Seattle Real Estate Bells

Negative Headlines Effect Seattle's Real Estate Market

With all the negative news about the slumping National Real Estate Market is hurting the Seattle Real Estate Market even though Seattle is not facing very many of the problems that are effecting other areas like, Las Vegas, Phoenix, Southern California, and Florida. While the national figures show that home prices have fallen by as much as 15% in some areas, other areas like Seattle have only fallen by about 5%. And while that drop started in early 2007 in other parts of the country, it only started in Seattle in the late fall of 2007 and after there was so much bad news about other areas of the country and the sub prim fiasco.

So much fear has been created by the media that many people are just plain scared to buy or sell today. We have one client that wants to rent their home and buy a smaller condo but is so afraid of what is happening that they are not going to do anything. The facts are that they can buy a condo now for about 10% less than they would have been able to at this time last year and they would be able to rent their house for about 15% more than they would have last year. Financially they would be making a good decision to make that move today but all the bad national news has them too afraid to make the move.

The rental market in Seattle is very strong today and there have even been bidding wars on some rentals. Over the past several years there have been so many apartment building converted to condos that we have a short supply of rental apartments. Because the housing market has changed and buyer and sellers are waiting to see where this market is heading, there aren't as many homes for rent. Supply and demand! Demand is up because people aren't buying and supply is down.

We see Bloggers that put out all these Real Estate sales statistics that can be very misleading. They paint the greater Seattle area with the broad brush of average sales prices and prices per square foot. They fail to understand that every city has areas that are different. If you look at sales figures for all of King County you get a much different picture than if you look at Ballard, Queen Anne, or Magnolia. Renton has a different Real Estate market than Madison Park. Yet people tend to lump all the areas together and make their analysis. Usually that analysis is misleading and inaccurate and we believe now that these misperceptions are hurting our market unjustly because of the phycological impact it's making on people here.

A good example of this just happened to a client of ours. They have their home for sale and received a low offer the first day it was on the market. The client countered and the buyer walked away. Three weeks passed and it was evident that a price reduction was needed even though the home was originally priced very well. But the few buyers that are out there are being so cautious that they have to feel like they are getting a very good deal. Well, the original buyers came back after the price reduction and wrote another offer for $30,000 less than their original offer. With this offer they attached a letter from the seller stating that all the headlines say that home prices have fallen by at least 15% and the end isn't near. They stated that mortgage rates have increased as well. What happening in Stockton California and Phoenix Arizona isn't happening in Seattle. In fact that same article with it's headlines saying "Home Prices Fall by 15%" buried in the middle of the article it said that Seattle prices were only down 4.8%. And mortgage rates are still at historical lows but the talk is that mortgage rates will be heading up.

You need to understand your specific market and not just rely on broad statements or sensational headlines. There are some outstanding opportunities in Seattle today to buy homes at greatly reduced prices, yet you still need to be careful and make sure you are buying a good home in a good location at a good price. You need to be working with a real estate agent that fully understands the Seattle market and home values and know how to get you best deals.

The Foreclosure Issues Facing Seattle Homeowners

It was reported last week that foreclosures have exceeded the 1 million mark nation wide. A vast majority of those however are located in just 4 states, California, Nevada, Colorado, and Florida. Washington State has less than 1% of all foreclosures nationally. But don't be fooled there are still people in Washington State that are at risk of foreclosure. Most of the foreclosures nation wide have been blamed on adjustable rate mortgages, when the buyer was offered a "teaser" rate then saw their house payment increase significantly over the next couple of years. We believe that some foreclosures in the Seattle area have and will be the result however of buyers paying too much for the home when they bought it over the last couple of years.

Seattle has been one of the last areas in the US to see any downturn in the real estate market. In the fall of 2007, we started to see our real estate market change and prices have fallen some and inventories have increased since then. There is still good activity however, and there are buyers ready to buy but sellers have to go about selling their homes much differently now. The latest foreclosure statistics have Washington State in about the middle of the pack in the US, ranked No. 27 for foreclosure filings in May 2008 according to RealtyTrac, which tracks default and auction notices and bank repossessions.

Washington State has seen almost an 18% increase in foreclosure filings compared to the same time in 2007 however, according to the report. Nationwide, RealtyTrac said foreclosure filings rose year-over-year for the 29th consecutive month and in May 2008 record the highest foreclosure-filing rate since the report began in 2005. One in every 483 households received a foreclosure filing during that month, according to RealtyTrac.

The Tacoma area, Pierce County, is #1 in the state for foreclosure filings, according to the report, with one in every 574 households going into foreclosure. Interestingly, though, that number was a 6% decrease from the same time period in 2007. The Seattle area, King County is #2, Clark County is #3, and Snohomish County is #4 in the state, as of April 2008.

A new law (in Washington State) took effect on June 12, 2008 intended to protect homeowners from foreclosure scams. See Washington State Adopts a New Statue that May Harm Distressed Homeowners

While this new law has many good parts to it, and will help protect people form equity skimming scams, it will also, most likely, discourage many real estate agents from helping homeowners facing foreclosure sell their homes. The new law also effects home buyers and depending on the situation the buyer may not want to buy a home that is within 20 days of the foreclosure date because of unnecessary but real liabilities.

There will be real estate agents in the Seattle area that will see an opportunity created by this new law and increased number of people going into foreclosure that will get involved with foreclosures, now called distressed homesellers. Some of these agents will do a fine job and others won't...so business as usual I guess!.

Stay tuned for several more articles on Foreclosures and Short Sales and some of the Do's and Don'ts to this very complicated process.

5 STAR BEST IN CLIENT SATISFACTION for 2004, 2005, 2006 & 2007

       

                                                

    

David & Karen Bell Voted Seattle Magazine’s “5 Star Best In Client Satisfaction” Selected By The End Consumer, for 4 Straight Years

"Your Clients Identified You As The Best!”

“David & Karen Bell are among less than 1% of Realtors in the Greater Seattle Area to have been awarded by Seattle Magazine the FIVE STAR Real Estate Agent “Best in Client Satisfaction” for the first 4 Consecutive Years this award was given. In 2003 Seattle Magazine hired a marketing and survey company out of Minneapolis Minnesota to determine which Seattle Real Estate Agents provided the best customer service according to the clients and others in the Seattle market place. How they determined who was chosen was by surveying:

1. Over 33,000 Consumers were Surveyed each year for 2004, 2005, 2006, & 2007
2. 31,000 Home buyers were Surveyed for each year
3. 1,500 Readers of Seattle Magazine were Surveyed each year
4. 1,000 Mortgage and Title Company Offices were Surveyed each year

Then Each Agent Was Scored and Rated for:

Customer Service
Integrity
Market Knowledge
Communication
Negotiation
Closing Preparation
Finding the Right Home
Marketing of Home
Overall Satisfaction

We are obviously very proud of this Achievement Award and we believe that the level of service and degree of knowledge we provide to our clients is unique and the Best in the Business.  Buying or selling a home today can be a very complicated thing, and people stand to make some serious mistakes if they don't have all the necessary information and insights.  While we ranked very high in all the categories, our highest rankings and that averaged well over the national and local averages were in "Market Knowledge" and "Negotiating" with "Integrity" and "Communications" a very close second. We want to make sure that our clients find the best possible homes to buy at the very best price and ones that will be a good investment over time.  We want to make sure our clients sell their homes for the highest possible price with the least amount hassle and expense.  We would look forward to discussing any of your real estate goals with you, just call us direct at 206.283.9100, email us at [email protected].  Success is a proven track record not just promises!

Washington State Adopts a New Statue that May Harm Distressed Homeowners

Home Foreclosures Reach an all time high in the US

It was reported this week by CNN Money that Home Foreclosures in the U.S. has toped 1,000,000 with Nevada, Arizona, California, and Florida accounting for 89% of the total of all Foreclosures. California, Nevada, Florida, Arizona and Michigan exhibited the greatest price depreciation in all transactions in the first quarter. While Wyoming, Utah, Montana, Texas and Alabama saw prices for all transactions increase the most. According to the NWMLS the Seattle market also saw a slight increase in sale prices as well over the last two months.

And as people were loosing their homes at the highest rate on record for the first three months of this year, there are new scams popping up everywhere to rip off and take advantage of stressed out, non English speaking, and unsuspecting homeowners that are willing to do almost anything to save their home. The worst of these scams is called Equity Skimming. The simplified version is : A Buyer will write an offer (below market value) for the home and then promises to rent the home back to the seller so they can stay in their home and when their fiances improve they can buy the home back. This Buyer then resells the home for a higher price and keeps all the equity that the seller had in the home and the seller has no place to live and has lost all their equity.

To help protect these vulnerable homeowners 17 States have passed new legislation pertaining to foreclosures and short sales. The State of Washington passed the new law that took effect Thursday June 12, 2008. And while the law has good intentions, many believe that it will end up hurting those it was intended to help. Apparently, Washington's new law was copied from the State of Wisconsin and there are many contradictions in this new law with our already existing Agency law. There is also so much vague language in the law that it’s impossible to interpret. Of the 17 states that passed a similar law, Washington is the only state that is holding Realtors responsible if something goes wrong. The law exempts financial institutions, mortgage brokers, mortgage loan servicers, credit counselors, and licensed attorneys, not real estate licensees. All the other state exempt real estate agents. The law also awards attorney fees and damages up to $100,000.

Now, I’m sure there are people out there that would say well those blank blank Realtors are a bunch of crooks and make too much money anyway so they deserve huge fines. And I agree…if we do something wrong or take advantage of some unsuspecting seller we should be responsible. And while I think that many Realtors don’t do that great of a job representing their clients best interests, I also don’t believe there are very many Realtors that are dishonest or would knowingly take advantage of someone or create an Equity Skimming scam of some sort.

But what this new law will do, in my opinion and many others, is force most Realtors to “stay the heck away” from Foreclosures and Short Sales. All a Realtor has to do to become a Distress Property Consultant and be subject to all the new laws and liabilities is to basically try to help sell that distressed property, as a Listing Agent of a Selling Agent. A Distressed Homeowner is the owner and occupant of a dwelling who is: 1. at risk of loosing the home for non-payment of taxes. 2. are in default under a mortgage. 3. are 30 days behind on a mortgage or 4. believes he or she "could" default on the mortgage within 4 months and tells a lawyer, real estate agent, lender, mortgage or credit counselor. But the Distressed Homeowner has NO duty to notify the real estate agent that they are a Distressed Homeowner, there doesn’t need to be a public notice of mortgage default to become Distressed, and the owners may not even know they are a Distressed Homeowner. Yikes! If they don’t know how are we supposed to know? Fortunately the NWMLS has just provided us with a new Listing Agreement that will hopefully cover this part somewhat.

Now the new law also defines what a dwelling is. A dwelling is a single, duplex, triplex, or four-unit family residential building. Condominiums in building more that 4 units are not subject to this statue…maybe they don’t have condos in Wisconsin. So if you don’t live in the home or if your unit is in a condo of 5 or more units this statue doesn’t apply to you. OK?

So how does a Realtor become a Distress Home Consultant? It’s pretty easy. They solicit or contact Distressed Homeowners and offer to perform any service that will:
• Stop or delay a foreclosure sale (try to sell the home)
• Assist a Distressed Homeowner to Obtain a loan (try to help refinance)
• Save the home from Foreclosure (sell the home)
• Close the sale within 20 days of the foreclosure (stay away from this one)
• Systematically contact distressed homeowners (mailings, phone calls, Blogs or ads)
• Draft a seller lease-back or an option to buy the home back

From what we have been told, one thing an agent should never do under any circumstances is draft or arrange a lease-back or buy-back for a distressed homeowner.

Let’s talk about another huge flaw in this statue. If a transaction to purchase a distressed property closes within 20 days of the foreclosure date then both the selling agent (that's the buyers agent) and the actual buyer become Distressed Home Consultants and owe fiduciary duties to the seller that are above their own. WOW! You have to be kidding me. If a buyer makes an offer on a home that will close within 20 days of the foreclosure date they have to put the sellers interest above their own or they can be held responsible for non-compliance and if found that they “got too good of a deal say” they can be sued for actual damages, plus double or triple damages of up to $100,000 and attorney and court costs. That’s has to be a pretty good home to buy. Under those circumstances we certainly wouldn’t want to be that selling agent and we would most likely advise our buyer client not to buy the home.

So how does a smart Realtor avoid all this? They don’t get involved with distressed home sales at all. This law was written to help protect the homeowner but instead we believe it will greatly hurt the homeowner because most realtors will not be willing to take on such risks. These Distressed Homeowners really need our help. Their best chance of getting out of all this is to sell the home before foreclosure. Maybe the credit counselors or attorneys can market and sell their homes? Do you think we need a revision to this law? Do you think we need a totally new law? But that can’t happen until about this time next year! So instead of getting many of these homes sold the banks will be taking them back and then selling them most likely in bulk, flooding the market and eroding home prices even more. Do you really think it matters whom we vote for?

PART 2 - How David & Karen Bell Work with Buyers to Purchase Good Homes in the Seattle Real Estate Market

This is Part 2 to our Post of June 9 on what we do to help people buy good homes in Seattle

We also go back and look at all the Expired and Cancelled Listings that fit our client’s requirements. At some point these people wanted to sell their homes. The home didn’t sell for some reason; usually it was priced too high. We talk with these homeowners and let them know that we may have a client that could be interested in their home and would they be interested in letting us take a look at it. If they are interested we’ll go and look at the home and at that time talk to them about why they thought it didn’t sell and try to determine how motivated they might be to sell. By looking at it we would then also know ourselves why it didn’t sell. If they are still interested is selling it and are motivated and realistic about the price and it’s a good home in a good location then we would set up a time to show it to our client. We would also expect to buy the home for a little under market value as well, and one of the incentives to the seller would be that only one real estate commission would have to be paid so that additional saving should be passed on to our client, the Buyer.

The next thing that we do for our clients is to call other homeowners in various neighborhoods that our buyers would be interested in. We ask them if they know of anyone in the neighborhood thinking of selling. We often find very good homes for our clients this way. We just don’t sit and wait for homes to come on the market and show up the NWMLS. We believe that we need to be very proactive to fully help our clients. But it just doesn’t stop here either.

We think it’s very important to look at the big picture when buying a home. We are very concerned with good resale value and that is determined by several factors. First of all, are you paying the right price for the home? Is the style, location, and quality of home such that when you go to sell, will it sell for a good price and sell quickly given the current market conditions? One of the “tests” we use is how many buyers out of 10 potential buyers would be interested in the home if it were on the market? If the home would only appeal to 2 or 3 out of 10 then it may not be the right home to buy, but if 7 or 8 out of the 10 would buy the home, then it’s usually a good home to buy. What we have found over the past 20 years however is that only about 2 or 3 homes out of every 20 listed homes are in fact good homes to buy in the Seattle Real Estate market.

We analyze the appreciation potential of a home and that’s a function of several things as well. There are homes with good bones (quality of original construction) and homes with OK bones, and then homes with just plain bad bones, chicken bones. Original building quality is very important. Many homes that were built at the turn of the century (1900’s) were really good and some were really bad, with pillar and post foundations for example. The good homes hold up very well but the bad ones are very expensive to fix and consequently worth a lot less. When the market slows people just won’t buy homes with bad bones. Homes that were built in the 1920’s to 1950’s in many cases have very good bones. Quality of materials used, the finish work, the plumbing and electrical systems all have their differences and challenges, but some are much easier to fix than other. We understand building quality and what the ramifications and cost might be for fixing poor construction or bad plumbing and every situation is different.

Finally, we look very closely at the location of a home. Remember what they say…the three most important things is buying real estate is location, location and location. It’s true! There are good parts of good neighborhoods and bad parts of that same good neighborhood. If the home is in the good part of that good neighborhood it will appreciate faster than if it is in the bad section of the good neighborhood. Now if it’s in the better section of a bad location it may not be as good as the bad part of a good area. Here is when it can get complicated and we have to take every case individually but an informed buyer should have an agent that knows how to evaluate all this. The agent really need to know the city and the all the neighborhoods. They need to know the history of the neighborhoods and where that neighborhood is going. Many of the people that are upside down today with their home is a direct result of making a poor buying decision. Getting caught up in a “hot sellers” market and paying way too much for a home in a bidding war or buying a home in a bad location that will only sell in a white hot market. Buying a home can be very emotional for many people but we make sure our clients have at least one foot firmly planted in Reality!

So in conclusion, experience, knowledge, and honesty are critical attributes in any Seattle Real Estate Agent you may hire. If your not are represented and represented well you could make a buying decision that could cost you 10’s or even 100’s of thousand of dollars in just a few years. One of the main reasons so many people are in financial problems today and can’t sell their home for what they paid for it is a bad buying decision…don’t let that happen to you!

For more information, email us!

How to Buy a Good Home In Seattle Today For the Right Price

Part 1 of 2

The majority of people believe that all a Realtor does to find homes to sell is look in the Northwest Multiple Listing Service and when new listings come on the market the Realtor sees it, and if it’s close to what the buyers want, the Realtor shows it to them. To be successful in helping Buyers buy homes today in the Seattle Real Estate Market you need to do a lot more than that.

When we work with a new buyer first of all we spend as much time as necessary to really define and refine what a buyer wants to buy. We understand that in “all” price ranges there will be compromises a buyer usually has to make. Even if someone designs and builds their own custom home by the end they will wish that they did this differently or included that. When you are buying a home you have to get everything you need but like what Mick Jaeger said, “you can’t always get what you want, but… you’ll get what you need”. Understanding the total picture when buying a home is very important. We work very hard with our clients to make smart buying decisions by understanding the total Seattle Real Estate Market.

After we have a very good understanding of what our client’s wants and needs are, we then take them out to look at several different homes with different styles and in various locations. From this we gain a much deeper understanding of what our clients are looking for and what will actually satisfy their needs. Often times what people verbalize in the conference room is much different from they actually want after seeing different types and styles of homes. It’s not until we get them in different types of homes that they can truly evaluate and understand what they really like and don’t like. This is especially true and normal for first time homebuyers.

With this understanding we then search the entire Seattle Real Estate Market starting with NWMLS (Northwest Multiple Listing Service). We look for homes that fit within a specific criteria and price range. But we also expand that search with regards to price range because so many homes are overpriced in the Seattle Real Estate Market. We really evaluate a Buyers situation and goals and set up a plan that works. Here is a good example: A first time home buyer with no children tells us they want to spend up to $500,000, and they want a 3 bedroom 2 bath home with a garage in a good neighborhood location with convenient shopping and a bus line close by that will give them an easy commute to downtown Seattle. We, as Buyers Agents, really need to understand several things here first. First, why do they want a 3-bedroom home? Are they planning to have children soon, do they need a home office? Do they have out of town guests on a regular basis? Then very importantly what are their plans for the next 5 to 6 years? There are as many different circumstances as there are people and an effective Realtor in the Seattle Real Estate Market needs to have a full and complete understanding of their client’s situation to be as effective as possible. And sometimes the clients haven’t even thought about all this and how their situation and 4 to 6 year plans can effect their buying decisions.

Here’s the deal…if they really need a 3 bedroom 2 bath home and can spend up to $500,000 then the location of the home may be compromised somewhat. If they really only need 2 bedrooms and 1.75 baths, and they can use the Rec Room downstairs for guests when they come and they are not thinking about having a baby in the next three years, then maybe they would be making a better buying decision if they looked for 2 bedroom 1.75 baths homes in a better location. As a result they would most likely be able to buy a better home in a better location for $500,000 so, in the long run, they would be ahead because homes in better locations appreciate more over time and would be much easier to sell if we have a slow market at the time they would want to sell. If they truly need a 3-bedroom home, then we need to look for the best home in the best location and one that will have the best appreciation rate.

Just because someone is asking $600,000 it may not be close to the right price. If someone is approved to spend $500,000 for a home we will look between about $450,000 to as high as $600,000. We do that because there are many, many homes in the Seattle Real Estate Market that are overpriced. Agents overprice homes in a hot market and agents overprice homes in a slow market. We often walk into a home that we are previewing and say to ourselves “boy, they must have had some good drugs when they priced this one!” Yes, there are several homes that are way over priced but in a hot market it doesn’t matter that much because unsuspecting buyers buy them anyway. Believe it or not, there are many Realtors in Seattle that don’t have a clue on how to price a home in any market condition but especially in today’s market. The so-called “Comps” are difficult to analyze and many home sellers end up dictating the price anyway, and we all know how objective the homeowner is when it comes to the price of their homes. Pricing in the close-in Seattle neighborhoods is an art! There are not really good comps like there are in the suburbs for example. In the suburbs a developer will buy a large partial of land and build several homes. These homes are pretty much alike except they will flip the floor plan and put upgraded counter tops in the Model homes and they paint every other home a different color. These home are very easy to comp out based on what else has sold in the neighborhood in the past 3 months. You just look at what the 3 most recent sales were, then figure a price per square foot and you’ve got it…done deal. It just doesn’t work like this in the city so the Realtor has to have many years of selling experience and a track record showing that their listings have sold for very close to the asking price (our last 52 listings have sold for 99.8% of the asking price and our Buyers have purchased for 94.5 of asking price). We know property value in the Seattle Real Estate Market and our clients make well-informed buying decisions. Over the past 20 years not one of our clients has lost a penny when they have sold their house.

When we find a home that fits our clients needs, but is over their price range, we track that home. If that home doesn’t sell in about 30 days then we take a closer look at it. We will go out and physically look at it if we haven't seen it already. Say it’s priced at $625,000 and we don’t know the Listing Agent. We’ll look up what that Listing Agent has listed over the past year or two to see if there is a pattern of overpricing. Karen and I will then independently come up with what we each think the property is worth. If we both think it would eventually sell close to $500,000 then we’ll let our client know that there is a home that fits their criteria but it’s way over priced so we need to wait and watch to see what happens with that house. After about 60 days if there hasn’t been any price reductions we’ll talk with that Listing Agent to try to find out how motivated the sellers are, etc. If that property has had price reductions all along and has now been on the market for at least 60 to 90 days then we may be in a position to write an offer well below their asking price, but more importantly, below market value. What is usually the case is that homes sell for the most amount of money in the first two to three weeks. After about 30 days on the market you should expect about a 3% to 5% price reduction every 30 to 60 days. So for example, that $600,000 home that’s been on the market for about 60 days now, and we think that the home would have sold for about $525,000 if they had priced it there to begin with, we would now recommend making an offer on it for under $500,000, say $480,000 and hopefully settling at $485,000 or a maximum of $490,000. We should be able to save our clients between $30,000 and $50,000 on an overpriced home in the $500,000 to $700,000 price range and that's not $30,000 to $50,000 under the asking price that's $30,00 to $50,00 under market value. But stay tuned…that’s not all we do, more to come in Part 2.