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Archive for the 'Buyer Info' Category
Monthly Mortgage Rate History 1979 to Now
Bottom line first: It is a RIDICULOUSLY good time to borrow money for a home. Just check out the chart below (courtesy of First American Title) and you can see the interest rates of years past, all the way back to 1979.
If you had to pay the rates today that buyers in February 1982 paid, for the average-price Bellingham home ($336,811 for the past 6 months), even with a 20% down payment, your monthly principal and interest amount would be a gut-twisting $3,997.32!!!
But relax: That same loan amount at today’s rate of 5%, give or take a quarter depending on when you lock, is a back-down-to-earth $1446.46.
It’s true that rates affect prices. If we were in fact paying over 17% for borrowed money, you better believe the average price in Bellingham wouldn’t be in the mid $300K’s.
But no matter how you slant it, once you spend a minute or two looking at the chart below, you’ll realize without any more persuasion that exactly NOW is the time to borrow. 
The Way I Live: Debbie Arthur
For the current issue of the NW Way of Life Newsletter, I spent some quality Q&A time with wife/mom/symphony orchestra flutist/surfski racer Debbie Arthur.
Debbie, along with her husband Morris and their kids Virginia and Kai, make up one of the preeminent family-fixtures in the Pacific NW racing-and-adventure Way of Life.
Treat yourself to a few minutes on Debbie Arthur’s page, check out her inspiring thoughts on her role as a symphony musician, uber-mom, racer, and passionate-about-Bellingham local! Enjoy!!!
Comments: Please leave a comment.Can Value Be Learned?
When I work with buyer clients, there’s usually an “Aha!” moment when they’ve seen a certain number of homes and become calibrated to the market. At that moment, they can sense with reasonable accuracy a home of good value, and they can sense when a home is over-priced. About 8 homes seems to be that magic number for most people.
A couple weeks ago, I got a call from some folks who are living in a rental home that they’re interested in buying. The landlord/owner said they would indeed sell, and that the price would be $350,000.
We talked for a few minutes about their situation and their goals, and we talked about the home. The following Saturday, we met at their rental home so I could properly assess its value.
The landlord/owner had bought it a little over two years ago. It was an MLS listed property that had been on the market for just over one month. They’d paid $240K for it. This was not a fire sale, but a “fair market value” sale.
During their ownership, the landlord/owner has installed new granite countertops, new bamboo flooring and new carpet. The cabinets, hollow-core doors, aluminum frame windows, popcorn ceilings, unfinished garage and cedar channel siding are all original. The 3-tab roofing, cedar decks and “au natural” landscaping are all in need of upgrade or near-future replacement.
Therefore, the owner’s basis in the property — how much they’re into it for — was perhaps $255K. Call it $260K.
Prices have essentially remained flat or decreased slightly in this home’s Bellingham neighborhood since ‘07, so the prospect of selling this house for $350K seems quite… bullish… on the owner’s part. Still, it’s a nice, quiet setting, and the open layout from kitchen to living room has a nice feel, so I could see it going for $279K.
To make my point to the tenants who’d called me, though, I said, “Let’s do a tour.” So the following weekend we hit 8 listed properties ranging in price from $269K to $360K. I wanted them to see what the rest of the market offers in that range between where I felt their rental home truly fits in, and what they could in fact get for $350K.
By the last house, they totally got it. “So, now that you’ve seen these homes,” I asked them, “where do you feel your rental home would price?”
“Two-seventy five, or a little lower,” was the answer. They had become calibrated in one afternoon.
Whether you’re a first time buyer or a 10th-time buyer, looking for a primary residence or an investment, make it a point to see 8 houses during your search. By doing that, you’ll feel good when you see that “value” that calls to you, and you can move forward on it with the confidence that real estate buying deserves.
Comments: 3 Comments »OK, So Can You Low-Ball an REO?
One of the blog’s most passionate fans, Debbie Downer, asks the question: Can you low-ball an REO? This is in response to last weeks’ post about low-balling short sales, where we discovered that, according to NWMLS stats, short sales have been selling for over 98% of list price. The lowest sale price to list price was still above 92%.
So will banks who find themselves owning property dump it at a wholesale price, once it’s listed and on the NWMLS and open market? Let’s look at some stats.
- Number of sold REO properties since August 09, in Bellingham and Sudden Valley: 51.
- Average sale price to final list price ratio for all REO sales in Bellingham and Sudden Valley since August ‘09: 99.62%!!!!!
- Lowest sale price to final list price REO sale: 89.66% (listed for $145K, sold for $130K).
- Highest sale price to final list price REO sale: 126% (listed for $174,900, sold for $222K).
- Number of REOs that reduced their price before finally selling: 17, or exactly 1/3 of the 51 solds.
So are we seeing a low-ball trend here? Not exactly, no. But it begs a little more digging to find a story and a possibility within those numbers…
Some of these properties dropped DRAMATICALLY before finally selling. Like a starting list price of $209,900 followed by a final list price of $164,900 and a sale price of $156,000. Looked at from the starting list price and compressed over time, that looks a lot like a low-ball sale.
So how do you make this happen as a buyer? You work with an agent who has a mutually-respectful relationship with REO agents. You ask your agent if it’d be plausible to call the REO agent and make a case for — and offer to help initiate — a price drop on the REO.
How? Your agent helps supply supporting comps for a lower price, maybe visits the property and take some photos of distressed areas of the home, then sends them to the REO agent, perhaps, who then forwards them to the bank as “buyer’s agent feedback” along with a request for a price drop.
And you have your offer there waiting, and a request to be alerted by the REO agent right BEFORE the price drop goes public. It’s do-able. Remember, these aren’t robots we’re working with here. They’re people.
So yeah, Debbie, in a way you CAN low-ball a short sale. Wanna try it? Call me!
Comments: 1 Comment »Can You Low-Ball a Short Sale?
You’re shopping for a house, and your agent tells you the one you’ve fallen in love with is a “short sale.”
“Cool!” you think. “You can low-ball the ______ out of short sales, and get just a SCREAMING good deal! Right?”
Occasionally, perhaps. But rather than talk about hypotheticals, let’s look at some cold, hard data for Bellingham and Sudden Valley short sales that have closed since last August, and see just how low they’ve sold for in relation to the list price.
- In Bellingham and Sudden Valley, according to the NWMLS, there’ve been 32 closed short sales since last August.
- All but 6 reduced their price before getting an offer.
- The average sale price to list price ratio was a very-NON-low-ball figure of 98.39%!!! (That’s higher than the average for conventional sales!)
- The lowest “low-ball” to occur, was a closing at 92.27% of list price. (That house was listed for $569,000 and sold for $525,000.)
- Fifteen sales — nearly half — sold for 100% or more of list price.
Now, we did have some listings drop, drop, drop their price, and then sell for a fraction of their ORIGINAL list price.
For example, one house started out listed for $260K, and eventually closed for $165K — though its list price was only $169K when it finally closed.
So, to get back to your original question: “Can I low-ball a short sale?” Sure… but, statistically speaking, you’ll likely face a counter-offer from the seller’s lender trying to bring you back up to very near that list price — if they counter at all. Keep in mind, for those 32 that sold, another 37 either cancelled or expired with a “no-go” on the sale.
Comments: 3 Comments »Bring the Noise
Every buyer has their own tolerance level for noise. Once, a buyer from Las Vegas said to me, as we listened to the busy road outside a house I had listed in lower Barkley, “If there’s not a helicopter overhead, it’s not noisy!”
That buyer was in the minority, in my experience. Most Bellingham buyers want a relatively quiet setting, away from busy roads, railroad tracks, flight paths near the airport, firing ranges and quarries. There are homes for sale right now by each of those things, and in almost every case, they won’t fetch the kind of price that a home in a quieter setting will.
Freeway noise is a common one in Bellingham, with the I-5 corridor running right through the center of it all. That being said, there are some absolutely gorgeous properties backing up to or overlooking the freeway, such as on 34th St. above Happy Valley , and on Old Samish Way between Lake Samish and Arroyo Park.
Inside these homes, if they have quality windows and insulation, it can be as if the noise source isn’t even there. Outside, if that’s where you spend a lot of your time, you’ll be joined by the relatively constant stream of background noise from the traffic.
The good news is, all other things being equal, you’ll likely pay about 10-20% less for one of these homes, compared to the same thing in a quieter setting. Keep that in mind, though, if you plan to re-sell in the future. Man-made noise has been affecting real estate for many, many decades, and it’s not going away anytime soon.
Comments: Please leave a comment.Drive Until You Qualify!
I wasn’t yet a home-owner myself the first time I heard the phrase. I was shopping, though, and the phrase instantly made sense. There was no way Heather and I were going to qualify for a home near Boulevard Park, right in the heart of the Bellingham waterfront. It was 2003, I was making $22/hour as a carpenter and had exactly NO savings for a down payment. But we were dead set on buying our own home. And that’s when my agent said it:
“Drive until you qualify!”
In its simplest sense, it means: “The further you get out of Bellingham, the more house you’re gonna get for your dollar.”
If your budget is $225,000 for example, in the core neighborhoods of Bellingham like Columbia or Sunnyland, that price tag is going to get you, on average, a little over 1000 square feet built in the early 1900s. It might have a garage, it might have 3 bedrooms but more likely just 2, and it might have some upgrades. You’ll be walking to downtown, though, and your investment is about as liquid as any you could make in Bellingham over the past year. By that I mean, if you had to sell it, you’d take a hit on the cost of the sale, but you could sell it. Average time on market for the past 6 months is just under 50 days.
But if that’s not enough house, start driving. Head out to Sudden Valley, for example. That same $225K in the Valley will get you a little over 1700 square feet, perhaps as much as 2350 feet. You’ll be looking at houses built in the 70s that’ve been nicely upgraded or that may have water views, or you may be looking at houses just 3 or 4 years old. You’ll have a 15-20 minute drive to downtown, but you’ll have Lake Whatcom beaches and 100 miles of Galbraith Mountain single track and fire road right out your back door. Need to re-sell? Totally do-able, but you’re facing an average market time of 100 days.
Still not enough? Then take a drive. Hit Maple Falls this time. For $225K you can tie up a 4BR, 2.5BA luxury home with over 3500 square feet, including granite counters, tile floors and baths, a jetted tub in the master suite, all on over 1/3 acre, and built in 2003. You’re now pushing 40 minutes to downtown but hey, if Mt. Baker Ski Area is your thing, you’re half-way there when you’re home. Liquidity factor? 222 days on market, average.
Are you getting the picture? If you’re not seeing the level of home you want to live in and you’re flexible on location: Drive until you qualify!
Comments: 2 Comments »Guess the ‘Hood!
Q: If you were hosting guests from out of town, and they wanted a tour of Bellingham’s residential hot spots – the most beautiful, desirable, in-demand and iconic neighborhoods, where would you take them?
I had this very opportunity last weekend, with two different couples who’d fallen in love with Bellingham on previous visits. They were both looking for their “retirement home” or maybe 2nd-to-last home, both in the $500K to $600K range. They didn’t know each other, hadn’t met, and still haven’t met. It was pure coincidence that I ended up showing them a few of the very same homes.
In their price range, these couples could get into any neighborhood in Bellingham, including Edgemoor, Eldridge, Parkhurst, South Hill, Geneva, North Shore, and everything in between. They could shop for panoramic views of the Bay and Islands, Lake Whatcom, the City, Mt. Baker and the Sisters, you name it. And we saw them all.
By the end of the tour, as with every buyer tour, I asked each couple: “If you had to choose a home today, of all the ones we saw, which one would it be?”
Both couples answered without hesitation, and both chose different homes in the exact same neighborhood, not 1/8th of a mile apart. Both homes had dramatic water views. One was built in the late 70’s, one in 2006.
Can you guess the ‘hood?
Comments: 3 Comments »It’s Time to Decide
Economists predict that, as the first quarter of 2010 ends, interest rates are going to start the climb upward. Keep in mind, the beginning of the 2nd quarter also marks the scheduled end of the $8000 and $6500 tax credit for home buyers.
“You can only print money for so long,” is the common reasoning one hears to explain why, eventually, we MUST see the cost of borrowing money get more expensive. (And inflation is expected to start climbing right along with the interest rates).
Still, for now and the next couple months, the still-historically-low 5% range is expected to hold. When that number shoots up to 6%, though, and you still haven’t bought a house, you might be surprised to learn what that extra 1% is going to cost.
Let’s break it down:
Say you’re going to borrow $400K at 5%. Taxes and insurance aside, the principal and interest on that loan are going to cost you $2147.29/month.
Now, take the same loan amount of $400K and see what it costs at 6% — still a historically low rate, mind you!
Here we are: $2398.20. An extra $250.91/month.
If you know you want to buy, but have been waiting for a sign, is the difference of 1% on your home loan a sign worth serious consideration?
Comments: 2 Comments »REO, Short Sale, Distressed?
There’s a lot of buzz in the media right now about distressed properties, foreclosures, short sales, bank-owned homes, repossessed homes, and whatever other names you’ve heard but may not really know the technical definition for.
First, let’s address the term “distressed property.” Does this mean the paint is peeling and the roof needs replacing? Possibly, but not necessarily and not techincally. The term “distressed property” is used in the context of buying and selling real estate to mean a home that is at risk of foreclosure or in the process of foreclosure due to non-payment of taxes or default under the terms of a mortgage.
In plainer English, it means the seller’s been missing payments and Big Brother and/or the lender is going to have a say in any potential sale of the home.
There are two forms of “distressed properties” we see on the regular Bellingham market (and everywhere, really). They are short sale and REOs, or “real estate owned” properties. (When you hear “repossessed” or “bank-owned” that’s an REO.)
Short Sale
A short sale listing is a distressed property where the proceeds from the sale are not enough to cover the closing costs and mortgage balance, as well as back taxes and any other liens on the property. So to sell a house through a short sale, the lender(s) and other lien-holder(s) have to agree to a reduced payoff for the title to transfer to a new owner. Typically, but not always, a short sale seller has begun missing payments and is facing a foreclosure.
I tell every buyer I work with who wants to try to buy a short sale that it’s an absolute coin-toss. Banks can take forever to give approval — or denial — of the sale, and the seller ultimately has the last word whether they’ll accept the bank’s terms of debt-forgiveness (or not). Just today I got a recission from a buyer’s agent after they waited for 7 months for an answer from Bank of America… and we still don’t have the answer. NOBODY likes that situation.
To go after a short sale house, you need the patience of Job and an investor’s indifference if you don’t get it. Right now there are 19 active short sale listings in Bellingham, 33 pending, and in the last six months 27 have sold and 27 have cancelled or expired without a sale. See, a coin toss.
REO — real estate owned
REOs — or real estate owned – are where the foreclosure process is already done, the house has gone to auction at the courthouse lobby, didn’t sell, and now the bank has it back and is listing it for sale. Now these you can buy! If, that is, you beat the other buyers first.
REOs can sometimes come on the market for well below market value and garner multiple offers on day 1. They sometimes offer favorable terms like included closing costs, a home warranty, and occasionally a screaming interest rate if you finance through the selling bank.
Right now there are 15 active REO listings in Bellingham, 10 pending, and in the last six months 33 have sold and 3 have cancelled or expired without a sale.
Drop me an e-mail. I’ll send you a list of all the distressed property listings on the market.
Comments: 1 Comment »
