The condo public offering statement/resale certificate

As always, this post is not legal advice.  For a specific legal question, consult an attorney.

Buying a condo can make a lot of sense, particularly if you can purchase a unit close to work (e.g. downtown) and if your “lifestyle” is conducive to apartment-style living (e.g. no kids, no pets).  If you’ve decided to take the plunge, make sure you do your homework.  The Seattle Times had a good piece on the topic a couple of years ago.  That article notes several sources of information that you should review prior to purchasing, including the public offering statement (for new construction) or the resale certificate (for a previously owned unit).  In reality, your homework can begin and end with the public offering statement or resale certificate, as by law each of these must contain the information necessary to make an informed decision.

That said, don’t revert to your younger self and “forget” to do your homework.  The statement or certificate can be quite intimidating, often including hundreds of pages of information.  Nonetheless, you need to sit down and dedicate some time to reviewing it in detail.  Reading it in bed, before drifting off to sleep, is NOT sufficient (although you may find a cure for your insomnia).  The disclosures contain information about the financial and physical health of the devlopment, as well as the rules that will govern how you can use the unit (such as renting it out).  Ignore this information at your peril — you may find years later that you made a very poor decision, all because you did not take the time to review the provided information.

Finally, given that the disclosure contains hundreds of pages, many of them written in dense “legalese,” you may wonder whether an attorney should also review it on your behalf.  An attorney can explain the disclosure and answer any questions you may have.  Moreover, the attorney may be able to identify issues of concern that you did not appreciate.  On the other hand, the attorney does not and can not know everything that is important to you.  Therefore, while you may benefit from an attorney’s review, the key is that YOU must take the time to review the disclosure carefully.  If, after doing so, you decide that the condo is not for you, both disclosures create a right of rescission (7 days for a public offering statement, 5 days for a resale certificate) so you can cancel your purchase and sale agreement and avoid the mistake entirely.

Seattle Area Appreciation

Brian Brady asked: “Off topic but I wanted to ask you a question, Ardell. Has Seattle been a rising market from Feb, 2005 through today?”

It would have been a lot easier to answer if you hadn’t said February 2005 🙂 I could have just said yes. But I remember the day. It was June 15, 2005. I could feel it. I could taste it. I could smell it. The ground was swelling. You could put your ear on the ground and hear it coming! LOL I happened to be in a complex called Sixty-01, which has its own idiosyncrases that I won’t go into since you are out of State, Brian. But here’s some stats to prove my blood boiling was on target. Hindsight is easy. Feeling it coming is an artform. I’m using Sixty-01 because I was there that day and also because it has a lot of “same product”/apples to apples for straight appreciation comparisons. They are all practically identical 2 bedroom – 1.5 bath townhomes in the stats below.
07/09/03 – $100,000

11/24/03 – $ 95,000

08/12/04 – $128,950

08/24/04 – $129,500

02/18/05 – $128,950

05/03/05 – $123,000

06/20/05 – $131,450

07/07/05 – $127,000

All of those were in contract before June 15. On June 15th one came on market with an asking price of $137,950. I practically begged a poor woman to get an offer in within an hour of it hitting the market, to grab it at full price. I could feel it in my bones! The prices were going to move right now! She could get it at full price today! But she couldn’t get her brain around it. She wanted to make an offer based on the average of the comps at $127,000. I was beside myself. I knew getting that townhome at $137,950 on that first day was going to be the best move she ever made. But I couldn’t convince her. Five days later it bid out and sold at $148,000. And here’s what happened after that.

07/19/05 – $148,000

07/22/05 – $167,950

07/29/05 – $166,000

11/29/05 – $178,950

03/30/06 – $177,000

06/07/06 – $205,450 (list at $199,900)

07/11/06 – $205,000

08/25/06 – $227,500

09/13/06 – $235,000

11/01/06 – $245,000

01/17/07 – $252,500

New on Market $269,900

So Brian, rephrase the question and ask me if it has been going up since 6/15/05, and I can answer yes. February 05 through June 05, not as much. I’ll have to do a new townhome comparison in Ballard to confirm Eastside vs. Seattle proper. Hard to find “like kind” in Seattle as there are very few “like kind” comparisons except splits and townhomes. Many of the homes were built in the early 1900s through 1930, and are all unique structures with massive modifications since 1905. But I’m pretty sure the stats will be about the same. Kirkland Condos…same story but harder to find “like kind” these days as newer equals higher ceilings, so “like kind” harder to track.

Hope that answers your question.

Inman has Gone Blog Wild

and it is a good thing!

Looks like they just published the first of a 4-part series on real estate blogging (only by subscription after today!). Lots of good stuff from some of today’s heavy hitters!

It was great to see Todd of Lenderama get some exposure for his (very cool) REMBEX search tool.

Also want to say thanks to Greg… I think he’s running one of the best real estate sites on the web, so it means a lot to me when he gives credit to RCG for some of his inspiration.

While I’m talking about Inman, I thought I’d mention that, like many other real estate bloggers, I’ve been invited to participate in their Blogger’s Connect at the very end of July. I’m definitely looking forward to it as I had a lot of fun last year in San Francisco… From the overview:

The content, speakers and workshops are being designed in the blogosphere. We have invited 20 leading real estate bloggers to use their blogs to reach out to their readers to invent the program.
Imagine the first “user-generated program” including panels, topics and sessions. Could be silly, could be interesting — certain to be fun.

Bloggers Connect will begin on Tuesday, July 31 with a party and then all-day sessions on August 1. Fun and crazy events are being built into the program including the Dive Bar Tour, the Haight Asbury experience and the blogging romp.

Use Your Sent-Items Folder as Inspiration

It was so much fun to stop off in Seattle last week to give the seminar in downtown. Meeting up with Rhonda and Jillyane (and potentially a new contributor I’ll introduce soon!) was awesome!

One of the tidbits I share with the real estate professionals in the audience that seems to resonate well (at least based on the feedback I’m getting) is when I explain to them that even the non-bloggers in the audience are already writing blog posts, but they are not getting credit for it. Here’s my logic in a nutshell…

Assumption #1: Writing a blog post is just like sending a webmail (via Hotmail, Yahoo Mail, Gmail, etc), except that it is one step easier. With a webmail you need to (1) click on “write” or “compose” message, (2) fill in the email address of recipient, (3) fill in the title of email, (4) write your message, and (5) click “send”. Blogging is one step simpler because you do not need for step 2, i.e. fill in the email address of the recipient since a blog post is essentially an “email to the world.” Otherwise, all the steps are essentially the same with the final step being “publish” instead of “send”.

Assumption #2: The sent-items folder for most real estate professionals is already filled with good stuff that they are already experts on… For most real estate agents, the sent-items folder of their email program is likely to find information on neighborhoods, mortgage and closing process, local events, etc..

Because most agents are already sharing lots of their knowledge via email and because a blog post is nothing more than an email to the world, hopefully, you’ll start to see how I can say that most agents are already blogging… The idea that they are not getting credit for their knowledge stems from the fact that if a professional has a lot of stored up information in their “sent items” folder, then the search engines and other bloggers can’t give them credit for this knowledge. The last bit is critical to the seminar, but not necessarily to this blog post… 😉

Interestingly, both Steve Rubel (Turn Gmail Into Your Personal Nerve Center) and Greg Swann (Feed guarding: Protecting your weblog content from theft — or worse fates . . .) wrote articles today that either demonstrate the blurring of email and blogging (i.e. blogging via email) or take it for granted (i.e. RSS syndication).

By the way, I’ve been taking my own advice about unleashing the “knowledge” from my sent-items folder over on the seminar blog by publishing answers to many of the questions that I’ve been getting from seminar participants. I’ve been inundated with email questions lately which is great for providing me blog content, but not so good in terms of providing me time to answer everyone quickly! 🙂

Death by a thousand paper cuts

[photopress:papercut.jpg,thumb,alignright]Every once in a while a realtor or broker from out of state will ask me to develop an IDX web site for them. Unfortunately, supporting a new MLS is very similar to supporting a foreign language. It is a large software engineering task that takes a lot of time, and since I don’t already have the code written and don’t already have access to their MLS’s feed, I inform them that time is money and the conversation usually ends there. Someday, that may not be the case, but I’d rather be small & profitable than large & broke.

The problem is made worse by the fact that many Realtors don’t know what format or protocol their MLS uses for data downloads or even who to contact in their MLS to get a feed for an IDX vendor. If you ever want to change IDX vendors, hire a software engineer or are crazy enough to do it yourself, you should know this. Knowing how your MLS distributes your listing data is like knowing how to change the oil in your car or how to defragment your hard drive. You don’t have to know, but it’s good to know. It may seem like I’m ranting about some MLS techie mumbo jumbo thing again, but it is preventing the industry from taking advantage of the low cost IT innovations that could be. I don’t think folks fully appreciate the challenges that an IDX vendor faces and how those challenges are retarding the industry’s growth and health.

For example, the NWMLS (Northwest Multiple Listing Service – serves mainly Seattle, WA and western Washington) uses software from Rapattoni. It provides listing data via a proprietary SOAP interface and all the photos are accessible via an FTP server. Listing data is updated constantly (a new listing usually appears in our feeds about 15-20 minutes after it’s been entered into NWMLS by a member as I understand it).

By contrast, EBRD (East Bay Regional Data – serves mainly Oakland, CA and the east bay area) uses Paragon by Fidelity MLS Systems provides it’s listing data via nightly updated CSV text files, down-loadable by FTP. The new and updated listings images are accessible via ZIPed files via FTP. The photos for active listings which haven’t been recently added or changed are not available (unless you bug the IT dept).

The only way they could make their systems more different is if the EBRD encoded their listings in EBCDIC! In order to support both, I need to develop 2 very different programs for downloading the listing data onto my server, importing the listing data in my database, dealing with differences in the listing schema (for example, the EBRD doesn’t contain a “Number of Photos” field or a “Community Name” field), dealing with differences in the photo location downloading (the NWMLS stores all photos in an uncompressed format in one of a thousand sub directories while the EBRD just stores the fresh photos in one big zip file). So I can spend my limited time improving my software for new markets (that have no customers) or improving my software for my home market (which has paying customers). Unfortunately, given the current market realities I can only afford to support my home market at this time since MLS IDX programs can be very different and there is no place like home (so far as I know anyway).

I keep waiting for RETS to save me from this madness, but until it happens in Seattle or the East Bay, I’m not holding my breath. After all, if two of the larger MLSes in the country in the two most tech savy areas of the nation don’t support it yet, I interpret it to be a vote of no confidence. I suppose, RETS could be going great guns in the rest of the country, but if it was, I’d expect the NWMLS & EBRD to be all over it, like the establishment on Redfin.

The Center for REALTOR® Technology Web Log, paints a rosy a picture regarding RETS deployment in the industry. Unfortunately, according to Clareity Consulting, an IT consulting firm that serves MLSes and other parts of the real estate eco-system, RETS is the NAR’s unfunded mandate. Although, everybody wants the benefits of RETS, nobody is willing to pay for it. Furthermore, it appears back in days before I got sucked into real estate technology, there was an effort to promote the DxM standard and that went nowhere (which is a bad omen). What’s worse is that they keep moving the goal posts. We don’t even have widespead RETS 1.0 support, and they’ve already depreciated that standard going full bore on RETS Lite and RETS 2.0. It seems the biggest problem is one of vision and scope. They keeping adding more features to cover more scenarios, when we don’t even have wide deployment of the existing standard (assuming that we had standards to begin with at all). It reminds of the recent software industry debacle that is known as “Longhorn reset“. The problem is that RETS is just too complicated, in an environment with too many legacy systems in place, too few resources to support it, and excessive aspirations. The idea of RETS is great, it’s the implementation and deployment that’s disappointing and at least Microsoft pulled Vista out if it’s death spiral…

[photopress:pappercutter.jpg,thumb,alignleft]The sad thing is that computer industry already has great tools for moving data around over the Internet in efficient and well supported (if sometimes proprietary ways). They allow you to query, slice, and dice your data in a near infinite number of ways. They’re called database servers. They are made by multiple software vendors and there are even some excellent open source ones out there. They let you set permissions on what accounts can see what tables or views (gee, sounds like something an MLS would want). The better ones, even have this level of security to the field level. Even better, most of these so called database servers have the ability of exporting data into spreadsheets, reporting tools, and even GIS systems. All of them provide a well defined and often times well implemented API that software developers can use and exploit to implement what hasn’t been invented yet!

Why doesn’t the NAR & the MLSes save us all the trouble, standardize on a few good database platforms (I’m a fan of MS SQL Server and MySQL, but I’d settle for anything that has ODBC, .net & Java support at this point), and provide everybody RDBMS accounts? It’d lower the cost for us IDX vendors (less code to write, since everything is just SQL), it’d lower the costs for MLS vendors (since data access, security, programmability, and scalability is now the RDBMS vendor’s problem), provide more choices for agents and brokers (since getting Excel talking to MS SQL Server is a cakewalk compared to RETS) and it will lower IT costs for the MLS (because the MLS vendors don’t need to invent an industry specific solution to a problem that’s been largely solved already and I’m betting that the MLS vendors already use somebody else’s RDBMS to implement their solutions anyway). Granted, a SQL Server won’t enable all the scenarios that RETS wants to enable (if RETS was ever well implemented and widely deployed enough for that happen). However, I’m of the belief that it’s not going to happen until after Trulia or Google Base becomes the de facto nationwide MLS by providing a single schema with a simple REST like web services interface.

So, what does your MLS do to support IDX vendors? Do they provide all the data all the time, or just daily updates? Have they deployed RETS yet? Are they going to? Who is their MLS software vendor or do they have a home gown solution? What do you want to do, that you can’t do today because the data is in a format that you can’t use easily? Would you be willing to pay more in membership dues for better software or better service from your MLS? Are we at the dawning of the RETS revolution, or is it too little, too late?

PS – Anybody, know anybody from an MLS / IDX dept or MLS vendor that blogs? I’d love to know what things are really like on their side of the listing data fence.

Update on staging of house…

I put a post here the other day about staging a house and then saying I’d put in photos of the finished product to get responses from readers here (preferably readers and not regular contributors) about whether or not they could see the value and difference staging (and good preparation) makes in a sale. This listing got multiple offers and has a contract on it for more than asking price right now which was somewhat expected since we priced the home in the mid-range of what it could sell for based on our market analysis for the area.

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Comments?  I have not posted every single photo but this gives a good layout of the house and most of the amenities it has to offer.

The Escrow Files: the funny side of escrow

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While in Leavenworth, Wa. recently, Lynlee and I stumbled upon a variety shop in town with a wall of extremely funny quotes on mugs and urns like this. Had to buy it!

The things you hear out in the field can be very funny. Today, while waiting at a real estate office, I overheard probably the funniest conversation yet:

“…..I thought they just paid the water bills and stuff like that?” (referring to escrow)

It reminded me of a comment by my mother-in-law (sorry Lynlee, I do love your mom, but sometimes…) talking about her neighbor who is a retired Firefighter for the City of Seattle:

“oh, I think all he did was just turn the water on.”

Wherever you close your transactions, life is good in the escrow business!

Rhonda Porter, memories?

What the Viaduct Vote means (even to those outside of Seattle)

[photopress:viaduct.jpg,thumb,alignright]I realize this blog reaches outsides of Seattle, so I will see if I can make this have meaning for everyone and for those of you that knew Dustin in his prior life, you will know this is right up his alley too :).

I am on vacation this week, but was catching up and reading Sunday’s Seattle Times article about the up and coming Seattle viaduct vs. a tunnel vote. For those of you who do not know about this vote (or like me and are a bit confused) here is a quick synopsis.  There are 4 options.

One: Yes on the viaduct.
Two: No on the viaduct
Three: Yes on the tunnel
Four: No on the tunnel

Seems pretty simple to me, but with the way the ballot was written these are actually two separate votes.  So in theory, both could win or both could loose.  They SAY the probability of this happening is very slim, but you never know, crazier things have happened i.e. 2004 Washington State Governor (if you have never read this, this is a great read!).

This may be a stretch, but in my eyes, this raises the question of how does any city solve a problem that affects a limited group.  The same was true for me with the Monorail where a finite group of people (primarily western Seattle) would have the convenience of using the monorail, but all of Seattle’s roughly 572,600 residents would have been on the hook for the bill.  While I have no political agenda in this post… I do believe in mass transit. This is a message asking if it is fair for an entire city to be called upon to pay for a major tax measure that limited number will enjoy.

I am not saying if a major section of a city needed repair, it is not up to all of the city’s population to pay.  The message I am attempting to convey is that the measure being voted upon can be solved in other ways.

[photopress:narrows.jpg,thumb,alignright]A great comparison would be the second Narrows Bridge connecting Tacoma and Gig Harbor.  This project is being financed through state tax exemptions, a bond and a toll. The basic difference here, is that users of the bridge (commuters and travelers alike) are paying, rather than all area citizens.

Again this is not about my support (or lack) of an issue, this is about what is fair.  If the viaduct is taken away and a tunnel is built, can we assume it will be similar to Boston’s Big Dig.  What about the young professionals who have puchased a downtown condo so they could avoid a nasty commute?  Should they pay for a tunnel or new viaduct that they won’t use?  Shutting down a major roadway to and from a large section of any city will have (in my mind) have a significant affect on traffic which will therefore have an affect on real estate values in that area (see I brought it all back to real estate).  In my own opinion, I am not interested in living in Queen Anne if I cannot use 99 (which is bordered by the major access highway that will be closed) .

So much for being unbiased.

15 Year Mortgage Too Pricey for Normal People

This morning, I read a commentary on seattlepi.com from columnist, Christy L. Thomas called Seattle too pricey for normal people.   It’s regarding her move from Boise and how she and her boyfriend are considering whether or not they can afford to buy what they would like to have in Seattle. 

The part that struck me, being a Mortgage Planner, is that they are selecting a 15 year fixed mortgage for their financing.   That avenue would be an expensive choice for anyone.   She mentions trying to find a home priced around $320,000 based on what she sold her Boise property.   I’m assuming that Christy and Tom (her boyfriend) are conservative folks since they’re looking at a 15 year fixed mortgage…so the following comparisons are based on putting approx. 20% down.   I’m also using the rates I quoted on Friday.

  • With a sales price of $320,000, their loan amount would be $256,000.  A mortgage amortized over 15 years would provide a principle and interest (P&I) payment of $2108.75
  • A mortgage amortized for 30 years with P&I of $2108.75 would provide a loan amount of $356,480 and an approx. sales price of $427,750.
  • Amortize a mortgage over 40 years with P&I of $2108.75, you will have a loan amount of $377,270 and an approx. sales price of $452,725.

Same payment with each scenario…except you’re able to buy $132,725 more home using a 40 year fixed over the 15 year fixed and  $107,750 more home with the 30 year fixed mortgage.    With an interest only product, such as a 30 year fixed rate with a 10 year interest only payment, the savings (or how much more home they could buy) would be even more substantial.

I hardly ever recommend 15 year fixed mortgages to my clients…unless they’re doctors or someone who makes so much money that their mortgage deduction is reduced and they all ready have all the investments they need.  

Even if Christy and Tom’s case where they want to “look around and buy the home where, if we’re lucky, we’ll grow old together”.    Why pay off your mortgage and lose one of your best income tax deductions?

Christy, Seattle is not too pricey for normal people…your 15 year fixed mortgage is.