Live Like You Plan To Move

It's happened a lot this year. A homeowner calls and announces they are thinking about a move, heard that it's a seller's market and wonder if I would give them a market analysis. I spring into action and head to their home with my camera and notebook in hand, wondering what I am going to find. Sometimes I find a home that is completely updated and beautifully decorated. That's such a pleasure, but not the norm. More often than not, I find homeowners who want to buy something that sparkles, but don't have their home in optimal condition. I might suggest the homeowners replace the stained carpet, but sometimes am told, "I don't know what color the next buyer will want....let them replace it." At that point I tell them that I happen to know what color the next guy wants as I have been shopping with buyers for years and hear the same comments over and over. They want a color their red couch and green bedspread and orange futon will go with...and they want the ability to change colors and not have to change carpet. They want beige. Make sense? They also want to come into a home and even if it is "used," they want to feel like it is "new." New carpet will do that. So will fresh paint. There is something about clean, bright walls and floors that make a potential buyer smile.

In my market, I work with a lot of two-income households. Buyers are working long hours and the last thing they want to do when they buy a new home is to start writing checks and overseeing contractors. OK, there are a few buyers out there who are willing to do that, but they are more the exception than the rule in my market. Also, if they are willing to do the work the seller did not do, buyers are going to expect to be compensated for that work in the form of a lower purchase price. You can't have it both ways. If you don't pay to have the work done while you are the homeowner, someone else will. Inevitably, you pay if you do the work yourself and enjoy it while you are there, or you pay by garnering a lower price when you sell, which brings me to my point: why not live now like you are planning to move?

So what would you do if you knew you were moving in 2 years? It wouldn't be a bad idea to call a Realtor and ask them for advice. I get that call now and then. I will talk to a homeowner who is thinking about getting their home market-ready and wondering where they should focus. I really enjoy those conversations and inevitably, am able to help sellers focus on prioritizing their repairs and improvements. Sometimes I talk them out of an expensive remodel and help them see the need to work on some deferred maintenance issues. Mossy roofs, overflowing gutters, a weedy yard and garden begging for attention, a deck with rotted boards, overflowing closets, clutter and other issues can often take more elbow grease than money and these improvements go a long way. If a homeowner has a budget to do more, we prioritize so they can tackle the items that give the best return on their investment.

But what if you aren't planning to move? My suggestion would be to live like you are. Most people move more often than they think. Sometimes you don't see these moves coming. Perhaps a new job or growing family or empty nest make you think life would be better in a different home. We often get so busy with day-to-day living that we do not look ahead to plan the next chapter of our lives. It sure would help if we did.

Perhaps because I  have moved so many times and know the getting-the-home-ready-to-sell drill, I always buy with an eye to sell and start the home improvements day one. Since I chose fixer-uppers, neutral paint and landscaping were often first, then maybe some electrical improvements, new toilets, appliances, etc.: every year a project. And then when the inevitable move came, I was ready. The bonus: not only did I garner a good profit when I sold, but I enjoyed a nice home while I lived there. Spreading the repairs out over the years was a budget-friendly way to do it, rather than waiting for the Realtor to tell me I had an overwhelming number of items to address before I could list the home for sale or that I would have to take a lower price if I wanted to list it "as is."

I recently met with one woman who was in charge of selling her mother's home. Her mother was getting older and could no longer care for the home where she raised five kids. While it was hard to leave the memories that home held for her, she knew it was time for assisted living and moved out. Her daughter spent seven months preparing the home, having an estate sale, and hiring contractors to work on every area of the home. She asked me to come see the progress and evaluate what else needed attention. We had several contractors come give their advice and together we strategically decided where to focus our efforts. When all was complete, we had the home staged and professional photos taken. 50 groups of buyers toured the open house and then we reviewed three offers, all well over list price. We were confident that the money was well-invested and that our seller got back much more than she spent. Yes, she spent seven months working on the home, but that just underscores the need to stay on top of repairs. It also validates that you pay now or later, but inevitably: you pay for your home repairs.

With the average American moving every five to seven years, it might be that your time to move is closer than you think. Why not look around your home with a discerning eye and make a list of improvements that need to be made, then start tackling that list one at a time. If you aren't sure where to start, give me a call. If and when the time comes to move, you will be that much further ahead. If you end up staying in the home for an extended period, you will be enjoying much nicer surroundings. Sound like a plan?

Buying a Home with a Tenant in It

When prices on Puget Sound homes began their decline  in 2008, many homeowners decided to wait for the market to rebound before selling.  They opted to rent their homes until the values increased.  Fast forward five years and we have a seller’s market.  Homeowners are finally able to list their home for sale.  Sometimes, those homes have tenants in them who are finishing up a lease.  What is a homebuyer to do?  Are there some things they should know before moving forward with a purchase? 

According to Dorothy Ennes, Manager of our Property Manager Division for Coldwell Banker Bain, homebuyers should know that if a home for sale has a tenant in it, the home sale is subject to the terms of the lease; ie, the owner can’t increase the rent or require the tenant to vacate or otherwise change the terms of the lease.  It is a good idea, prior to closing to ask the seller for a copy of the lease , the move in inspection report,  and a tenant ledger so you can know if the tenant has consistently paid their rent on time.  Also, by Washington state law, you cannot collect a deposit unless there is a move in inspection and you can’t charge a tenant for damages, even if the property was brand new when they moved in.  Without a written move in inspection, the owner can’t charge the tenant for damages.

In our hot seller's market, we are likely going to see more homes for sale that are occupied by a tenant. It is important for a buyer to do their due diligence when purchasing such a home.

Fast and Furious....the Buyers' New Home Buying Experience

The greater Seattle area has a seller's market.  We have low housing inventory and many buyers vying for the limited number of homes that are on the market.  In recent years, buyers have been taking their time to find a home, looking at dozens of houses before determining they want to write an offer.  They would look at a home, think about it a few days, view it again and perhaps want to see it again the following week, maybe even bringing family members or friends along for advice.  Those were the "good old days" for buyers.   They would bid low, walk away and wait for the sellers to drop their price before swooping in with an even lower offer. 

Those days are gone. Our current market is fast paced.  Buyers see a home and those in the know act quickly to put in an offer, often that same day.  They may have a "pre-inspection" before even placing an offer (at a cost of $400 or more) and waive any repair requests in order to make their offer more appealing to a seller who may receive a dozen or more offers. 

Our Coldwell Banker Bain office in Bellevue has mandated that we let our sellers know we must keep a property on the market at least three days.  This allows a multitude of buyers to see the home and creates a fair playing field for buyers.  It also often encourages bidding up of the price of a home, which sellers appreciate. 

An escalation clause may be used to present an offer that will beat the high bid by a price of a pre-determined amount but will not exceed what the buyer feels comfortable offering. For example, a buyer may find a home priced at $700,000 which is in a popular area and in fine condition.  A competent agent would call the listing agent and find out if there are other offers.  If so, she advises her clients and they determine what the property is worth to them.  I tell my buyers to determine the number at which they no longer feel bad if someone else got the property.  Is that price $704K? $725K?  $748K?  I recently heard of an escalation clause stating the buyer would pay $100K over the list price! 

Many first time buyers are not accustomed to this market and find it hard to believe a home will sell for over list price.  They also may feel the market is too fast for them to make such a large financial decision that will impact their lives for years. It is not unusual for buyers to "lose" a few homes before they understand they must act quickly if they find a home they like.  I encourage my buyers to call me as soon as they see a property they like and try to find time in their work day to view the property.  This gives them more time to consider if they want to write an offer on the home. 

I have had some buyers tell me that they will not offer more than list price.  Unfortunately, they may miss out on owning the best properties which are the ones with multiple offers.  Right now, with historically low interest rates, buyers have a wonderful advantage many buyers have not had for many years.  In addition, while we have seen prices creep up in the last year, the prices have not yet returned to the highs we saw in 2007, so buyers are getting two advantages:  lower prices which are likely heading up (instant equity) and record low interest rates which means every mortgage payment reduces the principal by a significant amount.  Many buyers are even considering 15 year mortgages with low interest rates which halves the normal amount of time a buyer faces paying back a loan.

All in all, it is a great time to buy or sell a home.  Please give me a call if you need an agent who is experienced in this fast and furious market.  I would delighted to use my knowledge and experience to represent your best interests.

Mortgage Rates at Historical Lows: Will 2013 Be Your Year to Buy a Home?

We have all heard over and over again how great the interest rates are these days, but these charts found in the links below really put it all in perspective.  We really are at historic lows!! 

Thank you to lender Stephen Chow for providing this great visual reminder that now really is the best time to buy a home!  Give me a call if you want to start your search:  206.383.3119.


Click Here for the 30 Year FHLMC Rates On 30-Year Fixed-Rate Mortgage Chart

Click Here for the 200 Year Historical Rates On 30-Year Fixed-Rate Mortgage Chart

Click Here for the 20 Year FHA Interest Rate Average For 30 Year Fixed-Rate Mortgage Chart

Click Here for the Rent vs. Buy Index Chart

If I Get Preapproved Will My Credit Score Go Down?

I recently met a new client who is interested in buying a home this year.  She had a pre-approval from last year, but it expired, so she asked me if she could get pre-approved without having her credit pulled.  Good question! A pre-approval is generally good for 90 days, but after that, a buyer needs to go back to their lender and refresh their pre-approval.

I called a few mortgage lenders I work with and asked some questions which confirmed what I suspected:  You cannot be pre-approved without having your credit pulled.  You can be pre-qualified, but not pre-approved.  So what's the difference?  A pre-qualification is when the lender meets with you, asks a lot of questions about your income, debts and assets and gives you a ball park idea of what you can afford.  As one lender said, this is "useless for an offer situation" as sellers want to know that your financials have been examined closely and that you really can afford their home.  Sellers certainly do not want to take their home off the market and then discover the potential buyer is not qualified.

So why would someone be concerned about having their credit pulled?  Inquiries make up only 10% of your credit score, but if you are hovering near a 740 credit score you may have a valid reason to be concerned. Scores over 740 get the best pricing on interest rates.  A lower rate means a lower monthly payment and significant money saved over the course of the loan.  If you plan to have a FHA loan and put the minimum 3.5% down on your home, the credit score does not matter as much as if you are putting down say 20% or 30%.   First time buyers or buyers with low to moderate income generally select a FHA loan if their credit scores do not qualify them for a conventional mortgage.

So how much damage does pulling your credit score really do?  The answer:  it depends.  If you are considering buying a home and visit a few lenders within a few weeks, and they pull your credit, these multiple pulls are considered one inquiry.  As a result of this inquiry, your credit score could be hit from 3 to 15 points, according to my lenders.  However, if  at the same time you are thinking of purchasing a car and the car dealer pulls your credit, then you choose to add a new credit card to your wallet and have your credit pulled by a number of lenders over a 2 month period, your credit score will take a serious hit.

It is in your best interest to keep your credit score in mind when you are getting ready to purchase a home.  Once you apply for your mortgage, your lender will tell you not to incur any new debt.  It is best to close on the home before you start looking to finance a new car or new furniture for your home.

Securing a pre-approval is an important step that cannot be avoided when purchasing a home, but how you go about doing that, and what the impact will be on your credit scores can vary greatly.  Let me know if you need the name of a reputable lender to help you navigate the financial piece of the home buying puzzle and minimize the impact on your credit score.

2012 Greater Seattle Real Estate Sales in Review

I haven't posted in a few months as I have been busy helping clients buy and sell homes.  All of this has contributed to my best year ever in real estate.  Even though we have low inventory, the buyers and sellers in our market are serious and understand this is an ideal time to buy or sell a home. Low ball offers are a thing of the past.  Buyers understand they must be pre-approved and ready to step up with a very good offer when they find the home they want to purchase.  Sellers know they have the upper hand, but Realtors are wise to insist sellers have their homes sparkling clean and staged if they want to garner the best offers.
 
Having witnessed the purchase of homes with mortgage rates in the high teens back in the 1980's, it is wonderful to see rates as low as 2.75% for 15 year mortgages and near 3.5% for 30 year fixed mortgages.  Those low rates buy you more house for your money.  How long this golden opportunity to buy and sell will last is, of course, the million dollar question I wish we had the answer to.  With the "fiscal cliff" looming and all the talk about our economy, unemployment rates, etc. we can't begin to guess what 2013 will bring.  What we do know is that this year was a very good year for many buyers and sellers. 
 
Besides  being a good year for buyers and sellers, it's been a very good year for my office in Bellevue, Coldwell Banker Bain.  According to Coldwell Banker Bain-Bellevue's Marking Director, Christopher King, over the past 12 months, Coldwell Banker Bain-Bellevue has been the region's top-selling real estate office:

• We've sold over $850 million in homes, the most in Washington and 12% more than our closest competitor;
• In King County, our total sales are 18% more than our closest competitor;
• On the Eastside, our total sales are 21% more than our closest competitor and we've had the most units (homes sold) in Buyer Sales of any office;
• Our average List-Sold price of $845,400 is 66% higher than the Eastside average

All this is to say, I'm proud to be working for an exceptional real estate company and I am happy to share with you all our vast resources at my disposal.

As we see 2012 come to a close, we look back and see progress made in the world of real estate.  The market has unquestionably turned around and is headed in the right direction. I am looking forward to 2013 as I hope you are as well.   Whom do you know who likely will be next to buy or sell a home?  It would be my pleasure to be of assistance to them in this process; please have them give me a call.

 

Market update from my Monday morning meeting

 

Every Monday morning I attend a meeting with Realtors from Coldwell Banker Bain in Bellevue.  We discuss our new listings, talk about the market, then pile into cars and view homes that our agents have recently listed in the greater Seattle/Eastside area.  It is a highlight of my week. One of my favorite portions of our meeting is when one of the Managing Brokers explains the market statistics showing what is happening in our current market .  Here is what the board looked like this morning. 

 

 

As you can see, there is a huge difference between our market in 2008 and now, four years later. On the Eastside, September 1, 2008, there were 3322 active listings, with 581 homes pending.  If you divide the active listings by the pending listings, you get a ratio that tells us that for every active listing, how many homes are pending.  This ratio helps us understand if we have a market that is more favorable for buyers or sellers or is a balanced/neutral market. 

 

A ratio of 2.5 or less is generally thought of as a seller's market. 

A ratio of 4.5 is a neutral market.

A ratio of 6.5 or more is considered a buyer's market. 

For homes in the luxury market over $1M, add 2 to the ratios. 

 

So let's look at the Eastside market again.  In 2008 the ratio was 5.7:1, which tells us the market favored the buyers.  In 2012, we see less than half the active listings and more than double the pending sales, so we know there has been a big shift in our market.  In fact, currently, pending sales in the Eastside market are nearly equal to the active sales.  The ratio shows this with a very low score of 1.17:1.  That means for every 1.17 homes that enter the market, we see 1 home go pending.  This clearly demonstrates that we have a strong seller's market (seller's market being 2.5 or less). 

 

Remember, just four years ago, it was almost six homes active on the market for every home that went pending.  That meant five of the six homes were not selling, so according to the law of supply and demand, prices had to go down in order to move inventory. 

 

We see the converse in effect as well. Take a look at the right side of the white board above:  In the past year in King County, with low inventory, active listings averaged 21% higher price than they did a year ago.  The year to date average price of an active listing in King County is $696,436.  Now let's look at pendings: The average price of a pending home in King County, YTD is $445,617., which is 9% higher than pendings were last year.  Finally, note the trend in sales:  the average King county home, YTD sold for $455,429. which is 5% higher than last year's average.  For homeowners in King County, this is very good news.

 

If you look at the left side of the white board above, you can see that the Eastside luxury market and the Seattle market have similar stories to tell.  In fact, the current Seattle market is white hot with only 908 active listings, but 1512 pendings.  The ratio of .83:1 reveals that now is an excellent time to sell your Seattle home!

 

If you or someone you know is interested in selling a home and wondering if now really is the best time to sell, give me a call for a private and confidential consultation:  (206) 383-3119.  I would be happy to go over statistics for your area and provide a complimentary market analysis.