Tag Archives: Seller-Information

Earnest Money – Where does it go and when?

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Some of the most Frequently Asked Questions in a Real Estate Transaction involve the Earnest Money Deposit. The Earnest Money usually follows with the transaction from day one all the way through to the last day, as in “follow the money”.

The buyer usually writes a check for the Earnest Money deposit at the same time that they sign the offer and they hand it to their Buyer Agent. The check can be made payable directly to the Escrow Company they chose in the contract, or to the Buyer Agent’s Company if they have an in house Trust/Escrow Account. More and more these checks are made payable to the closing agent.

When the seller accepts the buyer’s offer, the check gets deposited. Let’s assume the check was made payable to escrow and went directly to the escrow company for deposit.

At close of escrow this money comes back to the buyer as a credit against his costs or downpayment. If it is a zero down loan and the seller is paying the closing costs in full, this $1,000.00 can be returned to the buyer at close of escrow.

If you know you really want the house when you make the offer, and you have no problems at all throughout the transaction, the Earnest Money just slides like butter from your hand and back into your hand. Whether it actually goes into your hand at the end or is paid against your costs varies from transaction to transaction. But it still simply comes back to you like a boomarang.

The only time you should be worried about handing over an Earnest Money check, is if you are not sure you want the house at the time you make the offer 🙂

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.

You don't know the power of the dark side

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vaderAfter playing with Zillow for the past couple of days, the first words that come to mind are “Impressive, but you are not a Jedi yet”. I have a hunch the guys at HouseValues are going to get “Netscaped” if they don’t take their game to next level.

The Good
The UI is slick. The mapping isn’t quite Virtual Earth / Google maps slick but it’s close (if you add mouse wheel zoom, arrow key navigation support and resizeable maps, I’d put it in that league). Seeing all the lot boundaries displayed on the map is something that I haven’t seen done well before and is a feature that will be expensive or difficult for Zillow’s competitors to match. I like the fact that they partnered with GlobeXplorer, since I believe that will enable them to out map RedFin.

The Ugly
I find all the trash talk about uptime and availability amusing. As any experienced software engineer will tell you, the first days for any web based service that has had the anticipation & hype of Zillow are going be rough. After all, if the mighty Microsoft had troubles with X-Box Live when Halo 2 was launched a few years ago, the fact that Zillow’s first day had some minor troubles is hardly surprising. Besides, I’m sure Rich Barton and the boys will buy a few AMD Dual Core Athlons CPUs with the new WD Raptor drives during the next few days and cure that problem.

The Bad
I suspect biggest problem with Zestimates is the current lack of high quality data. (Gee, the same issue I keep complaining about). Any realtor will point out, doing an accurate completive market analysis house is a problem that involves many, many variables. I understand it’s a hard problem, but the fact that the Zetimates are so far off for my house (which I thought should be an easy case) is disappointing. I don’t expect accurate estimates for waterfront, hilltop views, high rise condos, Bill Gate’s house or rural properties. But my house is a cookie cutter house is suburbia (with lots of similar houses for sale). I would think my house would be an easy one to get right.

Just for kicks, I implemented a quick & dirty Compeitive Market Analysis feature for the Rain City Guide home search. I found it to be more accurate than Zillow for my house, and Dustin thought my estimate was right on the money for his home (after he entered the correct square footage). Anyway, play around with it and let us know how close to the “right” price it is for your area.

BTW – My version just goes against active NWMLS listings (so forget about trying it if don’t live in Washington). It’s pretty crude and it’s not as cool as Zillow, but then again, I hardly have $32 in venture capital (much less $32 million), so cut me some slack!

I think the nay sayer would be wise to recall the words my former boss once said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.” Zillow’s Zestimates may be off in Safeco Field right now, but I have no doubt they will get much better over time. And when they do get better (not if), you better be ready.

Well, I’m going to shut up now and let my code do the talking. I’m sure the engineers at Zillow are following suit.

Robbie
Caffeinated Software

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

Bubble-bursting round-up

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I doubt it’s here so soon (but I don’t claim to know a thing about market-timing). Here are the stories:

Marketplace
New York Times
Investors Insight – goodness that’s dense! (and a couple of weeks old)

I expect Ardell to further suss out where the bubble is popping and where it is not popping as she expertly did for Kirkland. I will go out on a limb and say everywhere, over the next 10 years (daring!). To those who say “they aren’t making more land,” which admirably hasn’t yet been stated on Rain City Guide, I would like to point you to Tokyo’s experience in the late 80s and throughout the 90s.

I like how Marketplace makes realtors sound like wild animals – “the realtor population has grown immensely over the last 5 years.”

There are a couple significant differences between this “bubble” and the internet one:

1. The magnitude. Internet stocks went significantly more than 50% to high. However, most people weren’t leveraged on internet stocks.
2. The naysayers. There are a lot more naysayers this time around (or am I just reading more negative publications?). Perhaps that means the market will continue to rise until the pessimists are suckered into second homes too.

I was told today that cranes are still on backorder in the Seattle area. If sales go soft as prices go soft, we might have a ton of extra units ready to open in 2007 and maybe even in 2008. If they’re half done now, they’re half price to finish.

-Galen
ShackPrices.com

Should you do For Sale by Owner (FSBO)?

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Four out of five homeowners use the services of a real estate agent to list and sell their home. Twenty percent will try to do a For Sale by Owner — should you?

I think that if you have the time, patience and real estate transaction experience – absolutely. I sold my last house as a FSBO before I became a Real Estate Agent. But…I also had extensive experience as a result of 7 or 8 transactions in a 5 year period through investment real estate. I also had my own company with an experienced staff so I had the time for marketing the home, showings and follow up to make sure the deal went through. But it’s harder work than most realize. According to statistics from the National Association of Realtors, eighty percent of people who do try to sell their home FSBO will eventually list with a realtor

I think part of the reason people are compelled to sell FSBO is the perception that realtors just list your house on the MLS, print a few flyers and that’s it. Unfortunately, the reality probably matches the perception in a lot of cases. A good professional will do so much more than that. From helping you accurately price your home, being available day or night to answer your questions and those of potential buyers, to making sure you get the right buyer who can actually close the deal – there’s a lot of work a professional realtor performs if they are doing their jobs correctly.

I’m curious as to other people’s experience in this area. Any bad FSBO experiences? (Aside from the pushy suede-shoe, old-school realtors that kept trying to convince you there is no way you can do this with out them). Success stories? Those who started FSBO and eventually listed — what was the compelling reason? Any stories in defense of realtors?

—Robert Gray Smith

ShackPrices Gets an Upgrade

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It looks like ShackPrices just had their first major update.

ShackPrices is a Seattle-based outfit that focuses on helping sellers value (or “appraise”) their homes.

The new layout is clean and very straightforward. If you’re a King County resident curious to find out what homes in your area are selling for, then using their site will be a breeze. In addition, they have some nice goodies like a direct link from each home to King County Records (and bus stops!).

ShackPrices Screenshot

For what they are trying to do (provide information for home sellers), they do it really well… But it seems pretty obvious that ShackPrices will need to expand into helping home buyers at some point. The obvious missing ingredient is real-time MLS data.

With that in mind, I think the hardest part for them will be creating something that is not easily duplicable. Their interface is easy to use, but at it’s current state, a similar functionality is available to King County residents through Redfin. (and even more data is available without the mapping interface through Property Shark). In addition, Redfin is a few steps ahead in that they already have the infrastructure to display MLS data and to incorporate user/agent data.

Meet a Realtor Who Doesn't Sell Houses…

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The NY Times ran an article a few weeks ago on how hard it is for new real estate agents to break into the market (I’d like to the article but it is now behind a password-protected wall, so instead I’ll just link to the Property Grunt’s excellent summary and analysis). This article got me thinking of a way that I could still be very useful to my clients without actually buying or selling any homes.

What’s that? A Realtor who doesn’t buy or sell any homes?

For the next six-months or so, I really won’t be in a position where I can dedicate a significant amount of time to helping clients. (higher priorities! ) But what I would really enjoy doing over the next few months is staying connected to the business by helping buyers and sellers find appropriate agents.

Say that again?

Mariel Kicking a Soccer BallIn my office alone, there are almost 100 real estate agents who would love to have your business (assuming you’re buying or selling a home) and while I don’t know all of these agents, I do know the successful ones . What I would like to do is use my inside knowledge of successful Seattle agents to connect individuals with the right agents.

For example:

  • Are you looking for a condo in Downtown? I know an agent who specializes there!
  • Are you looking to buy land in Woodinville? I know a different agent who specializes there!
  • How about a modern-style home in Seattle? I know a different agent who specializes in modern homes.

Regardless if you’re trying to sell a home, condo, boathouse, townhome, etc., I’ve come into contact with a highly successful agent who specializes in that field. Talk with me, and I’ll connect you with the right person.

Why would I do this?

It is really a win-win-win situation. You get the best representation possible, a successful real estate agent gets one more client, and I can continue to help people in a small but important way. (I’ll also get a small referral fee from the agent…)

By the way, my recommendations are not limited to just people moving to Seattle. I know a few listings agents who go out of their way to please, so if you are currently a Seattle-area homeowner looking to list your house, talk with me before you list. I’m confident that no matter how good your realtor is, I can get you a better one!

Are Home Sales Dropping Too Fast?

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It’s well known that things slow down tremendously in the winter… But none the less there have been some rumblings that things are slowing down too fast and that we might be approaching “bubble territory”. Using some pending home sale data from the NW Reporter, I put together the following chart:
4-County Home Sale Chart

It looks like we’re in a pretty typical October slowdown to me… Seattle homeowners: I’d be curious to know if you are concerned when you see this chart?

More In-depth Sale Price vs List Price Analysis

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Me and my sistersIf you were following the comments from my post from yesterday, I said I would follow up with another stab at diving into how the sales prices versus listing price changes over time. Seeing as how it is already getting late (and I’m tired!), I’m going to stop trying to make sense out of the numbers and present what I’ve found so far.

However, before I go any further, I’m going to rant at my fellow real estate agents! For the sake of all of us who actually care about data, please learn to double check your work before submitting listing information to the MLS! I spent more time cleaning up the database due to lazy real estate agents then I did actually creating the charts! Here are some things to look out for (but this list is by no means exhaustive): (1) Spelling: Fremont is spelled with only one “e”, (2) Location: South Lake Union is not a neighborhood located within Ballard and (3)Price: your home that sold for $345,000 probably should not have been listed for $34,500,000.

With that rant out of the way, I thought I would also mention that I’m not the only one surprised by housing numbers today… Hot Property had an article where Amey Stone says reading NAR’s press releases on sales levels “is starting to be a bit of a yawn — sales weren’t quite at record levels, but darn near close to it.” Unless you get tickled by trends and statistics, expect to sleep through the rest of this post…

When I look at the entire Ballard Area as defined by the MLS (this is a huge area that includes places like Greenlake, Blue Ridge, Wallingford, Fremont, Sunset Hill etc). We see the same seasonal trends over the past two years that I identified yesterday. But when we go back another season, the trend becomes much less pronounced.

Adjusted vs Original List Price Chart

Here are the things I found most interesting about the chart:

  1. The seasonal variation is much less pronounced in previous years
  2. There has been a steady trend up wards where the sale price is greater than the listing price
  3. In terms of trends, it didn’t really matter whether I used the original list price or the adjusted list price.
  4. The huge drop in 08/03 is due to some homes in Broadview that were listed way to high!

My speculation is that the patterns identified the above chart have a lot to do with evolving sales tactics by agents. It seems like it has become more and more common for agents to list a home below the value that they think it will sell for… This does two things: (1) It assures a quick sale and therefore a quick commission for the agent. (2) It has the potential to bring in more buyers and thereby raise the final sale price of the home.

When I went to analyze the data at a more local level, things got much messier… Rather than seeing clear seasonal patterns as I did in Loyal Heights, things simply got fuzzy. They got so fuzzy that I’m hesitant to even provide the next chart because it simply looks like an ugly mess…

My goal in creating the chart was to see if the same trend that held up in my analysis yesterday for Loyal Heights, would hold up for other neighborhoods. As the chart above demonstrates, it roughly holds up for all of Ballard, but as the chart below demonstrates, it does not hold up at the neighborhood level. I’ve done enough regression analysis for transportation planning studies to know that a chart like this is going to give meaningless trends.

Sale Price as a Percent of Listing Price for Ballard Neighborhoods

By the way, if you’re interested in the raw data that I used to create these statistics, just email me, and I can send you the Excel file that has all the wonderful (?) pivot tables and charts I used in creating this post.

Also, please feel free to comment on other ideas you might have for exploring the wealth of information that is locked up behind the MLS database. Anna has the key that opens that door! 🙂