Tag Archives: Buyer-Information

Golf Balls

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Ok, this post is really not about golf balls but they are part of the story. A recent case illustrates how courts are putting more obligations on buyers of residential property to understand the condition of the property notwithstanding the seller’s customary obligation to provide a disclosure form to the buyer.

This case involved a buyer who was purchasing a house on a golf course. I can already hear you thinking that anyone who buys a house on a golf course surely knows that one thing follows: errant golf balls. The seller did not consider errant golf balls being a problem and therefore did not disclose them in the property disclosure statement. Although they fell into the yard with some frequency during the summer, he did not remember that they caused damage to the house, his family or even their dog. When buyer first viewed the house, he noticed a ball in the street and even inquired as to “whether the balls fly here.

Housing assistance for the middle class on the eastside

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I have a client who has been searching for a condominium for 6-months. Typical problem — what he likes, he can’t afford — what he can afford, he doesn’t like. We even looked down at Othello Station and thought we might find something there. They had several units set aside for low income families to purchase. Here the problem was he made too much to qualify for the set-aside units but not enough to buy the market rate units. What’s a person to do?

Well, we found the answer. Last week we had offer and acceptance on a really nice 2 bedroom / 2 bath unit at Frazer Court in Redmond. How did he do it? There is a great program setup between King County and several eastside cities to preserve and increase the supply of housing for low and moderate income households in East King County.

This program is called ARCH (A Regional Coalition for Housing) and has several below market rate duplexes, condominiums and town homes located in various developments in East King County. During the initial marketing period, maximum income levels are established for buyers. Typically, each development will establish a maximum income for buyers somewhere between 80% and 100% of median income. In addition, maximum income guidelines are often adjusted for both household and unit size.

Finally – a program that helps out the buyer caught in the middle income bracket. Check it out at www.archhousing.org.

How do you get a bargain?

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How do you get a bargain when purchasing a home in a hot market, without getting a lemon?

I have thought about the many times over the years that I have helped people purchase property at less than fair market value in all kinds of markets. Up markets, down markets, buyer’s markets and seller’s markets. I have used several different means to accomplish this goal for my clients. Today I will talk about one of the most recent transactions where a buyer achieved a true bargain price.

My partner, Kim, and I recently helped a buyer purchase a property so undervalued, that appraisers have called asking how we were able to acquire the property at that price. Answer was terms. A property came on the market in North Seattle at such a low cost that agents swooped on it like vultures. The seller’s agent was from out of the area, and the property was difficult to value, and so it came on market at a low price. But it would have bid up to “fair market value” or beyond, if we didn’t stop the other bidders in their tracks. We offered terms, or as we Italians like to say “I made dem an offer dey couldn’t refuse!”

One of the things agents do is “pre-negotiate” before they write an offer. I called the listing agent and let her blab on and on about anything and everything. I gleaned a few gems of significant data. The seller was buying new construction out of the area and they were scared about having to leave their current home before their new home was completed. Bingo!

We wrote an offer that did not compete as to price, but allowed them to stay up to a month after closing. This way the sellers had the comfort of knowing their property was sold, they had their equity in the bank three weeks before they needed to close on their new home.That gave them a whole lot of peace of mind.

The sellers did not consider any other offers and accepted ours hands down before several agents even had time to write an offer. Complaints from the trenches? “Why did the seller accept an offer without waiting for us to submit an offer? My buyer would have offered more!” The answer. Terms! Never presume when it comes to terms. Fast closings are not always better, if it forces the seller to pack and move before they are ready. Always base terms on what you know this particular seller wants and needs. Not on what you presume all sellers should want and need.

Condo Conversion vs. New Construction

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Given the popularity of condo conversion communities in the Seattle area, I think it is worth noting what these are, and what these are not.

I have heard both buyers and escrow companies refer to condo conversion communities as “new construction”. Please know that these are not new construction, but remodels, for the most part asthetic remodels, of older, rental communities. While you are buying the interior, and the interior is remodeled, you are also buying a fractional interest in the exterior. If there are 100 units, you are taking on a 1/100th responsibility for the new roof or exterior paint and all of the major components shown in the reserve study.

If you are buying into a condo building or community that has always been a condo community, the monthly dues for the last 15 to 20 years should have provided for an accumulation of “reserve funds” to replace the roof. If you are buying into a condo conversion, make sure the developer has “contributed” enough monies into reserves, to compensate for the fact that there were never before “unit owners” putting monies into the reserve account toward future replacement needs.

The roof may be OK today. But if it is a 20 year shingle and a 15 year old complex, there should be 15 years worth of accumulated monies set aside by the developer before he turns over the complex to the Home Owner Association. This is to insure that when the roof needs to be replaced in 3 to 8 years, there will be sufficient funds in reserve to buy the new roof. Also make sure that the monthly dues set by the developer include a sufficient amount for reserves. In five years when you need a new roof, you will need five years of owner contributions, plus the 15 years worth of reserves set aside by the developer, so that the roof can be replaced without a special assessment.

Understand that if a condo community or building functions as it should, there should never need to be a special assessment. Every owner, via their monthly dues, should be paying their fair share of future repair and replacement costs each year. It’s a simple calculation which assures that the monies will be in the reserve fund at the time the Major Component item needs to be replaced.

So I leave you with this warning. Find those things that are not new when buying into a condo conversion, and make sure the developer is contributing an amount into reserves reflecting that portion of “useful life”, used to date.

Who Benefits from a Buyer's Agreement?

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(Editor’s Note: I’m happy to introduce Russ Cofano as a new contributor on Rain City Guide. He is a practicing real estate lawyer in Seattle with a tremendous amount of legal and business experience. Among his many roles and accomplishments, Russ is the former retained General Counsel for the Washington Assn of REALTORS (“WAR”), Seattle-King County Assn of REALTORS and Tacoma-Pierce County Assn of REALTORS; he was a key contributor/drafter of important real estate legislation in the State of Washington such as the Real Estate Brokerage Relationships Act and the Residential Transfer Disclosure Act; and he is an expert on MLS and Intellectual Property issues having been invited to speak at national real estate conferences including Inman’s Connect in San Francisco and MLS Connection. Russ can be reached at Russ@cofanolaw.com)

In the 90’s (sounds so long ago, doesn’t it), the concept of buyer agency entered the real estate brokerage world. For years, buyers working with agents were always surprised to find out that the agent typically was a sub-agent of the listing agent and legally represented the seller, not the buyer. This was true even though that agent almost never had any contact with the seller and usually had a much more significant relationship with the buyer. For a variety of reason (mostly because it made sense), the historical concept of sub-agency went away and agents working with buyers actually started representing those buyers.

As this concept took hold, folks like me would tour around far and wide and talk about the virtues of getting an agreement in place with buyers. This seemed to make sense because, heck, listing agents got sellers to sign listing agreements so why wouldn’t a buyer sign something similar. Well, if it wasn’t for my quick feet and years on the basketball court, I would have had many a projectile hit me in the head when I would suggest to agents this new way of dealing with buyers. The response was usually based on the fact that most agents felt that buyer’s would never be willing to commit themselves to a single agent like seller’s do in the listing agreement. In the same breath, those same agents would curse about those cheating buyers who would use them for days, weeks and months and then leave them at the last minute to work with someone else or (egads!) work without representation.

Fast forward to 2006. In Washington (as well as many states around the country), we have agency laws that define both seller and buyer agency roles. In Washington, if an agent is working with a buyer and is not the listing agent on the property that buyer wants to purchase, that agent will be the buyer’s agent (unless they have an agreement otherwise).

So what do buyers legally get from buyer agents. Well, look behind door number 2, and you will see the following duties:

  1. To be loyal to the buyer by taking no action that is adverse or detrimental to the buyer’s interest in a transaction;
  2. To timely disclose to the buyer any conflicts of interest;
  3. To advise the buyer to seek expert advice on matters relating to the transaction that are beyond the agent’s expertise;
  4. Not to disclose any confidential information from or about the buyer, except under subpoena or court order, even after termination of the agency relationship; and
  5. Unless otherwise agreed to in writing after the buyer’s agent has delivered the Agency Law Pamphlet, to make a good faith and continuous effort to find a property for the buyer; except that a buyer’s agent is not obligated to: (i) Seek additional properties to purchase while the buyer is a party to an existing contract to purchase; or (ii) show properties as to which there is no written agreement to pay compensation to the buyer’s agent.

My question is this: Doesn’t a good buyer’s agent deliver significantly more value to a buyer than those measly duties outlined above? If so, why would a buyer not be willing to sign an agreement that requires the agent to deliver all those “extras

Zats really cool…

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Zillow has launched!

I just got an email from Zillow’s Director of Communications and she passed along the fact that not only is their blog live, but a beta version of their site is live as well… Rich and David flipped the switch!

So, what does Zillow do?

In two minutes of of a Skype conversation with my mom, we were able to find the “Zestimated” value of my home in Seattle, my mom’s home in Sacramento, and my grandmother’s home in Las Vegas… Very cool indeed, especially since my home value is zestimated to be worth $140K more than we paid for it two-and-half years ago!

From what I can tell, they’ve found a way to estimate the value of thousands upon thousands of homes (60,000,000+ homes by their count). For my neighborhood, they have lots of background information on each home… Not only does it tell you the size, square feet, lot size, etc. but it also gives information like a list of recently sold comparable homes. Very cool indeed.

zillow_screenshot_1

The site is loaded with tables, graphs, and charts for each home.

Probably the strongest selling point so far is that creating a set of comparables is so easy. I’ve worked a fair amount with Anna to develop comparable market analysis, and I can tell you that agents may have access to slightly better data on each home, but Zillow’s system is SO much easier to use that I imagine many agents will turn to Zillow from now on…

zillow_charts

Interesting, interesting stuff… It is interesting that the site has a complete lack of obtrusive ads and it will be really interesting to see how this plays out in the agent community. I’m not seeing a lot of negatives so far.

Here’s how Rich Barton explains their business model on the Zillow blog:

I’d like to make a comment on our business model, which I’ve found helps divine motives. Zillow.com will make revenues from advertisements on the site. We will always be crystal clear about what is content and what is advertising, just like any respectable content provider, and our advertising will not define our content. However, the beauty of “Web 2.0

Best Seattle Area Restaurants

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peppersChris Pirillo had an excellent list of his recommended Seattle-area restaurants. The list is huge and he’s right-on with most of recommendations like Zoka Cafe and Mighty-O donuts, but his choice of Mexican food is downright dismal (Taco Del Mar???).

Finding good Mexican food in Seattle is not easy, as there is a lot more bad options than good places. However, Seattle Pulse came to the rescue with a much more enlightened view of Mexican food with their article dedicated to finding Seattle’s Best Margarita!

They were right on the money when they rated Ballard’s Oaxaca a perfect 10 for both the quality of the food and the quality of the margarita! Oaxaca is the best Mexican food that I’ve come across in Seattle. It’s extremely tasty… It’s authentic… If you’re craving good Mexican food, then I highly recommend checking out Oaxaca!

Getting Ready for a Home Inspection

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Having attended many, many home inspections, I would like to offer a few tips regarding getting ready for an inspection (sellers) and what to bring to an inspection (buyers).

There are a few things that a seller should do to get ready for an inspection. One is to change your furnace filter. I like the big bright blue ones for the inspection. When the inspector pulls out a filthy, dirty sometimes crumpled up filter in front of the agent and buyer, there is always a 15 second staring at the filthy thing that transpires. Just take my word for it. It’s not a pleasant 15 seconds. Check your filter before the inspector arrives.

For those not buying or selling property, go check your filter. They cost very little. Keep a new one in there monthly or every other month during heating season and year round if you have forced air and air conditioning.

Also for sellers, the inspector will be spending some time with the buyer at the furnace, hot water tank and electrical panel. Make sure these are not covered with an inch of dust and dirt and are not blocked by boxes and storage items. Most times the inspector has to move things to get to these, which can put him in a bad mood. Trust me, you don’t want a crabby home inspector. At a recent inspection we had to move a whole storage cabinet to find the whole house GFI in the garage. So yes, wash that hot water tank and change that filter and make sure three people can comfortable get to and stand in front of these areas.

Buyers should bring some graph paper for drawing out the floorplan, a measuring tape for measuring the refrigerator opening if you are going to buy a new refrigerator, a clip board and pad for making notes, and of course your check book to pay the inspector. The Home Inspection is one of the few things you pay at time of service in a real estate transaction and is generally not transferred to the closing sheet. Sometimes you can be reimbursed for the inspection, so be sure to tell your agent or escrow closing person to show the cost as a POC on the HUD 1 if you have seller paid costs built into the sale price.

There are very few things you can do to get ready for a home inspection. Putting in a clean furnace filter is #1 for a seller.

Healthier Living Involves an Urban Home

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A recent study was just released that concludes that living in a walkable neighborhood is healthier than living in the suburbs! Another good reason to live in Seattle!

The Seattlest nominated this article for the “No Shit Sherlock” department in that it does not take a study to conclude that people who walk more will be healthier. However, to the study’s benefit, this kind of data gets used in the most obscure (yet important) ways. For example, I found the data to be extremely useful for a transportation demand management (TDM) tool I recently built for the Washington Department of Transportation (WSDOT). It can be so darn hard to quantify the benefits that make neighborhoods special that sometimes us engineers, (yes, I am an engineer by training) latch onto relatively obscure concepts like “walkability” in order to differentiate good neighborhoods from bad! Besides just letting us know that a walkable neighborhood is a healthier place to live, the study also helped to define what it means for a neighborhood to be walkable!

Bonus: One piece of my involvement in the TDM study involved creating a map that displayed the walkability of every single neighborhood in King County. My memory of the map was that the most walkable neighborhoods were almost all located in Seattle (surprise) with only a few located in the Eastside. If you’re really interested in learning more about what makes a neighborhood “walkable”, let me know!

The moral of this long-winded post? Living in a walkable neighborhood is not only more pleasant, but better for you!

Walking at the Ballard Locks

Playing With Rain City Guide's Real Estate Search Tool

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Robbie Paplin of Caffeinated Software has built a great home search tool for the Seattle area and he put some very interesting posts together giving background on his effort, but I’m not sure he’s done a great job letting everyone know just how cool it is.

So, let me clarify the situation… The search tool is AWESOME!

What’s so cool about it?

  1. google earthGoogle Earth. It exports any and all of your searches to Google Earth! This means that you can get extremely clear aerial images of the home and nearby neighborhood.
  2. RSS buttonReal Simple Syndication (RSS). Every search can be exported as an RSS feed an imported into a Blog Reader.
  3. Sort by Price/SqFoot. . This is subtle improvement, but it can lead to some surprisingly relevant insights. On any search, let’s say “Seattle Homes” or even “Million Dollar Listings“, you can sort the results by the price per square foot. (This would be an even more useful feature if more homes didn’t have “0” listed as their size, but that’s better left for another post… 🙂
  4. Rain City Guide Search StatisticsSearch Statistics. With every search result, a box is presented that gives you statistics like the average list price and size for homes for that search.
  5. Complete Seattle Listings. Unlike some of the other search sites that are cropping up, we’ve got a complete list of homes that are for sale by real estate agents in Seattle. (I’d tell you that it is “MLS” data, but I don’t think I’m allowed to say that… 🙂

So who might find this search tool useful?

  • Home buyers who want to be updated on new homes as they hit the market! (it only takes a few hours (minutes?) for a home to be listed by an agent before it hits our servers and is picked up by the blog reader of your choice!
  • Home owners who are curious what homes are being listed in their neighborhood (or zip code!)
  • Real estate agents (like home buyers) who want to be notified of listings as they hit the market via their RSS reader!

And I’m sure there are others…

By the way, because of the nature of RSS feeds, I’ve been able to present the results from selected home searches as they get listed on my sidepanel. I’m sure that there are a ton of other interesting ways to use RSS feeds on real estate sites… Any recommendations?

Heard around the web: