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Archive for February, 2011

A Third of Seattle Homes Are Underwater
February 24, 2011 · Written by Brock Dunda · Filed under Real Estate

Underwater MortgageAccording to the news article by the Seattle Times, houses with mortgages in the Seattle metro area now owe more than their homes are worth, from an estimate by Zillow.com.

At the end of 2010, over 34 percent of all single-family homeowners in King, Snohomish, and Pierce counties were underwater on their homes. This is higher than the national figure of 27 percent.

Also shocking is that the region’s rate of increase over the past year is greater than the national increase. Part of the reason this is happening is because homes in the Seattle metro areas were still increasing while homes in other parts of the country were falling. The Pacific Northwest was about a year late in terms of the housing bubble. So what we’re seeing now is homes in the area at levels that Los Angeles was at a year ago.

Negative equity can have a large impact on the housing market, and also the rest of the economy. This is especially poignant where the gap between the home’s value and loan balance is large. There’s a likelihood that owners will default – even if they can still manage the payments.

This is referred to as a “strategic default” where a owner chooses to default on a mortgage. One of the negative effects of strategic defaulting are that it also damages the owners’ ability to obtain credit for other purchases, further reducing economic activity. This also means that they probably wouldn’t be able to buy another house anytime soon which also hinders a housing market recovery.

Using public records, Zillow estimated that over 28 percent of all houses and condos sold in the Seattle metropolitan area in December sold for a loss. That’s up from 20 percent in December of 2009. Snohomish County was hit the hardest where sellers of almost 42 percent of homes in that county in December received less than what they had paid.

The number of sales at a loss will continue to increase as home prices continue to drop. By Zillow’s calculation, homes in King, Snohomish, and Pierce counties are now worth what they were in 2004.

For the original article, please see the Seattle Times website.

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Preparing Your Home For Spring
February 8, 2011 · Written by Brock Dunda · Filed under Helpful Tips

Dust Slipperz!During the winter, your home may have been closed up to stay warm. Over those winter months, with the windows and doors shut, your home may want to breathe in the cool outside air. Lack of air circulation may have left your home stuffy and may have trapped common allergens that normally get circulated out of the home. Below are some tips for opening up your home and preparing it for spring.

Open windows and doors. This lets in the fresh spring air and sunshine. By opening the doors and windows, stale air and stuffiness will be reduced and will give your home new life.

Clean window screens and windows. Over winter, dust and other particulates can collect on the windows and screens, reducing visibility and light that enter the house. Cleaning the windows and screens will give you a more open and airy feel to it.

Vacuum and clean your upholstery, furniture, and draperies. Dust that hadn’t had a chance to escape will collect on surfaces that don’t get cleaned as often as others. Furniture and draperies are a prime place for dust and allergens to collect. Vacuuming and cleaning them will help to remove latent and hidden dust.

Thoroughly clean your ceiling fans, floor vents, and ceiling vents. If your home has a ceiling fans, or other vents, that is a prime area for dust to collect. It can then circulate through the room when you turn them on.

Clean your carpeting with an organic rug cleaner. Cleaning your carpets thoroughly will help to remove any pet odors that may be there as well as dust mites that can cause allergic reactions and leave lingering stale air.

Dust thoroughly. Dusting will further reduce airborne allergens that may have accumulated over the winter.

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How to Sell A Home In a Market That Includes Foreclosures and Short Sales
February 4, 2011 · Written by Brock Dunda · Filed under Real Estate

Home Sales AgreementSo you’re trying to sell your home in the current market. In most situations, one foreclosed home in the neighborhood shouldn’t affect your home price. However, in neighborhoods or areas where bank owned or short sales are more prevalent, it can more difficult as you’ll have to compete with those distressed properties. Your home’s market value is related to distressed sales if those short sales and foreclosures dominate the neighborhood.

Prior to the real estate bubble of the mid 2000’s realtors would often ignore the distressed sales surrounding a home when appraising the home. Since then, appraisers are paying closer attention to distressed sales that have closed and distressed properties that are for sale. How can a regular seller with equity compete?

Pricing a Home With Equity Against Foreclosures and Short Sales

Pricing a home can be difficult at time because it requires you and your agent to look objectively at your home in comparison to those around it. It’s a combination of wearing a seller’s hat and stepping into the buyer’s shoes. It does not matter how much you think your home is worth if all of the potential buyers disagree.

When pricing your home, you and your agent need to try to answer these three questions: 

  • What would make a buyer buy your home over a foreclosure or a short sale?
  • Why would a buyer’s lender appraise your home for more than a foreclosure or short sale?
  • How much more is your home worth than a distressed sale?

The answers to these questions may surprise you. The truth is that your home will not be worth a whole lot more than a foreclosure or short sale, even if you put in upgrades.

Buyers want a good deal. They might buy a home that needs carpeting, for example if adding the cost of the new carpeting still makes that bank-owned home’s price attractive. On the other hand, if your home is in tip top shape, clean, move in ready, as well as priced competitively with foreclosures and short sales in the area, your home’s price then becomes more attractive.

Examine the Foreclosed and Short Sale Comparable Sales

  • Look at similar homes in the area to determine comparable sales. The list should contain homes within a ¼ mile to ½ mile.
  • Pay attention to neighborhood dividing lines such as major streets, train tracks and freeways. Do not compare homes from “the other side of the tracks.” Perceptions and desirability have value.
  • Compare homes with similar square footage if possible.
  • Compare homes that are similar ages. One neighborhood may consist of homes built in the 1960’s, which co-mingle with homes built in the 1980’s. The values between the two will differ. Compare apples to apples.

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Zillow.com Predicts Another Tough Year
February 2, 2011 · Written by Brock Dunda · Filed under Real Estate

Housing MarketIn the current economy, we constantly come across more information and news regarding the volatile housing industry. According to Amy Bohutinsky, VP of Marketing and Communications for Zillow.com, it could take some time for Puget Sound to recover.

Bohutinsky says that as far as the recovery goes, the Northwest is about a year behind the rest of the nation. According to Bohutinsky, home prices in the Northwest peaked in the middle of 2007, in California, home prices peaked in 2005, and across the country in 2006. What this means is that since we were late to reach our peak, we’ll be late to stabilize as well.

Despite sales being up, home values are still dropping. The problem is the excess inventory of homes.

As more foreclosures hit the market more houses will be added to the housing inventory. Until the months of housing inventory starts to deplete, home prices will continue to decrease.

One thing to keep in mind is that certain areas or counties are hit harder than others. For example, year-over-year declines show Seattle down 11.5 percent, King County down 9.6 percent, Pierce County down 7.9 percent, and Snohomish County down 13.3 percent.

In this market, there are a few simple things to keep in mind.

If you’re a homeowner, it only matters to you if you’re going to move right now or you want to refinance.

If you’re a buyer, it means that homes are more affordable than they’ve been in many years, coupled with historically low mortgage rates, it can be a great time to buy.

If you’re trying to sell your home, be realistic about pricing. An overpriced home will sit on the market indefinitely unless the price is comparable to others homes on the market.

To see the full article and interview with Amy Bohutinsky, please see the King 5 website.

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Why Should You Use a Professional Real Estate Agent?
February 1, 2011 · Written by Becki French · Filed under Helpful Tips, Real Estate

Agent HandshakeThere’s a good reason about 80 percent of homes are sold with the help of a Real Estate Agent. Below are some of the ways that Real Estate Agents help the buying or selling of a home be a straightforward and manageable process.

Setting the right price. One of the very first things a Real Estate Agent presents to a home seller is a Comparative Market Analysis or CMA. The CMA is a report that analyzes the current market trends and recent sales prices within a given area. This report is an important tool that helps the agent determine a fair and reasonable price. Setting the right price is absolutely crucial in home sales, especially in this market. Sellers who utilize a Real Estate Agent, on average, receive 20 percent more for homes compared to those who sell on their own.

Neighborhood knowledge. A Realtor has a better understanding of what buyers can get for their money in the neighborhood they want to buy in. The agent will have information available about the neighborhood and be able to offer guidance and advice to their clients. Agents have information about the neighborhood including noise levels, schools, shopping, property taxes, local amenities, and demographics. For sellers, these details are equally important as they affect the value and marketability of the home.

Marketing expertise. Along with the CMA, a Real Estate Agent will typically present sellers with a marketing plan that details what they will do to sell the home. This may include open houses, internet exposure via large home search sites, fliers, brochures, placing ads in various media including social media, and showing your house to potential buyers. Agents also have access to two extraordinary resources that are critical to selling a home: other agents, and the Multiple Listing Service (MLS).

The MLS and the other agents. The multiple listing service (MLS), is a database of all the homes for sale by Real Estate Agents in a particular region. Once a home is listed, information about it can be accessed by those Real Estate Agents and matched to buyers. You are engaging the efforts of not just one person, but hundreds to sell your home. According to the National Association of Realtors, 82 percent of homes are sold through an agent’s contacts.

Objectivity. When selling, a Real Estate Agent can provide an unemotional analysis of the home and what needs to be enhanced to make it more appealing to buyers. Buyers who choose to utilize a Real Estate Agent will benefit from the agent’s objectivity. Real Estate Agents can provide an unemotional analysis of a home. They will determine any enhancements, modifications or remedies that might be needed to efficiently buy or sell a home.

Efficiency. With the expertise of Real Estate Agents a transaction will be more efficient. Buyers will be shown homes in relation to their needs and qualified loan amounts. Sellers will be best served by Agents objectivity in preparing their home for the market.

Contracts. Realtors can complete the purchase and sale agreement and are knowledgeable about the correct forms needed to accommodate the transaction.

Negotiation and closing assistance. A Real Estate Agent can provide advice for both buyers and sellers about whether to accept an offer, or counter-offer. Real Estate Agents know what a home is worth and what a fair price to offer or to accept is.

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