Exact Realty LLC; Seattle Area Real Estate

Part Two of Four: the "nuts & bolts" of short sales.

The second of a 4-part series discussing the basics of Short Sales

Nuts & Bolts of Short Sales II

Comparable Sales For That Short Sale House

The short sales are often priced below comparable sales, yet they are priced in line with pending sales. Why? Because short sales take anywhere from 2 to 4 months, on average, to close, and pending sales will become the comparable sales at closing.

Some short sales are priced ridiculously low. So low that the sellers' bank will never accept them. These types of listings receive multiple offers. But all is not lost. To get your offer accepted, it will need to be priced near market value. If you're not prepared to pay above a superficial price on a lowball short-sale listing, then pass.

Mortgage Amounts, Number of Loans and Lenders

Ask your agent to research how much is owed against the home and find out the number of loans that are recorded. A second or third mortgage lender will receive peanuts as compared to the amount a
senior lender in first position will get. Moreover, some lenders, deserving or not, get a reputation for being difficult to work with. If your agent is an experienced short sale agent, he or she will know who these lenders are and can advise you of the difficulty you may encounter..

If your offer is 20% or 30% of the mortgaged amount, it is unlikely that your offer will see the light of day on the negotiator's desk.

Do your research before making an offer to purchase. Your agent can find out who holds title, whether a foreclosure notice has been filed, and how much is owed to the lender(s). This is important because it will help you to determine how much to offer.

If there are two loans, it gets slightly more complicated. The first mortgage lender's ‘position’ is protected by the second lender, unless the second lender does not want to foreclose. For example, if a seller owes $160,000 on the first mortgage and $40,000 on the second mortgage, offering $160,000 leaves nothing for the second. The first will need to give something to the second to gain its
cooperation.

The "nuts & bolts" of short sales; a 4 part series

The first of a 4-part series discussing the basics of Short Sales

Nuts & Bolts of Short Sales

Buyers pursue short sales to get a good deal. So when you see a price listed for a home that you think is too low for the neighborhood, before you jump on that price like hot fudge on a sundae, ask your agent to call the listing agent(the one that works for the seller) to find out if the home is a short sale. You might want to think twice about making an offer on a pre-foreclosure, short sale home. It's not as simple as you may believe, and very few can close in 30 days or less. It’s often more like 6-9 MONTHS.

Something to keep in mind is that the ONLY predictable thing about a short-sale is that it will be UNPREDICTABLE. Really.

What is a Short Sale? A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer; even if the seller accepts it. Be aware that the seller need not be in default -- to have stopped making mortgage payments -- before a lender will consider a short sale. A lender may consider a short sale if the seller is current but the value has fallen. The seller may have over-borrowed, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it.

Stay tuned for the next installment...

Completing the Deal Part V (Closing cont’d)

Whatever the process, the outcome of the closing is the following:

• Property title is transferred from seller to buyer.
• The buyer receives the keys.
• The seller receives payment for the home.
• From the amount credited to the seller, the closing agent subtracts money to pay existing mortgage and other transaction costs.
• Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices. Usually the closing agent also completes the paperwork needed to record the loan.
• Transfer taxes are paid and other claims settled (including closing costs, legal fees, and adjustments).

Completing the Deal Part IV

What Happens during Closing?

Before closing, buyers typically have a final opportunity to walk through the property to ensure that its condition has not materially changed since the sale agreement was signed.
“Closing” is also known as "settlement" or "escrow." It is usually a brief office meeting to sign the paperwork needed to complete the sale transaction. All necessary papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties in the transaction to verify their interests.

Settlement is increasingly computerized and automated. One of the best parts of settlement is that there is very little that buyers and sellers need to do. In many cases, buyers and sellers don't need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery. Some areas have services that allow most of the transaction to be completed online. If buyer and seller are present, they may be at the same table, or they may complete their papers separately.

Completing the Deal Part III



When Should You Close?

With online transaction management now available, closings can occur within a week in some areas - at least in theory. In practice, it takes time to arrange financing, conduct inspections, obtain appraisals, locate replacement housing, contact movers, pack and actually move.

While instant closings are not practical, neither are closings too far in the future. The problem with closings much past 60 days is that loan rates are difficult to lock in. If mortgage rates go up, it's possible that the buyer will no longer be able to afford the home and thus the deal may fall through.

The result of these considerations is that most homes close 30 to 45 days after a sale agreement has been signed.

Completing the Deal Part II

What’s in a Sale Agreement?

A purchase and sale agreement sets a purchase price for the home and a series of terms and conditions. For instance:

• Contracts routinely depend on the ability of a buyer to obtain financing and/or sell their current home, which is why most sellers prefer buyers with mortgage pre-approval letters.
• A growing percentage of transactions involve a home inspection, or a physical review of the home by a trained and independent observer. Generally the buyer's agent arranges the inspections, which the buyer typically pays for.
• Lenders will establish numerous conditions before granting a loan. They will want a title exam, title insurance to protect against title errors, termite inspections, surveys and an appraisal to assure that the home has sufficient value to secure the loan.

Completing the Deal Part I

Completing the Deal Part I

Signing the Deal: Closing / Settlement / Escrow

It might seem as though once a purchase and sale agreement has been signed that the buying process is complete. Not only is it not over yet, but some of the most complex aspects of a real estate transaction now begin.

Once a contract for the purchase of a home has been accepted, a series of inspections and checks are typically required to satisfy buyers and lenders. REALTORS® can help buyers complete the transaction process by assisting with the many requirements found in a typical sale agreement. The REALTOR® also helps the buyer prepare for closing, that is, finalizing the sale.

FHA - a fantastic resource!

A huge percentage of buyers these days are using FHA loans.  See below for some quick information from the FHA website.

Let FHA Loans Help You

FHA loans have been helping people become homeowners since 1934. How do we do it? The Federal Housing Administration (FHA) – which is part of HUD – insures the loan, so your lender can offer you a better deal.

*       Low down payments
*       Low closing costs
*       Easy credit qualifying

What does FHA have for you?

Buying your first home?

FHA might be just what you need. Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.

Want a fixer-upper?

FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan.

 

click here for more information on FHA and give me a call at 206-369-6240 if you'd like to take the next step!

http://www.hud.gov/buying/loans.cfm

Savvy HomeBuyer's Power Hour(ish)

Savvy HomeBuyer's Power Hour(ish)
Upcoming Savvy HomeBuyer Seminars

Savvy HomeBuyer's Power Hour(ish)

Where: Uptown Espresso:

500 Westlake Ave North
What:
• De-Mystifying Credit score
• Receive a No Obligation Pre-Approval!
• Repeat or First-time home buyer
• What can you find in your favorite Neighborhood?

Current schedule at Uptown Espresso:
Tuesday, June 28, 5:30 - 7pm

For more information, and to RSVP, contact:

Sandy Walsh
Mobile: 206-369-6240
email: Sandy@ExactRealtyWa.com

Buyer's Agency...is it for you?

 

As a Buyer, why should you use a Broker?

Buyers often make the mistake of purchasing a property through the listing Broker (the person with his/her name on the sign in front of the property), who typically represents the seller’s interests only.  Below are many reasons why you should consider using a Broker who represents you, only, in the buying process:

• Loyalty

The real estate Broker must act in your best interest.

• Obedience

The Broker must follow the lawful instructions of the principal (buyer).

• Disclosure of all material facts

Examples, but not limited to:

• Relationships between Broker and other parties (ie: if they’ve used the inspector they’re recommending before).
• Existence of other offers.
• Status of earnest money.
• Commission split with other brokers.
• Legal effects of important contract provisions.

Confidentiality

Any discussions, facts or information that should not be revealed to others but does not include responsibility of fairness and honesty in dealings with all parties.

• Accounting in dealings

Reporting of where any money placed in the hands of the broker is kept.

• Reasonable skill and care
  • Arriving at a reasonable purchase price and advising buyer of such.
  • Affirmatively discovering material facts and disclosing them to the buyer.
  • Investigating the material facts related to the sale.

As a buyer's Broker, he/she represents the buyer, only, in the transaction, not the seller. This is different from a typical sub-agency transaction where the buyer is not technically represented. When you are looking to make the biggest investment of your life, it's easy to understand why it is important to be represented fairly.

Savvy HomeBuyer's Power Hour(ish)



 Upcoming Savvy HomeBuyer Seminars

Savvy HomeBuyer's Power Hour(ish)

 

Where:             Uptown Espresso:

500 Westlake Ave North  

 

What:              • De-Mystifying Credit score

• Receive a No Obligation Pre-Approval!

• Repeat or First-time home buyer

• What can you find in your favorite Neighborhood? 

 

Current schedule at Uptown Espresso:

 

Monday, May 23, 5:30 - 7pm

Tuesday, June 28, 5:30 - 7pm

 

2^nd location:     RE/MAX Metro Realty Inc:

2312 EastLake Avenue East

 

Saturday, May 21, 10:00 am - 12:00 pm

 

3^rd Location:    In Tacoma:

                        Summit Library-

5107 112th St E

Tacoma WA 98446

 

For more information, and to RSVP, contact:

 

Sandy Walsh

Mobile: 206-369-6240

email: Sandy@ExactRealtyWa.com

 

 

Get Your House Ready to Show to Buyers Part IV

Maximizing Interior Appeal

You want your home to look as spacious, bright and clean as possible. Also the home should look neutral – without a lot of your personal and sentimental objects - so buyers can begin to imagine living there.

• Give every room in the house a thorough cleaning and remove all clutter. This alone will make your house appear bigger and brighter.
• Make sure that table tops, dressers and closets are free of clutter.
• Pay special attention to the kitchen and bathrooms: they should look as modern, bright and fresh as possible.
• Repair dripping faucets and showerheads.
• Buy showy new towels for the bathroom, put them out only for showings.
• Clean walls and doors of smudges and scuff marks.
• If necessary, repaint dingy, soiled or strongly-colored walls with a neutral shade of paint, such as off-white or beige.
• Repair cracks, holes or damage to plaster, wallboard, wallpaper, paint and tiles.
• Replace broken or cracked windowpanes, moldings and other woodwork.

Get Your House Ready to Show to Buyers Part III

Maximizing ‘Curb’ Appeal

When preparing to put your home up for sale, your first concern is the home's exterior. If the outside, or "curb appeal" looks good, people will more than likely want to see what's on the inside.

• Keep the lawn/yard edged, weeded, cut and watered. 
• Be sure your front door area has a "Welcome" feeling.
• Paint the front door.
• In spring and summer, add a couple of pots of showy annuals near your front entrance.
• In snowy areas, keep walks neatly cleared of snow and ice.
• Check foundation, steps, walkways, walls and patios for cracks and deterioration, and fix any problems.
• Remove and repaint any peeling paint on doors and windows.
• Clean and align gutters.
• Repair and replace loose or damaged roof shingles.
• Repair and repaint loose siding and caulking.
• Reseal old asphalt.
• Keep the garage door closed.
• Store RVs and old cars elsewhere while the house is on the market.

Get Your House Ready to Show to Buyers Part II

How Much Should You Spend to Prepare Your House for Sale?

In preparing your home for the market, spend as little money as possible. Buyers will be impressed by a brand new roof, but they aren't likely to give you enough extra money to pay for it. There is a big difference between making minor and inexpensive polishes and touch-ups to your house, such as putting new knobs on cabinets and a fresh coat of neutral paint in the living room, and doing extensive and costly renovations, like installing a new kitchen.

Your REALTOR^® is familiar with buyers' expectations in your neighborhood and can advise you specifically on what improvements need to be made and which improvements are most effective. Don't hesitate to ask for advice.

Get Your Home Ready to Show to Buyers Part I

A house that "sparkles" on the surface will sell faster than its shabby neighbor, even though both are structurally well maintained.

From experience, REALTORS^® also know that a "well-polished" house appeals to more buyers and will sell faster and for a higher price. Additionally, buyers feel more comfortable purchasing a well-cared for home because if what they can see is well maintained, they assume that what they can't see has probably also been well maintained. In readying your house for sale, consider:

• how much should you spend to prepare your house for sale?
• exterior and curb appeal
• interior appeal

Before putting your house on the market, take as much time as necessary (and as little money as possible) to maximize its exterior and interior appeal.

King County property tax going up as home prices fall

From the Seattle Times:

By Keith Ervin

Seattle Times staff reporter

Declining property values will bring tax relief to some King County homeowners this year, but voter-approved levies and bonds will mean higher taxes for others.

Assessed values nudged slightly higher in some areas while falling steeply in others, County Assessor Lloyd Hara reported Thursday.

In Seattle, where voters last year approved two school levies and construction bonds and home values rose a tad, the tax bill on a typical $453,300 house will rise by $324, or 8 percent, to $4,379.

Assessed values fell so much in Burien — more than 9 percent — that the typical homeowner's taxes will drop 5.6 percent, or $210 this year, to $3,572 on the average $276,500 house even though voters agreed to pay a higher levy rate for schools.

Tax bills, based on property values as of Jan. 1, 2010, will be mailed to property owners Monday. Payments are due in two installments, on April 30 and Oct. 31. Tax bills in Snohomish County are expected to be mailed later this month.

Bills are going out as numerous homes are in or near foreclosure and Zillow.com calculates one-third of Seattle-area mortgage holders owe more money than their houses are worth.

"We really haven't seen a market like this since the Great Depression," Hara said. "A lot of people can't remember the history, and we're kind of making our own history in this marketplace. ...

"It's still a pretty volatile market because there are many foreclosures that are out there. Things haven't stabilized yet."

Hara said he expects many property owners to be surprised, as they were in the past several years, to see their property taxes go up as the value of their homes goes down.

That "counterintuitive" reality, he said, is primarily the result of new voter-approved levies and bonds.

Voters approved 44 tax increases in 2010, 38 of them for schools, according to the assessor. Other taxing districts collecting more money range from Si View Metropolitan Park District to the cities of Shoreline and Black Diamond to the King County Library System.

Even without voter-approved levies, Washington's "budget-based" tax system allows cities and other taxing districts to boost tax collections without voter approval by 1 percent a year plus tax on the value of new construction. New construction has declined dramatically.

The tax rate is adjusted up or down to prevent sharp fluctuations in tax bills as real-estate values rise or fall. 

Countywide, tax collections will increase 3.3 percent after a year in which total assessed value dropped 3.4 percent. The drop in value was modest compared with the previous year's 11.6 percent plunge.

As jurisdictions have raised their tax rates to offset falling values, some have bumped against statutory limits on the rate for special-purpose districts and combined local rates.

The King County Flood Control District, the lowest-priority taxing district in the county, avoided losing its entire $36 million tax stream this year by paying eight small fire districts $3.2 million to keep their levies down.

Non-voter-approved taxes will drop 3.6 percent this year countywide, according to Hara's office.

Average tax bills will drop in the Vashon Island School District by 2 percent. The biggest rise among school districts in the county was in Tukwila, up 10.9 percent.

Homeowners' average tax payments will go up more than commercial property owners' payments, because commercial values fell faster than residential values last year, Chief Deputy Assessor John Arthur Wilson said. In some years, commercial property taxes go up faster than residential taxes, he said. 

Completing the Deal Part V

Whatever the process, the outcome of the closing is the following:

• Property title is transferred from seller to buyer.
• The buyer receives the keys.
• The seller receives payment for the home.
• From the amount credited to the seller, the closing agent subtracts money to pay existing mortgage and other transaction costs.
• Deeds, loan papers, and other documents are prepared, signed and filed with local property record offices. Usually the closing agent also completes the paperwork needed to record the loan.
• Transfer taxes are paid and other claims settled (including closing costs, legal fees, and adjustments).

Completing the Deal Part IV

What Happens during Closing?

Before closing, buyers typically have a final opportunity to walk through the property to ensure that its condition has not materially changed since the sale agreement was signed.
“Closing” is also known as "settlement" or "escrow." It is usually a brief office meeting to sign the paperwork needed to complete the sale transaction. All necessary papers have been prepared by closing agents, title companies, lenders and lawyers. This paperwork reflects the sale agreement and allows all parties in the transaction to verify their interests.

Settlement is increasingly computerized and automated. One of the best parts of settlement is that there is very little that buyers and sellers need to do. In many cases, buyers and sellers don't need to attend a specific event; signed paperwork can be sent to the closing agent via overnight delivery. Some areas have services that allow most of the transaction to be completed online. If buyer and seller are present, they may be at the same table, or they may complete their papers separately.

Important for anyone parking in Downtown Seattle

From Seattle Times, By Mike Lindblom

Seattle Times transportation reporter

Until now, Seattle drivers have known that, if they could wriggle their way to an open curb, parking fees would be relatively inexpensive and straightforward.

But one of city government's New Year's resolutions is to embark on a new age of market-based pricing, ultimately charging more on the busiest blocks at the busiest times, and less at times when extra spaces tend to be available.

Seattle officials hope variable fees will inspire a quicker turnover of precious parking spaces, boosting commerce and reducing carbon burning. In some U.S. urban neighborhoods, as much as 30 percent of all traffic is caused by people who circle the blocks looking for an opening.

"It helps reduce the traffic congestion, of people finding a spot," said Mary Catherine Snyder, parking strategist for the Seattle Department of Transportation (SDOT).

Market-based prices largely are based on the work of UCLA professor Donald Shoup, author of "The High Cost of Free Parking," who has earned a cult following among green activists and urban planners. His research suggests an ideal occupancy of 85 percent for curbside spaces, a figure often cited by Seattle Mayor Mike McGinn.

For complete article:

http://seattletimes.nwsource.com/html/localnews/2013799522_parking30m.html

Completing the Deal Part III

When Should You Close?

With online transaction management now available, closings can occur within a week in some areas - at least in theory. In practice, it takes time to arrange financing, conduct inspections, obtain appraisals, locate replacement housing, contact movers, pack and actually move.

While instant closings are not practical, neither are closings too far in the future. The problem with closings much past 60 days is that loan rates are difficult to lock in. If mortgage rates go up, it's possible that the buyer will no longer be able to afford the home and thus the deal may fall through.

The result of these considerations is that most homes close 30 to 45 days after a sale agreement has been signed.

Completing the Deal Part II

What’s in a Sale Agreement?

A purchase and sale agreement sets a purchase price for the home and a series of terms and conditions. For instance:

• Contracts routinely depend on the ability of a buyer to obtain financing and/or sell their current home, which is why most sellers prefer buyers with mortgage pre-approval letters.
• A growing percentage of transactions involve a home inspection, or a physical review of the home by a trained and independent observer. Generally the buyer's agent arranges the inspections, which the buyer typically pays for.
• Lenders will establish numerous conditions before granting a loan. They will want a title exam, title insurance to protect against title errors, termite inspections, surveys and an appraisal to assure that the home has sufficient value to secure the loan.

Completing the Deal Part I

Signing the Deal: Closing / Settlement / Escrow

It might seem as though once a purchase and sale agreement has been signed that the buying process is complete. Not only is it not over yet, but some of the most complex aspects of a real estate transaction now begin.

Once a contract for the purchase of a home has been accepted, a series of inspections and checks are typically required to satisfy buyers and lenders. REALTORS® can help buyers complete the transaction process by assisting with the many requirements found in a typical sale agreement. The REALTOR® also helps the buyer prepare for closing, that is, finalizing the sale.

Inspections Part IV

Inspection Timing and Results

Home-buyers usually arrange for an inspection after signing a contract or purchase agreement with the seller. The results may be available immediately or within a few days. The home inspector will review his or her findings with you and alert you to any costly or potentially hazardous conditions. In some cases, you may be advised not to buy the home unless such problems are remedied.

You could include a clause in your purchase agreement that makes your purchase contingent upon satisfactory inspection results. If major problems are found, you can back out of the deal. If costly repairs are warranted, the seller may be willing to adjust the home's price or the contract's terms. But when only minor repairs are needed, the buyer and seller can usually work out an agreement that won't affect the sale price.

Inspections Part III

Some builders may try to dissuade you from getting a home inspection on a home they've built but they may not necessarily be trying to hide anything because most builders guarantee their work and will fix any problems in your new home before you move in.

 An Inspection Will Educate You about Your House

Education is another good reason for getting an inspection. Most buyers want to learn as much as they can about their purchase so they can protect their investment. An examination by an impartial home inspector helps in this learning process.

Ask if you can follow the home inspector on his or her rounds. Most inspectors are glad to share their knowledge, and you'll be able to ask plenty of questions.

Inspections Part II

Getting a professional inspection is crucial for older homes because time often takes its toll on the roof and other hard-to-reach areas. Problems can also be the result of neglect or hazardous repair work, such as a past owner's failed attempt to install lights and an outlet in a linen closet.  It’s also a wise investment when buying a new home. In fact, new homes frequently have defects, whether caused by an oversight during construction or simply human error.

 Getting an Inspector

Real estate agents can usually recommend an experienced home inspector.  Home inspections cost about a few hundred dollars, depending on the size of the house and location. Inspection fees tend to be higher in urban areas than in rural areas. You may find the cost of inspection high, but it is money well spent. Think of it as an investment in your investment – your future home.

Inspections Part I; why are they important?

Home Inspections Avert Future Headaches

Suppose you bought a house and later discovered, to your dismay, that the stucco exterior concealed a nasty case of dry rot. Or suppose that when you fired up the furnace in the winter, you discovered a cracked heat exchanger leaking gas into your home. The best way to avoid unpleasant surprises like these is to arrange for a home inspection before you buy.

 Home Inspections Help You Avoid Unpleasant Surprises

A good home inspection is an objective, top-to-bottom examination of a home and everything that comes with it. The standard inspection report includes a review of the home's heating and air-conditioning systems; plumbing and wiring; roof, attic, walls, ceilings, floors, windows, doors, foundation and basement.

Wondering if now is a good time to buy real estate?

With so much information and misinformation out there, it can be very confusing.  Get savvy and come meet our experts to get the “no fluff” facts, and find out if the time is right for you!

We’ll be covering:

1. Credit today: how to be prepared, including how to improve your credit to meet lender’s more stringent qualifying standards
2. What lenders are looking for in a buyer in both residential and investment purchases
3. What to expect from an agent in addition to info on the transaction process and who/what is involved
4. The “ins and outs” of today’s real estate market in Puget Sound

Where?

2 Locations:

• 11555 SE 8th St, 1st Fl conference room, Bellevue WA
  OR
• 2312 Eastlake Ave E, Seattle WA


Date/Time: Oct. 16, 10 a.m. ’til noon

Feel free to tell your friends and family about this class, everyone is welcome!  Space is limited to 12 people so please RSVP to the following email: Info@TeamReba.com

The Basics of Making an Offer part V

Some Definitions:

Legal Description:

A description by which the property can be definitely located by reference to surveys or recorded maps

Earnest Money

A deposit that you give when making an offer on a house. A seller is understandably suspicious of a written offer that is not accompanied by a cash deposit to show "good faith." A real estate agent or an attorney usually holds the deposit, the amount of which varies from community to community. This will become part of your down payment.

Physical Inspection

The most common, typically conducted by a general home inspector and it is a visual review of all the aspects of the home.  Running the dishwasher, testing the outlets, checking the faucets etc.  It is NOT invasive and is visual/operational only.

The Basics of Making an Offer part IV

What makes the strongest offer to a seller?

 

Terms can be more important than price.  For example, a $300,000 all cash offer is stronger than a $325,000 offer that needs financing because financing can fall-through but cash is always KING.  Similarly, an offer waiving an inspection is stronger than one requiring one because lots of issues can come up at an inspection and if there isn’t one there’s no risk of problems arising.  Another item is closing date, the sooner it is the better for the seller in most instances.

 

So, based on the above, which offer is stronger?

$325,000, financed with inspection required, and a 45 day close.

$300,000; all cash with no inspection wanted, and a 14 day close.

 

From the seller’s perspective, B is much stronger because it provides the least risk to the seller.  From the buyer’s perspective, A has the most protection.  The state of the Real Estate market when you’re writing an offer will determine which will succeed.

The Basics of Making an Offer part III

With any offer to purchase Real Estate, there are frequently Contingencies or “Subject to” Clauses that can include:  Here are two common contingencies contained in a purchase offer:

• The buyer obtaining specific financing from a lending institution: If a loan can't be secured, the buyer won't be bound by the contract.   This is known as a Financing Contingency.
• A satisfactory report by a home inspector: for example, "within 10 days after acceptance of the offer." The seller must wait 10 days to see if the inspector submits a report that satisfies the buyer. If not, the contract would become void. Again, make sure that all the details are explicitly stated in the written contract.  This is known as an Inspection Contingency.
• The property being free to transfer to a buyer at the end of the transaction without any ‘clouds’ or issues with it.  This is known as a Title Contingency.

The Basics of Making an Offer part II

The purchase offer you submit, if accepted as it stands, will become a binding sales contract. It's important that the offer contain all the items that will serve as a "blueprint”. The purchase offer includes items such as:

• address and the legal description of the property
• sale price
• terms: for example, all cash or subject to you obtaining a mortgage for a given amount
• seller's promise to provide clear title (ownership)
• target date for closing (the actual sale)
• amount of earnest money deposit accompanying the offer and how it's to be returned to you if the offer is rejected - or kept as damages if you later back out for no good reason
• method by which real estate taxes, rents, fuel, water bills and utilities payments are to be adjusted (prorated) between buyer and seller
• provisions about who will pay for title insurance, survey, termite inspections, etc.
• type of deed to be given
• a time limit after which the offer will expire

The Basics of Making an Offer part I

You've found a place....now what?

Once you’ve selected a home for purchase, your REALTOR® will put together your written proposal to the seller(s).  This written proposal is the foundation of a real estate transaction. Oral promises are not legally enforceable when it comes to the sale of real estate. This proposal not only specifies price, but also all the terms and conditions of the purchase.

Terms/Conditions could include but not limited to (more in Part II):

• Price
• Closing date
• Who you’d like to pay closing costs
• If you need financing, tell seller your offer depends on it
• Tell seller you’ll buy if the home passes your hired inspection

Your REALTOR® will guide you through the offer, counteroffer, negotiating and closing processes. In many states certain disclosure laws must be complied with by the seller, and the REALTOR® will ensure that this takes place.

Why Use a REALTOR® When Buying a Home?

Not all real estate licensees are the same; only those who are members of the NATIONAL ASSOCIATION OF REALTORS^® are properly called REALTORS^®.

REALTORS^® are committed to treat all parties to a transaction honestly. REALTORS^® subscribe to a strict Code of Ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate.

Real estate transactions involve one of the biggest financial investments of most people’s lifetime. Transactions today usually exceed $250,000. If you had a $250,000 income tax problem, would you attempt to deal with it without the help of a certified professional accountant? If you had a $250,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it would be wise to work with a professional REALTOR^® when you are buying a home.

Take Charge When Buying a Home Part II

Here are the two most important things to remember no matter where you are on the road to home ownership:

1. You can and should understand everything that is happening in the home buying process.

Just because you don't apply for a mortgage once a week doesn't mean you have to take the first one that comes along. You'll learn some new terms, apply some new concepts and should take the time to understand what you're getting into. Always ask for clarification if you don’t understand.

2. In the world of real estate sales, YOU are the most important person in the entire process.

You, the buyer, are the one person in the transaction that makes it all happen. If you decide to not buy, the entire process comes to a grinding halt.

Approach home buying with intelligence and confidence, and by doing your homework, and you are more likely to buy a house you’re happy with and to know that you made the right decision.

Take Charge When Buying a Home Part I

If you approach the home buying process intelligently and with confidence, you are much more likely to buy a house you'll be proud to call home.

Approaching the task of buying a home can be overwhelming; there's so much to consider:

• How much house can I afford?
• How can I find the best loan?
• Where will I come up with a down payment, and how much will I need?
• Should I buy a new or resale home, and which will go up in value?
• Should I work with an agent or look at homes on my own?

And these questions are just the beginning. Buying a home is one of the largest financial transactions in your lifetime - do your research so you know what you’re doing.

How to Choose a Home Part II

Decide What Age and Condition of Home You Want to Purchase

Weigh your needs, budget and personal tastes in deciding whether you want to buy a newly constructed home, an older home or a "fixer-upper" that requires some work.

Consider Resale Potential

As you look at homes, you may want to keep in mind these resale considerations.

• One-bedroom condos are more difficult to resell than two-bedroom condos.
• Two-bedroom/one-bath single houses generally have less appeal than houses with three or more bedrooms, and therefore have less appreciation potential.
• Homes with "curb appeal," i.e., well-maintained, attractive and with a charming appearance from the street, are the easiest to resell.
• The most expensive houses on the street, or ones with anything unusual or unique are not suited for resale. The best investment potential is traditionally found in a less expensive, more moderately sized home.

Use a Features Wish List to Keep Your Search Focused

Make a features wish list to clarify which features are most and least important to you when looking for a home. Using this features wish list will keep your house hunt focused and effective.

Use a Home Comparison Chart to Keep Your Observations Organized

While house hunting, it's a good idea to make notes about what you see because viewing several houses at a time can be confusing. Use a home comparison chart to help you keep track of your search, organize your thoughts and record your impressions.

Act Decisively When You Find the Right Home

Before you begin the home buying process, resolve to act promptly when you do find the right house. Every REALTOR® has stories to tell about a couple who looked far and wide for their dream home, finally found it, and then said, "We always promised my Dad we'd sleep on it, so we'll make an offer tomorrow." Many times the story had a sad ending - someone else came in that evening with an offer that was accepted.

Resolve that you will act decisively when you find the house that’s clearly right for you. This is particularly important after a long search or if the house is newly listed and/or underpriced.

How to Choose a Home Part I

Here are some tips to help determine which house is best for you.

Once you've settled on a couple of preferred neighborhoods for your home search, it's time to pick out a few homes to view. Having a house features “wish list” keeps you focused on which features are most important to you.

When narrowing down your home search, consider the following:

• know what types of home you want to buy
• determine what age and condition of the house you want to buy
• consider resale potential
• use a features wish list to keep focused
• use a home search comparison chart to keep organized
• act decisively when you find the right home

Determine What Type of Home You Want to Buy

There are several forms of home ownership: single-family homes, multiple-family homes, condominiums and co-ops.

Single-family homes: One home per lot.

Condominiums: With a condo, you own "from the walls inward." You also own a certain percentage of the "common elements" - staircases, sidewalks, roofs, etc. Monthly charges pay your share of taxes and insurance on those elements, as well as repairs and maintenance. A homeowner’s association administers the development.

How buying is better than renting....

 

If your monthly rent is:

 

$1200     $1500      $1800

 

 

Come up with the following minimum

for a down payment:

 

$6300     $8225     $9625

 

 

The corresponding sales price

could be:

 

$185,000      $235,000      $275,000

 

 

You could be a homeowner and have these benefits:

· Deduct your mortgage interest, effectively reducing your taxable income.

· Be FREE to make whatever changes you want to your home.

· Build equity and a nest egg every month!

 

REALTOR vs Real Estate Agent

Why Use a REALTOR^® When Buying a Home?

A real estate agent can help you understand everything you need to know about the home buying process.

Not all real estate licensees are the same; only those who are members of the NATIONAL ASSOCIATION OF REALTORS^® are properly called REALTORS^®. They proudly display the REALTOR " ^®" trademark on their business cards and other marketing and sales literature.

REALTORS^® are committed to treat all parties to a transaction honestly. REALTORS^® subscribe to a strict Code of Ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. An independent survey reported that 84% of home buyers would use the same REALTOR^® again.

Real estate transactions involve one of the biggest financial investments of most people’s lifetime. Transactions today usually exceed $250,000. If you had a $250,000 income tax problem, would you attempt to deal with it without the help of a certified professional accountant? If you had a $250,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it would be wise to work with a professional REALTOR^® when you are buying a home.

If you're still not convinced of the value of a REALTOR^®, here are more reasons to use one:

1. Your REALTOR^® can help you determine your buying power - that is, your financial reserves plus your borrowing capacity. If you give a REALTOR^® some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders - banks and mortgage companies - offer limited choices.

2. Your REALTOR^® has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agent to find all available properties.

3. Your REALTOR^® can assist you in the selection process by providing objective information about each property. Agents who are REALTORS^® have access to a variety of informational resources. REALTORS^® can provide local community information on utilities, zoning, schools, etc. There are two things you'll want to know: First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

4. Your REALTOR^® can help you with negotiations and inspections. There are many negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or appliances. The purchase agreement should allow time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5. Your REALTOR^® provides due diligence during the property evaluation. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your REALTOR^® can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports.
You will also want to see a preliminary report on the property title. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your REALTOR^®, title search company or attorney can help you resolve issues that might cause problems at a later date.

6. Your REALTOR^® can help you understand different financing options and identify qualified lenders.

7. Your REALTOR^® can guide you through the closing process and make sure everything flows together smoothly.  

Jumbo rates thawing

An excerpt from an article seen in the Seattle Times...

Two weeks ago, the average interest rate on 30-year fixed-rate jumbos dropped to 5.79 percent, a nearly five-year low, according to rate tracker Informa Research Services of Calabasas. It edged up to 5.88 percent this past week, still very attractive by historical standards. The average is down from well above 7 percent in late 2008.

This is terrific news for those looking for higher priced homes or for those looking to sell higher priced homes because it means that lending is getting a little bit easier for them.

See the full article here:

http://seattletimes.nwsource.com/html/realestate/2011189620_realjumbos28.html

as seen in the Seattle Times:

The Associated Press

McLEAN, Va. —

Rates on 30-year fixed mortgages fell slightly this week, dipping below 5 percent, the mortgage financier Freddie Mac said Thursday.

The average rate on a 30-year fixed mortgage was 4.97 percent this week, down from an average of 5.01 percent last week. Last year at this time, the rate for a 30-year fixed mortgage averaged 5.16 percent, Freddie Mac said.

Rates fell to a record low of 4.71 percent in early December. They have held around 5 percent thanks to a Federal Reserve program to pump $1.25 trillion into mortgage-backed securities to try to keep rates low and make home buying more affordable. That program is set to end March 31.

Low rates also can spur refinancing activity. More than two out of three mortgage applications were for refinance transactions over the first six weeks of this year, according to the Mortgage Bankers Association.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.

The average rate on 15-year fixed-rate mortgages fell to 4.34 percent from 4.40 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.19 percent, down from 4.27 percent a week earlier. Rates on one-year, adjustable-rate mortgages rose to 4.33 percent from 4.22 percent.

The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 point for 30-year mortgages. It averaged 0.6 point for 15-year, five-year and one-year loans.

Those Who Wait Will Pay Thousands More This Spring

Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).

Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board's mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.

Here are a few reasons why:

On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these "seller concessions" can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

There is only one way to avoid being affected by all of these costly changes that lie ahead – submit all FHA mortgage applications by the last week of March...

so contact me TODAY to start your home search!

I'm so excited that this is being written about...now is a fantastic time to buy Real Estate. The reason is that we have low interest rates at the same time that we have a good amount of available inventory...historically we get one or the other at a time, but not both. Please contact me today to take advantage of the situation!

http://www.businessweek.com/lifestyle/content/dec2009/bw2009127_753974.htm

Senators agree to extend homebuyer tax credit! It was set to expire at the end of November, and now will remain until the end of April!

As seen on MSNBC.com:

WASHINGTON - Senators agreed Wednesday to extend a popular tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.

The tax credit provides up to $8,000 to first-time homebuyers but is set to expire at the end of November.

Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to repeat buyers who have owned their current homes for at least five years, said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid, D-Nev.

For complete story: http://www.msnbc.msn.com/id/33522046/ns/business-real_estate/

This is FANTASTIC news for the Real Estate market....as this credit has been wonderful for first-time home buyers.  Don't forget that if you haven't owned in three years, you qualify as a first-time home buyer!

 

Have you heard about the Home Buyer Tax Credit?

The American Recovery and Reinvestment Act may give you the break you're looking for - a tax credit of up to $8,000 if you're a first-time homebuyer.

That means you haven't owned a home in the past three years, and your spouse hasn't either if you're married. The credit amount starts phasing out if you make more than $75,000, or
$150,000 if you're filing a joint return.

The credit expires at the end of November, and it takes 45 days to complete the sale once you pick something! So you can buy now, before December 1, 2009, and get cash back on your tax return. "Home Sweet Home" never sounded so good!

Visit http://irs.gov/recovery

First-Time Home Buyer Seminar
If you're ready to become a homeowner, I can educate you about the home-buying process!

Join us for a FREE Homebuyers Seminar, and we'll show you how this important step can help you start the process!

Monday September 21, 2009 6:30 pm
1700 Westlake Avenue North; Suite 315

In addition to walking you through the entire process from start to finish, we'll discuss:
* Benefits of homeownership
* Process of a home search
* Home Financing options for first-time homebuyers

This educational event is FREE, but seating is limited. To reserve your space, please contact me today! 206-369-6240

For First Time Buyers...an emotion road-map

If you're a first time home buyer you are probably wondering about the enormity of it all.  Buying a home is the largest single purchase anyone ever makes, regardless of the income bracket you fall in to.  It's also very personal, as this is your HOME we're talking about.  Add up those two factors, and you have an incredibly emotional purchase.  As it should be!  As I work with buyers,  many of them first-timers, I'm reminded of an analogy that was related by a home-owner:

"It’s a bit like dating… You see the house on-line and you like it but you are detached. You review the details and it peaks your curiosity. You tour the house (the first “date”) and you observe the good and bad qualities. You go home and ignore the bad qualities and obsess on the good ones. You become more attached. You drive by the house; you tell your friends about the house, you imagine decorating the house.  You make a bid. Then your real estate agent tells you lost in a multiple bid situation and the “relationship” is over. You mope, you cry.  You tell yourself if was not that great anyway, and recount all the bad qualities in detail. You go out on another date…."

S.Anderson

It's really very close to the emotion road-map as one moves through the process of finding and purchasing a home!  So, when you're choosing a Buyer's agent to work with, be sure that they A. Can relate to YOU. B. Will put your interests ahead of their own...because it's YOUR home you're looking for!

Why have a Buyer's Agent?

Have you ever wondered why some people hire a Buyer's agent and whether you should?

The answer is below....and yes you should!

Until recently, real estate agents always represented the seller, not the buyer, in real estate transactions.  Even that real estate agent who drove you from house to house looking at properties was not working on your behalf.  By law, the agent was always required to get the highest price and best terms possible - FOR THE SELLER!

A Buyer's agent owes agency duties to the buyer rather than the seller.  For many buyers, the loyalty and confidentiality owed to them by their agent is the most important benefit of a buyer-agency relationship.  Because of the duties of loyalty & confidentiality, a buyer's agent MUST put the buyer's interest ahead of the agent's interests, and any information the buyer discloses must be kept confidential.  So that you can get what you want, in the time you want; won't that be great?

More than one million people in the United States are licensed to sell real estate. Of those licensees, very few are Buyer Representatives.  Consumer advocacy groups have endorsed such representation, and licensing laws in virtually every state are now being reformed to enable and encourage representation for the buyer. 

Whether you're a first time or experienced buyer, it is good to know that your real estate agent has YOUR best interests in mind as you select a home.

An important tidbit for home buyers, or those considering buying.

Don't forget interest...   Mortgage rate increases can erase benefit of lower home prices!   COST OF WAITING? Some examples of how people might not benefit by waiting for home prices to drop: As a rough example; someone who could pay about $2,600 a month, assuming a 30-year fixed-rate loan with 20 percent down, could afford a $562,500 house at an interest rate of 5.75 percent.   If the interest rates rises from 5.75 percent to 6.375 percent the monthly payment will go up by a hundred or so dollars.   It can be a better deal to buy with a higher purchase price and a lower interest rate. There's no 'way to time the market' and rates right now are amazing. Factoring in interest rates adds yet another complication for buyers just trying to figure out when to jump into the market.  Rates can switch direction in a heartbeat; when they climb rapidly, there's no way to predict whether they'll plateau in the medium term, or fall right back down again.

Ever wonder how the assessed value of your property is calculated?

In King County, Washington, this is how the value for property tax is calculated; according to the Kind County department of assessments.

Real property (real estate) assessed includes land, improvements attached to the land (buildings, etc.) and improvements to the land (driveways, bulkheads, etc.). Mobile homes and floating homes are valued as real property but administered by personal property staff.

In Washington State, assessment for tax purposes means establishing the full market value of your land and the improvements on it. This is the job of an appraiser. Appraisal methods used in King County follow basic practices and procedures used in the appraisal profession. Three approaches may be used to determine real property value: They are:

Market: The market data (sales comparison) approach.
Cost: The reproduction or replacement cost new, less accrued depreciation approach.
Income: The income or capitalization of economic rents approach.

The market and cost approaches are the bases of appraisal of improved residential properties. The value of vacant land is most often determined using the market approach. Whenever the Assessor revalues your property, you will receive a "Valuation Change Notice."

The assessment procedure begins with establishing land value. Appraisal theory and state law require land to be valued as if vacant. This value is determined by analyzing sales of comparable bare land. Our next step is to study sales and market trends of improved (developed or built-on) properties in a selected area. This sales analysis is used to determine total market value based on square footage, year built and other characteristics of the property. From this total value, we subtract the amount determined for land. The balance is allocated to improvements.

Market value is the amount of money a buyer, willing but not obligated to buy, would pay to a seller willing but not obligated to sell. For residential parcels, fair market value is determined by analyzing recent sales of comparable properties in the same area.

The Assessor values property on a cyclical basis according to a revaluation plan filed with the state Department of Revenue. At a minimum, real property must be revalued each four years. King County began an annual revaluation program in 1995.

http://www.metrokc.gov/assessor/RealProperty.htm

Ever wonder how property taxes are calculated?

The amount of tax, according to King County, is calculated this way:

The costs of state and local government determine how much property tax will be levied. These include operating costs of schools, city and county government and other taxing districts such as the Port of Seattle, library, hospital, fire and sewer districts. A large part of each property tax dollar goes to pay off bonds for such capital costs as school buildings and other public projects.

The state constitution, statutory levy limits set by the legislature and excess levies approved by the voters are used to calculate the total property tax levy. The tax rate on your property is the figure resulting from dividing the dollar amount required for the taxing district by the total value of property within the district and then adding up the rates of the various districts in which your property is located. The assessed value of your property, multiplied by the combined rate, produces a tax amount which is your fair share of the total property tax levy in your area. The King County Treasurer issues tax statements and taxes are paid to the King County Treasury Operations.

The County values property on a cyclical basis according to a revaluation plan filed with the state Department of Revenue. At a minimum, real property must be revalued each four years. King County began an annual revaluation program in 1995. 

So...

Because the market was so 'hot' with values a couple years ago, we will continue to feel the effects due to the rolling nature of property revaluation. The revaluations happening now are looking backward to market value and until we have the market correction included in the 'past market values' the assessments will continue to be adjusted up.

Links:

http://www.metrokc.gov/Assessor/PropertyTaxes.htm

Be sure to check back for my next post on how the assessed value of a property is calculated......