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Archive for the 'Buyer Info' Category
Would You Buy a Stigmatized House?
When a client is interested in a house that’s been on the market a while — or if a house suddenly drops its price by 50% — I usually start with a call to the listing agent. After a quick back and forth of pleasantries, I cut to the chase: “OK… the house on XXX Avenue: What’s the story?”
I did this twice last week, and by the time the agents had finished telling their respective tales, I…. well, let me paraphrase their stories and you can judge for yourself.
The Horror…
Ironically, both these Bellingham properties are priced at +-$150K — a bargain basement price for B’ham.
The first is a fixer house and a detached shop with an apartment upstairs. Seemed like a pretty good deal to a buyer a few weeks back, so he tied it up, I was told. Then he arranged for full access and made his way into the shop.
Hmmm, funny smell, he thought. The plantation of marijuana plants littered around were likely contributing to the odor… but that wasn’t all.
The buyer marched upstairs to the apartment. And there before him lay the bloated corpse of the once-tenant/once-pot farmer. A shotgun lay nearby. The odor, it would seem, was quite overwhelming by then.
The buyer rescinded his offer, and to this day the house remains an “active” listing.
The second is another fixer house on a nice 2-acre parcel. Not bad for $150K, you might think. But the story the listing agent laid out for me had me half-laughing, half-crying, and all running away from this property.
Since the listing began a short month ago, he said, there have been two dog attacks on buyers and Realtors by the neighbor’s dogs.
The home’s septic system is of the “home-spun” variety, and happens to be leaking into the nearby creek.
That same creek, it turns out, is the home’s drinking water source. And Yes, it tested positive for ecoli.
It gets better.
There’s a commerical shooting range just across that creek and, in the words of the listing agent: “It sounds like Iraq whenever I’m showing the house!”
Oh, and did I mention that the home is 100% un-permitted and 100% un-financeable? And this is what’s KNOWN about this gem of a property…
These are example of what you’d call “stigmatized” properties. In the case of the first one, even fixed up, when buyers learned the story of the pot farm and suicide, that might (read: would likely) turn them off from buying it. Yes, some investors say, when they hear stories like this, “I smell money!” But are you the ONE who wants to take that chance? (Interestingly, a seller is NOT REQUIRED to disclose suicides, murders, or other felonies that don’t leave toxic residue behind for future occupants (like meth labs leave)).
In the case of the second property, even if you could clean up the septic and water situation, you can’t remodel a neighbor and their guard dogs, nor can you easily shut down a long-standing, commercial firing range.
My advice: “Let it go…”
There are enough great properties on the market — even if for a little more coin — to avoid making these sellers’ problems into your problems. Here’s to hoping you buy something that excites you and inspires you, rather than something you need a HAZMAT suit and experience as a Navy SEAL to be safe in.
Comments: Please leave a comment.“Papa, hold my applejuice!”
Heather and I can be a little over the top about our boy Hayden’s “Birthdays!” On November 21st, Hayden turned 21 months old!!! Now THAT is cause for celebration!
To honor the occasion, we caught our boy wonder on video “Storming the Rec Room!” If this doesn’t make you smile on a blustery Sunday, I don’t know what will. Enjoy:
The Path
I refer a lot of my clients to the Bank of the Pacific for their home loan. Their numbers, service, success rate (actually getting final funding approval so we can close!) and depth of expertise is — in a word — AWESOME!
I recently had a client who started with another lender. The experience basically went like this:
Lender, for a MONTH: “It’ll be fine! Everything looks good! It’ll be fine!!! Here’s documentation saying so…”
Buyer, seller, me: “OK.”
Lender, a month and one day in: “Oooohhh, sorry. We can’t help you after all!”
With a lot of lenders, this isn’t that un-common of a story these days. But in hindsight it could’ve been prevented. The “Sorry” answers could’ve been determined on day 1 or 2, it turns out.
And when we moved the file to the Bank of the Pacific, they saw that almost instantly — inside the first day. These buyers are not quite qualified to buy. But being the professionals they are, the Bank of the Pacific team within hours had reviewed 100% of the buyers’ financial documentation and created a path to follow to be able to buy in the shortest amount of time. It looks a lot like this:
- Have your 2009 tax returns prepared and ready to file in January 2010
- Ask your accountant about the option of depreciation as something to focus on in your expense column of the return.
- Look at the option of paying off the truck and not including this as an expense on your 2009 tax return.
- Continue to work with your legal advisor on paying off the small collection accounts
- Work to get your debt to income in the 44-48% range
- Try to not have any additional credit reports pulled since this can reduce your credit score. Typically, after 60 days, your credit score will recover from any negative reduction due to credit inquiries but it is best to avoid them in general
- Please call me at any time over the next several months if you have questions or wish to brainstorm. That is what we are here for!
With this list the buyers CAN and WILL travel the path from where they are to where they want to be: In their own home. On one hand, it’s a simple bullet-pointed list. On the other hand, it’s a formula to the realization of a dream. And as the Bank of the Pacific understands… that’s an incredibly beautiful thing!
Comments: 1 Comment »National Home Buyer Stats
I was just over on www.Realtor.org and saw this list of interesting statistics, so I thought I’d share:
Regarding the median home buyer:
- Number of weeks searched: 10
- Number of homes seen: 10
First-Time vs. Repeat Buyers:
- First-time buyers: 41%
- Repeat buyers: 59%
- Median age of first-time buyers: 30
- Median age of repeat buyers: 47
Buyers who definitely would use same agent again: 70%
Actions taken as result of Internet home search:
- Drove by/viewed a home: 77%
- Walked through a home viewed online: 63%
- Found agent used to search/buy home: 27%
Information sources used in home search:
- Internet: 87%
- Real estate agent: 85%
- Yard sign: 62%
- Open house: 48%
- Newspaper ad: 47%
- Home book or magazine: 30%
Statistics tell an interesting story. As someone in the business, I’m constantly reviewing stats of home sales, prices, where buyers learned about a house for sale or an open house, which advertising dollars pay off versus those that don’t, why some homes sell, some sales die while other sales succeed, and on and on.
Stats are like rules. And like my dad said twenty years ago when I asked him if he’d read the complete rule book for the game of golf: “Of course. Knowing ALL the rules can only help you.”
Comments: Please leave a comment.7 Key Questions to Ask a Lease/Option Seller
I got a call yesterday from a friend who’s considering buying a house… or leasing it, depending on how you look at it… with a “lease/option” scenario. I’ve closed two lease/options this past year, and since the house she and her husband are considering is a FSBO (for sale by owner), I e-mailed her these questions to ask the seller right off the bat. This, of course, presumes my friend and her husband have looked at the house and are interested in pursuing it.
1) How long of an option period are you willing to give us? 1 year? 2 years? More? (Longer is better for the Buyer, while quicker is better for the Seller.)
2) Assuming you have a price in mind, how did you come up with it? (This is always a favorite question of mine to ask of as FSBO seller. An actual “CMA” or “BPO” or Appraisal would be good. One way or another, you the Buyer need to know the value of the house beyond just what the Seller “wants”.
3) How much of an option fee will you require? One of mine this year had a $10,000 fee, the other had a clean-up of a storage building and the land in lieu of money.
4) Will 100% of the option fee will be credited toward the purchase price and/or Buyer’s closing costs?
5) How much will the rent be? And if the option runs for longer than 1 year, what will the rent be the 2nd year?
6) How much of each month’s rent will the Seller credit toward the purchase price or contribute to Buyer’s closing costs. The more the better for the Buyer, but less tends to inspire the Buyer to actually close the transaction.
7) Will Buyer and Seller split the costs of an attorney to review the contract? (Even with Realtors involved I think lease/options deserve an attorney review. There are a lot of What if’s? to be addressed, and a tight contract is a good contract.
These are essential terms to understand at the outset of a lease/option transaction. They’re not as straight forward as conventional transactions, but they can open the door to home ownership for someone who may not have the ability to close right away. If you’re interested in trying to buy OR sell with a lease/option, give me a ring. I’ll walk you through it and we’ll see if it’s right for you.
Comments: Please leave a comment.Money by Christmas!
By now you’ve heard that the $8000 1st Time Home Buyer Tax Credit has been extended to mid-2010! What you may not know is that you do NOT have to wait to file your 2009 taxes to get your $$$.
Intrigued? Read on…
IRS Form 5405 — the specific form you’ll use to apply for the credit — states right on it that you can amend your 2008 return and get your $$$ NOW! Heck, you could have it before Christmas ‘09 (it seems.)
If you’ve already closed on your first home (or first home w/in the past 3 years), or are scheduled to close anytime between now and June 30th, 2010, you might choose to file right away for your $$$.
Click HERE to access the proper IRS Form 5405.
Click HERE to read a list of Frequently Asked Questions about the Tax Credit!
And when you DO get that $$$… don’t spend it all in one place! 
Sudden Valley Lot Sales… NOT!
I got an e-mail from a friend today asking about Sudden Valley lots, and whether she could pick up a few at a good price to perhaps sell them at a modest profit a year from now.
I live in Sudden Valley, and I LOVE Sudden Valley. But one thing I would have a hard time putting money into right now is a Sudden Valley lot, much less a handful of them. They’re not liquid, meaning, they are NOT selling. Which makes them a good deal as far as price, sure — simple supply and demand. Let’s look at some numbers:
- Current number of Active lot listings in SV: 90
- Number of Pending lot sales in SV: 0
- Number of lot sales in SV in the past 3 months: 0
- Lowest Priced Lot: $10,000
- Highest Priced Lot: $400,000
- Average Price: $59,497
- Average # of Days on market: 424.
- Click HERE for a print-out of ALL Active, Expired, Cancelled or Sold lots in the past 6 months.
Yes, those Pending and Sold numbers are zeros. NOT ONE lot sale is pending in SV, according to the NWMLS right now. And when nobody’s buying something, you can rest assured you haven’t seen the bottom yet.
But let’s say we’re at the bottom, and you could pick up a lot for $3000. There aren’t any banks lending spec house money right now, so that’s not an option unless you have cash. You’ll have to pay monthly Sudden Valley dues on that lot, and taxes.
But here’s the big kicker: You’re in Whatcom County, not City of Bellingham, and you’re in the Lake Whatcom Watershed.
So what? I’ll tell you so what. You could wake up tomorrow, the day after you close on that bargain Sudden Valley lot, and there’s an emergency moratorium on any and all building or lot development in the watershed. Period. It’s happened before, and one of these times it’s going to stick and anybody with a bunch of money tied up in lots is going to be sorry. VERY sorry.
I do NOT recommend buying and holding land in the Lake Whatcom watershed, much less Whatcom County in general, unless you’re doing it to preserve it as green space out of your love for the planet. Then you’ll be fine.
Give me a quick shout or e-mail if you’re interested in knowing what I WOULD invest in right now. And I’ll let you know what my friend decides about Sudden Valley…
Comments: Please leave a comment.15 Simple Things Whatcom Middle School Students NEED!
This e-mail just hit my inbox at RE/MAX Whatcom County, and I had to pass it along. Last week, Whatcom Middle School was destroyed – along with the students’, teachers’ and staff’s belongings inside. And now they’re asking the community to help.
Here’s a direct quote from the e-mail:
“Below is a list of items that are needed – some of these kids that lost everything are also low-income families so this is an even greater added expense for them that is not affordable.
- pencils
- lined paper
- graph paper
- spiral notebooks
- calculators
- rulers
- pens
- dividers
- binders
- glue sticks
- markers
- planners
- scissors
- back pack
- Sharpies (black).
All of the items collected will be donated on behalf of RE/MAX Whatcom County and all its Realtors & Staff. Please help out if you can. Money is also welcome but the actual supplies are what is urgently needed.”
My offer to the readers of this blog:
I will personally match all blog readers’ donations up to $100.00. AND… I’ll do the shopping and handle the delivery of all items we can collect or buy by Wednesday.
Just shoot me a quick e-mail at brandon@nwhomes.net or call me at 360-319-0696, tell me the exact donation you’d like to make, and we’ll square up when we’ve made the delivery.
Let’s show our local Bellingham students and their families that we sincerely care about getting them back to learning as fast as possible!!!
Comments: Please leave a comment.Good News, Bad News
On Thursday in Bellingham the wind blew like mad, gusting to over 64 mph this afternoon. Friends paddled stand up paddleboards on the Bay and surfskis on Lake Whatcom, and that brings a huge smile to my face. Good news.
While the wind blew in Bellingham, the House of Representatives signed off on the tax credit extension, and since the Senate has already signed off on it, that leaves only President Obama to give it the thumbs up. I believe he’ll do just that, and first time buyers and move-up buyers will have until next May 1 to bring a house under contract and receive a substantial tax credit. Good news.
But alas, both these stories were balanced by a sad event today, the destructive fire that roared through the Whatcom Middle School building in downtown Bellingham. Built in 1920, the beautiful structure was being retrofit for seismic stability to preserve its place as a Bellingham icon for decades to come. But that dream is gone, as the structure was considered ”a total loss” as I heard it.
School for the 580 attending students has been cancelled until next week Thursday, so temporary venues can be established to hold class. There will obviously be a lot more information coming forth in the next few days, but one thing right now we know for sure: Bad news. Sad, bad news.
Comments: Please leave a comment.A SWAG, A Bid, and What’s In Between
I took part in a tremendously educational meeting today inolving a professional remodel contractor, a home buyer, and the house she’s considering buying.
The buyer had hired the contractor to walk through the house while going over a bullet-pointed list we’d created of all her remodel ideas. The goal was to end up with a reasonably accurate price range so she could make a decision about the house.
For just over an hour we toured the house, inside and out. Occasionally the buyer or I would get too specific, such as talking about whether to go with bamboo flooring or maple. “For the purposes of what we’re doing here today,” the contractor would reign us in, “they’re close enough in price that it’s a wash. Next item…” He did a fantastic job of keeping us at the right “depth” and in doing that he maximized his time and my client’s consulting dollars.
We’re talking about a pretty major remodel here, including the following and more:
- Full kitchen reconfiguration and new everything;
- Knocking out or moving 3 to 4 major walls;
- At least 1000 square feet of new hardwood flooring;
- Full bathroom reconfiguration;
- Replacing 5 to 8 fixed glass picture windows with opening casement windows;
- Adding a complete master suite above the garage;
- Transforming a heavy texture into smoothwall and repainting the entire sheetrock surface;
And so on. Full remodel, to be sure, on an already-very-custom home.
At the end of the hour-long tour, the contractor took 15 minutes to work up some numbers and do some math, then he sat us down.
“In estimating costs for a project like this,” he began, “you have a gauge. On the far left you have a S.W.A.G. — scientific wild-ass guess. On the far right of the gauge, you have a bid.”
He explained that, when his company actually “bids” a job, they know E-V-E-R-Y-T-H-I-N-G. Exact cabinet dimensions, materials, drawer joints, hinges, pulls, counter-tops and back-splashes, appliance makes and models, electrical layout, fixtures, right down to the CFM of the stove exhaust fan. EVERYTHING! Otherwise they can’t accurately bid the job.
That process, he explained, takes dozen and dozens of hours, and involves members of the design team, sub contractors, estimators, suppliers, engineers, the whole team. All by itself, a bid is a major undertaking, and that’s why most contractors won’t do them. They instead try to sell customers on “time and materials.”
On the other end of the scale is the S.W.A.G… and that’s a number based solely on a brief look and whatever experience the guy giving it can rely on. It can easily be off by 100%. Easily.
In the middle, you’ve got an estimate. And that’s what we had hired the contractor to deliver, in no more than 2 hours on site. And he absolutely did, within a 15% margin, he explained. And that was close enough for this buyer to make her decision.
My point in telling you this story is that, the next time you ask any service provider for a price, be clear as to where on the gauge the price is coming from. Be CRYSTAL clear. SWAGs and Bids are a world apart.
Comments: Please leave a comment.
