Author Archives: ARDELL

About ARDELL

ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: ardelld@gmail.com cell: 206-910-1000

It’s “$8,000 Friday”!

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The Tax Credit expires today. For some people that means it is $8,000 Friday…for others it is $6,500 Friday, but any way you slice it is a very important day for many people who are currently buying homes.

Oddly, given I have not and never would have, advised my clients to buy to get a tax credit, two of my clients are in “issues” involving the tax credit expiring today, somewhat coincidentally.

There are many buyers who just happened to find the right home that just came on market last week or this week, who are biting their nails waiting for a seller response “by 4/30”. If the seller is a bank or someone out of State or out of Country, this is a serious concern today.

There are other buyers who have a signed around contract before 4/30/2010, but who are in the process of negotiating the home inspection. Cancelling on inspection for a $3,000 item, and losing an $8,000 credit as a result, is part of the decision process on inspection negotiations today for many people. If they choose a different house next week vs. the one they currently have in contract, they lose the opportunity of the tax credit.

Any way you slice it…the clock is ticking…and weighing heavily on many, many people today. For those in a “gray area” as to being eligible for the credit, and there are many and varied gray areas, it is even more difficult.

In my opinion, it IS part a an agent’s job to help you preserve the right to that tax credit, and work hard to that end today. It is also part of their job to lay out the consequence of cancelling on inspection in the next several days and buying a different house instead. But NO agent can guarantee one way or the other that you WILL in fact get the credit. We can only help preserve your right to request it.

For those looking to receive a $6,500 credit, be aware of this:

“Additionally, you must have lived in the same principal residence for any five-consecutive-year period during the eight-year period that ended on the date the replacement home is purchased. For example, if you bought a home on Nov. 30, 2009, the eight-year period would run from Dec. 1, 2001, through Nov. 30, 2009. (11/17/09)”

If you live here in a rental, and still own your previous residence in another State that you lived in for less than five years…as I said…lots of gray areas. At the end of the day…this particular “$8,000 Friday”…some will be better off and some will not. An important day in the lives of many people who are in the process of buying homes.

Is that home over-priced?

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When my clients send me a home they want to see and ask for my thoughts, I often respond “nice house; seems a little over-priced to me”. Sometimes they wonder how I know that before seeing the house.

Using general statistics to establish an immediate reaction to price, gives you a good starting point for home valuation.
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The above graph is a good “cheat-sheet” for shoot from the hip value reaction. We can see that the recent history bottom of 3/09 is equivalent to 4/05 pricing.

One of my clients sent me a property, nice one, and I quickly checked to see that the owner bought it brand new in the summer of 2004 for $600,000 and the asking price is $750,000. “Looks a bit over-priced” because it was brand new when they bought it, so they didn’t (or shouldn’t have needed to) remodel anything. We are at May/June 2005 pricing (as you can see in the above chart).

The market didn’t increase by 20% from Summer of 2004 to Spring of 2005. New homes depreciate as 2004 new carpet is now 2010 old carpet. 2004 new paint and hot water tank are now heading toward the down-slope of their life expectancy period.

By all accounts asking 20% more for a home bought new in 2004 is not likely realistic. Median home price in June of 2004 was $340,000. Current month to date median price is $375,000. so that would put that property bought for $600,000 in June of 2004 at $660,000 to $665,000 today before applying depreciation. ($375 divided by $340 times $600 = $660) So my gut reaction to a $750,000 asking price is that it is almost $100,000 over where it should be.

That doesn’t mean that someone won’t pay $750,000 for it. The only question is…Is that someone who will pay about $90,000 too much for it…YOU?

(Required Disclosure: Stats in this post are not compiled, posted or verified by The Northwest Mulitple Listing Service.)

CD Release Party tonight for local Seattle band – Kris Orlowski

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Local song artists, Kris Orlowski and his band, are having a CD Release party tonight at The Hard Rock Cafe. Doors open at 8 and the show is at 9.

Seattle has long been known for supporting the “up and coming” people in their local areas. So if you have no plans tonight…try to head on out to The Hard Rock Cafe at 116 Pike Street to give some hard working and talented local young people your support.

I first found Kris Orlowski via the YouTube video below (the link was posted on twitter). If you want to get a feel for Seattle, watch this video featuring The Fremont Troll :). There’s a line in Kris’ song “Sweet Little Girl” that was SO very Seattle it cracked me up. “We’re dreaming of a future where the summer always stays.” How “Seattle Culture” is that!

The scenes in this video say more about Seattle than most any written post ever could…so if you are thinking of moving to Seattle, watch this video. It shows many of the best things Seattle has to offer…its people, our troll, people of all ages interacting with one another at Green Lake, and a young man celebrating…”Lou, Lou, Lou” an awesome, everyday, Seattle kind of girl.

Good luck, Kris! Taking a line from your song…”Hope is in my heart that you’ll be great!!!”

School Cancelled because of SUN!

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If you are relocating to the Seattle area, or have recently relocated here, a HUGE factor for you to “grasp” is about capturing those great days between October and May. Summer is great here, and you rarely get “snowed in”, but too many gray and rainy days in succession can really get to you.

When I first moved here I remember someone saying “no work today”. When I asked why they said “The Mountain is OUT!”. People jump up from their desks and run over to see Mount Rainier on a clear day. 🙂

School Cancels Classes for a “Sun Day” is a news story today along the same lines.

Seattle weather “progresses”. First you have one sunny day a week, then two sunny days in a week. By the time you hit 5 out of 6 sunny days in a week, you feel like God came down and brought you a huge gift of perpetual sunshine, just in time for the Fremont Summer Solstice Festival.

So when you see all the painted naked cyclists in Fremont in June, remember why and what they are celebrating. NO other area celebrates the simple pleasure of the sun being out…like Seattle.

A “new” bottom call…King County Home Prices 2010

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Earlier today I posted my thoughts on the King County Housing Market for 2010 and received this question on twitter:

@VAF_Investments asks @ARDELLd – This downward price expectation kind of goes against your view late last year… What’s changed?

graph (35)

Generally speaking, my clients are making a short term decision to buy a home to live in based on a compelling reason in their life, vs a long term market timed decision. Consequently, in my world, the question becomes “If I am going to buy a home in the near future, when is the best time to do that? What is the best strategy?

In February of 2009 there was no question in my mind that March closings would likely be the lowest point of 2009. When I “called that bottom” I was greatly surprised that it made front page news, because it seemed like a great big “duh” to me at the time. The graph above shows you how that prediction played out through to present day.

New Year…New Clients…New Bottom Call. Last year I had a few clients purchase homes who I told to wait in 2008 and late 2007. In 2009, I didn’t tell anyone to “wait” but I did tell a few people not to buy at all, and am still doing so. The minute someone says “I’m planning to sell it in 3 years” I do a big “Excuse Me?” One client wanted me to graph “appreciation” for each year over the next three years…I asked him to save me the time by sticking a big fat zero on that for me in each of the three columns on a net basis.

What’s different this year? LOTS! Many people bought in anticipation of the Homebuyer Credit ending. I was at the gym yesterday and a young agent on the next treadmill was telling his friend that buyers had to hurry up before the credit expires. If every agent is telling every buyer to buy before the credit expires, how can they possibly NOT think that the market will go down after it expires? Boggles my mind that the same people saying “you must buy before April 30” are the same people saying the market will not go down AFTER that point.

There are many other factors, of course. But the Homebuyer Credit is not a small one in the big picture. The title of the PI Article last year was “Agent Predicts Housing Slump’s Demise”. In 2010 the “training wheels” will come off. The oxygen supply will be removed, and we will see what the market will do when caused to “stand on its own two feet”.

I don’t think the market will fall dramatically without further government intervention, because I think if it DOES fall dramatically there WILL be continued government intervention. So yes, I do expect Homes Prices will be lower than the median price of $362,700 from March of 2009, at least at some point in the 4th Quarter of 2010, and possibly before. I don’t think we will see another 20% – 25% decline in prices, not because the fundamentals are stronger, but because I believe the government will come up with another plan if needed, to prevent that from happening.

Remember, most of the market decline transpired under the previous Administration. This new regime has proven its desire and ability to stabilize, if not grow, the market. I do think they will let this credit expire, and I do think they will decide what to do next…after they see how the market reacts to “pulling the plug”.

Before they decide what to do next…don’t be surprised to see a “new bottom” where median home prices in King County fall below $362,700. At this moment, without all of the March closings counted, the median for the first Quarter is $370,999 (maybe a little higher if I take out the houseboats) and at $372,475 for the month of March to date (this down from the $375,000 it was a few days ago). If I take out the houseboats and mobile homes…it is $375,000.

(The stats in this post are not compiled, posted or verified by The Northwest Multiple Listing Service)

Paying a fair price for the home you buy.

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One of the problems with today’s real estate inventory of homes for sale, is that it is difficult to determine if the asking price is a fair price. Today I received an email noting that the price of a home was reduced by $200,000. It is today $300,000 less than the day it went on market about three months ago.

Think about how scary that is to a would be home buyer! Someone could have paid $300,000 more for it than the asking price today, and who knows? That “new reduced price” could still be $300,000 more than someone will end up paying for it. This is particularly true of the home I am referring to in this post. (as an agent I cannot mention the address, and will have to delete it from the comments if someone else guesses it correctly. Let’s stick to the general point of the post and assume many homes fit this broad description.)

I want to talk to you today about a totally out of the box approach to buying real estate. It isn’t necessarily a new concept, it is simply the same strategy used in the hot market. In the hot market when there were 3 offers “in” when you wrote your offer, you automatically attached an “escalation clause” saying “I will pay X$ more than the highest offer up to X$ cap price”.

There are two homes on market, one each for two of my clients that my clients like, but we are agreeing that the asking price is too high for that home, and higher than any buyer will be willing to pay. In the meantime the seller is not ready to take an offer at what we consider to be a “fair” price for the homes in our “saved homes” watch list. We, the buyers and I, have attached a price to the homes that the buyer would pay, that is substantially less than the current asking price.

The way the market works generally, is buyers save these homes and wait for the price to come down. On the one hand they are afraid someone else will buy it at the price they are willing to pay. On the other hand they don’t want to get into a negotiation stance that might draw them above what they are willing to pay.

Let’s use a hypothetical. Let’s say the asking price is $999,950 and your price is $875,000. It would be fairly simple to put in an offer of $850,000 or X$ more than any other offer received with a cap of $875,000 in the next 30 days. Offer may be withdrawn anytime prior to acceptance or extended at the end of this 30 day period.

Many years ago during the last market like the one we are in now, I did something like this for a client. Slightly different. It was an abandoned very nice home. The owner did not have it on market as a short sale, they simply moved out when they stopped making their payments and moved out of State. The Bank had not foreclosed, and so the Bank could not sell the home or even consider offers to purchase. There were many people who wanted to buy the house. In fact one of the agents whose clients wanted the home, sent that client to me (which is how I got the client in the first place) as they could not determine how the buyer could get the house, it not being for sale. In fact half my business that year came from local agents who sent me situations they could not figure out in the weak market. Odd, but true 🙂

I wrote an offer at a ridiculously low price, which was also the highest price my client could afford to pay. The buyer was willing to give it his best shot, realizing that his best shot might not be good enough. I wrote the offer and sent it to the bank, who did not own it. I wrote a response time of 30 days. Every 30 days I had the buyer and his wife come into my office and rethink whether or not they still wanted that house at that price. If they said yes, I had them sign a short 30 day extension to the offer. This went on for nine months.

One day the Bank was within the time range when they could foreclose on the house. That’s one thing people don’t understand about short sales. The bank can’t always foreclose when they want to foreclose, and the person who put the offers into that file is not the person who opened the file to start the foreclosure proceedings. Banks can’t always answer your short sale offer when you want them to. The day the bank was ready to start the foreclosure process, they opened the file and found an offer inside with nine 30 day extensions. Rather than begin the foreclosure process, they called me and accepted my client’s offer.

There was never a for sale sign on the property as it was technically never for sale. My buyer client asked me to put a sold sign on the property so that would be buyers would stop going inside it while we were “in escrow”. I went over and put a sold sign up. Within two hours 21 people called screaming that they wanted to buy that house, but their agent or attorney told them they had to wait until after it was foreclosed on. One even told me he had already purchased new kitchen cabinets for it, and they were sitting in his basement.

I know there is an old saying that “the early bird gets the worm”, but in a market like this one we need to fall back on a completely different idiom. “patience makes perfect”. If you do the right things while being patient, you just might end up with a perfect result for you and your family.

Why do Real Estate Agents put their photo on…

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custom-real-estate-signs_splashEven though I do not have my photo on my business cards or signs at present, my clients have on occasion asked me this question when we enter a house where the agent’s picture is on the sign.
Even when the agent’s photo is not on the sign, some ask me why the agent’s picture is often on the business cards and other materials such as the home flyer.

This morning over at The Onion there is a funny post titled “I Wasn’t Going to Buy This House UNTIL I Saw The Realtor’s Headshot On the Sign”by Sam Cone.

The answer is fairly simple. There has been for some time now, a continuous struggle between Brokerages and Real Estate Agents as to whether you are going to call “The Office” or “The Agent”. For many years there was a rule called The Rule of Prominence, which is still a rule in some places in the Country. That rule required “…the broker’s name to be equal in size and more prominent than the agent’s name”. (but not necessarily the agents face or photo). As soon as it was determined that the agent’s photo was not part of the prominence rule, agent’s used the photo to help insure that the prospective client or home buyer would call them vs. the Brokerage, or at least ask for them by name if they did call the Brokerage.

Take a look at the sign I used in the thumbnail photo that says, “Buy Your Next Home With Us!” …and then ask yourself who “us” is? US is obviously Century Properties, and not Cindy, given the company has the header and footer control, and Cindy only gets to customize the insert on the white background. Also the slogan would say “call ME” vs. call “US” if that were Cindy’s slogan vs. the Brokerages slogan.

Cindy wants you to call her, and the company wants you to call them. This is more of an issue in some places than others. Historically Brokerages did not have to pay for a receptionist. Agents used to “sit floor duty” on the hope of getting a new client via a “sign call”. More and more, agents began trying to be “more prominent” on the sign than the broker, to insure that they personally got the call vs the Brokerage, or that you would at minimum be enticed to ask for the Cindies of the world by name when calling the Brokerage.

From the home seller’s standpoint, would the owner rather you talk to Cindy? Probably, because Cindy knows their home better than any old body who answers the phone at the real estate company.

So it would seem that whether you are the agent or the owner of the property, those two entities are best served if you take the extra time to reach “Cindy”, than whomever happened into the office to get a cup of coffee today.

Now let’s talk about the buyer. The buyer is often NOT best served by speaking with the agent for the seller from an Agency standpoint. They may be best served by talking to the agent for the seller when they want to know things about the property, or they want to possibly try to save some money on the real estate commission by not having a separate agent. Any way you slice it, the buyer being able to tell who is, and who is not, “the agent for the seller” is of value.

The big fat face on the sign is a HUGE reminder that the person in that picture represents the SELLER, and NOT you the BUYER.

Forewarned is forearmed…and the next time you see an agent photo on a sign you might ask yourself if you want that person who represents that seller…knowing a whole lot about you, the buyer. Do you want that person to know how much you LOVE the house!? Do you want that person to know that you are worried about whether or not you can get financing? Do you want that person to know that you are not sure if you want the house, you just want to tie it up for a few days while you think about it?

If nothing else, value the big fat photographic reminder, that the smiling face on that sign…does not represent you, if you are a potential buyer of that house.

March 18th & 19th PNW Housing Summit & REbarcampSea

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First and Foremost…HAPPY BIRTHDAY RHONDA PORTER!!!!!!!!!!!!!!

The Pacific Northwest Housing Summit will be held this Thursday, March 18th at the Seattle Center. The details of who will be speaking at that event are in the link, and Rhonda promised to stop by in the comments to describe it a bit further. The Washington Association of Mortgage Professionals is largely responsible for that event, along with several other sponsors, and there is a cost of entry. I think the cost is $80 or so $69 if you pay at the door. I’m pretty sure both Rhonda Porter and Jillayne Schlicke will be at the event.

On Friday, March 19th there is a free event that I believe is open to just about anyone, called REbarcampSEA. There is never an agenda for a barcamp, as it is an “un-conference” and the sessions are determined by those who come to the event.

When you arrive at REbarcampSea you are usually asked if there is a topic you would like to talk about, or have others talk about, sometime during the day. The times and sessions are then written on a board as people request the topic and others agree to speak on the topic. I recall seeing The Tim from Seattle Bubble there last year, so I’m 99% sure anyone can attend, though the room will largely be filled with 400 or so agents, lenders and real estate vendors.

Technically there is no subject that is taboo at the event, so a group of consumers could come and ask for a session on most any topic. Largely the event deals with Social Media and Blogging sessions, so if consumers would like to see blogs or social media handled differently than they are in the Seattle Area, they can come and discuss their list of “wants” in that regard. It would be nice if a large group of consumers came, so that the real estate industry could better serve their needs. So come out, bring a friend or two, and make your wishes known.

Hope to see you there!

Savvy Homebuyer saves 83% using Trulia Voices

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truliaHomebuyer saves 83% on his Buyer Agent fee by using Trulia Voices.

Around noon on Sunday a homebuyer named “Patrick” posted this question on Trulia Voices:

Need a buyer’s agent

Patrick
Both Buyer and Seller
Seattle, WA

I plan on making a $1M offer on a home in Queen Anne. I found the property myself. Was shown the home by the listing agent. She does not have a claim for procuring cause, as I told her I was working with an agent when she showed me the property. I am looking for an agent to write up my offer and take the transaction through closing. The offer will be cash, with only the standard inspection contingency. At closing, you will refund the entire 3% co-broker fee to me minus a flat fee of $5K. We will be asking for closing within 2 weeks.

The question caused “quite the stir”, with 137 comments as of this moment.

Just “a moment ago”, Patrick posted this result of his inquiry and endeavor:

I see my post has caused quite the stir. If any of you must know, my inquiry here, and through other channels, has lead me to interview many agents and hire one who was more than happy to accept my offer. We have put our first offer together and received out first counter. I expect to reach mutual acceptance within the week.

For those of you who question if this is real, why I don’t use an attorney, if I’m trying to scam you, if I have the cash, etc… I really don’t care what you think. All I know is that in a few weeks, I will have closed on a property, saved tens of thousands of dollars, my agent will have made $5k, and we’ll both be celebrating at Canlis with our wives. And those of you still holding out for your 3% because you’re “worth it”, will still be sitting in front of your computers typing bad things about us.

And for those of you who continue to tell us buyers that “you don’t pay the commission” and “commissions are not negotiable,” this thread alone has proven otherwise. Most agents get it, some still do not, and may never. But again, I really don’t care. Goodnight to you all.

For anyone wondering what “The Future of Real Estate” is going to look like, this just might be a peek into the future. The possibilities are endless. It’s a great time to be a participant in the changes afoot for consumers in the real estate arena.

New Construction – Settlement Cracks and such

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nail popHome Warranty: I just sent a text message to one of my clients who bought a new construction home almost a year ago regarding their “Builder Warranty”.

A new home will have its fair share of minor settlement cracks and “nail pops” and many quality builders will come back at the end of the 1st year to fix these. Some will have a limit as to how many times they will come back to the home to fix them, so I generally advise my clients to read their warranty very carefully so as not to use up their total return visits in the first week.

Many, many times I have gone to someone’s home to list it for sale finding these settlement issues, and the owner never bothered to call the builder in the warranty time frame to have them corrected. Trying to fix them 5 years later is not only more costly, since the builder would have done it for free if that is provided in the warranty, but also more difficult to fix. Finding the exact paint color five years later can be difficult. The 5 year old paint on the wall or ceiling may not match even if you have the exact paint color.

One of the most important issues with these fixes is not the paint color, but the paint “sheen”. Often I will go to someone’s house and see everything “fixed” by the owner vs the builder, and even though they used the exact same paint color, the fixes have a shine, and the rest of the wall does not.

If you bought new construction about a year ago, take out your builder warranty and examine your home very carefully. Look around door frames, windows, drywall tape joints. Pull your furniture away from walls and look for “bows” in the wall from green wood having dried incorrectly. Often you can see this by examining the baseboard for gaps, and remember to look at both sides of the wall if you find this type of abnormality.

Maybe you can have your friends over for an “Almost One Year Anniversary – Find a Crack” party 🙂

There is usually a “drop dead date” in your warranty for these types of minor repairs, so be sure to PUT IT IN WRITING. Don’t just call the builder a week before your time frame expires. It’s too easy for someone to say you never called, or that is not what you called about.

Best to get your request to the builder, in writing, before the time frame lapses. Happy One Year Anniversary in your new home, often includes a visit from the builder to fix those things that tend to settle in the first year of a new construction home.

If you bought resale, with a one year “home warranty”, same story. If you have been “ignoring” a small problem that may be covered by that warranty, be sure to get a written request in before that warranty expires. You will be looking for different things if it is resale vs new construction, so read your warranty carefully. You might even want to have a full home inspection done, to make sure you don’t miss something.