Autumn season always one to savor September 29, 2007
As we stride into October, I’ve found myself wondering where the year has gone (like we all do). It was a year ago this weekend that I journeyed to Seattle from Chicago and was spontaneously whisking my way through Seattle with a friend and touring the gargantuan Mt. Rainier. And though the temperatures are quite brisker this year than when I visited last year, longtime residents have insisted this year’s September weather is an anomaly. But there’s nothing like watching the lush greenery morph into bright reds and oranges and leaves dance from trees. Autumn has always been my favorite season, so, in spite of my sometimes overwelming schedule, I’ve been taking advantage of some of the local events. With Fremont just a stone’s throw away from my home, enjoying Oktoberfest was a given, though it seemed slightly overhyped.
Both the Fremont and Ballard farmers markets have become mainstays when it comes to my Sunday routine. When I first dropped by Ballard’s market, I could not believe the breadth of the vibrant vendors and just the vast amount of fresh fruit, fish, dairy etc. all centered in one dwelling. The Pacific Northwest and the Midwest versions of farmers markets, not surprisingly, are just not comparable.
Recently, I managed to take a jaunt via the Victoria Clipper to Victoria, B.C., with my Mother while she was visiting from Chicago. Our weather could have been a smidge better during the morning portion of our trip, but the afternoon sun that poked its head through the ominous clouds more than made up for the initial gloom. The absolute pure beauty of Victoria is just breathtaking; it melds modernity with antiquity in a dynamic that gives it a cozy and classy, yet hip feel. If you have never been there, you must try High Tea at the picturesque Empress Hotel (pictured), which is nestled amid much grand beauty. Replete with tea sandwiches, petit fours and other delicacies, the overall afternoon tea experience is something analogous to what you would enjoy in London, and you should not skip it if you plan to spend time there.
Now that fall is upon us and the full-fledged rainy season is soon to set in, I am quickly warming up to Rihanna’s hot last-summer song, “Umbrella.” It seems it will be a good IPod song now that I am riding the bus to work and grad school – yes, I barely drive my car anymore and I can’t stress enough how much it thrills me. Banished from my mind are the days of braving brutal Naperville, IL traffic. It always seemed no matter how prematurely I left for work there was always a snag (usually random, unannounced lane closures, courtesy of seemingly construction) that would prevent me from being punctual.
Although I have some trepidation about Seattle’s impending winter, when I think about trudging through Chicagoland’s cumbersome snow and the street salt and muck that constantly encapsulated my car, and often my clothes, I’m hardly fazed. The tepid temperatures here have been a welcome change and as long as we don’t have to cope with negative figures, frequent clouds and snow, it will be a breeze to endure.
Sphere: Related ContentFrom ‘A&E’s Flip This House’ to You!
Have you been watching the current real estate market and wondering how to find the pot of gold in it? Fix and Flip guru Than Merrill from A&E’s Flip this House will show you how right here in Seattle on October 11. Than, like many other saavy investors, is building his business taking advantage of sellers in trouble. Even though Seattle seems to be somewhat insulated from the current trend across the nation, there are still great opportunities to grab up distressed properties. Banks are looking to unload properties as are many homeowners on the brink of foreclosure. These often become the inventory and raw product for the ‘fix and flippers’. But how do you find these elusive properties?
My husband and I have been involved with about 2 dozens ‘fix and flip’ properties, but finding the right properties at the right price, i.e., below market, is a challenge. As a realtor, I live and breathe the mls, but once a property hits the mls, it’s generally going to be sold at retail, and paying retail is not the way to make a profit on a ‘fix and flip’.
There are several real estate investment groups in the Puget Sound area that will help you get started and offer advice in marketing, legal issues (recently, state law passed requiring a flip in less than one year to require a contractor’s license. More about that later) and tips of the trade. Says Shirley Henderson, President of REIA, ” flipping is profitable and a lot of fun if it’s done right”. And the members want to help you do it right. Usually they have monthly meetings and from time to time offer educational events to help their members. Members are happy to share their knowledge and are there to help each other.
On October 11, The Real Estate Investors Association of Washington (REIA) is hosting a fabulous Special Event straight from television land. Than Merrill of A&E’s ‘Flip This House’ will be speaking at a this very low cost event ($15) to show you how he and his team did 30 deals his first year and after that, double each year over the next 2 years. The team has 260 deals under it’s belt at an average of $27,000 profit per deal. $7,000,000 in three years, I could live with that!
If you’re interested in learning how he did it, join REIA on October 11 from 6-9pm to hear about Than’s systems and marketing to find those distressed properties and fix them for the best financial return. This will be my first ‘fix and flip’ seminar and I’m anxious to hear from the best. Of those 2 dozen flips my husband and I have done, we’ve had varied results (yes, some were losses) because we didn’t have the systems in place to find the bargains.
Hope to see investors from Seattle turn out in big numbers. Make some great connections. Maybe you will decide that this could be your next career.
Sphere: Related ContentHow are condo/home sales being financed?
I don’t know about you, but I’ve been chomping at the bit to know how people who are buying, are financing these purchases. It’s a monumental task to wade through the detail on this. I probably should have waited a week to get all of the September closings into the mix from the last few days. But I just couldn’t wait another day! The suspense was killing me.
I used all sales from one city on the Eastside, closings from 8/1 through end of September, purchase prices of $400,000 or less. For confidentiality reasons, since I am revealing mortgage data, I will not name which city I used. Too easy to trace some of these to the actual purchaser. I think it will be important to track over the next 6 months, how these percentages change, particularly with regard to FHA and financing for purchases with less than 20% down.
Here are the results of approximately 60 closings. Another 25 or so did not have the data recorded yet as to the mortgage amount and type. I’ll pick those up in the next analysis.
1) 41.5% were 20% down or more. Most exactly 20% down.
2) 25% were 100% financed. Interesting note: 75% of the ones with 100% financing were done as ONE loan. No second mortgage. So PMI may be back in a big way. (private mortgage insurance instead of a high rate 2nd mortgage, for the amount financed representing over 80% of the purchase price.) unless these programs waived PMI. In any event, one loan and not two, as has been customary for quite some time now. Big shift.
3) 15% were 10% down. 75% of those were also done as one 90% loan and not two, as in 80% and 10%. Again…big shift.
4) 10% were 5% down. Half done as one loan, and the other half done as two loans.
5) 5% were cash purchases.
6) 3.5% were FHA. The amount financed on these were both 98.4% of sale price, and not 97%. Important to note, as we tend to say that FHA is 3% down, but it really doesn’t work quite that way in reality. One was sale price $274,000 with a financed amount $269,766. The other was sale price $213,000 and financed amount $209,709. More like 1.6% “down”. I vaguely remember this from “the old days” but time for everyone to get up to speed on FHA and review some actual closing statements regarding how FHA really works at the end of the day. While only 2 of 60 were financed using FHA, we should be seeing many more of these. So we all need to get a lender in to explain FHA financing to the agents, in minute detail, with real closing statements as samples, NOT GFEs!
The under $300,000 market looks good with a 3 month supply in escrow…but something tells me a lot of these won’t close, due to financing, unless a lot of agents get up to speed on how to finance these really, really FAST! Inventory also looks OK, with less than twice that amount on market, but if we can’t close out those in escrow, there’s not much hope for the existing inventory either, especially if 2/3rds of those in escrow come back on market…which they easily could. I say at least 1/3 of these will not close. I’m thinking it will actually be half to 2/3rds that will not close. Mainly because in escrow represents three times the average per mo. that closed in the last two months! So my guess is that many of these are in closing date extensions, trying to figure out how to finance.
The key to the next six months will be everyone getting totally up to speed on FHA and FAST! If the low end can’t move in the first quarter, because agents don’t understand FHA or alternative financing, 2008 is in big trouble. Old saying: “As goes the low end (in the 1st quarter), so goes the year.”
I’m pushing all of our agents in that direction, to help the industry and consumers. Focus on the low end and totally “get” how to finance it, for people with little money down. The better we handle this, the better the market will be. Every broker should be having seiminars on FHA and minimum down financing, and not waiting to see how the market does without our influence. The best agents need to go down to the low end price-wise, and focus on helping this market move, and not leaving the cheap seats to those least qualified to juggle the financing piece of this low end market.
Fewer sales failing on financing in the under $400,000 market will be THE key to Seattle’s holding on to its preferred market position nationally. Don’t let Seattle down. Roll up your sleeves and get down there where it really matters. The first time buyer market. DO NOT leave that market to inexperienced newer agents, without a lot of support.
It’s a darned shame escrow can’t intervene and help with this too. Not a good time for them to be “neutral parties”. They are the ones with first hand knowledge of which lenders are closing, and which aren’t. I’ll give you a few clues:
Bank of America closed about 20% of the zero down, one loan, 100% financing.
Wells Fargo closed about 15% of the zero down, two loan 100% financing.
Countrywide, First Horizon, American Mtg Network, Choice Lending, Gn Mtg LLC, Mortgageit Inc., Planet Financial, Mtg. Network Svcs., Liberty Financial, Rainland - all of these closed one or more those 100% financed in the last 60 days. FHA - Wells Fargo.
I’m not recommending these lenders, and don’t even know many of them. Just reporting who seems to be getting the job done. I’ll try to pick up the last week of September, those not yet updated in the County records data, in a week or so.
Sphere: Related ContentUtilities: Avoid post-closing disputes
One of the functions of escrow is to pay lienable utilites. Lienable. There is a large segment of the real estate community that interprets that to mean all utilitites. It does not mean all utilities. In addition, escrow firms do not have access to seller’s account information. Sellers and/or their listing agents need to provide this information to escrow.
While Form 22K is clear in stating “lienable” utilities, there is much confusion by the real estate agents as to what constitutes a lienable utility. Escrow Instructions by any escrow firm or escrow department within a title company are very clear. All unpaid utilities not paid at closing by the escrow company are to be paid by the respective parties.
Which utilities are lienable (subject to property location)?
- Water
- Sewer
- Seattle Public Utilities
- Seattle City Light (power)
PUD and Puget Sound Energy (PSE) do not provide final utility bills to escrow and they are not lienable. PUD and PSE will send the final bill to the seller. Homeowners are responsible for paying all utilies, including phone, cable, garbage and so on.
To help your clients obtain a smooth and trouble-free closing, please have the Form 22K filled out properly with correct account information. Agents can avoid post closing phone calls from clients who are upset about utility bills that another party is responsible for by clarifying how the bills are handled during the escrow process. If you are uncertain or have questions, please contact your escrow office as they are eager to help you and the escrow staff avoid post-closing problems.
Sphere: Related ContentNWMLS Form Changes September 28, 2007
I attended a Forms Update Training Class put on by the NWMLS recently and learned about a bunch of changes that are coming down the pike on October 15, 2007. And while I posted some class notes and sample Purchase and Sale Agreement documents over on my site, I thought I’d summarize things below.
Highlights
- Coldwell Banker Bain (and I assume others) will drop the usage of their “own” optional clauses forms which will make co-op transactions smoother and easier for all agents.
- Lots of discussion was given to the Washington State Supreme Court decision Alejandre v. Bull, which was the impetus for many of these changes. I won’t bore you with the details here. But they ruled “economic loss rule” prohibits the Buyer from suing the Seller for negligent misrepresentation regarding the condition of real property when the parties relationship is governed by a contract. The courts want to see the allocation of risk of economic loss in the Purchase and Sale Agreements - Hence the changes.
Purchase and Sale Agreement
- Legal description must be attached as Exhibit A
- No more counter-offer expiration date (use the counter-offer form)
- Paragraph 9 - Buyer to waive or not waive the right to remedy in Form 17
- Homeowners Policy is new default in P&S
- Closing date and Possession date same - or use NWMLS forms 65A or 65B
- New provisions address charges and assessments against the property
- Page 5, item x: 10 day contingency for buyer to verify all information provided by Seller or Listing Agent.
Form 17
These have been in effect since July, but for clarification sake were covered in the updates class. There are several changes here, but the “Environmental Section” is the main one. Buyer can still waive the right to receive unless one of the items in the Environmental Section is checked yes. In that case, the form can not be waived.
As a side note, foreclosure properties are no longer exempt. No one has a clue why the legislature took that one out.
Financing Contingency
- Buyer must seek Sellers consent to change lender or loan type after loan application period lapses (usually 5 days)
Inspection Contingency
- Adds changes for “Environmental” Changes of Form 17
- Advises Buyers to do septic inspection (NWMLS Form 22S)
- Neighborhood Review Contingency is back
Optional Clauses Contingency
- Utilities broadened to include others
- Selling Office Commission moved to NWMLS Form 41C
- Seller to produced HOA documents if available
I interrupt the regularly scheduled programming…
to bring you this video interview by Joel from Inman Connect. While I talk too much and too fast, some of you might find it interesting to hear a bit about the history of RCG as well as some more details on the idea of “linkation“…
Now you can go back to your regularly scheduled programming…
Sphere: Related ContentFriday’s Mortgage Interest Rates
Update 12:23 p.m. Of course I no sooner post rates (stalling at RCG over the rates I posted this morning at Mortgage Porter) and I’m seeing new rate sheets with “price worsening”. Argh. Please contact your Mortgage Professional for current rates and to see if you should lock in at this time. I do not advise floating during this market (nor do I normally advise floating).
Conforming Mortgage Rates (loan amounts up to $417,000 for 1-unit properties). Conforming rate quote below based on owner occupied, “full doc” with minimum credit scores of 680 with an 80% loan to value or lower and a loan amount of $400,000. Rates quoted are priced based on a 45 day lock with 1 point and there are no prepayment penalties on any of the rates quoted below.
30 Year Fixed: 6.125% (APR 6.149%). Payment per $1000 = $6.08.
30 Year Fixed with 10 Year Interest Only: 6.375% (APR 6.527%). Payment per $1000 = $5.31.
40 Year Fixed: 6.500% (APR 6.641%). Payment per $1000 = $5.85.
5/1 ARM (2/2/6 caps): 5.875% (APR 6.%). Payment per $1000 = $5.92.
5/1 ARM 10 Year Interest Only Payments: 6.000% (APR 6.2%). Payment per $1000 = $5.00.
FHA/VA 30 Year Fixed: 6.500% (APR 7.119%). Payment per $1000 = $6.32 (not including MI for FHA).
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).
30 Year Fixed: 7.000% (APR 7.146%). Payment per $1000 = $6.65.
30 Year Fixed with interest only: 7.125% (APR 7.272%). Payment per $1000 = $5.94.
5/1 ARM: 6.375% (APR 6.516). Payment per $1000 = $6.24.
5/1 ARM Interest Only: 6.375% (APR 6.516). Payment per $1000 = $5.31.
Please do not select your Mortgage Professional by interest rates alone and do not shop rates by APR. This is just a small sample available of rates and products. Rates are as of Friday, September 28, 2007 at 12:00 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. For your personal rate quote or for loan amounts over $650,000, please contact me.
Sphere: Related ContentIntroducing Jillayne D. Vader September 27, 2007
Jillayne asks “How come I always get stuck with the Darth Vader topics?” (see comment 15).
Ummm….maybe you should remove your long black cape! 
You go, Girl!
One day every pothole will get its moment in the limelight
I think the running joke about blogs a couple of years ago was that belly button lint blogging was why most blogs would forever remain niche-y and unread. Today much of the “fantastical” thinking about locally-focussed blogs is that citizen journalists will report on everything (everything!) happening in their neighborhoods. When they look up from their navels, the online future gazers say (actually they blog) that we’ll all be served better local news by a cadre of unpaid neighbors noticing things in front of their houses and doing a little snooping. I tended to sneer at this concept until today, when I read every word of this blog post about a pothole in my neighborhood. Yes. A pothole.
Perhaps citizen journalism does have a place…
Sphere: Related ContentJim Cramer says don’t buy now…except for Seattle.
On the Today show yesterday, Jim Cramer from Mad Money told Meredith Viera ”Don’t you dare buy now…you will lose money”. This enraged Realtor Associations across the country who have blasted back that this is a “buyer’s market” and have demanded to NBC that Cramer correct his statements.
Cramer discusses slumping homes market
This morning on CNBC Squak on the Street, Cramer was asked if he would like to correct his statements on the Today Show…his only correction was that Seattle is still a good place to buy homes along with a small sector in…was okay to buy. Click here to watch his “Seattle correction” from CNBC this morning.
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