Coldwell Banker, Coldwell Banker Bain and NWHome sellers are tickling Washington and Oregon real estate buyers with an added incentive to buy this summer.  Sellers who opt into the program will be giving qualified buyers a credit on closing costs.  For more details about the program view the attached CBB Buyer Bonus FAQ.

PMI Mortgage Insurance Co has published their second quarter report and the Risk Index indicates that 93% of the nation’s 384 MSA’s (metropolitan statistical areas) are showing “Improved Risk”.  Real estate in Seattle is ranked in the Moderate catagory which is an improvement over the 2009 risk rating.  Assuming that this isn’t the type of calculating that took place in the Mortgage Backed Securities Market, it looks like a very positive sign that we have found the bottom to the housing market.

We might take some comfort in the understanding that PMI has included data from a number of sources, identified in The Report, to calculate a risk factor for each of the markets.  “The Risk Index uses economic, housing, and mortgage market factors (including home price appreciation, employment, affordability, excess housing supply, interest rates, and foreclosure activity) to determine these probabilities”.

According to an article in the Seattle Times this weekend, Puget Sound has experienced an increase in residential vacancy rates in the last twelve months, moving  from 4 to 7.2%.  With an the increase in inventory the market has to adjust to the increased pressure to lower rents.  The article is a good one and suggests that rental rates may decline as much as 8%  in 2010 and that rental incentives are now on the table. 

Will this impact residential sales until it becomes less expensive to buy than to rent?

Zillow is emerging as a powerhouse of unfettered opinion in the housing sector, based on their love for housing market data.  Regional recovery is still mixed so we are going to need more than optimism to believe that this market is beginning to stabilize.  Zillow Chief Economist Stan Humphries has been in the public eye in the last few days and he outlined the housing market drivers that could stimulate or stall any recovery on CBS Moneywatch.  In the true spirit of journalism, here is a voice that doesn’t have ties to your net worth or your bonus.

Abuse to one person may be fair play to another.  Where do you stand today on the field of credit?  Many of us have watched our net worth plummet and our retirement savings disappear. Some of us have received handsome performance bonuses for generating substantial profits based on formulas that don’t take into consideration looming write-downs that substantially influence our financial system.  Do you think that regulation will help curb the instability?

I’ve attached a list that I was given for your review.  The list was described to me as potential costs that might be included in the APR (Annual Percentage Rate) of a mortgage.

Do you see anything that shoudn’t be there?  Or should be added?

APR_fees

Here’s a note that came out of the HUD newsletter on October 1st:

The National Housing Act requires that elderly homeowners seeking an FHA Home Equity Conversion Mortgage – a “reverse mortgage” – must receive counseling “provided by counselors who meet qualification standards..”    A final rule published in the September 2nd, Federal Register establishes a roster of counselors who have met these standards and from which counselors should be chosen.  For more, visit http://edocket.access.gpo.gov/2009/E9-21076.htm

It is usually a rather expensive means of gaining access to home equity, but in some cases a reverse mortgage  may fill a gap that is ultimately a real help.  The number of professionals working in this field today is growing rapidy.  Look for experience and a good referral.

Do just what a good GC would do on a very custom job:
 1. Break the project into known and unknown scopes.
  a. Known – for example 42 electrical outlets at $75 each, 5 doors at $200 each. These are items that you can see and there isn’t any reason    to believe that these costs may vary.  If you are uncomfortable doing electrical work or plumbing work these may be subcontracts    that you get fixed bids on.  Again the point is NO CHANGE in the future.
  b. Unknown – these are tasks that may change in scope.  For example, you are too lazy to pick out a light fixture, tile or plumbing fixtures    now, or you want to make the choices later.  Establish an allowance budget for these items now.  Be realistic but don’t sweat the    details.

 2. Confirm (price) the known scope – this can be accomplished by going to the store with a shopping list and pricing it or asking subcontractors to   give you prices on their specific trades.

 3. Make allowances for the unknown scope -  if you have to remove a wall it is very easy to estimate how long it will take to remove and replace the   GWB.  It may not be easy to estimate how long it will take to repair the rot behind the wall but don’t give up on the whole process as being too hard to  estimate.  To repeat; estimate the knowns (fixed priced) and document them.  Make a guess at what you can’t see.  It really burns me when   subcontractors try and tell me that because it is a remodel they will only work on a T&M basis.  Do you mean to tell me that a plumber doesn’t know   how long it takes to rough in and set a sink or toilet?  OKI believe that those costs are known and it is the vast majority of their work.  When you   pulled the wall apart, it turns out that he has to run 16’ more copper to get around a column or spend a few more minutes notching a beam for the   toilet.  OK, those are unknown, but how much did they cost?  What we’ve done is control the risk.  We’ve isolated the allowances and they are a very   small part of the project.

 4. Give yourself a contingency; the size depends on the size of the project.  Start out at 25%.  Do your estimate and revise your scope (eliminate or  add back things you need or don’t need) if you want to.  Revise the estimate and only use a 20% contingency.  Make some more decisions and get  subcontractor quotes.  Do you feel comfortable going down to a 15% contingency?  Remember, no matter how detailed your estimate is, something  will change and you will need (or want) a little more money than the “bid.”
 
 5. Use your estimate as a sounding board.  If a subcontractor says they need more money, get really specific: what is actually different than was  estimated.  The more detailed the original estimate from the contractor, the easier this step is.  If it looks sketchy to begin with, the little red flag goes  up.  If you over spent on plumbing fixtures, under spend on electrical fixtures….. You will find that the allowance budgets are far smaller that the known  (fixed) budgets.  If you watch the allowances closely you won’t go over budget.

 6. If you live with a mate, tell them you love them on a daily basis, even if you are tired.  If you live alone, include a friend for support.

You deserve to know a little about the  law that governs real estate agency in Washington State.  The Law of Real Estate Agency is required to be given to every potenial client considering entering into an agency relationship with a real estate licensee in our state.

Here’s a little gorilla marketing for a wonderful building lot (never been used) right on the Washington Park Arboretum.  It is just over 10,000 SF and is accessed from a quiet loop of Arboretum Place E. and E. Garfield.  The neighborhood is an enclave of well-built homes with easy access to both the Mountlake district and Capitol Hill. 

This note is being circulated amongst a group of Architects with the thought that there may be someone that they are working with who is looking for an unusual in-city building site.  The link below will give you an initial look at a site map.

If you have any questions I can be reached at 206-729-0243.

See the Arboretum Place Location map

Click on the photo to view its full size:

The corner of Garfield and Arboretum Pl

The value of a home is arrived at individually by a buyer and a seller when they agree upon a price and, incidentally, when they are able to close the sale at that price.  There are many situations where the sale price is not the listed price and is not the offered price. “Arms length” means that there are no other influencing factors like family ties, distressed sellers or bank ownership etc.
The best way to determine if a home is the right price for you, the buyer, is to educate yourself in the neighborhood where you would like to live.  Gathering information from friends and family and the internet is a good start but we will all have different (and sometimes confusing) opinions of what is right.  Websites like your county web site, Cyberhomes.com or Zillow.com have to be interpreted by someone who uses those sites all of the time.  Zestimates rely on county data and owner input, both of which are just not accurate for YOU!  Assessor values are far more complicated than being 20% below “market value.”
I find that not everyone can learn value in previewing just a few homes, and that it may take months to learn what your values are.  I’ve had clients rent in a neighborhood for a few months and visit every open house while they are there.  Pretty soon they discover that this neighborhood is affordable or not; that a 2 bedroom usually sells for X and a 3 bedroom sells for Y.  You learn how people take care of their homes and how they upgrade them.  What does it do to the value if there is a new bedroom, kitchen, bath or deck? 
You learn what is valuable to you. “And that’s all that counts.”  I agree with this.  It doesn’t matter what we think.
I’ll use the term Realtor, which refers to a person who belongs to the National Association of Realtors.  Their website is Realtor.org.  You can find some great questions to ask your agent there. This is a differnet site than Realtor.com, which is a great place to search for homes.
Realtors can use all of this information to estimate the market value of a home because they are immersed in it all day and every day.  They use this information to advocate for your opinion of value.  They are supportive of your learning curve and can provide as much time and information as it takes for you to understand what you value in a home.