Mom & Dad: Do’s and Don’ts on “Helping” Your Adult Child Buy Their First Home

Buying a home for the first time can be a daunting experience.  Often young people have saved for years to get a down payment together.  After they choose their Realtor, get pre-approved for a mortgage or get a proof of funds letter in hand for a cash purchase, they define their criteria and the fun begins.

Most first time home owners cannot afford to get all the features they would like, so they quickly learn to sort through what is most important.  Is proximity to work a priority?  Making sure you have room for a growing family or your ATV collection?  Is the home’s resale value a consideration?  Many first time homeowners think they will live in this home much longer than they actually do.  People get married, divorced, have children, get new jobs across town or across the country, etc.  When that happens, they need to move. National averages show us we move about every five years, so it is good to look ahead and plan for growth, change and resale.

Often times, I show a client a couple dozen homes and then when they start to be drawn to one property over another, they want affirmation that they are picking the best home for their money.  They call in their parents and they join us to see the top two or three homes.  Here is where problems can begin.  Since the parents have not seen the dozen or more homes we have seen, they have not had the benefit of comparison in the overall market to know these really are the best buys.  They have also not worked through prioritizing the criteria…maybe deciding they can live with a carport instead of a garage if they get the fenced back yard for their dogs.

Another problem I have run into with the relatives is hearing them vent all the negatives about a home that their son or daughter has deemed the best.  They somehow feel that is their job…to point out the soiled carpet or torn wallpaper (things we saw and discussed).  What I see happening here is what I call “stealing their joy.”  Instead of being excited, now the clients are doubting their judgment and consequently want to see dozens more homes, even if they don’t  quite meet their basic criteria….just to please the parents.   When that happens, often I see the really great home they had picked out be snapped up by another buyer, and the buyers are consequently remorseful.

Sometimes I have run into parents imposing their housing desires on their children:  insisting on a 1 story home, or a home that is move in ready, but far from work, or even some superstitions they may have, but their children do not share.  Instead of helping their children, parents can actually confuse and discourage them.
 
So how would I suggest parents help their children?  First, rather than jumping into the driver’s seat, allow your adult child to tell you what they like about the home.  Let them show you around.  Watch their expressions to see where they light up and where they have concerns.  If they are going to pay for the home and live there, they should be allowed to pick what they want.  Of course, if you feel they are making a big mistake in buying a home that is unsafe or in a questionable neighborhood, it would be wise to suggest they investigate by hiring a qualified inspector or calling the local police department to ask for crime statistics.   It would also be wise to consult with the Realtor they have chosen to air your concerns and listen for their perspective in their special area of expertise.
                                                                   
Parents can be a big help in assisting their adult children with the purchase of their first home, but they need to remember that they have given their children roots and wings.  They need to trust that all those years of living with their son or daughter have caused them to pick up on their wisdom.  Now is the time to encourage and listen as they chart their course and begin the new adventure called homeownership.

Top States for Washington In-Migration

The state of Washington continues to enjoy economic growth.  Top employers such as Boeing, Microsoft, Amazon, Starbucks, Nordstroms, University of Washington, and more draw people from all over the world.  In May 2012, 10,269 adults obtained their driver's license in Washington, after leaving their home state or country.  This is 52 more than May 2011. While net migration out of Washington is not as accurate, due to incomplete reporting of surrendered licenses, we see a total of 3127 licenses surrendered.  Where are all these new arrivals coming from?  According to the Department of Licensing, drivers are migrating from all states and many countries, but the top five states are, in order:

1. California: 1832
2. Oregon: 1287
3. Texas: 598
4. Arizona: 517
5. Idaho: 415

Incidentally, California, Oregon and Texas are historically the top three in-migration states. 

Other locations outside the United States that top the in-migration list for May 2012 include:

1. British Columbia: 83
2. Korea: 70
3. India: 51
4. Mexico: 40
5. China: 25

For more information on driver migration, check out Washington's Department of Licensing statistics.

May 2012 Sales Strongest in 7 years!

Our market is constantly changing.  What we are seeing now in the greater Seattle area is a strong seller's market.  Low inventory and record low interest rates along with an increase in hiring in the Puget Sound area has caused quite a stir in our housing market.  Multiple offers are common.  Short sales and foreclosures are down.  Demand remains strong. Sales at Coldwell Banker Bain Bellevue are at levels not seen in the past 7 years.  Sellers are slowly listing homes for sale and buyers are often jockeying for best position to purchase a home.  Pre-inspections, escalation clauses and personal letters to sellers are now part and parcel of the buying process.  Those buyers who think they can find a home and negotiate on their own will soon discover the hard way that a savvy Realtor is their best strategy for finding and purchasing a great home in this competitive market.  If you want great results in buying or selling a home, give me a call:  206.383.3119.  My experience will go a long way in helping you achieve your housing goals.

Carbon Monoxide Alarms Required in Homes for Sale Starting April 1, 2012

According to the Northwest Multiple Listing Service, effective April 1, 2012, RCW 19.27.530 requires the seller of any owner-occupied single-family residence to equip the residence with carbon monoxide alarms in accordance with the state building code before a buyer or any other person may legally occupy the residence following the sale.  This requirement applies to all single family residences, including single family homes, condominiums, and manufactured/mobile homes.
The building code (WAC 51-51-0315) requires that an alarm be installed: (1) outside of each separate sleeping area in the immediate vicinity of each bedroom; (2) on each level of the dwelling; and (3) in accordance with the manufacturer's recommendations. The building code also requires that single station carbon monoxide alarms comply with UL 2034. There are no exceptions for properties that do not have fuel-fired appliances or an attached garage. The alarms may be battery operated and can be purchased for as little as $25 from a variety of sources.

The building code also requires that single station carbon monoxide alarms comply with UL 2034. There are no exceptions for properties that do not have fuel-fired appliances or an attached garage. The alarms may be battery operated and can be purchased for as little as $25 from a variety of sources.

In addition, effective April 1st, the building code requires a property owner to install carbon monoxide alarms when alterations, repairs or additions requiring a permit occur, or when one or more sleeping rooms are added or created. There has been a requirement to install carbon monoxide alarms in new construction since January 1, 2011.

Carbon monoxide (CO) is a poisonous gas that kills approximately 500 people in the United States every year. Carbon monoxide killed over 1,000 Washington residents between 1990 and 2005. You cannot hear, taste, see or smell carbon monoxide. In many cases of reported carbon monoxide poisoning, victims were aware they were not well, but became so disoriented that they were unable to save themselves by either exiting the building or calling for assistance. Young children and household pets are typically the first affected.

Carbon monoxide alarms are intended to trigger at carbon monoxide levels below those that cause a loss of ability to react to the danger of carbon monoxide exposure.

Multiple offers

Everything old is new again.  The multiple offer frenzy is back in the greater Seattle area!  I spent time with my local banker today, and we were talking about market trends.  He surprised me by saying, "well, it is  a buyer's market."  I wondered where he's been.  Certainly not following me and my buyers as we rush to a listing, only to see multiple buyers lined up to take a look inside.  What is happening?  The market is changing.  Just this last week, our Coldwell Banker Bain office in Bellevue had more than a dozen multiple offer situations.  The escalator clause is back!  One agent said she backed away from writing an offer for her interested buyers when she learned there were already 24 offers.  Buyer's market?  Not here!  Homeowners, this is the time to list your homes.  We have a buyer looking for your home. Give me a call and I'll help you determine what your home will sell for.  Buyers....beware.  If you find a home you like....be prepared to act quickly and don't be surprised if the home sells for more than asking price.  Oh yes, everything old is new again...multiple offers and bidding wars, here we go!

A Fresh Look at Our Current Market

There seems to be a misunderstanding of what is going on in our Seattle area market.  Buyers still feel in control, citing the volume of short sales and foreclosures.  What they have heard on the national news is not necessarily what is happening in our neck of the woods.  From 2010 to 2011, we have seen a decrease in the number of foreclosure filings as distressed homes have been sold off.  Less than 12% of King County homeowners are underwater on their mortgages.  Since our Eastside sales prices are down about 30% from the glory days of 2006-2007, sellers have not been eager to list their homes.  This has kept our inventories low.  In fact, King County currently is at half of the inventory we had in 2008 and the number of pending single family residences in December 2011 was at the highest level since 2006.  In short:  we are selling off the homes on the market and we are not replacing them with new listings.  The old rules of supply and demand hold true:  if the supply goes down, then prices go up.  Since we have a critical under supply of homes in Seattle and especially on the Eastside, prices should start to creep up. 
Buyers who see a home and think they will take a look at it in a week or so are likely to find they will not have the opportunity to see the inside of that home as it will likely be pending.  I recently listed a home in the Bridle Trails neighborhood in Bellevue and on the third day had three full price offers.  I'm sure many other buyers were looking forward to seeing that home the following weekend, but they missed their opportunity.

Yes folks, we now have less than a three month supply of homes to sell in King County.  A balanced market which favors neither buyers nor sellers is generally considered to be a five month supply. Sellers, this could be your year to see a turnaround.  And buyers, get ready for a fast and furious 2012....we are officially at the bottom of the market:  the bell has rung, the interest rates are fantastic and if you want to buy a home: 2012 is your year to buy!  Call me if you want to start searching for your next home: 206.383.3119.  It would be my pleasure to help you find the home of your dreams.

Bank of American's Unpopular Requirement for Foreclosures

I have been corresponding with Realtors across the country who are sounding off about Bank of America's  requirement to present a pre-approval from Bank of America when you submit an offer on one of their foreclosed homes.  Buyers and agents are not happy with this extra step when buyers already have a valid pre-approval in hand.  Some agents have even said they will not show BoA listings because of this requirement.  Why do you think BoA is doing this?  Is it to try to force buyers to take their business to BoA?  I don't think so. 

Back in the day when "liar loans" were made, buyers who were not qualified to purchase homes were encouraged to look into creative financing.  The result:  they financed a home and many later lost that same home when the economy had it's downturn. People lost jobs, had a health crisis, divorced or discovered their interest rate was not fixed, as they thought, but carried an adjustable rate that had skyrocketed so the buyer could no longer afford their home. As a result, we faced a flood of short sales and foreclosures.

Lenders reacted by tightening up the requirements needed to qualify for a loan.  Since BoA has had such huge losses from their bad loans, they are working hard to make sure more bad loans don't enter their pipeline.  This new requirement to have a pre-approval from them when submitting an offer on one of their foreclosed homes is their way of scrutinizing a buyer right up front to determine if  this loan will be a good financial risk for them.  If not, they can move on to another buyer.  This does not mean that the buyer cannot stick with their original lender.  It just means another group of lenders will be looking over the buyer's financial information to make certain this will be a good loan. 

The pendulum has swung from no-doc loans to lenders imposing multiple layers of investigation into buyers' finances.  While it requires more time and effort, I think the requirement is fair and reasonable.  I encourage my clients to comply and remind them they just may find a better rate with BoA, so why not go along?  Hopefully all will go well and they will find themselves being approved by a second lender and ultimately purchasing and living in a home of their dreams.