Buyers drive hard bargains in Puget Sound area real-estate market

With home sales soft, agents like Windermere's Mark Corcoran say most sellers must make concessions to be competitive.

Corcoran, whose main territory is North Seattle, recently represented the seller of a $700,000 home that quickly attracted two offers. Both were at least 10 percent below asking price, and his client declined them.

But with the real-estate market in the doldrums — April sales and prices were down from last year, according to Northwest Multiple Listing Service figures released Monday — buyers are driving hard bargains. Turning down an offer could leave sellers waiting a long time for another.

After about a month, with no buyers in sight, Corcoran's seller agreed to drop the price 5 percent. That brought a buyer who wanted the house fumigated and the hardwood floors refinished. Again the seller declined.

Finally, a fourth offer came in. It was for 2 percent below the lower asking price. But that wasn't all: The buyer also wanted the roof cleaned and repaired, a garage door replaced, a trench dug in the crawl space and several minor repairs.

This time the seller didn't dicker. She hired a handyman to complete all the tasks, and after 44 days on the market, the house was sold.

"It was quite an ordeal," Corcoran said. "The key is not to get insulted and be upset and not want to work with buyers. They're going to ask you for closing costs and fixes, and that's minor stuff once you agree on price."

Considering the number of homes on the market, sellers must be willing to negotiate.

Prices in the four-county region fell beginning in August, when the subprime-mortgage meltdown started, then showed modest movement.

So while King County's single-family home prices have climbed slightly three months in a row to $448,500 last month, according to the new MLS figures, they're still 3.6 percent below a year ago.

House prices in Seattle, after two months at $450,000, dipped last month to $440,000, 8.3 percent below the previous April.

That's far less of a drop than in parts of California, Florida and Nevada, where values have seen double-digit drops.

For the most part, Snohomish, Pierce and Kitsap counties have seen modest year-over-year median-price declines, too.

While prices aren't dropping precipitously, the number of houses and condos for sale remains high, putting significant pressure on sellers to appease buyers and, in turn, mortgage lenders.

"[Buyers] are coming in the door to buy the house, then in the prequalification process, they're finding they're going to need more money up front than they thought," says Denny Bullock, associate broker of ERA American Brokers in Renton. "The days of zero down are gone, at least for now."

As a result, sellers are subsidizing sales of their homes.

"Five years ago, you might get a seller to throw in $500 in closing costs," Bullock said. "Now they're prepared to throw in $3,000 to $7,000 in closing costs."

Even buyers who have good jobs don't necessarily have the cash for a down payment and closing costs, said Mike Morelli, branch manager of the Puyallup office of John L. Scott Real Estate.

"Most of the transactions we're doing are seeing some kind of seller concession," Morelli said.

In King County last month, sales of houses and condominiums combined were down 33 percent, while the number of for-sale properties was up 56 percent compared with the previous April.

Snohomish and Kitsap counties' numbers were similar.

Pierce County, however, seems to be doing slightly better. It started its decline several months before King County did and last month had just 14 percent more homes on the market than a year earlier. Transactions were down 25 percent from the previous April, the slimmest sales decline in the four-county region.

When sellers throw in closing costs or make other concessions, it can mask the true prices of homes.

There's no doubt that prices remain soft. Besides the multiple-listing-service numbers released Monday morning, Seattle-based Zillow released its first-quarter 2008 home-values analysis.

The real-estate valuation Web site found home values in the Seattle metro area dropped 4.2 percent from the first quarter of 2007 and are down 5.3 percent since the market peaked in the third quarter of 2007.

Nearly 30 percent of local owners who bought last year owe more on their homes than they're worth, Zillow says.

Still, the region continues to fare better than other West Coast areas. In hard-hit Sacramento, for example, home values have declined 21 percent year-over-year, and 69 percent of recent buyers are under water. Other cities, including Las Vegas, are in even worse shape.

The silver lining in all this belongs to buyers, Bullock says.

While many remain cautious, this is the best time in the past eight years for buyers because of sellers' willingness to deal, Bullock said.

Elizabeth Rhodes: erhodes@seattletimes.com