The Olympia real estate market continued breaking records for August 2020. This month saw the lowest absorption rate on record at 0.45 months of supply. In other words, if the market did not add any new listings, it would take just 13 days to sell everything!
Are you a prospective buyer or seller? Keep reading for my tips in how to compete in this market. And be sure to watch my video regarding the Olympia real estate market for August 2020.
OVERVIEW of the Olympia Real Estate Market for August 2020
- Supply – Olympia experienced its lowest number of listings, ever, in August 2020 with just 235 single family homes available for sale.
- Demand – Buyer activity was very strong with 708 pending listings.
- Absorption Rate – absorption rates looks at both supply and demand. A balanced market is 4-6 months of supply. A seller’s market is anything under 4 months and in August, the absorption rate for the Olympia area was 2 weeks.
- Median Home Price – the median sales price in the Olympia area for the month rose nearly 12% from last year to $389,000.
Buyers – How to Buy a Home in this Market
With all of this talk about how it is a steep seller’s market, many buyers are discouraged before even starting their home search. But you don’t have to be. There are many successful buyers who are finding their next homes. Here are a few of my tips.
PREPARE
Preparing to buy not only means getting your finances in order such as getting approved with a reputable, local lender but also understanding the costs of the loan and how much of a down payment is needed.
Preparing also means preparing emotionally. Buying a home in today’s market can be exhausting. Buyers may find themselves competing with other buyers and are submitting several offers before getting one accepted. This can lead to disappointment and frustration but I have tips that can limit this – see below.
Prepare to make big decisions in a short amount of time. You may not have the luxury of “sleeping on it” if you find a home that could work. Know what your must-haves are in a home and know what you can compromise on and this will help with your decision-making process.
A home that meets 80% of your wants and needs and has 10% of things you can change and has 10% of things you can live with is probably a very good house for you.
TIPS TO WIN WHEN COMPETING WITH OTHER BUYERS
These are the tips I included in my last market update but still apply:
Have your financial ducks in a row! This means having the most up-to-date preapproval letter from your local, reputable lender attached to your offer, and/or proof of funds if you are paying cash. Even if you are putting down a large amount, providing that proof of funds with your offer will help you win the bidding war over other buyers.
Terms. As your buyer’s broker, I will find out what terms the seller prefers. Do they prefer a longer or a shorter close date? Do they need to stay in the home after closing? Would they rather not move that pool table and instead include that in the sale? By agreeing to the seller terms, that will give you an edge over other buyers who may not be willing or able to do so.
Limit contingencies. Including a long laundry list of contingencies will clutter up the contract and shows the seller that you are not completely sure about buying their home. We can discuss what contingencies are available and what are most important to you.
Shorten contingency timelines. Instead of taking ten days to complete your home inspection, shorten that time period. The quicker you can satisfy contingencies, the better your offer will look to sellers.
Submit an organized offer. Incomplete offers, empty fields, or worse yet, handwritten offers (!) that are haphazardly submitted are just a huge turn-off to the seller. A poorly written offer reflects poorly on your ability to purchase. If I’m not your REALTOR, make sure your REALTOR represents you as the serious and organized buyer that you are.
The surefire secret to get your offer accepted? Add this ONE FORM to your offer.
Increased Down Payment for Low Appraisal is THE form successful buyers are using to win the property. In this hot market, we have seen some appraisals come in below the agreed-upon price. Sellers know appraisals can be an issue. As a buyer, you can provide assurances to the seller by adding this form. It states you can bring in more funds at closing to bridge the gap between a potentially low appraisal and the agreed-upon sales price.
Yes, this does mean you have to have cash in your reserves to use this form. If you haven’t done so already, start building your reserves in case you need to add this form to your offer, and talk with your buyer’s broker on how and when to use this.
Sellers – How to get the most this market can offer
Believe it or not, we have overpriced listings even in this market.
These sellers who overpriced had to reduce their asking price on average by $45,000 in order to get an offer, and they stayed on the market on average for 72 days. (The typical listing in Olympia goes pending in an average of 8 days.)
In August, 14% of the listed homes reduced their list price.
Buyers will ignore overpriced listings or will eventually offer on average 8.5% less than the asking price.
If your home hasn’t sold
The buyers are here and looking for their next home. If your home hasn’t sold yet, buyers may be ignoring your listing because you may be reaching too high for an asking price.
Homes are selling quickly in ALL price ranges – not just in the more affordable price range. Even the $1 million+ listings that are priced right are receiving offers relatively quickly. You can see in the chart below the days on market for all price ranges and if they were priced right or needed a price reduction in order to receive an offer.
*Single family homes excluding new construction and manufactured homes.
**Priced Right – listings that did not require a price reduction in order to receive an offer(s).
***Price Reduced – listings that reduced their price one or more times before receiving an offer.
Lowest inventory on record
This market is experiencing its lowest inventory ever. Buyers have fewer and fewer home choices. If your home has not received an offer in this market, return to the basics of listing a home and that is examine the market to see if your list price is in align with the market, is the marketing and promotion enticing and professionally executed, and is the home prepared to be desirable to the widest net of buyers.
Seller’s profit and equity gains
The age-old advice has always been for homeowners to stay in their home for at least five years in order to see a profit, but with the market as it is, sellers who are selling within two years are seeing a profit. Here are the average gains Thurston County sellers are realizing.
Conclusion
In conclusion, because of the high buyer demand and the low inventory, this sellers market will persist. Buyers and sellers should be prepared to enter the market in order to maximize the benefits this market has to give.
I empower my clients with the information they need so they can make the best decisions.
Call me today to talk about your particular situation for buying or selling in the greater Olympia, WA area!
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