about a two, one buy down, you're going to have the first 12 payments, the first 12 months. The first year is going to be at 5%. That's the two part. So it's going to go from 7% to 5%. The second year you're going to have a mortgage at 6%, so you'll step up a little bit. And then the third through the 30th year. If you never refinance, it's still a 30 year fixed mortgage at 7%.

Speaker 2: 47:19

The benefit of this is the cost of it is exactly commensurate to the amount of money that you are spending or saving. So say, over those monthly payment, those two years your monthly payment savings because the first year, paying 5% of the second year 6% is $12,000. The cost of the temporary buy down is just $12,000. What happens is we take that money, we put it in escrow account and we supplement your payment every month. The good news is, if you decide to refinance because rates come down to a place where it makes sense and you're still within your temporary buy down period, that money is yours. It just comes back to you, as opposed to a permanent buy down. That money will never come back to you Because you whether you keep the loan for a month, for a year or 30 years you told the investor I'm going to pay some money up front to have lower payments about the life of the loan. They don't care how long a buy for the loan is.

Speaker 1: 48:04

That was the contract Right. So even if you refinanced it. Tough luck right.

Speaker 2: 48:10

That money is at some cost For a temporary buy down. I don't recommend them now. If you're going to, I would just do a 1-0 buy down, which in this scenario, would be 6% for the first year and then 7% thereafter. It's much less expensive and, with rates trending downward right now and trending downward relatively quickly compared to the last 20, 21 months, I wouldn't be paying for a lower rate because I'm going to be refinancing in 6 to 8 months when rates are generally lower anyways.

Speaker 1: 48:36

I agree With your trend. I would much rather go for a combination of if we can negotiate a combination of the purchase price and the closing costs.

Speaker 2: 48:47

Absolutely 100%, I would say my cash and I would hope for the seller to pay some closing costs or for price reduction. 100%.

Speaker 1: 48:56

Yeah, for sure, and I love looking for those. I love hunting for those properties that have been sitting so we can get a good deal. Especially, we need some of those wins if we enter a more hot market, which we looks like we might be entering, but who knows? It was a little weird there because even last year, with what was going on with high interest rates we're talking about interest rates gotten to the 8th folks right.

Speaker 1: 49:28

And even in the 8th there were some high price points. We're talking about above a mill. In certain areas houses had bidding wars.

Speaker 2: 49:37

Yeah.

Speaker 1: 49:38

Multiple offers nothing crazy where, like, people were like here, take my first born and then here's my kidney, and then waived appraisal, but we still had people being like I'm going to go 50,000 over and waive my inspection or pay for a pre-inspection, that stuff. That was going on. So it was like certain pockets in certain areas which you can tell it's in the subjectively more desired area of the greater Seattle area, depending on yeah, it's where money goes, to the people who have money they go.

Speaker 2: 50:15

That's where they decide to go. Now I want to say, to your credit I don't know anything about that and a lot of realtors that I know don't know anything about that. Aaron is always, has this finger on the pulse, is a data nerd. I don't know if you can tell by looking at him he's a nerd for what's going on in this local market. He will tell me things that are so just like how in the world did you even think to look for that? So if you're looking for someone to represent you as a buyer or even as a seller, aaron's your guy. Just knowing that in this neighborhood there were bidding wars at this month at this price point is crazy to know. But Aaron has his finger on the pulse of the market.

Speaker 1: 50:58

Yeah, and like thank you, brian, also humbly say that I have a nice team back behind us. I couldn't do it without them, because they free up a lot of my time to be doing the things that matter most to me, which is either out in the field with my buyers, or being what I call, at the helm for my sellers, which, with my sellers, I am marketing your property.

Speaker 1: 51:26

Like I'm not doing what I call the three Ps. Where it's you know, put your house on the MLS, place a sign in the yard and then pray that someone else sells your property.

Speaker 1: 51:39

We're talking about hyper, local, targeted marketing, where I am marketing your property to people that I think are actually interested in the lifestyle that your property will bring in, to who I think would be appropriate for your property. Now, of course, we're still going to get your property out in front of everyone, but don't you want us to make sure that you, as a seller, are getting your house in front of the right people? I don't know, I think it's never right and he's still going to pray.

Speaker 2: 52:11

He still will put a sign. I'll still do the three.

Speaker 1: 52:14

Ps. I still do the three Ps, the three. P's are the bare minimum, though. Those are like the non negotiable. You know what I mean right.

Speaker 1: 52:22

I mean even at bare minimum, where you know our team is doing now. A lot of agents started doing this again when the markets slowed down. But if your agent's not doing this for you, I mean I still suggest doing this even when the market picks up, because it's going to get you more buyer activity. But one thing we do for our team, I know this kind of switch over sellers, but uh, and I'm going to get this done, so then we are wrapped up before the hour mark you got this but uh, my biggest thing that I want to mention is reverse.

Speaker 1: 52:53

It's called reverse prospecting. So in the MLS I love this. So in the MLS there is a tool basically all inform all the buyers that are listening, anytime that you have your search that's set up for your agent, unless your agent specifically ops out of it. Um, you're in most agents either, don't know, don't care topped out of it, um, they have your search set up in the MLS and it you have, like just like, a client ID attached to that search. So it doesn't give a listing agent your info, but it gives a client ID, which is that search and your data.

Speaker 2: 53:32

Yeah, what your search yeah, that data.

Speaker 1: 53:34

In any time that I have a listing that matches the basic criteria of whatever your search ID is looking for, I get a list of all these rotors that in the MLS that have searches that are set up for that data. And here's here's the big thing. Folks, the vast majority of people find houses statistically through their buyer's agent. So that's just, that's just how the majority of sales.

Speaker 1: 54:07

Yeah, that's how the system set up. So I am, yes, marketing to the general public, but I'm also going right to your agent. So I'm trying to make sure that for my seller, I'm trying to get our properties right. I'm not trying to be that agent that's putting it in front of them every day and being annoying about it, but I'm definitely making sure that they saw it and it wasn't just on an automatic search and they just, you know, they missed it. I want to make sure that they saw it.

Speaker 1: 54:38

Every time we're doing something important, whether it's an open house, if we had to do a price correction or whatnot, your property is getting in front of all of those agents to make sure that I can try to get you into my listing. Is is what we're doing. So that's just on the seller side. So it's kind of interesting and the strategies for both people right. And then there's a whole different type of clientele, which is the buyer and the seller. That needs to do both, and that's a completely different live broadcast. That is for a different day, a different rainy day in the Seattle area, because another prediction I'm going to have, I'm going to call it I don't think we're going to get snow this year, but we'll see for this one bro, we're going to get snow this week really is that what?

Speaker 2: 55:29

show, yeah, I don't think so. I still don't believe it okay, 40 chance it's going to be down in the tens and 20s here, but if it doesn't that will make.

Speaker 1: 55:38

So that will make my daughter very happy, but we'll see.

Speaker 2: 55:43

So why do you hate your daughter's?

Speaker 1: 55:44

happiness. Yeah, so I would. Why am I betting against it? Yeah, uh, because I'm a realist.

Speaker 2: 55:52

No, just, we got a 50 chance on Friday when the high of 28, low of 20.

Speaker 1: 55:59

But well you know what I'm about a realtor than I am a weatherman.

Speaker 2: 56:02

So but look at a Saturday and Sunday it's going to be 12 and 13 degrees, but all sunny yeah, that's gonna be crazy.

Speaker 1: 56:07

Oh okay, yeah, definitely that's awesome.

Speaker 2: 56:10

Better realtor than a meteorologist?

Speaker 1: 56:13

yeah than a meteorologist. I got a, but a close buddy of mine out of high school that's a meteorologist, so he'd probably laugh at me if I sent him to the this time, so, but then I'd be like bro, did you watch the full 56 minutes?

Speaker 2: 56:27

all right, how do? Yeah, if he doesn't say anything about it, it means he doesn't love you.

Speaker 1: 56:32

Do much oh okay, yeah, definitely, no, probably, well, that's, that's it.

Speaker 2: 56:37

Yeah, this is about an hour of real estate talk and strategies and BS in and definitely that's awesome and some great, again the hush will reach out to you.

Speaker 1: 56:46

Um final notes again guys. Brian the flame, awesome Washington Washingtonian, that's it now. Washington lender here knows everything all about the loans here really good. Um, works great with any type of buyer whether you're looking any type of down payment options. But he's also, um, he knows about a lot of the if you're someone that needs help with, like down payment assistance, um, this guy is like a down payment assistance guru.

Speaker 2: 57:19

So, like, if you're someone, that number one Washington housing finance commission lender in the state yeah, definitely, and it's never too early to start that journey too.

Speaker 1: 57:28

So if you're like someone that's like just stuck running and you're like I need to get out of this, like where do I go, and but I want to preface this that a lot of times you end up finding out that the answer is a lot of those people end up finding out that they come up with a strategy that it's going to be next year when they combine. Like the strategy is to figure out what to do now, this year, so you can do it next year.

Speaker 2: 57:54

Yeah, maybe we'll do this on the next podcast episode. Talk about that because there's never a no in real estate or lending, it's just to know where you are how far away you to get. Yeah, that's it yeah, yeah.

Speaker 1: 58:04

So let's talk about that next. Next podcast. Again, I'm Ermar here at local roulter in the greater Seattle area. These have been just a few of my happy clients that I've worked with in the past. We're getting call, texts and emails every day from people just like you looking to make their move or buy or sell in the greater Seattle area. We absolutely love it.

Speaker 1: 58:26

So, whether you're looking to make your next home purchase or your home sale in x, nine days or nine months, give me a call, shoot me text, send me an email or my favorite is scheduling a zoom call, which all of the contact information can be found in the comments below. Wherever you're watching this live since we're everywhere, and then I will also pin after the live. I will put Brian's contact information below as well, so reach out to him. But other than that, I just want to let you know my hash. Again, we will reach out to you and we're signing off. Thanks so much, guys, and we look forward to seeing you next week and again. We always do this every Friday ish. Sometimes we take weeks after and holidays, and it's around noon. Ish is what we do. All right, see you guys.