Monthly Archives: January 2006

No Bubble Bursting Here

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Well Galen, when I got pinged to start sussing up some numbers, here’s what I came up with.

True, closings Dec. 05 are down most everywhere. But a second wind has kicked in.

Kirkland Dec .05 closings at 127 were down from 154 in Dec 04 – BUT currently in escrow a whopping 206!

Bellevue more even keeled. Dec 05 at 175 down from 195 in Dec 04. Currently in escrow 200.

The high end is holding its own so far with 27 escrows in Kirkland over a mil and 20 in Bellevue, so no bubbles bursting there yet.

The low end is a scramble. New listings are being gobbled up with multiple offers as fast as they hit the market. A few of them didn’t deserve to be jumped on and I had my buyers pass them by, but someone grabbed them anyway.

One of the reasons Kirkland is way up in current escrows is because we have yet another group of displaced persons being kicked out of their apartments for a condo conversion in downtown Kirkland. Those people are scrambling for new digs and those who don’t want to chance being displaced again are buying instead of renting again.

So no bubbles bursting yet. Question will come when new inventory starts popping in at higher levels when the sun ever decides to come back and stay awhile. If the high end inventory doubles, as I expect it will, the low end will do just fine, but I’m still not sure about the $1.3 million plus crowd.

Oh, forgot. I popped into my old stomping grounds over by Green Lake. Same trend there. 76 closed Dec. 05 vs. 119 Dec. 04 with 136 currently in escrow.

Kirkland stilll leading the pack with 206 now in escrow vs. 127 closings in Dec. Go Kirkland…I mean Seahawks. Actually I’m a Sonics fan. Did anyone catch Ray Allen’s 30 foot shot in double overtime to win the game on Sunday?!?! It was a beaut!! And tonight’s win gives us the first back to back win in awhile. Go Sonics!

Bubble-bursting round-up

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I doubt it’s here so soon (but I don’t claim to know a thing about market-timing). Here are the stories:

Marketplace
New York Times
Investors Insight – goodness that’s dense! (and a couple of weeks old)

I expect Ardell to further suss out where the bubble is popping and where it is not popping as she expertly did for Kirkland. I will go out on a limb and say everywhere, over the next 10 years (daring!). To those who say “they aren’t making more land,” which admirably hasn’t yet been stated on Rain City Guide, I would like to point you to Tokyo’s experience in the late 80s and throughout the 90s.

I like how Marketplace makes realtors sound like wild animals – “the realtor population has grown immensely over the last 5 years.”

There are a couple significant differences between this “bubble” and the internet one:

1. The magnitude. Internet stocks went significantly more than 50% to high. However, most people weren’t leveraged on internet stocks.
2. The naysayers. There are a lot more naysayers this time around (or am I just reading more negative publications?). Perhaps that means the market will continue to rise until the pessimists are suckered into second homes too.

I was told today that cranes are still on backorder in the Seattle area. If sales go soft as prices go soft, we might have a ton of extra units ready to open in 2007 and maybe even in 2008. If they’re half done now, they’re half price to finish.

-Galen
ShackPrices.com

The Legal Description of Property

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(This post is authored by Craig Blackmon, an attorney in Seattle whose practice focuses on residential real estate — see his web page or his blog for more information. Please note that this post is not legal advice. You should consult an attorney for specific legal counsel.)

The legal description — it’s just an address, right? Unfortunately, it’s significantly more complicated than that, and it’s important to know the difference if you’re trying to create a binding contract.

In England more than 300 years ago, Parliament passed the Statute for Prevention of Frauds and Perjuries, which required that certain contracts be written and signed before they would be enforced by the courts. Thus, one was prevented from committing fraud and perjury by falsely convincing a court that there was an enforceable oral contract. In other words, absent a written and signed agreement, there would be no enforceable contract, regardless of whether the parties actually created an oral contract. Today, attorneys and other legal scholars refer to the legal principle first enunciated by that English law as the “statute of frauds.”

Our legal system in this country is largely based on the system in England. Thus, all states have adopted in one form or another laws that reflect the statute of frauds. Here in Washington, certain statutes relate specifically to the conveyance of real property. Per RCW 64.04.010 and RCW 64.04.020, every conveyance of real property must be in writing, and it must be signed and acknowledged by the party to be bound (i.e. the party selling or otherwise conveying the property).

The courts have also adopted the statute of frauds and repeatedly found (over many, many years) that a contract for the conveyance of land must contain a description of the land sufficiently definite to locate it without relying on other evidence. See Tenco, Inc. v. Manning, 59 Wn.2d 479, 485(1962); Green v. Escene, 108 Wn.App. 1045 (2001) (not reported). Indeed, in a case decided nearly 60 years ago, the State Supreme Court specifically rejected the contention that a property’s address was a description sufficiently definite to satisfy the statute of frauds. Martin v. Seigel, 35 Wn.2d 223, 229 (1949). Fifty years later, in 1999, the Court reaffirmed this rule, despite its unusual strictness. Key Design, Inc. v. Moser, 138 Wash.2d 875, 882-83 (1999).

Therefore, when drafting a purchase and sale agreement, it is imperative to include the legal description and not just the property’s address — which, of course, begs the question: what is a legal description? In most instances, the legal description is based on the lot, block and subdivision of the property. Here is a typical legal description for a home in Seattle: “Lot 15, Block 21, Gilman Park Addition, according to the plat thereof recorded in Volume 3 of Plats, Page 40, Records of King County, Washington.” Where the home was not built as part of a subdivision, the legal description may reference a government survey or use “metes and bounds,” a method of describing the property with reference to landmarks, angles, and distances. To obtain a legal description, you can turn to the preliminary title commitment or a previous deed of the property (which is usually available online at the King County Recorder’s Office.

And if you don’t include a legal description? The purchase and sale agreement is not a binding contract, and either the buyer or the seller can walk away without any consequences. The MLS form purchase and sale agreement widely used in Seattle includes language indicating that the legal description can be included after creation of the contract by the buyer’s agent, the seller’s agent, or the escrow agent. If your purchase and sale agreement includes such language, then the legal description can be added at a later date to create a binding contract. However, until the legal description is included, there is no contract, and either party can walk away. Therefore, it behooves any serious buyer or seller to include the legal description from the contract’s inception.

Playing With Rain City Guide's Real Estate Search Tool

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Robbie Paplin of Caffeinated Software has built a great home search tool for the Seattle area and he put some very interesting posts together giving background on his effort, but I’m not sure he’s done a great job letting everyone know just how cool it is.

So, let me clarify the situation… The search tool is AWESOME!

What’s so cool about it?

  1. google earthGoogle Earth. It exports any and all of your searches to Google Earth! This means that you can get extremely clear aerial images of the home and nearby neighborhood.
  2. RSS buttonReal Simple Syndication (RSS). Every search can be exported as an RSS feed an imported into a Blog Reader.
  3. Sort by Price/SqFoot. . This is subtle improvement, but it can lead to some surprisingly relevant insights. On any search, let’s say “Seattle Homes” or even “Million Dollar Listings“, you can sort the results by the price per square foot. (This would be an even more useful feature if more homes didn’t have “0” listed as their size, but that’s better left for another post… 🙂
  4. Rain City Guide Search StatisticsSearch Statistics. With every search result, a box is presented that gives you statistics like the average list price and size for homes for that search.
  5. Complete Seattle Listings. Unlike some of the other search sites that are cropping up, we’ve got a complete list of homes that are for sale by real estate agents in Seattle. (I’d tell you that it is “MLS” data, but I don’t think I’m allowed to say that… 🙂

So who might find this search tool useful?

  • Home buyers who want to be updated on new homes as they hit the market! (it only takes a few hours (minutes?) for a home to be listed by an agent before it hits our servers and is picked up by the blog reader of your choice!
  • Home owners who are curious what homes are being listed in their neighborhood (or zip code!)
  • Real estate agents (like home buyers) who want to be notified of listings as they hit the market via their RSS reader!

And I’m sure there are others…

By the way, because of the nature of RSS feeds, I’ve been able to present the results from selected home searches as they get listed on my sidepanel. I’m sure that there are a ton of other interesting ways to use RSS feeds on real estate sites… Any recommendations?

Heard around the web:

Real estate search sites hit data control sore spot

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Inman news had an interesting article today about how some of the innovative real estate search sites are causing headaches across the country. Considering all the conversations on Rain City Guide recently about the future of “data” this seems quite relevant and is a very interesting read. However, Inman will make the article subscriber-only after today, so catch it fast if you’re not a subscriber (or just read below for some of the more interesting quotes):

Out of companies that have released real estate search tools, the two most interesting (to me) are definitely Trulia and PropSmart. (The Inman article also features some background on Oodle, but they don’t seem to have the laser-like focus on real estate like the other two)

Here is Ron Hornbaker of PropSmart view of the situation:

While (Ron) said the response to Propsmart has been mostly positive from agents and brokers, he has received a bit of pushback from a few people in the multiple listing service community. “First of all, they’re using the word ‘illegal’ and … ‘copyright infringement.’ I’ve just been polite and talked to them. We don’t want to do anything people don’t want us to do.” Hornbaker said he has complied with the wishes of industry professionals who wish to remove their listings from being included at the site.

“My concern is they are speaking for way more interest than they should be. I do not believe we are a Napster-like model, and that’s what we’re being equated to,” he said, referring to Napster’s past problems in offering up a service that allowed users to illegally download music. “I would ask the people who say we’re doing illegal things to point out where the harm is — who are we damaging?”

That last quote would be sure to get a few comments from concerned agents should Ron have posted it on a blog… 🙂

The property listings displayed at Propsmart, he said, “are being used simply for display to consumers to point them to a home for sale. I would think that the opposite side of this could be argued more effectively: By restricting consumer access to the listings, that has more (potential) for being illegal.

“I believe it’s the seller who’s being forgotten in this situation. It is the seller we’re trying to stand up for and do the right thing for,” Hornbaker said, adding that sellers may not be aware — and may not approve — of efforts by brokers to block the listing from being viewed on some Web sites.

“I don’t buy the ‘copyright infringement’ for a second. They see their old model slipping away and they’re grasping at what they can,” he added. “We’re not trying to make money from the brokers. We’re not a middleman. We’re just trying to be a useful tool for consumers. I think this is going to backfire on the (opponents) in time.”

The gang at Trulia also gave some background on their view of where Trulia fits into the big picture:

Sami Inkinen, COO and co-founder at Trulia, said the site’s development team made a concerted effort to bring brokers to the table. “Most importantly, even before we launched we talked to all of the key brokers in advance to make sure the product was acceptable to what they want.” Inkinen said that Trulia is also careful not to access IDX, or Internet Data Exchange property listings information that is protected through broker agreements with MLSs.

While brokers seem to get it, Trulia CEO and co-founder Pete Flint said MLS’s are “frankly a mixed bag. Some of them have yet to understand … that this is in the best interest of their members. Some of them are not friends of innovation. Really what we’re focused on for now … (is) communicating how search is really positive to the real estate industry.”

Inkinen said, “We understand who we’re serving and we’re serving the brokers. We don’t want to own content. Our motto has always been the search-engine approach, the search-engine model — help brokers to place the digital yard sign on the Internet and then point to the actual source.”

Flint added, “We’re very aware that listings are a very delicate matter. We’re not looking to reinvent the industry in any way. We’re trying to improve things a little bit for consumers, and … a little bit for brokers.”

(Thanks to Jim of Central Virginia Real Estate News for tipping me off about this interesting article)

Buyer-Seller Who Represents Whom?

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Under Washington Law, there is only one (1) ONE individual, out of the thousands and thousands of licensed agents, who represents the seller.

Every single other agent, of the other skazillion agents in the State, represents the buyer of that house when discussing that house with a consumer. Even if that discussion is with the seller, the agent who is talking to the seller is doing so as a representative of a buyer, if he is not THE one and only listing agent. (Forget Designated Brokers and Branch Managers for a minute.)

I represent buyers 50% to 70% of the time. But when I am the Listing Agent, my duty is clear. When I am entering data in the mls, I must have my thinking cap on and enter that data to the seller’s best advantage, within the rules, of which there are many.

Washington State is one of the only States in the Country with this legal setup that limits the seller’s representation to one single, individual.

So far you have been telling me that having all of the skazillion agents in the State representing the Buyer isn’t good enough for you. You want the one and only lone person charged with representing the seller in a fiduciary capacity to enter the data “in the best interests of the buyer”.

Don’t you think that’s just a little “off”? Can’t the seller have ONE person who does things in HIS best interest? Just ONE please? That person happens to be the person who enters the data in the mls. If you can convince most of these, who don’t know any better, listing agents to do that to the buyer vs. seller’s advantage…well the pendulum will have swung. Bad enough we’re down to one person who represents the seller out of thousands and thousands of agents. Now you want that guy too.

I’m cleaning my house and my office. I think I’m gonna need that Big Red Dog. Giles, you really got my dander up. What you accused me of is tantamount to slander. Trust me. There is not ONE agent in the ENTIRE COUNTRY who understands FIDICIARY DUTIES better than I do. And my fiduciary duty when entering mls data is to the seller. My fiduciary duty when representing the buyer is to understand that the guy who entered the data represents the seller and not the buyer , and I need to do my “due diligence” and not rely on that in any way, shape or form.

I have a counter offer coming in…you guys chew on that for awhile.

Who Represents Whom?

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Which of the two agents on a sale represents the buyer and which one represents the seller?

To date everyone has been ragging on the seller’s agents for what they are not doing for the buyer. The agent who enters the info into the mls is, by definition, the fiduciary representative of the seller, not the buyer.

Just checking that you know that.

Licensees do not sell houses by law. By law they represent one of the parties, either the seller or the buyer (sometimes both).

When a listing is entered into the mls, there is no buyer yet. So the person entering the data is entering the info as the representative of the seller.

I keep hearing about what buyers want that agent to do, when it is only the seller that matters at that given point in time. Only the best interest of the seller client can be the motivation behind what to enter and what not to enter.

Does everyone understand that? Doesn’t seem so.

A Birthday Request!

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This past week I received the ultimate gift for my 30th birthday, which just so happens to be today!

With everything going on, I really haven’t spent much time thinking about my birthday (surprise, surprise!), but it did occur to me that maybe I should mix in a new feature of Rain City Guide with a birthday request.

Some background… I’ve been inspired by Jim over at J. LeRoy to write more book reviews. Some of the book reviews will be directly related to real estate (as in “how to buy, sell, invest” books), while other books will only loosely (very loosely) be connected to real estate (but I’m pretty good at stretching things!). The important thing is that I’m going to keep reading (and reviewing) and switching off between fiction and non-fiction in order to add some balance!

Knowing for a few weeks that I’ve wanted to include book reviews in Rain City Guide, I’m a little ahead of the game and have prepared a few book reviews that I’ll be publishing soon. However, I’ve got a problem. Only a few weeks into this endeavor, I’ve got plenty of non-fiction books lined up in my Amazon WishList, but I’m already out of fiction books. I’m in desperate need of some good fiction stories!

All this leads to my birthday request…

What books do you recommend I read in this upcoming year?

Despite my preference for fiction, there are no rules for your recommendations. Feel free to include one, two or ten books… Feel free to include books about investing in real estate, building environmentally-friendly homes, blogging, history, Japanese culture, and so on… Feel free to include books that have taught, inspired, or challenged you… Most importantly, I’m just looking for books that will keep me turning the pages!

The Red Dog is Coming!

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The Red Dog is Coming! The Red Dog is Coming! Said Ardell and Paul Revere.

The big question is: To Clean or not to Clean?

January 29, 2006 is the first day of the Chinese New Year. We will be entering “The Year of the Red Dog” aka Fire Dog. Do you want that big red dog in your house, or not? If you do, you have to start cleaning right now and make way for him. He won’t come in to dusty, dirty houses, or so the story and Feng Shui principles go. But maybe you don’t want to clean. Maybe you don’t want that big red dog in your house for all of the New Year.

I’m cleaning! I can’t wait to get rid of last year’s Rooster. But what about you?

Do you have a cause you need to get support for? If so, you want to welcome that Dog in to help Champion your causes. But as Morgan Freeman said in Se7en “Not everyone wants a Champion. Most people want to eat hamburgers, play the lottery and watch TV. ” If you’re one of those people, then spend the next 5 days making a big mess and tell that doggy to go to someone else’s house.