Have Lunch with Brian Stevens Tomorrow (12/23) in Bellevue

We are planning a “tweet-up” (meet up) for Brian Stevens of Think Big Work Small tomorrow (12/23) around lunch time in the Bellevue area.   If you attended last year’s RE Barcamp at the Seattle Center,  you may have had the chance to meet Brian and Frank.   These guys have been an asset to the lending and real estate community and they were both recently recognized on Inman’s Top 100 list.Brian

I will update this post as soon as I have the nitty-gritty…since this is on short notice, I wanted to get the word out to all of his fans.

Do you have an idea of a good spot for lunch tomorrow that can handle a crowd and has decent parking (wishful thinking…) for this gathering?  Please let me know!

UPDATE 12/22 10:00 a.m.:  Looks like the event will be at Rockbottom in Bellevue tomorrow, December 23, 2010, starting at 11:00 a.m. – 1:30 pm.

Parking is free or validated and Rockbottom Brewery is away from the mall.  🙂

It’s September 17, 2009 and I still originate mortgage loans…

For those of us to whom this statement applies there are a few obvious questions that immediately come to mind:  Why am I still working in this God-forsaken wasteland of an industry?

  • A) Nobody else is hiring in this booming economy,
  • B) I wanted to move to Nome Alaska but I couldn’t trade my upside down mortgage for a thatched roof yurt and a dog sled, or
  • C) The positive image of my career as portrayed by CNN makes me feel like a rock star.

Seriously, for the love of God Why!?

2009wampconnectIn all seriousness those of us that remain are not that different than survivors of a natural disaster. The clouds dissipate; the water level recedes and her we are – the survivors of the storm.  Not unlike the analogy the first thing that a ‘survivor’ must do is identify the resources that one needs to rebuild and restore one’s life. It is with this in mind that I invite you to WAMP’s Connect event coming up in Bellevue on October 5th and 6th

The Connect event offers each of us the opportunity to come together and meet all of the other survivors face to face. We’ll be able to reflect on what ‘once was’ and still more importantly the ‘what is’. As is the case in any disaster, the landscape we live in professionally is dramatically different than where we’ve been. The resources are certainly more limited – remember the days of quoting ‘hundreds of lenders and programs’? Now it’s more like ‘five lenders and programs’ – and we’re all using the same five!

Fewer programs and tougher guidelines are the realities of the aftershock and yet another reason to learn what others are doing to be more efficient and succeed in this new landscape. The Connect Event also offers the knowledge of how to seed your landscape for tomorrow. New technologies and lead sources like the Zillow Mortgage Marketplace, social network marketing (can you tweet for dough?), and the brace of brave new lenders that have sprung up alongside the resilient and steady familiar faces; they’ll all be represented at the Connect Event. The Connect Event will be nothing short of a meeting of survivors learning how to forge their professional landscapes for tomorrow – so don’t miss out!

There are very few lifeboats in this economy. There have been far more casualties than survivors. Come and be counted among the living. Come to Connect and learn how to forge a better tomorrow for yourself and for the industry you work in. Face it – If we don’t see you at Connect we’re going to suspect that you traded the house for the dog sled and the yurt – Don’t be ‘gone missing’

The Buyers are out, and trying to buy, but…

Buyers are out, and trying to buy, but they don’t seem to be quite as successful as some of the more breathless news reports would lead you to believe.  I have always liked the Pending Sales statistics from NWMLS because they represent the most recent monthly snapshot of new contracts on listed properties – i.e. a Buyer and a Seller have made a deal.  But recently a lot of those ‘deals’ have not closed, the Seller has not gotten his or her money, and the Buyer has not gotten possession of the property. It appears that a lot of these current transactions, which are indicating a high level of Buyer’s intent to purchase, are falling out or being delayed for long periods.

Here is a chart built from NWMLS published statistics of Pending vs Sold data – the chart is built by taking a two-month moving average of Pending (previous month) vs Sold (current month) data. Note that this post expands on an earlier post by Ardell in her Sunday Night Stats.

Let’s call this chart the Fall-Out Ratio – we may want to keep an eye on it.

(Required disclaimer: Statistics not compiled or published by the Northwest Multiple Listing Service)reilingteamcom-fall-out-ratio-0906

Historically the fall-out rate has been well under 10%, but then in early 2008 the fall-out rate started climbing like a rocket. Recall that we had the mortgage market meltdown in late 2007, and lenders started dramatically tightening their lending practices. Then we had the larger financial and business crash in late 2008, and more people started losing their jobs – and the other 90% got nervous. It was also in late 2008 that we started seeing a lot more short sales in our Seattle/Bellevue area. Recall that in a short sale, the insolvent seller is trying to avoid foreclosure by selling the property and getting the lender to accept less than is owed on it. That lender approval process is often slow and uncertain, and it certainly is contributing to this rise in the Fall-Out Ratio. Short sales may be 20% or more of our current sales activity, and those delays may also be a major contributor to why the average Days-on-Market measure isn’t dropping in concert with Months Supply. Other contributors to the fall-out rate would include failure to reach agreement on inspection, and failure of financing. I’m sure we’ll get a lot more insight on causes from the comments by our great RCG contributors.

Some Short Sale Statistics in West Bellevue

I had occasion last week to do some digging for short sale listings in West Bellevue – the NWMLS area 520, west of I-405 and north of I-90 including  Beaux Arts, Enatai, Medina, Clyde Hill, plus Hunts Point, and Yarrow Point on the north side of Hwy 520.

I wondered whether the new NWMLS listing fields to indicate short sale or bank-owned/REO would help – they didn’t; it only showed 3 hits.  So just for fun I went back and did it the drudge way.  There were 313 active listings for single family homes.  I scanned through the agent summaries for each looking for “subject to lienholder approval” or some similar phrase.   I found 32 listings that were short sale, about 10% of the total, and 5 that were bank owned, less than 2% of the total.  So 1) as we knew, there are a lot of short sales going on, and 2) there is very little use so far of the new fields.  So add this to the previous good post that Jillayne  did before the new fields were added by the MLS.

Some other interesting observations out of this little study – this is a relatively high-priced area: 68% of the listings are over $1 million.  But 67% of the short sales are under $1 million.

And last of all, since Sunday, 4 of those shorts have gone under contract – sounds like a pretty good absorption rate; I’ll track them for a while and post an update later.

Rain City Guide Eastside MeetUp

We’re planning a Rain City Guide “Meet Up” at Crossroads in Bellevue on February 4th at 6:30 p.m. 

I know Rhonda, Jillayne and I will be there.  Possibly Robbie and/or Galen, and others from RCG.

Pretty informal, as most “MeetUps” are.  No pre-planned “agenda” unless someone wants to submit a few topics they would like covered.

I picked Crossroads vs. “a pub”, as I don’t like to encourage drinking and driving.  It will be in the food court area, so people coming from work can grab a bite to eat. 

Hope you can make it, and we will post a reminder the day before or day of “the event”.  Anyone from RCG who is planning to attend should send me an email.  It would be nice if readers could RSVP in the comments here, so I could “reserve” tables as needed, but RSVP is not required.

We’ve never done one of these before (or I haven’t) so if anyone has any suggestions based on their previous experience at “MeetUps”, advices would be much appreciated.

2009 Conforming and Conforming Jumbo Loan Limits for Seattle Metro

Update April 9, 2009:  On February 23, 2009 FHFA announced that according to the American Recovery and Reinvestment Act, 2009 loan limits will be revised to the 2008 loan limits.  As of this update, we’re anticipating the higher revised limits to take place at any time (1-Unit for this area will return to $567,500).  FHA has all ready implemented the loan limit changes.   This serves as a reminder that any information on the internet regarding mortgages can be out dated in a fairly short amount of time.

This morning, the Federal Housing Finance Agency has announced the 2009 conforming and jumbo conforming loan limits for 2009.  The conforming loan limit will remain at $417,000.  The jumbo conforming was reduced to 115% of median home value from 125%, with the passage of HR 3221.   Based on the new lower estimated home values, the 2009 conforming jumbo limits for King, Snohomish and Pierce Counties are:

  • 1-Unit:  $506,000
  • 2-Unit:  $647,500
  • 3-Unit:  $783,000
  • 4-Unit:  $973,100

Some banks and lenders have all ready began to send notices that they will stop accepting locks for the 2008 conforming jumbo limits ($567,500 for 1-unit) effective later this month.    This is done so that once the loan is sold and closed to Fannie or Freddie, the loan limit is compliant.   (You may not have until the end of the year to take advantage of the $567,500 loan limit).

More to follow…including updated rates this afternoon.

One more story for the Bellevue mortgage fraud files

The Seattle Times is reporting tonight that a federal indictment has been issued for a Bellevue loan officer and his assistant. 

A former loan officer at a Bellevue mortgage company and his assistant have been indicted on a charge of conspiracy to commit wire fraud in a scheme that prosecutors say involved using straw buyers to purchase dozens of homes at inflated prices and siphoning off the extra cash for their own use.

Christopher Brooks and Amani Moss allegedly obtained more than $27 million in fraudulent loans for the purchase of at least 54 homes beginning in 2005, according to an indictment unsealed this morning.

The charges allege that they recruited straw buyers, who would allow the men to falsify loan papers for them. At the same time, Brooks and Moss would use a realtor, who is identified in the indictment by the initials “L.A.,” to find home sellers who were willing to overstate the purchase price of their homes. The straw buyers were paid between $7,000 and $10,000 for each transaction, the indictment says.

Brooks, who worked for America Mortgage in Bellevue, would then prepare and submit the false loan papers to several lenders in the area, according to court papers.

The difference between the inflated price and the actual purchase price of the home ranged from $30,000 to $778,000 per home, and the charges allege that money was funneled through a business owned by Moss, Peachtree Development, and into their pockets..

Home sellers, if your home is not selling and someone from our industry approaches you with an idea to take your home off the market and relist at a much, much higher price, please turn the person in to his or her regulator. If you are not sure who the regulator is, contact one of us and we can point you in the right direction.

The DFI Licensee database shows America Mortgage in Bellevue as a licensed mortgage broker. I wonder how many of these loans went into early payment default and how many the broker was asked to buy back from the lender.

In order to commit fraud at this level, the Realtor and mortgage broker would have had some help from an appraiser as well as an escrow closer.

How to evaluate "the comps" and price per square foot

tri levelWith more and more home buyers and sellers participating in the home buying & selling process to a greater degree than ever before, we can’t write enough posts that provide the basic infomation and skills that help them evaluate home prices. The other day I talked about the popularity and pricing of homes in differering age segments.

Today I’m going to talk about “the comps” and median price per square foot of homes of differing styles. For this purpose I’m going to use Bellevue, Kirkland and Redmond vs. Seattle or all of King County. We will be looking at the differences in price per square foot for ramblers, split-entry homes and ramblers with basements, tri-levels and two story homes both with and without basements. I’m using all sales from 1/01/07 to date, to insure enough volume of sales in each category, to have a relevant median price per square foot. I eliminated lots in excess of 13,000 sf so the “extra” land doesn’t skew the data.

The photo above is a tri-level. When you’ve been in the business for many years, you can pretty much know the floor plan of a house without ever needing to go inside. When a house looks like one story from one side and two story from the other, viewing it from left to right while standing only in front of it, that is a tri-level. You will enter on the main level which has the living room, dining room and kitchen. After you are inside the main floor (and not when you immediately enter the front door) you will go up 4 or 5 steps to the bedrooms or down 4 or five steps to the family room that exits to the yard, usually via sliding glass doors. The garage entrance is on the other side of the family room and no portion of the tri-level is underground. That is your basic tri-level and you can tell that without having to go inside.

bi levelThe home pictured to the left is a split-entry home. For those reading this from outside of the Seattle Area, you may call a “split-entry” a 2-level, a bi-level, a raised rambler or a raised rancher. All are referencing the same style of home called different things in different areas. Basically it is a rambler with a basement, most often but not always a daylight basement. The underground side of the basement is raised high enough for there to be windows.

The front steps take you up to the front door that looks like it is centered in the middle of the structure. Once you walk in the front door you have to go immediately up or down from the foyer to access any of the rooms. It is a rambler with a basement that is not fully underground at any point. A rambler with a daylight basement is basically the same home, but the street side of the basement is fully underground, so you enter at street level onto the main floor.

Now let’s do some stats on the differing home styles. PPSF = Price Per Square Foot.

Rambler/One Story Home – median price $491,500 – median sf 1,470 – median PPSF $334 DOM 26

Rambler w. basement – median price $699,000 – median sf 2,760 – median PPSF – $253 DOM 30

Some people think that the smaller square footage is creating the higher price per square foot. What is really happening is that the main level is valuing at $334 per square foot (same as the rambler) and the basement level is valuing at $172.50 per square foot. For instance the 2,760 sf divided by two, equals 1,380 on the main level times $334 equals $460,920 for the main floor “rambler portion”. The difference, $699,000 minus $460,920 = $238,080 for the basement divided by 1,380 sf equals $172.50 PPSF for the basement. That averages $253 PPSF for the whole house as to finished square foot and does not include the garage or unfinished/not heated basement area. It’s a bit simplified, but hopefully you get the gist of that. Same is true for the split entry.

Split-entry home – median price $510,000 – median sf 2,150 – median PPSF $237 DOM 30

Again, the main level of 1,075 sf of the split-entry is valuing the same as the rambler at $334 or $359,050. $510,000 minus $359,950 = $150,050 divided by 1,075 basement sf = $139.58 for the basement sf and that averages to $237 PPSF for the whole house. In reality above ground square footage values higher than underground square footage, so if the basement is all underground on either the rambler or split entry, the basement square footage would value for less than a “daylight” basement and the fully above ground portion would value for more than the partially above ground portion. So don’t pay the same for a fully underground basement as you would a daylight basement.

Two Story Home – median price $750,000 – median sf 2,760 – median PPSF $271 – DOM 39

Two Story Home w/basement – median price $1,097,000 – median sf 3,920, median PPSF $280 – DOM 59

The two story home with a basement does not get “diluted” in value by the basement because it is basically the top choice of available homes, there are fewer of them and almost half of them have a lake view. The builders will put the most house, 2 story plus a basement, on the priciest lots with views. So there are a lot of factors that create what looks like full value for the basement on these 2 story homes, when in reality it is an external “plus feature” doing that. Only 4.7% of splits and 1 story ramblers have a lake view, 11.4% of 2 story homes without a basement have a lake view and 42.8% of 2 story homes with a basement have a lake view. 31.8% of the big ramblers with basements have a lake view, so adjust for that as well.

The longer days on market has more to do with higher total price of home, than home style.

The tri-level pictured at the top is only valued at $268 per square foot, even though all of the living square footage is above ground. There are fewer of them, but that does not make them more desirable and a higher PPSF, because when you chop up 2,000 sf into three levels, no level seems large enough. When you put the family room on the main floor next to the kitchen it values higher on the main level, than when you put it down on the basement level. If you can see into the family room on the lower level from the kitchen, it values higher than if you can’t.

It’s really common sense when you think about it that way. With more and more people using price per square foot as an indicator of value, I hope this post gives you a little more info to help you to refine your DIY valuation process.

Have a great day!

Friday Night at Crossroads Shopping Center

4taydougwebI received an email announcing that The Taylor Jay and Doug Bright Combo are “performing hot jazz standards from swingers like Louis Armstrong, The Inkspots, Billie Holiday, Bonnie Guitar, and many others.”

Looks like Friday night from 7:30 to 10:00. I expect it’s free, as there is no info regarding price or tickets and likely in the open food court area. I don’t know them, but I like that kind of music, so I thought I’d throw it up here as a public announcement of a local, apparently free, event.