There are a variety of rules that regulate the real estate market in Washington state — and by extension, Seattle. We’ve laid out some of the most prominent ones below.
Home seller and buyer laws
Unless a property meets certain exceptions, such as being a foreclosure or having the deed transferred between family members, sellers are required to fill out a specific disclosure form. The form informs about potential problems with the home’s title, as well as deficits to its water and sewer systems or structure. It also covers known environmental issues or deficits with the homeowners association, if applicable.
Under Washington state law, a property may be foreclosed on judicially, with the court’s involvement, or non-judicially, outside of the court’s involvement, depending on whether or not a “power of sale” clause was included in the mortgage or deed of trust. If the clause is present, it may be foreclosed upon non-judicially. Otherwise, it must go through a judicial process. Deficiency judgements, where the bank can sue you to recoup their losses after a foreclosure, are allowed after judicial processes, but not after non-judicial ones.
Unlike most states, Washington is what is commonly described as a community property state. This means all assets and debts acquired during a marriage — including any real estate property — must be split 50/50 in the event of a divorce or annulment, regardless of whose name is on the title. However, any assets or debts acquired before or after the marriage remain separate.
Finally, Washington is also an escrow state, meaning state law doesn’t require buyers to hire an attorney to close on a home. Instead, buyers are allowed to use a representative from an escrow or title company.
When property changes hands, most states — and many municipalities — collect a real estate transfer tax. In Washington, the state collects a tax based on the property’s sale price that is calculated at the rate of 1.28%. King County, where Seattle is located, charges an additional rate of 0.25-0.5% for a total combined tax of 1.53-1.78%. This means the sale of a $250,000 home would require payment between $3,825 and $4,450 in total transfer tax, depending on the where you live.
Once you own the home, King County charges 0.88% of the property’s value in taxes per year, according to Tax-Rates.org. This comes out to $6,423 in taxes on a home worth the median value of $729,900. At that rate, King County has one of the highest median property tax rates in the country.
If paying those property taxes is an issue, there are certain exemptions available for senior citizens, veterans and people with disabilities. You can check your eligibility for these exemptions at the King County Assessor’s website.
Conforming loan limits
The conforming loan limit for a single-family home in King County is $726,525, which is the maximum conforming loan limit for high-cost areas in 2019. These loan limits are set each year by the Federal Housing Finance Agency and represent the maximum amount you can borrow and still qualify for a loan guaranteed by government-sponsored enterprises Fannie Mae and Freddie Mac. The conforming loan limit for single-family homes in most of the country is $484,350, but it rises in pricier areas, such as Seattle.