Buying wisely in any market

[photopress:seg.gif,thumb,alignright]I find that most people who track countywide stats, looking for bubbles and market trends, are not people who are buying and selling property. Anyone who is actually buying or selling property knows, that countywide stats tell you both everything and nothing. It is in the small subsections of any given market that you will find the information you need to make wiser choices.

For instance, can you really compare ramblers built in the 60s to newer housing choices? Can you compare “too small for anyone” condos of 400 square feet, to the saleability of 2 bedroom 2 bath condos? Lumping everything together tells you nothing. Houses on busy roads, for example, will not sell as well, and will sell worse at times like this when buyers are being more cautious. I think of houses on busy roads when I hear comments like, “The market is getting weak! I see more and more for sale signs every day while driving to work!” Well let’s assume that most people do not drive on quiet 25 mi. per hour residential streets when driving to work. So what they are seeing is the weakness of properties situated on busy roads, not the market in general.

A good example is tracking newer townhomes, in the $300,000 to $500,000 range, within 3 miles of Microsoft. This is a market segment that is driven by its own forces and outperforms the market in general. In the last six months there were only 21 townhomes sold, built since 1990 and within 3 miles of Microsoft, between $300,000 and $500,000. Of these 21, 16 sold AT or better than full price in less than 30 days. Several in less than 10 days and most in less than 20 days. At the moment there are only 3 available, all on market less than 15 days and two at less than 5 days on market and there are 3 in escrow.

So of the total six month inventory, you can expect four to sell per month and there are only 3 on market, two of which have only been on for two days and three days, respectively. Those are some pretty strong market stats. What are the odds that these will start dwindling on market for excessive periods of time or go down in price? Slim to none. Making offers on this product, based on what you are reading about the King County market in general, would make no sense whatsoever.

So Chicken Little, maybe the sky IS falling for older ramblers built on busy roads with only one bathroom. But conversely the sky is still the limit in newer townhomes for sale within close proximity to Microsoft. There’s a whole lot of varied stats in between. Make sure you are making your choices based on the product and market segment that YOU are considering buying. Buying the biggest “bargain” on market, could lead you into buying in that segment of the market that will not appreciate, and will be difficult to sell later for at or more than what you paid.

The last seven days in Real Estate

Last week of August. Who bought what, where and for how much? Typically a slow week with agents and clients taking some time away with their families before school starts.

[photopress:v.jpg,full,alignright]This is my absolute favorite property that sold this week, in Sammamish for almost $4,000,000. Going home there is like going on vacation every day after work. My definition of “sold” in the last seven days, for this article, is STI or PENDING…people “making decisions” to purchase.

Seattle under $300,000 – 38 people, between $300,000 and $400,000 – 66 people

70 people in each for the $400,000 to $500,000 range AND the $500,000 – $600,000

Then we really drop off to only 20 from $600,000 to $700,000, and then half of that at 10 from $700,000 to $800,000, half that again to 5 at $800,000 to $900,000, and 3 in the $900,000 to a million.

15 from $1 million to $2 million and two just over $2 million, one in Broadmoor and the other a tudor in Denny Blaine.

On the Eastside I used, Bellevue, Bothell (King County), Kenmore, Kirkland and Redmond.

Only 5 under $300,000 this week. 75 between $400,000 to $600,000. 4 between $2 million and $3 million vs. only 2 in Seattle, and about 10 in most other categories.

So all tolled on both sides of the Lake, most homes this week were sold between $300,000 and $600,000. That includes condos, townhomes and single family homes.

Fits into the theory that the average buyer is at $450,000 give or take.

Really BIG News!!

[photopress:85936861.jpg,full,alignright] I just got this invite via email. These have been short term rentals until now. I LOVE this location and have placed people relocating in them while they look for a house. There are two buildings on either side of first street that were part of the same short term rental…near Sur le Tab and the Greek Restaurant, for those who know Kirkland. Fabulous LOCATION!!

They will start at $350,000 and go to $1,200,000. Will give another report after the agent preview on the 7th, but email me if you want to get your dibs in on the best of the best. This is really big news for Kirkland. Yes, there are other new condos and conversions…but not with a location like this one!! Excellent traffic patterns as you can go up to 7th and all the way across and out, without getting stuck in “the Kirkland Crawl”. Oops…don’t tell the people on 7th I said that…it’s supposed to be a local secret.

Maybe I’m overly excited because I just love this location better than any other. A local perspective, I guess.

Public Service Announcement

As a “Certified Emergency Response Team” Member here in Kirkland, I was invited to attend the class on being a “weather spotter”.

Not my cup of tea, but thought some of you might be interested.


Site: Redmond Public Safety Bldg – Redmond, Wa
(8701 160th Ave NE – see map below)
Date: Monday, November 20, 2006
Time: 6:30 – 9:00 PM
RSVP: Lt. Charlie Gorman, Redmond Police Dept. (425) 556-2566 or e-mail:

The National Weather Service will train new and veteran spotters, including interested citizens, amateur radio, CERT, citizen corps, and law enforcement staff, on how to look for and report significant weather events. Training includes video demonstrations. Spotters are needed, particularly in rural parts of King County, as well as those who have weather instrumentation, such as an anemometer.

If planning to attend this spotter training session, please RSVP so an appropriate number of handout materials can be on hand. Class capacity is 60, so sign up early! We look forward to seeing you at this or other Skywarn Weather Spotter training sessions, and receiving your hazardous weather reports.

Improving Online Home Valuations?

This past week, Top Producer quietly rolled out a home valuation tool, called HomeInsight, for a few markets in California and Washington*. I was not part of developing the tool, but I like it enough to pass along the link to Rain City Guide readers before the local media picks it up.

What differentiates this product from others is that it not only includes sold data, but also real-time listing data. The result is a page of information for each home that includes:

  • an interactive map that gives details on ten similar nearby homes (5 that are for sale and 5 that have sold) and
  • dynamic charts that give the average/high/low listing price, the average/high/low selling time and the average difference between asking and selling price for the neighborhood of interest.


However, as with all things that sound too good to be true, there is a catch. In order to pull live listing information, the servers pulling this data have to go through an agent’s connection with their local MLS. (Don’t ask me to explain why, and definitely don’t ask Robbie, but anyone reading RCG for a while knows that the MLS’ have rules!) The result is it takes 5 to 15 minutes for the request to go to the local Realtor’s Top Producer account and then for the Realtor to initiate a report that pulls the data off the MLS servers (yes, a server call to the local MLS is necessary each and every time a request for a snapshot is made). Consequently, the only way to get your snapshop is from a link sent via email about 10 minutes after you complete the form.

So, how do you get a market snapshot for your home? Simply go to HomeInsight and fill in the required fields. (Remember it is only available in a few places right now!*)

If you don’t want to fill in the form, live in another part of the country, or feel guilty about sending people like Jim Reppond a “false” lead, then you can also check out this dummy snapshot filled with made up data.

And as much as I hate disclaimers, it is important to note that these are my opinions and my currently employer is not responsible for what I write on Rain City Guide.

* This tool is currently only available in parts of California (Hemet, Huntington Beach, Laguna Niguel, Long Beach, Los Angeles, Mission Viejo and Norwalk) and Washington (Bellevue/Eastside, Bremerton, Everett, Federal Way, Greater Seattle, Puyallup and Tacoma)

If wishes were horses, beggars would ride

if-wishes-were-horsesIt’s much easier to “stick it to the man” when you’ve never met the man.

“If” the beginning of every residential real estate transaction were the buyers and the sellers and their agents meeting and chatting, maybe having dinner together and a drink or two for an hour. Then everyone walks through the house together while the seller tells the buyer the story of their life in the house and the buyer and agents ask questions. Then the offer is written, and proceeds through the inspections to find things the seller just truly doesn’t know about. At the end of the transaction when all items and terms are fully negotiated, the buyer comes into the room with a check in his hand. The seller comes into the room with the keys to all doors and garage door openers and manuals on appliances. The agents review the final numbers and nod to the closing agent.

Everyone smiles and shakes hands after the seller gets his check from the closing agent, and the seller hands over the keys to the new owner and wishes them much luck in the home they have lived in, and now pass forward to the new owners.

Believe it or not, that is how many of my original real estate transactions transpired, once we achieved balanced market conditions. For the past several years, more often than not, the buyers and sellers never even meet each other. The Seller’s Agent never meets the buyer and the Buyer’s Agent never meets the seller. The playing field seems to get nastier when it becomes a true buyer’s market or seller’s market. For the first time in many years, I am starting to see transactions that are more civil and fair to both parties.

I’ve been in this business long enough to see both buyer markets and seller markets. I’m still happiest when the market is balanced and all parties have met each other and treated one another with dignity and respect. I wish it were always so, but then, “if wishes were horses, beggars would ride…and there’d be no work for tinkers.”

Floor Area Ratios – Bulk and Volume

I attended a meeting this week regarding proposed changes to the current FAR in my neighborhood in Kirkland.  I thought I’d report on Kirkland specifically on my blog, but raise the BIG question here.  Should neighbors and local governments be able to dictate, beyond height and setbacks, how “big” your home can be?[photopress:bigger_house.jpg,thumb,alignright]

Is the “argument” really about size?  Or is it about “style”.  It seems that people complain more about homes with a flat roof made of smooth stucco, than they do about homes with pitched roofs.  If everyone in town hates the house you want to build, should that matter?  Is this argument really about trying to dictate “taste”.  When an old house is torn down, the new one built in its place can’t be expected to look anything like the one that was there, can it?


The reason more houses are being built with a flat roof, rather than a pitched roof, is because of the height restrictions.  Here the height can’t exceed 25 feet.  If you have a point at the top, that point counts as your 25 feet, so you lose a lot of square footage at the top vs. building your second floor up to 25 feet with a flat roof. 

FAR is not so much about the size of the house, as it is the size of the house relative to the lot size.  If the building code has a restriction of 50% FAR, then the maximum size of a house on a 5,000 square foot lot is 2,500 square feet.  Unlike real estate agent and appraiser criteria, building code square footage can include the attached garage, but often does not include the “air space” of a two story room with no floor at the second level.  “Volume” related complaints suggest that this “air space” should be included in the square footage as if it had a floor.[photopress:small_house.jpg,thumb,alignright]

I will stick to the specifics of the actual Kirkland meeting on my blog, but here in RCG, I thought we could talk more about the issue generally.  Used to be as long as you adhered to the height restriction and setback rules, all was A-OK.  Now people want to dictate and prevent “monoliths” and homes that just don’t seem to “fit” into the type of town “we” want to be. 

The fur does tend to fly at these meetings.  Anyone have any opinions on this topic?  Some of the questions raised are “Why do so many new homes have such small yards?”  Should we really be able to tell people whether or not they MUST have a “yard”?  Whatever became of one story houses? and “What’s going to happen if my neighbors sell?” Should we let people do whatever they want with the land that they own, or should neighbors and local governments have some say in the matter?

Weigh in your opinion.  Inquiring minds want to know how people feel about this topic.

Did you sell your SOLD before the bell?

As you may know, HouseValues (NASDAQ: SOLD) is a publicly traded company. As you may not know, they reported their earnings for the quarter and year ended December 31, 2005, this afternoon.

To quote the highlights from the press release from MSN MoneyCentral

“For the year, HouseValues reported annual revenue and net income growth of 82 percent and 101 percent respectively. For the quarter, HouseValues reported revenue of $25.2 million, an increase of 75 percent from the comparable quarter last year. Fourth quarter 2005 net income was $4.0 million, up 117 percent from the prior year. Fourth quarter 2005 earnings per diluted share were $0.15 compared to $0.08 per diluted share in the fourth quarter of 2004. Net income for the fourth quarter and the year included an increase of $1.2 million as a result of the favorable settlement of a state tax audit.”[photopress:hv_logo.gif,full,alignright]

Blah, blah, Growth Opportunity, blah, blah…

“A recent National Association of Realtors study showed that 77 percent of consumers used the Internet as part of the home search process in 2005. The study also found that buyers who use the Internet to search for a home are more likely to buy through a real estate agent than non-Internet users.* Real estate and mortgage professionals are projected to follow consumer behavior, dedicating more of their marketing spend online than to any other medium by 2009, according to Borrell Associates.”

Blah, blah, Mortgage Opportunity, blah, blah, blah….

“On November 3, 2005, HouseValues announced its acquisition of The Loan Page, Inc. helps consumers find the best deal on all of their home related financing needs by providing them with up to four competitive bids from the nation’s leading lenders.”

So far so good, right? Not according to “Buy on the rumor, sell on the fact” nature of the Street…

To quote another press release from MSN MoneyCentral

“Shares of HouseValues Inc. plunged in aftermarket trading Tuesday, after the company reported a jump in fourth-quarter profit, but said its first quarter and full-year 2006 results would come in well below Wall Street expectations. Shares of the online subscription service for real estate agents and mortgage bankers dropped $3.26, or 25 percent, to $10.14 in after-hours electronic trading, after closing down 25 cents at $13.50 on the Nasdaq.””HouseValues said it expects first quarter 2006 earnings of 3 cents to 4 cents per share, including about 3 cents per share in stock option expenses. Revenue is projected at $25.5 million to $26 million. Analysts were expecting earnings of 14 cents per share, not including stock options, on revenue of $28.8 million.”

What’s your take on this? Does management think an upcoming war with Zillow is going to hurt HouseValues earnings? Is the slowing housing market at fault? Have enough people seen Ardell’s “Bottom feeder post” to cause this market cap hemorrhaging? Can mount a credible threat to Can Batman & Robin save us?

Conspiracy theories and comments?

Escalation Clauses – Downtown Kirkland Condo Market

I wrote an offer yesterday with an escalation clause on a Downtown Kirkland Condo that has been on market for 2-3 days. As I have said before, while there appear to be many things “on market”, most agents are waiting in the wings for something better than what is for sale at present. This is what causes properties to be on market, as opposed to being sold.

When that special property at the right price appears, it is likely to have multiple offers, as happened yesterday. Just before we write an offer, we call and speak with the listing agent to determine how best to write the offer. As soon as we hear there is another offer being presented in a few hours, we know we need to add an escalation clause. Problem is that everyone knows this, so you have multiple escalation clauses in play.

socAn escalation clause has an increment of increase and a cap. Example: Asking price $450,000. Offer might be $450,000 plus $1,000 more than any other offer in hand before this offer expires, up to a total price of $475,000. You need a cap value, as the reason everyone wants it is because of the location, condition and price. If the price bids up too high, you might as well have bought something else on market that was overpriced by offering a lower bid. So you have to be careful not to place your cap at a point where you wouldn’t have bought it in the first place.

It is amazing to me at times that no matter where I work in the Country, everyone seems to want the same thing. They all want the thing that is not for sale, especially this time of year. So as soon as something comes on market that fits the profile of what everyone REALLY wants…multiple offers. There can be 150 properties on market, but everyone is waiting for that one that is not for sale yet 🙂