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Mortgage Updates

Changes are coming to the mortgage arena.

Short Sales

If you had a short sale at least 2 years ago and have 20% down, you’ve been able to obtain a new mortgage. Fannie Mae is changing the rules (and Freddie Mac will likely follow) as of August 16th. Now you’ll need to wait 4 years after a short sale before you can obtain another mortgage. If you’re currently in the 2 year+ period and are buying a home, you’ll need to close by August 15th.

Interest Rates

As you may have heard the economy is improving. The jobs reports have been great. As a result, the Feds are leaning toward reducing bond purchases in October. When this happens, it’s likely interest rates will increase. Even 1/2 percentage increase in interest rates will affect your buying power.

For every $100,000 that is mortgaged at 4.25%, you will pay approximately $492/month in principal and interest. When mortgage rates increase half a percent to 4.75%, your monthly payment increases $30 to $522. On a $100,000 mortgage that’s not significant, but on a $500,000 mortgage, that’s an increase of $150/month.

Let’s take this further.

With prices on the rise and multiple offers the norm, that $500,000 budget you may have may instead now be $477,000. Let me explain. You have $100,000 for a down payment. Your lender has approved you for up to a $500,000 home ($400,000 mortgage) at 4.25% interest, with a monthly payment of around $1,968 in principal and interest.

Interest rates are now 4.75%, a half percent increase. Your lender only approves you for the same $1,968/month payment. You can now only afford a $477,000 mortgage (with the same $100,000 down payment). Your buying power has decreased $23,000 or 6%.

For every half a percent that interest rates increase, your buying power decreases by approximately 6%. Your $800,000 buying power becomes $762,000. If interest rates continue on an upward trend, your buying power will continue to decrease.

Please feel free to contact me at 206-790-0081 or jamie@jamieflaxman.com for further explanation.

What is a Buyer Agency Agreement?

A “buyer agency agreement” is a contract between a buyer and a real estate broker.  Contracts often vary in length, and can include or exclude certain geographical areas.  The buyer agency agreement lays out the commitments of the buyer to the broker, and of the broker to the buyer. Generally the agreement also contains a clause stating that you will work exclusively with that broker for the specified time period. Is it expensive to use a buyer’s broker? The compensation that a buyer’s broker receives (also called the “selling broker”) typically comes from the seller’s proceeds and is a percentage of the total commission charged by the listing company. That information is available to the broker through the Multiple Listing Service (MLS).  In such a case, there is no cost for a buyer to be represented by a broker. If a buyer is interested in purchasing a property not listed in an MLS (for example, a for sale by owner), it is possible that the seller will not compensate the buyer’s broker.  In this case, a buyer agency agreement would detail the buyer’s obligation to compensate their broker.  Typically, even with unlisted properties, the seller compensates the buyer’s broker.

First Time Home Buyer Class

Are you considering purchasing your first piece of real estate? Whether it be a single family home, townhouse, or condo, this buyer class may be for you.

The class will go in depth on both the buying process and on how to obtain a mortgage. You will also learn about down payment assistance programs, where if you earn less than $97,000 per year you may be eligible for no-interest, no monthly payment loans from the state. This course meets the requirement for Washington State Housing Finance Commission down payment assistance programs, including the Mortgage Credit Certificate (MCC) program. The course instructed by Ryan Niles from Cornerstone Home Lending and me.

Two classes are scheduled this summer: Sunday, July 27th and Sunday August 24th. Both classes will run from 10am-3pm and will be in the Wallingford neighborhood.

The course is free and there is no obligation to use our services. We ask that you bring a sack lunch. Please sign-up in advance by contacting me at jamie@jamieflaxman.com or 206/790-0081. For more information on down payment assistance programs, please go to the Washington State Housing Finance Commission website.



Neighborhood Reviews – What Are They?

You’re buying a house, but you’re also buying into a neighborhood. You hire an inspector to check out the house before you buy it, but what about the neighborhood? The Neighborhood Review is your opportunity to inspect the neighborhood as well.

A Neighborhood Review can be written into the contract to buy a home. In that case, it states you have X number of days to review the neighborhood and if you are not happy with it, you have the right to get out of your contract. The language reads:


However, in a competitive market, including a Neighborhood Review contingency may make your offer less competitive. I always recommend to clients that they conduct a Neighborhood Review, but they may need to do the research before submitting the offer.

What does a Neighborhood Review entail? It’s really up to you. What’s important to you about where you live? Crime rates or quality of schools, traffic or availability of public transportation, proximity to medical centers or retail areas, environmental issues such as electrical substations? These are all items you may want to research.

One of the best ways to learn about a neighborhood is to spend time there, both during the day and in the evening. Knock on doors and meet your prospective neighbors; ask them questions about what the neighborhood is like.

Below is a list of some places you can learn more, but you might have other ideas as well. If you do, let me know and I’ll add them to the list for other buyers to use.



Public Transportation:

Neighborhood Amenities:

  • http://www.walkscore.com/ (Walk Score)
  • Many neighborhoods have blogs. Just google that neighborhood name and the word “blog.”
  • Explore the neighborhood yourself.
  • There are many other websites for checking out amenities—for example, Yelp. Google (or your favorite search engine) is a great way to start.

CCRs and Covenants: Many neighborhoods, housing developments, and condominiums have CCRs or Covenants that list rules such as parking of RVs, exterior paint colors, who is responsible for driveway maintenance, etc. This is also true for items such as shared driveways and townhome roofs. Sometimes you’ll find these covenants and easements in the preliminary title, other times it may be in the homeowner association documents.




Thinking About Housing for Your College Student?

As students pack up and head for school, parents often wonder, “Should I buy property that my child can live in while they are at college?”

My answer is “Maybe.”

Not surprisingly, the answer to this question will depend on factors such as the school’s policy on off-campus living, your finances, the level of responsibility your child can handle, the likelihood of your child finishing their education at that school (and whether they will pursue additional education there) and whether you are considering this purchase for the long- or short-term.  Let’s look at each of these in a bit more detail.

Off-campus living.  Many schools require students to live on-campus for the first year (or even two!) that they are enrolled.  More and more students are taking five years to finish school rather than four, but even so if you want to sell the property as soon as the student finishes their undergraduate work, this restriction will cut into the time you have to recoup your equity in the property.

Is your young adult responsible?  Will he or she (and their friends!) take good care of your investment?  Even the most conscientious student/tenant doesn’t have time keeping up their living spaces.  You can, of course, hire someone to handle this for you just as any landlord would – just remember will cut into any profits this investment may generate.

Length of time at school.  What happens if your child decides their school isn’t really a fit for them … and heads off to a different school?  This is problematic for you as an investor at any time, but particularly so if the change occurs during the first year or two.  Once again, you are in the position of being unlikely to recoup your investment.

Your financial situation.  Right now we are seeing appreciation annually. However, you have to be prepared for your investment property to depreciate, or remain neutral.  Can you and your family handle the impact if, when you want to sell, you will take a financial loss … or be required to hold on to the property until such a time that you can sell?  Don’t forget that in addition to your capital investment in the property you will also face additional costs such as taxes, insurance, and repairs.

If you are willing to consider this purchase as a potential long-term investment, and you can live with the consequences of that, purchasing a home for your college-aged child may make sense.  It can be a particularly good idea if you have other children who are likely to attend the same college or if your child will be pursuing advanced degrees from the same school.  Purchasing a home for your child can also create peace of mind, as you know they will be living in a home which is safe and well-maintained.  There’s a lot to be said for that peace of mind, which may outweigh any potential negative consequences.

If you’re interested in purchasing a home for your college-aged child, please let me know … even if their school is not local.  I have access to a wide network of talented colleagues, and I would be happy to refer someone to you if appropriate.


Seattle Market Update

The Puget Sound housing market picked up in May with greater inventory, but demand is still very high. Most new listings are receiving multiple offers with many significantly escalating above list price.

The chart above shows activity in the city of Seattle for single family homes and condos combined. The number of homes for sale increased 14.3% over April, but the level was slightly below that of a year ago. The number of sales closing was up 4.4% over April but down 12% from a year ago.

While less homes are selling, prices are up over last year. Combined single family homes and condos in Seattle are up 4.4% over a year ago. On average homes sold at 100% of list price.

Inventory remains extremely low, at 1.4 months worth in May. That is, if no homes came on the market, the current inventory would be gone in about 6 weeks. In May last year that inventory was at 1.2 months.

However, when you look at specific neighborhoods, the numbers can be dramatically different. For example, Wallingford, a high demand neighborhood. Prices on sold homes and condos were up 8.2% from a year ago, with an average sales price of $620,000. Homes in Wallingford average a sales price of 105% of listing price. And inventory in Wallingford was at 0.7 months in May, approximately 3 weeks worth.

For further information, please give me a call or email. I’m happy to provide you with a market update for your neighborhood or city.

New to the Market in Phinney Ridge

736 N 70th St.On Wednesday I told you it was coming – so here it is. I’ve brought on a listing in Seattle’s hottest neighborhood Phinney Ridge. One and half blocks to Green Lake for outdoor activities, two blocks to the P-Patch, a half mile to the Zoo, and just 3 blocks to the all the retail and restaurants of Phinney Ridge – Red Mill Burgers, Starbucks, Ken’s Market, Greenwood Hardware, Umpqua Bank, and so many more local small businesses. Plus you’re just blocks from the Phinney Neighborhood Association which hosts the Farmer’s Market, numerous community building events, classes, a pre-school, and much more.

This home, at 736 N. 70th St., offers 3 bedrooms on the upper floor, 1.75 bathrooms, an additional room on the main that could be a 4th bedroom, family room, or home office. Southern exposure brings you lots of natural light, with a peek-a-boo view of Mt. Rainier from upstairs. A level, grassy, fully fenced backyard is perfect for your pooch to run around in, as well as for summer barbecues, croquet, and all-around fun. On the lower level you even have a working sauna in which to unwind at the end of the day.

Check out the home online, download the home flyer, or give me a call at 206-790-0081 or an email for more information or a private showing. List price: $549,000 and offers will be reviewed on June 13, 2014.

Phinney Ridge, Seattle’s Hottest Neighborhood

I’ll be bringing on a new listing on Friday in Seattle’s Phinney Ridge neighborhood, so I thought I’d provide you with a little information about this fabulous area. It’s so great, that one Seattle real estate company recently named Phinney Ridge the 7th hottest neighborhood in the U.S.

Phinney Ridge is named after the ridge which runs north and south, separating Ballard from Green Lake, from approximately N. 45th to N. 85th Street. The ridge, in turn, is named after Guy C. Phinneylumber mill owner and real estate developer, whose estate was bought by the city and turned into Woodland Park in 1899. Phinney’s estate had included a private menagerie, and the western half of the park became what is now the Woodland Park Zoo.

The generally accepted boundaries of Phinney Ridge are Aurora Avenue N. to the east, beyond which lies Green Lake and the eastern half of Woodland Park; N. 80th Street to the north, beyond which lies Greenwood; 8th Avenue N.W. to the west, beyond which lies Ballard, and N. 50th and Market Streets to the south, beyond which lies Fremont.

Phinney Ridge’s main thoroughfare, which runs atop the ridge south of N. 67th Street, is Phinney Avenue N. North of N. 67th Street, the arterial swings a block to the west and becomes Greenwood Avenue N. The route is lined with many small businesses and shops, as well as the Phinney Neighborhood Association (PNA), located at the corner of Phinney and 67th. It has occupied the former John B. Allen Elementary School building, which was built in 1904, since 1981, when the school closed.

In addition to its proximity to Green Lake and the Zoo, Phinney is home to numerous neighborhood parks and several P-Patches. The PNA hosts many community events annually, including the Phinney Farmer’s Market (opens this Friday, June 6), the PhinneyWood Pride Rainbow Hop, a wine tasting event, a beer tasting event, an annual auction, and a huge Winter Festival.  There are monthly Art Walks along Phinney Ave./Greenwood Ave. and annually in June (this year June 28th) those streets are lined with classic automobiles during the Greenwood Car Show.

Phinney is one of my favorite neighborhoods because of it’s proximity to everything. I happen to live in Phinney Ridge too.

Zestimates and Home Values

Almost everyone has heard of Zillow and their “zestimates.” And any homeowner knows that the county tax assessor has an assessed value for your home. Do these numbers tell you what your home is worth? The answer is emphatically NO.

The zestimate is an AVM – an automated value model. In addition to Zillow, there are many different websites that offer AVM’s. I believe Redfin now has a proprietary one, not sure about Trulia, but just google and you’ll find many.

The AVM that most real estate brokers look at is one put out by CoreLogic and we access it throughout the Northwest Multiple Listing Service. This AVM is one of the most respected and “closest” to accurate AVM’s available.

An automated model takes the information from public records about your home – lot size, square footage, bedrooms, bathrooms, neighborhood – and comes up with a price range. But the fact that it’s automated makes it not particularly reliable. AVM’s do not reflect the unique features and characteristics of your home. View? 17,000 sq. ft. lot but most of it is sloped? Public records are often wrong – King County had my house missing a bathroom.

The only way to get a true estimate of price is for a real estate broker to look at your home and then look at what’s currently on the market, what’s pending, and what’s sold and see how it compares.

Here’s an example using a house in Greenlake that closed last week (I randomly selected a listing, did not look for one to prove my message).

Listed for $635,000; sold for $702,500 – Zillow zestimate of $553,636; Realist estimate of $577,646

If you dig through Zillow’s website, you’ll find that they say their estimates are off on average about 10%. In this case, it was off by 27%. (I’m not saying Zillow is bad, it can give an idea and can show trends, but clearly this is not reliable.) The Realist estimate was also off significantly at 21%. The King County Assessor has the home valued at $440,000, which reflects how off those assessments are. The Realtor had priced it at $635,000 which was her best estimate, yet it sold 10% higher than. Our lack of inventory is driving prices up.

Bottom line, if you want to get an idea what your home is worth, ask a Realtor to complete a complimentary market analysis for you.

Do I Really Need to Remodel My Bathroom?

Selling a home doesn’t usually require major renovations on a home in order to get buyers interested. However, some homeowners who wish to sell instead choose to save for what they believe are necessary renovations and wait to list their home until these renovations are complete. They are hoping these improvements will help sell the home for even more than they plan to invest. However, rarely does the seller recoup all they invested, and they may have also missed the opportune time in the market.

Renovating with the intent to sell is a good idea when the right renovations are chosen. Instead of costly renovations, the focus should be on merchandising your home with the goal of making small changes that will help your home appeal to a wider pool of buyers. The seller benefits by:

  • Investing in smaller changes which have less impact to the pocketbook and a higher return on investment.
  • Being able to do these changes faster because the projects are smaller and less expensive, allowing for more flexibility when determining a listing date.

Of course, if you are not planning on a move for several months or years, consider doing the work in order to benefit from these renovations now. Oftentimes I see sellers fix up their home to sell and regret not having done it sooner. I encourage homeowners to make a list of the items in their home that are not working and make a plan to fix these items so they can spend more time enjoying the fixes instead of just doing them for the benefit of the next homeowner.Some common and inexpensive changes homeowners can make for the intent of merchandising include:

  • Decluttering
  • Touching up paint or repainting spaces in neutral colors to appeal to a wider pool of buyers
  • Defining a role for each space (such as an office, guest room, etc) and making sure the space has the right furniture (and the right fit furniture) in it. The intent of merchandising is for buyers to understand the possibilities of each space.
  • Landscaping and adding outdoor living spaces
  • Addressing any deferred maintenance

In terms of deferred maintenance, addressing items such as the roof and siding (making sure these are in good repair with no leaks or missing pieces), making sure the insulation and crawlspaces are in good shape under the house, cleaning the decks and driveway of any mildew and excess dirt, making sure the heating and cooling units have been serviced recently, and the plumbing has no issues. This is just a quick list. I recommend going through each inch of your home and making sure there are no obvious issues which could alarm a buyer or be an issue during the inspection.

For ideas on how to maximize your home’s value with minimum expense, give me a call at (206) 790-0081 or send an email to jamieflaxman@cbbain.com.  I’ll be glad to point you in the right direction for renovations that won’t cost you much but will give you a big return when it is time to sell.