Friday, December 25, 2015

Merry Christmas

Well today is a holiday so I think I'll relax with the family and be back next year!

Happy Holidays to all.

Friday, December 18, 2015

T-Minus Seven Days Till Christmas

Another year is about to take a ride into history. Christmas then New years day all in the span of the next two weeks. Those of you that are hearty home shoppers may still be hunting for that ideal house. This can be a good time to seek out properties as many people will start putting off home hunting until after the holidays. The persevering ones may find a golden nugget under the tree in the form of a new house.

Sellers that have home listed right through the New Year are eager to sell and buyers looking at this time are serious about owning a new home. This is a great opportunity for a real estate transaction.

I'll keep it short and sweet this week, Happy Holidays.

Friday, December 11, 2015

Do You Meet With Your Tax Pro in December?

I always meet with my tax professional every December. If you were involved in a real estate transaction this year, meeting with your tax adviser is a good idea. Often real estate has income tax benefits or consequences and this is nice to know before the end of the year. Even if real estate was not involved this year, knowing where you stand while there is still time to make adjustments in your finances can save you thousands of dollars.

Real estate in particular can be a tricky proposition for taxes. The laws change frequently and once you get past December, often it is too late to make any adjustments for the tax year. Sometimes waiting to close on a property until next year is better than closing it this year, or vice-versa. Your tax pro can go over the differences and help you make the best financial decisions that put you in the strongest position for taxation purposes.

If you engaged in a real estate transaction in 2015, talking to the tax accountant about the benefits or consequences of that action can be helpful. Generally real estate transactions for owner occupied properties are beneficial but rental units can be very tricky and an accountant is well worth the expense to help you sort it all out.

Last year I had a tax surprise and not the happy variety. Meeting in December alerted me to the problem. I was not able to change anything, but it was nice having a four month advance notice that the April 15 bomb was going nuclear.  

If you are not using a professional for your taxes and you own real estate or trade in securities you are probably leaving money on the table. Talk to a pro and keep the messy taxes nice and tidy.

Friday, December 4, 2015

Holidays are Here, You can Still Sell your Home!

Every year I have this conversation with my sellers. If sellers are willing to tolerate the intrusive nature of listing a home during the holidays, it can pay off with handsome rewards. My experience is that the volume of buyers drops off during December but the number of listings tends to drop more. I see a great deal of "withdrawn" listings begin to appear around Thanksgiving and through the New Year. These are likely sellers that wish to have some peace and tranquility with their families during this period.

The buyers that remain during this time of year tend to be serious about purchasing a home.The looky-loos are at office parties and family gatherings. With a temporarily tighter inventory, and serious buyers, the opportunity for sellers is magnificent. There is no sugar-coating the facts here, selling a home requires a great deal of effort on the part of the homeowner. The home needs to be kept tidy, it needs to be available to show on short notice, and the seller can anticipate a fair number of showings.It will be disruptive, but it will likely be profitable.

As I always mention every year as our weather turns wintry, follow a few key rules to keep a listed home appealing and safe. Keep leaves clear of the rain gutters and off the sidewalk, walkways, and driveway. Keep snow and ice clear of the driveway and walkway as well.If the home has a fireplace, have a fire going during showings and if you like to bake, bake something. One can also find lovely scented candles to add a warm and enticing feel to the property.

Have a great holiday season!

Friday, November 20, 2015

Thanksgiving in Six Days? Yikes!

Sellers often choose to forgo listing their home until after the holidays. It is understandable since most of us would like to take this time of year to spend with family and such. Having a home on the market can be most disruptive. But inventory remains tight, especially in the bottom half of the price range.

People that are out looking for homes during the holiday season are generally pretty darn serious buyers. Looky-loos and tire-kickers are doing the whole holiday thing. Having a home listed during the holidays can yield strong offers from serious buyers. Really, who is out in the rain and snow looking at houses when they could be inside hanging out with family and friends or at the company party? Real buyers, that's who!

I have offered up tips in the past about prepping a home for a holiday sale, you can look through the archives of Novembers and Decembers past to find useful information on the matter. In general, keep the clutter to a minimum, keep the leaves off the walkways, out of the rain gutters, and off the drive way. If it snows, be sure to keep snow and ice off the walkways and driveway.

Keep pet orders under control. Burn a scented candle with a holiday theme, bake some cookies, and if possible have a fire going during peak showing times. Some people are looking for a very specific house. If your house isn't it, then chances are no amount of warm and fuzzy presentation will sway them. But most buyers are less picky. If your house feels like home, they might just write it up!

I find buyers to be more focused and serious about their purchase during the holidays. Sellers are wise to keep that in mind when making the decision about whether to list now or wait till next year.

Happy holidays, may yours be warm and fuzzy all around.

Friday, November 13, 2015

The Two Hundred Thousand Dollar House is Elusive, But Not Dead Yet

975 SF, 3 bed 1 bath, $199k
Here in Clark County, Washington the housing prices have been robust. Maybe just a little too robust, but none-the-less homeowners that were once underwater to the bank are now finding themselves free to sell and move up or down as the case may be. Interestingly enough, sellers are sitting tight on their homes, and this has created a flush demand for entry to mid-level homes locally.

The $200,000 dollar price point is beginning to vanish in this market. Sure there are fixers and super tiny homes as well as condos and townhouses, but the single family detached dream is getting tight at $200k. I have a young man interested in buying his first home. He is looking to keep it around $200k and wants to use the USDA lending program. This loan program is designed to serve rural areas but there are a few here in Clark County.

1506 SF, 3 bed 1 bath $199k 
The bottom line is that buyers can still find some properties in good shape under this thresh hold. In close to the city, here in Vancouver, these will be fixers or really small houses. In the outlying areas such as Washougal and Battleground there are still opportunities for a decent sized home around 1100-1400 squares either modern and attached or older and detached. Many of these properties will qualify for a variety of financing options. Buyers need to be aware that most of the government sponsored loan products, FHA, VA, USDA, etc. have requirements that may exclude a "fixer" type house. There are other programs designed specifically for fixing up a troubled house, those a bit more complex and buyers should consult with a qualified loan officer about how they work.

This entry level housing market is almost always in demand. During the recent hard recession (2009-2012) I sold a great deal of homes in the entry level price range. The tough market conditions created a whole new class of buyers in a much more modest income bracket. Back then, I wrote articles about two minimum wage earners qualifying to buy a real house! These buyers are now sitting pretty with a nice chunk of equity in the homes they paid $125-150k for now valued at $200-250k.

The entry level buyers are the most vulnerable during an upswing in values. They can easily be priced out of the market by either rising home prices or rising interest rates. The whole new class of buyers I mentioned above are already priced out of this housing market. The window has closed locally for two minimum wage earners to buy a detached single family. Buyers in the higher prices ranges may not get priced out, but they can get priced down, meaning they may have to downsize the dream if they sit on the fence too long.

Sellers are in a prime zone right. Selling in the middle of an upswing can be good for the move up housing market. Sellers can let that entry level home go, use that equity to buy up to the larger home and still enjoy some market appreciation. Waiting too long, like people did in 2007-08 can result in being "stuck" for a few years when the market dips down. In my book 'Don't Panic', the whole theme is to buy low and sell high. We are running slim on the buy low opportunities so don't sit on that entry level house much longer. Sell it and grab your new house while their is still strong upside potential on the value.

Friday, November 6, 2015

Veterans Day around the Corner, VA Loan still the Best!

I am on an out of town business trip this week so I thought I would once again reach out to our veterans and talk about the wonderful VA Home Loan!

I originally posted this in 2013 on this blog. It has been slightly updated this time. The author is not affiliated with any government agency and is providing general information about available products in the real estate marketplace. 

Vets can check the VA website here
Are you a veteran? If you served honorably in the armed forces there is a good chance you qualify for a VA loan. The VA loan is probably the best mortgage loan product available. And it is for our veterans only.

What makes the VA loan so good? It is not any one thing but rather the whole package. The VA loan is a ZERO down program. The veteran does not need to save up a down payment for the house. VA loans are typically priced with the some of the lowest interest rates in the market. The VA loan does not have monthly mortgage insurance. These are strong features that make a VA loan hard to beat.

The VA loan does have a few minor drawbacks. It has a "funding fee" that runs around 2.25%. (funding fee may be waived for qualifying disabled vets) The veteran may finance that fee so the loan remains a truly no down product. The Veterans Administration requires that the property pass not just a standard appraisal, but a special VA appraisal that looks more closely at the quality of the property being financed. This can lead to the veteran having to be a little more selective with offers.

In the current low interest climate, the VA loan has another great feature. VA loans are assumable. A veteran buying a home now will likely have a great low interest rate. In the future when the vet wishes to sell, rates may not be so low. The veteran's ability to allow another veteran to "assume" his loan may make his property more marketable in the future. With rates currently hovering in the mid threes, it is likely this will be a great rate well into the foreseeable future.

Loan products have many variables. If you are a veteran of the US Armed forces I would strongly encourage you to talk to a lender and find out what is available for you. A qualified loan officer can give you all the details about what is required and how the program works. Our veterans have served this country with honor and they deserve an opportunity to own a home without excessive burden. The VA loan is a big step to making that a reality.

Disabled veterans often qualify for additional benefits. I run in to many people some veterans and some not who don't think they can buy a home. All too often they in fact can, and many times for a savings over comparable rent.

If you are veteran look into the VA benefits and the VA Home Loan today. It may be the best thing you ever do.

Friday, October 30, 2015

Inspector Boo!

You want to scare the hell out of a local Realtor this Halloween? Knock on their door dressed as a home inspector ;) I remember when the scariest part of a real estate transactions was the appraisal. But those days are long past. The real fright is delivered on inspection day. Nearly every home sale transaction will have an inspector perform a thorough examination of the house. This is not mandated by law but it is highly encouraged by the Real Estate Commissioner here in Washington State. I agree with the state as well. There are many things that can go wrong with a home that are not readily visible to the casual observer. There are also many things that are "wrong" with a home that doesn't really matter much however.

Here in the Evergreen State, our inspectors are required to be licensed to perform home inspections. This license is not a simple contractor's license and general contractors cannot conduct home inspections without being specifically licensed to do so. These inspectors are required to follow a specific set of standards for completing the inspection and presenting the results to the client. This is all very good.

Where the problem occurs is when you get an inspector with a terrible "bedside manner". You know, Inspector Boo! This is the guy that seems to take delight in terrifying the buyer of the home over things that are really not that scary. Unfortunately many of these Halloween Fright Inspectors just tell the buyer to hire a professional to further evaluate the problem. From the buyer's perspective, they did hire a pro, "isn't that what I just paid you $500 to do"? But alas, we live in a litigious society and inspectors are terrified of lawyers.

Some of Clark County's inspectors have a great way of presenting the deficiencies of the home. These guys categorize issues into several severity classes. Things like a loose light switch cover, or a little paint peel are placed in a general maintenance class and are characterized as normal and typical homeowner maintenance issues, which they are. Then there is a moderate category of things that are not really dangerous but should be taken care of promptly by the homeowner either the buyer or seller as negotiated in the deal. Finally, there is the severe stuff that needs to be done right away either by the buyer after close or the seller prior to, but probably by a licensed professional. These are things like very severe mold, leaking roof, dry rot, water in the crawl space, etc. There are some things that have to be done before the home closes, things like a bad roof or exterior dry rot, might be picked up by the appraiser and then the mortgage lender will require a remedy before funding the loan. Buyers should be real cautious about running away from a home with minor issues, especially if they really like the house. Realtors should counsel their clients in the proper way to evaluate an inspection. They should tell their clients what to expect in advance.

All homes will receive some wear and tear over time and buyers looking at older houses should expect some 'dings and dents'. They should also remember that older homes are priced a little more reasonable than their shiny new counterparts and that is due at least in part to the expectation that there will be some additional maintenance issues. I have seen buyers walk away from two or three homes over what amounted to less than a thousand dollars in repairs because they refuse to work with the seller. Funny thing about that is they end up spending more on inspections than they would have spent to fix the problems in the first house they offered on. This is a seller's market for the most part and buyers need to be flexible if they want to find an ideal house for their needs. The old adage to 'choose your battles wisely" is most appropriate for buyers in this market.

Friday, October 23, 2015

New Lending Rules Are in Place

The dreaded new lending rules took effect earlier this month and local lenders seem to be reasonably well prepared. In general these new regulations have created a closing delay. This is no fault of the local loan officers or their staff. This is a delay that is essentially mandated as part of the legislation passed by the Congress.

It is important for both buyers and sellers to be aware that closing times are going to be extended on any transaction involving a mortgage. For the short term these could be delays up to 10 extra days. I would imagine that things will get streamlined as time wears on. The new law addresses among other things, the amount of disclosure required by the lender to the borrower, additional time for the borrower to review the lending documents and a post signing period by which the buyer can cancel the transaction. All of this adds up to additional time to close.

A thirty day closing on a home sale transaction involving a mortgage was always a tough nut to crack. Sure, it could be done and many lenders made bold promises. But often they could not be kept. The days of the thirty day close are most likely in the rear view mirror.

This is important mostly because sellers are often in contract to buy another home upon the sale of their home. If they agree to close on the new home in thirty days and the buyer of their home is unable to close on time then they have two problems that could be expensive. Real estate transactions are governed by serious contractual obligations by all parties. No matter what the lender promises on closing times, always give extra closing time on the contract. The seller is rarely obligated extend the closing date. Generally the seller will do so to keep the deal afloat, but they are not necessary contractually require to do so, with few exceptions.

The bottom line is to be patient and just write the offer with a 45 day close or maybe even a little longer. Here in Washington you can write an offer with a "on or before" closing date. This is an effective way to build in extra time to close even if your intention is to close quickly. If the buyers have challenging issues associated with the loan such as marginal credit scores or high debt to income ratios, additional time WILL be required. I spent a fair amount of time on the wholesale side of the mortgage industry and believe me, when the borrower is up tight against the minimum requirements, the underwriter looks at every little detail in that file. No matter what the optimistic loan officer says, that file will take longer to close.

The bottom line is to be prepared for a longer closing cycle and everything will be just fine.

Friday, October 16, 2015

Holy Rate Basement Batman! Banks are Practically Giving Money Away

Have you looked at the mortgage rates lately? Most lenders are offering qualified borrowers a 30 year fixed rate loan at around 3.5% These may not be the lowest rates ever but if not, they are very close to the lowest ever. I have discussed the notion that interest rate is far more important than purchase price especially if one intends to stay in the property for a long term period of seven or more years. Imagine borrowing $240,000 from the bank at 4.5% over 30 years fixed. By all measures this is a good loan at a great rate. The principle and interest payment (PI) would be $1,216 per month. But right now you may very well find lenders offering 3.5% 30 year fixed loans. Now the $240,000 mortgage payment looks more like $1,078. That is a whopping $138 per month less! That is a savings of $16,560 over ten years and nearly 50 grand over the life of the loan! In the heavily paraphrased words of the immortal Doctor McCoy, my God man, why aren't you buying a house!

Seriously my friends, these are truly fabulous times. Sellers will get the strongest offers when rates are low because more buyers will qualify at the higher price. Buyers will get the most bang for their buck at 3.5%. Buyers can also qualify for a lot more money. The same buyer that qualifies to borrow $240,000 at 4.5% will qualify to borrow $270,500 at 3.5%. These super low rates will allow buyers to essentially get 12.5% more money for the same monthly payment. 4.5% is a great rate, 3.5% is a OMG rate! Be sure to check with your favorite mortgage professional as there are a few variables that banks look at such property taxes, mortgage insurance, etc. But in general these are pretty accurate figures.

Yes prices have crept up and many entry level buyers have found themselves in a pickle. But there is a window of opportunity to effectively take 12.5% off the price of a house. Seller wins, buyer wins, everybody wins, except the bank. That my friends is a good scenario. Happy hunting!

Friday, October 9, 2015

A Beach House is Surprisingly Attainable

Ever think about how cool it would be to have a place at the beach? Do you think that's the stuff of millionaires and VIPs? Hold on sunshine, because Southwest Washington has a fabulous coastal area with a drive on beach and real estate prices that are stuck in the 90s. Well look at that, beach houses for the regular Joes. Take a peek at this article I wrote for Evergreen Coastal Living earlier this week.

It has been awhile since I did a beach house deals post so here I go! The Washington coast has great deals on coastal and beach property. Imagine owning a home within a 10 minute stroll to the mighty Pacific Ocean. The Long Beach Peninsula offers many opportunities to have just that and at prices you may find shocking.

Look at this great little manufactured home on a huge 0.28 acre lot. This house has 2 bedrooms and two baths with 1188 square feet of space. The lot is wooded for that classic Northwest feel but is less than 1/2 mile to the crashing waves of the Pacific. It is priced at $114,800.

The home is located in Ocean Shores on the Long Beach Peninsula.

This next home is located in Long Beach. It is situated on a 0.16 acre lot just a few doors away from the beach entrance! The house has 896 square feet with 2 beds and 2 baths. It is a short walk to the shops and attractions of Long beach and an even shorter walk to the big blue Pacific. This one is listed at $120,000.

These sub $150k homes may need some TLC but they are livable right now. This can be a getaway house or you permanent residence at these priced they will make your wallet smile.

This final home is a classic 1904 home that has been gentry cared for.  It features 1364 square feet with 3 beds and 2 baths on a gigantic 0.33 acre lot. It abuts the beach so a very short stroll through a lightly wooded area lands you on the shore. This home is fairly secluded and that makes it that much more amazing. It is priced at $229,000.

The Washington coast is the ocean bargain of America! Come pay a visit to this magnificent coastal community and take a peek at some of these fabulous home values.

There are many lots that I have found available in this area as well. You can build you own custom dream house at the beach. Whatever your passion come enjoy the coastal living!

Friday, October 2, 2015

Low Interest is keeping Upward Pressure on Home Values

The market continues to move along at a healthy pace. Here in the Portland-Vancouver Metro Area values seem to be rising at a pace of 5% to 10% year over year. Local fluctuations and market conditions can vary a bit from neighborhood to neighborhood. Low interest rates will always help drive sales in real estate and robust sales will typically lead to increased price pressure on buyers.

Inventory remains tight and many would be sellers seem to be waiting before they list. Holding out for more money? Waiting for equity position to grow so they can make their move up? Still upside down from the crash? All of the above my friends. Buyers are going to continue to feel the pinch of higher prices so they are well advised to consider whether waiting any longer will benefit them. In general this pace of say 7% price appreciation will almost certainly outpace income growth. Some people might be waiting on a career promotion which could launch them into a much higher income, but for those in a job with a steady rate of growth, buying now will make more sense than waiting.

The median price in Clark County, WA is now pushing up above $260,000 and that could easily make its way to $300,000 over the next few years if this trend continues. Sellers should also consider the benefits to selling now rather than waiting. Whatever home will replace the current home will be more expensive later. Those that are downsizing may wait to gain a larger down payment for the next house. Those that are moving up however will only get further behind the longer they wait. The three bedroom starter home is in seriously high demand right now so the move up seller should get listed now before that larger four bedroom house slips out of financial reach. No one knows what tomorrow will bring but we do know what is happening right now; that is low inventory and lot's of hungry buyers.

Friday, September 25, 2015

Should You Put More Money Down?

The notion of making a larger down payment is often floated by clients looking to best position themselves financially whilst buying a house. Spending 200 or even 300 thousand dollars is a daunting task for most people. The answer to query posed by the title of this article is not as simple as it seems. Many factors effect a person's finances and everyone is bit different. But there are some solid guidelines that can be applied to help determine if a big down payment is the best course of action.

The first thing to remember is that a word like "big" is relative. What is a big down payment. 3%, 5%, 10%, 20%? In the mortgage world 20% is a big down payment. If a borrower puts down 20% they generally avoid paying for mortgage insurance. This is a strong motivator for many people that are sitting on a large sum of cash. Mortgage insurance protects the lender from loss should the house default. The mortgage insurance pays the bank the difference between what the borrower put down and 20%. So if a borrower puts down 10%, the mortgage insurance pays the bank 10% if the borrow defaults, giving the bank the money they would have had if the borrower had put down the full 20%. The down payment protects the lender from loss in a default that happens early in the loan cycle. Since interest is paid largely up front if a borrower defaults in the first five years there is a good chance the bank would lose money without a 20% down payment. The insurance protects the bank, not the borrower.

If a buyer is able to put down 20% with out risking financial stability, then avoiding mortgage insurance can be a pretty big deal. Depending on the size of the loan it could easily save $100-$200 a month on the payment. Many borrowers however do not have that kind of cash. If they do, it could be the only cash they have in reserve. Having cash reserves is very important to financial stability. There is a point at which putting less down is beneficial. Right now mortgage interest rates are ridiculously low. Borrowing an extra $10,000 at a tax deductible 3.75% could be a better bet than giving up that $10,000 in cash reserves. Talking to a tax pro is always recommended when buying a house.

Before putting more money down it is well advised to carefully consider the advantages of more or less down payment. Every situation is different, but sometimes less is more!

Friday, September 11, 2015

Lenders Follow the Money, Very Closely!

If you are buying a house and using a mortgage loan it is very important to follow the direction of the Loan Officer even when it seems redundant or even stupid. Ever since the 2008-09 crash the government has been putting banks beneath an ever watchful eye of regulators and under the oppressive thumb of the government. Every significant deposit or withdrawal into any account the borrower uses is carefully analyzed. The bank needs to know where the money came from and where it went.

Make no mistake about it, the bank will kill your deal and leave you standing at the proverbial altar with out so much as a Dear John letter if they can't "follow" the money trail to a happy place. by all means do not hide money under the mattress! Cash that magically appears from fairy dust will kill your deal faster than Superman saves Lois Lane.

Any funds used in the transaction should be well seasoned, in the account for several months or deposited from reliable traceable sources such as a payroll check, government agency, insurance company, pension fund, etc. Any larger deposits or withdrawals totaling more than a couple hundred dollars should be logged by the borrower so they can explain to the bank if needed. Also any funds used for the purchase of the home should be taken from the same account the borrower has reported to the lender. No funds should ever be sourced from an account the lender has not vetted.

So in short, your moving and decide to have a garage sale. You do well selling off your unwanted junk. You net a cool and crisp $600. So you deposit the cash into your account. Keep a log of where that $600 came from. A loan underwriter is trained to assume that anything unknown is corrupt. Did ISIS give you that $600? Did your uncle give it to you because you can't really afford to buy this house? Do you moonlight as cat-burglar and this was the loot money? I am not kidding. They are very concerned about the comings and goings of your finances. Remember they are about to loan you hundreds of thousands of dollars based on your promise to pay them back. You are going to have complete control over the very asset that is collateralizing the loan. It is serious business and it is not difficult to comply, but you must comply if you want to play in their vault.

Unfortunately we had some loose regulations prior to 2008 that lead some people and companies to be dishonest and deceitful in their business practices. This helped create a very bad financial collapse that cost the American taxpayers dearly. As is typical with government, there was a gross overreaction that has lead to somewhat oppressive regulations that now create a new series of headaches for the American people.

It is very important to understand the age old adage "Those that have the money, make the rules". Banks have the money and if you want their cash, you play by their rules. The banks have to play by the government rules for a similar reason.

So be mindful and get your dream house.

Friday, September 4, 2015

Analysts Backing Off Rate Hike Predictions

I have been perusing through the financial news and scouring for hints of what the outlook over the next few years is shaping up to look like for our mortgage rates. The trend in thought has been that these historic low rates were primed for a rise. But many professionals are backing off the dire short term conclusion that rates will spike and taking a more status-quo view, at least through the end of 2016 and into portions of 2017.

Of course this all lies under the presumption that significant economic events do not alter the financial markets. A disruptive war, major shift in national and or world politics, etc. Ah, the future it is just so gray and fuzzy isn't it? This is why I have been harping on the notion that people take advantage of the current low rates and mild rising market to get a home before it is priced out of reach and while the rates are so favorable.

Historically rates have been as high as 17% and as low as they are now. Here is a chart from Showing average annual rates since 1964.

Looking at the chart one can quickly see that this is a great time to take out a mortgage! Understand that these figures represent the average rate issued by banks over the course of each year on the chart. Actual rates move around regularly and may be adjusted up or down based on the individual loan and the borrower's credentials.

There are still some financial gurus that feel the government may be pressured into moving away form the strong loan guarantees they have been making since the crash in 2009. The presidential election next year could determine the path rates will take over the next few years. They really have nowhere to go but up as we are very near the historic low. Odds favor an increase over a decrease and even if there is a decrease it could go much lower than it already has. Conditions support a positive purchase decision. Since the future is always cloudy one should consider the conditions today which are still quite favorable for buyers.

Friday, August 28, 2015

Should I Stay or Should I Go Now

Ah the 80s... Yes that title invokes the lyrics of a song by The Clash that had absolutely nothing to do with real estate.

"Should I stay or should I go now?
If I go, there will be trouble
And if I stay it will be double
So come on and let me know"

But those words do relate indirectly to the mindset of many homeowners as they ponder the equity they have gained or gained back as the case may be, since the crash of the market in 2009. If they stay, they continue to gain equity and get closer to paying off the house. but the "trouble" is that they may lose out on an opportunity to move up to a more spacious home with very low interest rates that honestly can't last forever.

There are even people nearing retirement that might be thinking about downsizing to the last house they'll ever own. "Should I stay or should I go..." dances in their mind. In the case of downsizing, the low interest rates could be the catalyst for the decision. If in fact it is the long term proposition then the low rates will be far more advantageous than waiting for additional equity to build up. The low rates are very real and right now. Gaining more equity is likely, but still not guaranteed. No one knows the future after all. What we know is what we have at the moment and that is very low interest rates and a rising home market. 

Sometimes my friends, a bird in the hand IS worth two in the bush.These super low interest rates have been hanging around for several years but there is no guarantee they will stick around. In fact many economists feel that it will just take a little nudge in the general economy to get the Feds to back off their aggressive loan guarantees and that could easily return the interest rates to a truly market range likely around 1-2% higher than they are now. 

This current market is healthy but not too robust. Many sellers are throwing homes on the market with a puffed up price and the market isn't biting. Buyers will snatch up well priced homes that are clean and sharp but they won't bid up a dump or nibble on the line of a puff piece. This is a good time to sell, bit also a good time to buy. Buyers that move into a new house today have a reasonable expectation of market appreciation but do not have to worry about bidding up on a house that is overpriced. During the 2005-2007 craze, that is exactly what was happening. People were bidding up overpriced homes and paying way too much for them. This market is much more subtle than that and buyers still can get a fair deal. The only exception is the very entry level portion of the market where inventory is so tight that buyers are feeling the squeeze. All the more reason for sellers in the entry level homes to list now while to price is upwardly pressed but the move up hose is not as tight.Sellers can squeeze a few thousand extra dollars out of the 3 bedroom ranch and move up to the four bedroom deluxe house with a low interest rate that will serve them for years to come.

Should I stay or should I go now...

Friday, August 21, 2015

Drones Becoming Prevalent in Real Estate Marketing

I have been noticing more and more marketing materials created with camera drones. Some of the video presentations on nice estates along the Columbia River are clearly the work of a professional production company. But I am seeing drone aerials on even the more modest listings.

To the right is a listing video I found on the local MLS for a Tidewater condo on the Columbia River. The entire intro was done with a drone camera and it definitely adds some visual drama to the listing.

I have always been an advocate of good clear a well composed images of homes in real estate. The seller is paying a handsome fee and they deserve to have their home presented in the best possible light.

I have a photography background having spent the entirety of the 1980s and half the 1990s as a professional in the photography industry. So I need not hire out to make real estate images that have a professional touch. I have always been a bit of an equipment junkie so I still own great quality camera gear. But short of renting a 30 foot lift, I can't get these above the neighborhood viewpoints that seem to be permeating the industry.Well, I couldn't before now. I decided to add a camera drone to my "arsenal" of marketing. Of course I will need a little practice flying the thing but I took my first simple images in my own neighborhood for practice.
Sellers are becoming more and more demanding with regards to the marketing of their home. The cold hard reality is that the market is driven by price sensitive buyers and fancy marketing only goes so far. A puffed up overpriced home will still linger in the market. The fancy media will help bring more buyers in to see the property and that can make a big difference for a well priced home. But what's the difference if 20 people view the home and say it's over priced or 100 people view and say the same?

It's good to keep everything in perspective. That said, a little marketing edge never hurt, methinks ;)

Friday, August 14, 2015

Irrational Fear has Created a Scary Mold Racket

Here in the the gorgeous but often damp Pacific Northwest we have a higher than average occurrence of mold and mildew in homes. Many years back there were a series of very serious mold outbreaks that got significant media coverage. Horrifying tales of sickness and death were paraded in front of America with homes that became uninhabitable. As always, it seems America's so called "journalists" present the worst case scenarios and over-sensationalize them. Fear became rampant. Make no mistake about it, mold can be a real problem, but driving a car is far more dangerous and yet here we are driving every day.

I am no mold expert and will start by saying right now, if you are concerned about mold in your home or a home you are about to purchase or sell, check in with the Washington State Department of Health for solid information on mold. The state isn't trying to sell you anything here.  

What I will say is that we have a system that keeps trying to protect people and in so doing sometimes hurts them instead. It all comes down to lawyers. No I will not go on any kind of anti-attorney rampage, worry not. Attorneys are an important part of our American system of justice. But here is part of the problem. When a home inspector sees any kind of dark staining or potential mold, he is obligated to suggest the buyer have additional testing done to ensure the questionable matter is safe. He does this at least partly out of fear of lawsuit but also due to mandates for his license. OK, no problem. So enter the "mold" company and let the racketeering begin. OK, racket might be a little harsh, but not entirely undeserved. My experience has been mostly negative when the staining is not at all mold-like and it is in minuscule amounts. Mind you, I have seen mold in houses that was so scary I didn't want to go in. But nearly every single house west of the Cascades will have mildew and or mold. So the mold company says something like this... "We can test this to be certain it is not a dangerous variety of mold... $500 and two weeks lab time... or we can just treat the whole space for a quick and easy $1500... you want to be safe, right?" Seriously, I want to go into a Rocko McKnuckles, New Jersey accent every time I read that line.

On one hand we have the very important issue of health and safety on the other we have to worry about unscrupulous activity by certain companies to essentially extort money through fear rather than giving an honest evaluation of the nature of the problem. Again I turn to the legal system. The mold company does not want to be sued so they operate on side of excessive caution and recommend full treatment which just happens to line their pockets with cash. Convenient, isn't it. 

I would ask this, why don't we hire a mold company when we clean our bathrooms? We get right down on the floor and clean up "mildew", we don't seem worried about "black mold". Yet the same minor occurrences in an attic sends a wave of terror through people. Let me reiterate my position because I don't want to get sued either! If you are concerned about mold by all means take it seriously, especially if the "mold" is everywhere and not just a little area. But do some research and remember that mold companies are "for profit" businesses. Some businesses put profit ahead of integrity so get a second opinion if the first is a potential deal killer or seems unreasonable. My point however is that many people miss out on their dream house because some inspector scares the hell out of them over what is probably a minor condition that can be treated by any one. Then the mold company racketeers arrive with their deal killing solution that costs more than the seller is willing to pay and more than the buyer can afford.

I have found that many brand new homes have some of this black staining that can be "mold" related. The roof plywood sheeting is delivered and it rains. The sheeting is a little wet, it is installed, and some growth and or staining occurs. Often the attic is ventilated well enough that the mold either dies and leaves the "stain" or it doesn't grow into any kind of infestation. It can however become a problem if not periodically checked especially if the attic is NOT well ventilated. The bottom line for home buyers is this: Use caution, do some research, have things checked out and be reasonable with the seller when the "mold" is a minor condition. The State of Washington, Department of Health has this to say on their website about mold.

"Most molds do not harm healthy people. But people who have allergies or asthma may be more sensitive to molds. Sensitive people may experience skin rash, running nose, eye irritation, cough, nasal congestion, aggravation of asthma or difficulty breathing. People with an immune suppression or underlying lung disease, may be at increased risk for infections from molds.

A small number of molds produce toxins called mycotoxins. When people are exposed to high levels of mold mycotoxins they may suffer toxic effects, including fatigue, nausea, headaches, and irritation to the lungs and eyes. If you or your family members have health problems that you suspect are caused by exposure to mold, you should consult with your physician."

There are very few molds that are dangerous to healthy people. The ones that are dangerous are generally only a problem when the outbreak is not treated and allowed to expand. A little staining in the attic is 95% of the time, no issue. A simple treatment with consumer available products will eliminate the problem. If the mold is allowed to expand and grow into an infestation, the cost to eradicate it can be excessive. Proper attic ventilation can reduce the chance of significant mold growth exponentially. There is a great deal of information from reliable sources such as the Department of Health. Take a few moments and read about the issues before killing the deal on your dream house over a few specks of benign mold. Here is another quote from the State of Washington Department of Health. Please follow the link if you have concerns about mold.

"Decide if you have a large or small area of mold. A small area is less than about ten square feet, or a patch three feet by three feet square. To clean a small area, follow the advice below. You may use a cotton face mask for protection.

If you have a lot of mold damage (more than ten square feet) consider hiring a cleaning professional. If the moldy area has been contaminated by sewage or is in hidden places, hire a professional."

The State is making pretty soft recommendations here that cover nearly every "mold" scenario. They get firm in the suggestion of hiring a professional when the mold is hidden or contaminated by sewage, etc. It is important to keep things in proper perspective. 

The idea of this blog post is not to take away from the serious nature of mold, but rather to keep it in its proper context. Mold is everywhere. In our part of the world you will be exposed to mold spores. Cleaning up mold is a part of life in the beautiful Pacific Northwest. There are times when a mold situation is so severe and potentially dangerous, that the treatment MUST be done by properly trained and licensed professionals. The majority of times however, treatment can be done by homeowners or general contractors using consumer grade products and basic protection.

People with high sensitivity must use more caution than others. Common sense should still prevail, and utilizing our government's public resources is a good start before making an uninformed decision you may regret later. 

Friday, August 7, 2015

External Issues Need to be Addressed

Originally posted on March 20th, 2015

Sometimes a seller has a home that is facing external issues beyond his control. These can be neighborhood issues, location, busy street, crowded, noisy, overlooking industrial area, etc. There is nothing the seller can do specifically to change these external problems. If these problems existed when he bought the house then it is likely the price was reflective. The seller probably got a "deal" on it when he bought it.

Sometimes these external issues develop over time. Maybe a busy new shopping center was built down the street recently and that has created a negative vibe that wasn't there before. Regardless of what the external issue is sellers affected by them need to give special attention to their home to make certain the negative external issues are offset by positive internal value. Internal value comes in the form of the condition of the home and the presentation of the home.

Sellers faced with external negative value should prepare their home for the market by fixing most of the easily visible problems. A fresh coat of paint inside and out could go a long ways towards bringing internal value. Staging the house by eliminating unnecessary clutter and keeping it spotlessly clean will do wonders to overcome external problems.

The external problems will likely be noticed BEFORE the buyers ever enter the property. First impressions can be hard to shake off. It is critically important to show tremendous value once the buyer is inside the house. If they walk in and go, "Wow! I wasn't expecting this to be so nice inside..." the seller has done a good job at overcoming the external negatives.

Regardless of efforts to shine light on the positives the external issues are sometimes too great to completely overcome without a price advantage. But even if price is used to cover the gap, the nicer that home looks and feels the more money it will fetch.

The first and foremost thing to address is the front yard and entry to the home. The external issues have already been seen as the buyer approaches the home so having that front yard really sharp and clean will take attention off the external and put it on the value of the home itself. It is equally important that the buyer walk into the home and see as nice a presentation as possible. This takes their attention away from the negative and delivers a warm and desirable feeling of 'home'.

If the buyer has driven up the street and seen the external problem, then they already have reservations about the property. When they arrive up front the curb appeal is more important than ever. If the curb appeal is bad as well as the external you have two of the proverbial three strikes already in place. Sellers don't want to be facing an 0-2 count before the front door even opens, if you'll pardon the baseball parlance.

Have a landscaper spruce up the front yard. Make that entry and first room look as nice as possible. We all know that ultimately kitchens help sell homes, but if the house has some downside before the front door opens, then that first entry point becomes equally critical as the ever important kitchen!

Sellers need to overcome external problems and surprisingly, they can be overcome without too much time or expense. Failure however to compensate for external problems will result in the only other solution, a lower price or less favorable terms.

As the market continues to enjoy the upswing in prices, buyers can even seek out homes that have external issues and use those to leverage a better "deal". Of course the buyer ultimately has to be willing to tolerate those external problems.

The bottom line is that external issues need not be a break point for the seller. A little care and attention can save the seller a lot of heartache and maybe a whole lot of cash as well.

Friday, July 31, 2015

Back to School Brings Opportunity

As we approach the month of August many sellers and buyers are becoming nervous as they continue their efforts to either buy or sell a home. Worry not opportunity still knocks after the peak summer season subsides.

Originally posted August 15th, 2014

There is typically a nice little summer boost in the number of real estate transactions. June and July enjoy a robust seasonal perk up as many families prefer to move in the summer while kids are out of school, and while the weather is fair for moving. The summer month's totals are usually about 20% higher than the average month. Mid-August tends to see a slight slow down in activity that is most likely due to families with children in "back to school" mode.

This slight reduction in buyers, means a little less competition for the remaining listings. Buyers that have not found their ideal home or that have been outbid may find a reprieve from the craziness. Likewise, sellers that did not sell over the summer may be ready to take that slightly lower offer that would not have been accepted a month ago.

Sellers with homes that are not selling of course should consider evaluating the price but also other factors that might help sell. One problem that is all too common among sellers is the availability to show the home. Selling a house that is lived in is a difficult pain in the rear end. But the more easily an agent can show the house, the more buyers will be able to see it. More showings will directly translate into more or faster offers. The next 3-4 weeks will mark the end of our late summer sun and making listed properties available until 7 or 8 o'clock can be the difference between sold and sitting.

Buyers should revisit homes they passed over in June and July. If they are still on the market the price may now be reduced or the seller may be softened up and open to a lower price offer.

We continue to see appreciating prices but the rate of appreciation has slowed dramatically from the skyrocketing prices of 2013 to more modest upward trend in 2014. There is no guarantee that prices will continue to move up. The economy is fair and interest rates are a major factor in the recent real estate turn around. Sellers should not assume that they will get a better price next year. They might; in fact they probably will, but it is by no means set in stone. A good solid offer today that generates the cash needed to do what the seller wants to do should not be underestimated.

Don't worry if you missed out on the peak summer sales cycle, there is plenty of opportunity as the Autumn approaches.

Friday, July 24, 2015

HOA's, CCR&Rs and You

Many clients are reserved about HOAs in the neighborhoods they are seeking homes in. HOA stands for Home Owner's Association. The overwhelming majority of people are at the least, cautious regarding buying in a neighborhood with an HOA and many flat refuse to buy if an HOA is present.

Caution is well advised as the good standing of the HOA is very important, especially in a condo or townhouse development where the responsibility of the HOA is high. For this post today, I am focusing on HOAs in detached home neighborhoods.

An HOA is often utilized to make certain the neighborhood continues to conform to the original specifications the developer created. Often there are common areas the HOA will maintain such as walking paths, parks and sometimes the front yards of the residences. There is of course a fee that is billed to the homeowners monthly, quarterly or annually. Generally the HOA elects a board from the ranks of the homeowners and sometimes the HOA is run a professional management company.

An HOA can be a great asset to a neighborhood as they routinely enforce the CC&Rs that can help preserve the integrity of the neighborhood. CC&R is an acronym for Covenants, Conditions and Restrictions. These are generally deeded and often recorded with the deed and thus run with the land indefinitely. Disbanding an HOA or dramatically changing the way the HOA is managed may occur via a vote of the homeowners. CC&Rs require a significant legal action to remove.

The two go well together. The HOA can enforce the CC&Rs. CC&Rs are much more difficult to remove as they are deeded to the land. However, if no HOA is present, then enforcing the CC&Rs becomes difficult. It is complaint driven and would likely require formal legal action to enforce. Inversely, an HOA without strong CC&Rs can quickly become useless as well. As the homeowners can simply vote away important protections.

I have watched nice neighborhoods decline rapidly due to a weak HOA/CC&R or no HOA at all. The idea of keeping a neighborhood as nice as the day you bought the house over years or even decades is important to many people that intend to live in a home for long term. The fear some buyers have is that the HOA will be run so strict that homeowners lives will be negatively impacted. This can be true sometimes. A client may move into a neighborhood that restricts RVs and Boats or street parking. Perhaps when they buy the home these restrictions are fine, then they have a family and want a boat or end up with teen drivers that can't park their car in the neighborhood, etc. These are things buyers must consider when purchasing a home. Buyer's need to think about the big picture and what their future may hold. Some things are not planned in life, but many are. Buying a house that does not conform to one's future plans is foolish at best.

The bottom line about HOA and CC&Rs is that people who want a neighborhood that is well regulated and keeps homeowners in compliance with the neighborhood plan, should seek out areas with strong CC&Rs and a solid HOA. People who like to have RVs and boats and extra cars and such should avoid HOA regulated neighborhoods.

Friday, July 17, 2015

Big on Small or Small on Big?

With the recent building boom this article still resonates. Originally posted here August 29th, 2014

The trends in home building for middle income buyers has been larger homes on small lots. Builders have been stuffing 2200 square foot homes onto 4000 square foot lots. There is a wow factor when a prospective buyer walks into a brand new house with 2200 square feet of space and all the nice modern features.

The trade-off has been in the "real estate" portion of the deal. These gorgeous big houses had nearly no yard and a tiny so called two car garage. For the very same money a buyer could look at a 20 year old home with 1800 square feet sitting on a large 10,000 square foot lot. Sure, that house was a more dated design, but often the seller had done updates to improve the feel of the home.

So buyers that find themselves in the local market with a $250,000-$300,000 budget will face the same dilemma. 'new on small' or 'old on big'? That trend of new on small even pushed it's way into the bottom of the upper income homes. There are a great many 3500 square foot homes stuffed onto 5000 foot lots here in Clark County as well. Some of these are top quality builders cramming luxury homes onto postage stamp lots up on Camas' Prune Hill.

Buyers should consider that land is valuable. It is a major part of the real estate equation. Having a large, safe yard for children or grandchildren to play in can be most valuable. Summer parties in a real backyard are hard to beat as well. Buyers are well advised to look at a range of homes from new on small to old on big before making that final decision. There are strong merits to both concepts. Personally I am at a point in my life where a big house on a small lot would be just dandy! One should just make sure they are choosing the property that will serve them best rather then the property that offers more bling.

Friday, July 10, 2015

Builders Are Back, But is New Better?

Many home buyers may be feeling frustrated at the lack of resale inventory in the market. here in Clark County it remains a tight seller's market. There are many buyers and they seem to be preferring that move-in ready house rather than the one that needs "TLC". The builders are back and they have come with force. Dozens of new developments are underway all over the fruited plain.

For the buyer that has to have the house just so, a new home holds an advantage in that often times the buyer can choose carpets, flooring, counter tops, colors, etc. The downside is that builders are booked solid and completion times are pushing 6-7 months. New spec homes are always and option but they lose the pick you theme angle in exchange for buy me now availability.

The general theme in new homes has been big house, tiny lot. The older homes are usually found on nice big lots with 7-8 thousand square feet and go back to the 1970s and you will likely find reasonably priced homes on 10,000 foot lots.

That remains the trade off, older homes on giant lots versus newer homes on smaller lots. In general a new house will appreciate quicker in the first 5 years. When looking at newer subdivisions consider the neighborhood and price ranger. Entry level homes will often hold up better if an HOA or strong CC&Rs exist to keep the neighborhood conforming and tidy. Generally upscale developments with large expensive homes fare well with or without an HOA.

I have written in the past that sometimes buying a brand new house in an older neighborhood can backfire. Be aware of your needs and think about the future. Buying a home is a little more "permanent" than renting and will require a bit more time commitment on the part of the purchaser.

Most new home developments list their properties on the local MLS so your favorite Realtor® can still help you find your dream home, whether it is brand new or 100 years old.

Friday, July 3, 2015

Seller's Keep Your Home Cool!

It's hot outside. All across the fruited plain, this is the warmest time of year. As we begin to celebrate our great nation's independence seller's should remember that an uncomfortable buyer will stick around in the showing to soak up the nuanced greatness of your home. To put it another way, buyers are not interested in purchasing a home that feels like a sauna or steam room. For crying out loud if you have A/C use it! Buyers will linger in the glorious bounty of a cool home when the mercury outside is popping those 90s. Sellers need not cool the house to ridiculous expense. Even a setting of 78 degrees will provide a comfortable recompense in 90 plus heat.

No A/C? No problem, sellers need to follow those classic cooling tips. keep windows open till the temp starts to get warm. Then close up the house and run the furnace fan (if you have forced air) or ceiling fans, etc. In the evening when the temperature settles down, re-open the windows to bring the cooler evening air in. Furthermore, if blinds horizontal are employed in the home, angled them down towards the ground at about a 45 degree angle. (further south in California they can be at 20 degrees) This blind trick allows indirect light to enter the home but keeps direct sunlight from hyper-heating the house. On all but the hottest days this should suffice to keep the home bearable.

I know some sellers and agents are thinking it's a seller's market so why do all this effort. Buyers are still picky and they won't buy a home that makes them feel uncomfortable. Nor will they stay in the house long enough to determine if it is a good home for them. In a seller's market the same rules apply, the more presentable and attractive the listing, the more money it will yield at closing.

Happy Birthday, America! You're a spry 239 years old tomorrow.

Friday, June 26, 2015

Seller's: Water the Lawn!

Here in Southwest Washington we have had one of the best Junes ever as far as weather goes. Nothing but big blue skies and sunshine. Certainly not the norm for June. So, we have an early summer and that means we have to actually water our lawns. In a typical year we can usually go 9-1/2 months without worrying about the lawn. In the summer however that grass with brown out faster than Usain Bolt runs the 100 meters.

Curb appeal adds value to a home. This is not a novel idea. Yes the water company charges in body appendages in the summer, but keeping that yard nice and lush could be the difference between nabbing that over full price offer.

Many sellers are caught up in the notion that this market is so good it doesn't matter. Lies, filthy rotten lies. This market is awesome IF you have a well priced, cherry house. Buyers are not just buying any train wreck at any price. In fact, buyers are particular. When someone has a clean, move in ready property priced right, the buyers come out of the proverbial woodwork with big juicy offers. Ugly, poor condition homes with clutter and mess will linger in the marketplace unless they are priced like it's 2013.

Now there are exceptions, of course. There are a handful of neighborhoods that are so overwhelmingly desirable that the buyers are chomping at the bit for an opportunity to buy. These neighborhoods are few and far between. A few in Fisher's Landing, a few more in Salmon Creek, Prune Hill in Camas, Steamboat Landing, etc.

A healthy real estate market like we have right now, requires sellers to follow the time tested truths of curb appeal and the minimalist approach inside. Even if the property is located in one of the "HOT" neighborhoods, following these classic preparation techniques will still yield extra dollars on the offer(s).

Come on, just water the lawn already!

Friday, June 19, 2015

Understanding Contract Terms is Essential to a Smooth Transaction

This was posted last summer here on the blog...

It is imperative that both parties to any contract understand the terms and requirements to close. Most problems that arise in real estate transactions are misunderstandings between the parties. One person thought the seller would move out on this date or that time but the seller thought they had till such time, and so on.

Real estate agents are not attorneys! We fill in the blanks on standardized forms prepared by attorneys and approved by the state of Washington. This is designed to alleviate many problems that can happen during a real estate transaction. It is critical that all parties understand timing, dates and expectations. Many people make assumptions about how things are supposed to go. There are many standard timing issues that act as a default. For example, in Washington State, a buyer has the right of occupancy at 9pm on the day the county records the transaction. Unless specifically agreed in writing this is a contractual requirement. Many buyers think they can move in right after they sign documents or when the bank funds the loan. This can cause problems.

The moral of this tale is that both buyers and sellers need to be certain they understand the terms and conditions to the purchases and sale agreement. They should never feel afraid to ask their real estate agent questions about the details and procedures that are mandated and/or customary practices when closing a real estate transaction. Real estate agents should always be clear and concise about these terms and conditions and be certain that their client understands them. If language is a barrier then that agent needs to work harder to ensure that the clients understand.

When all parties understand the details and procedures to close, the transaction will go smoothly and everybody wins.

Buyers Need to Tailor Their Offers

Sometimes buyers find themselves in a position of offering on a house that looks real sharp in the marketplace. You know the listing. That solid three-two in the cute neighborhood with good schools blah, blah, blah and only $199k.

Although most people think the price is the end all be all, and money is a strong motivator, but the best offer is not always the highest. Their are many factors to consider. The price and ultimately the net proceeds to the seller will always carry a lot of weight with the seller. Obviously when it comes to cash, the more the merrier. The listing agent may have a different angle. Listing brokers here in Washington state, have a statutory obligation to keep the best interests of the seller. Sometimes a clean offer for $201k with a large earnest money deposit and 20% down is a better deal than the border line 3.5% down offer with $500 in earnest money no pre-qualification letter and so on at $203k.

Buyers should consider all the variables that might effect a seller's decision to choose. Putting up 1-2% in earnest money shows the seller that the buyer is serious about the house. Earnest money is more or less a deposit on the house. That money is in jeopardy if the buyer decides for no good reason to back out of the deal. Buyers are protected against certain events beyond their control and have contingencies for financing and inspection. But in the end putting up more earnest money always looks stronger than an equal offer with less. Of note: veterans using a VA loan should be an exception to this.

Writing offers with excessive addenda can be a mistake that even some seasoned agents make. Addenda should be used for contingencies such as financing and inspection. There are quite a few addendum forms that are available to suit a wide variety of possible scenarios. I have seen agents submit offers however with addenda attached that had no relevance to the subject property. A clean offer is a simple, straight forward offer, and its strength should not be underestimated. That said, the appropriate addenda for relevant aspects of the deal should always be used!

Buyers should always have their financing pre-approved when submitting offers. Many buyers run around looking at house before meeting with a mortgage professional. Most sellers and their brokers want to see at least, a pre-qualification letter before considering an offer. A pre-approval letter is even better. (pre-approval means the lender has acquired some documentation and run the client through the automated underwriting system) I think it is safe to say that 70% of real estate transactions that fail, do so because the financing failed. This is why the pre-qual or pre-approval letter is important.

Buyers agents should talk to the seller's agent prior to writing the offer. Try to find out what makes that seller excited. Usually sellers are motivated by the almighty dollar; sometimes seller's have another motivating factor. This knowledge can help the buyer's agent tailor the offer to appease the desires of the seller and make their offer stand out against others even if it is not the highest price.

It should be noted that all of this commentary only goes so far. A clean offer for $200,000 is not likely to beat out a sloppy looking offer at $220,000. But most multiple offer scenarios bring a handful of offers within a couple of thousand dollars of each other. It is here that the well crafted offer can win the day.

Happy house hunting and keep it clean and simple, whenever possible.

Friday, June 12, 2015

Metro Area Market Trends

I pulled some data from the National Association of Realtors® for the Portland-Vancouver Metro Area and the results are interesting but not surprising.

Many agents and media outlets have suggested the market is a raging bull and although in context it may be true. But the perception has been that it is a seller's market in the vein of 2005-2006 and that is simply not the case. Back before the crash in 2008-2009 it was a ridiculous seller's market. Homes were fetching whatever the seller wanted and condition was almost a moot point. Double digit appreciation was practically expected rather than being a gross anomaly like it really should be.

This current market is much different and frankly much healthier. yes we are in a seller's market. But sellers still have to present a quality product at a fair price. Over priced listings are NOT selling and that is a very definitive difference between 2005 and 2015.

Buyers are also showing reservations about homes that are in questionable neighborhoods or that need TLC as they say. The market is raging but only if you have a solid move in ready house in a conforming neighborhood. Other homes are are taking longer to sell. 

The media can sometimes make a mountain out of the proverbial mole hill and sometimes they underestimate things. It seems the story is not always what it seems.

We are in a healthy real estate market here in the Portland-Vancouver market. Values are rising in the 3-5% annual range and that is just dandy. If sellers want to have a vigorous multi-offer situation they need to be in a solid hot neighborhood AND they need to have that house looking real sharp. Sellers that are unwilling to comply with the conditions presented by the cold-hearted market will only find disappointment.

Buyers on the other hand, need to realize that the house they want, the clean and sharp beauty in the perfect neighborhood will not be on the market long. It will also sell for more than the asking price. Buyers making low offers on hot houses will also be met with frustration. 

The National Association of Realtors® has some projections for pricing over the next twelve months and the outlook is HEALTHY.

Friday, May 29, 2015

Fixing it up to Sell? Caution is Advised

Many home owners are starting to realize that this recent upward trend in real estate values has put them in a position to sell.This market is very strong but the buyers are seemingly focused on clean, updated and move in ready properties. Fixers seem to be lagging in this current market. In general it is a seller's market but fixers are still fairly neutral. These home owners that have a house that needs some maintenance and updating are sometimes considering improvements to their home to increase its marketability.

It is important to recognize that improvements to a property can be either positive or negative towards the end result of cash in pocket for the seller. Most improvements will add value to a home, but will they add as much to the price achieved in the marketplace as they actually cost to make? That is the 64,000 dollar question.

Some improvements do not add value at all. Here in the Pacific Northwest in-ground swimming pools generally cost more to put in than they generate in value. In fact a swimming pools in middle class homes are generally ignored by appraisers in this market. Southern Californians by contrast will pay for an in-ground pool and in fact it is almost a mandate.

Home owners need to consider only the improvements that will truly generate additional proceeds for them. Kitchens and bathrooms have long been held as areas that should be kept updated. Remodeling a dated kitchen might be expensive but it could bring more in cash than costs to do so long as the seller doesn't over do it. Over improving a house can be a serious mistake. A 1950s three bedroom one bath rambler need not have a $50,000 kitchen remodel. The home has a price ceiling based on its size, age and neighborhood. Generally, there is no room for that kind of remodel. A modest kitchen update however might cost the seller $3000-$6000 and net $10,000 more in price.

Other improvements for sale would be a fresh coat of neutral color paint throughout the house and making sure the first few rooms the buyer will see inside are tidy, and bright. The classic curb appeal is still a major factor so keeping the front yard spic and span so to speak are crucial. Additionally most buyers in the sub-$300k market locally at least, are going to use an FHA or VA loan. The seller is advised to make sure the house will meet the guidelines for these government backed loan products. These products are not that difficult to satisfy so their value is immense. The market is driven by buyers at this point. What makes a seller's home valuable is the surplus of buyers seeking homes. If the seller eliminates the majority of buyers by excluding the bulk of the loan products, then the seller will find that the house will sit on the market or be forced to reduce price.

This is as simple as making sure the siding is not in contact with the ground, the exterior paint is not peeling away and exposing the siding to weather, rood is free of excessive moss and debris, no water in the crawls space and the proper vapor barrier is in place under the house.

  • Front yard sharp and clean
  • First rooms and entry to home tidy and bright
  • Kitchen updated, bright and clean
  • Bathrooms bright and clean updated if possible
  • Interior fresh paint with neutral colors such as a light beige or antique white
  • Exterior to meet FHA and VA guidelines
Following these simple ideas will yield the best possible results. Buyers need to pull up to a sharp looking house. They need to walk into a clean and bright entry. These two alone will ensure a thorough look at the rest of the house and thus give the best chance of generating an offer.

This market is demanding clean, updated houses. So give them what they want and make a lot more money when you sell.

Friday, May 22, 2015

Land Opportunities Abound

In the local market we are still fortunate to have a large area in which homes can be built on five acre estate parcels. These need not be far away from town, and many in fact are very close in.

I recently showed a five acre parcel ready to build in Hockinson just five minutes out of East Vancouver. It was listed at $179,900. Buyers dreaming about that country estate should consider looking now. Land prices are inching up and rates for now remain low. Building costs however have been rising sharply. Building materials are experiencing price increases that are disproportionate to the economy at large. This could be due to the recent heavy demand added by a major influx of suburban and urban development in the local market.

Here in Clark County five acre building sites abound from areas in close like Camas, Hockinson, or Ridgefield all the way out to places like Yacolt and Amboy. The further out locations will often yield better pricing. The trade off becomes convenience versus value.

Some of the lots that are found for sale are located in subdivisions with a strict set of CCRs or even an HOA that may place restrictions on the size and type of buildings. Other lots are relatively unregulated in that regard. Our office currently has a generous supply of listings for buildable land. I am quite impressed with the variety.

Red area is seeing suburban development pressure,
yellow area remains mostly rural in nature
and is outside of the urban growth boundary
For those who wish to have a five acre estate in close to the city, the time is now. These types of parcels are reacting to the increased pressure from hungry buyers. Soon land pricing couple with building costs may push these completely out of the reach of the middle class.

The future of housing is in cramped quarters with neighborhoods stuffed with homes on tiny lots. The chances to own some space grow thin as increased regulations and the finite nature of land create a market that can only get tighter. In the graphic shown the area in the inside the yellow line is all within 20-25 minutes of PDX and has many opportunities to have a five acre country estate.

We are very fortunate in the metro Portland-Vancouver area to still be able to have a rural country home less than 30 minutes to the city core. Seattle lost that ability long ago. Those wishing to enjoy the country estate are well advised to make their move now.

Friday, May 15, 2015

Buyers Want it Move-In Ready

I have broached this subject before and I'll do it again. The market is robust but buyers seem to be gravitating towards the well maintained, fresh and ready homes. I have a listing that is 40 years old and pretty clean but needs some minor maintenance. The buyer is playing hard-ball on the inspection. This is not something one would expect in a so called "seller's market". But our seller's market has the caveat that the seller have a nice move-in ready home.

Seller's with the fixer or needs TLC home would be well advised to clean up the property prior to listing in this market. Sometimes sellers may not have the resources to do that so they need to be prepared to take a hit on price. This market is good but it has its limits.

Locally the new home construction market seems to be booming. This tends to support the idea that the current buyers in the marketplace are supporting the move-in ready house. Brand new of course is about as move-in ready as it gets.

It also seems that inspection reports are being heavily scrutinized by buyers. This is a good thing for buyers but can be challenging for sellers that are not in a strong financial position. It is always a good idea to give any listing as much 'curb appeal' as possible. When prospective buyers drive up the house should shine and the first room in the home, the entry and the kitchen should sparkle.

This is a solid and healthy market and both buyers and sellers can benefit from the current conditions.

Friday, May 8, 2015

Do You Really Know What Your Home is Worth?

In this day and age of Internet information many people feel like they have a solid handle on the value of their home. After all, sites like Zillow offer an instant value with a single click of just about any house in America. But how accurate is Zillow? They use a variety of data but mostly public records. Unfortunately companies such as Zillow are not intimately aware of the important details about any individual house. All of their posturing in the market really boils down to public data on a spreadsheet.

I think the coolest thing Zillow ever did was the old heat map but that is gone. But Zillow is a great tool for looking at trends across a broad market area. Are prices going up? Are they flat? Are they trending down? I am a professional Realtor® with a variety of tools at my disposal and I still enjoy playing around on sites like Zillow and Trulia because they offer an easy interface and provide a quick way to analyse broad markets and compare relative housing costs in different areas. How does Vancouver, WA compare broadly against Denver, CO?

Looking at an individual house however on Zillow is a fool's errand. They simply do not have enough information about the comps they used relative to to home they are evaluating nor do they know anything about the condition, upgrades, etc to the house they are applying a Zestimate to. They disclose all this in the fine print so they are doing it right, legally.

The last 18 months have been good to real estate values in the residential market locally and for the most part across the nation. Any homeowner thinking about value on their home would be wise to ask their trusted real estate pro to do a comparative market analysis. They should be willing to do that for free. Of course the alternative is to hire an actual appraiser but a local agent can give a solid evaluation providing they can see the home.

It is never a bad idea to be aware of your home value. Whether or not selling is in the near future or not, knowing where you stand against the market and any loans on the property is solid info to keep on hand. Talk to a Realtor® about the value of your home and go ahead and have some fun on those internet real estate sites, just keep a health pinch of the proverbial salt handy before jumping to any conclusions based on broad based internet data.

Friday, May 1, 2015

Loan Changes Ahead

The regulators have decided to change the loan process again with new requirements on final HUD statements and disclosures that many in the industry feel will slow the process down by a few weeks. Right now a government backed loan product already averages nearly 6 weeks to close and potentially adding another two on the end could make that process a two month ride.

Borrowers whether using FHA, VA, USDA or Conventional products need to follow the loan officer's explicit instructions and most importantly in a timely fashion. This will become even more important when the new regulations are activated in August.

Conventional loans that currently close in 20-30 days will likely see close times increase to 30-40 days. Government backed products will likely nudge up against that 2 month window. Buyers need to be sure to ask for a long enough closing time to get everything complete and ready for recording.

All too often buyers are sluggish getting the required documentation into the lender and this causes delays that could result in having to ask the seller for an extension. In this robust seller's market asking for an extension could end up in causing the whole transaction to end.

Buyers need to follow the advice of the loan office and act quickly on getting requirements fulfilled so the loan is funded on time and without complications. The added issue is that inspectors, appraisers and other professionals involved in the process are all quite busy right now and they may need several extra days to complete their process.

Buyers simply need to stay on top of the process and respond promptly and they will be in their dream home before long.

Friday, April 24, 2015

Listed, Shown, Sold

That just about sums up the state of our market right now. Houses come on the MLS and agents are just waiting for them. Like sharks to the chum, they attack! Such is the state of housing in Clark County, Washington and in many other markets as well.

Many home owners seem to be guarded about selling right now. If the seller has equity and can sell, this could be the ideal time to list. There are not an overwhelming number of buyers but they do outnumber sellers significantly. This market locally is all about a lack of inventory not so much an abundance of buyers.

Sellers can capitalize on the lack of inventory and get a little more for their home. As more inventory hits the market prices will stabilize a little. There is always that sweet spot in market transitions. This is one of those sweet spots. Tight inventory makes it easy to sell but difficult to buy.

The real heat in the marketplace is generally in the bottom half of pricing. Those sellers looking to move up from the bottom half into the upper half can take advantage of that sweet spot I mentioned. Rapid price increases at the bottom and much more modest increases at the top make for a tidy advantage for a seller to sell now. Also, interest rates remain low and although I have been barking that they could go up significantly for several years, they will go up. When they do, all bets are off for many buyers and sellers.

For a seller that has been waiting to get out from under and upside-down house, now could be the time to grab one of the desperate and frustrated buyers to give them that little bit extra they need to clear the bank and move on to the next house.

It looks like this summer is going to be very interesting indeed.