Are you a Kirk­land condo owner think­ing of putting your condo up for sale?  Or are you look­ing to buy a condo in Kirk­land?  Sub­sti­tute Belle­vue, Red­mond, Bell­town, or any other Seat­tle area condo neigh­bor­hood, the answer may be critical.

Condo: the afford­able first-time home owner option

The down­turn in real estate has hurt Seat­tle area con­dos more than sin­gle fam­ily homes. Because of the shared own­er­ship of the “com­mon” areas, con­dos have always been more dif­fi­cult to finance than homes.  At the same time, con­dos were, and still are, the afford­able entry level to first-time home ownership.

Con­dos and the chang­ing FHA loan process

The low down pay­ment require­ment — cur­rently 3.5 — make FHA insured mort­gages the favorite forms of financ­ing for first-time buy­ers.  Lenders bear less risk because FHA will pay the lender if a home­owner defaults on the loan. How­ever, bor­row­ers must meet spe­cific FHA require­ments to qual­ify for FHA insur­ance.  For condo buy­ers there is another hur­dle:  the condo com­plex has to be FHA approved.

Until recently a lender could obtain a so-called “spot approval” for a spe­cific con­do­minium unit in an oth­er­wise not FHA approved con­do­minium com­plex.  The cri­te­ria for such an approval were com­plex and the out­come uncer­tain. Still, it could be done.  Now, new rules are in place.

What’s HRAP/DELRAP?

HRAP stands for HUD Review and Approval Process,  DELRAP for Direct Endorse­ment Lender Review and Approval Process.  In short,  either process requires that a con­do­minium project must be approved before appli­ca­tions for FHA mort­gage insur­ance can be processed for indi­vid­ual units.

Luck­ily, there is an offi­cial  HUD web­site where you can find out if a condo qual­i­fies for FHA insured mortages.  Click on the help link to learn about how to use the online form.

Strangely, the site does not oper­ate 24/7.  “Your request could not be processed at this time. Please try again later.  Nor­mal hours of oper­a­tion are from 8 am to 9 pm East­ern time Mon­day through Fri­day.”  (Dont for­get to turn off the the web site!)

Good news for Kirk­land Springs condo sell­ers and buyers.

Using the form dur­ing the hours of oper­a­tions I found out that Kir­land Springs in Juanita is now an FHA approved condo com­plex (since Jan­u­ary 8, 2010).  More good news is that my condo list­ing there has found a new buyer. We have reached mutual agee­ment. Unlike the first two buy­ers who qual­i­fied for financ­ing under the old spot approval FHA rules and ulti­mately were unable to pur­chase, this  one is using con­ven­tional financing.

Final Call for $8,000 and $6,500 buyer tax credits

The dead­line for the buyer tax credit pro­gram (first-time and repeat buy­ers) is fast approach­ing. The trans­ac­tion must close by April 30, 2010 to qual­ify.  Go to my web­site for the details and get moving.

Web sta­tis­tics include the terms peo­ple use to search on my web­sites. Through the first 36 hours of Decem­ber 2009, the search terms which brought peo­ple to GNAde.com were:

1. wash­ing­ton state rodent dis­clo­sure buy home
2. stairs near the liv­ing room
3. home sell­ers dis­clo­sure form wash­ing­ton state
4. first time home buyer tax credit seattle
5. din­ing room with sky­light light­ing room design
6. mount­lake terrace
7. real estate attor­ney north­gate washington
8. cus­tomer tes­ti­mo­ni­als exam­ples real estate
9. form 17.doc washington
10. real estate laws for wash­ing­ton state
11. under­stand form 17 seller disclosure
12. bed mas­ter room door out
13. fail­ure to pro­vide resale cer­tifi­cate wa
14. exam­ple of home buy­ers form 17
15. the liv­ing end 1998
16. brick tudor homes
17. first time home buyer seattle
18. form 17 wash­ing­ton state law
19. dec­la­ra­tion state­ment real estate washington
20. wash­ing­ton state form 17
21. real estate seat­tle area
22. prop­erty dealer — tes­ti­mo­nial by clients
23. 8000 tax credit flyer

Six of the 23 terms deal with seller dis­clo­sure or men­tion directly Form 17, the Wash­ing­ton Seller Dis­clo­sure State­ment which I have called “form fatale.” Two are look­ing for infor­ma­tion about the which has not only been extended for tax credit for first-time buy­ers but also expanded to include tax cred­its for cur­rent home buy­ers.

Five search terms deal with spe­cific loca­tions (Mount­lake Ter­race and North­gate ) and home style or fea­tures (brick tudor, stair loca­tion, sky­lights). The lat­ter where likely image searches.

The one seach term on the list that has me baf­fled is “the liv­ing end 1998.”

A friend of mine handed me The Seat­tle Times and asked: “have you seen this?” I hadn’t but I did catch the tiny byline cred­it­ing a writer of The Wall Street Jour­nal with the arti­cle. I had read part of the arti­cle in the Jour­nal but the head­line in the Times did not look famil­iar. Curi­ous, I took the local paper home with the idea to com­pare the Times arti­cle to the original.

I am a Real­ist and a Realtor®

Before com­par­ing the two arti­cles, let me say that I’m a real­ist. Home prices are still com­ing down in Seat­tle land but they are not “crash­ing down” as they have in parts of Florida, Ari­zona and Cal­i­for­nia. I’m a real­ist who makes his daily liv­ing in this busi­ness and I have every rea­son to keep in touch with reality.

The National Story and the Local Story

Hyper­bole cuts Both Ways.

The real­ity includes naively opti­mistic and bor­ing adver­tis­ing by the National Asso­ci­a­tion of Real­tors (NAR) on one side (I’m a mem­ber) and on the other side jus­ti­fi­ably neg­a­tive media reports about the country’s finan­cial affairs in gen­eral and in par­tic­u­lar the hous­ing mar­ket. The prob­lem is that some of these neg­a­tive national reports are manip­u­lated to give the impres­sion that they are writ­ten and pro­duced for the local market.

Acci­den­tal or Inten­tional Misrepresentation?

The ques­tion is if this impres­sion is acci­den­tal or inten­tional. Judg­ing by the edited “reprint” of the WSJ arti­cle in The Seat­tle Times (ST) I can only con­clude that the ST did every­thing pos­si­ble to give the impres­sion that this story was about the Seat­tle real estate market.

Sell­ing Doom

The most obvi­ous dif­fer­ence is in the head­line. The WSJ head­line describes the story’s con­tent, while the local head­line is meant to shock. Not enough, the ST edi­tor added an into­duc­tory para­graph lifted from the body of the arti­cle and reworded it so it would appear more neg­a­tive and look as if it described the Seat­tle real estate market.

Stu­pid­ity or Bla­tant Manipulation?

Below the small-print “byline” that iden­ti­fies the WSJ writer of the story, the first para­graph shows addi­tonal edit­ing to give the impres­sion of this being a local story. The WSJ states “House prices have crashed more than 35% in some parts of the coun­try.” (empha­sis mine) which the ST edi­tor changed to “…in some areas.” What areas are we talk­ing about here? Some areas of Seat­tle, the east­side, King, Pierce or Sno­homish county?

Irre­spon­si­ble Journalism

There’s noth­ing wrong with edit­ing to make a story rel­e­vant to the local read­er­ship or shorten it to fit the avail­able space. (The Seat­tle Times reprint left out sev­eral para­graphs from the orig­i­nal WSJ arti­cle.) How­ever, when a local news­pa­per manip­u­lates a thought­ful, even-handed story from a national paper so as to frighten the locals into buy­ing the local news­pa­per, that’s sim­ply irresponsible.

If there are fewer homes for sale these days in Seat­tle land, per­haps there are still a few too many. Those sell­ers who are test­ing the mar­ket just to see “what they can get” should wait for bet­ter days. If you don’t have to sell now, don’t.

Make Your Home Stand Out

But what if you have to sell?
First, be clear about one thing: it’s not what you need to sell your home for but what some­body else will pay for it. Sec­ond, make it the most attrac­tive home in the neighborhood.

Don’t D-I-Y (Do-It-Yourself).
In a declin­ing mar­ket that favors buy­ers you need all the help you can get. Get an agent and get a good one. Inter­view a few on the phone and describe your sit­u­a­tion. Ask for two refer­rals from recent clients and call them. Then ask two or three agents to come to your home and present their plans to sell your home. If you have a hard time decid­ing between two agents based on their qual­i­fi­ca­tions and plans pick the one you like bet­ter. You’ll be spend­ing some time together.

You and your agent are a team.
Regard­less how good your agent is, your input and coop­er­a­tion are essen­tial. Don’t hide any­thing from your agent. If you dis­agree, speak up.

Do your home­work.
What other homes are for sale in your neigh­bor­hood? How long have they been on the mar­ket? Have your agent show you the homes for sale. Look at the com­pet­ing homes as if you were a buyer. Then go home with that mindset.

Check the record.
What is pub­licly known about your home? Check the county records. If the data is wrong cor­rect it. Your lat­est room addi­tion is not there? Still say­ing sep­tic tank when you’ve con­nected to pub­lic sewer line?  You can cor­rect this online via a request to the county.  Also, check and see what Zillow.com “thinks” your home is worth. You may dis­agree but that’s what the pub­lic sees.

Make lists.
There is noth­ing your agent should not know about your home. When some­one calls and asks about the age of the water heater or the near­est day­care cen­ter the answer should never be “I don’t know” and rarely “let me check.” Make lists about the home top to bot­tom and by time line of own­er­ship. Col­lect all receipts for repairs and improve­ments. Make lists about the neigh­bor­hood facil­i­ties. Know dri­ving dis­tances to every­day con­ve­niences and the near­est bus stop. Book­mark all related websites.

Clean up.
Pre­pare the place as if you where going to invite a poten­tial buyer tomor­row. Don’t just clean but make it spot­less. Touch up, repair, paint, air out. Get rid of the clut­ter, includ­ing in clos­ets. Rent a stor­age place for every­thing you can’t part with (yet). Move or remove fur­ni­ture when there’s a chance to bump into it. (Do the “pen­guin walk” test, sway­ing side to side.) If you have a pet plan ahead of how best to make yor dog or cat “invis­i­ble” to vis­it­ing agents and buyers.

Be patient.
Don’t put your home on the mar­ket before you and your agent are ready to sell. A first bad impres­sion is hard to correct.

Know what your agent sees and does.
Once your home is listed for sale have your agent show you in print or online what­ever and wherevever your home appears as being for sale. Print a copy and check it for mis­takes. Remem­ber, you are a team. Make sug­ges­tions for improv­ing the pre­sen­ta­tion. There’s a dif­fer­ence in what other agents can see and what the pub­lic sees about your home. You need to see both.

Ask to see the stats.
There is an agent hit counter on the MLS and sites like Zillow.com and Trulia.com let you know how many peo­ple have viewed your home online. Same is true for your home’s spe­cial web­site that your agent has created.

“Google” your home.
Pre­tend you live on the East Coast or abroad and you are look­ing for a home like the one you have to sell. For­give your agent if it doesn’t show up on page one for “Seat­tle homes” but ask him why it doesn’t show up for a more spe­cific neigh­bor­hood term like, for exam­ple, “Red­mond homes near Microsoft.”

Pre­pare to drop the price.
You’ve agreed with your agent on the ini­tial list­ing price. That price is real­is­tic and reflects your moti­va­tion to sell (which only you and your agent should know). You should have agreed at the same time on the next lower price and the rea­sons and tim­ing for low­er­ing the price. Have your agent pre­pare at the out­set “Seller Net Pro­ceeds Esti­mates” for sev­eral price points.

Leave the lights on.
Make it easy to see your home. Be ready to leave on a moments (30 min­utes) notice. Leave the lights on and per­haps the radio on at low vol­ume (you are not try­ing to cover up exter­nal noise). Make sure there are enough fly­ers inside and out­side. If there’s some­thing note­wor­thy direc­tional or fea­ture cards on the walls should guide the vis­i­tor  — “Bonus Room above Garage” or “Brand New Furnace”.

Bur wait, there’s more!
Yes, there always is. This is not an exhaus­tive list by any means but it should get you start think­ing and check­ing in case you have to sell now. One final thought: stay pos­i­tive; don’t let the neg­a­tive news get you down. If you believe in prayer, do pray. Remem­ber, you may have to sell, but there are also buy­ers who have to buy.

Open Houses are one of the old­est ways to mar­ket a home. Is an open house still a use­ful mar­ket­ing tool in the age of the inter­net? It all depends on what you expect from it. I’ve held open houses on the past two week­ends, one in the Seward Park neigh­bor­hood of Seat­tle and the other in Sam­mamish. I write this with open houses on my mind.

The suc­cess of your opne house depends on sev­eral fac­tors, including:

• mar­ket­ing
• loca­tion
• pric­ing
• tim­ing
• the seller
• the agent
• the weather and other events.

Mar­ket­ing

Don’t just rely on the neigh­bors and local gawk­ers. Get the word out ahead of time. In print and on line. Your agent has two audi­ences: other agents and the gen­eral pub­lic. Other agents get the word through inter-office email and the Mul­ti­ple List­ing Ser­vice where they can find open houses by date and loca­tion. The pub­lic gets the word via the inter­net at real estate por­tals like Zil­low and Tru­lia, the agent’s and/or broker’s web­site, and through spe­cially timed ads on craigslist; in print the pub­lic is informed through ads in the local papers and the notice at the local mar­ket. Putting stick­ers on the list­ing fly­ers ahead of time and adding an “Open House” rider with date to the lawn sign helps but reaches fewer peo­ple. Inter­net mar­ket­ing has an unbeat­able edge: map­ping and directions.

Loca­tion

How easy will it be to find your home? Often, that depends how easy it will be to give direc­tions. Regional and local Seat­tle area sign ordi­nances have become stricter and there’s been some con­tro­versy as this blog post in the Seat­tle Times points out.  It’s eas­ier to direct peo­ple to a home in a sub­ur­ban neigh­bor­hood in, let’s say  Red­mond or Wood­inville than to a condo in the Bell­town neigh­bor­hood of Seat­tle. The harder it is to help find­ing a home with sig­nage the more impor­tant is the pre-open-house mar­ket­ing, espe­cially maps and direc­tions. Thank­fully, open house seek­ers guided by GPS devices are becom­ing more common.

Pric­ing

The pric­ing fac­tor is closely tied to loca­tion. Very expen­sive homes don’t lend them­selves to open houses and the neigh­bors in exclu­sive neigh­bor­hoods may not want the atten­tion of strangers. An aggres­sively priced and well pro­moted home may attract a large crowd. There are risks involved in hold­ing an open house. You do not want to have two or three par­ties show up at the same time and traps about your house unsu­per­vised. To han­dle that kind of traf­fic your agent will need to have addi­tional personnel.

Days on Market

Tim­ing can be every­thing. The ear­lier after first listed the bet­ter but not too soon. Your agent should have stirred the pot and know the online traf­fic stats to gage inter­est and tim­ing. I try to list on a Wednes­day or Thurs­day and wait until the sec­ond week­end to hold an open house. Another tim­ing fac­tor for hav­ing an open house (or a sec­ond one) is after a change in the list­ing, such as a price drop or when the own­ers have moved out, when the clut­ter is gone and the home can be staged advantageously.

The Seller

You and your agent have to work as a team. Your agent should con­sult you first as to the date of the open house. You may have din­ner guest on the evening of the day. You or a fam­ily mem­ber may be sick or have a birth­day. Then there’s the prepa­ra­tion. Some things only you can do; like clean­ing out the lit­ter box or telling your teenage son to tidy up his mess. Also, put all pre­scrip­tion med­i­cine safely away. Leave noth­ing dan­ger­ous in plain sight, such as that set of Vic­tori­nox knifes. Any­thing really small and valu­able should not be within easy grasp. Call your agent about 15 min­utes after the end of the open house to make sure the coast is clear for your return. Ide­ally, you want your agent to stay until you come back to dis­cuss what’s hap­pened. A fresh mem­ory sup­ported by good notes will help eval­u­ate the event.

The Agent

You’ve prob­a­bly expe­ri­enced this. You go to an open house and the agent show­ing the home is not the list­ing agent. You ask ques­tions and the agent can’t answer the one of great­est impor­tance to you. The indus­try wis­dom is that this other agent will be inter­ested in find­ing the buyer among the open house vis­i­tors and rep­re­sent that buyer in the trans­ac­tion. At the least, the “house sit­ting” agent, often a more junior agent, gets the oppor­tu­nity to meet some poten­tial clients and hand out busi­ness cards. How­ever, in my opin­ion there is nobody bet­ter equipped to hold your open house than your list­ing agent.. Your list­ing agent knows you and your home the best. Your list­ing agent rep­re­sents you and your inter­ests the best. Your open house should not be the seen chiefly as an occa­sion for client prospect­ing -.not by your list­ing agent and cer­tainly not by another agent.

The Weather and Other Events

Sunny or at least dry days are usu­ally bet­ter. Rain and snow keeps peo­ple away, and if they come any­way their mood can be as cark as the skies and the mud they drag in even darker. (Keep those booties handy.) You can, within rea­son, take the weather into account but don’t let it dic­tate your event. Speak­ing of events, this is were you and your agent should check the cal­en­dar ahead of time. Don’t try to com­pete with the local home com­ing week­end, the World Series or Super­bowl. Also, if your home is in an urban neigh­bor­hood and park­ing is at a pre­mium don’t sched­ule your open house at the same day as the annual culi­nary event held by Greek Ortho­dox church around the cor­ner. On the other hand, a spe­cial sign announc­ing your open house on the fol­low­ing week­end may get more atten­tion than usual.

What Makes an Open House Special?

It is the only oppor­tu­nity for any­body to see a broker-listed prop­erty at their con­ve­nience on their own. It gives your list­ing agent and you a chance for unique feed­back. A skilled list­ing agent will be able to read a visitor’s silent reac­tions. Finally, the visitor’s ques­tions should be viewed as oppor­tu­ni­ties to improve the list­ing, which means improv­ing the pre­sen­ta­tion of your home in print and, most impor­tantly, on the internet.

Open houses are great learn­ing opportunities.

Facts and Fantasies

Accord­ing to the Zil­low Q2 Home­owner Con­fi­dence Sur­vey 62% of home­own­ers believe their home’s value has increased or stayed the same in the past year yet 77% of U.S. homes actu­ally declined in value.

This con­trast of real­ity and wish­ful think­ing is less pro­nounced in the West, per­haps because in parts of Cal­i­for­nia and Ari­zona the signs of the down­turn are just too promi­nent to be ignored. As always, the North­west is lumped in with the rest of the West, so the com­pany that con­ducted the poll for Zil­low pro­vides no data for our cor­ner of the USA.

Signs of Denial in the Seat­tle Real Estate Market

Sell­ers and buy­ers do not see the same market.

To find signs of this denial let’s take a look at the Prop­erty His­tory of the list­ings in the data base of the North­west Mul­ti­ple List­ing Ser­vice (NWMLS). The Prop­erty His­tory cap­tures the price trend of every prop­erty from when it was listed to when it was sold — if and when and how often and by how much the price was reduced. What is used in many pub­lished sta­tis­tics is the spread between the list­ing price (at the time of the offer) and the pur­chase price. How­ever, that tells only part of the story. The list­ing price at the time of the offer is often lower than the orig­i­nal list­ing price (first day of list­ing). Another price fac­tor — not reflected in the sell­ing price — is other seller con­ces­sions, such as the seller pay­ing part or all of the buyer’s clos­ing costs. Let’s look at a typ­i­cal example:

Some num­bers tell only part of the story.
The media will report sta­tis­tics that reflect the dif­fer­ence between the list­ing price and the sell­ing price. The real story, how­ever, is told by the dif­fer­ence between the orig­i­nal list­ing price and the sell­ing price. This real story tells the dif­fer­ence between a seller’s hopes (unre­al­is­tic expec­ta­tions) and the real­ity of the mar­ket. In the exam­ple above the seller reduced the price of the home by 3.3% and then sold it 2.5% below the reduced price, mak­ing for a total price reduc­tion of 5.8% since the orig­i­nal list­ing. If the seller paid $6,000 of the buyer’s clos­ing cost then the total price reduc­tion was 7.1% (dif­fer­ence between $450,000 and $418,000). Such seller con­ces­sions and these kind of price reduc­tions are rep­re­sen­ta­tive of what is cur­rently hap­pen­ing in the Seat­tle real estate market.

Only Moti­vated Sell­ers Need Apply
As a real estate agent it is my job to sell your home at the high­est pos­si­ble price. Some would add: “in the short­est pos­si­ble period of time” but that depends on the cir­cum­stances. Still, if you do not want to sell quickly as pos­si­ble why do you want to sell at all? This is no time to “test the mar­ket” just to see what you could get. I know of a street with three sim­i­lar homes for sale. One of them is priced about 35% lower than the other two. One of the over­priced homes is listed with a com­ment by the agent: “price set by seller.” In other words: don’t blame me.

The price of the “inex­pen­sive” home reflects the mar­ket. After 30 days it is listed as “Pend­ing Sale BU” which means Backup Offers Requested. I don’t know what the offer price is but it is a safe bet that some­one spot­ted a good value and is now try­ing to get an even bet­ter deal.

On June 12, the Wash­ing­ton State “Dis­tressed Prop­er­ties Law” took effect. That’s House Bill — HB 2791 If you have the time to plow through the bill, here’s the whole offi­cial mess as a PDF file. If you have a shorter atten­tion span, read the June 6 Press Release from the Wash­ing­ton Attor­ney Gen­eral.

So, what’s the big deal, you ask.

Big deal because you, too, are a “Poten­tial Dis­tressed Home Owner” if you

1. Are at risk of loss for non-payment of prop­erty taxes,
2. in default under a mortgage,
3. 30 days behind on mort­gage — OR
4. believe that you could default on your mort­gage within 4 months and tell your lawyer, real estate agent, lender, mort­gage or credit coun­selor, etc.

The bill has many flaws,

such as point 4 in the list above, vague word­ing, and sweep­ing def­i­n­i­tions, but there are two major flaws worth not­ing. To be a Poten­tial Dis­tressed Home­owner you must be

1. occu­py­ing the property,
2. the prop­erty must be your pri­mary res­i­dence, and
3. this prop­erty has from 1 to 4 res­i­den­tial units

Any­thing miss­ing here?

Yep, the Dis­tressed Prop­erty Law does not cover any build­ing with more than 4 units, which excludes almost every con­do­minium com­plex.

What makes this an impor­tant flaw, you ask? Well, the pur­pose of HB 2791 is to pro­tect res­i­den­tial prop­erty own­ers in Wash­ing­ton from those shady char­ac­ters who are prey­ing on the dis­tressed home owner. It is to pro­tect them from con artist who “skim equity” and “steal homes”.

Since a good num­ber of first-time-buyers buy con­dos and since some of them financed their dream with ques­tion­able mort­gages this leaves a whole lot of tar­gets for the scam artists to pur­sue.

The other major flaw

of the bill is that it does not exempt real estate agents. (In other states that passed sim­i­lar leg­is­la­tion, real estate agents are exempt,) It is not that real estate agents are nec­es­sar­ily bet­ter than the aver­age per­son, but they are already cov­ered under other leg­is­la­tion, namely RCW 18.86 which gov­erns real estate prac­tice.

The bill cre­ates a whole new pro­fes­sion: the “Dis­tressed Home Con­sul­tant.” That new label was meant to apply to legit­i­mate fore­clo­sure spe­cial­ists and scam artists. It now also applies to real estate agents. The bill does exempt oth­ers equally likely involved in real estate trans­ac­tions: lenders, mort­gage bro­kers and lawyers.

These two flaws may be major but this one beats both.

Each bill that becomes leg­is­la­tion includes a “Fis­cal Note” which states the esti­mated Fis­cal Impact of the bill — that’s the impact on the bud­get, I sup­pose. And since that bud­get is paid for by our taxes that means the fis­cal impact on you and me. Accord­ing to the math wiz­ards in Olympia, the Dis­tressed Prop­erty is esti­mated to have “No Fis­cal Impact.”

No Fis­cal Impact? Let me count the ways.

The bill has resulted in numer­ous rewrit­ten and newly printed real estate trans­ac­tion forms. It has already cre­ated and will cre­ate more con­fu­sion and waste of time for any­one involved in buy­ing and sell­ing a home. That includes all the afore­men­tioned poten­tial dis­tressed home own­ers. The worst and most costly impact of this bill will be this: Every sane real estate agent will stay miles away from any­body sus­pected of har­bor­ing thoughts of being a poten­tially dis­tressed home owner. The poten­tial lia­bil­ity to be sued is sim­ply too great. Ulti­mately, this bill may achieve the oppo­site results of what was intended: more fore­clo­sures and more bank­rupt­cies. The shady char­ac­ters meant to be deterred by this bill will find other ways to ply their trade. Most condo own­ers remain unpro­tected and should watch out.

Much has and will be writ­ten about this law.

Here’s how a real estate fore­clo­sure spe­cial­ist (now becom­ing my Dis­tressed Home Con­sul­tant col­league) views this bill. Your com­ments are welcome.

That “For-Sale-By-Owner” Sign may be an Invi­ta­tion to Com­plete Strangers.

If you con­sider sell­ing your home on your own, envi­sion this sce­nario: A friendly, well-spoken stranger wants to see your home. You invite her in. She com­pli­ments you on your home and asks to take some pho­tos so her hus­band, away on busi­ness, can see the pic­tures online. You are flat­tered and have no objec­tions. In fact, the prospec­tive buyer has just taken pic­tures of some your most valu­able pos­ses­sions. If you have a secu­rity sys­tem, she may have taken a pic­ture of the motion detec­tors and the secu­rity key pad in prepa­ra­tion for another, per­haps less well-intentioned visit.

Safety is always on the mind of a real estate pro­fes­sional. Alerts are posted on the Mul­ti­ple List­ing Ser­vice mem­ber web­site which reports sus­pi­cious activites. Thanks to these alerts, sev­eral sus­pects have been iden­ti­fied by police before more dam­age was done.

For Sale By Owner Sell­ers (FSBO) may be ignor­ing safety risks.

The FSBO seller likely lacks for­mal train­ing in per­sonal safety and is not expe­ri­enced in deal­ing with com­plete strangers. Seem­ingly inno­cent ques­tions by a “poten­tial buyer” may be designed to find out who is at home and when the home may stand empty. The con­tents of the home can be at risk and, worse, so can be loved-ones, includ­ing children.

What’s the best pro­tec­tion for the FSBO? First, don’t be “home alone” when the stranger comes call­ing. If that’s not pos­si­ble let some­one else know when you will be show­ing your home. Have the vis­i­tor sign a guest book and ask to see iden­ti­fi­ca­tion. Equally impor­tant: don’t adver­tise the home as “vacant.” Other safety pre­cau­tions include remov­ing pre­scrip­tion drugs and valu­ables, such as jew­elry. Elim­i­nate evi­dence of per­sonal con­tacts, such as which school your chil­dren are attend­ing. Remove those pho­tos and notes from the refrig­er­a­tor door! Visit the National Asso­ci­a­tion of Real­tors web­site for more infor­ma­tion on safety for home sellers.

Safety is KEY

Licensed real estate agents and their clients ben­e­fit from the secu­rity sys­tem man­aged by the North­west Mul­ti­ple List­ing Ser­vice. The sys­tem records every entry and iden­ti­fies all agents who have entered a prop­erty. A crit­i­cal ele­ment of the sys­tem is the daily update of the agent’s access code on a GE Supra Dis­playKEY™ or sim­i­lar device which opens the lock­box via infrared sig­nal. If not updated, the code that allowed entrance into a home yes­ter­day will not work today. The lock­box, located near the entrance of a home, can be pro­grammed by the list­ing agent to suit the home owner’s schedule.

Every time the lock­box is unlocked and the house key(s) become avail­able the safety sys­tem records the agent’s iden­tity and time of entry. The list­ing agent can access the infor­ma­tion to con­firm this infor­ma­tion not only for safety rea­sons but to gain valu­able mar­ket­ing infor­ma­tion which allows imme­di­ate feed-back from all agents that have vis­ited the home for pre­view or with their clients.

The North­west Mul­ti­ple List­ing Ser­vice (NWMLS) Takes Safety Seriously.

The key­box safety sys­tem pro­tects real estate agents, home sell­ers and buy­ers. Through their list­ing agent sell­ers will know exactly who’s been to their home and when.

A $5,000 Fine

The NWMLS takes safety seri­ous. Using another agent’s Supra Dis­playKEY™ or Supra eKEY™ key to gain entry to a prop­erty is a vio­la­tion that car­ries a $5,000.00 fine.

Almost as inevitable as death and taxes, the Wash­ing­ton Seller Dis­clo­sure State­ment is a sure thing when it comes to sell­ing res­i­den­tial prop­erty in Wash­ing­ton State. Form 17, as it is also called, looms large and larger.

Get­ting more com­plex over time.

The state leg­is­la­ture keeps adding and chang­ing Form 17. The last major change was in 2003. Sub­se­quent effec­tive dates and changes/additions per­tained to:

• Jan­u­ary, 2005: sex offender in area
• June, 2005: prox­im­ity to farms
• June, 2006: farm prox­im­ity lan­guage changed
• June, 2007: envi­ron­men­tal sec­tion added plus other major changes

Major changes include:

• Def­i­n­i­tion and des­tinc­tion between improved and unim­proved res­i­den­tial property
• Amends the exist­ing Form 17 used for “improved” property
• New Seller Dis­clo­sure State­ment to be pro­vided to buyer of “unim­proved” prop­erty zoned for res­i­den­tial use
• Lim­its a Buyer’s abil­ity to waive receipt of either form

Changes to sec­tions of the form include:

• Sec­tion 6 – title of sec­tion changed from “Com­mon Inter­ests” to “Home­own­ers’ Association/Common Interests”.
• Sec­tion 7 – title of sec­tion changed from “Gen­eral” to “Envi­ron­men­tal”. This sec­tion must be pro­vided to the Buyer, and receipt of this sec­tion can­not be waived by the Buyer, if the answer to any ques­tion in the sec­tion is “yes”.
• Sec­tion 7(D) – replaces old ques­tions related to flood­ing with new ques­tion ask­ing about exis­tence of shore­lines, wet­lands, flood­plains, and crit­i­cal areas on the property.

Who must pro­vide Form 17?

The require­ment is get­ting tougher. Not hav­ing occu­pied the premises is likely no longer a valid excuse. One excep­tion remains: when the owner has passed away.

What if the Seller does not pro­vide Form 17?

The buyer can walk away from the pur­chase just before clos­ing and get the earnest money back.

What’s the role of the real estate agent?

The agent can not assist the seller in fill­ing out the form. The buyer acknowl­edges this by sign­ing below a state­ment that reads: “…the dis­clo­sures made herein are those of the seller only, and not of any real estate licensee or other third party.”

Must agents dis­close what they learn from Form 17?

Once the Form 17 has been pro­vided to the buyer the answers become known to the real estate licensees rep­re­sent­ing the seller and the buyer. Hav­ing learned of mate­r­ial facts through Form 17, the real estate licensees must dis­close them.

I am not using an agent to sell my home. Do I need to pro­vide Form 17?

Absolutely.

If you are inter­ested in the details of the new con­tent and ratio­nale behind the changes to the Wash­ing­ton State Seller Dis­clo­sure State­ment, visit the Wash­ing­ton State leg­is­la­ture web­site (pdf file).

Clients and friends keep ask­ing me: what do you think of the Seat­tle hous­ing market?

From per­sonal obser­va­tions and expe­ri­ence I know that Seat­tle area homes are sell­ing if they are:

• com­pet­i­tively priced,
• well pre­pared for sale
• offered by a moti­vated seller, and
• mar­keted aggressively

I’ve listed and sold two Seat­tle prop­er­ties in March which met these four cri­te­ria. Dur­ing the same time I’ve also helped two buy­ers pur­chase homes.

Buy­ers have plenty of choice and will buy when the above cri­te­ria are met. Obvi­ously, buy­ers are up against tougher lend­ing stan­dards. Still, first-time buy­ers with good credit, steady income and sav­ings for a siz­able down pay­ment have the pick of the lit­ter — if they can afford it.

The prob­lem with Seat­tle res­i­den­tial real estate is afford­abil­ity.

Cur­rently, the aver­age Seat­tle area home price is $414,518, just about dou­ble the national aver­age of $207,272.

Why’s that?

• More peo­ple are mov­ing to Seat­tle than are leaving.
• Seat­tle com­pa­nies are still hir­ing and open­ing offices here, such as Google.
• The local gov­ern­ment cur­tails land use.
• The local geog­ra­phy fos­ters exclusivity.

Take a look at a Seat­tle area map and what you see are bod­ies of water dis­sect­ing the land. What you get is an abun­dance of highly desir­able water­front prop­er­ties. Add the undu­lat­ing hills that rise from these waters and you get desir­able view prop­er­ties. Water­front and views sell for a premium.

The solu­tion for many first-time buy­ers is to “go condo” or to buy fur­ther out and set­tle for a longer com­mute. In the mean­time, prices on some Seat­tle area homes are com­ing down. One exam­ple is Kirk­land con­dos, espe­cially those at the higher end. The high­est fore­clo­sure rates are south and north in cities like Burien and Mon­roe. These fore­clo­sures came about through the com­bi­na­tion of easy credit, lofty expec­ta­tions of appre­ci­a­tion, and per­haps opti­mistic assess­ment of increased per­sonal income.

What the Experts say about the Seat­tle hous­ing market.

PMI Cor­po­ra­tion, the com­pany that pro­vides pri­vate mort­gage insur­ance, looked at the risk of home prices declin­ing over the next two years (pdf file). Seat­tle ranks in the least risky group. Speak­ing to the sta­tus quo, The Wall Street Jour­nal shows the Seat­tle area in 197th place out of 200 when it comes to mort­gage pay­ment delin­quen­cies (by value) of 30 days or more.

Another mea­sure of the same table is the cur­rent price level when com­pared to the peak of the US hous­ing mar­ket which the WSJ deter­mined to be the fourth quar­ter of 2005. Com­pared to that peak (being 100%) the national aver­age price level is now at 91.9 per­cent — a drop of 8.1 per­cent. Seat­tle home prices, how­ever, have still risen fur­ther since then to 117 percent.

This would sug­gest that it’s about time for Seat­tle home prices to cool down fur­ther. Fore­clo­sures excluded, what I see is a stand-off between sell­ers and buy­ers. Seat­tle home sell­ers can’t believe prices are com­ing down, buy­ers are won­der­ing by how much.