The Market Is Hot – Is It Smart To Go FSBO?

The market is hot in the downtown Seattle area as well as the Eastside. Many sellers are considering selling FSBO to save money. Market inventory is low, and agents and buyers have been known to approach potential sellers to encourage a private sale. Is it a good idea?
The best answer very well may be a resounding “no.” Top real estate experts are saying that the greatest expense a seller faces in this current market is the money they would lose if they do not get full market exposure.
According to Realtor.com “Statistics show that selling your home with the assistance of a professional real estate agent will garner you a higher profit, enough to cover the commission as well as put more money in your pocket. According to the National Association of Realtor®’s 2016 Profile of Home Buyers and Sellers, the average FSBO sales price was $185,000, while the average price for a home represented by an agent was $245,000. That’s a difference of $60,000!”
I know my marketing plan has helped my sellers get top dollar in several different neighborhoods.
The KCM blog has an overview of five reasons you may not want to go FSBO:

In today’s market, with homes selling quickly and prices rising, some homeowners might consider trying to sell their home on their own, known in the industry as a For Sale by Owner (FSBO). There are several reasons this might not be a good idea for the vast majority of sellers.
Here are five of those reasons:
1. There Are Too Many People to Negotiate With
Here is a list of some of the people with whom you must be prepared to negotiate if you decide to For Sale By Owner:
• The buyer who wants the best deal possible
• The buyer’s agent who solely represents the best interest of the buyer
• The buyer’s attorney (in some parts of the country)
• The home inspection companies, which work for the buyer and will almost always find some problems with the house
• The appraiser if there is a question of value
2. Exposure to Prospective Purchasers
Recent studies have shown that 89% of buyers search online for a home. That is in comparison to only 20% looking at print newspaper ads. Most real estate agents have an internet strategy to promote the sale of your home. Do you?
3. Results Come from the Internet
Where do buyers find the home they actually purchased?
• 44% on the internet
• 33% from a Real Estate Agent
• 9% from a yard sign
• 1% from newspaper
The days of selling your house by just putting up a sign and putting it in the paper are long gone. Having a strong internet strategy is crucial.
4. FSBOing has Become More and More Difficult
The paperwork involved in selling and buying a home has increased dramatically as industry disclosures and regulations have become mandatory. This is one of the reasons that the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.
The 8% share represents the lowest recorded figure since NAR began collecting data in 1981.
5. You Net More Money when Using an Agent
Many homeowners believe that they will save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.
Studies have shown that the typical house sold by the homeowner sells for $210,000 while the typical house sold by an agent sells for $249,000.
Bottom Line
Before you decide to take on the challenges of selling your house on your own, sit with a reputable real estate professional in your marketplace and see what they have to offer. I’d welcome the opportunity to share a marketing plan that has helped my sellers obtain top dollar for their homes.

What First-Time Home Buyers Need To Know

My team and I regularly come in contact with first-time homebuyers looking for some guidance. The prospect of buying your first home can be an anxiety-inducing one, especially if you don’t know where to start. I’ve spent my career helping thousands of people find the perfect home, so I’m happy to shed some light on the subject for those new to the process.

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Patience is key.

Even after you spend hours searching through listings and going to showings, your journey is far from over. Getting a mortgage, having the home inspected and going through the closing process all take time. General wisdom suggests that the process could last from 30-90 days, but that depends on a lot of extenuating factors.

The neighborhood you choose is important.

We believe the neighborhood you live in is just as important as the home you live in. When you make a purchase based solely on the number of bedrooms and bathrooms or square footage, you’re missing out on the lifestyle component of your new home. Where you live will determine not only obvious factors like where your children go to school and how much you pay in taxes, but it also determines more nuanced factors, like how you spend your weekends. Spend time in an area before deciding to buy there, and see if you can really imagine yourself living there on a day-to-day basis.

Have your documentation ready.

Keeping everything digitally organized — rather than trying to keep track of a stack of papers — will help immensely. Have pay stub statements, proof of assets and any loan or credit card debt documentation readily available. Expect to present more paperwork than you might think they need to see. Like a Boy Scout, the key here is to always be prepared!

Be flexible.

One sentiment that almost all of the homeowners we asked expressed is just that: the importance of being flexible. You may have a list of features that make up your perfect home but ultimately discover that you are unable to find all of those features within your budget. Know which “must-haves” you’re willing to compromise on and which ones you really need. If a short commute is most important to you, you may be willing to sacrifice an extra bathroom or granite countertops to be closer to work.

Follow guidelines.

In other words, don’t buy beyond your means. Deferring principal payments in order to get into a bigger home is often a risky proposition that can lead to financial strain. Work out a budget that’s realistic, and then stick to it. Not sure how much house you can actually afford? NerdWallet provides a calculator to help you determine that based on location.

Shop around.

Like any other major purchase, it’s important when buying a home to weigh your mortgage options. Different banks may offer different rates, so getting a wide range of offers can save you money. Planning ahead is your friend in this scenario — as soon as you think you may be interested in buying a home, start the mortgage process. This will also help you determine how much you can feasibly afford.

Don’t let fear stop you.

There’s no doubt that the home-buying process can be daunting — and for first-time buyers, the uncertainty can lead to dread. You will experience a range of emotions in the pursuit of finding your perfect home, but it will be worthwhile when you finally settle in.

At the end of the day, buying your first home will be an intensive process, but it doesn’t need to be a scary one. If you go in with a strong plan and know your facts, you’ll avoid making the wrong choice or missing out on a great deal.

~Bill Ness, Forbes Community Voice

Why Single Women Build Less Equity in Homes than Men

Female homeowners are still earning less equity than their male counterparts, according to an August 2017 study by Redfin. The disparity remains because women still make less money than their male counterparts, put down a smaller down payment and often carry a higher student loan level, said Nela Richardson, a chief economist for Redfin.

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The Seattle-based real estate brokerage examined 199,387 homes that were sold in 18 of the largest metros in 2012. In the five years following their purchase, women earned a median $171,313 of home equity compared to $186,403 of equity earned by men, or 8.1% less than men.

The gap in gender equity was the largest in Seattle, where women earned 6.3%, or $20,983, less equity over the five-year period. The second-largest gap occurred in Columbus, Ohio with 6.2% less, followed by 6.2% less in Baltimore, 6.0% less in San Francisco and 5.8% less in San Diego.

This phenomenon was reversed only in New Orleans, where women earned more home equity than males by 8%, or $8,784. The gap was narrower in Omaha, Neb., with women earning 0.5% less equity, Portland with 0.8% less, Denver with 2.0% less and Oakland, Calif., with 2.0% less.

The home equity was calculated by adding the initial equity from the down payment and the principal paid on the mortgage to the appreciation of the home since its purchase date. The appreciation was determined by subtracting the original purchase price of the home from the current estimate on Redfin’s website.

Mind the Gap

The workplace gender pay gap is one of the largest contributors and leads to women spending $25,000 less on homes than their male counterparts, Redfin’s analysis said. The more expensive homes were also more likely to be in better neighborhoods where the appreciation occurred faster.

The playing field could be evened out by more women owning homes, which remains the single largest factor for middle class employees to “create wealth over the long term,” she said.

Single women can create more home equity by shopping around for financing and saving for a larger down payment, which immediately gives them more equity in stable markets. A larger down payment usually means they can qualify for a lower interest rate on their mortgage.

Making an extra payment once a year or even paying a little extra each month means homeowners can pay down the principal instead of their interest much faster.

Women have more student loan debt than men, according to 2016 data from Credit Sesame, a San Francisco-based credit advice site, said CEO Adrian Nazari. The National Center of Education Statistics reported that in the fall of 2016, 11.7 million females attended college, compared to only 8.8 million males.

“Women have 21% more debt than men and this, coupled with making less than men, is putting women at a disadvantage when it comes to home buying,” he said.

Another major factor is that women tend to have lower credit scores than men, which means they are being offered higher-rate loans on their mortgages, which adds up quickly over 30 years. While men usually only have credit scores that are 10 to 20 points higher, the difference can put one gender into the prime category vs. and subprime credit categories.

“Combined with the lower income and higher debt experience, this means women are buying ‘less home’ because their money is going into interest to the bank instead of building equity, as part of the mortgage principal,” Nazari said.


~Ellen Chang, The Street

 

Half of Seattle homes selling above list price

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More than half the homes sold in Seattle last year–52.4% according to real estate website Zillow–were sold for more than the asking price. That’s an increase from 20.3 percent five years earlier. That’s the largest increase in any market that Zillow tracked.

The median amount paid above the list price was $21,000.

Nationwide, 24.1 percent of homes sold above asking price compared to 17.8 percent in 2012. The median amount paid above list price was $7,000.

Zillow cites strong demand, limited supply, and low-interest rates in the U.S. housing market, with a steady decline in inventory over the past three years.

The average home in Seattle sells in less than 50 days, according to Zillow. That’s faster than the nationwide average of 80 days.

“The typical buyer spends more than four months home shopping and has to make multiple offers before an offer is accepted,” Zillow said in a statement.

San Jose had the highest percentage of buyers who paid above price for homes — 68.5 percent — with the median amount spent at $62,000 over list price. San Francisco was second — 64.5 percent — and with the median amount spent at $41,000 over the list.

“In the booming tech capitals of the California Bay Area and Pacific Northwest, paying above list price is now the norm. In the face of historically tight inventory, buyers have had to be more aggressive in their offers,” Zillow Senior Economist Aaron Terrazas said in a statement. He added that he does not see the trend changing in 2018.

 

~Travis Pittman, King 5 News

Buying a home in 2018? Here’s what you need to know.

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Homeownership can be a costly endeavor, especially since certain tax breaks are now less generous. Here are a few things to be aware of if you’re planning to go from renter to owner this year.

If you’re thinking of buying property this year, here are a few points you need to be aware of.

1. Your housing costs shouldn’t exceed 30% of your take-home pay

Regardless of how the recent tax changes end up impacting you, a homeowner’s housing costs should never exceed 30% of take-home pay. Different folks have their own interpretations of what peripheral expenses that 30% threshold should encompass, but at a minimum, it should cover known costs like property taxes and homeowner’s insurance. For better protection, however, I’d recommend that that 30% mark include maintenance, as well.

The typical U.S. homeowner spends anywhere from 1% to 4% of their home’s value on maintenance each year. If you’re buying for the first time, there’s no way to know where you’ll fall in that range, but if you aim for 2.5% — smack down the middle — and are looking at a $400,000 home, that’s roughly $833 per month in maintenance.

If you then take that $833 and add it to your monthly mortgage payment, property tax payment, and homeowner’s insurance payment, your total should not be greater than 30% of your monthly income. If it is, you’re leaving yourself with limited wiggle room for unplanned expenses that may arise in the future.

2. You can still deduct your mortgage interest — to a point

The mortgage-interest deduction has long been criticized for favoring the rich, and so some legislators have been arguing to eliminate it for years. Thankfully, this key deduction is still intact for the current tax year — albeit at a lower threshold.

It used to be that you could deduct interest on your mortgage for loans valued at up to $1 million. But as a result of the new tax changes, that limit has been lowered to $750,000. If you’re an average earner looking to buy a modest home, you should be able to deduct your mortgage interest in full. But if you’re looking at pricier homes, or live in an expensive area of the country where home prices are inflated, you may want to be more cognizant of that cap.

Of course, if you’re not planning to itemize on your tax return, there’s no need to worry about the mortgage interest deduction, or any deduction, for that matter. As it is, the majority of taxpayers don’t itemize, and since the new tax rules effectively double the standard deduction, it’s estimated that fewer filers will do so going forward. But if your intent is to itemize, then be aware of the aforementioned limit.

3. Your property tax deduction may be capped

Just as the new tax laws limit the mortgage interest deduction, so, too, do they limit the extent to which you can deduct property taxes. In fact, going forward, your total SALT (state and local tax) deduction maxes out at $10,000, whereas prior to 2018, it was unlimited. If you’re thinking of buying a home in a low- or no-income tax state, and you don’t expect your property tax bill to be particularly high, then the $10,000 cap won’t impact you. But if you’re buying a home in, say, New Jersey, which boasts the highest property taxes in the nation, you may come to find that a portion of your property tax bill is non-deductible.

Again, if you’re not planning to itemize on your tax return in the first place, then there’s no need to worry about this change. But one thing you should be aware of is that some experts say that home values may soon start to drop as a result of the new laws, since, by taking away a portion of the tax breaks buyers once enjoyed, they make ownership less affordable in some parts of the country.

If you’re buying a home because you plan to live there for quite some time, this may not be too concerning. But if your plan is to buy a home, flip it, and unload it in a year or so, prices could start to fall when more buyers see their tax breaks go down and their tax bills go up.

Buying a home can be a wise financial decision that serves you well, not only at present, but for many years to come. Just be sure to know what you’re getting into before signing that mortgage.

~Maurie Backman, The Motley Fool

Can Seattle’s Real Estate Market Keep Up This Growth?

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If Seattle’s real estate market is going to slow down over the next year, will it be a burst or a dribble?

That’s the question on a lot of analysts minds. According to the latest S&P Corelogic Case-Shiller home price index, Seattle has lead the nation in home price increases for  14 months in a row.

The only relief buyers seem to get is a holiday slowdown, and even that is fairly short-lived: Adjusted for seasonal changes, prices grew 0.6 percent from the month prior, according to Case-Shiller, and the Northwest Multiple Listing Service report found that while both inventory and pending sales dipped to their lowest levels since April, prices still increased by double-digits in most of the 23 counties NWMLS serves.

While many brokers see the market growing at more than double the rate of the national average and think the boom is unsustainable in the next year, the question now is mostly whether Seattle will go out with a bang or just start to rise more gradually.

According to the NWMLS report, many brokers are seeing signs that Seattle is not a bubbling market.
“Prices are expected to see some much needed slowdown in 2018 which will help bring more balance to the market,” OB Jacobi, president of Windermere Real Estate, said. “Rising home prices on their own don’t lead to a bubble; a number of other factors have to come into play.”

But can Seattleites be expecting another 12.67 percent growth over last year? Probably not, is what most brokers hope, but so far there’s not much indication that Seattle is slowing down in the first part of 2018.
As one put it to the NWMLS, 2018 could be “less glamorous with 6-to-8 percent appreciation, or even a slight flattening of the market for 8-to-12 months.” But J. Lennox Scott, chairman and CEO of John L Scott Real Estate, “market conditions are set for another robust market in the year of 2018.”

~Zosha Millman, Seattle PI

The Best New Condo Project in Seattle Is Actually in Bellevue

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Bosa Development just released new architectural details and renderings of the highly anticipated One88 condo project in Downtown Bellevue.

One88 will be the city’s first high-rise condominium community in nearly a decade, and it will also be the first project in the region for world-renowned architect Hossein Amanat. The 21 story luxury tower will feature 143 residences.

Bellevue, much like Seattle, has been starving for condo inventory. Its boutique, has an amazing location, will overlook Downtown Bellevue Park and has quite a bit of view protection for years to come.

According to a recent press release by One88:

“One88 will truly change the skyline of downtown Bellevue. It will not be an ordinary, cube-shaped tower, it will be a statement-making building with a different application of materials and shape that creates the appearance of movement,” said Amanat, principal of Amanat Architect. “The views of Lake Washington, the Cascades and the surrounding city also heavily influenced my design. I wanted to create a number of private and communal spaces that framed those views and bring the outdoors in.”

“One88 brings a new style of design and a new level of luxury to downtown Bellevue,” said Bemi Jauhal, director of sales and marketing for Bosa.“The demand for downtown’s vibrant urban lifestyle is growing and we feel the city is ready for an unique residential offering.”

“One 88 is located at the intersection of Bellevue Way Northeast and Northeast Second Street. One88 will be just a few steps from Downtown Park and a variety of dining and high-end shopping. Residences will have a range of views from Lake Washington, mountains, The Bellevue Skyline and more.

~ Urban Condo Spaces

Report: Tech makes up almost all new office jobs in Seattle

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Seattle observers are well aware of the tech industry’s role in the city’s economic boom, but a new report takes it to a new level, finding that more than nine of every 10 office jobs created over the last two years came from the tech sector.

The report by real estate firm CBRE, finds that Seattle tech firms added 23,575 jobs in 2015 and 2016, accounting for 93 percent of all office jobs in the city created during that time span. In raw numbers, Seattle also created more tech jobs than any other single market in the survey.

Seattle has been buoyed by massive growth from hometown tech giant Amazon, which employed 541,900 people worldwide at the end of the last quarter, including more than 50,000 in Seattle. Additionally, more than 100 out-of-town tech companies have set up shop in the Seattle area. A few, like Facebook and Google, have become some of the top tech employers in the city.

The report finds that high tech jobs focused on software and services employed 145,356 people in Seattle in 2016, or about 38.1 percent of office jobs. Tech companies in Seattle have a strong talent pool to pull from, as 45 percent of residents have a bachelor’s degree or higher.

Another area where Seattle stands alone is in its frothy office market. The report listed significant tech leases for each market, and F5 Network’s move to lease the entirety of a new downtown Seattle office tower was the biggest deal spotlighted in the report. The report did not mention two big leases signed by Amazon for a striking new tower, and a large swath of space above the downtown Macy’s.

Despite all these tech office deals, rents for tenants aren’t rising as fast as other markets. Seattle came in 10th in office rent growth. The average asking rent for office space of $32.45 per square foot is less than half of San Francisco’s at $72.90. Developers are active here: the 7 million square feet of new office space under construction in Seattle trails only New York and Silicon Valley.

All these figures point to Seattle as a more established tech market than some of the other top finishers in the report. In Pittsburgh, for example, tech accounted for a slightly higher percentage of new office jobs at 95 percent. But that only translated to 4,400 new jobs, or about one-sixth of Seattle’s new tech jobs over the two-year period.

It also shows that the San Francisco Bay Area is still the top tech region in the country. The report separates San Francisco and Silicon Valley, diluting their numbers. Combined, the two markets accounted for more than 41,000 tech jobs over the two-year period, with more than 15 million square feet of office space under construction.

 


~Nat Levy, Geekwire

Seattle’s Condo Conundrum: Historically Low Supply

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Seattle is experiencing a historic shortage of condos, as developers choose to build apartments rather than market-ready living spaces.

One reason for the shortage is an unusually stringent state condo law that makes it easier for condo owners to sue developers for construction defects.

“This is really an affordable housing issue,” said Kerry Bucklin, condo attorney with Bucklin/Evens in Seattle. “We need more housing. And in order to have more housing, we need to stop suing developers over ticky-tack complaints.”

There are only four tower developments currently slated to include condos in the downtown core.

Before 1999, King County had an average of around 2,000 condos on the market for buyers to purchase. Today, it’s lower than 350 — a record low.

Dean Jones with Realogics Sotheby’s International Realty says clarifying the law is one of several steps that can be taken.”The only solution I see to this affordability crisis on market-rate housing is reduce the headwinds that developers face in getting permitted products,” he said.

One foreign developer sees the void of condos and is ready to take a risk on Seattle. Dali Development from Taiwan has plans to construct the KODA tower at 5th Avenue and Main Street in Seattle’s International District. It’s slated to have 17 floors and 202 units, and will soon hit the market with condos between 400-1,124 square feet for up to $1 million.

“A lot of developers are looking to diversify their portfolio, and Seattle is the place to be,” said Kevin Hsieh with Dali Development.

“Also, Amazon is huge in Asia right now, so it’s become the most attractive place on the West Coast when it comes to growth and potential. Seattle is the city of the future right now,” said Hsieh.

~Jake Wittenberg, KING

Seattle’s affordability crisis is costing renters $6K per year, report says

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Across the United States, renters are paying more of their income on rent than ever before, and Seattle is no exception. But what’s the actual hit to the average renter’s pocketbook like?

A new study by Zillow analyzed cost burden from renters before the housing bubble and now. Between 1985 and 2000, typical rent in the Seattle metropolitan area was about 23.8 percent of area median income (AMI). Now, it’s about 30.8 percent.

In today’s dollars, that difference accounts for $5,592 per year, Zillow’s analysis found, but that’s directly comparing median income to median rent. For homeowners, housing affordability improved, with income share spent on mortgage actually dropping a couple of points.

This would imply that the affordability gap between renters and homeowners has only grown—meaning the typical cost burden for renters could actually be a little higher than 30 percent, although the Zillow data doesn’t conclusively point to that.

It would track with data from the Harvard Joint Center for Housing Studies, which found that in 2015, nearly half of renter households in Seattle spent more than 30 percent of their income in rent, with almost a quarter of renter households spending more than half their income.

Regardless, with more than half of those filing taxes in Seattle making under $50,000, it’s safe to say that not everyone that’s paying median rent is making median income—which broke $80,000 in 2015.

Even taking the numbers at face value, though, the problem is a little worse in Seattle than nationwide. In the United States as a whole, Zillow found, the percentage of median rent to median income went from 25.8 percent to 29.1 percent, costing the typical renter around $2,000 per year.