Flip This House of A&E is looking for… September 4, 2008
Flip This House on A&E
Once again the Producers of Flip This House have asked us to announce that they are looking for people in the Seattle Area who have flipped 10-12 houses. I expect that can be over any period of time. I don’t know all of the selection criteria, but if you want to be on the show, email your contact info to flipthishouse.casting@gmail.com and they will send you an application.
DEADLINE for applications for this season is October 1, 2008.
I thought it was fun that the casting company is using “gmail” :) From what I am seeing, gmail is as acceptable in business applications as a private domain email address. Why is this “free” email more accepted than all the free hotmails and yahoos before it? Even more acceptable than most paid for email addresses like AOL. Why is gmail so acceptable and accepted?
CoRE #106 - We have A WINNER! September 2, 2008
We at Rain City Guide have had the pleasure and honor to host this week’s Carnival of Real Estate. I can’t help but remember someone saying that Greg Swann is disappointed when there is not one, single and clear WINNER of the CoRE. Well Greg, we do not disappoint you this week.
Diane Tuman’s post on John McCain’s Houses was by far the clear cut winner, with no close second.
Congratulations Diane and Zillow Blog! Dustin, Rhonda, Jillayne and I didn’t even have to have a meeting to discuss who the winner was to be, as each and every one of us chose the same post. The vote was UNANIMOUS!
To the other 32 entrants I would like to point out that RCG as Judge is a tough crowd to please. Many of the blog posts submitted were quite fine enough for a post on your blog, and yet not stellar in the sense of entering the post into a nationally recognized Carnival event. So “good blog post for whom?” is the question of the day.
1) If it was only of interest to people who live in your area, then it likely didn’t make the cut.
2) If it didn’t fulfill the concept of blogging from our perspective, that being to enlighten and educate someone on a topic of wide interest, then it likely didn’t make the cut.
3) If the topic was of broad interest, and the attempt to educate and enlighten fell short but made it at least part way there…then you are included in the following list of Honorable Mention.
Honorable Mention:
Dan Green on What is a Conforming Mortgage? Dan, using your own words “but that’s jibberish” I would suggest you take your post out on the street to be read by some Average Joe, and ask them if it is still “jibberish” to them. Seems to me the answer is still a bit too insider for Average Joe to make good use of the answer. Some numbers are missing. The ones that a buyer needs to know before going out to look at property and insure the conforming loan option is at the end of his journey. Great Topic!
Dan Melson of Searchlight Crusade on Rent to Own and Lease with Option to Buy Dan, this is also a Great Topic and the information provided is stellar. Presentation could use a little work with so much crammed into one post. Maybe some bullet points or graphics. I was in the process of writing a post for one of our readers on this very topic when your entry came in, and held off because of this entry. In this market, more posts on this topic will be of great importance to the masses of people who don’t qualify as a result of the mortgage loan criteria changes. Kudos!
Matt Meyer on So You Want to be a Landlord? “More than any other time in life, NOW is not the time to play “trust me.” Never take the stated rents as fact…” Clearly one of the highlights of being the Host of this week’s Carnival of Real Estate was meeting Matt Meyer. SugarHouseHomes is definitely going into my bookmarks. I Love, Love, LOVE…this guy! Do yourself a favor and go meet Matt.
Gerhard Ade on Seattle Area Sellers In Denial? To give you an idea of how tough the Judges were this week, this made the cut because one Judge said “this one is OK”. Many were disposed of in short order with a bunch of “too short”, “too long”, “no links”, “did nothing for me”. If we learned nothing else this week, we learned that RCG is a tough crowd to please, which makes this list of Honorable Mention that much more Honorable for those who made the cut. The best part of this post is following the price from initial list price, to price at time of offer, to final recorded price. That is the kind of transparency that readers crave. A bit agent-centric in parts…but overall a good topic with some good detail.
Kevin Tomlinson of South Beach Condos Blog is one of the lucky ones who can get a way with a post about local statistics being somewhat of national interest, because his niche market has lots of eye candy and Real Estate Porn. But he blew it with this line: “I’m not going to do an analysis of $ psf because…” Stats without commentary and an analysis by the poster…is just a bunch of numbers. Advice? - get Brad to line up those columns.
TwoWiseAcres on Flipping Houses for Profit - A Case Study left us with more questions than answers. But at least we stuck around long enough to have questions. Since it is an ongoing case study, the answers will unfold over time. Interesting Topic with some meaty content. We highly recommend your tuning in to see the rest of this story, as it unfolds over time.
We liked the comments on Michael Bergin’s Post better than we liked the post itself. My favorite line in the final comment (as of today) is “…IF does not sell a house. Good value…does.”
Ro Troia’s post on House Swapping left is with more questions than answers, but did get everyone’s attention. Ro, if you could provide a link to the Wall Street Journal article you referenced, perhaps that article contains some of the answers to our questions. In addition to adding it to the post, if you could also put that link into the comments here or email it to me, I’d much appreciate it. Any post that makes us want more is surely worthy of an Honorable Mention.
All those worth mentioning, are also worth reading, IONSHO.
Using Storytelling to Connect September 1, 2008
This weekend I’ve been working on writing lesson plans for a course I’ll be teaching this fall at Bellevue College on Land Titles. For extra credit, I’ve assigned watching the movie “The House of Sand and Fog” and trying to find all the land title issues that come up as the film unwinds. Other extra credit choices are a chapter from “By the Shores of Silver Lake by Laura Ingalls Wilder and the Tom Cruise/Nicole Kidman movie, “Far and Away.” I’ll tell you why in a minute but first, a memory.
I remember when I was first asked to join Toastmasters by a friend. This was pre-marriage, pre-kids, a long time ago back when I was a mere 20-something and thought I knew everything, including that I wanted to be a public speaker (cue the applause!) I took Toastmasters very seriously, tried to show up at all the Friday morning meetings, even though 7:00 AM was murder. I wore my 1980s-style suits in jewel tones, and had a perm and an attitude. If you’ve never been to a Toastmasters meeting, it’s a great place for anyone who wants to improve his or her public speaking skills. What I wasn’t prepared for was the variety of different people I’d meet who would “need” Toastmasters. In our group we had a police chief, a new Swedish immigrant, several business owners, salespeople, business men and women, stay-at-home moms, and one or two Realtors. The person who impressed me the most was Robert. I can’t remember his last name, but I remember him. He owned a plumbing company and specialized in cleaning out sewer drains and septic systems. He always came to Toastmasters dressed in coveralls that, although probably clean, still had the faded stains of greasy jobs long past. Robert grew up in the deep south and had a deep southern accent. He was tall, with light brown hair and blue eyes. He was neither fat nor thin but not stocky either. I could never quite tell because the coveralls were alway loose. Though not in a crisp policeman’s uniform or a business suit, Robert was by far the best Toastmaster because he always told a story. His stories twisted and winded and you’d wonder how he was ever going to connect a pig, a maple tree, his cousin Vinnie, and an old truck with some kind of moral but he would always do it. His stories weren’t funny or sad, they were mostly stories that taught us something. I can’t remember the stories but I will always remember how he made me feel. Somehow Robert’s stories touched me, a young woman who thought quite highly of herself, the power of how to connect with others through storytelling. I no longer wear the jewel tone suits but I still carry around the way Robert made me feel.
Any real estate investor wannabe should first watch the movie “House of Sand and Fog” to understand the full force of how people in danger of losing their home to foreclosure go into denial. Even though Ben Kingsley’s character bids on Jennifer Connelly’s home at the auction, following all the protocols, it’s extremely difficult to try to foresee all the possible consequences of our choices.
I’m currently re-reading all the Little House on the Prarie books with my daughter. Although Farmer Boy is by far one of our favorites (how did Almanzo eat all that food? Do boys really eat that much?) now we’re on The Long Winter, where Pa has staked his land claim. These stories are a terrific way to re-live how America settled the West after overpowering the Native Americans. (We could call this the very first American real estate fraud case, couldn’t we?)
Far and Away is a great all-around tale of an Irish immigrant who dreams of owning his own land, has to work hard to save up enough money to travel west and ends with a fun land-rush scene.
Tonight, it would have been Norma Rae, but my eldest is at Bumbershoot. I hope you all had a great weekend!
Buying without an Agent — the Epilogue August 29, 2008
This is not legal advice. For legal advice, contact an attorney.
Over the last year, I’ve posted several times on using an attorney – rather than a real estate agent — to purchase a home. As discussed in those posts, one of the biggest challenges in doing so is getting access to the properties that you may be interested in purchasing.
I am currently working with a couple looking to purchase their first home together. The did their homework — they searched the listings on the web and looked at numerous properties before deciding to make an offer. I asked them about their experience and if they had any difficulty. They told me that they actually looked at perhaps 10 homes (as opposed to the “drive-by”), and in only one instance did they have any trouble. In that case, they got the old “that’s not my job” reply from the listing agent when they called to schedule a viewing. In every other instance, the listing agent either met them at the property or, in several cases involving new listings, allowed my clients to attend a brokers’ opening (at my clients’ request).
So, if you’re thinking of going this route and saving some money in the process, it appears that listing agents are coming around to at least tolerating this approach. A 90% success rate seems pretty good. I guess the times, they really are a-changin’…
Friday’s Mortgage Interest Rate Update
The comparison of rates is based on when I last posted on (I skipped a week while our family was vacationing at Lake Roosevelt). Overall, rates are slightly improved to unchanged and do continue to be volatile.
Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties). The conforming rate quote below is based on owner occupied with a minimum credit score of 720, “full doc” purchase with a sales price of $500,000 and a loan amount of $400,000. This scenario includes reserves (taxes & insurance) not being waived. Rates quoted are priced based on a 30 day lock with no prepayment penalties on any of the rates quoted below.
30 Year Fixed @ 1 Pt: 6.250% (APR 6.410%) improved by 0.125% to rate. 
30 Year Fixed with 10 Year Interest Only @ 1 Pt: 6.500% (APR 6.648%) unchanged
15 Year Fixed @ 1 Pt: 5.625% (APR 5.880%) improved by 0.25% to rate.
5/1 ARM - LIBOR @ 1 Pt: 6.000% (APR 7.200%) worse by 0.125% 
Conforming-Jumbo Rates. Pricing is based on the same criteria above except where the loan amount is $417,001 - $567,500 for properties in King, Snohomish or Pierce Counties; specifically priced for a sales price of $650,000 and a $520,000 loan amount. NOTE: The Conforming-Jumbo loan limit will be reduced to $522,100 effective January 1, 2009.
30 Year Fixed @ 1 Pt: 6.250% (APR 6.499%) improved 0.125%.
30 Year Fixed with 10 Year Interest Only @ 1 Pt: 6.750% (APR 6.896%) unchanged
5/1 ARM @ 1 Pt: 6.125% (APR 7.243%) unchanged
JUMBO (Non-Conforming) Rates. Pricing is based on the same criteria above, with the exception that the loan amount is $417,001-$650,000 (20% down). The specific scenario used to price the rates below is a sales price of $850,000 with a loan amount of $680,000.
30 Year Fixed @ 1 Pt: 7.500% (APR 7.656%) improved 0.25% to rate.
FHA. Pricing based on credit score of 620 or better and loan amounts up to $362,790 for FHA in King, Snohomish and Pierce Counties.
30 Year Fixed @ 1 Pt: 6.375% (APR 7.158%) improved 0.125% to rate. :)
FHA-Jumbo. Pricing based on loan amounts from $362,791 - $567,500 for King, Snohomish and Pierce Counties. NOTE: The FHA Jumbo loan limit will be reduced to $522,100 effective January 1, 2009.
30 Year Fixed @ 1 Pt: 6.375% (APR 7.133%) improved 0.125% to rate.
VA. Pricing based on credit scores of 620 or better based on loan amounts up to $417,000. VA loan amounts over $417,000 are also available. Contact your local Mortgage Professional for more information.
30 Year Fixed @ 1 Pt: 6.375% (APR 6.%) improved 0.125% to rate.
Prime Rate (what HELOCs are based on): 5.000%
This is just a small sample available of rates and products. Rates are as of Friday, August 29, 2008 at 1:00 p.m. and may change at any time. Available programs may change at anytime as well. This is not a guarantee nor is it a commitment of interest rate. To see live rate quotes for various scenarios, check out my Twitter.
52% Appreciation in Kirkland This Year???
This is fun. Just got my new Tax Assessment, and like Robbie, I am clearly puzzled. Robbie’s Total Assessment went up 10% and he freaked out. Well Robbie, my total assessment went up 40.6% this year. NOW let’s talk about the Attack of the Killer Assessments.
Land - Old Value $376,000 - New Value $510,000 - UP 35%
Bldg. - Old Value $167,000 - New Value $254,000 - UP 52%
Nope, no major remodel. No permits pulled for improvements that I know of except maybe fixing a shower in the basement.
According to Zillow there’s been a drop of about 3.5% in value in 98033 during the same period.
Clearly a 40% PLUS increase in value is not about appreciation. Since I am from the Era of Respecting Authority, I think the County has a really, really good reason for what just happened, and i think they are correct. I want to know what that reason is, of course. But my guess is that they know what they are doing, and they will give me a valid explanation.
Now…let’s talk about Seller Disclosure for a minute.
If you are buying a property, be sure to ASK the seller if he has his new assessment for 2009. No, I’ve never seen seller’s disclosing that. There is no place on the Seller Disclosure Form or MLS Input Sheet to disclose that. I don’t think a reasonable annual increase needs to be disclosed necessarily.
But if based on opening my mail this morning, I have learned that the taxes are going to increase by 40.6%, don’t you think I SHOULD disclose that? Most sellers would feel disadvantaged because “no one else is doing that”. My home has been on market for about 25 days saying the taxes are $4,805. While what I received in the mail says nothing about a change in the tax amount to be charged, given what it does say it looks like that $4,805 is going to be $6,755 in 2009.
Clearly there’s more to this story than meets the eye. If anyone knows a reason why the assessment would go up 52% on my house and 35% on my land this year…I’d love to hear it.
Some agents and loan officers need to just say, “No.”
There is a lot about the real estate industry that needs improvement. But, there are some very stand-up hard working salt-of-the-earth real estate agents and loan officers that are working in a challenging market and who are literally bailing out financially challenged homeowners. They are making things happen and are doing what they can to make transactions close.
I know it is a challenging market, especially in the outer lying areas outside of Seattle/Bellevue proper and cash flow is tough, but I’m growing VERY tired of LO’s giving broker credits and agents giving up commissions earned for “challenged” borrowers who obviously have a history of financial mistakes.
I say this in the similar tone and voice of Al Pacino in his famous scene in Scent of a Woman:
I know people want transactions to close, but sometimes consumers need to face the consequences of their own decisions. Loan officers and agents sometimes need to say, “you know what?….enough is enough. I’m not dipping into my livelihood to bail you out. Dig yourself out of your own hole.
Don’t blame us for your prior agent selling you an overpriced home. Don’t blame me as a loan officer for your garbage loan sold to you by a prior mortgage broker.”
If the Bubbleheads want to trash me because I’m part of the real estate industry, so be it. But, this is the stuff that goes on behind the scenes that agents and loan officers GET NO CREDIT FOR AND SHOULD.
RightTimetoBuy.Org August 27, 2008
I just saw a scary commercial. It went by pretty quickly and I was just walking by the TV, but this is what I think I saw.
A woman holding a microphone saying it’s maybe not a good time to buy. (perhaps a media facsimile)
A perky young woman who said that wasn’t true and she found out it was a good time to buy at “RightTimeToBuy.Org” and had just made her first home purchase.
Then the garden guy popped his head in “sisco?” and told everyone to go to RightTimeToBuy.Org
Who is behind this site? It’s made to look very generic like a Public Service Announcement of some kind. But who paid for the commercial on TV?
“RightTimetoBuy.org is a free resource to educate, encourage and empower people who are thinking about buying a home. We don’t sell any financial or real estate products or services, all information is free and we don’t accept payment from anyone to be mentioned on our site. We accept information from a variety of credible sources.” I love that last line. I see no links to SeattleBubble.com
Then it lists a bunch of real estate companies, a testimonial about a RE/MAX agent and something to do with a homebuilders association. If this is backed by people who do “sell…financial or real estate products or services”, or is an advertising site for that purpose, is it OK to make it look like it isn’t a biased site?
If anyone else sees this commercial or knows anything about this site, can you give me your take on it? I’d appreciate it.
Reviewing Your Adjustable Rate Mortgage
RCG’s Jillayne Schlicke was interviewed on King 5 last night…I wish her spot would have been longer. Check her out here! The piece is about resetting subprime adjustable rate mortgages. King 5’s, Chris Daniels reports that locally, we’ll see around 12,000 subprime mortgages reset over the next 6 months. Combined with lower home values and tougher underwriting guidelines, if home owners are not able to swing their new payment or refinance, may be in a tough situation.
I thought this would be a good opportunity to go over how to determine what your new mortgage payment may be in the event you have an adjustable rate mortgage. This does not only apply to borrowers with subprime mortgages–this is for anyone with an adjustable rate.
First, drag out your Note for your mortgage.
In your Note, you will find the following information that you will need in order to determine what your payment may be once your mortgage adjusts:
- Index/Indice — this is what your rate is based on. Most common are LIBOR, Treasury, MTA, etc. It can vary so you need to determine this. The index is a variable and not a fixed figure.
- Margin — the margin is added to the index to determine what your new rate will be.
- CAPS — caps limit how much your rate can adjust at the first adjustment, every adjustment following and provides a lifetime limit on how high or low the rate can adjust.
- Start Date — when you started paying your mortgage.
- Fixed period term — is your ARM fixed for 2, 3, 5… years (etc).
- Amortization – Does your mortgage offer an interest only feature? Do you have negative amortization?
If your mortgage is set to adjust within the next 6 months, I especially recommend that you go through the following exercise. I’ve been sending letters to my clients with adjustables that are set to adjust with this information:
Start Date: May 1, 2003
Start Interest Rate: 4.125%
CAPS (first/after first/lifetime): 5/2/5 (Lifetime CAP: 9.125%)
Margin/Index: 2.75%/1 Year LIBOR - 3.16 as of June 1, 2008 (currently 3.22)
Start loan amount: $131,500
Fixed Period: 60 Months
First Adjustment Date: June 1, 2008 and adjusting annually on June 1 for the remaining life of the loan.
This is not a subprime loan. Many subprime loans have much higher CAPS and margins. This is a classic 5/1 LIBOR ARM. This home owner has not refinanced nor do they need to. Their rate is attractive compared to current market.
Based on their estimated balance (assuming they did not pay additional towards principal over the last 5 years) of approx. $118,500; their rate for the next 12 months will be 6.00%. (Index from when the mortgage reset: 3.16 plus the margin of 2.75 = 5.91. This is rounded up to the nearest 0.125%). 6.00% is a pretty good rate for not having to pay closing costs to refinance as long as you can tolerate the annual adjustments (which may work in your favor or not). Their pricipal and interest payment will be approx. $763.50. (balance at adjustment/projected interest rate/remaining term of 25 years).
On June 2009, the highest this rate can be is 8% since there is a 2% annual cap. The lowest the rate can be is 4%. The most the rate can change on the anniversary of the change date is up or down 2% from the current rate. It can never go beyond the lifetime cap of 5% plus the Note rate (9.125%) and it can never be lower than the margin of 2.75%.
How will your ARM treat you? It all depends on the term of your Note and what the Index is when it adjusts. This reset I’ve reviewed here is prettier than most–especially compared to subprime. With FHA and Conforming Jumbo loan limits being reduced at the end of this year, I would consider meeting with your Mortgage Professional sooner rather than later if your ARM has you feeling itchy.
Sunday Night Stats - King County August 24, 2008
We’re just past the halfway point on the third quarter, and condo prices are getting much lower. Unless we see a major change in the next 5 to 6 weeks, the MPPSF is showing down over 11% from peak At $274 vs. $311. Not a big surprise, as pending stats have been low, so it was only a matter of time before those low numbers in pending status started showing up in the closed sales. Still I wouldn’t be surprised if they bounce up a little by the end of the 3rd Quarter.
Inventory is getting pretty darned flat. For condos the number of properties for sale hasn’t changed much since May. 3rd week of August - 4,082, July 3,958, June 4,049, May 3,953. Pretty much flat for four months in a row.
I’m not even going to talk about pending sales as there is so much junk stuck in there and not closing. For now I’m not counting anything until it actually closes.
King County Condos
2004 - 1Q - 1,694 - $188, 2Q 2,636 - $199, 3Q 2,540 - $196, 4Q 2,176 - $195
2005 - 1Q - 2,066 - $198, 2Q 2,925 - $209, 3Q 2,769 - $226, 4Q 2,266 - $224
2006 - 1Q - 1,956 - $242, 2Q 2.748 - $252, 3Q 2,737 - $269, 4Q 2,217 - $278
2007 - 1Q - 2,042 - $295, 2Q 2,862 - $302, 3Q 2,676 - $311, 4Q 1,618 - $294
2008 - 1Q - 1,258 - $299, 2Q 1,535 - $287, 3Q to date 685 - $274
Residential properties seem to be holding on to value a little better than condos, but still showing more weakness now than they have since late last year. MPPSF is only down 5% - 6% from the peak of $230 to current numbers of $217, and we may not see much of a change in those numbers by the end of the 3rd quarter.
Inventory in the single family markets has flattened out a bit, but only in the last 30 days or so. Some of that is being caused by people renting instead of selling or pulling their properties off market to wait for next Spring.
Residential King county
2004 - 1Q 5,650 - $152, 2Q 9,237 - $160, 3Q 8.737 - $163, 4Q 7,467 - $165
2005 - 1Q 6,402 - $173, 2Q 9,093 - $185, 3Q 9,131 - $192, 4Q 7,301 - $195
2006 - 1Q 5,596 - $201, 2Q 8,248 - $214, 3Q 7,771 - $216, 4Q 6,204 - $217
2007 - 1Q 5,304 - $222, 2Q 7,393 - $230, 3Q 7,944 - $229, 4Q 4,301 - $221
2008 - 1Q 3,640 - $219, 2Q 4,676 - $220, 3Q to date 2,366 - $217
Stats not compiled or published by NWMLS. (Required disclosure)
As is true most years, the prices will start to be better for buyers from now through year end. In the hot markets of the past few years, that only meant that appreciation would slow down. But this year and last year, the prices just kept getting better and better…for buyers that is. If you can wait a year or two, I think prices will be even lower. But if you plan to buy in the next 6-9 months…the next 3 may be better than waiting just a few months longer.
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