Joseph Witt's Blog

FHA impacts condo values and marketing time.

Joseph Witt — Mon, 24 Oct 2011 16:46:00 GMT

Interesting article that outlines how FHA restriction/regulations are impacting the time is takes to sell a condo and values. Nothing that should cause fear, but it is good to be aware of how it can impact you as a buyer or seller of a condo.

http://seattletimes.nwsource.com/html/realestate/2016551441_harney23.html?syndication=rss

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Catch The Chicken

Joseph Witt — Thu, 26 Aug 2010 14:48:00 GMT

"When is the bottom going to hit because I want to time it and buy at JUST the right moment?"

If I had a dollar for every time I heard this question, I would be rich. If I had the answer to this question, I would be rich. Unfortunately, my crystal ball is a bit cracked these days...

First, I think we are close enough to the bottom that trying to 'catch the chicken' or time it anymore may require too much energy and not provide enough return. My gut feel is rates will stay low for the next couple months. I think the government will participate in making sure this happens and I think banks will also contribute to this as well. Over the next 24 months I predict the banks will be slowly releasing a backlog of shadow inventory (foreclosures they have either been avoiding putting on the market or have been avoiding actually foreclosing on to keep the books 'cleaner'). The combination of REO's and low rates should keep the market flat with maybe a couple % change in either direction. NOTE - MY CRYSTAL BALL IS CRACKED. This is just my gut feel from the pulse of the market I am currently feeling. Please know that for the last 18 months I have been telling people to pause, especially investors. This is the first time I am actively voicing that I think it is a good time to buy in a long time.

One other trend to note is bidding wars. The last couple of offers I have submitted and the last couple of listings I have put on, have been involved in bidding wars. This is a great sign of life and may be another blog topic in the near future - stay tuned...

With this being said. I think now is a GREAT time to buy IF you want a home to live in and not flip. Prices are low. Rates are low. Inventory is good. You can't get too many other factors on your side... Enjoy your hunt.

Referrals... I love them!

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Snap. Crackle. Sucker?

Joseph Witt — Thu, 19 Aug 2010 13:56:00 GMT

Snap - the photo is taken prior to putting a home on the market.

Crackle - what is this? Virtual staging... Did they just insert virtual furniture into a vacant house?

Sucker - did you just get suckered into seeing a house that you would have otherwise passed on?

Virtual staging basically takes your vacant home and inserts pictures of staging furniture and items without ever physically putting them in the house. Then these pictures are used to market the home online and in flyers.

Is this good marketing and the way of the future or unethical? Professional photos and good staging is a MUST to get the maximum foot traffic and ultimately the maximum price for the seller. But virtual staging? I have witnessed, many times, a seller takes pictures with their furniture in a house and then they move out. The pictures still reflect the furniture, but when a potential buyer shows up, it is a vacant house. Is virtual staging any different? They are simply inserting in furniture into a vacant picture to help generate real foot traffic. It is much cheaper than actually staging, but is it ethical? In a recent Seattle Times article, they said the virtual staging company went so far as to change the 'condition' of the house. http://seattletimes.nwsource.com/html/realestate/2012589283_harney15.html Is this ethical? Is the agent helping a buyer see the home's potential or is this a form of fraud? Is there some form of virtual staging that is acceptable and others that is not? This is a very new topic, but I think it is one we will see and hear a lot about in the months and years to come. Is it the wave of the future or a passing trend? I would love to hear your feedback and thoughts - Ethical or Not Ethical?

Photos of before and after - http://virtualstagingsolutions.com/gallery

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Remove the Blindfold...

Joseph Witt — Wed, 18 Aug 2010 12:12:00 GMT

In any real estate transaction, communication and a plan is Vital!

When selecting your agent, make sure they have not just an open line of communication, but a plan for communicating from start to finish. Communication is not only an important element between agent and client, but must also be crystal clear between your agent and:

the other agent
escrow
title
loan officer
potential buyers (if you are listing)
everybody involved in the transaction

Each individual has their own preferred method of communicating, so you want to make sure your agent is comfortable with picking up the phone, emailing, texting, faxing...

In addition, make sure your agent has a plan for the transaction from start to finish. I personally use a 6+ page checklist to make sure that no detail goes overlooked. I give a copy of this to my client at our first meeting, so they know exactly what I will be doing and so they can follow along throughout the deal. In addition, I keep my clients posted throughout the deal either verbally or via email. This communication is an agenda item on my calendar regardless if there is new information or not. This allows my clients to 'relax' and know that everything is handled. The combination of communication and an outlined plan, removes the blindfold of stress, that so many individuals feel when buying or selling. Make sure in your next real estate deal you are working with somebody that will remove that blindfold and make the entire deal, from start to finish, crystal clear.

I am always available for your questions, big or small, and always appreciative of referrals.

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Sellers Jump?

Joseph Witt — Thu, 12 Aug 2010 11:01:00 GMT

Right now I seem to be meeting with a lot of sellers contemplating if they should or should not sell their home. They are balancing on the tight wire of indecision. Many think that they should wait for the market (value) to come back. The great thing about real estate is that buying and selling run parallel. If you sell low, you also buy low (right now you buy even lower with rates in the 4's). If you sell high you also buy high. Therefore, the decision should be based on what your goals and needs are. Market fear, should not be a driving force. Downsizing, upsizing, job location, needed change and so forth should be the driving force in making the decision. Look at your home as a HOME, a place for you and your family to live and create memories. This should allow you to remove the investment factor that pushed the market out of control in the first place and help you make a sound decision that is best for you and your family. Most importantly it will help you get off that tight wire and move on with your life.

I am always available for any real estate questions. Keep me in mind when you or your friends are considering buying/selling a home.

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July NWMLS Report - Housing market hits 'trifecta'

Joseph Witt — Thu, 12 Aug 2010 11:01:00 GMT

Here is the latest update for July 2010 from NWMLS! Enjoy!

News from NW Multiple Listing Service

FOR IMMEDIATE RELEASE: August 5, 2010

Housing market hits “trifecta”

KIRKLAND, WA, August 5, 2010 – Housing activity during July held few surprises for members of Northwest Multiple Listing Service, although some brokers wonder why more buyers aren’t taking advantage of historic low interest rates. Both pending sales and median prices on closed sales showed slight improvement from the previous month, according to the latest report from NWMLS.

“It’s a housing trifecta,” declared Meribeth Hutchings, a director for Northwest Multiple Listing Service when asked to comment on activity for the month of July.

The combination of the lowest interest rates on record, plenty of inventory and low prices offer an unprecedented opportunity for buyers, Hutchings explained. The broker/owner of Windermere Real Estate/Lake Stevens Inc. said homes have never been this affordable in her 28 years in the business.

Brokers reported 5,571 pending sales across the 21 counties in the Northwest MLS service area. That’s up slightly from June when they reported 5,547 pending sales, but down about 23 percent from twelve months ago when there were 7,279 pending sales.

The MLS report showed year-over-year increases in inventory, a double-digit decline in closed sales and a small drop in prices:

At month end, there were 44,770 properties for sale system-wide, a gain of 5.8 percent from twelve months ago. The inventory includes 10,850 new listings added during July (9,308 single family homes and 1,542 condominiums).
Brokers reported 4,491 closed sales of single family homes and condominiums (combined) during July. That’s down 18.7 percent from the same month a year ago when members tallied 5,527 closed sales.
The median price for last month’s closed sales was $274,990, down 1.4 percent from the year-ago figure of $279,000. Prices rose in nine counties.
Last month’s median price, compared to June, is up about 3.8 percent overall.

“The tax credit pulled some first-time buyers from the second half of the year into the first half,” surmised NWMLS director Pat Grimm, managing broker, Windermere RE/Capitol Hill, Inc. The National Association of REALTORS® echoed his comment. In a statement accompanying its report on nationwide pending sales for June, NAR said it expected near-term home sales to be noticeably lower in contrast to the spring surge when buyers rushed to take advantage of the home buyer tax credit.

Dick Beeson, NWMLS director and broker/owner at Windermere Commencement Associates in Tacoma, suggested the market has adjusted to a “non-stimulus environment.” The lack of a tax credit has caused some buyers to postpone their purchase, he said, but added, “Many others are continuing to take advantage of superlative interest rates and bargain prices.”

Hutchings said business was “typical” for July, “usually a slow month because of vacations.” Nevertheless, she noted, despite the expiration of the tax credit, sales volumes for her office were comparable to a year ago.

Another MLS director, Frank Wilson, managing broker at John L. Scott, Inc. Poulsbo, said the current market is being driven by people who “have to.” These include buyers who “have to buy” and sellers who “have to sell,” with a good deal of buyers and sellers still sitting on the sidelines waiting. He noted homes in Kitsap County priced in the $200,000 to $299,000 range are selling quite quickly, thanks in part to very favorable loan programs.

On another positive note, Grimm said the influx of first-time buyers taking advantage of the tax credit has pulled move-up buyers into the market. “We’re seeing increased sales in the higher-end market,” he remarked, adding there’s been a “reality check” on pricing at the higher end, marked by price drops and a corresponding uptick in activity. As an example, he said a home in Seattle’s Capitol Hill neighborhood sold for $1.045 million in just four days. “The seller had priced the home well and it sold within four percent of the asking price,” Grimm stated.

Commenting on the inventory and pace of sales, Bobbie Petrone Chipman, managing broker of Coldwell Banker Bain in Puyallup and a member of the NWMLS board of directors, emphasized that sellers “must focus on the condition, amenities and pricing of their properties in order to obtain a sale in this very strong buyer’s market.” She also suggested buyers who procrastinate while waiting for a better time to purchase may risk looking back in hindsight bemoaning the opportunity that passed them by.

Brokers also report some encouraging activity for newly built homes. “We see sales occurring in new construction where large builders have reset their prices to 2004 levels. Sales are brisk among first-time buyers in this market. These buyers know we are bouncing along the bottom in prices and have reach historic low interest rates,” Beeson reported.

The “Monthly Monitor” newsletter from Bothell-based New Home Trends, Inc. also said new home sales activity is trending up in the Puget Sound region. “The number of new construction home sales written in the last twelve months exceeds the previous year by 28.1 percent. The Puget Sound area continues to show a demand for new housing,” the report concludes.

Industry officials believe interest rates, jobs and consumer confidence are critical to building momentum.

“Consumer confidence is ebbing and that makes major purchases even more difficult to initiate or even contemplate,” observed Beeson. “If the job picture improves even slightly later this year, we will see an uncharacteristic uptick in sales in the final quarter,” he stated.

NAR, in its prepared statement, also addressed the employment picture. “There could be couple of additional months of slow home-sales activity before picking up later this year, providing the economy continues to add jobs. We’ve turned the corner on home prices and they should remain fairly stable over the balance of the year, but we really need to see stronger job creation to have a meaningful recovery in the housing markets,” according NAR.

MLS director Matt Deasy, managing broker of Windermere Real Estate/East, suggested some would-be buyers may not fully understand the advantages of today’s low interest rates.

Citing examples from Windermere’s affiliated mortgage company, Deasy said a buyer saves $374 a month on a $300,000 loan compared to three years ago. The principal and interest on a $300,000 mortgage at today’s rate of 4.375 percent would be $1,498. Three years ago, when the rate averaged 6.375 percent, the P&I payment would have been $1,872.

On a $400,000 loan, the savings would be almost $500 per month ($2,495 less $1,997 = $498). For the past 30 years, the average rate is approximately 9 percent, which puts the payment on a $300,000 loan at $2,414 – a difference of $916 per month.

“Buyers are motivated when they see these comparisons,” Deasy remarked. He also believes there’s a pent-up demand based on the number of pre-approvals for loans in the mortgage company’s pipeline. He expects many of these potential buyers “will pull the trigger” once rates or prices start edging up.

Bystanders are still waiting for a piece of the puzzle to fall in place, according to Wilson. For some, he said the missing piece might be jobs, the economy, confidence in the future or direction of the stock market.

J. Lennox Scott, chairman and CEO of John L. Scott Real Estate praised recent action to help households purchase homes in rural areas. “The Federal Government should be applauded for passing the legislation that will allow for recapitalization of the USDA's Single-Family Housing Guaranteed Loan Program,” he said. “Rural America has more than 50 million people nationwide, many of whom are in a strong position to buy a home, but lack the down payment funds required by conventional loan programs, he explained, adding, “The USDA loan program opens up opportunities to many of these buyers, bringing with it a proven track record of success and another step towards creating long-term housing sustainability."

Washington fared “4th best state” for building a nest egg and has the country’s most promising real estate market in the near term, according to an index created by U.S. News that considered each state’s housing market, unemployment rate, per capita income, and taxes. Citing data by Moody’s Analytics, the report indicated home prices in the state are expected to surge by “a whopping 6.6 percent per year” between 2010 and 2013.

Northwest Multiple Listing Service, owned by its member brokers, is the largest full-service MLS in the Northwest. Its membership includes more than 24,000 brokers and agents. The organization, based in Kirkland, currently serves 21 counties in Western and Central Washington.

Statistical Summary by Counties: Market Activity Summary - July 2010

July 2010 Single Family Homes + Condos	LISTINGS		PENDING SALES	CLOSED SALES
July 2010 Single Family Homes + Condos	New Listings	Total Active	#Pending Sales	# Closings	Average Price	Median Price
King	4,148	14,490	2,133	1,782	$460,821	$375,000
Snohomish	1,545	5,908	870	727	$305,793	$270,000
Pierce	1,614	6,467	1,019	686	$240,245	$219,970
Kitsap	487	2,126	284	218	$313,193	$265,000
Mason	177	965	61	45	$219,441	$190,000
Skagit	283	1,395	123	93	$246,714	$219,000
GraysHarbor	227	1,048	75	60	$134,830	$138,250
Lewis	159	903	39	37	$167,714	$162,000
Cowlitz	149	697	72	70	$177,438	$162,500
Grant	133	708	45	53	$174,228	$165,000
Thurston	555	2,116	289	249	$251,643	$234,900
San Juan	45	525	16	13	$428,769	$325,000
Island	220	1,229	107	84	$322,197	$304,000
Kittitas	112	651	41	30	$286,215	$242,000
Jefferson	151	719	27	29	$296,833	$300,000
Okanogan	56	479	15	17	$192,944	$169,000
Whatcom	477	2,251	236	187	$295,916	$256,950
Clark	52	317	39	33	$235,332	$216,000
Pacific	57	510	26	20	$134,805	$130,000
Ferry	10	59	1	3	$200,000	$165,000
Clallam	98	562	22	23	$184,416	$165,000
Others	95	645	31	32	$189,275	$182,450
MLS TOTAL	10,850	44,770	5,571	4,491	$342,422	$274,990

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2000	3706	4778	5903	5116	5490	5079	4928	5432	4569	4675	4126	3166
2001	4334	5056	5722	5399	5631	5568	5434	5544	4040	4387	4155	3430
2002	4293	4735	5569	5436	6131	5212	5525	6215	5394	5777	4966	4153
2003	4746	5290	6889	6837	7148	7202	7673	7135	6698	6552	4904	4454
2004	4521	6284	8073	7910	7888	8186	7583	7464	6984	6761	6228	5195
2005	5426	6833	8801	8420	8610	8896	8207	8784	7561	7157	6188	4837
2006	5275	6032	8174	7651	8411	8094	7121	7692	6216	6403	5292	4346
2007	4869	6239	7192	6974	7311	6876	6371	5580	4153	4447	3896	2975
2008	3291	4167	4520	4624	4526	4765	4580	4584	4445	3346	2841	2432
2009	3250	3407	4262	5372	5498	5963	5551	5764	5825	5702	3829	3440
2010	4381	5211	6821	7368	4058	4239	4306

__________

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Market update

Joseph Witt — Tue, 20 Oct 2009 12:03:00 GMT

Make sure to keep scrolling past the article for more blog entries on multiple topics relating to real estate.

Great article from the NWMLS that gives a real update on the status of the real estate market right now. There is a lot of info, but it is worth the read.

Prices Down 7.5% (over past 12 months)

Sales up 27% (over past 12 months)

Distressed homes 31% of transactions

8K gov't bonus ends 11/30/09

Northwest MLS brokers agree "there's a lot to be optimistic about"

KIRKLAND, WA, October 5, 2009. "There's a lot to be optimistic about," according to one director of the Northwest Multiple Listing Service upon reviewing summary statistics for September's housing activity. The report shows a big jump in pending sales compared to a year ago (up almost 27 percent), continued drops in inventory (down 17.7 percent versus a year ago) and brisk demand for homes at the lower end of the price spectrum.

Distressed properties in the system continue to be a drag on prices ï¿½ median prices for last month's sales were down about 7.5 percent from a year ago ï¿½ and brokers continue to voice frustration with slow response time by lenders. (Banks are taking 9.5 weeks to respond to short-sale requests, versus 4.5 weeks a year ago, according to research by Campbell Communications of Washington, D.C.)

Joe Spencer, president and COO of John L. Scott Real Estate, estimates up to 10 percent of pending sales do not close because they're caught in the short sale cycle. Still, he comments, "There is a lot to be optimistic about." He cites interest rates that are now in the high four percents as bordering "on being epic" and the federal tax credit as stimulants to the market.

Northwest MLS brokers reported 7,581 pending sales (offers made and accepted but not yet closed) during September, outgaining the same period a year ago by 1,599 transactions for a 26.7 percent increase. Last month's condominium sales surged, with pending sales up nearly 25 percent from a year ago after languishing in negative year-over-year figures for the first five months of 2009 and only modest gains over the past three months.

During September, members added 10,054 new listings of single family homes and condominiums to inventory, about 7.6 percent fewer than a year ago. With the combination of fewer new listings and more sales, inventory at month end dipped to its lowest level since March. At month end, the selection included 40,041 properties for sale (33,332 single family homes and 6,709 condominiums). That's down 17.7 percent from twelve months ago.

"Our market has certainly come a long way since this time last year," said Ron Sparks, managing vice president of Coldwell Banker Bain, who said demand is at its highest level in two years. "For all the challenges that remain, it would be difficult to not appreciate the reemerging market vitality that continues to build even as the summer buying season closes," he added.

Activity at open houses is reported to be brisk in many areas, which MLS directors attribute to a combination of factors, including expanded use of a "Public Open House" program. This program allows buyers to search schedules of all open houses in the NWMLS system from the website of any member broker that uses the feature.

Brokers also credit improved affordability, incentives and the looming deadline for the $8,000 tax credit for first-time home buyers as boosting activity. As the Nov. 30 deadline for the federal $8,000 tax credit program approaches, Spencer advises buyers to "be under contract by the third week of October, to close by Thanksgiving, and to stay away from short sales."

"Because there are so many short sales and bank owned property sales, it was inevitable that prices would fall slightly," explained NWMLS director Dick Beeson, the broker/owner of Windermere Commencement Associates in Tacoma.

Year-over-year prices are down nearly 7.5 percent across the 19 counties served by NWMLS, but the median sales price of $273,000 for last month's sales of single family homes and condominiums (combined) equaled the figure for January. Beeson described the price drops as "a necessary adjustment given the number of short sales and bank owned property sales in the mix. (A survey by the National Association of REALTORS indicates distressed homes accounted for 31 percent of transactions in August and July.)

A comparison of year-over-year prices of closed sales by county shows wide variation for September, from a decline of almost 17 percent in Cowlitz County to an increase of nine percent in San Juan County. For the four-county Puget Sound region (King, Snohomish, Pierce and Kitsap counties), prices were down about 7.6 percent from twelve months ago.

On a brighter note, Beeson said activity is brisk for lower priced homes in many areas. "Multiple offers are occurring on a regular basis and many buyers have to make two or three offers on different properties just to secure one," he reports.

Sparks echoed that report, saying, "Describing much of the current market as 'lively' is probably a bit of an understatement," adding, "I've heard agents describe open houses as 'mayhem' and 'chaos." Modestly priced homes in good condition and in popular neighborhoods can certainly draw more than one offer, according to Sparks, who also noted, "This is not to say that all neighborhoods and price points are rebounding at the same pace, but there is an awful lot of economic momentum in our region, including our housing market, that can't be ignored."

Emphasizing recovery comes in stages, Beeson acknowledged some "hard adjustments" are being made in higher priced homes where inventories remain high, but expects that segment to recover. He said the main focus of many agents is meeting the needs of the first-time buyers and those who have needs because of lifestyle changes due to advancing age, change in marital status, the birth of children or death of a family member. "These people always need help solving their real estate problems," he observed.

Statistical Summary by Counties: Market Activity Summary - September 2009

September 2009 Single Family Homes + Condos	LISTINGS		PENDING SALES	CLOSED SALES
September 2009 Single Family Homes + Condos	New Listings	Total Active	#Pending Sales	#Closings	Average Price	Median Price
King	4052	12912	2927	2016	$421,293	$349,000
Snohomish	1551	5445	1222	755	$303,020	$282,000
Pierce	1513	5720	1303	838	$246,942	$221,600
Kitsap	498	1954	373	260	$295,529	$249,725
Mason	118	778	83	67	$207,691	$181,500
Skagit	261	1341	144	94	$266,821	$233,900
Grays Harbor	132	855	116	62	$156,295	$134,000
Lewis	136	772	80	48	$176,736	$167,500
Cowlitz	152	690	85	62	$163,072	$149,900
Grant	127	726	95	65	$193,067	$160,000
Thurston	473	1754	391	265	$266,564	$242,000
San Juan	30	491	23	18	$527,251	$480,000
Island	188	1204	111	81	$333,741	$280,000
Kittitas	71	607	42	40	$280,344	$220,495
Jefferson	62	622	49	33	$286,133	$230,000
Okanogan	42	403	26	21	$211,305	$160,000
Whatcom	356	1935	314	244	$262,737	$236,450
Clark	92	334	72	50	$212,036	$197,450
Pacific	41	401	34	21	$172,222	$155,000
Others	159	1097	91	92	$218,170	$188,750
MLS TOTAL	10,054	40,041	7,581	5,132	$325,871	$273,000

4-County Puget Sound Region Pending Sales (SFH + Condo combined)
(Totals include King, Snohomish, Pierce & Kitsap counties)

	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2000	3706	4778	5903	5116	5490	5079	4928	5432	4569	4675	4126	3166
2001	4334	5056	5722	5399	5631	5568	5434	5544	4040	4387	4155	3430
2002	4293	4735	5569	5436	6131	5212	5525	6215	5394	5777	4966	4153
2003	4746	5290	6889	6837	7148	7202	7673	7135	6698	6552	4904	4454
2004	4521	6284	8073	7910	7888	8186	7583	7464	6984	6761	6228	5195
2005	5426	6833	8801	8420	8610	8896	8207	8784	7561	7157	6188	4837
2006	5275	6032	8174	7651	8411	8094	7121	7692	6216	6403	5292	4346
2007	4869	6239	7192	6974	7311	6876	6371	5580	4153	4447	3896	2975
2008	3291	4167	4520	4624	4526	4765	4580	4584	4445	3346	2841	2432
2009	3250	3407	4262	5372	5498	5963	5551	5764	5825

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Professional Photography

Joseph Witt — Tue, 20 Oct 2009 12:03:00 GMT

Professional photography is a MUST!

I swear by professional photography. I did when the market was hot and I do when it is slow.

Why?

Everybody! Everybody, goes online and looks at homes prior to venturing out and having their agent open the door. The parameters are input into the computer and up pops your selection. The very first thing the buyer sees is a picture. If they don't like the picture they scroll on past it to the next listing. If you have a nice first picture you can pull them in. Then they click and want to see more photos. All the photos look good, so they look at the rest of the info to see if it is worth going to physically see. Without a good photo to pull the buyer in and follow up photos to keep their attention you will simply be passed over. This is the situation in Every market - good or bad.

A buyer physically walks through your property and likes it. They will not ask the agent to show it 17 more times before they make their decision (well... maybe some will), but instead they will go online and repeatedly review the pictures. Then they may request a 2nd showing. Once the contract is signed around there is generally 30-45 days before the close. Now the nerves set in, "did I/We do the right thing?" The pictures will be reviewed over & over & over to reassure that the buyer picked the right place. Great pictures will re-enforce the right decision.

In a good market I still swear by a professional photographer. Why? Because even though you knew you would be getting multiple offers on a property, good photos may bring an additional or several additional bidders. This could translate into a higher sales price for your client.

In a bad market, you simply need to stand out from the rest on all levels to get the home sold. Professional photography is simply one aspect of that strategy.

As a listing agent, I do not even give my clients an option of professional photography. It is the first call I make when the listing paperwork is signed. No additional cost to my clients. Make sure that no matter what agent you use to list your home that professional photos are taken to market your home above the competition.

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Pre-Qualify FIRST

Joseph Witt — Wed, 01 Jul 2009 10:58:00 GMT

Buyers - what is the first step in buying a house?

No it is not figuring out how you will furnish a place if and when you get it.

Get Pre-Qualified!

Don't go out and look at a 750K house because you think you can afford it or a 200K condo because you think that is all you could possibly get. Call a loan officer and in 15 minutes they will have you pre-qualified.

What will a lender need from you to get pre-qualified?

Credit report (which they will pull)
Verbal on your income
Verbal on your debts
Verbal on job history
Verbal on what your assets are

Know that to get Pre-Approved, this will all need to be documented (so don't make up numbers or jobs). However, a verbal will be enough to get you started.

Why is it so important to get pre-qualified before you start looking at a places?

Expectations - If you start out looking at 1 Million Dollar homes and start planning your life in one of these, when you find out that you can only afford a $500K home, you will be very disappointed and nothing that you look at in the $500K range will fit into your expectations. The reverse is also true. You may start looking at $200K homes and decide that there is nothing out there for you, when in actuality you qualify for $500K.
Time - Once you are pre-qualified, you have a target and you can narrow down your search to what is in your price range as well as your other parameters. This will save a TON of time in your search.
Offer Strength - Your offer will be so much stronger when you attach a pre-qual letter to it. Even stronger than that would be a Pre-Approval Letter. A seller will take you much more seriously. In some cases, the offer will not even be considered unless one of these letters is attached. When I am the listing agent, I demand it and talk to the lender before we accept or counter. This way I know exactly how strong the buyer is.
Requirement - At some point before you buy (unless you are buying with cash), you will need to do this, so get it done up front. As a buyer's agent, I demand this before I even start the car to show homes.

A couple more words of wisdom before I sign off: Just because you qualify for $500K does not mean you need to buy a $500K house. Talk to the lender and understand the different loan programs. Understand what your payments will be with Principle and Interest (P&I), taxes, insurance. Then factor in utilities, upkeep and misc costs. Make sure that you are comfortable with your monthly expenses. Make sure your monthly payments fit your lifestyle and goals.

Hope this helps! I have a couple great Loan Officers on hand if you need to get pre-qualified!

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Open Houses

Joseph Witt — Mon, 29 Jun 2009 16:19:00 GMT

Do open houses work to sell your home?

In the last 10 years I have done more than my fair share of open houses. Do they actually get the house sold? In ten years I have had 1 person that came to an open house actually buy it.

Open houses do give people in your neighborhood a chance to view the house and they may possibly know somebody that wants to live in the area. However, home interiors are so accessible via the internet that people tend to look there before going in to an open house (this is why professional photos are so very important - another blog topic to come). This creates an anonymous buffer. If they like the homes features and the way it 'feels' from the photos, then they will generally call to set up an appointment to view the inside.

So what is the purpose of an open house? An open house tends to be more directed at self promotion for the agent. It is a chance to meet passerbys and advertise their name on every corner near the house via 'A-Boards' with the hope of gaining business and name recognition. Nothing wrong with that, it is a mutually beneficial. It gets people in to view your home and free advertising for the agent.

Depending on the home I tend to do an open house right when the house goes on the market. Why? The first weekend tends to be when the most traffic goes through the house. So you let the neighbors in to view the house (just in case they know somebody that wants to be in the area). Also, you tend to be there when agents bring their client's through. The purpose of this is to point out features to these serious buyers that they may not have seen otherwise. If they are out with an agent then they tend to be pre-approved and serious. Those are the people you want in there. I will also, sometimes, do an open when there is a price drop to catch the same potential buyers with their agents.

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It's About the People

Joseph Witt — Thu, 25 Jun 2009 10:07:00 GMT

When business is exploding or when the economy is in 'crisis' mode, I absolutely love what I do. Yes, I do enjoy the hunt when helping buyers and the challenge of maximizing the selling price while minimizing the time on market. The negotiations I simply thrive on! (At the UW I took several negotiation classes while getting my degree in business and, without question, those were my favorite classes. Now I get to do it all day long.) The contract paperwork, well, that isn't as fun, but it is a necessary evil. Dealing with loan officers (unless it is my couple of favorites), will explain the lack of hair - haha. My favorite part of being a Realtor is, without any question, the people I get to work with. My range of current clients is early 20's to early 70's and they are all a blast to work with. I do wish I could tell people their home was worth what it was in July of '07, but once we get past the reality check it is a blast! Thank you to all my past, present and future clients (if you are nice) for making my job so enjoyable.

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Rental Reality

Joseph Witt — Wed, 24 Jun 2009 20:45:00 GMT

As a Realtor I should be telling everybody that they should have rental properties... Right? WRONG!

Rentals is a numbers game and most people seem to be bad at math. They are also work.

Numbers: Here is what you must factor in order to property analyze the numbers.

Vacancy Rate

Repairs

Move in / Move out fees (for condos)

Advertising

Depreciation / Tax write off

If when you factor in all these numbers and you are even or positive then it is a rental worth considering. During the last boom, EVERYBODY jumped into the Landlord role (myself included), banking on the equity growth. It didn't matter if you were bleeding $300 / month because things were going up at 1%+ a month. This calculates to an incredible return. History consistently shows that properties do appreciate. However, I would factor in a 3-7% rate of appreciation. The smartest Landlord's I have met do not factor in appreciation. They purchase the property strictly based on its monthly return. They want to hold properties that generate cash flow after all the expenses are factored in. One way to do this is to put down enough cash to generate a positive flow. This is,and should be, a very realistic expectation. In the NW I have found that a down payment of somewhere between 25-35% puts you in an break-even or positive position each month, once all your 'true' costs are factored in. (Please note, this is not a formula, just an observation.) The other way to find yourself in a positive cash flow situation is to purchase something at .70 cents on the dollar or less. This generally means going to the auction or finding a distressed property (that is a whole blog on its own).

Work: A rental is work. One way to avoid the work is to hire a property manager, but then you must factor this back into your numbers. I have found that if I put the rent at just under the going market rent I tend to attract many more renters and I can put in a quality tenant. However, you still need to show the property to 5 or 10 different people. If your property is next door then that is not a big deal. If your rental is across town then the time starts to add up. Repairs, not only do they cost money, but you need to coordinate them and again this takes time. Late rents & evictions, you must understand the Landlord/Tenant laws and know that 'Time is of the Essence' when you are responding to problems. Damage - hopefully you picked a tenant that doesn't want to put anything on the walls and walks around in their socks on the hardwoods, however, I bet you didn't - know that there is going to be some wear and tear and possibly damage every time a tenant moves out. Are you painting the walls yourself or hiring somebody?

My goal is not to scare you off from owning rentals. My goal is to help you understand the realities of being a Landlord BEFORE you take on the roll. Even in the current economic state I am still an avid believer in Real Estate being one of, if not the, best investments out there. Over time rentals will appreciate and, if you purchased wisely, they can generate consistent monthly income. Overall, they can be a very wise investment. Do plan on being in it for the long haul. I currently have rentals and I am sure I will probably always have rentals. History has shown that in this area a property doubles in value every ten years. So if you don't mind the headaches and unexpected, it can be a very good investment, especially when you factor in leverage. Just go in with your eyes wide open.

I am always available to help you track down the right rental for your goals and situation or just to answer any questions you may have.

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Time to Buy?

Joseph Witt — Sun, 07 Jun 2009 13:40:00 GMT

Statistics are saying yes!

This just in from the NWMLS (the authority in local real estate statistics):

'KIRKLAND, WA, June 4, 2009 ï¿½ Waiting longer to buy a home is not likely to pay off, according to Northwest Multiple Listing Service director Kathy Estey after reviewing reports summarizing May activity. Estey pointed to shrinking inventory (about 20 percent fewer listings than a year ago), double-digit increases in the number of pending sales (up 17.7 percent from a year ago), solid open house activity, and signs of stabilizing prices (eight of the 19 counties in the report show price gains since January) as indicators of an improving market.'

So:

Sales/demand is up 17.7%

Inventory is down 20%

Rates are low and increasing

Based on the economics of supply and demand, all indicators are that now is a good time to buy. Add in the cost of borrowed money increasing and I think we are going to see a mini rush this summer. I personally don't think you are going to have all the factors in the buyer's favor the way they were 2 months ago again and unless there is another economic crisis things are going to keep pushing in an upward direction. There may be a seasonal slowdown in winter, but I think this will be the normal seasonal adjustment.

Please note that for the last 6-8 months, I have been telling potential buyers to wait because I thought better deals were coming. If a buyer was set on buying, I told them to plan on getting the home at 5-10% under current market 'value' (not asking price) to provide a cushion for any potential market decline. Now I think the potential to work deals this good is going to quickly evaporate as sellers realize that the market is showing signs of coming back.

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Short Sale Fine Print

Joseph Witt — Thu, 04 Jun 2009 23:14:00 GMT

If you are a home owner in the middle of doing a short sale with your lender, make sure you read the fine print. Just because your lender signs off on the short sale doesn't mean you are always off the hook. Some lenders are establishing a policy that the home owner may still be liable for the unpaid debt even after the house is sold. Lenders are either making the home owner sign at closing that they will pay the difference between the amount owed and the sold price or reserving the right to sue the home owner for 6 years after the close. Translation - read the fine print of the contract that the bank sends you, then read it again, then take it to an attorney to read and strike any legal phrasing that gives the bank the right to come after you or leaves you liable for the debt. If the bank refuses to accept this change then it is up to you at that point if you wish to proceed being fully aware of the consequences that may occur.

I am a real estate agent, but please know that a real estate agent is not allowed to practice law. Agents are allowed to help you find a home, sell a home, market a home, put together basic contracts and follow the transaction through. When it comes down to interpreting law or writing legal contracts this is an attorneys job. Pay for an attorneys time to make sure you are protected if / when anything is outside of a standard contract. It will be the best insurance policy you can buy. Lesson of the day - read the fine print!

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Foreclosures

Joseph Witt — Wed, 03 Jun 2009 14:54:00 GMT

People generally pack any type of 'Distressed Property' into the term 'Foreclosure'. From my experience, I have found that there are 3 categories of Distressed Properties that people generally lump into the term 'Foreclosure,' however, they are all very different!

Short Sales: Short sales (pre-foreclosures) are homes that have negative equity. The Seller generally owes more than what the home is worth. If a home owner stays current on the payments then they are in no risk of going into foreclosure. Short sales tend to be the owner attempting to sell the home themselves or with an agent. If a contract is signed around by the seller and buyer, then the bank needs to approve the shortage of equity. Many times you will see a short sale situation when an owner has negative equity and has stopped paying the bank. This is the owner's attempt to sell before going to foreclosure. The benefit to this is that, while it does have a negative impact on your credit report, it is not nearly as bad as a foreclosure. Buyers can pick up short sales with a conventional loan, however, it is a very lengthy process to get the banks to sign off on the loss. I have seen these take anywhere from 2 -12 months to get signed off.

Foreclosure: The actual Foreclosure takes place on the courthouse steps. In Washington it is every Friday. These are homes that the home owner stopped making payments on and was unable to work out a sale, short sale or loan modification. The courthouse foreclosure is just like you see in the movies. Walk in with cash (or, for most people, cashier's checks in multiple denominations), prove that you have the funds and the bidding starts. Highest bidder gets the house. An actual foreclosure is devastating on the credit report. I am told that it will take 7+ years to come off. Buyers - no conventional loans here - it is either cash or nothing and you are buying without seeing the interior of the home generally.

REO's: (Post-foreclosure) This is also commonly clumped into the term 'Foreclosure'. An REO (Real Estate Owned) is a home that went to auction and for one reason or another was not purchased by anybody. This home now goes back to the bank and it is the bank's job to sell it. This is, usually, the last thing a bank wants so they slash the price and hope to sell it quickly. Banks usually take a big hit if it gets this far. However, buyers can walk in with a conventional loan, close very quickly AND actually get to see the interior with an inspector in tow! If I were a buyer, I would be on the lookout for these properties. I recently saw a home that sold for 870K in 5/07 become and REO and sell for 560K in 3/09 in Kirkland, WA.

This is just the tip of the iceberg regarding foreclosures. This month I wrap up an intense round of classes and will officially be a 'Foreclosure Specialist'. A title, surprisingly, very few agents hold in Washington. If you have any questions about 'Foreclosures' or real estate in general I am always available.

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Price Ahead of the Market

Joseph Witt — Wed, 27 May 2009 13:19:00 GMT

Sellers tend to think in terms of what their home was worth in July of 2007. The first and most important news flash..."Things Have Changed!" The change varies depending on what city you are in and even what neighborhood you are in. However, I have not found a single home yet that has been immune to the last 18-24 months of economic turmoil. Understand that you have to price ahead of the market in order to sell in todays market. (I think you need to do this in any market.) I am still seeing multiple offer scenerios for sellers. However, this is only when the home is priced ahead of the market. If you price at the what the other current, identical, active listings are priced at then expect to sit on the market. Then expect to have a price drop. Then expect to sit some more. And maybe another price drop. Finally, as time drags on the market price drags down. This is reality.

A new listing gets noticed! A new listings gets the most activity! So price it right from day one and your chances to sell will increase exponentially. Take the last SOLD price and cut it by 3%. This will look like a good deal to buyers and they will come. Half the battle is getting them in the door. Cut it 5-10% compared to the last sold and you will most likely be looking at multiple offers that push you back up to what true market value is. Anytime people are competing on a property is when you will quickly find the true market value. Also, you close the house and move on with your life in a short amount of time. I have used this pricing strategy on my own properties even during the HOT market and everytime it caused me to get above what I thought market value was and have a deal signed around within 72 hours. I am not making any promises, but it is a strategy that many have used successfully.

So Sellers... If it is time to move, you can still sell a home despite media headlines. Just know that you must be REALISTIC in what you are going to sell for and price ahead of the market. A good agent won't always tell you what you want to hear, but they will have a pricing strategy to get your home sold and an actual marketing campaign to get it out into the publics attention.

Stay tuned more to come...

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How I Started in Real Estate

Joseph Witt — Mon, 25 May 2009 21:24:00 GMT

How I Ended Up Being A Real Estate Agent

Enjoying the beautiful sunny day here in Kirkland. Thought it was long overdue and time to start a blog now that I have my new website up and running. For my first entry - how about how I got into the real estate business?

1999 - I was graduating from UW School of Business with a focus on Marketing and Management. Now it was time to start the job search. During college I was doing a ton of remodeling jobs on the side. Ever since I could walk I was helping the Old Man with remodeling his 100 year old Victorian on Capitol Hill. I loved these projects. The creation and satisfaction of getting something accomplished. I also loved marketing and knew that I am the type of person that would need to work for myself eventually. Add an unending curiousity of what houses look like, floorplans, updates, why this house is more than that house, how neighborhoods impact values........ Throw this combo together and real estate seemed the perfect fit. So I got my degree from UW and back to Real Estate School. I soon signed on with a small company and was up and running selling real estate and doing home loans. I figured why not do them both because I like numbers too.

My first month I managed to sell 4 homes. 3 or which actually closed. Not sure if that was luck or networking, but I realized at that moment that I had found my niche. I also quickly realized that the loan aspect of the deal was not for me. I love helping people search for a home, listening to their needs and wants and finding a solution. My favorite calls are "Joe you have to see what I did to the house. Without you this wouldn't have been possible." Although, it still would have been possible, it always puts a big smile on my face to know that I am warmly associated with a friend's home. Now loans on the otherhand... These involve digging deep into a person finances and personal information. Many times you have to let people know that they can't afford the home of their dreams or that they need to clean up their credit. I learned quickly that this was not the role I wanted to play. I also learned quickly that helping somebody buy or sell real estate is more than a full time job and being a loan officer is also a full time job. I think it is better to do one thing very well as opposed to doing both mediocre. So I have now surrounded myself with a team of loan officers who update themselves multiple times a day on the latest news while I am out helping my clients buy or sell and enter the next phase of their life.

The rest as they say 'is history!'

Stay tuned for more of the "History", current market updates, deals that are too good to pass up and much much more real estate!

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