What to Expect in the Washington DC Real Estate Market
We work with many buyers moving to the DC area from other parts of the country. While just about everyone is prepared for the sky-high housing prices in our region, most are not aware of some other key characteristics of the DC real estate market. Allow us to share these common practices that will shed some light on the norms of our sometimes challenging market!
BUYERS MUST PROVE THEMSELVES
Sellers and their agents want to know — and will check — that you can afford the house! This means if you are financing the property, you must have a pre-approval letter from your lender. If you are paying cash, you’ll need proof of funds in the form of a letter from your banker or a copy of bank statements showing a sufficient amount of cash to buy the home. This documentation will be presented to the listing agent on your behalf. The agent may contact your lender or bank to confirm the information. This is normal in our area, so it is no cause for concern!
SELLERS PREFER LOCAL LENDERS
On a related note, sellers and listing agents typically prefer local lenders who know the norms of our market and are reachable on weekends and evenings. Your lender needs to provide you with estimates of closing costs, which can vary greatly from one state or jurisdiction to the next. In fact, even between Virginia and the District, closing costs and taxes vary widely.
In the DC real estate market, it is standard for all appliances, light fixtures, and anything permanently affixed to the walls or floors to convey with the property. The only exceptions to this practice are televisions and audio/visual equipment. Occasionally, the seller will want to take something that would normally convey. In such a case, the seller will note it in contract or in disclosures. If there is something you would like to convey that is not attached, we can always request it in the offer.
For more on this subject, read our blog post dedicated to what stays in a home when the seller moves out.
IT’S A SELLERS MARKET
The DC real estate market is very much a seller’s market at the moment, so out-of-town buyers should know the following:
Offers must be fairly close to list – most of the time.
In many parts of the country, it’s possible to get houses far below list price. Not so here – we don’t see “low ball” offers unless there is a major issue with the property or some extenuating circumstance. Inside the beltway, most sellers are insulted if you offer more than 10% under list price. Additionally, low offers don’t get negotiations off to the best start…..(though certainly, we have gotten it done). Every negotiation is different. Some houses in our market do go for under that 10% mark, but many go 10% OVER list price – or more! As always, the final sales price depends on location and condition of the property. In hot neighborhoods, you will very likely need to pay over full price. Some agents even purposefully price their homes low to encourage multiple offers.
Of course, our job if we are your agent is to advise you on each scenario so you know when it is appropriate to come in low and when you might need to come in at or above the offer price. Remember, a good deal is not based on how much lower than the list price you pay, it is how much you pay below the comps.
Timelines are TIGHT!
Deadlines for any contract contingencies (home inspection, appraisal, etc.) should be kept to the minimum. Sellers do not want to have their home “off the market,” tied up with contingencies for more than 7-10 days.
Home Sale Contingencies are a Tough Sell.
Speaking of contingencies, DC area sellers rarely agree to offers contingent on the sale of a home, especially if that home is out of the area. Cases in which contingent offers might be considered is if the home you are considering buying has been on the market for a while or it is listed a higher price point. If the sellers do agree to accept a contingent offer, their agent will want to speak to the listing agent of the buyer’s home and review the pricing. If sellers are amenable to a home sale contingency, they will generally expect the offer to be close to full price and have tight timelines as noted above.
Multiple Offer Scenarios are Common.
It’s not unusual for a DC area property to receive multiple offers soon after it is listed, especially if it is well-priced and in a “hot” area. We’ve seen it time and again. In fact, in one recent case, we saw double digit offers on a home! If you’re coming from out of the area, you most likely have not seen this situation (unless you’re coming from Toronto, New York City or San Francisco, perhaps).
Making an offer on a hot property in the DC real estate market is a bit different.
When you know you’ll be in competition, your first offer should be your best offer. In almost every multiple offer scenario, the sellers and the listing agent will review all of the offers presented to them and simply pick the best one. You should act as though the seller will not counter your offer. You should feel satisfied at the end of the day that your best offer was made. Then, if you are not the winning offer so you aren’t stuck wondering… “what if”? Be sure to ready our post with tips for winning in competing offer situation,. To learn how we helped one of our DC clients in a multiple offer situation, click here.
RENT TO OWN AND PRE-SETTLEMENT OCCUPANCIES ARE NOT THE NORM
Renting to own, while common in other parts of the country, is rarely seen in the DC real estate market. Pre-settlement occupancies are also extremely rare. While we have seen it, these agreements are used in only the most unusual cases. Pre-settlement occupancies offer convenience to buyers, but come with great risk and liability for sellers.
The Bottom Line
If you’re moving to the DC area from another part of the country, you’ll find many differences in our real estate market. In addition to steep prices, be prepared for a seller’s market. This means acting quickly and definitively, being flexible, and keeping a sense of humor throughout the process!
If you’re going to be moving to the DC area, please contact us. We’ve helped many out of town clients find – and win – their dream homes in our area. It’s one of our specialities!
If you’re new to the area and want to get to know it better, schedule one of our neighborhood orientation tours today!