Tag Archives: real-estate

Buyer Tip – Successful Negotiation of the Home Inspection

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You can ask for the moon in Phase 1 of the inspection contingency. But if the seller’s response to that is less than satisfactory, you need to get specific in your response to the seller’s response.

Let’s say you give the seller a big laundry list of “stuff” that is “wrong” with the house under Phase 1. of the Inspection Contingency.

Seller comes back in Phase 2. offering to fix only one of those things.

To be successful at getting more than that in Phase 3, you should go back with a very specific, and pretty much final request, such as:

I will buy the home “as is” with regard to all times noted in the inspection if the price is reduced from $514,000 to $512,000.” Or “I will buy the home “as is” with regard to all other items noted in the inspection contingency IF Items #2, 7 and 9 are repaired prior to closing and receipts for those repairs are delivered at closing with at least a 30 day warranty on those repairs”. There are many and better ways to state this, but be specific about what you want the seller to actually DO when you get to the final round.

The long winded version is on my blog. Trying to cut down on the verbiage over here. I tend to “overstate my case” to put it kindly, which results in blog-clog 🙂

And don’t forget…as with any negotiation…timing is everything.

Who Represents Whom?

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Which of the two agents on a sale represents the buyer and which one represents the seller?

To date everyone has been ragging on the seller’s agents for what they are not doing for the buyer. The agent who enters the info into the mls is, by definition, the fiduciary representative of the seller, not the buyer.

Just checking that you know that.

Licensees do not sell houses by law. By law they represent one of the parties, either the seller or the buyer (sometimes both).

When a listing is entered into the mls, there is no buyer yet. So the person entering the data is entering the info as the representative of the seller.

I keep hearing about what buyers want that agent to do, when it is only the seller that matters at that given point in time. Only the best interest of the seller client can be the motivation behind what to enter and what not to enter.

Does everyone understand that? Doesn’t seem so.

Kirkland Real Estate

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I find in my daily chats with people, that the public’s perception of Kirkland Real Estate is a far cry from its reality. So this morning, with one eye open drinking my coffee, I put together some stats for you to bring this point home. I think you will be surprised by this piece I will call “perception vs. reality” which also points out the “housing bubble” area of Kirkland.

For the purpose of these numbers, I have used the mls and not the tax records.

People ask me all of the time in passing, at parties, etc…”How can anyone afford to live in Kirkland?” General perception being that real estate prices in Kirkland are all over a million dollars. That is greatly because the consumer looks at what is for sale. Reality is in what has sold, not what is for sale. We call “for sale” that which has not sold and not particularly reflective of the marketplace.

We will be using an economic forecasting tool called the Rate of Absorption, which is further described in my blog.

Of the 2,042 properties sold in Kirkland (PO) in 2005, only 92, less than 5%, sold over a million dollars.

  • 616 (30%) sold for less than $300,000
  • 856 (42%) sold between $301,000 and $500,000
  • 349 (17%) sold between $501,000 and $750,000
  • 129 (6%) sold from $751,000 to a million dollars
  • Only 30 properties sold between a million and $1.2 million
  • Only 14 properties sold from $1.2 million to $1.3 million
  • And 48 properties sold higher than $1.3 million in 2005

Many people think that Kirkland is the town for millionaires. That is because they look at what is for sale creating this “perception vs. reality” issue. Only 2% of homes sold in Kirkland last year sold for $1.3 million or more BUT a whopping 26% of the homes currently for sale are priced over $1.3 million.

Now let’s get to rate of absorption before my client comes to my house to sign an offer on his way to work.

616 properties sold in 2005 under $300,000. 56 properties on market are priced under $300,000. That’s about a one month supply. If it takes a year to sell 616, it should take a month to sell 56.

856 properties sold in 2005 from $301,000 to $500,000. 63 properties are for sale in that range. That’s slightly less than a one month supply.

349 homes sold in 2005 between $501,000 and $750,000. 62 properties are for sale in that range. At a rate of 29 homes sold in a month, it will take about two months to sell 62 (two months supply on market).

Here’s where it gets very interesting (to me anyway).

While only 129 homes sold last year between $751,000 and a million dollars, there are currently 47 for sale. That’s a 4-5 month supply carrying over from last year. Add that to people who list their homes in the next 4-5 months and you have an oversupply.

While only 11 homes sold last year between a million and $1.2 million, there are currently 30 for sale. Let’s call that a 3 month supply.

21 sold from $$1.2 to $1.3 million and 14 are for sale that’s about an 8 month supply coming out the gate into the new year.

And now for the Piece de resistance! !! (apologies to the French)

While only 48 properties sold over $1.3 million…there are currently NINETY (90) N I N E T Y!! for sale!!! That is almost a TWO YEAR supply! I’m not shouting at you, but I find that incredible. Next they’ll be saying the bubble is bursting because there is pressure on this high end! Oh yeah, they already said that just yesterday in the King County Journal.

Yesterday one of my agents posed this question. Her client was buying a condo for $142,500 and was worried about “the bubble bursting”. I have a client today buying a condo for $99,900. Is HIS bubble going to burst? Of course not. Unless you are up in the air in “bubble territory” over a million dollars, you don’t have to worry about the air getting too thin.

Have a good day! If you would like me to find the bubble range in your neighborhood, just ask as a comment, or email me. While Dustin has “dubbed” me “the Kirkland Specialist”, I have actually sold more property outside of Kirkland than in it, at present. I have sold real estate in PA, NJ, FL, Sacramento and L.A. (kind of two states) Seattle and Eastside. So ask any question you like, about any place you like.

Real estate is a smaller part of American's income than ever before… and rent is an even smaller part

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Yesterday, the New York Times reported that “Twenty Years Later, Buying a House Is Less of a Bite.” Two points on this:

1. It’s a macro-level article and points out that housing on the coasts is not necessarily a deal:

In high-profile places like New York and Los Angeles, home to many of the people who study and write about real estate, families buying their first home often must spend more than half of their income on mortgage payments, far more than they once did. But the places that have become less affordable over the last generation account for only a quarter of the country’s population.

2. They entirely ignore the fact that 20 years later, most things are cheaper. For instance: food, beer, wine, appliances, computers, telephone service, and so on. Some things, particularly services, have become more expensive, but the most important thing when you’re talking about the relative cost of houses, rent, is still cheap. An older article from the New York Times points this out:

In the Bay Area of California, a typical family that buys a $1 million house – which is average in some towns – will spend about $5,000 a month to live there, according to the Times analysis. The family could rent a similar house for about $2,500, real estate records show, and could pay part of that bill with the interest earned by the money that was not used for a down payment.

Seattle is not the Bay Area, but owning here is still much more expensive than owning in Dallas. I think this fits with anecdotes about buying rental properties. Twenty years ago, it was fairly easy to buy a rental property in the Seattle area and have the rent pay for repairs and the payments; you could earn equity for the cost of finding tenants. Today, the search to find a property like that is a challenge.

So will house prices plummet or flat-line this year? I don’t think anyone can say. A lot of people seem to be betting on increasing prices (they are still buying rental properties), however I believe that the stock market is beginning to bet against builders because they fear an over-supply of housing. My advice: If you have above 50/50 odds of staying in the same house for 10-20 years (unlike most Americans), you should definitely buy. If you can’t save money to save your life, maybe you should buy because your home could serve as a sort of inefficient savings scheme (again assuming you won’t sell right away). If you really value owning a home, buy one. Just don’t expect prices to continue increasing at the same rate as they have over the last 5 years. And don’t get an interest only loan!

-Galen
ShackPrices.com

Keeping Real Estate Entertaining…

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[photopress:twinkies.jpg,thumb,alignright]
David A. Smith, founder of the Affordable Housing Institute, has a great blog that is loaded with articles that are both interesting and informative (is that possible?). In terms of readability, his posts are up there with grow-a-brain except David keeps more focused on real estate.

He posts on a wide variety of topics. Today he gives some lessons on how home owners can learn from haggling in third world contries in the Economics of Haggling. A few days ago he had an article (What destroyed your home first) where he relates the killing of Rasputin to whether or not insurance companies will pay to rebuild homes in New Orleans (read the article and it will make sense!).

All in all, David is a great writer, and if you’re interested in real estate, I highly recommend adding him to your reading list.

Seattle Real Estate Blogs

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[photopress:half_dome.jpg,thumb,alignright]The problem with most real estate blogs is that after an initial flurry of activity, the bloggers quit making regular updates. However, there are two new seattle real estate blogs that have been providing some great information and hopefully, they will be around for the long haul.

Seattle Property News is written by an annomous individual who claims:

I’m not a real estate professional, just a Seattle resident who enjoys tracking the world around me, in a literal sense, by watching real estate trends and discovering the stories behind different properties around the region. I started this site for myself, as an open notebook of the information I find interesting.

However, I find the writing to be too full of technical details to believe that the person is involved in the real estate industry in some manner. Keep up the great work!

Seattle Real Estate Talk has also been putting some interesting content together. As it stands, this site is currently producing content similar to Rain City Guide in that it covers general interest real estate news and local Seattle updates.

There is definitely room for some more good real estate information in Seattle, so good luck to both of these blogs!

Moving to Seattle?

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I recently began an ad campaign on google that places an ad when someone searches the term “moving to seattle”…

Did you click on that ad to get to my site?

If so, I’d be especially interested to know what type of information that you are looking for! Is there something specific you would like to know about Seattle?

If you wouldn’t mind taking a minute to write a comment, I would sure appreciate knowing how I could serve you better!

Seattle walk

Call for Guest Bloggers

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I had a brainstorming session with a mortgage broker this afternoon and we discussed all kinds of potential uses for generating leads on the web. I mentioned that I would be interested in having guest bloggers on my site who could give opinions on their particular area of expertise. Considering I haven’t held back in giving mortgage advice, I should at least let mortgage brokers get a word or two in.

My plan is to give a forum for real estate experts (mortgage brokers, title company representatives, contractors, etc.) to post articles (“blog entries”) on a semi-regular basis. If you fit into the “real estate” industry and would be interested in posting an article every once in a while, then email me with some of your ideas and I’ll create a username/password so that you can begin.

My requirements for posting articles are simple:

1) Post informative articles. Post that simply advertise your service won’t cut it. For example, from mortgage brokers I would like to see articles that are about current events or explanations (in plain english) of mortgage terms. Like why did the long-term interest rates go down right after the Feds recently raised the prime interest rates a quarter of a point? (I’ve got lots of other ideas, if you need some, just ask me!)

2) Work in the Seattle Area.

The main benefit of blogging on my site is that you can get increased exposure without having to build a blog of your own. (I’m starting to generate a significant amount of traffic and the site is only two months old!) Maybe you’ll find that you like blogging so much, you’ll start your own at some point in the future. Either way, you are welcome to test out the technology on my site if you are willing to add good content!

Discount brokers…

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[photopress:donald_playing_guitar.jpg,thumb,alignright]I had a long discussion with my grandfather this past weekend regarding the utility of full-service realtors. He’s been around quite a while, so I have no intention of dismissing his opinion on anything. Especially considering that he’s been an investor in real estate for most of his life.

He point blank asked me why anyone would use anything other than a discount broker to sell their home. He mentioned that on a typical home sale, they could easily save you a couple thousand dollars in commissions. He mentioned that if he had to sell a house, he would list with a discount broker, price it a little higher than he would be willing to accept and then negotiate to an appropriate price. For him, this strategy comes right out of a Capitalism 101 course that we all learn along the path of life… And then today, CNN mentions a related issue in one of their top stories:

The article discusses how some discount brokers are complaining that they are not getting access to the multiple listing service (MLS). I know nothing about the background of this story, but I do have an opinion on discount brokers.


My take on using a discount broker?
Discount brokers play an important role in keeping full-service real estate agents on their toes and are definitely here to stay. For some people, a discount brokerage makes a lot of sense, and will get them a fair price for their home. However, a typical discount brokerage is not going to provide the value added services that can potentially raise the value of a home substantially. What are you missing out on by using a discount firm?

  • Preparation. Home preparation (including staging, painting, gardening, and other simple improvements) can make an otherwise ordinary house extraordinary. Owners sometimes have a hard time being objective about their belongings, and an experienced real estate agent will make sure that your house house really shines.
  • Marketing. This is where a savvy real estate agent can really earn their commission. A really nice house can only sell itself if the people show up to look! A tech-savvy agent can create brochures, flyers, slideshows, websites, newspaper ads, CDs, etc, that are beyond the capability of the typical home owner.
  • Pricing. My grandfather’s comment about pricing the home a little higher than he would have liked and then negotiating down might not be the best bet in the current market conditions. I’ve found that fast moving houses seem to be selling for the most money and the fastest moving houses are the ones with LOTS of interest. The best way to get a lot of interest is to price the house a little low and let a bidding war begin. While this doesn’t work for every house, and especially houses that are truly remarkable (and therefore only appropriate for a very small subset of buyers), it does seem to be a very successful strategy for most homes in a hot seller’s market as Seattle is currently experiencing.
  • Presentation. Once again, many owners have trouble being objective about their home. When potential buyers visit, an owner is often tempted to tell stories about each room. While the stories might be great, they don’t allow potential buyers to “imagine” themselves in the home. A potential buyer is much more likely to begin imaging how things can be redecorated and personalized if an agent is showing the home.
  • Time. A well prepared, marketed and presented home takes a lot of time, and many owners simply do not have the skill and/or time to do it as well as an agent.

In the end, if you are using an agent who is just rolling through the motions, then you may do just as well to use a discount broker and sell your home yourself. However, if you find an exceptional agent, you will inevitably find that the work that they are doing and their stored up knowledge about the local market conditions will allow your home to sell for substantially more money.

1757 NW 60th St

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This home is one of the most cozy and fascinating houses in Ballard! The home has retained its Victorian style and has been nominated each year for the Ballard Historical Society’s Old House Tour. The decoration is impeccable and it is obvious that the current owners had a keen attention to detail.
The house is two stories with a basement and a wonderful yard and is in a great locations! It is within walking distance of Downtown Ballard and all the coffee shops and stores there…

It has 3 bedrooms, 1.75 baths, dining room, eat-in original kitchen, office, family room and incredible aura from turn of the century! If you are looking for a home in this price range, it is a must visit!

Details

Address:
1757 NW 60th St.
Seattle, WA 98107

Bedrooms: 3

Bathrooms: 1.75

Square Feet (approx): 2097

MLS #: 25046278

List Price: $ 549,950

Are you interested in learning more about this house? Contact Me!