Economists: Price Declines Will Be Contained

The housing bust is over, but home prices will decline next year, reported most of the 49 economists surveyed by The Wall Street Journal in an online survey.

Economists' opinions varied widely on how much housing prices will change. Twenty economists predicted home prices would rise; 24 predicted a decline; and 8 predicted gains greater than 2.1 percent. Analyst Ethan S. Harris of Lehman Brothers says he expects price declines next year to be confined to "bubble" markets, such as those in Florida, California, and cities in Nevada and Arizona, where large numbers of investors have inflated prices. "There's no reason for prices to be falling in areas without a bubble," he says.

"People are just slowing down purchase decisions."

Source: The Wall Street Journal (11/21/2006)

Your Mortgage Application Checklist

The following are some items you should have with you when applying for a mortgage:

1. Copy of your Purchase & Sale Agreement.
2. Your present mortgage information.
3. Two-year history of employment and verification of all income sources.
4. If self-employed, copies of past two years Federal Income Tax Returns.
5. Information about your checking, savings and credit card accounts.
6. Name, account number and outstanding balance of each of your debts.
7. Application deposits.
8. Information about any assets, including information regarding any other assets that will be used as funds to close.
9. If FHA - Copy of Social Security card and photo ID.
10. If VA - Certificate of Eligibility or DD214If Employee Relocation Client.
11. Include relocation information and copy of offer, promissory note and copy of check on bridge loan.

6 Secrets to Buying the Best House for Your Money

Here are 6 simple secrets to buying the most house, that fits you best, for the money.

1. Get "Pre-Approved" - Not "Pre-Qualified!"
Do you want to get the best property you can for the least amount of money? Then make sure you are in the strongest negotiating position possible. Price is only one element in the negotiations, and not necessarily the most important one. Often other terms, such as the strength of the buyer or the length of escrow, are critical to a seller. In years past, we always recommended that buyers get "pre-qualified" by a lender. This means that you spend a few minutes on the phone with a lender who asks you a few questions. Based on the answers, the lender pronounces you "pre-qualified" and issues a certificate that you can show to a seller.

Sellers are aware that such certificates are WORTHLESS, and here's why! None of the information has been verified! Many times unknown problems can come to the surface! Some of the problems we've seen include recorded judgments, alimony payments due, glitches on the credit report due to any number of reasons both accurately and inaccurately, down payments that have not been in the clients' bank account long enough, etc.

So the way to make the strongest offer today is to get "pre-approved". This happens AFTER all information has been checked and verified. You are actually APPROVED for the loan and the only loose end is the appraisal on the property. This process takes anywhere from a few days to a few weeks depending on your situation. It's VERY POWERFUL and a weapon we recommend all our clients have in their negotiating arsenal.

2. Sell Your Property First, Then Buy the House
If you have a house to sell, sell it before selecting a house to buy! Contingency sales aren't nearly as strong as one that comes in with a ready, willing and able buyer. Consider this scenario: You've found the perfect house - now you have to go make an offer to the seller. You want the seller to reduce the price and wait until you sell your house. The seller figures that this is a risky deal, since he might pass up a buyer who DOESN'T have to sell a house while he's waiting for you. So he says OK, he'll do the contingency but it has to be a full price offer! You have now paid more for the house than you could have because of the contingency, and you have to sell your existing house in a hurry! Otherwise you lose the house! So to sell quickly you might take an offer that's lower than if you had more time. The bottom line is that buying before selling might cost you THOUSANDS of dollars.

3. If you're concerned that there is not a house on the market for you, then go on a window-shopping trip.
You can identify possible houses and locations without falling in love with a specific house. If you feel confident after that then put your house on the market. Another tactic is to make the sale "subject to seller finding suitable housing". Adding this phrase to the listing means that WHEN YOU DO FIND A BUYER, you will have some time to find the new place. If you don't find anything to your liking, you don't have to sell your present home.

4. Play the Game of Nines
Before house hunting, make a list of things you want in the new place. Then make a list of the things you don't want. You can use this list as a guide to rate each property that you see. The one with the biggest score wins! This helps avoid confusion and keeps things in perspective when you're comparing dozens of homes.

When house hunting, keep in mind the difference between "STYLE AND SUBSTANCE". The SUBSTANCE are things that cannot be changed such as the location, view, size of lot, noise in the area, school district, and floor plan. The STYLE represents easily changed surface finishes like carpet, wallpaper, color, and window coverings. Buy the house with good SUBSTANCE, because the STYLE can always be changed to match your tastes. We always recommend that you imagine each house as if it were vacant. Consider each house on its underlying merits, not the seller's decorating skills.

5. Don't Be Pushed Into Any House
Your agent should show you everything available that meets your requirements. Don't make a decision on a house until you feel that you've seen enough to pick the best one. A decade ago, homes were selling quickly, usually a few days after listing. In that kind of market, agents advised their clients to make an offer ON THE SPOT if they liked the house. That was good advice at the time.

Today there isn't always this urgency, unless a home is drastically underpriced, and you'll know if it is. Don't forget to check into the SCHOOL DISTRICTS of the area you're considering. Information is available on every school; such as class sizes, % of students that go on to college, SAT scores, etc. You can get this information from this web site.

6. Stop Calling Ads!
Please note - ads are sometimes created to make the phone ring! Many of the homes have some drawback that's not mentioned in the ad, such as traffic noise, power lines, or litigation in the community. What's not mentioned in the ad is usually more important than what is. For this reason, we want you to be very careful when reading ads. Remember that the person writing the ad is representing the seller and not you!

The most important thing you can do is have someone on your side looking out for your best interests. Your own agent will critique the property with an eye towards how well it meets your needs and will point out any drawbacks you should know about. So whether you decide to work with us or not, pick an agent you feel comfortable with and enlist the services of that agent as a buyer's broker. Then you become a client with all the rights, benefits, and privileges created by this agency relationship, and you're no longer just a shopper.

Did you know that many homes are sold WITHOUT A SIGN ever going up or an AD EVER BEING PUT IN THE PAPER? These "great deals" go to those people who are committed to working with one agent. When an agent hears of a great buy, who do you think he's going to call? His client, who he has a legal obligation to work hard for, or someone who just called on the phone and said "keep your eyes open"? So to get the best buy on a property, we always recommend that you hire your own agent and stick with him or her.

There are many more FREE reports at our website: www.tk2homes.com

Thanks for reading!

Signs That Inflation May Be Less of a Threat to the Economy Help Push Mortgage Rates Lower

McLean, VA – On Friday Freddie Mac (NYSE:FRE) released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.24 percent with an average 0.5 point for the week ending November 16, 2006, down from last week when it averaged 6.33 percent. Last year at this time, the 30-year FRM averaged 6.37 percent. The 15-year FRM this week averaged 5.94 percent with an average 0.5 point, down from last week when it averaged 6.04 percent. A year ago, the 15-year FRM averaged 5.90 percent. Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.04 percent this week, with an average 0.5 point, down from last week when it averaged 6.08 percent. A year ago, the five-year ARM averaged 5.86 percent. One-year Treasury-indexed ARMs averaged 5.53 percent this week with an average 0.5 point, down from last week when it averaged 5.55 percent. At this time last year, the one-year ARM averaged 5.20 percent.

This report was provided by the Washington Association of Realtors.

Market Sets Your Home's Value - And You May Not Like It

Yet another article regarding pricing your home. We just can't stress proper pricing enough!

Market sets your home's value — and you may not like

By Mary Umberger
Chicago Tribune

Here's one of those glass-half-empty/glass-half-full bits of news: Online company househunt.com recently surveyed real-estate agents and concluded that 51 percent of U.S. home sellers are getting 95 to 100 percent of their asking prices.

You can look at that glass as half-full because, well, about half seem to be hitting their target.
But then there's the rest of America, where weeds are popping up around the for-sale signs.
During the housing boom, selling your home for 95 percent (or better) of your asking price became something of an icon — a reliable, reasonable goal. But as the market has cooled, "asking price" has become a moving target.

How much is a fair price, anyway? A response from the glass-half-empty camp might sound like the late cartoonist Jeff MacNelly's parody of how the Internal Revenue Service determines how much tax you owe: How much did you make? Send it in. That is, no matter how certain you are that your home is worth a specific figure, there's a good chance that it will turn out to be less in today's climate.

"The old, easy model [for pricing a house] is to look at the computer to see what sold last year and add 5 percent," said Stephen Baird, president of Baird & Warner Real Estate in Chicago.
"That model doesn't work now." Baird said that coming up with a figure has become less an exercise in math than an exercise in group-think for agents.

"We get the office together and price the property," he said. "It's much more of an art than it was a year ago." Brokers, agents and people trying to sell their homes on their own have said that starting out with the right asking price is akin to being told to shut up and eat your spinach.
"You have to look at what is actually selling in your price range right now," Baird said. "That determines the market. "The period of time you look back at now [for sales prices of comparable properties, or comps] is three months. Anything over three months is not a good comp now."

Even the economics-impaired can grasp this concept: Your home (or your car or your collection of Mark Foley campaign posters) is worth only as much as someone will pay you for it. Today.
Or, as Baird put it: "The market is going to tell you what a house is worth. You just may not like what the market says."

"If you want to sell your house against the 20 other properties that are like it, you have to get aggressive on your price," Baird said. "Out of that 20, somebody will step out from the pack and price it more aggressively, and it will sell."

Lest we end this chat on a negative note, here's a reminder of the cyclical nature of real estate: If you're a seller and you have the luxury of time, conditions are likely to improve.

"People are sitting on the sidelines waiting to see what happens with pricing," Baird said.
"The nice part about this business is that demand doesn't go away, it just gets put off.
"If somebody isn't going to get what they want, they're going to wait until next year."

Copyright © 2006 The Seattle Times Company

Thanks for reading!

How To Make Money In Real Estate Investing

How to Make Money in Real Estate Investing

Lower Your Taxes!
Tax incentives for real estate investors can often make the difference in your tax rates. Deductions for rental property can often be used to offset wage income. Tax breaks can often enable investors to turn a loss into a profit. For which items can investors get tax breaks? You could claim deductions for actual costs you incur for financing, managing and operating the rental property. This includes mortgage interest payments, real estate taxes, insurance, maintenance, repairs, property management fees, travel, advertising, and utilities (assuming the tenant doesn't pay them). These expenses can be subtracted from your adjusted gross income when determining your personal income taxes. Of course, these deductions cannot exceed the amount of real estate income you receive. In addition to deductions for operating costs, you can also receive breaks for depreciation.

Buildings naturally deteriorate over time, and these "losses" can be deducted regardless of the actual market value of the property. Because depreciation is a non-cash expense -- you are not actually spending any money -- the tax code can get a bit tricky. For more information about depreciation and various tax alternatives, ask your tax advisor about Section 1031 of the U.S. Tax Code.

Have a Positive Cash Flow
There are two kinds of positive cash flows: pre-tax and after-tax. A pre-tax positive cash flow occurs when income received is greater than expenses incurred. This sort of situation is difficult to find, but they are usually a strong and safe investment. An after-tax positive cash flow may have expenses that outweigh collected income, but various tax breaks allow for a positive cash flow. This is more common, but it is generally not as strong or safe as a pre-tax positive cash flow.

Regardless of what kind of real estate you choose to invest in, timely collections from your tenants is absolutely necessary. A positive cash flow -- whether it be pre-tax or after-tax -- requires rental income. Be sure to find quality tenants; a thorough credit and employment check is probably a good idea.

Use Leverage
One of the most important factors in determining a solid investment is the amount of equity you are purchasing. Equity is the difference between the actual worth of the property and the balanced owed on the mortgage.

Benefit from Growing Equity
While investing in real estate is relatively complex, it is often worth the extra work. When compared to other financial investments, like bonds or CD's, the return on investment for real estate purchases can often be greater. The key to real estate investing is equity. Determine an amount of equity that you want to achieve. When you reach your goal, it's time to sell or refinance. Determining the proper amount of equity may require the assistance of a real estate professional.

Happy Investing!

The Benefits to Sellers of Proper Pricing

Pricing your home properly when you list it for sale is critical. The cost of not doing so will be disastrous!

Here are two great examples that illustrate this point:

In August, we were referred by past clients to a young couple with Microsoft that was relocating out of state. We had visited the home in person and gone through it with the sellers, observing its features, condition and making recommendations that would help improve its curb appeal and interior finish/salability (most of which they did).

We then did a very careful market analysis and came back to them with a recommended price range of $500k to $520k. Our analysis compared like-homes within a 1/2 mile radius that were actively listed, pending sale and had sold within the last six months. We made adjustments for condition, upgrades, curb appeal, appreciation, etc to arrive at our price range.

We lost the listing to another agent who promised the sellers that he could get them more money. The clients chose an agent who told them that they could get $569,950 for their home, despite the fact that there were no comparable sales to support this price. The clients failed to remember an important point we stressed to them - that the market sets the price, NOT the agent. What buyers were willing to pay for similar homes is always the most reliable figure in setting the price. Sure, adjustments can and should be made for upgrades, better location, etc, but what buyers have been paying should always set the baseline.

We warned the sellers that over-pricing would lead to their home becoming "stale" on the market - buyers and their agents research pricing and know when a home is over priced. These homes also gain a stigma of a problem property - think about it - what would you think about a house in good condition, in a good location, in a hot market (a five minute walk to Microsoft, no less...Hello!!!) that just sat and sat, unsold for months? Maybe there's something wrong with it? Of course you would!

In any event, we checked back on the house last week to see if it had sold. As we suspected, the house was still for sale - now for just $500k - and over 120 days on the market. Yesterday I noticed that it had finally gone under contract and was Subject to Inspection. I'm just waiting to see how much it actually sells for. One thing I do know - it will sell for considerably less than it would have if it had been priced correctly from the start.

Not only will the sellers make alot less profit on the home, they've also made four months worth of mortgage payments on a house that was sitting vacant. They also had to pay rent in their new location and won't be able to move into a new home until they can close on their listing here in Redmond. So much time and money has been wasted, because they chose to ignore the facts and believe an agent who couldn't back up his pricing strategy (and also had NO other active or recently sold listings - this is a warning sign, folks!). Hey, we all want to get the most for our homes when we sell them and I'm no different. But, you can't ignore the facts, either!!

On the other hand, at just about this same time, we were referred by my sister and brother-in-law to friends of theirs in Bothell. Once again, we went through a careful evaluation of their home and did a careful market analysis. Interestingly, the price range we set for their home was more than what they thought it could fetch. We loved what the husband asked when we showed them the price range - he asked "why" we thought we could get a higher price. Once again, armed with the facts, we were able to reiterate the data supporting our position.

After interviewing 3 other agents, they called us to list. The other agents had come in with wildly different prices. Some much higher, some much lower (so always interview at least 3!!!). Convinced that we had the right data, they agreed to list with us in the range we suggested and made the changes we recommended so the house would look its best (a little paint, a little de-cluttering, a good, thorough cleaning to make every nook and cranny shine).

Within 20 days their home had sold - at a net of 99% of the list price (they paid some closing costs for the buyer). And even better - within 60 days from the day we listed their Bothell home, they had closed on their existing property and had closed on their new dream home - a beautiful and luxurious contemporary on acreage in Snohomish with a view of the valley. They wasted absolutely no time and no money paying for a house they weren't living in. They listened, observed the data and our recommendations and had a smooth and low stress experience (hey, we can't make it stress-free...this is real estate, afterall!)

The article below speaks again to the importance of proper pricing. Read it carefully and take it to heart - it will save you time, money, and stress the next time you need to sell your home.

The Benefits Of Proper Pricing

When your home sells faster, you save carrying costs, mortgage payments and other ownership costs. A quicker sale creates less inconvenience for you. If you've moved before, you know the energy it takes to prepare for showings: keeping the home clean, making childcare arrangements, and altering your lifestyle. Proper pricing reduces these demands on you, by helping your home sell faster. At market value your home will gain exposure to more prospects that can afford the price.

Sellers who list at a high price are looking for that one buyer who will pay it, often not realizing that they have discouraged many potential buyers who could have afforded the home. The final sales price is probably one that will be affordable by more purchasers. This is because sellers many times accept a much lower price at a much later date since that one buyer willing to pay the higher price never comes.

When salespeople are excited about a home and its price, they make special efforts to contact all of their potential buyers. Knowing that it is priced properly for its market, they expect it to sell soon and encourage their prospects to act quickly. Their excitement is contagious!

Ad calls and sign calls to REALTORS® turn into showings when price is not a deterrent. Most serious prospects are well educated about asking prices in the areas they are seeking. They will not waste their time on a home they consider overpriced. Buyers fear they might lose out on a good home when it is priced right. They are less likely to make "low ball offers." Better pricing attracts multiple offers!

Bottom line, if a home is priced right, the excitement of the market produces higher sale prices. You net more both in terms of actual sale price and in less carrying costs.


We love helping people fulfill their dreams of home ownership and moving up to that dream or family home. Just don't call us if you plan on pricing your place too high - we won't list it and won't be a party to your heartache!

Happy house hunting,
Tim & Keith

Remodeling that Pays!

Upgrading your home is always appealing, but which enhancements get you the best return for your money when it's time to sell? The 2004 Cost vs. Value Report by Remodeling magazine and REALTOR® Magazine has the answer.

Here are the national averages for 10 of the projects in the 2004 report:

MAJOR KITCHEN REMODEL: Update an outmoded 200-square-foot kitchen with new cabinets, laminate countertops, and standard double-tub stainless-steel sink with standard single-lever faucet. Include energy-efficient wall oven, cooktop, ventilation system, built-in microwave, dishwasher, and garbage disposer. Add custom lighting and new resilient floor. Finish with painted walls, trim, and ceiling. Include 30 linear feet of semi-custom grade wood cabinets, including a 3-by-5-foot island.

National Average Job cost: $42,660 Value at sale: $33,890 Cost Recouped: 79.4%

BATHROOM REMODEL: Update bathroom that's at least 25 years old. Replace all fixtures to include standard-sized tub with ceramic tile surround, toilet, solid-surface vanity counter with integral double sink, recessed medicine cabinet, ceramic tile floor, and vinyl wallpaper.

National Average Job cost: $9,861 Value at sale: $8,887 Cost Recouped: 90.1%

MASTER SUITE ADDITION: On a house with two or three bedrooms, add a 24-by-16-foot master bedroom suite over a crawlspace. Include walk-in closet/dressing area, whirlpool tub in ceramic tile platform, separate 3-by-4-foot ceramic tile shower, and double-bowl vanity with solid surface countertop. Bedroom floor is carpet; bath floor is ceramic tile. Paint the walls, ceiling, and trim. Add general and spot lighting and exhaust fan.

National Average Job cost: $70,245 Value at sale: $56,257 Cost Recouped: 80.1%

FAMILY ROOM ADDITION: Add a 16-by-25-foot room on a crawl space foundation with vinyl siding and fiberglass shingle roof. Include drywall interior with batt insulation, prefinished hardwood floor, and 180 square feet of glazing, including windows, atrium-style exterior doors, and two operableskylights. Tie into existing heating and cooling.

National Average Job cost: $52,562 Value at sale: $42,347 Cost Recouped: 80.6%

WINDOW REPLACEMENT: Replace 10 existing 3-by-5-foot double-hung windows with vinyl- or aluminum-clad, double-glazed, wood replacement windows. Wrap existing exterior trim as required to match. Don't disturb existing interior trim.

National Average Job cost: $9,273 Value at sale: $7,839 Cost Recouped: 84.5%

ROOFING REPLACEMENT: Remove existing roofing to bare wood and dispose of properly. Install 30 squares of fiberglass asphalt shingles with new felt underlayment, galvanized drip edge, and mill-finish aluminum flashing.

National Average Job cost: $11,376 Value at sale: $9,197 Cost Recouped: 80.8%

ATTIC BEDROOM: In a house with two or three bedrooms, convert unfinished space in attic to a 15-by-15-foot bedroom and a 5-by-7-foot shower bath. Add a 15-foot shed dormer and four new windows. Insulate and finish ceiling and walls; carpet unfinished floor. Extend existing heating and central air conditioning to new space. Retain existing stairs.

National Average Job cost: $35,960 Value at sale: $29,725 Cost Recouped: 82.7%

BASEMENT REMODEL: Create a 20-by-30-foot entertaining area with wet bar, a 5-by-8-foot full bath, and a 12-by-12-foot auxiliary room. Exterior walls are insulated. Include five six-panel primed hardboard doors. Main room includes 15 recessed ceiling light fixtures, three surface-mounted light fixtures, and snap-together laminate flooring system. Bathroom includes standard white toilet, vanity with cultured marble top, resilient vinyl flooring, two-piece fiberglass shower unit, a light/fan combination, vanity light fixture, and recessed medicine cabinet. Bar area includes 10 linear feet of raised panel oak cabinets with laminatecountertops, stainless steel bar sink, single-lever bar faucet, under-counter refrigerator, and vinyl floor tile.

National Average Job cost: $47,888 Value at sale: $36,457 Cost Recouped: 76.1%

SUNROOM ADDITION: Add a 200-square-foot sunroom to a two-story house. Form and pour footings for slab-on-grade foundation. Use exposed post-and-beam framing on interior side and extruded aluminum window frame-and-flashing system with insulated, low-E, laminated, or tempered glazing. Provide for natural ventilation using screens and ceiling fan. Insulate all non-glass areas; provide movable shades for glass area.

National Average Job cost: $31,063 Value at sale: $22,002 Cost Recouped: 70.8%

DECK ADDITION: Add 16-by-20-foot deck using pressure-treated SYP joists supported by 4-by-4 posts set into concrete footings. Install composite deck material in a simple linear pattern. Include a built-in bench, a planter of the same decking material, and stairs. Provide a railing system made of the same composite material as the decking or a compatible vinyl system.

National Average Job cost: $6,917 Value at sale: $6,000 Cost Recouped: 86.7%

Thanks for reading and be sure to check back soon!

Seven Selling Mistakes You Don't Want To Make

Hello All,

If you've been thinking about putting your home on the market, read this post first to avoid 7 common mistakes that lead sellers to failure.

SEVEN SELLING MISTAKES YOU DON'T WANT TO MAKE!

Mistake #1 -- Pricing Your Property Too High
Every seller obviously wants to get the most money for his or her product. Ironically, the best way to do this is NOT to list your product at an excessively high price! A high listing price will cause some prospective buyers to lose interest before even seeing your property. Also, it may lead other buyers to expect more than what you have to offer. As a result, overpriced properties tend to take an unusually long time to sell, and they end up being sold at a lower price.

Mistake #2 -- Mistaking Re-finance Appraisals for the Market Value
Unfortunately, a re-finance appraisal may have been stated at an untruthfully high price. Often, lenders estimate the value of your property to be higher than it actually is in order to encourage re-financing. The market value of your home could actually be lower. Your best bet is to ask your realtor for the most recent information regarding property sales in your community. This will give you an up-to-date and factually accurate estimate of your property value.

Mistake #3 -- Forgetting to "Showcase Your Home"
In spite of how frequently this mistake is addressed and how simple it is to avoid, its prevalence is still widespread. When attempting to sell your home to prospective buyers, do not forget to make your home look as pleasant as possible. Make necessary repairs. Clean. Make sure everything functions and looks presentable. A poorly kept home in need of repairs will surely lower the selling price of your property and will even turn away some buyers.

Mistake #4 -- Trying to "Hard Sell" While Showing
Buying a house is always an emotional and difficult decision. As a result, you should try to allow prospective buyers to comfortably examine your property. Don't try haggling or forcefully selling. Instead, be friendly and hospitable. A good idea would be to point out any subtle amenities and be receptive to questions.

Mistake #5 -- Trying to Sell to "Looky-Loos"
A prospective buyer who shows interest because of a "for sale" sign he saw may not really be interested in your property. Often buyers who do not come through a realtor are a good 6-9 months away from buying, and they are more interested in seeing what is out there than in actually making a purchase. They may still have to sell their house, or may not be able to afford a house yet. They may still even be unsure as to whether or not they want to relocate. Your realtor should be able to distinguish realistic potential buyers from mere lookers. Realtors should usually find out a prospective buyer's savings, credit rating, and purchasing power in general. If your realtor fails to find out this pertinent information, you should do some investigating and questioning on your own. This will help you avoid wasting valuable time marketing towards the wrong people. If you have to do this work yourself, consider finding a new realtor.

Mistake #6 -- Not Knowing Your Rights & Responsibilities
It is extremely important that you are well-informed of the details in your real estate contract. Real estate contracts are legally binding documents, and they can often be complex and confusing. Not being aware of the terms in your contract could cost you thousands for repairs and inspections. Know what you are responsible for before signing the contract. Can the property be sold "as is"? How will deed restrictions and local zoning laws will affect your transaction? Not knowing the answers to these kind of questions could end up costing you a considerable amount of money.

Mistake #7 -- Limiting the Marketing and Advertising of the Property
Your realtor should employ a wide variety of marketing techniques. Your realtor should also be committed to selling your property; he or she should be available for every phone call from a prospective buyer. Most calls are received, and open houses are scheduled, during business hours, so make sure that your realtor is working on selling your home during these hours. Chances are that you have a job, too, so you may not be able to get in touch with many potential buyers.

Come back soon!

Washington's Housing Market Squeezing Middle Income Families

Hello All,

If you've looked at local housing prices lately, you know that they continue to rise in many areas, despite slower sales. We've blogged about this before and you've no doubt seen articles in the news about this, too. One special thing to note, however, is the overall decrease in new affordable homes for middle-income families.

As you'll discover in the article below, surprisingly, Washington has one of the lower home ownership rates in the country. While this lower home ownership rate is definitely a challenge for some, it presents a great opportunity for those people looking to purchase an investment property. With area employers continuing to expand their workforces and land shortages for new construction keeping appreciation on the rise, rental homes make good sense - there is high demand, making getting a home rented much easier and faster and with home prices still climbing at a good rate, the rewards in terms of appreciation are there, as well.

Read on below for more details and thanks for reading our blog!

Washington Home Prices Continue to Rise in Washington
Despite National Trends

NWREporter December 2006

Home prices continue to rise in Washington despite the news elsewhere of increased inventories, a slowing market and falling prices, according to the Washington Association of REALTORS®. Record-high prices will continue to rise here, experts say, putting homes further out of reach for many middle-income families.

"Our state population is growing but the supply of middle-income homes isn't keeping up," said Steve Francks, Washington Realtors Chief Executive Officer. "The fact is we don't have enough homes that are affordable for middle class families— and they represent the majority of would-be homeowners."

The Northwest Multiple Listing Service (NWMLS) reports that home prices in the region were 9.8 percent higher last month than the same time last year. The NWMLS, which published October 2006 statistical reports recently, serves 19 counties located in western Washington. The price increase occurred even though the number of home sales has dipped over the same period and home inventory has increased 48 percent. In King County the price of a single family home rose 12.8 percent from a year ago to $440,000. Condominium prices rose more than 20.8 percent, climbing to a median price of $259,700.

Francks said factors unique to the Northwest caused the home shortage that is pushing prices up. The primary cause is the failure of cities and counties to plan for enough homes to meet the demands of growth. Local government has not provided the infrastructure required for new homes, and has not planned for enough land capacity to allow home construction to keep up with job growth.

The Puget Sound region will add jobs at a rate double the national average for at least the next few years. Washington's Growth Management Act requires municipalities to "provide sufficient capacity of land suitable for development within their jurisdiction to accommodate their allocated housing and employment growth." (RCW 36.70A.115)

Francks also explained that Washington's home ownership rate of 67.6 percent ranks a dismal 42nd in the nation, while some states boast a rate of 80 percent or higher. According to the Washington Center for Real Estate Research at Washington State University, middle-income families in Washington had about 12 percent less income than they needed to qualify for a mortgage on the median price home. The Center's Housing Affordability Index measures the ability of middle income family to pay for a median price home. When the index is 100 there is a balance between the family's ability to pay for a home and its cost.

The Housing Affordability Index for Washington State in the second quarter stood at 87.9, a decline of 5.5 points compared to the first quarter, and a drop of 18.7 points compared to the second quarter of last year. The Center described the drops as "a very rapid deterioration in affordability." The Affordability Index is at its lowest level since the center developed the statewide affordability benchmark in 1994. Francks said that the Washington Realtors would go to the Legislature in January to try to increase the availability of homes that middle-income families can afford. "This is a real crisis and will only get worse until lawmakers decide to make it a priority to see that middle-income families have home choices that are affordable to them," said Francks. "If cities and counties continue to under-plan for growth, we can we can look forward to home prices beyond the reach of most of the middle-class families. They're the backbone of our communities, but sky-high home prices are pushing them out of communities and onto the freeways, forcing them to live farther and farther from work."

During the summer, at the request of the Washington Realtors, legislative leaders and the governor appointed a task force to develop strategies to improve the supply of homes that are affordable to middle income families in Washington. The GMA/Housing Task Force met four times and has sent draft recommendations to the governor.

Washington Realtors' legislative solutions for expanding the supply of home choices would include the following:

• 
  Ensuring sufficient buildable land capacity is available to accommodate residential and employment growth.
• Establishing performance measures to determine whether communities are realistically preparing to accommodate growth, ensure economic vitality, provide housing opportunities, and relieve traffic congestion.
• Increasing the accuracy of growth projections that municipalities use for planning.
  Establishing a "Growth Management Infrastructure Account" to help communities provide the streets, sewers, and other infrastructure that homes require.

Washington Realtors represents about 170,000 homebuyers each year, and the interests of more than 2 million homeowners throughout the state. The Washington Realtors' membership numbers about 25,000 statewide, making it the largest professional organization in the state. The organization's top public policy priority is building communities that have a strong economy, attractive housing choices, excellent schools and parks, safe neighborhoods, and efficient transportation choices.

Condo Buyer? Ask the Condo Board These 10 Questions Before You Buy!

Condos are the logical choice for many first-time and baby boomer or "move-down" home buyers in the Seattle area. The cost of entry is much lower than many single-family homes, and there is less routine maintenance and yard work required.

There are literally hundreds of condo communities in the Microsoft/Redmond, Kirkland, Woodinville, Bothell, Issaquah, Bellevue & Sammamish communities to choose from. Your Realtor can help you find the perfect one for you.

Before you buy, however, contact the condo board with the following questions. In the process, you'll learn how responsive-and organized-its members are. talk over the answers to these questions with your Realtor, who can help to put things into their proper perspective. If you are shopping for a condo, consider a Realtor that has extensive experience in this niche - their expertise will help you to make a better choice.

1. What percentage of units are owner-occupied? What percentage are tenant-occupied? Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.

2. What covenants, bylaws, and restrictions govern the property? What grandfather clauses are in place? You may find, for instance, that those who buy a property after a certain date can't rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.

3. How much does the association keep in reserve? How is that money being invested?

4. Are association assessments keeping pace with the annual rate of inflation? Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.

5. What does and doesn't the assessment cover-common area maintenance, recreational facilities, trash collection, water/sewer?

6. What special assessments have been mandated in the past five years? How much was each owner responsible for? Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board's fiscal policy.

7. How much turnover occurs in the building?

8. Is the project in litigation? If the builders or homeowners are involved in a lawsuit, reserves can be depleted quickly.

9. Is the developer reputable? Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer's report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren't in good repair, they become your problem once you buy.

10. Are multiple associations involved in the property? In very large developments, umbrella associations, as well as the smaller association into which you're buying, may require separate assessments.

October Housing News from the NWMLS

Hello All,

Although activity is slowing a bit, our market remains healthy. If you've been thinking about buying that first home, vacation home or investment property, now is a great time to be looking. Read on for October's stats from the Northwest Multiple Listing Service and some of our area's experts.

Home Buyers, Sellers Look Beyond Elections

KIRKLAND, Wash. (Nov. 7, 2006) – Not everyone spent the month of October campaigning. Nearly 12,000 homeowners around western and central Washington state put their homes on the market last month and 8,567 owners accepted offers on their properties, according to the latest figures from Northwest Multiple Listing Service.

October’s activity was similar to September when brokers reported rising inventory, higher prices and fewer pending sales compared to a year ago.

MLS members reported 11,910 new listings of single family homes and condominiums during October, about 500 more than twelve months ago.

With those additions, the inventory at month end stood at 36,282 listings. That total encompasses 19 counties and marks a 48 percent increase in active listings from a year ago. (Starting with October, NWMLS is reporting data for Clark and Pacific counties; previously, transactions in those areas appeared in the “Other/Out of area” segment of the monthly report.)

“When it comes to current market conditions, it’s important to keep things in perspective,” cautioned Lennox Scott, chairman and CEO of John L. Scott Real Estate.

“Housing sales are down, but this has created a greater balance in the market between buyers and sellers,” Scott remarked, adding, “Since we’ve come off of the frenzy market of the past year, buyers have more selection, there’s less competition for homes, and interest rates are still low. Home prices continue to appreciate in most areas and we’re on track to have the third most productive year in the history of real estate.”

System-wide, the median price for a home that closed last month was $315,000. That is $28,000 more than a year ago, an increase of about 9.8 percent. For a single family home (excluding condominiums) the median selling price was about $332,000; for a condominium, the median price was $243,450.

In King County, which accounts for about four of every 10 sales in the MLS service area, the median price of a single family home (excluding condominiums) rose 12.8 percent, increasing from $390,000 a year ago to $440,000 for sales that closed last month. Condo prices jumped 20.8 percent, climbing from a median selling price of $215,000 twelve months ago to last month’s figure of $259,700.

For most counties in the Northwest MLS market area, price gains from a year ago tended to be in the range of 9-to-11 percent.

Every county experienced a double-digit buildup in inventory and all but three counties reported dips in pending sales.


“The evidence looks pretty convincing that the market has corrected itself and we are experiencing a tilt to the buyers’ side in the arena of negotiations,” observed NWMLS director Dick Beeson. This “gentle incline,” as he described it, presents some good opportunities for buyers, particularly in areas like Pierce County where the selection is about 50 percent larger than a year ago.

Overall, traffic has been steady at open houses and "perfect" properties still get multiple offers, according to Beeson, the broker/owner at Windermere Real Estate/Commencement Associates in Tacoma.

“Knowing 2005 was the zenith year in real estate sales, having an adjustment this year was to some degree expected,” Beeson noted. Nonetheless, he expressed some surprise at the growing ratio of vacant homes that are currently on the market. He believes this could be the result of “natural” vacancies from job transfers and buyers who are moving up or downsizing, as well as some selling by investors.

Another NWMLS director, Ken Bacon, the broker at Windermere’s Redmond office, expressed little worry about the slippage from last year’s record-shattering sales volume. “The 9 or 10 percent decline in pending sales from the boom year of 2005 illustrates the demand for housing in the Seattle area remains strong,” he commented.

Appreciation continues because of this demand, according to Bacon, but he emphasized “Pricing is critical as the market now allows buyers time and options prior to making a commitment.”

“We are still seeing some multiple offers in price ranges between $300,000 and $800,000 depending on the neighborhood, house, and location,” Bacon said. Contingent sales are also being written, he reported, but said in his experience the first buyer is often bumped by a second buyer within a couple of weeks.

Condominiums continue to fuel demand among entry level buyers and downsizing sellers, according to Bacon. The combination of tight inventory, close-in locations and sought-after amenities is sustaining demand and creating some bidding wars.

In King County, there is slightly more than a two month supply of condominiums (2.3 months) to meet demand at the current pace of sales; for single family homes there’s a 3.2-month supply. (Nationwide, there was a 7.3 months supply of existing homes for sale nationwide at the end of September, according to the National Association of Realtors®.)

Bacon described open house activity as “steady but not strong,” pointing to inclement weather, weekend sports activities and growing popularity of computer tours as factors that affect open house visits.

Asked about “hot” neighborhoods for his office in downtown Redmond, he said properties that combine views, acreage and good locations typically draw multiple offers. Close-in communities such as Marymoor Heights (if priced under $800,000) and Bridle Trails (if priced under $1 million) and affordable communities such as Education Hill are experiencing high demand among buyers.

Bacon expects some seasonal leveling will continue during the fourth quarter and predicts election results will have no impact on housing activity. He believes the area’s strong economy, good prospects for job growth and stable interest rates will continue to fuel the local market.

Northwest Multiple Listing Service is the largest full-service MLS in the Northwest. Based in Kirkland and owned by its member brokers, it currently encompasses more than 2,100 companies with approximately 27,000 sales associates. Together, they serve 19 counties, mostly in western Washington, plus Grant, Kittitas and Okanogan counties in the central part of the state.

Sources quoted:
Ken Bacon, NWMLS director and broker, Windermere Real Estate, Redmond
Dick Beeson, NWMLS director and broker, Windermere Real Estate/Commencement Associates
Lennox Scott, chairman and CEO, John L. Scott Real Estate

10 Tips For 1st Time Homebuyers

It seems that these days there are as many people offering you advice and opinions on the homebuying process as there are stars in the sky. If you're a first-time homebuyer, use these 10 tips to simplyfy the process and lessen your stress along the way!

10 Tips for First-Time Homebuyers:

1. Be picky, but don't be unrealistic. There is no perfect home.

2. Do your homework before you start looking. Decide specifically what features you want in a home and which are most important to you.

3. Get your finances in order. Review your credit report and be sure you have enough money to cover your down payment and your closing costs.

4. Don't wait to get a loan. Talk to a lender and get pre-approved for a mortgage before you start looking.

5. Don't ask too many people for opinions. It will drive you crazy. Select one or two people to turn to if you feel you need a second opinion.

6. Decide when you could move. When is your lease up? Are you allowed to sublet? How tight is the rental market in your area?

7. Think long-term. Are you looking for a starter house with the idea of moving up in a few years or do you hope to stay in this home longer? This decision may dictate what type of home you'll buy as well as type of mortgage terms that suit you best.

8. Don't let yourself be house poor. If you max yourself out to buy the biggest home you can afford, you'll have no money left for maintenance or decoration or to save money for other financial goals.

9. Don't be naïve. Insist on a home inspection and if possible get a warranty from the seller to cover defects within one year.

10. Get help. Consider hiring a REALTOR® as a buyer's representative. Unlike a listing agent, whose first duty is to the seller, a buyer's representative is working only for you. And in Washington State, buyer's reps are paid out of the seller's commission payment - you don't pay them a dime!

Thinking of a highrise Condo in Downtown Seattle or Bellevue?

Hello All,

Condos are an ever more popular choice with today's Eastside & Seattle homebuyers. As baby boomers downsize and first time buyers enter the market, a condo is often the right fit. The following article from the Seattle Times gives some great advice on condo buying, especially if a view is important to you.

As with any real estate purchase, its always best to work with a Realtor to represent you exclusively in the buying process - even in the case of "Pre-Sale" purchases. For more helpful free reports and buying tips, go to www.tk2homes.com and click on the "Free Reports & Information" tab. Numerous valuable reports are available and can be e-mailed to you automatically from the website.

All the best,
Tim


Getting the right floor plans, amenities and views by buying a presale
By Kellie Tompkins
Special to The Seattle Times


Prospective buyers, such as Evelyn and Michael Alphin, line up for a chance to buy a unit in the Moda condominiums, which is planned for downtown Seattle. Most of the units were sold in the first two days. The Alphins live in Tacoma, but she works in Bellevue and he is a Seattle police officer.

Buyers lined up for a chance at the unbuilt Moda condominiums planned for downtown Seattle. Ryan Raffetto and Rosalee McFadden look at sample floor plans at the sales center.
With condo sales going strong, more and more buyers are trying to secure units with the right floor plans, the right amenities and above all, the right views by buying a presale — securing a condo before a building is finished.

About 90 percent of condominiums at 2200, a mixed-use development in Seattle, sold before the sales center was open for business, said Julie McAvoy, sales director.
"It's almost rendering sales centers a thing of the past," said Dean Jones, president of Realogics, a Seattle-based marketing firm for condominiums and mixed-use buildings.
"Even before we have final floor plans, we are approached by homebuyers. Everyone wants to be in the know before the show," Jones said.

Buying a condo sight unseen isn't something to jump into without forethought or research.
Here's a look at how presales work and what issues buyers should pay special attention to:

Tips for presale buyers
Before signing a contract to buy a condo that's not finished — or even started — take steps to ensure you get what you pay for.

Know who's involved: Learn about the reputations of developers, architects, contractors and designers and find out about their performance on past projects.

Check out the options: Check with Seattle's Department of Planning and Development to see who else is building in the area — to see if there are better units available and to be informed about possible view obstructions.

Don't forget the neighborhood: Be sure to check with neighborhood and business associations to see what to expect outside the new unit. Ask them if more businesses, such as restaurants or retailers, are coming to the area or whether there are any annual events, such as fairs or parades.

Real-estate agents are a good bet: If you don't want to spend the time researching, local agents should be able to answer most of these questions. Sometimes buying a unit before a project is finished means signing a contract and forking over a hefty deposit that is nonrefundable. For at least some of the units at the 1521 Second Avenue building, the 5 percent deposit was $50,000.
Depending on the developer, there can be an earnest deposit with a signed contract immediately, or there can be the reservation stage.

The reservation stage, a more forgiving first step, allows developers to gauge interest in a project while it gives buyers a chance to select one of their top choices of units once the presale begins. Reservations often require deposits of $10,000 to $25,000 — not always refundable — and allow buyers to back out before they sign a contract. When individuals find out about a particular condominium plan, they can begin inquiring immediately.

Often in the early-development stage, before the building is constructed and before the developers have drawn up any detailed documents, buyers have a chance to reserve one or two units — deciding later which one they might want. They're put on a priority registration list and may be invited to a preview event. Some deposits are refundable, some aren't.

Many developers are skipping the reservation stage, but buyers still need to know the difference between a reservation deposit and an earnest deposit, said Kari Gran, a condominium specialist for Windermere. A reservation deposit is paid when developers want to gauge buyer interest. It usually comes in the early stages of a the project. Buyers pay a deposit ranging from $10,000 to $25,000 for downtown condos, Gran said. The deposits are usually refundable.
Gran has known people to back out of reservations. When one client found out the barbecue restrictions for the building, he opted out of the deal.

An earnest deposit is usually binding and nonrefundable after the first seven days of receiving the public-offering statement. Earnest money is tied to the purchase and sale agreement. This deposit is almost always 5 percent of the purchase price and goes toward a down payment when the sale is complete. "This is not something to go into lightly," Gran said. "A presale takes more planning."

Some builders attempt to protect views. One of the most important issues to condo buyers in and around downtown Seattle is the view. Developers sometimes drop cameras from cranes at each unit level to give potential buyers the best possible idea of what their view would be from a particular unit. To ensure buyers get what they pay for, they need to check the zoning of surrounding properties and look for any permits or proposals to develop those properties. City and county building departments have permit applications, zoning changes and variance requests on file.

Buyers need to remember zoning doesn't necessarily remain the same, Gran said. If a developer is granted a variance, the zoning changes. Attorney James Middlebrooks agrees. His law practice deals almost exclusively with condominium issues. "Let's say the buyer has a 10-story unit and the building across the street is only four stories when the buyer bought the unit," Middlebrooks said. "But the building gets torn down and a 20-story building goes up, blocking the view and devaluing the property. Just take a drive around Seattle, and you can see where this has happened many times," Middlebrooks said.

To ensure that buyers keep their views, some developers buy "air rights" around their projects. That way if the smaller building is torn down, it can't be replaced with a taller one that would eliminate views. Developers also can buy a "view corridor." In this case, they essentially buy easements that protect views in swaths. For example, a developer might buy the rights to the view of Elliott Bay from owners of several buildings between his project and the water.
If a developer says he has bought air rights or a view corridor, get it in writing, Middlebrooks said.

For Terrence Vasquez, who has placed a reservation at the Escala condominium project, his view was not guaranteed. "It was in that 'not guaranteed forever' range," Vasquez said. But he isn't too worried because he has reserved a unit on the 22nd floor.

Protect yourself — get it in writing. Problems with presales often arise when the unexpected occurs. Marriages, divorces, births and deaths, and more commonly, job transfers, might lead buyers to change their minds after agreeing to a presale. Usually, getting out of the purchase and sales agreement means losing that 5 percent deposit, sometimes more.
The more customized a unit is, the more likely it is the developer will want more compensation.
"These are contracts," said Lee Brettin, a real-estate and business lawyer in Seattle. "It's not like a hotel reservation where you can cancel 24 hours prior to arrival."

Buyers can protect themselves by getting promises in writing and by reading and understanding their public-offering statement. That document — which details restrictions, association rules and other information concerning their building and their unit — is thick and full of legal language, so buyers might want to hire an attorney. "With an expense that large, buyers need to get careful legal review," Middlebrooks said. "If you tell the lawyer that the view is really important to you, then the lawyer is going to say you'd better get that promise in writing."
The public-offering statement is issued to buyers once they pay the deposit.

By law, they have seven days to review the document. If they change their minds within seven days, they get their deposit back. After that, the developer is entitled to keep the deposit.
Advantages to buying early include having first picks for units, locking in today's prices and sometimes having the opportunity to personalize the home. "With a presale, I'm getting into the early price without the dues or mortgage," said Ryan Raffetto, who has reserved a unit with a downtown Seattle condominium project.

"As a homebuyer, you can be your own architect," said Realogics' Jones. Customization may range from choosing among several themes to fully personalizing the unit, with the latter more common among penthouses. Sometimes, buyers looking for larger spaces will buy two units next to each other and ask that they be combined. McAvoy, the condominium-sales director, recommends buyers keep the future in mind before committing to a unit.

"Don't just pick the unit you know that fits you today; pick one that fits you two years from now when it'll be complete," she said. "Look at the bigger picture." The primary attraction for presale buyers is clear. Said Jones: "You're shopping in 2008 at today's prices."

Information from Seattle Times business reporter Bibeka Shrestha is included in this report.