ComeBuyAHouse.com

Current Observations of Buyer’s Market in Seattle

Here are my notes on buyer and seller activities in the current Seattle housing market:

Buyers:

1. There’s more inventory, so:  Buyers want to see them all, and with so many homes on the market, it takes longer for folks to decide which house to buy.

2. Buyers want the best bargain, which is always true, but in this market, more likely to happen, depending on the seller’s situation.

3. Buyers are having more challenges with financing, which is why it’s more important than ever to have that pre-approval letter from the lender.

Sellers:

1.  The situations are so varied for sellers. 

Banks that are selling homes are interested in their bottom line and getting the collateral/bad loan off their books.

New construction deals depend on the financial strength of the builder, how close they are to the due date on their construction loan, and if they have money to cover the payoff.  Also early sales in a condo complex or plat are not usually discounted, but the last few may be.  They have to preserve their sale price because the sold units or homes become comps for the subsequent sales.  If they discount early sales, they discount the whole project.  The way to get a good deal is to ask for closing costs, upgrades, appliances or other perks like homeowner dues paid for a specific time instead of price.  Is it the last one?  You may get a screaming deal if the builder wants to be done with the project–and they usually do want that.

Sellers/homeowners:  we look at time on the market, price drops they’ve already made and how leveraged they are in a mortgage.  The seller will be easier to work with if the offer doesn’t cause a short sale of course, as then we add the lender into the negotiations.  The lender will not okay a short sale until the seller is distressed and has missed some payments. A seller that doesn’t need to sell but can hold on and rent the house is not going to budge as much as a seller in dire straits.  A seller with lots of equity has room to dicker, but may or may not be willing.

2. Relocations are often a pretty good deal, and often the seller has two mortgages or a mortgage and rent in the new location, so they are anxious to sell.

3. If the house has been on the market a long time and the price has dropped, the seller has already done alot of the price hacking for the buyer, and it’s best to honor that and offer near the asking price as long as the sold comps support it.  They will be relieved to be working with a reasonable buyer and the buyer will be getting a good deal.

We work with buyers from all over the nation and world who have their own local real estate conditions and culture that they bring with them.  One of our clients said that buyers ALWAYS offer 20% less than the asking price and then they usually end up somewhere between 3%-10% below asking price.  Seattle is different.  Statistics show that even in this buyer’s market the average sold price/list price ratio is within 0%-5% of the listed price, and an offer 10%-20% low often doesn’t even get countered. 

This has frustrated some of our clients coming from other areas of the country, but the good news is that the real estate market in Seattle is still strong, and that as the nation recovers from the current financial turmoil, Seattle housing market will lead the way back up.

Lynette Hensley — Associate Broker

How Seattle Rides Real Estate Storms

This article and letter to a customer (from March 08 with subsequent updates) are a brief collection of my thoughts on Seattle’s ability to ride out the current national economic storm.  As with all research, anyone can tweak any data to mean what they wish, so I have tried to find the most balanced perspective possible. I do believe in Seattle Real-Estate as a sound real-estate investment in comparison to other parts of the country. When to sell ? When to buy? That’s as individual as yourselves.  Where to buy? HERE as soon as you find a place that’s comfortable.  How much to buy, what percentage of your debt to income ratio? Likely up to somewhere around 41% of your gross income, including all your debts is the old standard before this last unregulated splurge that got many in trouble.  Well here it is, hope this is of some help.

info added 11/19/08
Forbes where to invest in real-estate
(specifically commercial but homes follow that market closely)
http://realestate.msn.com/buying/Article_Forbes.aspx?cp-documentid=12808843&GT1=35000 

Info added 10/30/08
New US home price comparative graphs 1990-2008 US as a whole and select markets Seattle  SanDiego, Miami, etc
http://mysite.verizon.net/vodkajim/housingbubble/

Seattle is an area of excellent opportunity in real estate. The most stable is King County. Currently, home prices are down 1-6% + – over last year in King county (the area Seattle, Bellevue and Redmond are in), each micro area has its own story most readily explainable. Most stable are the areas just north of Seattle’s city core and then east through north Bellevue and Redmond.  These areas are home to Microsoft, Amazon.Com, Zymogenetics, UW, and their employees.  Many Boeing management employees also live in these areas.  Boeing plants are south and north of town and while the areas around the plants are susceptible to air tanker, and dream liner, sales and losses (causing housing to fluctuate) the management core doesn’t fluctuate as much.

The historical charts show somewhere between 3 to 5 years for the average slump which is usually fairly flat then turns upwards. By my count we’re at about 18 months in and hopefully near the bottom of the curve but who really knows.  My family has been in real-estate in WA state since 1914.  My Grandmother was a real-estate lawyer in a downtown Seattle office. She always said real-estate was a sure deal, but always buy it knowing it could be a 20 year investment.  You might be able to sell it at 5 or 10 years at a profit but who can tell?  At somewhere between 10 and 20 years it was her feeling you would always have an opportunity to net a sizeable gain.  Choosing just when to sell was the art … I guess some things never change.

I think right now or fairly soon is a good time to invest.  How much?  That depends on your available funds … Properties at the $250-350k are “affordable housing” and every house flipper/investor or newlywed/first time buyer are eating them up.  Many of the GREAT deals seem to be in new construction town homes $500-600K or you can look for the last $700K house on the cul-de-sac because the builder wants to be done with that plat.

This article (admittedly from March 08) excepting the new US market comparative graphs at http://mysite.verizon.net/vodkajim/housingbubble/

These links are some of the best I have found on defending Seattle’s ability to ride out the current national economic storm.  Obviously, there is no crystal ball, but next is one of the best single sources of a fairly balanced view that I’ve found, as well as a couple of links to some graphs I found interesting:  http://seattlebubble.com/blog/2006/09/03/seattle-times-we-are-immune-so-says-history/
 
http://seattlebubble.com/blog/2008/02/19/king-county-home-prices-1946-2007/ http://seattlebubble.com/blog/2008/02/28/king-county-affordability-1950-2007/#more-1621http://www.zillow.com/static/images/quarterlies/2008-Q1/Home-Price-Appreciation-Seattle-WA.jpg 
Zillow can be kind of up and down on their pricing/valuing of current homes on the market, however these links are the compiled home prices sold last year and not their “zestimates”.

http://seattlebubble.com/blog/
For continued discussion of the local market, the Seattle Bubble blog is a fairly well balanced neither Polyanna nor the Harbinger of Doom.

Larry Baumgartner  | Realtor 

Ways to Use the Free Search on our Website

 Whether you are buying or selling a home or just want to know what the current values are in your neighborhood, you will find our Free MLS Search and email reports to be a useful tool.  
The main use of our search is for buyers who can preview the market or actively search for their next dream home.  Yet that’s not the only purpose.  If you are preparing to sell you can see what neighborhood prices are, which homes are in competition, and how they are being marketed.  This information along with your ComeBuyAHouse.com team’s current knowledge of the market will be useful as you place your home for sale.    
Homeowners who want to stay put and just want to be in the know, can simply track the current neighborhood values accurately using MLS listing data.  
Sign up on our website anytime!   ComeBuyAHouse.com

Great News for Seattle Area Values

 It is a bit of a buyer’s market in many areas, and some good deals are to be had!
In general, houses for sale are spending longer times on the market than in recent years, and some areas are showing signs of prices coming down. Buyers: sellers who need to sell quickly are selling low. Sellers: Fear not, you can add value to your property and negotiate in creative and
tangible ways.  
The mortgage market and interest rates are contributing factors to this market change.  (Please see the next article for mortgage market info.)
Still the house value trend in Seattle is good news. According to the Seattle Times, in the 2nd quarter of 2007, Washington State led the nation with 5 cities in the top 20 for appreciation, with the Seattle/Bellevue/Everett areas up 9.89%,
“Washington State led the nation with the number of cities in the top 20 for appreciation with five. In order, there are: Wenatchee (up 23.54 percent), Longview (up 13.6 percent), Seattle/Bellevue/Everett (up 9.89 percent), Tacoma (up 9.34 percent) and Spokane (up 9.3 percent). And, the state had no cities in the bottom 20, which were located primarily in California and Florida.”  Seattle Times
The rest of the Seattle Times article includes national information.  If you would like to have the entire article in print or via email, please send an email request to us at ComeBuyAHouse [at] gmail.com
——-Lynette and Larry
 

Protect Your Identity

• The next time you order checks, omit your first name and have only your initials and last name printed on them.  If someone takes your check book they will not know if you sign your checks with just your initials or your first name, but your bank will.
• When you are writing checks to pay for your credit card accounts, DO NOT put the complete account number on the “for” line, but only the last 4 digits.  The credit card company knows the rest of the number and anyone who might be handling your check as it passes through all the payment processing channels won’t have access to it.
• Put your work phone number on your check instead of your home phone.  If you have a P.O. box, use that address instead of your home address.
• NEVER put your social security number on your checks.  You can add it if it’s totally necessary, but if you have it printed, anyone can get it.
• Photocopy both sides of all of the contents of your wallet–credit cards and ID cards, etc. You will remember what you had in your wallet, and have all the account numbers and contact numbers to call and cancel them or order replacements. Keep the photocopies in a safe place.  Also carry a copy of your passport when you travel at home or abroad.

What to do if your purse or wallet is stolen:

• We have been told that we should cancel our credit cards immediately.  The key is having the toll free numbers and your card numbers handy so you know whom to contact. Keep that information in a safe place.
• Immediately file a police report in the jurisdiction where the theft occured. This proves to credit providers that you were diligent and is the first step toward an investigation (if there is one).
• Call the three national credit reporting organizations immediately to place a fraud alert on your name and Social Security number.  Thieves can make a credit application over the internet just like you can. The alert means that any company checking your credit knows that your information was stolen and they must contact you by phone to authorize new credit.  There will be records of all the credit checks initated by the thieves purchases.

Important numbers:

• Equifax: 1 800 525 6285
• Experian: 1 888 397 3742
• Trans Union: 1 800 680 7289
• Social Security Administration (fraud line): 1 800 269 0271

How much interest do you really pay?

Interest and Tax Deductions

If you itemize deductions on your federal income tax returns, you may be able to deduct all the interest you pay on your mortgage loan.  (We are not tax professionals. Please consult one for your own situation.)  I have created a table that shows actual interest rates you may be paying on your mortgage and the effective interest rate based on your tax bracket.  For example, you have a 7% mortgage rate and your tax bracket is 15%, then your effective rate is actually 6% after interest deductions.

Link to Table

Interesting article for married couples

Here’s a way to hold title to your primary residence as a married couple.
It has more protections than holding property as joint tenants.

This isn’t a suggestion or recommendation.  Check with your lawyer, accountant, etc.

Tenants By The Entireties

Lynette

Legal Issues Class = Even better agents

Larry and I took an interesting class today with attorney Greg Ursich covering legal issues from purchase and sale to closing.  It covered title insurance, types of deeds, essential elements of a purchase and sale agreement, and avoiding misrepresentation. 

The new thing that I learned about title insurance that more people will come up against is this:  if you place a property into a trust, an LLC, or any other ownership entity AFTER the purchase, the title insurance coverage ends.  You can provide for continued coverage by contacting your title insurance company and obtaining a rider to transfer the title to the new entity.

It was interesting to get the information about each kind of title insurance–there are three–without the marketing bent of a title insurance rep.  Greg’s a lawyer who is often hired by title companies to handle legal issues that arise in this arena, so he sees not as a salesman, but as a practicing litigator, handling claims and problems. 

Title insurance is backward looking–not forward looking like most insurance–though there are some new provisions for identity theft and future encroachment.  Title is primarily research of the marketability of the title using recorded documents for the research.  I can get lots more detailed, but for a blog, I’ll keep this brief.  Title insurance tends to be rather dry till there’s a problem.  Any time you have a question, I’d be happy to talk it over with you, and either explain it myself, or get you in contact with one of our title partners.

Regarding deeds, there are three basic ones.  Warranty deed, the most common.  Bargain and sale, usually for lender owned foreclosures or estate sales.  Quit claim deed, with no warranties or covenants attached to it.  Add a spouse, or remove a spouse from ownership on a property using a quit claim deed, and it would be good to check with your title insurer to make sure you are still covered.

Regarding the purchase and sale contract, real estate agents have a license for a limited practice of real estate law. Limited because we are licensed to fill out standardized forms that have been painstakingly created by lawyers.  We are allowed to fill in the blanks, and create simple addenda with simple instructions like extending closing dates or instructions following inspections.  Custom instructions or agreements beyond the agents expertise should be created by a lawyer.  A real estate agent that writes anything into a purchase and sale agreement will be held to the same standard as a lawyer. 

Disclose disclose disclose is the mantra for a real estate agent, and incidentally for the seller of real estate.  I’ve been told by one of the area’s top lawyers that a seller need not disclose an issue in their home that has been fixed.  But Greg advises that it’s better to tell the buyer everything–the problem, the repair, the whole history.  More comfort for the buyer, more protection for the seller. 

All in all, a great class, lots of info, even better super agents.

 

NAR Response to 60 Minutes

Big topic of talk in our office and probably across the country. I’m sure more people in Seattle per thousand were thinking about this one– I just found out today that one in eight people in Seattle are real estate agents. -Lynette

NAR Responds to 60 Minutes’ May 13, 2007 Segment
CBS News Magazine Show Misses the Mark May 14, 2007

In the world of political campaigns, it’s a standard ploy to set the stage with an empty chair when one candidate refuses to debate his opponents. The CBS show 60 Minutes gave the NATIONAL ASSOCIATION OF REALTORS® the empty chair treatment in a May 13 segment that examined the impact of online brokerages on the real estate industry. The show featured interviews with a representative from the now-defunct eRealty and the president and CEO of Redfin, but no one from NAR, even though NAR twice offered and prepared Association spokespersons for interviews with Leslie Stahl. It was CBS that made the decision it would rather interview our opponents and let them make unanswered — and inaccurate and unfair — accusations about REALTORS® and NAR policies. The one-sided journalism and egregious errors served no one well, especially the once-vaunted news magazine show.

NAR staff spent nearly a year working with CBS, briefing producers on the issues involved. The producers attended the REALTORS® Conference in New Orleans and met with NAR’s legal counsel for half a day in Chicago. Yet, still the segment was full of major errors. NAR is in communication with 60 Minutes about its unbalanced reporting and presentation of misinformation and will be sending the CBS network a letter demanding an opportunity to correct these errors and misrepresentations.

Here are some examples of the misinformation:

Error: The six percent commission is “sacrosanct.”
Fact: All commissions are negotiable. The average commission rate is not 6 percent, but 5.1 percent, according to Real Trends.

Error: NAR is the industry’s “governing body.”
Fact: NAR is a trade association. It does not govern the industry.

Error: In 2003, NAR issued new rules of its own that threatened to block Internet discounters’ access to the MLS.
Fact: The Virtual Office Website policy did not block access to MLSs for discounters or any other brokers who are members of the MLS.

Error: The MLS is the database that lists virtually every home for sale in the country.
Fact: There is no single national MLS. Rather, there are more than 900 local and regional multiple listing services. These are not simply “databases” but private exchange of offers of cooperation and compensation between real estate brokers.

Error: Eight states have “minimum service laws” that require REALTORS® to provide a level of service many Internet discounters can’t afford.
Fact: “REALTOR®” is a trademarked term and should never be used synonymously with “real estate agent.” The intent of minimum service laws is to ensure consumers receive a minimal level of service from licensees.

Error: The brokerage industry has a powerful lobby. Eleven states flatly prohibit rebates.
Fact: The intent of anti-rebate laws is to prevent kickbacks in real estate transactions, not to limit brokers’ incentives to attract customers. The brokerage industry does not lobby for anti-rebate laws.

Other key points 60 Minutes misrepresented or overlooked: NAR supports all business models and favors none. Our 1.3 million members include REALTORS® who work on a full-service basis, as well as those who consider themselves to be limited service, fee-for-service, minimum service, and discounters. We think it’s great that consumers have a choice today.

The real estate industry has harnessed technology for the benefit of consumers and will continue to do so. Real estate is both high-tech and high-touch, so can be enhanced by both electronic and personal interaction.

There is no such thing as a “standard commission.” Commissions are negotiable and prices vary. The fact is that commission rates have decreased 16 percent from 1991 to 2004 (source: Real Trends).

The real estate business is unique in that competitors must also cooperate with each other to ensure a successful transaction, and MLS systems facilitate that cooperation. The first MLS was created more than 100 years ago as way for brokers to share their listing agreements with each another in hopes of procuring buyers for their properties more quickly and efficiently than they could on their own.

The MLS is a tool to help listing brokers find cooperative buyer brokers to help sell their clients’ homes. Without the collaborative incentive of the existing MLS, brokers would create their own separate systems, fragmenting rather than consolidating property information.

Pricing, staging–ways to sell faster and for more money

Three things to consider

We’ve found that when sellers choose a price in the current market range at the beginning of the listing period that takes into account the location, condition and appeal, their homes sell faster and for more money.  So we provide you with an in-depth analysis of the market value of homes in your area to help you decide on your selling price.

Homes that the seller has moved out of sell faster because the personality of the owner has left the building. If you have watched any HGTV shows about setting up a house for sale, you know that the way you live in a house and the way you show a house for sale are two very different things!  It’s much easier to keep the house ready to show when you are not living in it.  However, we totally understand that you may not be able to afford two houses at once, so we will help you strategize the best way to market your property around your own individual situation.

In addition, staging your home by de-cluttering, de-personalizing, and doing pre-listing fix up, will sell it faster.  Staging addresses all the senses as a buyer enters a home.  Sound, scent, space, light and textures all add to the ambience that welcomes a buyer home.  Melinda Knight, owner of MAK Promotions Design & Decorating, and a member of International Association of Home Staging Professionals gives these 10 reasons for staging your home for sale:

Ten Reasons to Stage

1.  Your house will sell faster than if it hadn’t been Staged 
2.  More buyers will find your house attractive
3.  The offers you receive will bring you the most money possible for your house 
4.  The best marketing tool available is the appearance of your house
5.  More agents are happy to bring their clients to view houses that have been Staged 
6.  Buyers will know your property has been cared for 
7.  Appraisers are more likely to appraise Staged houses for more 
8.  Buyers can more easily imagine themselves in your home
9.  The process of Staging and organizing makes moving a smoother process 
10. Knowing your home looks its best reduces the overall stress of selling your house

One additional thing to remember

Choosing an agent that creatively markets your home is key to a speedy sale.  We effectively capture the broadest range of today’s buyer market with our creative marketing  including access to a stager, open house events, blogging, online ads, web tour commercials, our own network of former clientele and coworkers.  Our monthly newsletter features our listed properties as well as the coolest houses for sale.