The last seven days in Real Estate August 31, 2006
Last week of August. Who bought what, where and for how much? Typically a slow week with agents and clients taking some time away with their families before school starts.
This is my absolute favorite property that sold this week, in Sammamish for almost $4,000,000. Going home there is like going on vacation every day after work. My definition of “sold” in the last seven days, for this article, is STI or PENDING…people “making decisions” to purchase.
Seattle under $300,000 - 38 people, between $300,000 and $400,000 - 66 people
70 people in each for the $400,000 to $500,000 range AND the $500,000 - $600,000
Then we really drop off to only 20 from $600,000 to $700,000, and then half of that at 10 from $700,000 to $800,000, half that again to 5 at $800,000 to $900,000, and 3 in the $900,000 to a million.
15 from $1 million to $2 million and two just over $2 million, one in Broadmoor and the other a tudor in Denny Blaine.
On the Eastside I used, Bellevue, Bothell (King County), Kenmore, Kirkland and Redmond.
Only 5 under $300,000 this week. 75 between $400,000 to $600,000. 4 between $2 million and $3 million vs. only 2 in Seattle, and about 10 in most other categories.
So all tolled on both sides of the Lake, most homes this week were sold between $300,000 and $600,000. That includes condos, townhomes and single family homes.
Fits into the theory that the average buyer is at $450,000 give or take.
Sphere: Related ContentRPA Zearch - Now with Turbo Zillow!
OK, I admit it. I got early access to the Zillow API. 
And it’s pretty interesting stuff, it provides Zestimate values, comparable properties, Zestimates charts, and Zindex charts. Anyway, everybody knows I’ve done Zestimates before, but the charts are a new wrinkle I haven’t had the opprotunity to explore yet.
As some of you know, I’ve been working with Gordon & Jay of Real Property Associates (old site) to develop their new site (beta). Although the site is about a month away from going live, I thought I’d let the world know so they beta test my favorite new Zearch feature which I call “Turbo Zillow”.
So if you run a search for Eastside communities, below the map (sorry about the lack of pushpins folks - the server is having a bad geo-coding day), you’ll notice the new Zillow control. The control will populate with every city & zip code that was in your search results. (PS - Will the agent who entered a 00000 zip code into the MLS for MLS# 25147354, please fix it, don’t get me started). It will then let you plot a Zindex chart based off location, dollar/percent appreciation, and 1/5/10 year durations. So the control, looks like something like this…
This is really cool, because getting a new chart, is as simple and changing the drop downs to what your interested in, and the watching the chart change. Comparing city & zip codes median price histories has never been this easy on Zillow. The details page of a listing will also have a Zillow control that will show the chart of the listing, the zip, the city, the state, and the USA in the same way. Currently. the details version of the control appears to have a bug with getting the USA chart if Zillow can’t find the Zestimate. So if you see something that is way off. it could be my bug, or it could be Zillow’s bad Zestimate. Either way, I think charts & data visualization are the next big thing for MLS searches after everybody gets the AJAX maps out of their system.
On the Zillow site, to get this information, I have to click here for Bellevue, click back, click here for Redmond, and then back, and then click here for Kirkland. Why do they make getting Zindex charts so hard? I have to scroll to the bottom page, for everything and then click? Why can’t you do some Web 2.0 map magic instead of a sea of links (or just put the links it at the top of the page)?
OK, enough mini-flaming, I have to give credit were credit is due and I thank the crew at Zillow for having the guts to release an API to the public and having the courage to let me put it through it’s paces. Perhaps my experiments will inspire them to greater things, more APIs and a better UI for the Zindex pages? Until then, I’m using “Turbo Zillow” for my ZIndex fix.
Visit http://www.rpare.com/search.aspx, do your thing, have fun the fast lane my friends!
Sphere: Related ContentRuss, NO! Please Say It Ain’t SO!
One of the FEW rights of a buyer these days, is that they have 3 days to review the “Form 17″ Seller Disclosure Form.
These forms are often sitting out at the homes when buyers view property, and often buyers pick them up at every single house. Recently the mls system has made these available online, so we can send them to our buyer clients, before they even see the property. A buyer could conceivably recieve 20 or more Seller Disclosure Forms, before even deciding on a property.
The first page of the Seller Disclosure Statement says in all caps: “You (buyer) have 3 days from the day seller or seller’s agent delivers this disclosure statement to you, to rescind the agreement.”
Some agents are suggesting, that every single buyer who has picked up a Seller Disclosure Form in a house, and now possibly weeks later makes an offer on that same property, has given away their 3 day right to review it! They had it in their hand weeks before they were even interested in making an offer, but the clock started ticking the day they picked one of these forms up while looking at property? Is that even remotely possible?
Please say it ain’t so! Otherwise get those darned things out of those houses and off the online access! What a TRAP! Please say it ain’t so…please. Russ, your thoughts MUCH appreciated. Seems to me that if a buyer has “3 days to rescind the agreement” that there has to in fact BE an agreement at the time of delivery!
Sphere: Related ContentReally BIG News!! August 30, 2006
I just got this invite via email. These have been short term rentals until now. I LOVE this location and have placed people relocating in them while they look for a house. There are two buildings on either side of first street that were part of the same short term rental…near Sur le Tab and the Greek Restaurant, for those who know Kirkland. Fabulous LOCATION!!
They will start at $350,000 and go to $1,200,000. Will give another report after the agent preview on the 7th, but email me if you want to get your dibs in on the best of the best. This is really big news for Kirkland. Yes, there are other new condos and conversions…but not with a location like this one!! Excellent traffic patterns as you can go up to 7th and all the way across and out, without getting stuck in “the Kirkland Crawl”. Oops…don’t tell the people on 7th I said that…it’s supposed to be a local secret.
Maybe I’m overly excited because I just love this location better than any other. A local perspective, I guess.
Sphere: Related ContentMicrosoft vs. Google a real estate perspective
On a side note, nothing to do with the topic, isn’t that MAC advertising campaign fabulous! Doesn’t everyone want to run out and get a MAC when they see that commerical? Of course I can’t get the mls on it, or at least not easily, so I hate them. But that has got to be the best advertising campaign I’ve seen in a long time. Doesn’t everyone want to be that guy on the right? Heck, I’m a woman and even I want to be that guy on the right.
On to Microsoft vs. Google. So far my Google clients have been able to negotiate significantly higher savings in real estate transactions than my Microsoft clients. Of course I’m dealing with a very small portion of the Microsoft poplulation, even though I have more Microsoft clients than Google clients.
Microsoft has a contract that kicks back 35% of the real estate commission when a new employee is hired, even if they don’t buy a house for a year to 18 months after they are hired. Perhaps Microsoft doesn’t get all of that 35%, but the agent who has to pay it is still unable to negotiate with the buyer, nor are they as able, at 65%, to resolve issues in the transaction using commission dollars. This agreement that the agent pay 35% to Microsoft also limits the employee with regard to agent selection.
I recently had a call from a Microsoft employee’s wife who is being transferred. She was checking online and trying to pick an agent she felt comfortable with and happened upon me. I told her that she really needed to check with her husband and his employer, as I didn’t think she was totally free to pick an agent of her choice. I told her I might be willing to match the 35%, but she would likely need to try the assigned agent first, before suggesting she wanted someone other than the assigned agent.
Now these programs where an agent is assigned to an employee are, of course, beneficial. These programs have been around for a very, very long time. I myself did tons of relocations with Siemens and other companies around the Country, utilizing this very same program. The 35% of the commission paid by the agent to the relocation company, helps pay for a portion of the relocation benefits such as movers, temporary housing, and other benefits.
In my experiments over the past few months with negotiating buyer agent fees, and a few other out of the box negotiations, I have been able to transfer $20,000 of pure cash advantages plus an additional $10,000, into transactions, with Google clients. More importantly, I have been able to treat the Google clients in these negotiations, identically to the way that I treat seller clients…which is my goal.
If Google does hire 1,000 new people, as Dustin suggests they might, I hope that they will not lock the employees into a program that skims off the employee’s ability to negotiate and ties their hands with regard to agent selection. Relocating is a very stressful and emotional process. Feeling hogtied at the same time, only adds to the stress. While many are happy to have someone ready, willing and able to assist, this benefit should be optional at best and should allow the employee more freedom of choice and no restriction with regard to fee negotiations.
Not trying to change Microsoft here…just trying to encourage Google not to follow suit. Once released from the 18 month requirement, I have been able to assist Microsoft employees and negotiate fees, but the Google guys are still way ahead for some reason in total dollars. Not sure why that is, I’ll have to ponder it when I do my year end round up of “the experiment”.
Since we are entering the Age of Transparency in the real estate transaction, kind of like The Age of Aquarius in my day when everone was stripping off their clothes, I do think that it should not be a surprise to anyone that there is an exchange of monies between the agent and a third party. That goes for any “purchase of a person”, see Zapped, that does not disclose to the person that they have been bought and sold.
Sphere: Related ContentLease Options - Investor, Tenant, Agent: Win/Win/Win?
Within the segment of consumers who want to be homeowners, there’s a subset who cannot qualify for a loan, and will therefore not be a homeowner until they can. Typically, these folks have a credit profile that precludes them from qualifying for a loan that can work within the parameters of their income and debt. In the past, the only alternative to buying was to continue to rent while working to fix credit issues, and decrease debt (and if income happened to increase along the way - a bonus).
Today, this segment of folks have the ‘Rent to Own’ option available to them. Popular with conservative investors who want the advantages of appreciating investment property, but without the hassles of rental income, the Lease-Option is an arrangement whereby an investor leases a property to a tenant, who is also extended an option to purchase the property within a certain time frame (two years is typical in the Puget Sound market). For an investor, the Lease-Option playbook is extensive - there are multiple approaches to this type of investment.
However, a program that seems to be growing in popularity is the ‘Pick Your House’ program that agents offer potential homeowners. The scenario the agent shares with the tenant is that they can pick the house in which they want to live (as long as the price of the home - rather, the monthly costs associated with the home - falls within the tenant’s budget). The agent then finds an investor to purchase the property. The rent is structured to cover all the investor’s monthly costs (PITI). Additionally, there is typically an option fee that the tenant pays to the investor up front. I’ve seen it fall into the 1% of property market value. Though non-refundable, this fee is applied as a credit toward the purchase price should the tenant exercise the option. Sometimes, a small portion of the monthly rent is applied toward the purchase as a credit as well. The option price is calculated under certain assumptions (such as 8% annual appreciation), and the price therefore might be set at 10% over current market value at the end of two years. This allows the tenant to capture some equity upon exercise, assuming appreciation is higher. Additionally, the tenant is contractually obligated to manage small repairs (where a renter would just call the landlord), with the investor taking care of larger repairs (in excess of some agreed upon dollar amount).
It’s a good way for a potential home buyer to get his foot in the door - as a matter of law, they have an interest in the property with the option (this can and should be recorded with the county to protect the tenant’s interest).
The option can be lost if the tenant defaults on the terms of the lease, or if he chooses not to exercise the option. Here’s the kicker - I’ve read/heard that the default rate for lease option tenants hovers near 70%. The biggest reason seems to be that bad habits are hard to break. If the tenant is counseled correctly, the lease period is an opportunity to repair credit, pay off debt, and position the tenant to qualify for a loan needed to exercise the option. The reality is that tenants don’t pay their rent, continue to over-extend themselves, or decide upon a different direction with their life that requires a move.
Unscrupulous investors and scammers will take advantage of these tenants and pull the option from underneath them for the smallest deviation from the lease terms. In fact, Lease Options were outlawed in Texas due to the scams. However, if the investor enters the transaction and deals with tenants fairly, it’s a win/win for the investor and the tenant/optionee.
I am wondering about the ethics of an agent working with a tenant to pick a house, then bringing in an investor to purchase it. At first glance, it seems that there is a clear conflict of interest. Isn’t there? Maybe not. The tenant is informed and gives consent to the process from the start. The agent is there to help find the home, but the investor is actually purchasing it. However, since an option - and therefore an interest in the property - is involved, does this create a technical conflict of interest? The investor is more concerned with the profile of the tenant, and with making sure that the numbers work for the transaction. The tenant is more like a client to the agent. They are driving around with the agent, evaluating neighborhoods, and picking the home, subject to investor approval.
Are ‘Pick your Own’ Lease Option programs a win/win/win for the tenant (who may successfully purchase the home by exercising the option), the investor (who gets a fixed return assuming an exercised option) and the agent (who gets the commission from the transaction)? A fourth party, adding another ‘win’, is the mortgage broker who may very well finance the deal for the investor, and create a relationship with the tenant that leads to financing the exercise of the option down the road.
Full disclosure - as an investor, I have purchased four properties with tenants who had options to purchase. However, none of them were acquired in the ‘pick your own’ method discussed above. I acquired the contracts by paying an assignment fee.
Sphere: Related ContentFlaming for Ardell August 29, 2006
There’s definitely a tech bent to today’s list…
- Starting off with Niki’s interesting take on the Reply.com launch. Niki runs Homethinking, a site dedicated to letting users review agents. I had a chance to talk with him at SF Connect over a beer (or two or three) and got to learn a fair bit about his site. It is definitely worth checking out as there is a lot to the backend of what he’s doing and it is not necessarily what you might fear (assuming you’re an agent!).
- Inside Google talks about a fun press release from Intermedia that talks to the
snarkydiscussions that Galen and Robbie have been having around online office applications. Tech blogger Om Malik gives his reason for not using google’s new service. - Others are asking if Google services are joined too tightly? I’d be really curious to get Robbie’s take on that.
- Thinking of Google, Ardell, does it help that Google could could be adding 1000 people in Bellevue? (via Greg)
- I’m not the only one thinking of Ardell… I noticed someone trying to start a flame war on Craigslist over Ardell (look for the post title: “Get the feeling Realtors read from a script?”)… It was great to see a few people come to her defense and unlike so much of the stuff over there, the flamewar never materialized.
- I’m all over microformats, so I was glad to see someone write this post about understanding microformats for the non-technical web professional or marketer. Most relevant to real estate is the hListing format currently being deployed by Edgeio.
- Watch out when Greg’s talking about rethinking everything.
- Also, considering Greg’s opinion on hosted blogging platforms is not exactly private knowledge, I thought he might enjoy this comic from Chris Pirillo…
- The blogger from from hismove (a christian real estate network???) points out an interesting chart from the NY Times displaying the inflation adjusted home prices in the US since 1890.
- Not only are the For Sale By Locals people ready to launch, but these people are serious about going international. Interestingly, they will be launching their official site at a conference in Bolivia. Their temp site looks really bad in firefox, which doesn’t bode well for them in my mind, but considering the massive activity on their blog as of late, I’m definitely interested in seeing what they produce.
No Credits “For Repairs” Allowed
This excerpt from a recent comment to an old article of mine, deserves more than “comment back” attention.
“we said we would take $5,000 for…repairs…The addendum was signed by both seller and buyer….Our lender wanted us to take the word repairs out of the contact, but we wouldn’t do it, so our loan fell through…’
Lenders do not want to lend out money for future repairs to a home, nor do they want to finance properties that need repairs. Let’s say a house needs a new roof and the cost of that roof is $7,500. Agents cannot write a contract with an addendum that says “Seller to credit Buyer $7,500 for a new roof” and expect the sale to close. Nor can the lender simply say “remove that addendum”, as if the buyer is supposed to pay the same price without a new roof or the money to buy a new roof.
Clearly this situation has come up several times in my career. Most recently, the roof was OK, but was two layers of composite over a wood shake roof, meaning at time of replacement all three layers would have to come off. Also, since wood shake roofs do not have sheathing, the new roof would have to include all new components and not just new shingles. The owner agreed to “pay” for most of the new roof and the buyer “agreed to pay” for a portion of the new roof. The new roof was installed by the seller prior to closing, and the sale price was increased to include the buyer’s share of the roof cost. Excellent resolution as the lender financed a house with a brand new roof. Everyone is happy.
Another good and often used solution, if the buyer wants to take a credit and pick and install their own roof, is for the buyer to take a credit “toward closing costs”, They simply use the money they were going to use to pay closing costs, to put on a new roof. It’s just a replacement of these monies for those monies. It satisfies the lender, as they will usually allow a credit toward closing costs, but not for repairs. As long as the appraiser doesn’t “call” the roof and require it to be done before closing, the buyer can get the monies this way.
So is Denise “bad” to refuse to take the word “repairs” out of the addendum? Or are the agents (if there were in fact agents involved) “bad” for writing and accepting an addendum in the first place, that they should have known would cause the loan to fail?
It is no surprise to me that a lender would not fund a loan that included a $5,000 credit “for repairs”. It is worth noting here, so that others do not write or accept addendums that offer credits for repairs, that send up red flags to the lender that the house is not in good condition. Perhaps it was a For Sale By Owner that Denise purchased without the assistance of agents. So to For Sale by Owners and private individuals buying from For Sale by Owners. and attorneys who assist in transactions without agent involvement, please note that generally speaking, a lender will not fund a loan with a repair credit, especially if there is little or no downpayment.
Sphere: Related Content“Carpet” Credits, et al
We are at that time of year when houses are not selling like hotcakes. So we are back to that age old question, “Can’t I just offer a credit?”
Often agents will tell sellers that they need to remove wallpaper, paint rooms or put in new carpet. A common response from a seller is “Can’t I just offer the buyer a credit?” The short answer is NO. The long answer is, if you offer $2,000 as a credit to the buyer to remove that ugly wallpaper, the buyer will offer you less after having seen the wallpaper AND they will take your $2,000 on top of that as well.
So yes, you can offer the buyer $2,000 and he will happily take it. But he will still take $10,000 off the price of the house, because he hates the wallpaper.
Sphere: Related Content10 Questions For Yahoo! Real Estate
Today I got an email from Haley at Yahoo announcing their new and improved real estate site:
Today Yahoo! Real Estate announced a revamped site which includes comprehensive tools and services to help home seekers chose their dream home. Yahoo! Real Estate is now more tightly integrated with Yahoo! Search and Local, giving users inside information (like mortgages, local market rates, even ratings and reviews on local restaurants, businesses and schools) for the more than 3 million homes listed on the site.
Below you’ll find a release detailing the improvements. If you’re interested in learning more, I’d be happy to arrange an interview with a Yahoo! Real Estate spokesperson, please feel free to email or call me on XXX.XXX.XXXX.
It is really not appropriate for me to do the interview, so I’d rather turn this back on RCG readers… Are there any questions you have for Yahoo about their new site?
If you do have questions, let me know ASAP because I’d like to aggregate the 10 best questions and pass them along to Haley by the end of the day today!
Sphere: Related Contentolder posts »
