Where to Live Now

By Roger Brooks, Ashley Griffin, and Carolyn McConnellResearched by Stefan Durham

Your Next move

What you should do right now if you’re a buyer, seller, or home owner.

Seattle housing prices have inched down for the first time in 17 years. Inventory is up by as much as 64 percent. And thanks to a wave of national foreclosures, lending standards have squeezed buyers out of the market. Depending on your perspective, those words evoke either panic and cold sweats or eager hand rubbing and Cheshire cat grins. Yet real estate agents and experts still say that Seattle prices are poised to rise even higher in the coming years. With so much conflicting data, it’s only natural that potential buyers, sellers, and home owners could use a few tips on their next move. We contacted agents, brokers, and banks in the Seattle area to get the best advice to help you navigate the 2008 real estate market.

Buyers

Be prepared As recently as six months ago, borrowers could secure subprime loans without even verifying steady income. Not anymore. Banks and brokers now require at least two months’ worth of income documentation. Bring copies of your W-2s, pay stubs, and bank statements with you when you apply.

Check your credit Lenders use your credit history and standing to determine, in part, the terms of mortgages they are willing to offer you. Resolve any collections on your record. If there are any errors, contact the company and correct the issue. Keep a record of any paid or corrected debt.

Get in the game As of the end of February, more than 13,000 housing units were up for sale in King County, a 68 percent increase from the same time a year ago. Bottom line: There are more houses to choose from now than in the past 10 years, and the competition from other buyers has all but dried up (pending sales were down more than 35 percent from February 2007).

Negotiate Sellers have already adjusted their prices to reflect the 1.3 percent drop in prices in our area, so don’t expect a lowball offer to be accepted. But most properties aren’t receiving multiple offers the way they were just 18 months ago, and many sellers will agree to sales contingent on inspections or the selling of your old property, concessions that were increasingly rare until recently.

Consider new construction Many local builders are offering high-end incentives (better finishing materials, more landscaping, etc.), covering closing costs, and even cutting prices in order to reduce inventory.

Sellers

Think twice Inventories are swollen, lenders have tightened their standards, and potential borrowers are worried about the economy. Unless you have to move, you’re better off waiting for the market to pick up.

Know the market Bidding wars have been relegated to only a handful of properties in the most popular neighborhoods—you’re not likely to get the same price your neighbor got even three months ago. Large inventories punish greedy sellers: Price your property too high, and it will languish on the market while new listings grab buyers’ attention.

Dress up The price is important, but so is the presentation. Take care of any cosmetic issues (fresh paint, new flowers, clean windows) before putting your home up for sale. Consider having it staged for open houses. Buyers now have options, so make your property stand out in the crowd.

Home Owners

Assess your situation Local lenders are still refinancing existing mortgages. If yours is negatively amortizing (meaning your monthly payment doesn’t even cover the interest that’s accrued), you’ll want to refinance. Owners who have adjustable-rate mortgages or jumbo loans should consider doing so to avoid higher mortgage payments in the future and to lock in better interest rates.

Get help If you’re in danger of missing a payment, contact your lender immediately. Banks don’t want to take on your property, so most are willing to work with you if you’re up front about your problems.

Don’t panic The area market remains strong. Prices have dipped, but only by 3.3 percent from a year ago in March. Our geographic isolation, a diversified economy, and a steady influx of new residents (U.S. census data shows King County to be the 25th-fastest-growing area in America) will push prices higher in coming years.