Oct. 26, 2017

First Time Buyer Programs

First Time Buyer Programs

Lenders now have new options available to first time buyers!  These programs help buyers get their foot in the door for home ownership.  One of these programs is called a Down Payment Assistance programs or DPA Grants.  The benefits of a DPA Grant are:

    1.  Down payment and/or closing cost assistance grant, up to 5% of the loan amount.
    2.  DPA grant never has to be repaid.
    3.  Affordable interest rates and variety of grant levels.
    4.  FHA, VA, USDA and Conventional mortgage loan options.
    5.  NOT limited to first-time homebuyers.

The three main types of down payment assistance are grants, second mortgage loans, and tax credits.

    Grants – Grants are funds that you do not have to pay back as long as you own and occupy your home for a certain period of time.
    Second mortgage loans – The most common down payment source, many second mortgage loans offered by state and local governments have low or zero interest rates, and the payments are deferred over a specified time span and, in many cases, the loan is completely forgiven over time.
    Tax credits – Certain states and local governments, including housing finance agencies, issue mortgage credit certificates, which reduce the amount of federal income tax you pay. This makes more money available upfront for your down payment or closing costs.

Depending on the program, assistance may be limited to first-time homebuyers and/or low- and moderate-income homebuyers. Home buyer counseling may be required and we highly recommend that you get advice through the process.

For more information about First Time Buyer programs or down payment assistance, please contact a lender or give us a call and we can refer you to some great local lenders.

 

Aug. 1, 2017

Buyer's beware of wire fraud

Real Estate wire fraud is on the rise. Buyer's need to be aware never to transfer funds into an account per instructions received via email. Instead, they should contact the escrow company personally to confirm any account numbers before they transfer funds.

Escrow company's are responsible for any lost funds when they transfer money out of their accounts, however, buyer's are responsible for all funds transferred into the lenders account. Thus, if the funds are transferred into a fraudulent account, those funds can be lost forever with no way to recover them and the buyer is out the money and won't get the home.

Hackers have become quite savvy with logging into email accounts and watching what is happening with a transaction. They can then start sending you emails that appear to be the real estate broker, the lender, or the escrow/title company involved in that transaction. The hacker can use the same logo and have the same branded appearance.

Here are some tips to help prevent against wire fraud according to an article in RealEstate.Boston.com:

-Brokers should tell their client that everyone is exposed to the risk of wire fraud, but explain what precautions they will use to guard against theft.

-Brokers should stress to the home buyer that any change in the transfer of funds will be discussed face to face to ensure the validity of the request.

-It’s recommended that agents, realtors, attorneys, every party handling property transactions use only those devices that are on secured Wi-Fi networks encrypted to prevent “break-ins.’’

-Everyone involved should change their passwords frequently; use only complex, impersonal character combinations; and write different ones for every site.

-Real Estate Brokers and attorneys should use company e-mail addresses. Ex. Name@SolutionPartnersNW.com. It’s more difficult for hackers to create a duplicate company e-mail address than a Gmail or Yahoo one. And look for subtle differences: Jane.Johnson@gmail.com could very easily become Jane.Jonson@gmail.com.

-Clients should pay attention to the URLs, the e-mail addresses, and the times of day they’re receiving correspondence from the parties in the transaction.

-Report suspicious activity to the parties involved.

So it is better to be safe than sorry and confirm any wire transfer number directly with the escrow company before sending the money. 

June 9, 2017

Risks of listing homes below market to stimulate multiple offer situations

A popular listing strategy some agents are implementing is marketing homes substantially below market to stimulate a frenzied multiple offer situation. This means buyers compete to outbid one another with escalation clauses. The result is the seller may receive an above market final closing price and the buyer might end up paying more than the home is actually worth.

The risk with this approach is the sellers might not receive escalation high enough to bring them up to market. For example, homes in a neighborhood might be closing for sales prices at $625,000 or $278/square foot.  A broker may list a home for $499,999 to stimulate multiple offers on the home, but the escalation might only reach $585,000 or $260/square foot, thus the seller loses potential income. And, homes in the neighborhood could be devalued if the strategy fails.

Another problem with this approach, is buyer's may see a home is listed for $499,999 and be very hopeful that they can purchase the home for this price and be extremely disappointed to learn they have been outbid and will never have a chance to buy this home. This creates a tough situation for buyer's agents.

Due to the competitive bidding happening in the Seattle market, buyer's and their agents are getting fatigued. Buyers may not even bid on a home they know will likely escalate beyond their reach when they know it is listed below market.

May 4, 2017

Should Sellers get a Pre-listing Inspection?

Should sellers do a pre-listing inspection when the market is buzzing and it is a seller's market?  With homes around the region bidding up with multiple offers, and most buyers waiving the inspection, it would seem a pre-listing inspection is not necessary.  However, a pre-listing inspection can make your home even more attractive to buyers. 

This way buyers don't have to pay $500 for an inspection and they feel more comfortable waiving it.  This also can eliminate pre-inspections and the possibility of having multiple inspectors going through your home before it is under contract. 

A pre-listing inspection also lets buyers know exactly what they are getting.  You, as a seller, have an option to fix the items on the list - which could increase your home's value even more, or you could just opt to sell your home "as is."

"Sellers who have a home inspection upfront also can identify any major problems that could potentially derail a sale later on at the closing table. Any major repairs can be addressed beforehand. Doing repairs ahead of time might also be more cost-effective than having to pay a buyer's own licensed contractor do the work," according to the National Association of Realtors.

If a home is under contract and an inspection is done as part of the contract - often buyers will use the inspection as a way to negotiate the price down.  However, a pre-listing inspection takes that negotiating power away from the buyer's agent. 

March 30, 2017

Things to Know when Selling a Condo

Selling a condo has a few more steps involved than selling a single-family home.  First the seller needs to order a resale certificate, which will disclose to the buyer if there are any impending Home Owners Association (HOA) special assessments for the development.  A special assessment is assigned when there are not enough reserves for replacements in the HOA budget.  For example, if the siding on the building needs to be replaced but was not in the budget, then a special assessment may become the burden for all of the homeowners.  Thus, as a real estate broker, it is very important to read the resale certificate to advise our buyer's of this potential cost. 

Also note, a resale certificate is only typically good for 90 days.  If selling time exceeds 90 days, then the lender may request an updated resale certificate. 

Another important question to ask, is if there a rental cap on the development.  A rental cap is a limit to the number of renters allowed in a condo or development (also known as owner-occupancy rates). If you own a property with a rental cap and the rental cap has been met, you need to add your name to the HOA waiting list before you can rent out your unit. If you are selling you condo, you will want to disclose if there is no rental cap.  A condo development without a rental cap is more desirable to an investment buyer.  Condominiums with low owner occupancy rates, under 51% can also have difficulty obtaining financing. 

If the HOA is well managed, then selling condominium is not a difficult process.  It is important for a real estate broker to help their client through the selling and buying process and ensure the due diligence has been done. 

March 13, 2017

February 2017 NWMLS News Release: Housing Inventory Reaches Record Low, But Brokers Expect Spring Bounce

 

 

 

KIRKLAND, Washington (March 6, 2017) – Home buyers are in a spring mood, but sellers are still hibernating, suggested one broker while commenting about the latest statistics from Northwest Multiple Listing Service. Figures for February and feedback from brokers indicate record-low inventory is spurring multiple offers, rising prices, fewer sales, and frustrated house-hunters.

Year over-year pending sales (mutually accepted offers) declined for the first time since March 2016, falling 8.9 percent. Eight counties, including King and Snohomish, reported double-digit drops in pending sales as the volume of new listings couldn’t keep pace with demand.

During the past three months, brokers have added 17,572 new listings to inventory, down only 5.7 percent when compared to the same three-month period of a year ago. During the latest December-to-February timeframe, MLS members reported 22,393 pending sales, far outpacing the number of new listings.

“Our robust market has created extreme conditions, and we’re seeing frenzy hot activity on each new listing coming on the market,” reported J. Lennox Scott, chairman and CEO of John L. Scott. “We’re also experiencing some of the lowest inventory levels on record,” he noted.

In fact, a check of Northwest MLS records dating to 2004 shows no other month when the number of active listings dipped below the 10,000 mark – until last month.

At the end of February, there were 9,091 active listings in the Northwest MLS system, which encompasses 23 counties. That represents a drop of nearly 25 percent from the year-ago total of 12,107.

“Home sellers and buyers are complaining equally about the current market’s low inventory,” remarked MLS director George Moorhead, designated broker at Bentley Properties. “Sellers are frustrated when they cannot find another home to match their current needs, or when a home goes off market so fast that the option of a contingent sale is not even considered,” he stated.

Buyers have been grumbling about the market for the past two years, Moorhead said. “That mood has escalated into a panic as other buyers up the ante – at times to a level that even causes real estate professionals to shake their heads,” he remarked.

Brokers believe seasonality is a factor, with several saying they are expecting an uptick in listings.

“For buyers, hope springs eternal, but the sellers are still hibernating,” suggested John Deely, the principal managing broker at Coldwell Banker Bain. “We’ve been experiencing continued high buyer demand as the spring market takes off early but sellers are on a more traditional schedule as listings slowly ramp up,” he reported, adding, “Sellers that have come to market ahead of the traditional spring market are reaping the benefits of less competition [from others who are selling] and a highly competitive buyer pool.”

Deely said anecdotal information indicates many sellers are preparing their properties for the more traditional listing time around May.

That expectation was echoed by fellow MLS director Frank Wilson, the branch managing broker at John L. Scott in Poulsbo, and by Lennox Scott.

Scott expects inventory to start rising in March, but he also anticipates the number of buyers will increase too. “It will continue to be a competitive market in the more affordable and mid-price ranges,” he predicts.

“The spring market in Kitsap is a little like waiting for the tulips to begin coming up. We have the buyer demand but the inventory has not started springing up yet,” commented Wilson. “Open houses have a lot of traffic and we are seeing multiple offers on new listings that are priced correctly.”

Wilson noted Kitsap County is seeing an increase in investor type buyers as they anticipate the impact of the new fast ferry system, now in the beginning stages of roll-out. “Access directly to Seattle on a fast foot ferry will have a large impact on Kingston, Bremerton, and Port Orchard, while hopefully reducing the pressure on the Bainbridge Island terminal,” he stated.

“What many don’t realize is that while a lack of inventory might help a seller get more for their home, it has a downside,” according to Wilson. “It can cause potential sellers not to list, appraisals to come in low, buyers to lose out to multiple offers, VA and FHA buyers to take second chair to cash or conventional loans, and a general frustration from lack of choice. A balanced market is always preferable to this unbalanced state of things,” he remarked.

Scott agreed, saying, “Some potential sellers are currently parked in a gridlock position because they are afraid to put their home on the market for fear they either won’t find a home, or they will find themselves in a multiple offer situation. This has stalled the migration pattern of sellers who would normally be putting their homes on the market.”

Moorhead suggested one tactic for buyers, given the historic low levels of inventory, is to start looking below the price point they’ve been considering. “Getting into a home and then moving up in 3-to-5 years is becoming a more common theme as most buyers cannot secure the home they wish to be in long-term. This is a definite shift in mindset since the average homeowner typically lives in a home 7-to-10 years.”

Brokers expect little relief in rising prices.

“Home sellers are benefitting from the perfect storm of market conditions, but as the ongoing low inventory levels and precipitous drop in pending sales indicate, there simply are not enough homes to meet the demand of buyers. All of this is pushing up home prices faster than anywhere else in the country and will continue to do so if we don’t see more homes come on the market this spring,” said OB Jacobi, president of Windermere Real Estate.

“With less than a two month supply of inventory, we will continue to see price escalation,” stated Wilson, who noted prices on closed sales of single family homes and condos in Kitsap County, where his office is situated, are up 10 percent from a year ago. That county has about 1.4 months of supply, third lowest among the 23 counties in the MLS database.

Both King and Snohomish County had less than one month of supply. Area-wide there was about 1.7 months of supply. (In general, four-to-six months of supply is considered balanced.)

Year-over-year prices are up nearly 8.9 percent area-wide, with 13 counties reporting double-digit gains. The median price for last month’s 5,374 closed sales of single family homes and condos (combined) was $335,000. Closed sales volumes rose nearly 6.9 percent from a year ago.

In King County — one of only four counties where the volume of closed sales fell from a year ago – prices jumped 14.1 percent, climbing from $439,950 to $502,000. Despite the drop, King County’s year-to-date total of 3,803 closed sales is running 7.3 percent ahead of the first two months of 2016. System-wide, the number of completed transactions for January and February is up 12.3 percent. Deely believes those figures indicate the “fast pace, high velocity market” will continue to grow in 2017.

For single family homes (excluding condos), the median selling price in King County was $560,000. That’s a gain of more than 8.7 percent from the year-ago figure of $514,975.

Snohomish County prices spiked more than 18.2 percent, rising from $327,500 to $387,250. For single family homes only, prices in that county increased 14.9 percent, from $359,000 to $412,500.

“At this point it appears that those seeking to stay in ‘commuter counties’ that surround the job hub of King County have the best opportunity to do so in Pierce County,” suggested Mike Grady, president and COO of Coldwell Banker Bain. “However,” he noted, “inventories in Pierce County are shrinking at a high rate as well (down nearly 24 percent), suggesting that demand is pushing southward to Tacoma/Pierce County. That will likely cause sales prices to spike in the future, so this opportunity may not last long.”

The median price on last month’s sales in Pierce County rose to $274,950 from $249,250 for a gain of 10.3 percent. That’s about 55 percent of the price in King County ($502,000), Grady noted. Single family home prices (excluding condos) in Pierce County ($280,000) were half the price in King County ($560,000).

Area-wide prices on last month’s completed transactions for condo sales rose 6.2 percent from a year ago, increasing from $275,000 to $292,000. King County condo prices increased 5.1 percent to $340,500.

Condo inventory plunged 33.2 percent, most notably in King County where brokers reported a sharp drop, at 41.5 percent. At month end there were only 759 condos listed for sale, down from the year-ago total of 1,136 units.

Sparse inventory of condos system-wide likely contributed to a 14.8 percent decline in pending sales. Brokers reported 1,063 pending sales of condos during February while adding 915 new listings. A year ago, members logged 1,247 pending sales and added 1,099 new listings to condo inventory.

Asked about recent news reports of immigrants backing out of home purchases in reaction to the President’s immigration policies, brokers had mixed comments.

“While we’re hearing from our brokers about buyer uncertainty related to those holding H-1B work visas (for temporary employees) and those who are undocumented residents, we don’t at this point see a significant effect on the market. Until we have clarity around the Trump Administration’s executive orders on immigration, it’s impossible to know what effect they may have,” said Grady.

Moorhead said there is a “distinct ripple being felt,” but added, “We do anticipate many buyers with the H-1B visa to start cooling their interest until clarity is given to how this new policy will shake out.”

Northwest Multiple Listing Service, owned by its member real estate firms, is the largest full-service MLS in the Northwest. Its membership of nearly 2,100 member offices includes more than 25,000 real estate professionals. The organization, based in Kirkland, Wash., currently serves 23 counties in Washington state.

© 2017 NWMLS

Jan. 19, 2017

Solution Partners NW has Moved to a New Office Location!

 

Hi Everyone!

Solution Partners NW is now located at:

22525 SE 64th Place

Issaquah, WA 98027

Company Phone: 425-460-4423

Posted in SPNW News
Nov. 30, 2016

Buying a Home During the Holidays

Buying a home during the holidays may not top of mind for most people, however, it can be a good idea for several reasons. 

  • Motivated Sellers -  The sellers that do list during this time of the year, typically need to sell, so buyers can take advantage of their urgency and the sellers may be open to negotiating a deal.
  • Less Competition - Because people are busying holiday shopping and spending time with their families, there is less competition to buy a home.  So if you are trying to avoid a multiple offer situation, now would be the time to buy. 
  • Potential Tax Savings - If you itemize your taxes you can deduct any points you paid upon closing, property taxes and mortgage interest paid.
  • Better Interest Rates - Within the general trend of interest rates, there is often a cyclical trend of lower interest rates during the holidays.
  • Faster Closings - Typically at the end of the year all parties are motivated to close deals quickly. The lenders want to close their books, the real estate agents want to wrap up their sales and receive their commissions before year-end, and sellers want to move on to their new home and settle in for the holidays – and you, the buyer, wants to settle in as well.

With the recent election and interest rates poised to rise, buyers should take advantage while they can!

Posted in Buyer Tips, Real Estate
Sept. 23, 2016

Seattle the next San Francisco?

With the water to the west and mountains to the east, geographic constraints, a lack of land and rising in-migration, Seattle real estate prices continue to push higher.  The recent Housing Summit 2016, Peter Orser, Director of the University of Washington's Runstad Center for Real Estate Studies, predicts that eventually the median household price in Seattle will be $1,375,000.  He based this estimate off of current San Francisco numbers and said there is nothing from preventing the Seattle housing market from rising to the same levels.  With high tech companies moving here in droves, and in-migration on the rise, housing prices are already escalating to unprecedented levels and they will likely continue to escalate. 

In the last five years our area has seen:

  •     50 new residents a day
  •     35 new jobs a day
  •     12 new units built a day
  •     The current average home price is $525,000 in Seattle
  •     It takes $82,000 salary to meet the income requirement. In order to afford and meet the debt to income ratio, the buyer should put 20% down which is approximately $105,000.
  •     How long would it take someone making $82,000 to save $105,000?

The future looks like this (below are San Fransisco's statistics).

  •     13% can afford the median price home
  •     $269K required to qualify for a median price home
  •     Median priced home:  $1,375,000
  •     Average asking rents:  $3,595/mo.

“I look at San Francisco as really an image of Seattle’s future because it has the same land restraints, it has the same driving economy that is hiring six-figure millennials,” said Peter Orser, director of the University of Washington’s Runstad Center for Real Estate Studies. “They’re blood brothers; they’re twins.”

 

Based on the historical price increases, it looks like it will be at least 20 years before Seattle reaches the current San Franscisco levels.  While we don't have a crystal ball to know for sure if this is the future for Seattle, it seems we are well on our way to becoming the next San Francisco.  It might be a good idea to buy your investments now and hold on to them for the long haul.

July 19, 2016

Brisk market is fatiguing buyers

Low interest rates, low inventory, multiple offers and rising prices are a combination that is fatiguing buyers in the Seattle market. With this competitive market it can be draining and discouraging for buyers to find the perfect home and then lose out at the last minute due to a multiple offer situation. 

It is especially difficult for first time buyers.  Sellers are wary to accept an offer with only 3% down, due to the financial risks that the buyer may not have enough reserves for things like closing costs, earnest money, etc.  In this situation, buyers need to have a well trained agent who can help guide them through the process.

An agent who is experienced in multiple offer situations, will help the buyer be competitive.  For first time buyers, we recommend they include a pre-qualification letter with the offer, have their lender call the listing agent to alleviate any concern the seller may have with the buyer's qualifications, and write a compelling letter to the seller as to why they want to purchase their home.  These are all ideas that can help a new buyer break into the market.

Another option is for buyers to look further out in the region where prices may not be as competitive or wait until the off season to purchase a home. 

The good news is a "10 percent year-over-year increase in new listings has some brokers with Northwest Multiple Listing Service suggesting a little relief may be emerging." according to the July 2016 NWMLS report.