Brandon Nelson
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Archive for the 'Buyer Info' Category
How Are Banks Like Coffee Shops?
When I work with buyer clients, the conversation about lender selection almost always comes up during our first meeting. It’s a big deal. About half the time, a buyer will make a comment like, “I’ve been with _____ bank for 6 years, so I’ll just use them. They know me.”
I absolutely appreciate the loyalty. But oftentimes I don’t believe it’s a loyalty issue. I think it’s a “Banks and lenders are complicated institutions and I’d rather not go down a whole new road with this home purchase” kind of attitude. I can certainly understand that.
But trust me: It’s not that scary. And furthermore, it’s worth it!
The majority of times, I make this statement to a new buyer: “Even if you’re married to ______ bank and are 99.9% sure you’ll go to them for your home loan, I STRONGLY recommend you also consult with ______ and ______. (It’s no secret that I love the Bank of the Pacific, but even still, consulting with 2 or 3 lenders makes sense.)
Here’s why…
Banks are a lot like coffee shops, especially right now. What tastes like crap and costs $4.50 at one shop might taste like pure heaven and cost $2.50 at another shop right next door. They choose different beans grown in different parts of the world, and that are roasted, packaged, shipped and ground differently. The barristas are well-trained and really, really CARE at one shop, whereas at the other they’re more concerned with quotas and volume served. Two different shops, two TOTALLY different cups of coffee and overall coffee experiences.
And you’ll never know unless you taste-test them both. It’s the same with lenders.
Give each lender the same exact scenario and ask for a Good Faith Estimate on the loan(s) they can approve you for. How do their origination fees differ? How about rates, points, appraisal fees? Where do their appraisers come from? What’s their closing-on-time success rate? How about a guarantee? What’s that bank’s “Texas Ratio?” How genuine and helpful and pleasant is the representative you’re talking to? Do you LIKE them? Does your Realtor like them, and have experience with them? How about your friends or other people you trust?
The answers can be across the board, and perhaps at Lender B you’ll get terrific numbers, but you like the rep at Lender A a lot better. Well… will Lender A match Lender B’s numbers? Perhaps they will, but you’ve got to visit them both to know what to ask.
Even if you’re married to a lender, wander down the block and “stray” just enough to know you’re getting a good deal. Who knows? You might have your eyes opened to a whole new experience with your next home loan.
Comments: Please leave a comment.Beyond Your Range
Most buyers have a price ceiling they’re willing to look “up to.” Sometimes it’s purely subjective, i.e. “We promised ourselves we wouldn’t spend more than $200K, even though we’re qualified up to $300K .”
It’s cool… you set a limit and you’re sticking to it. I got no beef with that.
Sometimes it’s logistical, i.e. “We’re only qualified to borrow up to $200K! Period!”
Wherever a buyer sets the bar, though, I’ll often send them listings for up to 10% or a little more above that ceiling. It’s not that I’m trying to sell a more expensive house. It’s because sellers will usually negotiate AND/OR drop the price if no offers are forthcoming, and we may just get lucky with the timing. If the house is just “IT” and a little above the ceiling, it can be very worthwhile to try to make it work.
Taking a quick look at all Bellingham Listings priced between $275K and $325K that have sold in the past 6 months, we see that:
- There have been 91 sales, total.
- 73 of them — or just over 80% — sold for less than original list price.
- Some dropped their price more than 25% from original list price before selling.
So if you tell me you’re looking up to $300K, and I send you listings up to, say, $330K… it’s not that I’m not listening or trying to up-sell you. I’m just thinking ahead, statistically speaking.
Have a great weekend! Oh, and the data above was compiled from the NWMLS.
Comments: Please leave a comment.Q and A with Carolyn Watson of Core Kinetics Pilates
Every month in the NW Way of Life Newsletter I interview one of the Pacific NW’s most adventurous, intriguing, interesting or just outright FUN people!
This past month I chatted with Carolyn Watson, founder of Core Kinetics Pilates. The business, which started and is still based at 1103 Railroad Ave in Bellingham, is now 3 locations strong having expanded to Anacortes and Birch Bay.
Is Carolyn “the over-achiever’s over-achiever” as friends have called her, or just following her heart wtih unwaivering certainty? Read the Q&A interview and browse a a few photos, then decide for yourself!
Comments: Please leave a comment.Bellingham’s First Snow!
By mid-morning on Sunday, December 13th, big, fluffly flakes starting floating from the sky! Our almost-two-year-old Hayden ran to the window and yelled out, “Ice! Ice!” We handed him a new word, “Snow!” and began bundling up and pulling out the toys.
Check out the photos below from Sudden Valley Marina, and our sledding adventure at Huckleberry Park. Get out and enjoy it!!! It’ll make you feel like a kid again! 
Year to date Bellingham Home Sales
Ahhh… statistics!!! If you love real estate, then you love statistics! Here’s an interesting batch of numbers now: Bellingham home sales, year to date, and a comparison of the same time period in ‘08. This is just good, statistical fun!
2009 Bellingham Home Sales
- Number of homes sold so far: 872
- Average price: $339,132
- Average time on market: 92 days
- Highest price home sold: $2,000,000
- Lowest price home sold: $39,900
- Total dollar volume: $295,723,008
2008 Bellingham Home Sales
- Number of homes sold in the same time period in ‘08: 855
- Average price: $359,952
- Average time on market: 93 days
- Highest price home sold: $3,300,000
- Lowest price home sold: $70,000
- Total dollar volume: $307,759,387
Where would your house fit in?
Note: This session of “Good clean fun with numbers” has been brought to you courtesy of the NWMLS.
Comments: Please leave a comment.Credit Tips from Heidi Goodman at the Bank of the Pacific
Heidi Goodman, Bank of the Pacific
Whenever a home buyer asks for a lender referral, I send them to Bank of the Pacific. The list of reasons is long:
- It starts with their people: polite, informed, intelligent, pleasant people with a customer-centric attitude from beginning to end.
- Their rates and programs are ultra-competitive if not competition-crushing.
- Their application process is refined and effiicient — even pleasant.
- They do not mis-lead potential buyers that clearly do not qualify to buy, but instead will go out of their way to provide a custom-written path to purchase — an outline for the buyer to reach their financing goals.
- They communicate early and often throughout the transaction (communication is the fuel AND the lubricant in the engine of real estate).
- They only use local appraisers (ask any lender where the appraiser for your home will be driving (or flying) in from! Hint: Insist on a local appraiser!)
And the list goes on and on. The bottom line for me is the experience of working a continuous stream of successful transactions with Bank of the Pacific, closing on time or even early, with no excuses, no curve balls… just honest to goodness professionalism and results.
On that note, I asked loan representative Heidi Goodman at the Lakeway Dr. branch – inside the RE/MAX building — to share a few hints on establishing and maintaining credit. She immediately sent me this:
Hi Brandon,
I have some helpful hints on how to improve and maintain one’s credit score.
1) Try and have at least 3 credit trade lines with a 12-month payment history.
2) Do not carry a balance greater than 40% of the actual credit card limit.
3) If you are just starting out, be sure to charge on the card and pay it off each month thus building your credit history.
4) If there are errors on your credit report, address them immediately. It can often take up to 3 months to resolve them and another 60 days for the bureaus to update the information.
I e-mailed back: Heidi, can you explain “trade line?”
Absolutely! Tradelines are just what we bankers call open accounts… so they want to have 3 open active credit cards. If someone is trying to build credit and is under the 40% threshold I would suggest not paying the balance in full each month, but instead keeping a small balance to demonstrate they have the capacity to owe and manage the debt they owe. If the person has an “established” credit history (meaning they have had an open credit card for over 12 months) then I would suggest, if possible, that they pay the balance in full each month. That’s because they have already built their credit history and now want to maintain and improve it.
Let me know if you have any additional questions.
Thanks ~Heidi
The lender plays a HUGE role in the real estate transaction. Choose carefully and wisely after you ask around, shop around, and meet face to face with a few different lenders. My guess is, if you do that, you’ll end up at the Bank of the Pacific.
Comments: Please leave a comment.Is Bellingham Risky?
Warren Buffet defines “risk” as “losing money.” Combine that with one of a million different quotes (or statistics) out there that basically say, “Nothing has built more wealth in the U.S.A. than real estate.”
So is investing in Bellingham real estate risky? Or to re-phrase that: Does it have to be risky?
If you buy a single family or a triplex or a 16-unit apartment building, with a full feasibility period, seller’s disclosures, financial analysis out the ying-yang, rental histories, 3rd party inspections, property management on board, the works… are you STILL taking a risk — or taking a chance on “losing money?”
I just read this quote: “You should recognize that investing is a program for the long-term building of wealth, and it has little or nothing to do with speculation.” –Frank Gallinelli
“Nothing to do with speculation?” So nothing to do with ‘gambling’ or an ‘unknown outcome’ is what Frank is proposing.
Don’t you just so WANT that to be true? I love investment analysis. I have a packaged software program that I use for my clients to create an APOD — or annual property operating data — and a proforma — or a hypothetical analysis on the property’s future performance with a couple assumptions built in. (None of us have a crystal ball, afterall.)
It spits out a tremendous amount of data that goes way beyond the surface-level ‘gross estimated rents’ which — I might gripe — a tremendous number of agents and sellers seem to use to calculate advertised cap rates in this town. (???)
We see properties in Bellingham that cash flow with less than the non-owner-occupied lender minimum of 20% down. We see properties with years of paid-on-time, no-vacancy rental history. We see non-owner occupied property in Bellingham for sale with a seller (bank)-provided 3.99% 30-year fixed rate mortgage.
As an investor, can you do as Frank suggests and, with proper due diligence, eliminate risk from Bellingham investment real estate? Maybe not with just one unit? Well how many, then?
It may take a while, and a near-infinite amount of research and practice, but I aim to find this answer for my clients and for myself.
And I so WANT the answer to be “Yes!”
Comments: Please leave a comment.A Gift Idea for the Serious Adventurer
Bellingham is plenty dark on either end of banker’s hours in the winter months — like now, for example. If you’re like me and head home from the office around 5:30 or 6, and you still want to get some outdoor adventure or exercise in for the day, you better be geared up with some serious light.
Enter Fenix. I first learned about Fenix flashlights from my friend Charlie Buell, the Seattle home inspector and world class blogger. Charlie was over for dinner a couple months back and literally lit up our home’s surrounding forest with his new Fenix TK40.
Recently, Fenix introduced their first headlamp, the HP10. It runs off 4 AA batteries and has four brightness setting ranging from 7 lumens, such as for reading, up to 225 lumens, such as for guiding in a 747! Seriously, 225 lumens is ridiculously bright. The headlamp is rated to cast its beam at that setting for 120 meters, or nearly 400 feet! On top of that, it’s also rated waterproof up to 2 meters for 30 minutes continous lighting.
This is a professional grade headlamp that would be sincerely drooled over by any biker, walker, runner, kayaker — or any home owner who has occasion to traverse the attic or crawl space, or just take the garbage out after hours. The headlamp sells for a totally reasonable price of <$70.
Pick one up for that special someone this Christmas… and grab an extra one for your favorite Realtor!!!
Paying It Off Early: Does It Pencil?
If you’re buying a home in Bellingham or anywhere else in the near future, and taking out a loan to do it, you’d be wise these days to go for a fixed-rate mortgage. Interest rates are STILL historically low, and there aren’t many — or rather, any — economists out there talking about the rates dropping (significantly) anytime soon. (It’s no secret that the opposite is what’s predicted.)
But even a 30-year-fixed rate of 5% on the avergage-priced Bellingham home ($349,654 over the past 6 months) with 20% down, you’re going to pay $260,859 in interest over the life of that loan.
IF, that is, IF you make the “minimum monthly payments.”
Home loans payments are like credit card payments in that you pay the most if you pay the minimum monthly amount. But if you tack on some extra moola each month, that extra moola goes against the outstanding principal. And little by little, it has a DRAMATIC effect on the aggregate amount off interest you pay and the TIME over which you pay it.
One commmon and easy-to-remember techique is to take one month’s regular (”minimum monthly”) payment, divide it by 12 — the number of months in a year — and tack that on before you send it off to the bank. Here:
- In our example, the principal and interest payment amount on our average Bellingham home is $1501.61/month. (That’s based on a 20% down payment and a 5% interest rate, and does not include tax or insurance).
- Divide that figure by 12, and you get $125 plus a few pennies.
- By tacking that on each month, you cut the full-length term of 30 years and 360 payments, down to 25 years 4 months and 56 fewer payments!
- And you SAVE… hold onto your hat… $47,419 in un-spent interest money. Yes, you KEEP that MONEY!
After the now-known-to-be irrational lending and spending behavior that created the over-inflated market of yesterday, buyers nowadays are prudently spending as little as 50% of their qualified limit when they shop for a house. I recently had clients who were approved up to $380K opt to buy a house in the mid-$200K’s.
So… HELLO… it’s probably not that much of a stretch for people like them — and maybe YOU — to tack on some extra $$$ each month to that “minimum monthly payment.” Do it! That tens of thousands of dollars you save will be your own!
Yes, it pencils! See for yourself. Here’s a great mortgage prepayment calculator to see what different amounts of extra payments will save you in time and money.
Comments: 1 Comment »The NEW 3 Most Important Words in Real Estate
Zero points for you if you already thought, “Location, location, location!” If “Location” is everything, why do we even publish prices, since the price wouldn’t even matter if the home was in THE spot! Why have a home inspection and worry about rotten framing and faulty wiring when the home’s address is just IT!?
Because it isn’t ALLLLL about location. That’s just a variable. One of many. And all the variables add up and are processed by a finely-tuned buyer’s “internal algorithm” that determines just the right equation. Location, yes, but also style, condition, orientation, quality, neighbors, setbacks, staging, occupants, price, and more.
So let’s retire “Location, location, location.” And let’s introduce the NEW 3 most important words in real estate:
“Be Here Now!”
I don’t mean, “Move to Bellingham right now!” although you should. I mean BE in the moment of this situation you’re currently facing, not some other situation you read about or remember from way back. Let me give you an example.
I had a listing in Sudden Valley a few months back. It was a gorgeous home, priced right and getting a steady flow of traffic. The sellers and I were feeling confident that we’d get a sale in the following 1 to 3 weeks.
So my phone rings one afternoon and it’s a buyer’s agent, asking me all about the house, the seller’s motivation, any other offers on the table, etc. I asked if her clients were approved for the list price, and she said they were. So I gave her the straight scoop, filling her in on comps, traffic, seller confidence… everything she’d need to pass on to her buyer clients to inspire them to write a good offer.
Later that day, I received the offer: $30,000 less than list price! More than 12% below list. What the….?
I called the agent, but before I could even speak she started in, apologetically: “The buyers aren’t from here. They just moved out from ________ where buyers never, ever offer more than 80% of list price on a home. So it was a stretch,” she said, “to even get them to go this high.”
“Well, Ms. Agent,” I said, “you’re going to have to get your buyers to realize they’re not in ________ anymore.”
And along with the seller’s counter-offer at just 1% below full price, we included a stack of comps, 6 months of data showing that NO houses had sold for the $-per-square-foot price the buyers had offered, and a cover letter thanking them for the offer, but asking them politely to “Be here now.”
They got it, and we closed the sale.
I’m not suggesting that NO houses in Whatcom County sell for 80% of list. They can, and do. But houses are not a commodity in that they all have a unique story. And good agents can dig down on that story and help you create a unique buying strategy to match that house and its sellers. If you get the story, act on it. Be here now. Leave the way it was back in ________ truly back in ________ and Be…Here…Now.
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