Category Archives: Seattle Real Estate Stats

It's Stormy out there, but we are having fun!

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OK, so it’s stormy and gloomy outside and there are blogger civility issues going on. The stock market gloomy today? Oh yea, that too. But,we are having fun! What are you doing around the office to keep things bright and morale high?

We’ll, someone had a birthday at our office and her Elvis memorabilia continues to grow at her desk and Pumpkin season is here! I love the Fall. My wife dislikes it and hates my favorite saying this time of year: “it’s great Soccer weather!”

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The funny thing about this cardboard Elvis is that it has a sensor so that when someone walks by, Elvis talks! Elvis appears to also be light sensitive. When we turn off the lights after work, he said, “hi, good to talk to you.” Can’t wait till the night cleaning crew comes and turns on the lights. They will be in for a treat!

Washington State Loan Originator Licensing Update

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2007 is a transition year for loan originators who work for a mortgage broker in Washington State.  These folks have received an interim license with a Dec 31, 2007 expiration date.  The license is conditioned upon LOs passing a competency exam, completing two continuing education courses (one of which must be an ethics course), paying the required annual fee, and completing their required renewal paperwork by Dec 31, 2007.

If loan originators complete their two required CE classes and pass the exam by Dec 31, 2007 but fail to renew with their state regulator, LOs will have 45 days to complete the renewal paperwork with DFI and will be assessed a 50% fine for completing the paperwork late.

[photopress:LOTest.jpg,thumb,alignright]If a loan originator does not complete the required two CE classes and pass the exam by Dec 31 2007, the LO must cease originating loans and transfer all files to his or her broker or another licensed loan originator.  The LO will have 45 days to pass the exam and complete the required CE classes while originating NO loans. After Feb 14, 2008, if the LO has not passed the exam and completed their CE, the interim license will expire and the LO will need to start the application process all over again from the beginning. After Feb 14, 2008, LOs must wait until their new license arrives from DFI before being able to do the job of, and earning fees from loan origination. There are no exceptions; not even one loan.

The consequences of not completing the continuing education and passing the competency exam by Dec 31, 2007 are not pleasant.  Read more about license renewal from the state rules.  (Scroll down to numbers 18 through 22.)

DFI is reporting (link opens pdf) 11,114 interim-licensed loan originators in Washington State with an additional 3956 applications pending for a total of 15,070 loan originators. So far, only an estimated 2000 loan originators have taken their competency exam. That leaves 13,070 who still must pass their exam by Dec 31, 2007 if they want to avoid paying the 50% penalty.

If we remove the 1833 LOs who originate Washington state loans from out of state, then we’re left with 11,664 originators who are physically located in WA State. Promissor, the vendor delivering the exam, shows seven exam sites located around Washington State. We have 46 test-taking days left in 07.  Theoretically, if 254 LOs took the exam every day (36+ LOs per test site) they could all make the deadline.  The real question, is: will they do it?   One of my students called me yesterday to report that she passed her exam, but that there were only 3 other LOs taking the exam along with her.

The pass rate is reportedly 89%.  To me, this means the test is too easy, so why the delay? Are LOs just behaving like stereotypical sales people and putting it off until the last minute? Are folks not concerned about the 50% penalty and they’re going to put it off until January and February? Are we in for some mass attrition?

Realtors: If you refer consumers to a loan originator who works for a mortgage broker, inquire about the status of the LO’s interim license. You don’t want your client’s loan file to be transferred to another originator mid-stream.

Does the NAR & the Big Brokers really want to fight The Blogosphere?

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There have been a lot of discussions lately regarding Blogging, both it’s merits and potential for fallout on many levels. The problem with trying to keep Blogging under wraps: If you do, you have the potential for political backlash, both from the agents that build the brand of the broker (Re/Max, Windermere, Coldwell Banker, etc. ) and the Blogosphere itself, an enormous Goliath. Is it a battle anyone really wants to have?

Over at the Seattle PI Real Estate Professionals Blog, agent Sandy Kaduce remarked, “they will take away my blog from me when they pry it from my dead cold hands.” And, our friends howling down in the Sun in Phoenix take on the National Assn. of Realtors possible policy on curbing blogging for its membership.

But, what if an agent’s very own client blogs about their very own listing for sale and soliciting advice from the general public? For example, this case at Seattle Bubble from blogger “Econ101”. (a little more than halfway down in the comment fields)

I’m not certain anyone understands the possible repercussions of curbing blogging.

Update on 'Fix and Flip'

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Last Thursday night at the monthly REIA meeting, Than Merrill from A&E’s Flip this House presented an informative glance into his working business model. Than does more than 120 flips a year at an average of $27,000 each.  Although he just started 3 years ago, Than is making millions using a system that he partially nabbed from other fix and flip coaches and partially created himself.  Than acknowledged up front that he would have something to sell, otherwise he says there would be no point in his flying out here from Conneticut to talk to a real estate investment club.  And sell he did.  What my husband and I heard prompted us to attend an all day (9 to later than 6!) on Sunday.  The cost was relatively inexpensive and anything for more education, right?

In case you’re wondering who attends a real estate investing club, I noticed a lot of people with jobs looking for a way to become self employed, and I also found many who had already made that transition using real estate investment as monthly income.  Others are there to build a retirement using real estate investing as a vehicle. Some using sefl-directed vehicles and others doing 1031’s to defer taxes. 

Finding the right investment opportunity is key to good real estate investing. The investments we have been buying are properties that can be subdivided or converted to condos or in some other way create equity through development.  I hate fix and flips because there have been such a small margin in them because we didn’t knowi how to find below market inventory consistently.  We only do the fix and flips if we can increase the value of an adjacent lot or new construction home we sell by increasing the value of the original home. 

However, working with distressed sellers to find below market inventory is a business that is very specialized and can by itself be a full time occupation.  And there are a lot of investment buyers looking to buy discounted properties.  Finding these discounted properties has always eluded me. We have tried the foreclosure route and bought on the court house steps, but too many investors were chasing these properties and they still got bid up, squeezing that profit margin.  Then there are title issues and the fact that you can’t really inspect the properties among other things, like needing cash!

Than has been successful finding these sellers and I wanted to know how. He has multiple sources and mutliple campaigns aimed at finding anyone willing to sell at a discount. His program is a highly developed marketing and operation.  We were impressed, So, we decided to invest in the systems thinking that if he can make them work, so can we (I know, pretty egotistical). The cost of the program is pretty reasonable, the bigger cost being the time to attend a one week boot camp and implement the multiple marketing systems. But we’re looking forward to it and hope soon to have a source of ‘cents on the dollar’ real estate to offer our buyers.  Keep tuned.

BTW, still nothing definitive on the Contractor’s issue, i.e., an owner needing a contractor’s license to perform work on real estate prior to a sale if within one year. We’re all waiting for clarification. 

Top 12 Women Real Estate Bloggers 2007 Podcasts

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[photopress:top_12_2007.jpg,thumb,alignright]Oliver Muoto from vFlyer Blog wasted no time contacting the women Sellisius recognized as the Top 12 Women Real Estate Bloggers for 2007.   The podcasts are in nice easy to digest “bite size”  pieces with great bits of information to chew on about real estate blogging.   Oliver also includes a summary of advice from the interviews.

Yours truly is included and I am honored beyond words.

To listen to the interviews, click here.

Are you really preapproved or are you just prequalifed for a mortgage? Part 2

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A preapproval is the next step after becoming prequalifed.   Essentially, this means that you are supplying all of the documentation that is required to support your loan scenario.   Everything you have told the Loan Originator needs to be backed up for a “full doc

Inspiration is everywhere if you decide to let it touch you.

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There is nothing better than an underdog. Meet Paul, a phone salesman from Wales. This will blow you away. (need sound for You Tube)

The gentleman below inspires me everyday I drive to work. He is disabled and uses a broom to help support him and keep himself from falling while on his way to Walgreens. The beauty of it is that he sweeps EVERY inch of sidewalk or street in his path. It probably takes him about 2 hours to walk the four blocks round trip and he is smiling every inch. Look close at the photo on left and you’ll see the up-swing of his broom.
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When I feel like I’m not positively impacting the lives of 23 kids I coach in soccer or the stresses of work or family (extended or close ) gets us down, I look for ways to be inspired. It’s everywhere if you let it touch you.

Home Owner Quicksand

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If you own real estate beware. Last Wednesday, Russ Cofano wrote of new changes to the Washington Contractor’s Registration law that were made this summer. The real estate investment community is in shock that a change in definition of who must be a contractor with ramifications this drastic, slipped by in the guise of consumer protection. 

Although this applies to the ‘fix and flippers’ and you may think they need to become contractor’s in order to protect the public as they make a profit on the real estate they buy, fix and sell, don’t be too quick to applaud this new change.

In fact, ALL real estate owners, including owners of only a primary residence, should be equally as shocked as this definition appears to affect all property owners and not just investors.

The repercussions of this law go deep and have dire consequences.  As many of us understand the law, any homeowner that does any repairs and maintenance or remodeling to a home in anticipation of a sale within 1 year MUST BE A CONTRACTOR. Suppose you have a sale on your home, you have an inspection and you must now repair a few items.  What we believe this new definition maintains is that you, the homeowner, MUST BE A CONTRACTOR.  How impractical is this given that a contracto’s license requires a $12,000 bond, unless the homeowner has sterling credit in the area of 760 and can get insurance for the bond.  Even with that, the cost of the contractor’s license, insurance and bond  would be around $3000 or higher not to mention, the time that would be required to get a contractor’s license.

At the REIA (Real Estate Investors Association) monthly meeting on Monday night, even the 2 attorneys invited to explain the consequences of this new definition, were at a loss.  Neither wanted to take a position as neither had yet spoken with the Department of Labor and Industries who will enforce the law.

Can you imagine every homeowner needing a contractor’s license who a: has work orders persuant to a sale or b: remodels their, say bathroom, prior to putting their home on the market, or c: does maintenance or remodeling work on their home prior to renting it out within the year. Any of these instances could require a contractor’s license.

The investment community is wondering what this all means. Many investors purchase homes through their retirement accounts through self directed IRA’s or other LLC’s or corporations.  Does this law mean that the LLC must be a contractor, or does it mean that the owners of the LLC must be a contractor or both.  In the case of the self-directed IRAs buying real estate, there may be prohibited transactions if either the LLC or the owner of the IRA become a contractor.

My question is, where was the Realtor’s Association when this was enacted and why didn’t they alert us all.  I will find that out. It’s my understanding that they were directed to take a no opposition stand.

I hope this all works out in a reasonable manner. We’ll see.

6 Interesting tidbits from around the web

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  1. Seattle is doing a lot of recycling and New York is listening. Did you know that it will soon be illegal to throw away food scraps? At Chez Ward we feed food scraps to the red worms in the bin so we don’t have to pay the city to haul our scraps away and then pay again to get them back.
  2. The DOJ released a website all about real estate commissions yesterday (beware the Inman paywall tomorrow!). We can argue all night and day about whether agents as a whole are “worth” 2.5-3%, but I’ll tell you this right now: some Realtors are and others are not. The DOJ says that an amazing 70% of home sellers negotiated the commission with their agent. Maybe the DOJ should set up a site on divorcing commisions or the frickin’ health care system, where rates have gone up a lot more than a few percentage points a year. OK, maybe this warrants its own post.
  3. Only “20% to 25% of the homes shown on the Internet (depending on your information source) use home tours and/or multiple photos … It indicates apathy, arrogance, negligence and many other bad words.” No points for trying; all extra photos must make the process of selling the house better, not worse.
  4. Apparently banks are even less rational than sellers about home values in a slow market. Teresa Boardman:

    “They often hire Realtors, but banks make lousy clients … Buyers need to understand that when making an offer in a bank owned property it can take weeks to get the offer presented and then accepted, or rejected. They don’t seem to negotiate offers like other sellers do, they just accept, or reject and wait for a better offer.”

  5. Huzzah is a real word. Wikipedia says so.
  6. Lowell Elementary school ranks better than any other school in Seattle (using standardized tests scores). I learned this while ironing a bug out of Estately’s new Seattle real estate page. And I think I just broke the rules.
  7. Bonus: the past tense of help is holp. Anyone who says otherwise is decimating the language.

Department of Justice Speaks Out

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[photopress:doj.jpg,thumb,alignright]This website put out by the Department of Justice’s Antitrust Division is…Oh MY GOD!!!  It’s almost an indictment of the entire industry!

Most of you know about the lawsuit that is still ongoing filed by the Department of Justice against the National Association of Realtors.  There are a few other cases as well, noted on this website.

Based on the entire content of this site, which is well worth your time to peruse, it seems the DOJ is taking a stand whether they win or lose in the individual suits.

It’s a Call to Action.  Will the Industry respond accordingly?  Quite an amazing site!  Portions appear to have been written by Glenn Kelman 🙂

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Added to post from comments below.  What can Brokers do to help the DOJ’s efforts:

There are many things that Brokers can do to help.

1) Remove all commission language that reduces the mls offering to the Buyer Agent, if the Buyer Agent is not present when the buyer first views the property. In fact, I think the mls should not permit these clauses, as they are not being uniformly enforced, and in fact may be totally unenforceable.

2) Remove all minimum commission language directing agents with regard to agent client commission negotiations. While a Company can set a minimum amount that the agent must pay to their broker, they should not control the amount an agent can negotiate with a client.

Don’t you think it’s a bit odd that many agents will not pay a Broker for a whole year, what they would charge some clients for one move out-move in?

3) Clearly no Broker should permit talk within their office against any new business models. No talk about not showing certain property. No talk about how to combat the intrusion of certain business models on their income stream. In fact, I will not talk about commissions en masse at any office meetings.

I will meet one on one with any agent to discuss their individual goals and business plans. I can further discuss the amount the Company expects that particular agent to pay to the Company in a year’s time. But I will not discuss commissions as general policy, nor tell them what commission they must charge their clients.

Each agent is their own business. So any company that binds these separate businesses together as one commission model, is hindering competition in the marketplace. I know that’s a different way to look at it. But it’s true. No Company should have a policy that addresses in any way, the commission dollar that is not staying with the Company.