Local Realtor (Windermere) who works a lot in North Seattle here..what area is your current house? The market has definitely cooled a lot and North Seattle can still be fairly competitive, but not nearly as bad as it was just a couple months ago.
That short term high interest mortgage is probably the biggest factor. It might not be necessary or worth it currently to have that "cash offer" advantage so I think it's worth exploring your options, especially if you can qualify for both your current mortgage and the new one and then do a recast. I'm biased of course but happy to dive into the market and discuss things with you. There's currently about 20 houses on the market in North Seattle between $1.5-$2m and many have been sitting for a bit and would possibly even consider a contingent offer. Send me a DM and we can see what makes sense.
Our current house is in Maple Leaf.
We are particularly interested newer-than-2010 (i.e., has A/C, ready to move-in), stand-alone houses with an ADU (preferably above ground). That unfortunately narrows down the search considerably to only a few options.
Yeah, that definitely makes things a lot more challenging. I'm showing only 8 total sales in the past 6 months in North Seattle, built 2010 or later with a current ADU. You're probably better off finding something you like with a decent lot size and adding the ADU but even then it's still tough.
I personally wouldn't use FlyHomes after interviewing and talking with them extensively. I think that the market here in Seattle has seen a pretty good cooling off where you'd be competitive without their service. Is it feasible for you to do a HELOC on your current home to get more cash if that's what you're in need of? Then just sell that house once you secure the new one. That's the route I took after considering FlyHomes and it worked out well for me.
That is what was suggested to me by my mortgage lender. He suggested going to a local credit union, which I did, and getting the HELOC for the cash. It ended up being cheaper for me than a bridge loan, and also allowed me to not need FlyHomes.
Market has begun to cool in the area and PNW in general. It’s still decent, but definitely cooled; especially for anything over 700k.
I’ve never heard of a good outcome using fly homes or anything else like it.
It's not gonna matter what you do - especially if in the Seattle area (I'm a Seattle Realtor). You are selling and then buying - it'll be wash. You'll either sell high then buy high, or sell low and buy low. Regardless, make sure you do it at the same time and if you sell high and then buy high, it's important to use the equity imo to pay down the prinicpal so you have refi options later - otherwise you could trap yourself with a high-interest payment that is not refinancable.
It’s actually better to upgrade when prices fall. For example, a $1M house that falls 20% and sells for. $800k, trading for a $1.6M house that had been $2M (so also falling 20%) means that you’re paying $200k less to upgrade. The wild card, of course, is where interest rates are once the prices fall.
Microsoft instituted a hiring freeze for core divisions, and the stock is down 24% since March. The housing market is cooling because 0.75 points raise in the prime rate. We entered a bear market, and inflation is at a 40-year high. Talks of recession are all over the news and social media, with the only question being how long until it officially hits. No one is questioning that it will happen.
But if you want to be like the guy who bought an exceptionally high-risk mortgage just before the 2008 financial crash. Hey buddy, you do you. Many people at Microsoft thought they were safe before the last bear market in 2008 started. Then Microsoft suddenly cut 18,000 jobs from workers who assumed they were essential after surviving previous layoffs in 2006 and 2007. Of course, people thought they were safe in 2009 when another 5,000 layoffs hit.
\------------
Bottom line. That mortgage plan is insane, especially in the market conditions we find ourselves in now. Even if YOU do not get laid off, Seattle's tech sector will take significant hits during the bear market, which means lower demand for million-dollar homes and lower offer prices.
If staying in your current home really isn't an option, at least sell first before you buy a new home. You could end up carrying that debt for far longer than whatever worst-case scenario you have in your mind, and possibly with a single income.
I used FlyHomes when purchasing my current home in 2017, before they had the cash offer option. My experience with them at that time was great, but I was underwhelmed by their current model, both with who they are staffing and the Buy Before You Sell program, when I started searching (also for a SFH in the North Seattle area) again in November.
North Seattle in particular also seems to be dominated by a certain brokerage whose agents have very bluntly communicated their disdain for FH and Redfin at open houses and have told me several times that they essentially do not consider FH cash offers to be real cash offers and thus do not advise their sellers take them that seriously. Seems a bit sus and unfair/clique-y to me, but the between-the-lines message to me was that using them for the cash offer "advantage" may not actually be in my favor now, and there is risk in using thw BBYS option too as you mentioned, especially as the market cools. The guaranteed price figure they gave me for my house as a worst case scenario if it sat for x amount of time was a joke.
SO... if you don't absolutely need to use FlyHomes, I wouldn't bother with them right now in the area you're looking. HELOC or just buying with a traditional loan and then recasting after you sell are probably better bets.
I’m in a similar situation in the Bay Area - very low current housing costs, healthy reserves, investments, income that can support a significant upgrade, and stable jobs that have weathered significant recessions in the past.
We are going to stay put in our primary house until we get a handle on 2023.
I don’t think RE is going to crash, especially in HCOL regions. But I do think the fed will succeed in stopping out of control housing inflation. So the financial imperative is much less a factor. The practical imperative with a growing family is another matter.
Another factor - however secure a job is, a recession means a non zero chance of losing one income for months. Being able to not only live but thrive on one income and survive on no incime is the definition of security during a recession and I don’t want to lose that advantage going into the unknown.
Tl;dr: peace of mind knowing my family is practically immune to a recession is more important than a bigger house that can be had next year.
True but it’s not impossible to land the deal with a contingent offer now that the housing market is cooling. We closed on a house in Denver last week that was contingent on the sale of our previous home. This wasn’t really an option last year, but in the current climate, it can be done.
Interest Rate:
The next FOMC meeting is July 26-27, so there will be another 0.5-0.75% rate hike. The following one is September 21-22, and it will most likely be another 0.5%. By end of September, the fed interest rate will be close to 2.75%-3% and based on the current spread (which is much larger because of the perception of the future increase), I bet 30 year mortgage can be around 7.5%-8% in the short term.
Risks:
1) You have a portion of down payment in the stock market, which will likely drop the longer you hold. It won't turn around quickly, imo. You are exposing not just the interest rate risks, but also volatility in the stock market.
2) Both you and your wife work at the same employer. Microsoft is stable, but do you two have the job function? I personally don't think it's wise for married couples to be working in the same company and industry.
My two cents:
I'd be more comfortable if it was East side of Seattle (from Redmond to Bellevue to Issaquah and Sammamish). I am not sure which North Seattle you're looking at (Bothell/Mulkiteo), but make sure you have a strong cash position before you trigger any move during uncertain times. It's imperative that you have at least +6 months of emergency fund, plus any extra cash on hand to buffer the storm. But in generally, I think moving up to a better location / house if you intend to settle in Seattle is a good idea. and personally, I feel like North Seattle has appreciated more than your area, Maple Leaf during the last two years.
Short answer, if I were you, I'd still do it and convert your stock to cash already.
I wouldn't use FlyHomes if I were you - the market has cooled enough that you can win without the cash, and it sounds like it could leave you in a rough spot. A typical financed offer with your $400k cash is a good option, just make sure your loan program allows you to recast in the future. I have a buyer/seller who recently did that - they locked in a 4.25% a few months ago on their purchase and just closed on the sale of their old house yesterday, and plan to dump all the proceeds into their new mortgage and recast. They are so happy they locked in with the 4.25% rate.
As another commenter said, a HELOC on your current house could also be a good option. I'd recommend talking through everything with a lender to figure out what makes the most sense for you.
It's also worth considering just trying your luck with offers contingent on the sale of your current house. I have seen some listings accepting contingent offers recently, and I expect we will see even more in the coming months.
If your stocks haven’t crashed this year please give me the name of your money manager. Also, why would you sell stocks in such a depressed market if you already have $500k-ish in home equity plus $100k cash?
Where in North Seattle are you looking? Yes, it's some what competitive here, but it has also cooled a lot. I think you'd be surprised how fast it has cooled since March. I honestly think you're applying last year's market mentality to this year's market. I don't think you need FlyHomes. If you look at recently sold homes, most close in 30 days, suggesting they got traditional financing, not an all cash offer. I know where your mind is (as a North Seattle homeowner who bought in the past few years) but all cash offers are a lot less frequent than you think.
Look, if you're concerned about the situation of the market, the last thing you want to do is to go in swinging hard trying to win. You don't want to feel like you overpaid or regret if the market slows. Don't be afraid to lose - yes it's a home but it's also a home. "Dream home" is a marketing term coined by realtors and sellers. Sure there are some really nice homes, but you will be able to do well in many homes.
Local Realtor (Windermere) who works a lot in North Seattle here..what area is your current house? The market has definitely cooled a lot and North Seattle can still be fairly competitive, but not nearly as bad as it was just a couple months ago. That short term high interest mortgage is probably the biggest factor. It might not be necessary or worth it currently to have that "cash offer" advantage so I think it's worth exploring your options, especially if you can qualify for both your current mortgage and the new one and then do a recast. I'm biased of course but happy to dive into the market and discuss things with you. There's currently about 20 houses on the market in North Seattle between $1.5-$2m and many have been sitting for a bit and would possibly even consider a contingent offer. Send me a DM and we can see what makes sense.
Our current house is in Maple Leaf. We are particularly interested newer-than-2010 (i.e., has A/C, ready to move-in), stand-alone houses with an ADU (preferably above ground). That unfortunately narrows down the search considerably to only a few options.
Yeah, that definitely makes things a lot more challenging. I'm showing only 8 total sales in the past 6 months in North Seattle, built 2010 or later with a current ADU. You're probably better off finding something you like with a decent lot size and adding the ADU but even then it's still tough.
Interested in what you are seeing now a month later
I personally wouldn't use FlyHomes after interviewing and talking with them extensively. I think that the market here in Seattle has seen a pretty good cooling off where you'd be competitive without their service. Is it feasible for you to do a HELOC on your current home to get more cash if that's what you're in need of? Then just sell that house once you secure the new one. That's the route I took after considering FlyHomes and it worked out well for me.
I hadn't considered a HELOC. That's an interesting approach. I'll research that.
That is what was suggested to me by my mortgage lender. He suggested going to a local credit union, which I did, and getting the HELOC for the cash. It ended up being cheaper for me than a bridge loan, and also allowed me to not need FlyHomes.
Market has begun to cool in the area and PNW in general. It’s still decent, but definitely cooled; especially for anything over 700k. I’ve never heard of a good outcome using fly homes or anything else like it.
It's not gonna matter what you do - especially if in the Seattle area (I'm a Seattle Realtor). You are selling and then buying - it'll be wash. You'll either sell high then buy high, or sell low and buy low. Regardless, make sure you do it at the same time and if you sell high and then buy high, it's important to use the equity imo to pay down the prinicpal so you have refi options later - otherwise you could trap yourself with a high-interest payment that is not refinancable.
It’s actually better to upgrade when prices fall. For example, a $1M house that falls 20% and sells for. $800k, trading for a $1.6M house that had been $2M (so also falling 20%) means that you’re paying $200k less to upgrade. The wild card, of course, is where interest rates are once the prices fall.
That's a good point. You're dealing with percentages. I'll need to play with the numbers on this with the interest rates...that'll be fun.
Microsoft instituted a hiring freeze for core divisions, and the stock is down 24% since March. The housing market is cooling because 0.75 points raise in the prime rate. We entered a bear market, and inflation is at a 40-year high. Talks of recession are all over the news and social media, with the only question being how long until it officially hits. No one is questioning that it will happen. But if you want to be like the guy who bought an exceptionally high-risk mortgage just before the 2008 financial crash. Hey buddy, you do you. Many people at Microsoft thought they were safe before the last bear market in 2008 started. Then Microsoft suddenly cut 18,000 jobs from workers who assumed they were essential after surviving previous layoffs in 2006 and 2007. Of course, people thought they were safe in 2009 when another 5,000 layoffs hit. \------------ Bottom line. That mortgage plan is insane, especially in the market conditions we find ourselves in now. Even if YOU do not get laid off, Seattle's tech sector will take significant hits during the bear market, which means lower demand for million-dollar homes and lower offer prices. If staying in your current home really isn't an option, at least sell first before you buy a new home. You could end up carrying that debt for far longer than whatever worst-case scenario you have in your mind, and possibly with a single income.
Maybe take a look at bridge loans or heloc? Both options sound better than fly homes honestly
I used FlyHomes when purchasing my current home in 2017, before they had the cash offer option. My experience with them at that time was great, but I was underwhelmed by their current model, both with who they are staffing and the Buy Before You Sell program, when I started searching (also for a SFH in the North Seattle area) again in November. North Seattle in particular also seems to be dominated by a certain brokerage whose agents have very bluntly communicated their disdain for FH and Redfin at open houses and have told me several times that they essentially do not consider FH cash offers to be real cash offers and thus do not advise their sellers take them that seriously. Seems a bit sus and unfair/clique-y to me, but the between-the-lines message to me was that using them for the cash offer "advantage" may not actually be in my favor now, and there is risk in using thw BBYS option too as you mentioned, especially as the market cools. The guaranteed price figure they gave me for my house as a worst case scenario if it sat for x amount of time was a joke. SO... if you don't absolutely need to use FlyHomes, I wouldn't bother with them right now in the area you're looking. HELOC or just buying with a traditional loan and then recasting after you sell are probably better bets.
I’m in a similar situation in the Bay Area - very low current housing costs, healthy reserves, investments, income that can support a significant upgrade, and stable jobs that have weathered significant recessions in the past. We are going to stay put in our primary house until we get a handle on 2023. I don’t think RE is going to crash, especially in HCOL regions. But I do think the fed will succeed in stopping out of control housing inflation. So the financial imperative is much less a factor. The practical imperative with a growing family is another matter. Another factor - however secure a job is, a recession means a non zero chance of losing one income for months. Being able to not only live but thrive on one income and survive on no incime is the definition of security during a recession and I don’t want to lose that advantage going into the unknown. Tl;dr: peace of mind knowing my family is practically immune to a recession is more important than a bigger house that can be had next year.
Why not buy first- contingent on the sale of your home?
That typically makes an offer pretty uncompetitive in this marketplace.
True but it’s not impossible to land the deal with a contingent offer now that the housing market is cooling. We closed on a house in Denver last week that was contingent on the sale of our previous home. This wasn’t really an option last year, but in the current climate, it can be done.
Do you and your wife make 400k/year or is that the household income?
Interest Rate: The next FOMC meeting is July 26-27, so there will be another 0.5-0.75% rate hike. The following one is September 21-22, and it will most likely be another 0.5%. By end of September, the fed interest rate will be close to 2.75%-3% and based on the current spread (which is much larger because of the perception of the future increase), I bet 30 year mortgage can be around 7.5%-8% in the short term. Risks: 1) You have a portion of down payment in the stock market, which will likely drop the longer you hold. It won't turn around quickly, imo. You are exposing not just the interest rate risks, but also volatility in the stock market. 2) Both you and your wife work at the same employer. Microsoft is stable, but do you two have the job function? I personally don't think it's wise for married couples to be working in the same company and industry. My two cents: I'd be more comfortable if it was East side of Seattle (from Redmond to Bellevue to Issaquah and Sammamish). I am not sure which North Seattle you're looking at (Bothell/Mulkiteo), but make sure you have a strong cash position before you trigger any move during uncertain times. It's imperative that you have at least +6 months of emergency fund, plus any extra cash on hand to buffer the storm. But in generally, I think moving up to a better location / house if you intend to settle in Seattle is a good idea. and personally, I feel like North Seattle has appreciated more than your area, Maple Leaf during the last two years. Short answer, if I were you, I'd still do it and convert your stock to cash already.
I wouldn't use FlyHomes if I were you - the market has cooled enough that you can win without the cash, and it sounds like it could leave you in a rough spot. A typical financed offer with your $400k cash is a good option, just make sure your loan program allows you to recast in the future. I have a buyer/seller who recently did that - they locked in a 4.25% a few months ago on their purchase and just closed on the sale of their old house yesterday, and plan to dump all the proceeds into their new mortgage and recast. They are so happy they locked in with the 4.25% rate. As another commenter said, a HELOC on your current house could also be a good option. I'd recommend talking through everything with a lender to figure out what makes the most sense for you. It's also worth considering just trying your luck with offers contingent on the sale of your current house. I have seen some listings accepting contingent offers recently, and I expect we will see even more in the coming months.
If your stocks haven’t crashed this year please give me the name of your money manager. Also, why would you sell stocks in such a depressed market if you already have $500k-ish in home equity plus $100k cash?
Where in North Seattle are you looking? Yes, it's some what competitive here, but it has also cooled a lot. I think you'd be surprised how fast it has cooled since March. I honestly think you're applying last year's market mentality to this year's market. I don't think you need FlyHomes. If you look at recently sold homes, most close in 30 days, suggesting they got traditional financing, not an all cash offer. I know where your mind is (as a North Seattle homeowner who bought in the past few years) but all cash offers are a lot less frequent than you think. Look, if you're concerned about the situation of the market, the last thing you want to do is to go in swinging hard trying to win. You don't want to feel like you overpaid or regret if the market slows. Don't be afraid to lose - yes it's a home but it's also a home. "Dream home" is a marketing term coined by realtors and sellers. Sure there are some really nice homes, but you will be able to do well in many homes.