Residential Real Estate in SW Washington State

Residential Real Estate Services with Passion, Integrity, Knowledge

Don’t Let Your Luck Run Out

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With rates climbing and the promise of two or three additional federal rate hikes this calendar year, it’s important to be prepared. Even if you don’t feel you’re ready to buy this year, take a look at the infographic below to see what happens to a potential purchase with a rate of 4.8%.What you want to look at is whether you can save enough money fast enough to keep up with both the raise in interest rates and the 1% a month (or more) increase in prices.

As an aside, my favorite loan officer tells me that rates for very well qualified buyers this week was about 4.375%, already higher than this example.

Some Highlights:

  • The “Cost of Waiting to Buy” is defined as the additional funds it would take to buy a home if prices and interest rates were to increase over a period of time.
  • Freddie Mac predicts that interest rates will increase to 4.8% by this time next year, while home prices are predicted to appreciate by 4.8% according to CoreLogic.
  • Waiting until next year to buy could cost you thousands of dollars a year for the life of your mortgage!

You Can Test Drive a Car … But Not a House!

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The last couple of weekends have included a few hours helping our son decide what car to buy. We’ve been to this dealer and that, had him prequalified … and have driven a number of cars, usually with the all-chatty salesman in the backseat telling us exactly why this car is THE one to buy. We’ve driven some brand new cars and are now taking a look at a few that a just a couple of years old (Mom insisting that maybe the payment will be a bit easier on his monthly budget.)

Now that we’ve graduated to the used car market, I’ve been busy reading CarFax reports, looking over my son’s shoulder and hanging onto the passenger “Lord Help Me!” strap conveniently located just above most of the passenger windows. (Word to the wise … don’t ever go on a test drive with a 21-year old male …. )

Now that I’m safely home, I’ve been able to reflect on the disparity between buying a car and buying a house. We’re out driving around in a $18,000 car, testing the brakes, going around corners, up steep hills, accelerating on the freeway–all with a eye on making sure that the vehicle seems safe, feels good, and is worth going to the step of taking it to our trusted mechanic before going down the buying path.

However, buying a house … many times more expensive, doesn’t include that same test drive. There’s no chance to sit in the house long enough to decide if it’s drafty, cook a meal in the kitchen and see if the layout really truly works or pack the closets to see if the clothes all fit. All of those things are a bit subjective. We think it’ll work. We walk through the house–maybe a few times–then begin the purchase process. With careful thought and due diligence, we hire a trusted inspector to test and prod the house to reveal its strengths and weaknesses. We measure the rooms, sometimes draw them out on paper and hope everything fits.

But test drive? Nope. That’s reserved for much smaller purchases … like cars, trucks, and RVs.

As Agents/Brokers, it’s important to provide as many opportunities for our Buyer clients to look at a house at their own pace. To figuratively kick the tires, lay on the floor of the empty bedroom to see if the bed fits and stand in the pantry to evaluate the food storage. Because buying a home is truly the largest purchase they’ll ever make. It’s the best we can do .. their test drive begins the day they move in.

*photo courtesy of egg on stilts via Flickr

A Great Lender Helps From Start to Finish, Especially in a Short Sale

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One of the very first steps in the home buying process is determining how a Buyer will pay for their new home. Not only must a Buyer determine much they can afford, but how an offer must be structured–whether closing costs must be paid by a Seller, gift funds will be used for a down payment, how much of a down payment will be paid, and so on.

Having a great lender as part of the Buying team is critical, but especially so with short sale purchases.

It can be difficult for a lender to help a Buyer determine exactly how much they might need to close the sale. A good faith estimate on the front end of a short sale might not be appropriate; interest rates, dates of closing, and other terms may change before lender approval occurs several months later.

Will the Buyer have sufficient funds to close? Will they have sufficient reserves; will they be comfortable with their payment?

A GREAT lender prepares an estimate of costs at the beginning, then meets periodically with the Buyer throughout the process, updating them on the changes and making sure they understand the numbers. They help the transaction succeed – from start to finish.

Working with an agent experienced in both listing and assisting buyers with short sales … and considering their recommendations for a great short sale lender will ensure success and confidence as a buyer proceeds through the process.

Time to Publicly be “Thankful”

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Thanksgiving is almost here .. almost! Just a few days away.

In our family, that means the kids come to our home with grandchildren in tow (“I’m” the grandma now), with special treats tucked in baskets, games to play and visiting to be done. We’ll spend 2-3 days chasing the little ones around while they decide that “gramma” and “grampa” live on a farm (NOT), have lots of good hot cocoa and whipped cream, hugs, and stories. They’ll likely ride the “tractor,” (read that as the riding lawnmower), chase the dogs, pick up the eggs from the chickens, feed the neighbor’s horses, and try to prevent the cat from bringing his latest mousing finds into the house.

Then there’re the evenings to sit with a quiet glass of wine with the grown children after the crowd of little ones go to bed. (When did my children grow up and become real people with whom a glass of wine is such a treat? They’re all adults now with families of their own.)

It’s a hectic, chaotic, blessed time.

I’m so thankful!

This upcoming 4th Thursday of November is just the accepted, public time to express thankfulness. Underneath it all, I’m thankful every day for the life we lead. It’s full of stress, but it’s full of laughter as well. It’s full of real estate clients that express hope when they have a real estate need, frustration when things go sideways, gratefulness when things get back on track, and delight when the transaction finally closes. Their trust is a huge responsibility … and I’m thankful to be someone to whom they look to lead them through the quagmire of real estate purchases and sales.

I’m tremendously thankful.

In our family, we’ll all hold hands around the dinner table for a moment on Thanksgiving afternoon and express our thankfulness to each other.

Now it’s time to virtually hold hands with all of you – clients, friends, coworkers, and acquaintances. I’m thankful to have each of you in my life.

Keeping Transactions on Course is a Bit Like Herding Chickens

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My family is new to the world of chicken-keeping. Funny busy noisy creatures those chickens. But inclined to running all over the place when attempting to direct them from one place to another. Block one bird from running off course, then look around and another one has doubled back and is heading back to the pen … or off to dig up a worm in a totally different area of the yard.

Kind of like keeping real estate transactions on course. Sometimes it takes a lot of arm waiving and shirt flapping to keep everyone moving in the same direction from start to finish. But persistence does pay off. Sometimes you have to pick one chicken up and carry it to the final destination. Seems like I’ve done that in my real estate career just a few times! Well, I guess I haven’t actually picked up any clients and carried them around, although sometimes it felt like it!

The business of real estate is hard work. It takes perserverance, tenacity, professionalism, exacting and timely actions, smiling personality, and a  lot of arm waiving and shirt flapping as well.

Maybe my career in real estate has trained me well for chicken-keeping! Or maybe it’s the other way around. Give me a call if you ever need someone to herd your real estate transaction through from start to finish.

 

So … What IS a Buyer Agency Agreement?

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In a previous post, I wrote a bit about why a Buyer Agency Agreement is important and how a Buyer / Broker relationship might occur. I also indicated that, as a rule, I require a Buyer Agency Agreement to work with Buyers.

So what, exactly, does a Buyer Agency Agreement obligate a Buyer to do? Likewise, what does it obligate the Broker to do?

Here are the essentials of a typical Buyer Agency Agreement:

  • Appoints a specific Broker (agent, salesperson—ME!) to work with you, but also creates an agency association with the Firm with whom the Broker works. It helps you understand that, not only are you represented by your specific selling Broker, but also by the Firm with whom the Broker has association.
  • It asks you to acknowledge receipt of the Law of Real Estate Agency pamphlet, which specifically sets out laws by which a Broker works in the State of Washington.
  • Sets out whether or not your relationship with the Broker governs any home you purchase in a given area and time frame, or whether your relationship is only for those homes in which the Broker participates (shows) you. It also clarifies what happens if you buy a home the Broker showed you after the term of the Buyer agreement has passed?
  • Allows the Broker to work as a dual agent in a transaction where the Broker represents the seller as their listing Broker, and you as their selling Broker.
  • Specifies exactly how and how much the Broker is paid. Your Broker may agree to only accept what the Seller has agreed to pay through the listing agreement the Seller has with their listing Broker. But …
    • What happens if the Seller’s contribution to the Broker’s compensation is minimal or insufficient to pay for all of the services a Broker must perform in a transaction? … or …
    • What happens in For Sale By Owner properties? Agency law in the State says that a broker doesn’t have to show you or pursue properties for you if there’s no compensation involved – but wouldn’t you as a Buyer still want representation by a trusted advisor? (After signing a Buyer Agency Agreement with me, I’ll represent you in a For Sale by Owner transaction, unless the seller is in a distress situation.)
  • Possibly one of the most important points in the agreement clarifies what the Broker will do in a Distressed Property Conveyance – one where you wish to participate in a distressed property transaction where the Seller will remain in the home after your purchase is complete, or will somehow gain in the transaction through retention of an interest in the property or will benefit from resale of the property.

In short … as with any critically important matter, you want the assurance that you are working with a professional who understands the laws governing real estate transactions and who will fully and competently represent your interests, and your interests alone (unless you agree to work within a dual agency situation).

Working With Buyers — That Scary Buyer Agency Agreement

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I love working with Buyers. The excitement of shopping for houses, seeing homes through their eyes, and the ultimate gratification everyone has when the transaction closes and move-in day occurs! It just doesn’t get much better than that!!

But working with Buyers is a tremendous amount of work. There’s a lot of stress involved, a myriad of big and little steps, lots of time on the phone, on the computer, in the car. Sometimes several offers are written and negotiated before an offer is ever accepted by a seller. In today’s world of bank-owned homes, short sale properties, pre-foreclosures, government-owned houses, the work can be difficult, exacting, and LENGTHY!

And I LOVE it!

Sometimes one of the trickiest negotiating points when working with Buyers begins early in the relationship between the Buyer and their Broker. After all, there’s often a presumption of loyalty very early on. You trust that the Broker will work with your best interests at heart … and the Broker trusts that you’ll use them to complete your home purchase.

Often a Buyer initially contacts the Broker asking to see that perfect house – you know, the one they’ve just driven by and it’s exactly what they want. Or the house on the internet with great pictures, or a great price, or a great neighborhood, or whatever.

So the Buyer calls the Broker. Could be the listing broker, could be a broker used by their best friend, or could be a broker for whom they’ve seen some advertising, found on the Web, or whatever.

The best Brokers start by doing a bit of careful screening prior to meeting a prospective Buyer at a home. The screening has a couple of purposes: Is the Buyer qualified to buy? Have they been looking long? Who have they worked with in the past? Are they working with an agent already? And, subtly, do they sound trustworthy? Should I take another agent/hubby/wife with me?

After agreeing to meet, whether it’s at the office for a prescreening, down the street at the local coffee shop, or at a home that’s just too good to delay, it’s typically a careful and somewhat cautious first date. Sometimes the first date is a lengthy phone call where everyone asks and answers a fair amount of questions. It’s a good way to see if there’s a fit – can the Buyer work with the Broker? Can the Broker work with the Buyer? Is there a formation of trust beginning to occur?

I’ve also found that there’s usually a whole portfolio of information the Buyers should receive prior to jumping in to make an offer on a home – sample contracts, definitions of terms, how the process works, a few legal documents including a copy of the Law of Real Estate Agency and a Buyer Agency Agreement. We’ll have a frank discussion about money matters as well. It’s important to me to learn what exactly what you can afford and how we should structure any sort of an offer to purchase. It’s important to you to learn how I get paid and by whom. It’s an important step to forming a trusted relationship between a professional (the Broker) and the Buyer.

Now, I won’t necessarily ask you to sign a Buyer Agency Agreement the first time we meet. YOU need to see if you can work with me as well. But I do request official formation of an agency relationship through acceptance of the Agreement at the conclusion of either the first or second showing session, after you’ve had some time to digest whether you like my working style, whether you trust me to represent your best interests, and, as well, whether I feel we can work together well as a team. Terms are negotiable, of course, but endorsement of the Agreement as we move forward will be necessary.

Follow the link here for more information about what’s in a basic Buyer Agency Agreement.

Welcome to Real Estate!

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While driving between appointments a couple days ago, I called my daughter to check up on grandbaby Tyler. The car and traffic was quiet and it was a nice break in an otherwise hectic day. After learning about the latest baby accomplishments, inevitably we drifted into what my day had been like and what I was up to at the moment. To me, it was just another day … going to a vacant listing to meet with a plumber after water was found all over the kitchen floor.

I was struck by her comment “Mom, you’re always out there taking care of other people’s houses. I can’t believe you do that. It seems like they should be doing this stuff themselves.” My response was “Welcome to Real Estate!”

Thinking back, my open-ended job description has changed significantly over the last two-three years. Is this a result of the “economy?” A result of my own changing standards and desire to be of help to folks? Or just laziness by allowing myself to get sucked-into agree to tasks that maybe could be delegated. Hmmmmmmm

Certainly my business profile has changed:

  • Most of the homes I list and market are vacant. Used to be they were almost never empty!
  • The majority of my listings are the result of financial distress on the part of their owners.
  • The majority of the Buyers I assist have never owned a home before.
  • Most of the Buyers are young, just starting out in their real estate ownership lives.
  • A significant chunk of my business (almost 40%) comes from internet exposure.
  • Nothing is fast — not the marketing time of a listing, nor the “finding a house and closing the sale” time with a Buyer.

So what does that mean to the actual “practice” of real estate?

Well, it means that my job description continues to evolve. Buyers don’t jump as fast at a great house — we have to see lots of houses. And then once a house is identified, an offer is accepted, inspections are negotiated and completed, the whole nightmare of completing all of the financing tasks comes into play. Let’s see, over the last half-dozen Buyer clients I’ve had to:

  • Run to a Buyer relative’s home to pick up copies of bank statements and send them to the loan officer. Why me? Well, the Buyers got called away on a family emergency and somebody had to do this now!
  • Go to the local IRS office to try to get copies of tax returns when an underwriter demanded real copies at the last minute.
  • Attended a oh dear! super fun septic inspection in the pouring rain only to find out that the pump didn’t work.
  • Negotiated payment for the septic repair over a period of a week and ran it around to all of the various parties because, gee, we were already a week past closing and the bank was threatening to pull our short sale approval.
  • And on and on ……….

Sellers generally need help. They need hand-holding. Some of them are desperate. Most are anxious:

  • I spent the better part of a day mucking out a garage and yard. Why? Well, it needed to be done and the Seller was totally unable.
  • Met repair people at vacant listings!
  • Helped move extra furniture out of the house and into storage because … well, I have a truck available and these two single gals had no idea what I meant when I said “pack!”
  • Supervised the cleaning of gutters
  • Picked up replacement locks and had them changed out.
  • Bought food for an abandoned fish pond and cleaned it out.
  • Above all, I’ve listened and listened and listened to their anxieties.

Now WHY should an agent bother with this? My response is always … because it has to be done. Somebody has to do this. To serve my clients well, the house needs to be sold/bought, they need help to be on their way to their next step in life, to be their ear, sometimes to encourage, sometimes to nag. To serve my clients, I am their trusted advisor, their “do-er,” the one to whom they look when there are snags along the way … and sometimes even after the transaction closes.

It all comes down to service. Real Estate is a service business.

Welcome to Real Estate!