Want to buy a house in the Seattle area? You’ll need stockpiles of cash in the bank, endless free time and a masochistic streak.

OK, maybe it’s not quite that bad.

Still, the region’s housing market is one of the hottest in the country. Prices are up. Inventory is selling fast. Your dream home could draw dozens of competing offers. It will likely sell for more than the list price, maybe even to an all-cash buyer.

So frenzied is this sellers’ market that some buyers can barely get in to see a home before someone else snags it.

“We’re halfway through our appointment, we’re gushing about how we want to make an offer and the Realtor gets an alert that they accepted an offer earlier today,” recalled recent buyer Alice Cryer. “We were standing in the house.”

Along the way, buyers are expected to make quick decisions with high stakes. Will you have the house inspected? (What about the sewer?) There’s a cash buyer making a better offer — can you pay any more?

“We watched a lot of HGTV,” said James Johnson, who with his wife, Emily, bought a Tacoma town house this year. “It was nothing like you saw on television.”

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We talked to real estate brokers, lenders and recent buyers to put together a more realistic picture.

Before you buy

Saving up: Long before you set up your Redfin alerts, your financial status will shape your homebuying experience.

How much do you make? How much have you been able to save for a down payment? Do you already own a home you’ll be selling? Do you have stocks or a 401(k) to tap for extra cash? Can your family help? If a lender takes a deep dive into your finances, what will they find?

Even with assistance programs and today’s low mortgage interest rates, many people will be locked out of homebuying.

By one estimate, a household would need to make nearly $107,000 a year to afford a home in the Seattle-Tacoma-Bellevue area with a 20% down payment. With less money to put down, you need an even higher income. For a buyer putting 10% down, the salary threshold increases to about $125,000. Home-ownership rates show stark racial gaps. In Washington, 67% of white people own a home compared to 31% of Black people.

The pandemic has only underscored those gaps, said Tacoma-based Windermere agent Sharon Chambers-Gordon.

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“The essential workers who are the backbone of this country doing the work that is allowing us to live and eat are the ones who have been left behind in being able to purchase a home,” Chambers-Gordon said. “Even when you have payment assistance programs, you still need access to cash.”

As a homebuyer, your finances will factor into where you can buy and whether you’ll have an edge over other eager shoppers.

Generally speaking, the old rule of thumb that you need 20% for a down payment isn’t a hard-and-fast requirement. But in the most competitive areas, that’s common.

The median buyer in King County during the final quarter of last year paid 18.4% for their down payment, or roughly $134,000. In Pierce County, where home prices are climbing but more affordable, buyers paid a much lower 4.6%, or about $19,500, according to ATTOM Data Solutions.

Other costs: The down payment isn’t the only pot of cash you’ll need.

In the most competitive markets, expect to pay for inspections, sometimes on multiple houses, at roughly $500 each or more (plus more to look at the sewer — more important than it sounds!). At the end of the deal, you’ll pay closing costs of roughly 2 to 5% of the price of your home.

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You’ll likely need to set aside a deposit in an escrow account, also known as your “earnest money,” to show a seller you’re serious about your offer. This can range from 2 or 3% of the price of the house to 10%, depending on how competitive the area is, brokers say. Depending on the conditions you attach to this money, the seller could keep it if you back out of the deal. If all goes well, you can apply this later to your down payment or closing costs.

Look for assistance programs: If saving tens of thousands of dollars for a down payment feels out of reach, look for assistance programs. In the most expensive neighborhoods, it can be harder to secure a house with less money down, so even with assistance, your offer may be less competitive.

An FHA loan, insured by the federal government, allows you to put 3.5% down. Veterans may qualify for VA-backed loans with no down payment.

Michael Pokryfke combined a VA loan, $2,200 in savings and $15,000 borrowed from his retirement account to buy a two-bedroom condo in Renton. “I was under the assumption I’d never buy a house,” he said.

To help with a down payment, the Washington State Housing Finance Commission offers no-interest loans of up to 4% of the mortgage for families who make $145,000 a year or less, have a credit score of at least 620 and use the commission’s mortgage programs. The loans are deferred, meaning you don’t have to repay until your mortgage is paid off or you sell or refinance.

Look for a homebuyer education course to learn more, and talk to your agent about what’s possible — and what’s realistic — in today’s market.

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Preparing to house hunt

Find your agent and lender: You’re not looking for just anyone to help with the biggest purchase of your life. Take time to find a real estate agent and a lender you trust. A recommendation from friends or family with firsthand experience is a good place to start for both.

Treat this like interviewing candidates for a job. Talk to a few before you choose. Suss out how well they know the local market.

Ask a potential real estate agent how they’re tracking the local market and how many recent local sales they’ve had. Find someone who won’t sugarcoat the current challenges.

A loan officer should be able to walk you through different financing options, including assistance programs, and should be quick to return your calls and emails, brokers said. Local connections could give you an edge. Sellers’ agents may prefer local loan officers they know and trust to finish the closing process quickly.

Line up a loan: Unless you’re bringing all cash, you’ll need a loan — and you’ll need to be well into the lending process before you start house hunting. Forget getting “preapproved”: Buyers are increasingly getting pre-underwritten, a step further along in the approval process. If a lender has scoured your financials, a seller can have more confidence your deal won’t fall through.

“It’s not as good as cash, but it’s the best you can do when you’re financing,” said Aaron Crossley, sales manager at Caliber Home Loans.

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This process can be more invasive for self-employed borrowers. A lender may look at a longer income history for someone who is self-employed, and the effects of the pandemic can show up here. Say your bar, restaurant or freelance career took a serious hit during the pandemic but is returning to normal now. A lender looking at two or three years of your finances will have to consider those 2020 losses.

The search

“Miserable.” “Cutthroat.” “Exhausting and depressing.” “The worst.”

Those are a few ways recent homebuyers described the process of searching for a home in the Seattle area.

Their advice: Have your priorities clear when you start searching. What’s most important to you? What can you live without? Do you and your partner each have veto power?

Get real about list prices: They can be meaningless. Because so many houses sell for over their list price — nearly half in the Seattle area, according to Zillow — look at homes listed below the amount you can actually spend in order to leave room for sweetening your offer.

“I tell people in this market if you’re looking to purchase a home for $1 million, start looking at $750,000 to $800,000,” said Umpqua Bank loan officer Amie Edmondson.

Set alerts on listing sites: And be ready to move quickly to schedule a tour.

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“I was completely addicted to Zillow,” said Hayley Sayre, who with her wife, Anna, bought a home in Tacoma last fall. The couple, both teachers, said a walk around each neighborhood where they made an offer gave them a sense of how they would like living there.

Go farther, and consider condos: Look as far from your ideal destination as you’re willing to go. Keep an eye out for homes that have been lingering on the market. But, with construction costs soaring, be careful not to fall for a fixer-upper that will be a money pit. Each week, take a night off from scouring listings to avoid burnout, suggested Cryer, who recently closed on a three-bedroom house in Parkland, south of Tacoma.

If you’re not set on a single-family house, add condos and townhomes to your search.

As buyers look for more space indoors and outdoors, the condo market is less bruising. Across King County, including in Seattle, condo prices are climbing more slowly than single-family home prices. (The condo market is hotter on the Eastside and in South King County.) In Seattle, it would take nearly two months to sell through all the inventory at current demand, compared to a little over two weeks for single-family homes.

“If you don’t need that single-family home,” said Redfin agent Shoshana Godwin, “don’t compete for it.”

So you love that house

You’ve found a house where you can picture yourself making waffles and playing with your future labradoodle puppy. Great!

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Now don’t get attached.

Many buyers lose their first offer, if not several. You need to be committed enough to offer hundreds of thousands of dollars for the place, but ready to let go if you lose. Several buyers said they reminded themselves there would “always be another house.”

Prepare to bid: When you’re ready to start bidding, the dollar amount isn’t the only factor that will make your offer stand out. You’ll have to decide whether to waive various protections known as contingencies.

In theory, buyers can make their offers contingent on a variety of factors to safeguard their purchase. You can await an inspection, financing from a bank or an appraiser confirming the home is worth the price. But in a sellers’ market like this, the race is on to drop those protections to make your offer more attractive to the seller. 


Know a few of your key contingencies:

Early release of earnest money: Remember, earnest money is that upfront deposit you bring to show the seller you’re serious. Making that money nonrefundable and releasing some early to the seller means if the deal falls through, you’ll lose the cash.

Inspection contingency and pre-inspections: Gone are the days you can count on having your offer accepted and then doing an inspection to find any potential issues with the house. Many buyers are now waiving this contingency, instead either paying for a “pre-inspection” before they put the offer in, accepting an inspection paid for by the seller, or skipping the inspection altogether.

Skipping your own inspection “is kind of the nuclear option,” said Dylan Chalk, of Orca Inspection Services, who’s been working as a home inspector for nearly two decades. But if you’re going to do it and the seller offers their inspection, look for pictures, videos and plenty of specific detail about the house, Chalk suggests. A good inspection should feel like “an owner’s manual for the house,” he said.

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Appraisal contingency: Once you’ve been approved for a mortgage, your bank still wants to check out the price it will be covering for the house.

Usually, this contingency would protect you if the appraiser finds the house is worth less than you offered. However, buyers increasingly face pressure to agree to pay any difference between the appraised value and their offer. If you plan to do this, you’ll need to be prepared with money to cover any difference between what the bank will lend you and the cost of the house. With no idea what that difference might be, this is a high risk.

Financing contingency: Waiving this means if your loan falls through, you could lose your earnest money. You could also potentially be required to buy the house anyway or face a lawsuit, though brokers say legal action is rare since typically the seller can quickly find another buyer.

The bad news is that while waiving these protections offered an edge in the past, they’re well-known strategies now. A small snapshot: Among Seattle-area Redfin offers in March, nearly eight in 10 waived the financing contingency, six waived the inspection contingency and fewer than one in ten waived the appraisal contingency.

No one hack will guarantee you get the house you love. Buyers need “luck, money and resilience,” said Seattle-based Compass broker Jennica Lynn.

“We watched a lot of HGTV,” said James Johnson, who with his wife, Emily, bought a Tacoma town house this year. “It was nothing like you saw on television.” (Greg Gilbert / The Seattle Times)

When James and Emily Johnson, the Tacoma buyers, sat down with their agent, Chambers-Gordon, they couldn’t believe some of the advice she offered, like doing pre-inspections and making their best possible offer right away.

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“We were real hesitant to listen in the beginning. She was telling us things that sounded so out in left field,” Emily Johnson said.

But after losing out on an offer and struggling to find other homes, the couple decided to follow the agent’s advice and eventually got the home. “We tried to learn from our mistakes,” said Emily.

From pending to closed

You’re so close! But it’s not over yet. After you’ve secured a house, the closing process will bring another round of paperwork and, according to recent buyers, more anxiety.

If you did include the contingency in your offer, now is the time to inspect the home. You’ll also get the lender’s appraisal and go through the final steps with your bank. Expect to answer a flood of requests for documents as an underwriter reviews your loan for final approval.

Closing can bring a laundry list of costs depending on your situation, like insurance premiums, prepaid interest for the start of your mortgage, and various fees.

The key: Be prepared. Get an itemized list of these costs before making an offer, if you can, said Washington Trust loan officer Liz King. “You shouldn’t be surprised.”