Category Archives: Investing

Zillow and the SeattlePI Partner-up for Property Searches

Posted on by
34

Zillow and SeattlePI business partnership

As is being widely announced in the news this morning, Zillow.com and the SeattlePI.com websites have partnered to offer co-branded website property searches. Ironically as of 8am you can find this story on Reuters, Inman News, and of course Twitter and Facebook. But Ironically it is still missing from the Homepage of SeattlePI.com.

The website will also offer Zillow’s other features such as home values, “just sold” data, local market data, etc.  As well as their custom real estate community content via Zillow Advice and mortgage rates from their Mortgage Marketplace function.

This raises some interesting issues for other companies, organizations, brokerages, and agents who  have property search functionality built into their blogs and websites in order to drive traffic to their sites, and ultimately derive business from it. Rain City Guide is a great example of a website that has recently added property search functionality through M Realty in hopes of garnering more viewers, and potentially a revenue stream as well. Many agents, including myself, have spent years developing websites that we use to attract potential buyers and sellers. Is Zillow now officially our competition?

Strategically this makes a lot of sense for both companies as the SeattlePI is struggling to re-create it’s business model after shutting down it’s printed newspaper version in March. And Zillow has recently been monetizing their searches through selling advertising to agent’s by zip codes.

I wonder what RCG’s readers and contributers think of this turn of events. It’s definately a “game changer”. The question is, what’s the new game going be like, and who’s going to get to play?

Sunday Night Stats – King County, Seattle and Eastside

Posted on by
10

Ardell_aug-kcWhile I am not seeing any huge surprises in the market overall in King County, there were some jaw-dropping results in individual neighborhoods.

Amazingly great results from Downtown through 85th in both the first and second price tiers.

Amazingly poor results in Kirkland’s 98033 vs 98034 zip codes.  Those areas are usually reversed in terms of performance.

Redmond did not perform as well as they did last year. Bellevue only doing well in the lowest price tier.

All of King County still struggling in the over $1M market, with no exceptions.

The clear winner by far shown in the 2nd graph here, as compared to other parts of Seattle and the Eastside. Those figures of only 133 for sale in the lowest price tier, with 455 sold YTD, is beyond anyone’s wildest dreams for this market. My guess as to the dismal results for 98033 is that most of the cheapest homes used to be sold for lot value…and there are few takers for building lots and tear downs these days. The remainder of the problem is likely that homes are just overpriced, and buyers are getting much better at finding true value, vs negoatiating off of list price. This is sending the 98033 buyers into 98034 for better values and larger and nicer homes for the money.

I will be doing some in depth studies of the neighborhoods from Downtown through 85th to see if Queen Anne is outperforming Capitol Hill or if Fremont is outperforming Green Lake. Overall…as a group…clearly the best neighborhoods in terms of consistent performance which could be the hedge one is looking for against further price declines.

(Required Disclosure – The data used in this post is not compiled, verified or posted by The Northwest Multiple Listing Service. Hand calculated by ARDELL.)

Ardell_aug_dt_-_85

Inspection = Yay or Nay

Posted on by
32

thumbs-downAn alternate title for this post might be “The seller doesn’t ‘have to’…anything”.

I am writing two offers today and the one MOST IMPORTANT thing to keep in mind when making an offer on a house is, the seller does not have to do anything during escrow except pack and move out!

In this market, if you have successfully achieved the lowest possible price at time of contract negotiations, there is often NO MORE ROOM for the seller to give at time of inspection negotiation.  This is not always the case, but is clearly more often the case IF you have achieved a hard bargain at time of contract. The better you were at getting lowest possible price in the beginning…the less likely you will get anything at all at time of home inspection “negotiations”.

There is a misconception that the seller has to compensate, or even give a RA, about the negative items in the home inspection report. Not so! You have a Yay or Nay vote, that is true. You can say, “I don’t want this house because of that $50 defect”, in fact you don’t have to give a reason at all. You have the right (in the Seattle area under our standard Home Inspection Contingency, assuming you attached one) to “cancel on inspection”.

BUT there is absolutely nothing in the contract negotiations to compel a seller to fix or compensate the buyer for defects found during the home inspection timeframe. “Timeframe” the key word(s) there. IF you are going to cancel, there is a drop dead date for your having the right to do that. Every contract is different. Most often it is in the first 10 days from when you originally achieved a “signed around” contract. Could be 5 days…could be 7 days…pay attention to the blank as filled in on your Inspection Contingency.

When you make an offer, inspect the home as carefully as you can and make sure your initial offer “compensates you” for clearly obvious negatives. Inspection negotiation is no time for you to start wanting money for something you could easily have seen without the help of a home inspector. To be clear, you CAN do that. But do you want to lose the house because you didn’t take that into consideration at time of offer?

Look at the date on the hot water tank, look at the date on the heater (sometimes harder to find), try to determine the age of the roof. Turn on all the lights, the appliances, flush the toilets. There are many things you can check before you are “in contract”. Often with short sales and bank-owned property, you are pretty much buying “as is”. Even with a regular sale, often the seller simply has no money to give in a 2nd round of negotiations.

Understand that your contractual rights are “yay or nay”, and NOT that the seller “has to”…anything.

Retweeting RCG just got easier

Posted on by
8

backtweetsI was at an tweetup last night with some great guys who run social media strategies for some pretty hefty newspapers and one of the tools they recommended I look into was BackTweets WP plugin…

I like to think of myself as ahead of the social media curve, but I hadn’t played around with the BackTweets much, but after just a few hours of use, I can tell I’m definitely going to be able to enjoy how easy it makes following twitter conversations around websites… and in the case of RCG, around RCG posts.

To try it out the new tool, you only need to click on the button that says “retweet” that’s at the top-left of every RCG blog post (just under the title!).

The Fed’s new GFE Helping to Insure Consumers Get ‘It’?

Posted on by
7

[Editor’s Note: I’m excited to publish this guest post from Adam Stein on changing role of good faith estimates. He’s a long-time local mortgage professional with Cascade Pacific Mortgage. ]

ftc screengrabThe FTC study reported on the proposed new Good Faith Estimates early on in 2005. Armed with a very thorough and unbiased study the FTC went on record, early and often, and clearly stated the FTC’s position on (then) HUD’s proposed revised Good Faith Estimate:’ DON’T DO IT!’ It seems the FTC’s findings clearly showed that consumers failed to be able to choose what loan was in their best interest when comparing rates and fees. [here’s the FTC’s Facts for Consumers: Looking for the Best Mortgage: Shop, Compare, Negotiate] So much was the confusion caused by the new Good Faith Estimate that over sixty percent of the consumers could not identify the best loan for them when comparing Good Faith Estimates generated by mortgage brokers and mortgage bankers. HUD, not to be outdone, quickly came to their own rescue with their own ‘not-so-unbiased’ study. HUD, supporting their own, quickly produced a study stating that the consumer really does understand the new disclosure (Really?).

And so the battle over RESPA reform has been waged for the better part of the last ten years. At one point the Secretary of HUD attempted to ‘slip RESPA reform under the mat’ by submitting the proposed rule just hours before Congress went on recess. Those who would have been impacted by the rule change clearly and accurately viewed this effort as ‘under handed’ as much of the required ‘commentary period’ passed by without any representative government in session to discuss the proposed RESPA reform. That effort failed in the end. The banking special interests, however, have finally figured out how to get a Good Faith Estimate through the rule making process under the guise of ‘what you can’t buy in an administration you’ll just have to do yourself’. Enter the Federal Reserve Board.

While the FRB sounds like a branch of the Federal Government it really isn’t. The Federal Reserve is a codified, private sector, coalition of the nation’s largest banks and finance companies who collaborate and advise government on key financial issues. The Federal Reserve Board also is empowered to regulate the Truth-in-Lending Act (TILA) and promulgate rules as required. Is it any wonder that the new Good Faith Estimate, vilified by the FTC for creating consumer confusion, creates a bias towards Good Faith Estimates that are generated by banks over those prepared by mortgage brokers?

My concerns are twofold: if the consumer can’t properly identify the best loan they will pay more; if mortgage brokers appear less competitive due to the disclosure of indirect compensation the mortgage broker channel will be reduced if not eliminated.

Mortgage brokers were initially the scapegoats of the ‘mortgage meltdown’. More recently, however, the broader aspects of derivatives and the role played by Wall Street and the nation’s largest investment banks have come to light. I find it ironic that now, after the creators of toxic assets have been exposed, that the FRB will promulgate rules that make their disclosures deceivingly more appealing to consumers. In the end the rule will hasten the consolidation that is already occurring in this battered real estate economy. There will be fewer choices for the consumer to choose from, moreover; when the consumers do choose their mortgage over sixty percent will choose higher rates and fees thanks to the new disclosures. Way to go FRB – You have successfully reduced, if not eliminated, competition in the mortgage marketplace and virtually guaranteed the mortgage shopping consumer will get it ‘in the end’.

Geek’s Guide to Seattle and More…

Posted on by
Reply

seattle geek guideI’ve been having a lot of fun playing on RCG’s Facebook page lately… Some of the stories I’ve been linking out to include:

If you have an event or a seattle-related post you’d like to see featured, let me know!

My daughter’s shoot for Smashbox Makeup

Posted on by
18

I’ll be heading down to see my three girls and two grandaughters in L.A. on Tuesday. I thought you might like to see Andrea’s recent pics from her photoshoot.  Maybe this time I will actually get over to see her doing tattoo art over in Venice Beach. She moved over to the Boardwalk store, so it should be a fun place to hang out in.

Hey Dustin! Weren’t we supposed to get matching tattoos?

andrea pinup

andrea makeup

andrea ink

Hard to tag this post…I chose the category “diversions” 🙂

Distressed property rental income: Who’s money is it when a home goes into default?

Posted on by
Reply

This is both a legal question and an ethical issue.

I’ve bumped into this, not in the workplace, but out looking at property :   A home that is in process of either a short sale or heading to foreclosure has tenants.  It is not that a homeowner does not have a right to rent a home or even part of their home, but when a homeowner is involved in a short sale, is in arrears (default), most lenders require substantial paperwork from the owner justifying their hardship. My guess is that the rental income could be kept under the radar.   Many homes in default are the result of job loss or other hardship due to medical reasons or other life issues.   In some cases though, defaults are a result of excessive equity withdrawal from serial refinancing.

Homeowners in a short sale are typically not allowed any proceeds from the sale as a condition of approval.  But, if the homeowner is receiving rental income from the property, should that money be forfeited to the lender to help cure the debt?

I have not been able to find the languange in a standard Washington State Deed of Trust form, but I thought I read somewhere that rents are collectible by the lender to help cure the debt when a default has occurred.   I could be very mistaken.

Starter homes you can STAY in

Posted on by
30

First Time Buyer Big Red Flag = “I plan to sell in 2 to 3 years”.

Many people are out buying homes right now because of the $8,000 1st time homebuyer credit. Unless the credit is extended, these people have until mid to late October to find a a house and get into escrow, so they can close by the deadline of November 30, 2009 (“before December 1”). My best guess is there will be a 2010 homebuyer credit, but it will be a new one with different parameters, and not merely an extension of the current one. But all we know for sure at the moment, is the homebuyer credit we have at present will expire, if you don’t close by the end of November.

The credit is not the ONLY reason people are out buying homes. The fact that you can more readily buy a “starter home” for $350,000 or less in many areas, is likely a larger part of the reason people are buying. The linked post will show you that in the current market you are almost EIGHT times more likely to find a starter home for $350,000 or less in Kirkland, Bellevue or Redmond, than you were in 2007. In Bothell and Kenmore, homes selling for $350,000 or less represent more than a full third of all homes being sold.

This market is a blessing in disguise…lots of sadness for sellers, but an opportunity for some young families to get into a starter home for less.

My caution is this:  I don’t want to hear “I will probably sell it in….”. In the data sample I used in the link above I did not include any homes with less than three bedrooms or less than 1.5 bathrooms. I’m not saying you can’t or shouldn’t move in less than 5 years, I am saying don’t buy a house that you can’t stay in for more than 5 years. When choosing a home, you should have the option to stay in the home, as many people who are suffering today and must sell their homes, are doing so because they have grown out of them.

The moment I hear someone say “this will hold us for a couple of years”, that is a big red flag! The home below was purchased by one of my clients who already had a small baby. It was purchased in a great school district in Kirkland for about $310,000 and it is not likely they will “grow out of it”…well, maybe ever.

Moral of the story: If you can’t see yourself living in the house five years from now…don’t buy it.

starter home

Go Ahead, Make My Day

Posted on by
60

Dirty-Harry-Make-My-Day

You know, some days I can really relate to Inspector Harry Callahan. Some days, it feels like being an IDX vendor is a dirty job so unappreciated that only Dirty Harry could fully appreciate it.

Recently, I’ve heard that the NWMLS decided to enact a few more rule changes. Needless to say, I’m all broken up about the new NWMLS rules. The good news is that there will no longer be a 3 download agreement limit. This should allow members to more easily work with multiple vendors, and perhaps better allow members to easily find cost-effective solutions to their IT problems. I think it’s a good idea because it could create more demand for the services I can provide.

The bad news is that starting in October, the NWMLS will charge each entity downloading the IDX data (i.e. the consultant or the broker for an in-house data feed) $30 per month, per agreement. For example, if a vendor A has a download agreement with office A, B, and C, then the vendor will be charged $90 per month. Needles to say, this new rule will seriously hinder your vendor’s ability to inexpensively host web sites or otherwise develop applications w/ NWMLS listings on them.

Sometimes, I got to wonder what are the jive turkeys at the NWMLS are thinking? So now I either have to eat an unwanted (and probably unnecessary) cost or I have to pass on the increase in my costs to my customers? Neither scenario really appeals to me (and probably won’t appeal to my customers either). I’d rather increase my costs by buying more servers, going to Inman SF Connect, buying iPhone app development tools & books, or anything else that would ultimately improve end-user satisfaction with the applications I build. But now I have to pay a tax for merely trying to serve my clients? Gee, it isn’t like developing an Evernet XML download is already as much fun us as doing my taxes is.

My clients are hard working real estate professionals; they are not professional software engineers. They know about as much about creating Zillow XML feeds or developing Real Estate based Google Maps mash-up as I know about selling a home with a troublesome neighbor or if a property is next to a graveyard, does it lower the value because it’s creepy, or does it raise the value cause it’s quiet? Unfortunately, the nature of the world today requires real estate professionals partnering with vendors and/or consultants because real estate consumers increasingly demand high tech services from their agents & brokers and you can’t provide that service without high tech experts working on your behalf.

I’m not opposed to higher taxes if I know it’s going for a good cause. But what is this extra $30/month per agreement going to buy me or my clients? Is the NWMLS going to buy faster servers? Hire more IDX support staff? Throw a big party and spend the money on booze and strippers? Is the NWMLS running in the red and needs a bailout? Seriously, I’d like to know what I’m about to pay for.

Also, wouldn’t it make more sense to charge per vendor instead of per agreement? A vendor needs the same amount of NWMLS IT resources regardless if they serve only one member or ten members. Typically, a vendor only downloads the NWMLS data once, and uses the same copy of the NWMLS database for all their clients. It’s not like a vendor who has 10 clients incurs 10 times the CPU & bandwidth costs that a smaller vendor does.

Allowing multiple feed per broker could encourage more competition between vendors, but increasing vendor costs certainly won’t make things cheaper for members in the long run.

I can see a future phone call from the NWMLS enforcement division going something like this…

I know what you’re thinking, punk. You’re thinking “Did I sign six download agreements or only five?” Well to tell you the truth, in all this excitement I kind of lost track myself. But being as this is the NWMLS, the most powerful MLS in the greater Puget Sound area, and could blow your web site clean off, you’ve got to ask yourself one question: Do I feel lucky? Well, do ya, punk?

Has anybody else heard any details on these new policy changes? Do you know what the new IDX feed fees are for? Do you think the repeal of the download rule will help you? Do other MLS’s do this kind of thing? Why do I feel like I forgot my fortune cookie and it says I’m {bleep} out of luck?