Windermere Woodinville Blog

Extension of Closing Date to “On our Before “a certain date is not favored language.  Who determines the “before” date? Buyer?  Seller?

On or before not good unless the parties say how “before” is determined, e.g., mutual agreement?  These sort of ambiguities can lead to to unnecessary misunderstandings  in the transaction.  Careful drafting and the use of NWMLS forms would be best.  See Form 22Y, below.

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Alan L. Pope, SRA, CRP,  Real Estate Appraiser and Consultant since 1974. Over more than 2 decades, he has managed, trained, organized, and implemented appraisal policy to provide clients with the highest quality appraisal reports and professional expertise.

On November 19th, Mr. Pope addressed the Premier Properties breakfast attended by agents marketing high end homes.  Here are some highlights from his presentation.

• Values today are back to the fall of 2005.
• The market started to fall in late 2006/early 2007.
• Our strong appreciation started in 2004.  The writing was on the wall.
• If you look at the last 40 years of history, it is rare to see the appreciation we saw last for over 3 ½ years.

• Relocation companies are driving much of the market; they are making business decisions with no emotion. They value properties at a decline of 1 ½ percent a month.
• Pricing will cure the market. Get it right at the beginning: list 3% below market value.
• Convince the sellers that they will make money on the buy (if buying in this market or others).
• Problems and issues in properties are magnified in a declining market, the seller has to make sure the house is in near perfect condition.
• 2009 won’t see much change, the market will continue to be volatile. There is too much inventory, we need to convince sellers to lower prices.
• Slow housing starts, no more new big plats will cause a lack of inventory, but when …2011?

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Take a hand in drafting

You’re a real estate agent.  You’re representing a buyer client.  Your buyer chooses to buy a property that has been through foreclosure and now belongs to a bank (lender).   In the Woodinville area you would use Northwest Multiple Listing Service forms to put together the offer. 

Here’s a caveat. With more bank sales of foreclosed properties watch for bank addenda that change, amend, or override the NWMLS forms.  Your buyer’s rights are usually weakened by the bank addenda which are very seller friendly.

Special contract language will be needed in the buyer’s offer to deal with things like:

• De-winterizing the home, read, get the water turned on to see if there are leaks.
• Allow a buyer to terminate if they cannot get financing (bank forms are very seller oriented and attempt to take away the financial contingency).
• If there are repairs and the buyer pays a portion (by bank form requirement), put a cap on buyer required contributions or allow buyer to exit if they don’t want to pay for large repairs.

Language Might Look Something like this …

Be sure to consult your attorney to review such language.

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Several real estate companies in our State operate with “franchisees.”  There is a main service company and then there are the independently owned offices.  The individual offices carry the common brand and find advantage in the advertising and reputation that the mother company generates for that brand.  Other than brand, there are other services the mother company can and does provide: e.g., education, bridge loan programs, web sites, marketing, a common charitable foundation.

In these challenging times what can the services company, that is, the mother company do to help out the individual owners?

• As budgets tighten for the franchise owners, some sort of deferral program on franchise fees could be discussed.  The owners need every cent to meet basic overhead.
• Now might be the time to cut costs by making the inevitable move away from a print media advertising.  Owners and the mother company should replace the traditional advertising in newspapers by buying only ads that direct potential clients to our web sites.
• Establish a “commission” fund that allows owner/brokers to tell buyers that if buyers go ahead with a home purchase (despite fears of buying when the market has not yet bottomed) that the brokerage will sell that home, charging no commission, if the value has appreciably dropped in the next year.  The “commission” fund is needed to pay those agents who may have to make good on this company promise.
• The mother company could help with recruiting.  This is a great time for strong companies to attract good agents from real estate firms closing doors and cutting back.  The services company could put some resources into advertisements that help the individual owners attract those productive agents looking for a new home.
• Now is the time to innovate.  When other companies talk survival, the mother company could talk industry leadership and innovation.  We think particularly here of innovations that save individual owners and their customers time and money. 
  • For example, the mother company could emphasize the use of electronic signatures to save clients gas money, time and inconvenience. 
  • The services company could emphasize and lead the franchisees into web based transaction storage and managements systems.  The company could announce the beginning of paperless real estate. With this innovation, paper costs are cut, storage costs are eliminated, client file access is greatly enhanced.  There are many advantageous to digital transaction systems.
  • The services company could innovate with long distance education technology.  Using closed circuit television systems the all-important education tools can be brought to franchisees throughout the state without the necessity of driving into metropolitan area classrooms.
  • The mother company could upgrade it’s own web site entry portal.

Mainly the services companies might think about bearing some of the financial pain with their franchisees and gaining public attention by leading the industry in cost saving, efficient and client convenient tools.

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Thanks to my own self-centered predilection to judge others - and the world - and thanks plenty to the sensational reporting of the media … it’s easy for me to concentrate on the negative, the wrong-headedness of leaders, the injustice of the judicial system, the misguided economic policy, the incompetents in sports management, the tyranny of bosses and so forth. 

It’s especially easy for me to concentrate on bad news in the real estate market.  While I must adjust to realties, I don’t have to let them defeat a winning spirit.

Knowing myself and my weakness, I vowed this week to avoid focus on what’s wrong with the world and the market (a bitter focus which brings resentment to my heart and handcuffs my creativity) and instead I made an oath to follow the words of Philippians 4:8:

“Whatever things are true, whatever things are noble, whatever things are just, whatever things are pure, whatever things are lovely, whatever things are of good report, if there is any virtue and if there is anything praiseworthy – meditate on these things.”

Chin up. Smile and meditate on the blessings all around.  Thanks for reading our blog.

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Matthew Gardner

Mr. Gardner is a land use economist and principal with Gardner Johnson Land Use Economics and is considered by many to be one of the foremost real estate analysts in the Pacific Northwest.  He prepares reports for the Windermere Services Company.

He is also a member of the Pacific Real Estate Institute; sits as a trustee for the Washington State Center for Real Estate Research; the Urban Land Institutes Technical Assistance Panel; and represents the Master Builders Association as a Director on the Board of the Building Industry Association of Washington.

Here are highlights (the more positive ones) from Gardner’s third quarter 2008 report to Windermere.

• Our region continued to add jobs in the 12 month period ending September 30, 2008.
• We see some slowing in our economy and the number of counties that reported negative year-over-year growth increased to 6 from 4 in the last quarter. Even so overall employment was up by over 9,000.
• The economy is unarguably in a recession.
• It is our opinion that mortgage rates will remain benign through 2009 and trade in a fairly narrow range.
• Look for additional federal assistance that could provide government guarantees for up to $600 billion of home mortgages to help prevent foreclosures. This, if implemented, would add much-needed stability to the housing market.
• On optimistic note, we saw price increases in Island County and limited negative growth occurring in King, Thurston, Whatcom and Kittitas Counties.
• The underlying value of residential real estate is still positive with our market still being, on average, 38 percent more expensive today than 5 years ago.
• We all understand that these are troubling times, but I believe that we will start to see the clouds parting around the middle of 2009.

 

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Here’s some good news:

Here’s some sobering news:

The Norwest Multiple Listing Service issued its report on November 6, 2008, giving the state of the market.  Here’s a summary.

• Sales off. October’s pending sales fell more than 27 percent from the same month a year ago, and dropped nearly 26 percent from September. All counties reported double-digit drops.
• Buyers in stays. A unique and historic combination of events has frozen many buyers. The daily roller-coaster of events in the financial sector this past month has understandably caused a high degree of uncertainty with buyers and sellers alike.
• Stock market turmoil. Others pointed to the stock market turmoil and misperceptions about the availability of mortgage loans as restraints on activity.
• Listings slow. Listing activity also slowed during October. The total was the smallest number added to inventory since December 2007.
• Prices lower. Prices followed the downturn. For closed sales of single family homes and condominiums combined, the median price system-wide went down 7.4 percent from a year ago and down 1.3 percent from Sept. 2008.
• A good time to buy for some. Despite market volatility and shaky consumer confidence it’s important to understand that advantageous market conditions currently exist for:
  • first time buyers,
  • move up buyers, and
  • investors.
• Interests rates favorable. Interest rates are at historic lows for conforming and FHA loans and a variety of great mortgage options are available,
• Waiting for a sign. The public is waiting for a sign that all is going to be okay. NWMLS leaders agreed consumer confidence will take time to rebuild, but are optimistic,

Thanks for reading this blog.  Have faith.  The market runs in cycles.

Here are some notes from the Urban Land Institute (ULI) Fall 2008 meeting in Miami Beach, Florida, October 27030. ULI, it is a non-profit organization devoted to leadership in the responsible use of land. It’s nearly 75 years old, with approximately 25,000 members in the Americas, Europe and other spots around the world.

The comments here relate to the general state of the United States economy.  The remarks are from Paul Volker, former chair of the Federal Reserve Bank of the United States.

“The U.S. is already in a recession.  The recession may end up being relatively shallow thanks to recent interventions by the U.S. government, but it is likely to be long. Some say up to three years.

“We find ourselves in a financial pickle because country-wide we consumed more than we produced; as a people we saved less and less; as a nation we went deeper and deeper into debt.

• “Consumption as a percentage of GDP is way up.
• “Personal savings as a percentage of GDP is down to almost zero.

• “Total U.S. debt [including non-government] as a percentage of GDP is up
  • 1960’s – 40-50%
  • 1990 – 70%
  • Today – 110% !!!

“Today, the U.S. financial system is essentially nationalized, all in a matter of weeks.

“On the other hand, there is very little comparison in today’s situation to the Great Depression – we are not headed there.

“In summary, once this major correction is over, U.S. consumption will fall back into more historic patterns, i.e. at far less levels than was experienced in the 2003-2007 period.”

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Good ideas in your head

 Here are some notes from the Urban Land Institute (ULI) Fall 2008 meeting in Miami Beach, Florida, October 27-30. The comments here relate to the resort property market and how to weather the slow market storm.

ULI, it is a non-profit organization devoted to leadership in the responsible use of land. It’s nearly 75 years old, with approximately 25,000 members in the Americas, Europe and other spots around the world.

“Because of this massive upheaval in capital markets and the economy, the buyer that used to spend $1 Million on resort real estate is now looking for $600,000 real estate and the $2.0 Million buyer is looking for $1.0 Million property.”

• “Do everything you can to reassure your existing property owners and prospective buyers, and re-contact all of those prospects very soon.”
• “Adjust your marketing plan to protect existing price points, not to support current sales volume at any price.”
• There is no simple answer to this mess, so stay with the fundamentals!
  • “A positive attitude must be your top priority throughout your organization EVERY day.”
  • “Take the best possible care of existing owners and members.”
  • “Do everything you must do to avoid tarnishing your brand.”
  • “Emphasize to your core market, the Baby Boomers, the notion of “QTR” or Quality Time Remaining. The notion of quality time remaining is a point that must be strongly emphasized at least by your sales team if not also in your marketing material. Given this perspective for someone who is 55+, who cares if you miss the exact bottom of the real estate market by 5-10%
  • “Be face-to-face with your owners, your customers, your bankers and your investors RIGHT AWAY! Go see them; don’t wait for them to ask what’s going on!”
  • “Stay sharply focused on the fact that development of human settlements is our business. Our business is NOT just selling real estate.”
• “When the recovery finally comes, the first three years of the recovery will be so strong it will take your breath away.”

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