Top 4 Deal Killers for Homebuyers

Falling in love is exhilarating. It can also be a bit scary, especially when a home has captured your heart. What if something goes wrong and you end up not spending the rest of your life with this stack of brick and mortar you're lusting after? 

No matter how careful you are, some deal killers are unavoidable. Others, however, are preventable, so pay heed if you hope to keep your deal alive. 

1. Don't Mess with Your Mortgage Pre Approval 
A common reason for a real estate deal to fall apart is that many homebuyers don't fully understand the mortgage process. Sure, you may get a loan preapproval, but don't think for one minute that this guarantees you will get the loan. It doesn't. 

Here's what happens after you receive your preapproval letter and decide to move forward with the purchase. The lender will start your file, give you a list of paperwork required, order an appraisal and credit reports, verify your employment and income, and more. 

The file is then sent to the processor who will review all of your information as well as the appraisal. He or she will then put together a package of all pertinent information to be sent to the underwriter. 

The underwriter is the person who ultimately determines whether or not you are an acceptable credit risk. He or she will assess your ability to repay the loan, your credit, and the collateral used to secure the mortgage - in this case the collateral is the home. Then, just before funding the loan, the underwriter will perform what is known as a "soft pull" of your credit information to see if anything has changed. 

This is the point where many borrowers run afoul. If you hope to keep your purchase alive, don't do anything - from application to closing - that might change your financial picture and sabotage your final approval. This means no shopping on credit for appliances, furniture or anything else. Don't switch jobs, fall behind on your bills, co-sign a loan for anyone, or in any way reduce the income stated on your application. 

2. Read Homeowners Association Documents Carefully 
When you purchase a home in a managed community governed by a homeowners association (HOA), you'll be given a mountain of paperwork to read and approve. Because there may be deal killers included in the fine print, it's important to get to this task immediately upon receipt of the documents. 

Look for any information about liens against the property; current litigation against the HOA, the builder, or the developer; and any red flags in the HOA budget. Since these documents aren't easy to read and understand, it is worth the money you'll spend to have your attorney look them over and advise you of any potential deal killers lurking within. 

While the aforementioned HOA problems could potentially derail the deal, it's better to have it happen upfront rather than when you're further along in the process. 

3. Home Inspection Problems 
All homes - even newly constructed ones - may have problems. Going into the process not fully understanding this can set you up for a failed real estate deal. Sure, you ideally want to find a home that was owned by Mr. or Mrs. Clean who conscientiously took care of it during their entire ownership, but those are few and far between, and seeking them out is unrealistic. 

Set your sites on finding a home that has small, easy-to-fix problems, and don't freak out if some are worse than others. In other words, when considering making an offer, laugh at the loose doorknob but negotiate when it comes to water damage or worse. 

The nitpicky homebuyer, who plans on nickel and diming the homeowner into replacing missing switch plates and dripping faucets, is the picture of a deal-breaker-in-the-making. Sure, in a buyer's market you may get away with minor demands. In a seller's market, however, there is always a cleaner offer right behind yours. 

4. Budgeting Blunders 
The real estate industry does a bang-up job of reminding homebuyers that they'll need a down payment - typically from 3 percent to 20 percent of the total loan amount - when they purchase a home. What they often fail to inform real estate consumers about are the loan's closing costs - the money you will be required to pay before the house is yours. This is most likely because closing costs are a little harder to pin down. They vary wildly and depend on the type of loan, the amount of the down payment, and a host of other factors. 

Unfortunately, this lack of information frequently causes real estate deals to disintegrate. To avoid this particular problem, pay attention to all communications from your lender. 

First, you will receive a form called a Loan Estimate. Look this over carefully to ensure that everything your lender agreed to is included. Pay close attention to the "Calculating Cash to Close" section, which concludes with an estimated cost to close the loan. Remember, this is an estimate and the amount may go higher or lower in the end. Speak with the lender if you find any problems here, especially if it will be impossible for you to come up with this money. 

Just before closing you will receive the "Closing Disclosure," which is quite similar to the estimate, but these figures are final. Again, review the "Cash to Close" figure. 

By and large, real estate deals conclude successfully. Typically, it all comes down to the experience of your agent. Choose wisely and you'll avoid the common pitfalls that can derail transactions. For a smooth, low-stress real estate transaction, slow down, keep your expectations realistic and heed the advice of your real estate agent or attorney.

The finest compliment I may ever receive is a referral from friends and clients.  Thank you!

Bidding Wars - How To Prepare

Seattle Places #2 For Bidding Wars

The Seattle Times just released an article placing the Puget Sound Region second in the nation for the highest rate of bidding wars.  This is second only to the Bay Area, beating out both Orange County and L.A.  

Which begs the question of how does one compete and be successful in this market?  

1.  Organize Your Team

Have your broker, lender, home inspector (including sewer scope, septic systems, and wells) all lined up and ready to go.  You will want to get a full approval on your loan, which is much stronger than a pre approval. Additionally, pre inspections have become the norm in this market, so be prepared to have this done quickly.  I can provide you with the names of reputable lenders, along with home inspectors who will and can go to any house the next day.

2.  Hire a Local Lender

Do not work with banks such as Bank of America, or Wells Fargo for your mortgage.  They are great at your typical banking, but when it comes to underwriting mortgages, their reputation is horrible amongst brokers, because they do not tend to know the local market and the pressing needs during intense bidding wars.  Hire a local reputable lender who can close your loan in 30-days.  If your offer is in line with another offer with the exact same price and terms, a local lender can make all of the difference.  

3.  Be Fast

I cannot express enough how important it is to hire a broker who is "on it," and who can move quickly for you.  You will need an experienced broker who knows how to win in this market.  Also, if you see a house that you like, and you want to write an offer before the "review date," do not hesitate to ask your experienced REALTOR® to find out if the seller would be willing to look at offers before the stated review date.     

4.  Waive Contingencies

Doing as much homework as you can upfront will help you feel confident in waiving certain contingencies.  Waiving inspection once you have pre inspected, and waiving the neighborhood review period are a couple of examples.  There are many more contingencies, and every offer is different so you need to decide what is "worth" it.  Some contingencies are backdoor ways out of the contract, which listing agents know about, and so make sure your broker knows about these.  

Multiple offers occur 75% of the time in real estate transactions in the Puget Sound Region, so educate yourself, read as much as possible and ask a lot of questions.  

Seller's Market Leading To Rent Backs

Rent Backs: What Are They?

There is no question that the Real Estate market is booming this Spring.  Along with a slow, but truly increasing inventory, are the increasing demands of some sellers.  

If you took a dartboard and mapped out the reasons why we have not had a decent amount of inventory lately in the Puget Sound region, the fact that sellers have no idea where they would move to after selling would be smack in the middle of the board.  I have clients who would love to upgrade, or even downsize, but when they start their search, it all feels very daunting. 

Knowing buyers are at their mercy, sellers have been requesting that buyers close in thirty days, and then rent back the house to the seller.  Keep in mind that this does not happen with all homes, but we are starting to see it happen more often this Spring.  The time frame can be anywhere from one month to six months for the rent back. 

What does this mean for buyers?  If you agree to rent back, you need to realize that you will become a landlord to the sellers, and yes, there are certain risks.  We have forms that can be filed to keep things clean and professional in terms of the Real Estate transaction, and most of the time, things do work out.  But what about those risks?  If the seller decides to not vacate the property, or if they leave the house in poor condition after turning it over to you at the end of the rent back.  

What can you do?  Make sure that every detail of the rent back is in writing (including having a good lease agreement).  Take a security deposit, and ask that the seller pay your mortgage for rent.  We are seeing some buyers allowing sellers to live in the home rent-free, but I would advise against this.  Even in this seller's market, it is never a good idea to allow the other side to have control of the steering wheel for the entire time.  

Words of advice...  Hire an excellent buyer's agent, and proceed with caution.

Seattle Spring Adventures

With the unusual nice weather we are having this Spring, I have been spending a lot of time outside, and feel inspired to offer some of my favorite Seattle Spring time adventures.

1.  Skagit Tulip Festival

The days are longer and brighter, and with the darker skies are almost behind us I find myself appreciating all of the colors this season has to offer.  

The Skagit Tulip Festival is happening right now starting April 1st - April 30th. Pricing varies based on which gardens you choose, and parking tends to be free. Weekends are very crowded, so the best time to go is during the week.  

Here you go:  Skagit Tulip Festival

2.  Farmers Markets

What a fantastic way to eat local fresh food, and to support local businesses.  Farmers markets in the Seattle area tend to run anywhere between May through September.  Food education is a big thing in Seattle, and buying from a local farmer is a great way to teach yourself, and your kids about where our food comes from.  

Here you go:  Farmers Markets

3.  Pacific Science Center - Lego Exhibit

Last but not least, The Art Of The Brick exhibit coming this May to the Pacific Science Center.  For all of my lego geeks, this one is for you!  Pricing varies amongst members and nonmembers, so definitely check out whether it is worth it or not to become a member.  

Here you go:  Lego Exhibit

The finest compliment I may ever receive is a referral from friends and clients.  Thank you!

Spring Forward - 3 Tips To Refresh Your Home

We are approaching that time where we want to shake off the winter dust. It is very exciting that Spring is just around the corner. Cleaning your house for the Spring will help you feel organized, and accomplished.  It's no surprise Spring time becomes a busy Real Estate season.

Here are three great tips!

Everything Has A Home

Go through your closets and dressers to see if there are any clothes you are ready to donate.  Rule of thumb is you haven't worn something in six months to a year (depending on what it is), you probably don't love it.  Ask yourself if it is something you would buy today.  Maybe is not a yes!  

Go through all of the bathroom drawers, and pull everything out from under the sink.  Evaluate whether or not you want to throw things away, and have storage containers for the things you are going to use or need down the road.  

Freshen Up

Take all of your sheets, pillow covers, duvet covers and comforters, and wash everything in hot water.  Open up all of the windows and let in fresh air.  During this time it would be a good idea to have your carpets cleaned professionally. 

Don't forget about vertical spaces as well.  Use a mild detergent and wash all of the soot and dirt off of the walls, and dust any wood that is in sight.  Follow with a shine by drying the walls and all of your woodwork.  

Clean Your Appliances

The first step is to run a cycle with one cup of vinegar in a dishwasher.  Then sprinkle a bit of baking soda on the bottom of the washer and run it again (short cycles are fine here).  The vinegar and baking soda combined will clean out any food particles and leave it smelling fresh and clean.

Cleaning the coils under or behind your refrigerator is important because they can become clogged and overheat, eventually causing your refrigerator to stop working.  This is especially important if you have pets.

Be sure to check your manual on how to best clean the inside and outside of all of your appliances.  

If you are preparing your home to sell, please do not hesitate to call me!  I have many more tips to offer.  

"The finest compliment I may ever receive is a referral from friends and clients."  Thank you!

Low Inventory Causes Sellers To Pause

Low Supply Causes Sellers To Pause

Lately, it seems as if homeowners have gone on strike.  We currently have the lowest inventory since the last boom, which is just shy of a decade.  It is safe to say, the market is back!  With people moving to the Pacific Northwest from all over the world, I have no doubt in my mind that we will be the next Bay Area.  Why is this happening, and what will it take to bring more houses on the market for our high demand market?  

It is a vicious cycle of sellers wanting to pull the trigger, but having no idea where they will go.  I'm going to address how you can sell your home successfully without worrying where you are going next.  My first advice is to take it one step at a time, and do not jump ahead.  

1.  Negotiate a Longer Closing Time

For starters, you can take advantage of being in the driver's seat because most banks give buyers sixty days to move into their new home.  You can also ask your Realtor to extend the closing for two months.  This will give you time to find another house, and if you do not find one during that timeframe, it is best to have a backup plan where you would stay in temporary housing. It is essential to always have a backup plan, and your Real Estate Broker should be working with you on different strategies.   

2.  Equity Line of Credit

If you want to find your next home first before you sell your current house, you could talk to your lender about taking out an equity line of credit for your down payment.  Once this is secured, you can take your time finding a house, knowing your current house will sell quickly.  The caveat is that you must take out the equity line before you put your house up for sale as lenders will not give you a loan if you are trying to sell your house.  

3.  Use One Realtor

It is best practices to use one Real Estate Broker to sell your home, and to purchase your next home.  When you use one broker you are streamlining the communication process, and overall understanding of your personal goals, timelines, and deadlines.  Having to communicate all of this twice is simply adding more stress to an already very stressful process.  Bottomline, hire someone who is truly excellent, and more importantly someone who is emotionally trustworthy and who will be professional throughout your transaction.  

Having a competent, and reliable team is key!  

What Will It Take To Change?

The housing market tends to cycle between shortage and surplus.  Therefore, factors that impact supply and demand are interest rates, the economy, and consumer confidence.  When interest rates go up, buyers pull back, and ultimately confidence can go down.  At this point it will take interest rates to increase, and the economy to slow down in order for this market to shift.  Ultimately, this will lead to a transitional market where both buyers and sellers are on an equal playing field.  


"The finest compliment I may ever receive is a referral from friends and clients."  Thank you!

Rising Interest Rates - Puget Sound Region

Rising Interest Rates - What Does It Mean?

Recently we had our first rate hike in almost a decade, and rest assured they will continue to slowly increase over the next year.  This is actually good news!  

Housing is back, our economy is back, and jobs are on the rise.  The reality is that interest rate hikes impact regions differently across the country.  How will this increase affect the Puget Sound Region?

1.  Slower Real Estate Growth

Finally, a slightly more balanced market where buyers and sellers can work together, rather than the scale being unfairly tipped towards one side.  Buyers, do not get too excited, because demand is still strong, and there will only be a slight slowdown.  Housing values will not decrease, but the historic rapid increases are due to drop-off.  

2.  Local Economy

While we will see appropriate market adjustments, our thriving local economy and increased population growth can support future rate increases.  We have strong local companies, and it seems like everyone from around the world is learning about how wonderful it is to live in Washington State.  Lastly, banks will now profit from interest rates going up as the margins have been very slim in the past.  All in all, the slowdown will be slight, and it will take some time throughout the year.  Bottom line is that Washington State is well insulated from any kind of crash in the foreseeable future!  

3.  Local MLS  News And Statistics

Compared to a year ago, MLS figures show drops in the number of new listings added to inventory during November (down 4.6 percent) as well in the total number of active listings at month-end (down 26.5 percent).  We had the driest inventory we have seen in any December!

MLS Realtors reported 7,511 pending sales during November for a 10 percent increase from a year ago when they notched 6,821 mutually accepted offers. This simply displays that people are scooping up properties faster than they are available for sale.  

In King County, the median price for home sales that closed during November was $499,950, a jump of 13.6 percent from the year-ago figure of $440,000.  

The housing market is not going anywhere anytime soon, and there will not be a big crash like we have seen in the past.  But if I were a buyer looking in this market, I would try to act sooner than later so you're not paying a premium and a higher interest rate.

Happy House Hunting!

"The finest compliment I may ever receive is a referral from friends and clients."  Thank you!

Pacific Northwest Holiday Adventures

4 Things To Do During The Holiday Season

Now that December is here it is time to enjoy and appreciate some of the fun things to do during this holiday season. I have personally hand selected some of my favorite Pacific Northwest holiday outings that I think you will enjoy.

Here they are:

1. Trinity Tree Farm - Issaquah

Trinity Tree Farm is a local Christmas tree farm where you can have the holiday experience of cutting down your very own douglas fir.  Not sure if you want to engage in all of that hard work?  Don't worry, Trinity Tree Farm has a variety of freshly cut trees waiting for you!  Sip on delicious hot chocolate, cozy up by the warm fire, or say "cheese" while you get your picture taken with Santa.  There is no chance you will not love this holiday experience.  

*Small Tip:  The weekends are very busy, so try to go during the week to beat the crowds.

Check out:  Trinity Tree Farm

2. Zoo Lights - Tacoma

The kids love this one so be sure to bring the entire family! The tickets are inexpensive, parking is free, and you will be supporting a fantastic cause. Bundle up and enjoy the 3-D animal light displays, be adventurous and ride the carousel, and light up your hearts with the zoo's latest tiger cubs who will be on display "Berani" and "Dumai."

*Small Tip: Buy a combo pass if you are bringing multiple family members.

Check Out: Zoo Lights


3. Redmond Lights - Redmond

This is a celebration of the many different holidays and traditions, and it is a one of a kind educational experience you will not want to miss. Slowly stroll down Redmond Central and find yourself at the Luminary Walk, listen to live music and carolers, all while witnessing a beautiful tree lighting.

*Small Tip: Check the website before you leave for parking instructions.

Check Out: Remond Lights


4. Seattle Christmas Ship Festival

This is a classic Seattle Christmas tradition you will not want to miss. Sail around on the Argosy Cruise while listening to the onboard choirs singing Christmas carols broadcasting over a state of the art speaker system. The best part of all is that people bring their own boats all lit up for the celebration and follow suit for a wonderful parade along the Puget Sound.

*Small Tip: Book tickets well in advance because this one is popular, and they do sell out!

Check Out: Seattle Christmas Ship Festival

Happy Holidays!

Do's and Don'ts of Real Estate

Three Essential Buyer's Tips for a Smooth and Successful Close

Buying a home can be an emotional process, and having a plan that includes respect, patience and good communication can help ease those highly charged emotions and ultimately help you accomplish your goal of home ownership.

Here are three quick buyer’s tips that are proven to keep your transaction as smooth as possible:

1.  Be Respectful of Time

Selling a home isn’t easy and it’s important as a buyer to be respectful of the stress that selling a home can put on a family. Do your best to always be on time to showings, inspections, walk-throughs etc.

Quick Tip: Putting yourself in the seller’s shoes throughout the process is a good way to help keep emotions calm, cool and collected.

2.  Keep Your Eye on the Prize 

Home ownership can be a huge step towards financial stability, and finding the right home in the right community can help to provide a great life for you and your family. Once you’ve found “the” home, it’s important to keep your eye on the prize and not let the little things come between you and those new keys.

Time and time again I’ve seen buyers make the mistake of getting too emotionally charged over inconsequential things (i.e. “I will blow this whole thing up if the sellers don’t clean out the gutters.”).  Staying focused on the big picture to help you accomplish your ultimate goal.

Quick Tip:  A good real estate broker should be there for you throughout the entire process. It’s his or her job to help you get through the emotional times and keep you focused on the end goal. Do your research and pick a broker who can stay calm under pressure. 

3.  Do Your Research and Form a Great Team

You will want to hire an experienced broker who has a firm grip on the current market and how to put you in the best position to compete against other buyers. Do your research and ask tons of questions. Choosing the right broker can help you accomplish your goals on time, all while helping to make a stressful transaction a smooth one.

 

You will also want to hire a local and experienced lender, one who knows how to position you financially when it comes to purchasing a home in this competitive market. A good lender will also take the time to sit down and discuss all the available lending options, helping you make the best decision for your financial future.

Lastly, you will need a reputable home inspector to give you peace of mind that you’re purchasing a well-built, safe home. Search for reviews on line and/or ask your broker for recommendations.  

Quick Tip:  Cheapest is not always the best when it comes to choosing the best inspector. Remember, this is one of the biggest investments you will make in your lifetime.

3 Home Inspection Tips

3 Home Inspection Tips

A thorough home inspection is one of the most important steps in the home buying process and covers everything from the foundation to the roof, taking two to three hours to complete.  The report should reflect the current condition of the home and all of its systems, and should cost $300-$600.  Here are the three most important things you need to remember during the process:  

1.  Don't Waive

With the current market conditions, many buyers are doing everything they can to make their offers standout, amongst the competition, including waiving their  inspection contingency.  Purchasing a home is one of the most monumental investments you will ever make, and committing that kind of money without checking for major health and safety issues is a huge risk that could have dire consequences later on down the road. If you have found the home of your dreams, conduct a pre-inspection to rule out any major problems prior to submitting your offer.  This will bolster your offer without compromising any opportunity to  inspect the home.  


2.  Inspect New Construction

When purchasing new construction, do not assume that just because the home has passed code and ordinances it must be in great shape.  Believe it or not, builders and contractors frequently make mistakes, and a proper home inspection will give you the peace of mind that you are moving into a well-built home, free of any major defects.  

3.  Health & Safety

Lastly, home inspectors do a great job of inspecting the entire house, but your main concern should be to find things that are negatively affecting the health and safety of the home.  This means anything that is going to cause the house to lose functionality in any way.  For example, gutters, roof, foundation/crawl space, pests etc.  Don't get caught up on the small, cosmetic issues that are easy and inexpensive to repair.  

Keep calm and hire a home inspector!  

Delayed Closings & Market Snapshot

Delayed Closings

The current standard is that we have a thirty day closing with no interruptions and everything works out smoothly, and even in this practice we typically do not close on time because underwriters are so backed up, and banks have tightened up their requirements.

Additionally, there is a huge change coming that is federally mandated, and it includes settlement and disclosure statements from your lender.  The TIL (Truth In Lending) and HUD1 statements are being combined into one document, and this document needs to come from your lender directly.  In the past your escrow company would handle all of this prior to closing and it would be a lot smoother.  Many experts predict a 40-45 day closing is more realistic with these new changes.

The truth is there are many challenges can come right before a transaction is getting ready to close, and this just adds more complications.  

The best response is to write up your offer for a 45-day closing to be safe.  This will allow for any issues to be dealt with and expectations will not go unmet. 

Market Snapshot

The crucial question we are facing is, are the rates going to actually increase this time?  The Federal Reserve was supposed to raise rates in September; however, the bad press coming out of China will likely delay any increase once again.  I will keep you posted!