Homes in Kitsap

Silverdale Market Update

2009-07-30T10:24:00.000-07:00

Based on average sold price, the Silverdale market reached it's peak in the between the summers of 2007 and 2008. The average sold price reached $374,000. Subsequently, the average sold price reached it's low this March when the average sold price dropped to $268,000.

Remember: there's lies; damned lies; and statistics. So let me qualify these statistics. I track sales in six month blocks (i.e., my end of month July 2009 chart includes sales from February 1st thru July 31st). But I concentrate on the trend which is what this chart shows you.

But just looking at the raw sales data, there have been 25 sales over $335,000 in this report and 23 of them have "closed" since May 1st.

Buyers and sellers ask me, "how's the market?" Well, it would seem the Silverdale market is beginning to improve.

Kitsap County Market Statistics for July 27, 2009

2009-07-29T10:16:00.000-07:00

Several items of importance this past week: active listing count is up; new purchase contracts written are down; and closed sales are down.

County-wide active listings are 1,842 (the highest so far this year)
There were 45 new purchase contracts written (one short sale and nine foreclosures)
Closed sales for the week were 43 (one short sale and eight foreclosures)
Kitsap County's absorption rate increased to 43.1 weeks of inventory for sale
Silverdale's absorption rate increased to 14.1 weeks of inventory

The market share of short sales and foreclosures remains in the 20% to 25% range.

I still believe our markets will trend from buyer's markets to neutral markets later this year after summer ends and fall begins. I expect the neutral markets to last for about 18 to 20 months (May-June 2011) then shift to gradual, annual appreciation for sales prices.

Over the past 28 years, our average annual sale price appreciation has been about 3.25%. That being the case, house prices will double every 22 years.

2010 Tax Assessments are Out

2009-07-27T11:32:00.000-07:00

The clock is running...and you only have 60 days!

You should have received your 2010 property tax assessment the first week of July. If you agree with the revised assessed value, there's nothing to do. If you believe the valuation is too high, call the Kitsap County Assessor's office at 360-337-7160 (toll-free from Bainbridge Island at 842-2061) and make your case. But be certain to have enough information.

If this doesn't work, you may appeal your assessment to the Board of Equalization at 360-337-4424. Appeal forms must be submitted within 60 days of the mailing date of your 2010 evaluation.

Click here for the Assessor's web page (appeals on the left margin).

Kitsap County Market Statistics for July 20, 2009

2009-07-22T20:44:00.000-07:00

For the second week in a row we stayed above 1,800 active listings county-wide.

There were 1,817 active listings for purchase
Silverdale had 81 active listings
The county's absorption rate was 29.8 weeks of inventory
Silverdale's absorption rate was 11.5 weeks of inventory
There were 53 new purchase contracts written (four short sales and six foreclosures)
There were 61 closed sales (one short sale and 11 foreclosures)

As you can see by the trend line imposed on the graph, Silverdale's absorption rate is "trending" downwards based on where we were three years ago.

Kitsap County Market Statistics for July 13, 2009

2009-07-16T16:37:00.000-07:00

Our markets continued to "putter about" this past week. The only factor of note is that the number of active listings finally passed 1,800 (1,814).

Here are the numbers of note:

Active listings county-wide was 1,814
Active Silverdale listings was 77
Kitsap County absorption rate was 49.1 weeks of inventory
Silverdale absorption rate was 38.5 weeks of inventory
There were 46 new purchase contracts written (one short sale and 11 foreclosures)
There were 37 closed properties (seven short sales and four foreclosures)

Short sales and foreclosures still constitute one-quarter of our market activity.

Market Statistics for July 6, 2009

2009-07-09T12:55:00.000-07:00

The number of closed short sale transactions county-wide actually increased this past week to five (normally we only have one or two). Not too many other differences though.

Number of active listings county-wide was 1,788
Number of active Silverdale listings was 77
Number of new purchase contracts written was 44 (one short sale and seven foreclosed properties)
Number of closed sales was 64 (five short sales and six foreclosed properties)
County-wide absorption rate was 27.9 weeks of inventory for sale
Silverdale absorption rate was 19.3 weeks of inventory for sale

You may have read or heard that our markets are "picking up" since the number of pending sales has increased. Baloney! Last November the Northwest Multiple Listing Service (NWMLS) had one category of pending (pending) now there are four (pending inspection, pending feasibility, pending backup (offer) and pending). This has resulted in an artificial increase and double counting as it's normal for other three pending type to move to pending when the buyer and seller negotiate the inspection results or decide they don't want to entertain a backup buyer's offer).

Watch out for this type of stuff!

Kitsap County Marketing Statistics for June 29, 2009

2009-07-02T20:10:00.000-07:00

The number of newly written purchase contracts continues to be a positive indicator of the newly-found interest of buyers.

These are the statistics for the past week:

Total number of listings for sale in Kitsap County - 1,772
Total number of listings for sale in Silverdale - 73
Number of new purchase contracts written in Kitsap County - 65 (seven short sales, five foreclosures)
Number of closed sales in Kitsap County - 56 (five short sales, ten foreclosures)
Absorption rate for Kitsap County - 31.6 weeks
Absorption rate for Silverdale - 24.3 weeks

The absorption rate for the county is remaining relatively stable but the rate for Silverdale is fluctuating between 25 weeks and 80 weeks.

The number of active listings in Kitsap County remains below 2,000 houses.

Buyers continue to make offers on short sale properties but very few of these purchase offers ever close.

2009-06-26T15:34:00.000-07:00

Here's the recap for last week:

Kitsap County active listings back below 1,800 to 1,787
Silverdale active listings down to 78
New contracts written county-wide was 66 (strong week)
Kitsap County closed sales was 51 (about average)
Kitsap County absorption rate was 35.1 weeks of inventory for sale
Silverdale absorption rate was 78 weeks of inventory for sale

Of the 66 new purchase contracts written last week, 11 were foreclosed properties and only one was for a short sale. Of the closed sales last week, 12 were foreclosed properties and three were short sales.

The percentages of short sales and foreclosures to total contracts written and closed sales stayed within the 18% to 25% range.

Potential Buyer Incentive Program Changes in the Works???

2009-06-18T11:12:00.000-07:00

(I believe) the American Recovery and Revitalization Act (H.R. 1) established the $8000.00 first-time buyer tax credit. What you may not know is the US Senate version was for $15,000.00 originally but didn't clear the House/Senate conference.

Well...some of our elected representatives, as well as some powerful lobbying groups, aren't satisfied with the slow recovery of the real estate markets. So, there have been some discussions about increasing the credit amount to $15,000.00, making the credit available to any home buyer and extending the program (to qualify the home must fund and recond on or before November 30, 2009).

Stay tuned!

Weekly Kitsap Marketing Statistics for June 1, 2009

2009-06-02T20:40:00.000-07:00

The past two weeks the trend of new purchase offers written and accepted has decreased to 43 and then 39. The average over the previous six weeks was 54. Not a good trend! And as the number of accepted offers decreases, so will the number of closed sales (six week delay).

Here is the Kitsap recap for the week:

39 new purchase offers accepted by sellers (10 foreclosures and one short sale)
43 closed transactions (five foreclosures and one short sale)
1,770 active listings for sale county-wide
85 active listings for sale in Silverdale
Absorption rate for Silverdale was 14.2 weeks (not bad)
Absorption rate for Kitsap County was 41.2 weeks

Since I started "breaking out" the foreclosures and short sales the past two weeks it's evident that many buyers are avoiding short sales and focusing on foreclosures.

That's what I expected. Now I have proof.

Weekly Kitsap County Marketing Statistics for May 25, 2009

2009-05-27T21:05:00.000-07:00

The number of newly written contracts was 43 and back to where we were from January through March.

I'm also identifying the actual number of short sales and foreclosures from now on.

So here are the stats:

1,776 active listings in the county
89 active listings in Silverdale
43 new contracts written (one short sales and nine foreclosures)
40 sales in the county (one short sale and 12 foreclosures)
Kitsap County absorption rate is 40.4 weeks of inventory for sale
Silverdale absorption rate is 86 weeks of inventory

Total short sales and foreclosures is still around 25% of transactions.

Additional Government Help to Spur Home Sales?

2009-05-21T22:21:00.000-07:00

In the past two weeks the Obama Administration has increased the focus helping that segment of the market involving short sales.

Specifically, the administration is acting as an intermediary between sellers and lenders by offering cash incentives to complete the short sale.

Also, there is an attempt to encourage junior lien holders (home equity lenders) to accept a reduced amount for settlement and allowing a short sale to proceed.

Whatever the outcome, I believe it will take at least two years, maybe three, for the inventory of short sales and foreclosures to be sold (to whomever). Remember, until we've had at least two quarters of increasing GDP, there'll be more homeowners losing their jobs and being forced into this situation.

New Information on Short Sales

2009-05-20T10:32:00.000-07:00

Attention homeowners...if you are having problems making mortgage payments and your lender can't (or won't) help you, be very careful if you are considering a short sale.

Last week I received information from our staff attorney at Washington REALTORS stating that some (but not all) mortgage lenders are deciding not to release sellers from the unpaid debt amount on a short sale. The end result is the lender has six years to sue the seller for repayment.

The lender can also sell the right to collect the debt to a collection agency or other third party. If a court issues a judgement against the seller for the unpaid amount, that judgement will attach to any real property (i.e., a home or rental property) owned by that seller. This judgement is valid for another 20 years. Ouch!

You must seek legal advice before you choose the short sale alternative!

Kitsap County Market Statistics for May 18, 2009

2009-05-18T21:45:00.000-07:00

There were 52 new purchase contracts written in Kitsap County this past week. That means over the past seven weeks we've been averaging 30% more contracts being written.

However, not all of these purchases have closed and if a property comes back on the market then there is some double-counting.

But here are the numbers:

52 new purchase contracts (16 either short sales or foreclosures)
35 sales county-wide (10 either short sales or foreclosures)
1,780 active listings county-wide
50.9 weeks of inventory for sale county-wide
84 weeks of inventory in Silverdale

Keep watching the absorption rate trend line that I'll be posting on some of my charts.

CRS Real Estate Education

2009-05-16T19:23:00.000-07:00

One of the reasons I pursured the Certified Residential Specialist (CRS) professional designation is because it sets me apart from my peers.

Only four percent of REALTORS are CRSs and I'm one of them! Even though we are a small segment (41,000) of the REALTOR population, we are involved in 26% of all residential real estate transactions nationwide.

In addition to the international referral network, CRS education classes are absolutely the best for residential REALTORS!

I helped the Washington State CRS Chapter sponsor this one-day class several weeks ago in Tacoma with Ed Hatch, CRS as the instructor. The class is titled "The New Negotiating Edge...A Five Step Behavioral Strategy."

Kitsap County Market Statistics for April 27, 2009

2009-04-28T20:15:00.000-07:00

The increasing trend of newly written contacts we've seen over the past three weeks came to an end this past week as the number decreased.

Number of new purchase contracts written - 46

Number of new contracts that were short sales or foreclosures - 11 (24%)

Number of recorded sales in Kitsap County - 32

Number of sales that were short sales or foreclosures - 7 (22%)

Number of active listings in Kitsap County - 1,749

Absorption rate for Silverdale - 86 weeks

Absorption rate for Kitsap County - 55.9 weeks

Taken together and in context, our markets aren't experiencing any changes so far this year.

Kitsap County Market Update

2009-04-21T11:57:00.000-07:00

Based on what's been happening over the past three weeks with the number of new contracts being written, we may be seeing the early beginnings of a market shift from strong buyer market towards a neutral market.

Downpayment Assistance for Homebuyers

2009-04-18T21:35:00.000-07:00

This week the Washington State Legislature enacted a very creative program using the $8,000 tax credit (HR1, American Reinvestment and Revitalization Act) and parlaying it into downpayment assistance for first time homebuyers in Washington State.

We are the first state to do this and our legislators deserve all the credit. If you're interested, click here to a link from Washington REALTORS.

Maybe Kitsap Markets are Changing

2009-04-16T22:10:00.000-07:00

I've been watching the number of new purchase contracts written each week since the beginning of January 2009 and the numbers are up the past two weeks.

This video contains my assessment and concerns of the situation.

Look at San Diego, CA to See What's Next

2009-04-14T11:18:00.000-07:00

If you want to know where we're headed, take a look at San Diego, CA. Why...because the last two market cycles have begun in San Diego. The first in the mid-1990s and the current cycle in 2005.

Last October an article appeared in The Wall Street Journal which talked about the number of sales almost doubling while the median sales price was decreasing comparing 2008 vs. 2007. The article didn't say whether this was just comparing the months of October or whether it was cumulative (Jan thru Oct).

Our median sales prices have definitely decreased over the past two years. Now the number of weekly purchase contracts county-wide has increased almost 25% each of the past two weeks (compared with mid-January through the last week of March).

This chart shows the number of active listings and number of sold homes over the past 15 months.

Silverdale Average & Median Sales Prices

2009-04-09T21:18:00.000-07:00

This chart shows the history of sales in Silverdale, WA for the past twenty-four months. Note that the downward trend for both the average and median sales prices is similar.

I Apologize for the Delay

2009-04-09T11:27:00.000-07:00

I just returned after being in Vancouver, WA for several days where I attended the CRS201 class (Listing Strategies) so I'm behind on my market statistics blog post.

The easy way out is to give you all some quick information which may be useful so click here for the front page of the Washington REALTORS website.

This should keep you busy for awhile and give me time to collect, analyze and post this week's market statistics.

Legislstive Mandated New Home Warranties (ESSB 5550)

2009-04-02T21:04:00.000-07:00

I received this information from Paul Guppy, VP for Research at Washington Policy Center, a nonpartisan independent policy research organization. Click here for the website.

Our state legislators are at it again! Proposed legislation is being debated that would create a new way for consumers to sue homebuilders and small contractors (remodelers) by mandating that all new homes carry a state-imposed warranty creating liability for builders for up to six years. As Paul points out, now is certainly not the time given our current real estate markets.

The proposed warranty would be imposed on each purchase contract, even if the terms conflict with the homebuyer's desires. And, homebuyers would be barred from choosing a different warranty or voluntarily establishing their own guarantee terms directly with the builder.

And who's backing this proposal...well, the state trial lawyer's association of course! With the threat of more litigation comes more expensive insurance premiums for architects, engineers, builders, general contractors and subcontractors. Guess who's going to pay for this...YOU, when it comes time to buy a new home or undertake a remodel!

The Better Business Bureau, state Attorney General's Office and the Department of Labor and Industries all have programs to identify responsible contractors. Builders are already required by law to have insurance to pay customers if the builder fails to fulfill the contract terms.

I know our legislators try to do what they believe is "right," but do you think special interest groups were involved? And I wonder if the sponsors of this legislation consulted with builders, architects, engineers and building trades? Hmmm.

BTW: if we're going to write legislation, it helps to "get it right" the first time.

Kitsap County Market Statistics for March 31, 2009

2009-04-01T10:42:00.000-07:00

While there are some differences in this week's numbers compared with the those beginning in January, there is no indication our markets are changing:

1,823 total active listings county-wide
42 new contracts written this week county-wide (six of which were either short sales or foreclosures and this number is about half as many as in the past)

50 recorded sales county-wide (16 of those being short sales or foreclosures)

Silverdale absorption rate was 47 weeks of inventory on-hand

Kitsap County absorption rate was 36.7 weeks of inventory for sale

As I mentioned, no change in any of the trends yet.

D-I-S-C Personality Profiling

2009-03-30T22:15:00.000-07:00

I've written before about personality profiling and its importance in helping me communicate with my clients.

It's so important in fact that I have the D-I-S-C information posted on my website in the seller pre-listing and buyer pre-purchase portions. It's available for anyone to use.

But there are two additional elements:

how my clients process information I give them
who's the decision maker

If you expect your REALTOR to listen to you instead of talking at you, give me a call.

$75B Help For Struggling Homeowners

2009-03-27T15:24:00.000-07:00

This plan attempts to help homeowners who are having trouble making their mortgage payments.

This plan has two ways in which to help homeowners:

Those who want to restructure their loan
Those who want to refinance their loan's interest rate

Each plan has different qualifiation standards so you may or may not qualify. This is the link to the website I mention in the following video.

Having Problems with Mortgage Payments?

2009-03-19T20:49:00.000-07:00

We have intra-office training weekly. This week several folks representing companies who can provide help to homeowners facing financial problems met with us. Their names were:

Rachelle Strutz, XTRA MILE Investment Solutions
Steve Frandsen, Xtended Grace Mortgage Relief

While I don't usually make referrals based on initial meetings, I have to admit these folks were really impressive so here's their contact information. Both have offices in Gig Harbor.

Rachelle's phone is 360-286-1551 and you can click here for her website. Steve's phone is 253-677-0240 and you can click here for his website.

Here's how they can assist you. If you're having trouble making payments, speak with Steve first. He may be able to convince your lender or servicer to modify your monthly payment by reducing your mortgage amount, reducing your interest rate, increasing the payment term or converting you to a fixed mortgage from an interest only or adjustable rate. This step may enable you to stay in your home if that's your goal.

However, if you're having financial difficulties and you want to sell your home, then speak with Rachelle. She is an expert on the short sale process (you don't have to miss a payment for your lender to agree to a short sale).

There's no guarantee that either Steve or Rachelle can help you but I recommend giving them a call if you are having financial difficulties.

Dave Explains Absorption Rate

2009-03-17T16:44:00.000-07:00

In this video Dave explains how absorption rate is computed and how that information can be used by either buyers or sellers to help them on their real estate decisions:

Is this a buyer's market or seller's market
What is/are the market trends now and in the short-term
How much should I ask for my house
How much should I offer in our purchase agreement
Are we priced ahead or behind the market

If you have any questions just give me a call.

Have You Heard About Chinese Drywall?

2009-03-15T21:57:00.000-07:00

Drywall manufactured in China has become a problem in 25 states so far. The drywall could be the potential cause of respiratory problems as well as being the cause of electrical fires.

How do you know if you have Chinese drywall in your home:

Does your home smell like rotten eggs
If you have air conditioning, has your air conditioner turned black from corrosion
Does it say Made in China, Knauf Plasterboard Tianjin or Taishan Gypsum

Not all Chinese drywall is defective but if you can determine you have drywall manufactured in China, I would recommend you disclose this.

More Short Sale Information

2009-03-12T21:44:00.000-07:00

I attended a webinar today sponsored by the National Association of REALTORS on the subject of short sales. Here are the highpoints:

Almost 33% of listed short sales aren't closeable
Second (or third) lien holders will eventually accept as little as 10% recovery
Recourse vs. non-recourse debt is a critical issue
We need buyers to enter the market (for the right reason) to absorb excess inventory
As the selling agent, insist in the purchase contract that no other offers will be accepted by the lender (we need to remove the inventory, not anger potential buyers)
Only show the right short sale properties to buyers

I'll keep you all updated on any new changes or information.

What You Always Wanted to Know About PITI

2009-03-09T17:16:00.001-07:00

This week I wanted to talk briefly about the mortgage acronym PITI:

Principal - how much you borrow
Interest - the interest rate at which money is borrowed
Taxes - property taxes assessed by local government
Insurance - home owner's insurance

Interest rates have been "hovering around" six percent for the better part of a year but if rates increase...so will the monthly mortgage payment.

First-Time Homebuyer Tax Credit Form

2009-03-07T19:18:00.000-08:00

I've made several posts over the past two weeks addressing the government's new first time home buyer tax credit for 2008 ($7,500) and 2009 ($8,000). But I didn't have any information at the time on the tax form to be filed.

In my continuing effort to be The Source of real estate information for your family, click here to see (and make a copy of) IRS Form 5405 which you will need to file with your annual tax return.

Clarifying Information on President Obama's Mortgage Plan

2009-03-06T21:43:00.000-08:00

The political and financial information from the current administration has been coming with more regularity this week than in the past.

This update is provided compliments of Cherie Kesti who works for Windermere Mortgage. Click here to read the latest on the plan to assist homeowners having trouble paying their mortgage.

Financial Recovery Times for Short Sales and Bankruptcies

2009-03-06T13:55:00.000-08:00

Here's some neat information I received from the CRS205 Finance class I attended in February regarding the recovery time for homeowners who are involved in a short sale, foreclosure or bankruptcy.

Being involved with any of these will affect your credit. It may prevent you from seeking additional credit or require you to make a higher downpayment or pay a higher interest rate until after these timeframes, especially if you wanted to buy another house:

If the homeowners file a Chapter 7 bankruptcy this remains on their credit report for four years from discharge or dismissal.
If the homeowners file a Chapter 13 bankruptcy this would remain on their credit report for two years from discharge or four years from dismissal.
If the homeowners have filed multiple bankruptcies the credit report would be affected for five years after discharge or seven years from dismissal.
If the property is foreclosed this would remain on the credit report for five years from completion and you would be required to make a 10% downpayment and qualify with a 680 credit score (can't qualify for a second home or investment property purchase).
If the property is turned over to the lender using a deed-in-lieu of foreclosure your credit report will be affected for four years after completion
If the homeowner/lender sells the property by short sale the homeowner's credit report will be affected for two years after completion.

These are the rules in effect right now as I understand them. But they could be modified as we work our way through the current housing market cycle.

Consult an accountant and/or attorney before you make the final decision.

Dave Jones Talks About Kitsap County's Real Estate Markets

2009-03-05T12:16:00.000-08:00

In this video Dave takes a few minutes to discuss the current situation about active inventory, new contracts being written and sold properties in Kitsap County.

Dave also talks about the abundance of short sales and forclosures in the context of our overall markets as of the first week of March 2009.

Kitsap Market Statistics for March 2, 2008

2009-03-05T11:03:00.000-08:00

This is a recap of the market statistics for the past week:

Active listings in Kitsap County - 1,784 (down from 1,823)

New purchase contracts written throughout Kitap County - 46 (up from 37)

16 of 46 new contracts were either short sales or foreclosures - 35%

Absorption rate for Silverdale - 22.3 weeks (down from 43.5 weeks)

Absorption rate for county - 43.5 weeks (down from 62.9 weeks)

Closed sales county-wide - 41 (up from 29)

14 of the 41 sales were either short sales or foreclosures - 34%

Summary: The number of short sales and foreclosures is one-third of activity. This is good because we need these properties sold so markets can begin to recover. Click here for average sale price info.

What's Better for the Seller...Short Sale or Foreclosure?

2009-03-03T19:50:00.000-08:00

Both short sales and foreclosures can have short-term as well as long-term consequences for the homeowner (seller).

Here are several specific circumstances as I understand them:

Both will have a negative affect on the seller's credit rating
Short sale "forgiven" debt becomes an obligation payable to the lender
Foreclosure eliminates the debt which the lender has no recourse to collect
Short sale "forgiven" debt may be considered a "taxable event" by the IRS
Foreclosure debt doesn't result in a "taxable event" by the IRS

If you are facing either of these, it's important that you consult with your accountant or legal counsel to determine the potential consequences of your particular situation.

Kitsap County Market Stats Recap To Date

2009-03-01T09:58:00.000-08:00

I just completed a recap for 2008 concerning home sales for all of Kitsap County:

Number of homes available for purchase in 2008 - 7,861
Number of homes sold in 2008 - 2,387
Percentage of listings sold - 30.3%

I then completed the same calculation for the first two months of 2009 county-wide:

Number of homes available for purchase in 2009 to date - 2,347
Number of homes sold in 2009 to date - 208
Percentage of listings sold to date - 8.8%

Buyers: Don't try to "time the markets" because you'll have missed it. If you're serious about buying...do it now! You have the leverage.

Sellers: Your need to get ahead of the markets. Get your general building inspection now and make the repairs. Pump your septic if it hasn't been pumped within three years and order the health letter. And finally...Price Competitively.

More Information on the $8,000 Tax Credit

2009-02-27T12:51:00.000-08:00

The longer we wait, the better the information. Click here to see a very informative one-pager from the Illinois Association of REALTORS.

As always, contact me if you have any questions or need more info.

Couple New Lending Changes for Buyers

2009-02-26T23:33:00.000-08:00

Here are some new lending updates that affect buyers effective immediately:

Kitsap limits increased for FHA purchases: single family $475,000; duplex $608,100; three-plex $735,050; and four-plex $913,450
Conventional financing now available for investors who own more than four homes.

The requirements are somewhat detailed so contact me for the specifics. Happy to help at your convenience.

Correction to Refundable Tax Credit

2009-02-26T09:45:00.000-08:00

On Tuesday's video post I mentioned that the recently approved stimulus legislation included an $8,000.00 non-refundable tax credit. This is incorrect!

The tax credit is refundable which means if your taxes (joint return) are less than $8,000.00, then you would receive a check for the difference.

I apologize for any confusion.

Is Now A Good Time To Buy A House?

2009-02-24T20:55:00.000-08:00

Dave responds to a question about whether now is a good time to buy a house or to wait.

Provisions of the $75B Mortgage Bailout Package

2009-02-23T20:29:00.001-08:00

Although I'm certainly not the expert, not to mention the package is less than a week old, these are some of the provisions in the proposal as I understand them:

Homeowners who might be eligible:

Those who have missed mortgage payments (don't know how many it takes) or who have been notified of a pending foreclosure
Haven't yet missed a mortgage payment but who have a high income-to-debt ratio (I believe the number is greater than 38%)
Mortgages aren't held by either Fannie Mae or Freddie Mac

Homeowners who are not eligible:

Folks who have already lost their homes
Those with vacation homes (second homes) or investment properties

As I mentioned, this program is so new the specifics are probably being debated as more and more politicians and administration officials actually read and try to interpret the wording.

Dave Jones and Walt Frey Discuss Ninja Principles

2009-02-21T01:21:00.000-08:00

Walt Frey was the original Ninja Selling instructor and taught the classes beginning in 2003 in Washington State. Since then Walt has taught Ninja throughout the country.

The Ninja program is based on real estate principles developed by Larry Kendall, Chairman of The Group Inc., Fort Collins, CO, one of the premier real estate countries in the United States.

2009-02-18T09:13:00.000-08:00

Now that H.R.1 (economic stimulus law) has been signed, there are several real estate specific provisions that may affect you. I've attached the spec sheet from the Washington REALTORS so you can have a look for yourself.

Give me a call if you have any questions.

Meet Dave Jones...LIVE!

2009-02-12T11:37:00.000-08:00

I've been uploading videos to my website for the past several months and just realized I can also do this on my blog so here goes!

Should We Refinance our Mortgage

2009-02-06T12:02:00.000-08:00

I'm including an information sheet that describes some behind-the-scenes actions by Freddie Mac and Fannie Mae provided by Cherie Kesti. You might find this interesting.

But the question remains: "how much money can we save if we refinance now?" You need to know your monthly payment (principal and interest only) and the cost of money. What's that?

OK, here are figures for the cost of borrowing money you can use. At 6% the cost to borrow $1,000 for 30 years is $6.00; at 5% the cost is $5.37; at 4.5% the cost is $5.07; at 6.5% it's $6.32; and at 7% the cost is $6.65.

For example, the prinicipal and interest only cost of borrowing $100,000 at 6% is $600.00 (100 X $6.00). Rates today are around 5% so the principal and interest cost to borrow $100,000 at 5% is $537.00 (100 X $5.37).

There will be costs to refinance and you won't know those until you've spoken with a loan officer. For argument's sake, let's say the cost to refinance is $5,000 and the interest rate of your mortgage is 6% and you want to refinance $100,000. Therefore, the principal and interest portion of your monthly payment is $600.00. If the rate on your refinance is 5%, then your monthly principal and interest payment portion would be $537.00, saving you $63.00 per month in principal and interest or $756.00 per year.

Lastly, divide the refinance cost ($5,000) by your annual savings ($756) to determine the pay-back period. In our example this would be a bit over six years. So if you were planning to stay in your home for the next six years, it may make good financial sense to refinance.

If you're considering refinancing, please consult with your accountant who will be able to help confirm your math and recommend whether this may be a good decision in the overall scheme of your financial situation.

Fed May Step in to Help Homeowners

2009-02-04T11:12:00.000-08:00

In reading the news summary this morning, the Fed may be ready to flex its muscles (read leverage) to help homeowners who are 60 days delinquent on their mortgage payments.

Here's what the Fed could do: lower the mortgage amount; lower the interest rate; or lengthen the payment time.

This would occur when troubled asset relief program (TARP) funds have been provided to institutions holding those delinquent mortgages.

Kitsap County Market Statistics for February 1, 2009

2009-02-03T11:53:00.000-08:00

This past week there were 38 new real estate purchase offers written. Of those 38 contracts, 11 were for either short-sales or foreclosed homes.

I believe the above information is very important so I'll continue to "break out" these numbers over the next several months or until something else changes in our markets.

The Silverdale market had four homes change to a "pending" status but of those four, one was a short-sale and one was a "make us an offer" situation.

However, with those four pendings, Silverdale's absorption rate dropped almost in half to 19.3 weeks of inventory available for sale.

County-wide, the absorption rate dropped about eight percent to 60.2 weeks of inventory for sale.

Although the drop in absorption rates is good news, this is happening because not very many new homes are being listed and the number of purchase contracts being written has remained fairly stable (mid-30s each week).

Market Statistics Update

2009-01-30T18:44:00.000-08:00

Yesterday I conducted a more detailed review of the 37 new purchase contracts written two weeks ago and 18 of them were for either short-sales or foreclosed (bank-owned) properties.

I then did a more comprehensive review and of 116 recently written purchase contracts, 55 were for either short-sales of foreclosed properties.

Recently then, over 40% of the new purchase contracts being written are in these two categories. This is similar to circumstances in the San Diego, California market. I mention this because whatever is happening there eventually spreads throughout the rest of the country (usually with at least a six month delay).

I also conducted a search of the 1,800+ plus active listings and somewhere around 200 have been coded as either a short-sale or foreclosure. I say somewhere because it's difficult to determine the status of these properties because of the wording used in the listing. But I believe the percentage of short-sales and foreclosures is about 15% of our current active inventory.

The unanswered question is how many more properties of this type will be "coming on the market" for the next six months or so.

I also believe this is a preview of what's coming up and it's positive because we need to absorb all these short-sales and foreclosures before our markets have a chance to improve.

New Credit Scoring System in Effect

2009-01-29T21:41:00.000-08:00

The January 29, 2009 issue of The Wall Street Journal has an article on the improved credit scoring system devised by Fair Issac Corp. and recently released.

Click here to read this article.

Remember, we are all entitled to a free credit report (but not a credit score) annually from each of the three credit bureaus. You can click here here and be taken to the website for that information.

Economic Recovery? Unfortunately...Politics As Usual

2009-01-22T20:29:00.000-08:00

Several months ago I wrote it was vitally important that professional politicians stay out of the way of our economic recovery. Well...I guess that's not going to happen!

I don't like posting politics but you really need to click here and read The Wall Street Journal's January 22nd front page article on bank recoveries. You may come to the same conclusion I did.

President Obama's no dummy. He's surrounded himself with an intelligent and capable team of economic and financial advisors to correct the situation. But some members of Congress have a short memory and a sorry case of conflict of interest. If President Obama doesn't put a stop to this right now, he won't get a second chance!

Oh, did anyone else happen to see last week's comment from Senate Majority Leader Reid that "I don't work for President Obama?"

Recycling Your Old Television

2009-01-21T20:42:00.000-08:00

In light of the upcoming change of television signal reception (February 14, 2009 (which may be delayed until July)), there are several locations in Silverdale which will recycle televisions for free.

If you own a Sony, Zenith, LG or Goldstar television, you can take it to a Waste Management location (transfer station on Dickey Road).

If you own a Panasonic, Sharp or Toshiba television, you can take it to Office Depot at 9931 Mickleberry Road.

Although not in Silverdale, Wal-mart will recycle Samsung televisions taken to their drop-off spots.

Regardless of the manufacturer, Best Buy will take your old television provided you purchase a new one and have it delivered to your home.

Short Sale Report

2009-01-16T10:53:00.000-08:00

One of my CRS "buddies" told me about this blog site that has information on how national banks respond to requests for short sales from homeowners in trouble.

Click here to check out this information (as Artie Johnson used to say on Laugh In..."veddy intarestink)."

Update: Short-Sale "Catch-22s" For Sellers (and Buyers)

2009-01-13T14:59:00.000-08:00

Good News!

The Washington State Department of Revenue reversed its position this morning to collect real estate excise tax on the difference between the sale price and outstanding mortgage amount on a short-sale. Chalk this victory up to the Washington REALTORS and Escrow and Title Industry among others.

The Department of Revenue will only collect real estate excise tax based on the sale price.

This removes the third "Catch-22" I addressed on my previous blog post.

Short-Sale "Catch-22s" For Sellers (and Buyers)

2009-01-10T19:02:00.000-08:00

I've recently posted information on short-sales but yet to address possible tax consequences that occur at the local (city/county), state and federal levels.

Here goes!

In Kitsap County the sale of real property "triggers" a real estate tax of 1.78% on the sale price of the property. If the sale price were $100,000.00, the excise tax due the county would be $1,780.00. This tax amount is deducted from the seller's proceeds at closing.

We have no state income tax in Washington State. But if you live in a state that has an income tax, your state may consider the difference between the outstanding mortgage amount and the sale price as income to be taxed at your marginal tax rate. This is one of the "Catch-22s."

At the federal level, the IRS may consider the amount "foregiven" by the mortgage holder as income and thus taxable at the seller's marginal tax rate. This in another "Catch-22."

By the way buyers, just this week the Washington State Department of Revenue issued direction to escrow companies that it considers the foregiven amount of a short-sale to be subject to the 1.78% excise tax. So...who pays this if the seller has no money? This is the third "Catch-22."

If you're selling under short-sale conditions you need to consult with your accountant to determine the tax consequences.

Silverdale Real Estate Market Statistics

2009-01-07T21:50:00.000-08:00

Here are two charts showing some additional market statistics for Silverdale. The sales chart covers the past 2 years of sales showing the average and median prices trends for those sales.

The other chart shows the trend of original list price to sale price ratio for this period.

Facing Foreclosure...Here's Help in Washington State

2009-01-07T21:31:00.000-08:00

If you live in Washington State and are having problems making your mortgage payment, here's a link that may help you.

Kitsap County Weekly Market Statistics for January 5, 2009

2009-01-05T20:07:00.000-08:00

This is the first report for 2009 and let's all hope the information I present throughout the year becomes more positive by year's end.

That being said, the absorption rate for Silverdale declined to 78 weeks of active inventory for sale. This rate has been decreasing since the beginning of December 2008 but not because the market has improved...unfortunately because there are fewer active listings for sale.

The absorption rate for Kitsap County also decreased, from 200.4 weeks of active inventory the previous report to 134.5 weeks this past week. This number has remained relatively stable for the past five months.

There were 26 new purchase contracts written the past week which is five more than the average for the month of December 2008 but one-half the number prior to the stock market's major decline this past October.

There were 1,738 active listings for sale county-wide this past week.

I expect the number of active listings to gradually increase over the next several months, possibly to 2,400 or more. For sellers...more competition. For buyers...more choices. If I'm correct, the absorption rates will also increase unless the number of contracts written also increases. More to come!

Your Credit Report

2009-01-01T19:58:00.000-08:00

Your credit score is one of your most precious resources...especially in today's economy! A good score (above 720) can open doors and save you money. But what if your score is "bruised" amid the credit crunch?

Don't fret. Here are some tips to repair damage and increase your credit rating:

Order a credit report from the top three bureaus (Equifax, Trans-Union and Experian). Don't be surprised if the results are slightly different. Creditors aren't required to report to all three credit bureaus, so they typically report only to the bureau to which they also subscribe.
Examine your reports carefully. Nearly every consumer has an error on at least one credit report from one of the major bureaus. Errors can include typing, outdated and incomplete information to innacurate account history. Make a list of items to dispute and why.
Dispute. Either by completing the dispute form provided with your report or write a letter. Identify each mistake and state why it's wrong. Send a photocopy of your report with the mistakes circled to the reporting bureau. Include copies of supporting documents.
Document. Keep copies and records of all forms, letters and documentation you send to the bureaus plus the dates sent. The bureau must investigate any relevant dispute within 30 days of receiving your letter.

Click here to order a copy of your credit report (you are entitled to one FREE report from each bureau each year). However, this program does not entitle you to your credit score.

Kitsap County Market Statistics for December 29, 2008

2008-12-29T21:15:00.000-08:00

This is the final report for 2008.

The absorption rate for Silverdale remained at 92 weeks of inventory for sale while the county's absorption rate increased to 200.4 weeks.

There were 11 new purchase contracts for the county the past week and the total number of active listings was 2,204.

Happy New Year to all my faithful readers!

Short-Sale vs. Foreclosure: Which Should I Buy?

2008-12-28T10:36:00.000-08:00

As a serious buyer, is it better for me to make an offer on a property that is listed as a short-sale or a property that is bank-owned?

For clarification, a short-sale is defined as a home in which the owners are facing problems making their mortgage payments and are negotiating with the lender to sell their home at a lower price than the outstanding mortgage. A short-sale property may be occupied by the owners or vacant.

On the other hand, a bank-owned home is one in which the owners have defaulted on their mortgage and the bank holding the mortgage has assumed ownership of the home. This home is vacant.

Here's the quick and dirty on submitting an offer. A short-sale is a catch-22. Even if the owner accepts the contract terms, the lender has the final word! But with a foreclosed home, at least you're dealing directly with the lender.

What about due diligence on condition? There are no guarantees here. Pay for a general building inspection even though you have no leverage to ask for repairs made by the owner/lender and be prepared for the worst. Also be aware that some owners may intentionally damage the property prior to their leaving.

If it seems too good to be true, maybe it is. That's the risk you face!

Thinking of Remodeling?

2008-12-20T13:10:00.000-08:00

If you want to get the lastest information on remodeling your home, I highly recommend you check out this website.

You can also get information for the highest return on investment (ROI) if you look at the 2008-2009 cost vs. value button.

Mortgage Interest Rate Information

2008-12-15T12:06:00.000-08:00

The Open Market Committee of the Federal Reserve will be meeting tomorrow and possibly Wednesday. This is the group that sets the federal funds rate which is the rate member banks charge each other for overnight loans (yes, there is still money being lent)!

Anyhow, expect the rates to be reduced another 25 to 50 "basis points" (1/4 percent to 1/2 percent) within a day or so. This could bring the 30-year fixed rates down to 5.25% or lower for the near future.

Also, there is "talk" that the Treasury Department (Timothy Geithner has been selected by president-elect Obama to replace Henry Paulson) or the Federal Reserve may subsidize interest rates for first-time buyers. This could reduce rates another one percent or so. If this happens, and it's a good possibility, I don't believe any action will be taken until after president-elect Obama's inaguration (January 20, 2009).

I'll keep you all advised.

Tax Law Change for Second Properties

2008-12-11T10:56:00.000-08:00

If you own a vacation home/second home, read this!

Congress has presented us taxpayers a Christmas tax present effective January 1, 2009. This will have acute tax consequences if you own a vacation/second home and intend to occupy that home as your principal residence in the future.

Current tax code: you can sell a principal residence every two years without any tax consequences on capital gains if you occupy that residence for 24 of the past 60 months. The capital gains exclusion is $250,000 for a single person and $500,000 for a couple. You could then sell that vacation home after 24 months occupancy as your principal residence and use the $250,000/$500,000 capital gains exclusion. Any amount above the exclusion rate is taxed as a long-term capital gain at the 15% rate.

New tax code: you can still sell a principal residence with the current capital gains exclusion but you will only be able to exclude a pro-rata portion of your vacation/second home's capital gains based on the percentage of time you occupied that home as your principal residence.

Call me if you have questions and I can provide more specifics but eventually you'll need to consult your accountant (and hope he/she is aware of the tax code change).

Kitsap County Market Statistics for December 1, 2008

2008-12-06T09:30:00.000-08:00

Last week was just another week in paradise for Kitsap's real estate markets. However, being Thanksgiving week there was even less activity than I've come to expect in this cycle. But there were 23 new purchase contracts written which is consistent with the trend over the past two months.

The absorption rate for Silverdale was 100 weeks of inventory for sale. With the exception of two weeks over the past ten, that number has continued to decline slightly as the number of active listings also has declined. But that doesn't mean the Silverdale market has improved for sellers. After the holidays, more listings will "come on the market" so the absorption rate will begin to increase.

The same is true for the county overall. There were eight properties that changed to a pending status out of 2,391 active listings, a dismal absorption rate of 298.9 weeks. That number will certainly decrease, especially after the first of the new year. But it will still average over 120 weeks of inventory for the near future.

Mortgage Foreclosure Is Not An Option

2008-11-10T08:59:00.000-08:00

NeighborWorks is a non-profit organization that focuses on helping homeowners who are or could have problems in the future making their mortgage payment.

Click here to visit the NeighborWorks website.

Kitsap County Market Stats for November 3, 2008

2008-11-04T17:25:00.000-08:00

For Kitsap County overall, the number of active listings decreased to 2,432 and the number of purchase contracts written in the past week was 27. Both of these numbers continue to decrease.

The absorption rate for Silverdale this past week was 120 weeks of inventory for sale. The absorption rate county-wide was 121.6 weeks.

Our real estate markets seem to be in a "holding pattern"...just waiting (for something).

The Mechanics of a Short-Sale

2008-10-30T12:23:00.000-07:00

A short-sale occurs when a seller owes more to the mortgage lien holder (s) (a.k.a. lender in my post) than the property will sell for and the seller cannot pay the difference including the closing costs.

Short-sale transactions are becoming a greater share of Kitsap County's sales. In fact, I completed a search of the MLS yesterday using "short-sale" and "bank-owned" in the agent remarks block for active properties and had 128 "hits."

The last time our markets saw this number of short-sales was during our last market cycle of 1994-1996. We eventually moved through that cycle as we will through this one. Unfortunately, don't expect that move until later next year or early 2010.

The remainder of this post will deal with the process of a short-sale. I won't address the nuances of a short-sale contract because the terms of the contract will vary with each purchase offer. Let's just say that sellers and buyers need someone who really knows what they're doing when they decide which REALTOR to use as their representative.

In a short-sale, the seller must receive permission from the lender to whom the seller makes mortgage payments before the sale "closes." This means the seller should alert the lender as soon as you realize there may be problems making future mortgage payments. If you must sell your house and you're using a REALTOR, you must send a hand-written letter to the lender giving your REALTOR access to the mortgage payment records. You will need to give your REALTOR the mortgage account number as a minimum so your REALTOR can deal with the lender directly.

If the lender agrees to a short-sale, then a listing price is established with lender approval (which may not reflect actual market conditions) and then you wait for a purchase offer. If an offer is received, you will sign the contract but the lender reserves the right to accept the terms. If this occurs, the property can be sold. However, the buyer may still have an opportunity to rescind their offer at any time during this prolonged process based on contract terms.

I would encourage both seller and buyer to consult with a real estate attorney and accountant to ensure the parties understand the pros and cons of their purchase and sale. The reasons: does the lender have the authority to transfer title; what category of title; whether the seller is obligated to repay the "short" amount to the lender in the future; and what tax consequences, if any, exist for the seller.

One final piece of advice: be prepared to wait several months, possibly more, for a short-sale to be completed.

Buyer Update...Lender Mortgage Programs

2008-10-28T19:35:00.000-07:00

This is an update of mortgage lending programs currently available for buyers. Cherie Kesti splits her workdays in the Windermere Real Estate/West Sound, Inc. offices located in Bremerton (600 Park Ave), Poulsbo (18570 Hwy 305) and Silverdale (9939 Mickelberry Rd).

Kitsap County Market Statistics for October 27, 2008

2008-10-28T12:35:00.000-07:00

The number of contracts written the past week increased to 42 from 30 the previous week and 25 the week before that.

The absorption rate for Silverdale was 122 weeks of inventory for sale which has been relatively stable except for last week when the number was 61 weeks.

The absorption rate for Kitsap County was 159.2 weeks of inventory and the range for the past eight weeks has been a low of 78.4 weeks to a high of 199.8 weeks.

There are currently 2,547 active listing on the market in Kitsap County. That number has decreased about eight percent over the past eight weeks. But as I've said previously, it's because sellers realize they can't get the price they want so they don't list, not because the market is improving.

Yes, There Really Is Money For Mortgage Loans

2008-10-22T22:56:00.000-07:00

Click here to read a factual piece from the Seattle Times.

The Latest on our Financial Bailout

2008-10-16T17:39:00.000-07:00

OK...so, $250B of the $700B that Congress approved will be going to nine of the country's largest banks (i.e., Citibank, Morgan Stanley, Lehman Bros, Wells Fargo et.al).

Here's the $64 question: will Barney Frank insist that some of the remaining $700B be provided to Fannie Mae and Freddie Mac?

The follow-on question is: should anyone in Congress have any business trying to straight-arm Treasury (Neel Kashkari and Henry Paulson) or the Fed (Ben Bernanke)?

Like it or not, Congress is as culpable as Wall Street in this mess because of politics, some bi-partisan...some not.

We need to rely on advice from experts who have no personal or financial interest on the decisions to be made over the next year or so. Mark my words, if politicians try to exert political pressure to get "sweet-heart deals" for their lobbyists and constituents, we're all in BIG trouble; especially if they get away with it.

Buyers Be Careful

2008-10-04T08:50:00.001-07:00

If you participate in the $7,500.00 tax credit program recently enacted which ends in July next year, remember that you're obligated to repay the total amount borrowed once you sell your home up to any gain in the price.

The formula is based on a 15 year payback so if you "borrowed" the full amount, you should "put aside" $500 each year in a separate account then you'll have some money for the payment due when you file your tax return in the year in which your house was sold (balance paid from proceeds at sale).

This may prevent you from running afoul of the IRS.

Financial Impact on Kitsap's Housing Markets

2008-09-30T20:35:00.000-07:00

By now some of the hysteria of yesterday's congressional vote on the $700 billion rescue plan has passed. Thank God for politics...I don't know what we'd do without the posturing, blustering and finger-pointing!

Now, let's see if we can't wade through the mud and figure out how our county's real estate markets will be affected.

First, do I have all the answers...absolutely not and if anyone tells you they do then they're "full of it." What I do know is that we need time, probably several months, to get back some of our sanity.

Second, there are too many external factors to try to quantify and weigh the effect of each and the impact overall.

Third, if you are being forced to sell or buy real estate now, regardless of the reason, it's as good a time as any as long as you understand some of the factors you'll be facing and the risks involved. None of us have the ability to control any of these factors but we might be able to reduce some of the risk factors. Specifically, there's money to be lent, as long as buyers have established and protected their credit ratings and they're serious about proceeding. If you're waiting until the market "hits bottom," good luck. It'll have passed before you realized it. As a seller, you need to "get ahead of the market." Price aggressively, stage professionally and market proactively.

Helpful Information

2008-09-26T19:07:00.000-07:00

Cell Phone Numbers Went Public September 25th, 2008.

REMINDER....all cell phone numbers are being released to telemarketing companies tomorrow and you will start to receive sale calls. .... YOU WILL BE CHARGED FOR THESE CALLS To prevent this, call the following number from your cellphone: 888-382-1222.

It is the National DO NOT CALL list. It will only takea minute of your time. It blocks your number for five (5) years. You must call from the cell phone number you want to have blocked. You cannot call from a different phone number.

Kitsap County Market Stats for September 22, 2008

2008-09-23T15:45:00.000-07:00

Not too much change in our markets this week compared to last week.

The absorption rate for Silverdale decreased from 137 weeks of active inventory just waiting to be sold to 131 weeks. There were 131 active listings on the market.

For Kitsap County the absorption rate dropped from 101.4 weeks to 87.7 weeks. Overall there were 2,719 listings on the market.

There were 51 new purchase contracts written during the week.

What's Happening Now at Freddie Mac and Fannie Mae?

2008-09-15T14:11:00.001-07:00

Now that you and I own a piece of Fannie and Freddie (as taxpayers, not investors (not that either of them are worth much any more)) do you believe we'll have a say in what happens to these institutions?

Most of you know what happened that weekend awhile back but what you may not know is that James Lockhart who as oversight administrator has prohibited Fannie and Freddie employees AND lobbyists from lobbying or donating to any member of Congress. Yesssss!

What remains to be seen is whether this policy will be kept in place once the elections are over. I'll bet Congressman Barney Frank who chairs the House Financial Services Committee and a fervent supporter of both Fannie and Freddie is really pissed about this. Tough!

As far as the investors go, they've made some money over the years and if they didn't sell they lost. What goes around comes around! Tough again!

I'm Not Going to Let Go

2008-07-30T15:11:00.000-07:00

The latest from The Wall Street Journal (Tuesday July 29th) in the Opinion section under Review and Outlook addresses lobbying conducted by Fannie Mae and Freddie Mac.

Just note that the financial escape bill signed July 30th doesn't prevent political lobbying and donations from either of these organizations. Now that's tantamount to the fox guarding the hen house! Are we just stupid or what?

Here's the link to this article.

Weekly Kitsap Market Statistics for July 27, 2008

2008-07-30T10:03:00.000-07:00

The absorption rate for both Silverdale (142 weeks) and Kitsap County (155.2 weeks) remained just about the same.

For Silverdale, this means we haven't had any active listings "clear" a general building inspection and move to a pending sale status in four weeks.

Don't forget you can view a wide range of Kitsap's market statistics by clicking here.

Financial Happenings...Round Three

2008-07-25T16:37:00.000-07:00

I'm really getting tired of these "fixes" (you can interpret this term however you like). If you'll recall in last week's post I addressed that Fannie Mae and Freddie Mac need an apolitical regulator.

Here's an article from today's The Wall Street Journal written by James R. Hagerty and Damian Paletta. You can click here to read it. About a third of the way through, you'll read we're going to have a new level of political bureaucracy called the "Federal Housing Finance Agency." This replaces the current agency called the Office of Federal Housing Enterprise Oversight, OFHEO for short. The director will be named by, you guessed it, the President and subject to...Senate confirmation.

I guess we haven't learned our lesson yet. My question is this: "When are we going to learn?"

More Info on Financial Happenings

2008-07-25T08:38:00.001-07:00

I posted my comments a week ago about the "mess" we're now in with Fannie Mae and Freddie Mac. I hinted that politics keeps getting in the way.

This past Wednesday (July 23rd), The Wall Street Journal had a terrific opinion article written by Paul A. Gigot (the Journal's editorial page editor). This is a concise, 10 minute "must read" that provides an indepth assessment of the situation. Check it out for yourself by clicking here.

Real Estate Market Happenings

2008-07-17T11:46:00.000-07:00

Now that the media sensationalism concerning Fannie Mae and Freddie Mac finally hit the front page, how is this going to affect buyers and sellers?

First off, the Federal Reserve (Ben Bernanke) and Treasury Department (Henry Paulson) will never let Fannie Mae and Freddie Mac "go under." That's not going to happen...period! The real story is what's going to be done and how much is it going to cost (us, the taxpayers)?

In my humble opinion, $5 trillion of mortgages held is way too much for these two organizations to handle. That's too much risk and it's what got us into this mess anyhow. Second, these two companies need an indepent overseer and not something "dreamed up" by Congress (conflict of interest). Third, mortgage qualifying and lending standards need to be "tightened" much more than they have been in past three years. Yes, it's nice to be able to own your own home and not rent, but life's not fair and not everyone gets this privledge. Sorry! Fourth, mortgage lenders and mortgage brokers who didn't provide full disclosure on the loans they were "selling" to buyers should face criminal prosecution and be sent to prison if found guilty. Fifth, mortgage lenders and brokers who have been found guilty should not be able to open a mortgage company or work in the mortgage lending industry again.

Impact on buyers: Many lenders now require buyers to put 20% down on their purchase. If buyers don't have the money, they can hope to find a seller willing to finance (up to 15%) so buyers can put 5% down. Buyers need to have good credit history and scores also.

Impact on sellers: Hope you have buyers with good credit scores and enough money for 20% down and able to qualify for an 80% mortgage. The backup position is to be willing to provide financing (which has its own risks).

Don't expect this mess to go away anytime soon. It's taken us 20 years or so to get here and it'll take at least two or three years before "things" settle down and maybe start to improve.

Kitsap County Market Statistics for June 30, 2008

2008-07-01T14:37:00.000-07:00

Over the past two weeks the absorption rate for Silverdale increased from 25 weeks of inventory to 42 weeks and then back to 25 weeks.

Kitsap County overall the rate increased from 42 weeks up to 74 weeks and then down to 70 weeks.

The market is still very volatile so we'll continue to see this throughout 2008 and then maybe "things" will begin to even out this time next year.

It's Called...the "Buy and Bail" Scam

2008-06-18T10:43:00.000-07:00

If you read The Wall Street Journal, you may have noticed an article in last week's edition on Jume 11th, page A3 titled "Some Buy a New Home to Bail on the Old."

Essentially, an owner who is having trouble making mortgage payments contacts a mortgage lender to begin the process of obtaining a loan to purchase another home. The lender is told the first home will become a rental property (and the income can be used in the loan qualification process). The owner qualifies for a loan, buys a second home and lo-and-behold, walks away from the first home.

In my opinion, the legal term for this is FRAUD. The owner knows that they have no intention to continue making mortgage payments on the original home. The purchase contract is a legally binding contract. And guess who ends up picking up the tab when the property is foreclosed upon by the lender?

The article identifies a real estate agent named Linda Caoili who works in a RE/MAX office in Sacramento who is assisting a buyer named Michele Augustine walk away from her home. According to Linda, "It's just a business decision." And further on in the article Linda states "If you're upside-down $250,000, why would you keep it? It just doesn't make sense."

Apparently Linda has been hosting coffee klatches in a Sacramento Barnes & Noble store where she has been, and continues to, advise homeowners how to succeed in this scam.

I'll say this again, it's FRAUD. Don't do it! Nor would I knowingly ever be a party to this.

Kitsap County Market Statistics for June 1, 2008

2008-06-04T19:02:00.000-07:00

The absorption rate for Silverdale dropped almost half to 25.8 weeks of homes for sale while the absorption rate for Kitsap County remained relatively unchanged at 52.9 weeks.

There were six properties in Silverdale that changed to a "pending sale" status which means that any findings identified by a general building inspection were either acceptable to the buyers or not, in which case the sellers agreed to correct the situation.

I did some extra research on these six properties and found that the price had been reduced at least 8.3% from the original list price and the average time on market was 203 days (median was 151 days).

The final sale price will not be available until these sales "close" and I'm betting the discount will be more than 10%.

A Taxing Decision

2008-06-01T19:42:00.000-07:00

Whether you're planning for your own retirement or helping family members or other retired folks plan a move to another state, taxes may play a key factor to consider when choosing a location.

This link takes you to The Retirement Living Information Center's 2008 Taxes by State guide which summarizes the tax requirements for each state, including income taxes, exemptions for seniors and how retirement income and real property (i.e., real estate) are taxed.

The center advises retirees to look beyond state taxes and review local property, sales and income taxes as well. You might find that your chosen state isn't the welcome tax haven you thought it was. For example, California is one of six states that is particularly tough on retirees because it has a relatively high top tax bracket and fully taxes most retirement income.

I'm specially trained on matters concerning residential real estate investments so contact me if I can be of assistance.

New...Distressed Property Legislation

2008-05-29T08:52:00.000-07:00

The Washington State legislature recently passed legislation titled Distressed Property Law (HB 2791) which is intended to prevent "equity skimming." The legislation becomes effective June 12, 2008.

"Equity skimming" occurs when homeowners are having difficulties making mortgage payments but have built up some equity in their home. A buyer contracts to buy the home with the provision that the homeowner can continue to occupy the house as the tenant. Then re-purchase it at "fair market value" sometime in the future. The buyer quickly sells the house and pockets the equity leaving the tenant "high and dry"...no home, no equity and no place to live.

The legislation is very complex so here's a link to information posted on the the Washington REALTORS website if you would like more information.

BTW: If you are having trouble making your mortgage payments, contact your lender (the company to whom you make your mortgage payments) if you haven't already done so and attempt to "work out" the situation.

Branching Out in Kitsap County

2008-05-14T10:05:00.000-07:00

Aside from their beauty, trees provide significant benefits to homes, streets and cities. Trees keep our air supply fresh, provide shade and shelter and minimize noise. Trees may also increase the value of your property by up to 25%. Professional tree appraisers can determine the dollar value of your trees and plants by evaluating their size, type, condition and location. But regular care is what's more cost-effective and important in maintaining and protecting the value of trees.

Proper maintenance includes pruning, watering, mulching, pest management and sometimes...removal. Inspect your trees for signs of disease or insect damage as well as hazards such as dead or detached branches, mushrooms at the base and proximity to utility lines.

When you need professional help, be certain to find a certified arborist with a reputable company. Seek recommendations from neighbors and friends and make calls to several companies and interview each. Before you hire a company, ask for copies of valid and current insurance documentation and demand a detailed written estimate of the work needed and costs. Also be certain to have a complete diagnosis before a tree is removed. And finally, beware of companies that solicit work door to door, demand payment in advance or advertise topping--a harmful practice.

FHA Mortgage Update

2008-05-06T16:34:00.000-07:00

The following information was provided this afternoon by Cherie Kesti, Windermere Mortgage:

On all FHA loans, repairs for minor cosmetic deficiencies are no longer required, as long as the safety of the occupants or the security and soundness of the property is not affected. The following are some examples of those items not requiring repair:

missing handrails
cracked or damaged exit doors that are otherwise operable
cracked window glass
defective paint surfaces in homes built after 1978
minor plumbing leaks (such as leaky faucets)
defective floor finish or coverings (such as badly soiled carpeting or worn through finish on wood floors)
evidence of previous non-active pest damage where there is no evidence of unrepaired structural damage
rotten or worn out counter tops
damaged plaster, sheetrock or other wall and ceiling materials in homes built after 1978
poor workmanship
trip hazards (cracked or partially heaving sidewalks, poorly installed carpeting)
crawl space with debris and trash
lack of an all weather driveway surface

On all FHA loans when a roof certification is required, we will accept a minimum of 2 years for the remaining life of the roof. On FHA loans where a new roof is required and either the seller or buyer installs the roof, the following is required:

specific hold harmless on the roof
receipt for payment of materials
FHA inspection of roof

On FHA loans where a new roof is required and the roof is installed by a licensed roofer, only a roof certification and a specific hold harmless on the roof is required. An FHA inspection or lender's certification is not required.

On all FHA loans with a flat and/or unobservable roof, an inspection is no longer required unless there is evidence of a problem.

On FHA loans, the borrower(s) are not required to hook up to public water or sewer IF the connection cost exceeds 3% of the value. The bid for hookup must come from a licensed well driller or septic installer and include the county hookup charges. You must also provide proof with a health inspection or licensed sewer inspection that the system is functioning properly.

Upcoming 2009 Hood Canal Bridge Closure

2008-05-06T16:25:00.000-07:00

If you didn't remember or weren't aware, the Hood Canal Bridge has a scheduled closure in the May-June 2009 timeframe for some major repairs.

Here's a link with the specifics. It's not too early to plan ahead.

Home Equity Lines of Credit

2008-05-02T09:28:00.000-07:00

The term “HELOC” is becoming a dirty word. Short for Home Equity Line Of Credit, HELOCs were all the rage for the first six years of the 21st century.

But lately, the push from banks to get homeowners to sign up for HELOCs has subsided. Could it be that the toll from using homes as piggy banks is adding up? Yes. Banks are suddenly getting scared. Very scared.

Bankers rode the wave of over-the-top lending led by the subprime mortgage industry. All seemed well. Gold seemed to grow on trees. Then, the subprime mortgage market suddenly collapsed, causing the media to declare that the entire real estate industry was in a state of meltdown. This misinformation set in motion a series of events that caused property values to drop in many areas of the country—seemingly overnight!

Bankers dropped their coffee and started to shake. Their entire portfolio of HELOCs suddenly seemed very fragile indeed. And bankers didn’t want what happened to the mortgage industry to happen to them. So what are bankers doing now? They’re sending out letters to homeowners with HELOCs that read something like this:

"Dear Homeowner:
Because property values in your area have decreased so dramatically this year, we are forced to reduce the amount of your Home Equity Line of Credit from $50,000 to $25,000. We apologize for any inconvenience."

Or even worse:

"We are forced to relinquish your entire Home Equity Line of Credit."

Homes are not piggy banks and shouldn’t be treated as such. Homes are investments that need to be treated with respect. If you start to disrespect your investment, you are heading down a path through a dark forest filled with hungry wolves.

DAVE'S RULE OF THUMB: YOU CAN ONLY TAKE EQUITY OUT OF YOUR HOME ONCE...WHEN YOU SELL IT!

Many people—maybe even you—have HELOCs and if you're one of those people, you may be getting this letter if you haven't already. Many people are totally unaware that banks can even do this. But it’s right there in the fine print. It usually reads that the bank has the right to “relinquish on demand” your Home Equity Line Of Credit.

If you are heading into trouble by getting close to maxing out a HELOC, the safety net may soon be ripped out from under you. We’re living in a different world from the one we were in 2-3 years ago. But this doesn’t mean that the real estate market is crashing. Far from it. Things are just different now. Growth like that just couldn’t go on forever.

What Is A Customer

2008-05-01T11:37:00.000-07:00

Since I am the education chair for the Washington State Chapter of Certified Residential Specialist (WACRS), part of my duties include contracting for and monitoring all our classes. Even though I've attended the classes multiple times, I always get the newest ideas from other CRSs across the country.

The most recent class was held in Bellingham and I "picked up" a whole bunch of new ideas that I'll incorporate in my business. But I thought I'd share this one with you.

WHAT IS A CUSTOMER?

Customers are the most important people in my business.
Customers are not dependent on me. I am dependent on you.
Customers are not an interruption of my work. You are the purpose of it.
Customers do me a favor when they come in. I am not doing them a favor by waiting on them.
Customers are part of my business--not outsiders. You are not just money in the cash register. You are human beings with feelings and deserve to be treated with respect.
Customers are people who come to me with their needs and wants. It is my job to fill them.
Customers deserve the most curteous attention I can give them. You are the lifeblood of this and every business. You pay my salary. Without you I would have to close my business. And I will not ever forget this!

Sometimes we overlook the obvious!

Kitsap County On-Site Sewage (OSS) Regulations

2008-04-25T07:32:00.000-07:00

Hey potential sellers, or those "thinking about it"...

The Kitsap County Health Department (KCHD) click here will finally begin to use Washington State Health Department guidelines for standard gravity septic systems effective September 1, 2008.

Regulations for alternative (pressurized) systems have been used by KCHD for at least five years.

"On sewer," probably not applicable. However...if you're not "on sewer," then you're "on septic" so check out this link to read and/or print the pamphlet that provides some very good background information about the use and care of a septic system if you're "on septic."

The only difference for you homeowners on gravity systems is that you will be required to obtain a "health letter" from the KCHD before you transfer title (sell) your home. Again, this requirement begins September 1, 2008. The cost will be $202.00, paid to the KCHD. In order to obtain the "health letter," your septic tank must have been pumped recently.

Successful...and Legal Landlording

2008-04-10T13:22:00.000-07:00

This information is coming from the April 2008 REALTOR magazine, published by the National Association of REALTORS.

Slower sales are compelling more home owners to rent their properties, at least for a while. If you fall into this situation, follow these tips from attorney Kenneth M. Roth.

Run renting like a business. Even if you are planning to lease only until your house sells, and even if the tenant is your second cousin, keep the leasing process on a professional basis. Establishing business rules and policies allow you to maintain objectivity if your tenant makes demands or is late with the rent payment.
Treat everyone equally. The federal fair housing law, which prohibits discrimination on the basis of race, color, religion, sex, national origin, family status or handicap, applies when you advertise or lease residential property. Although it's completely legal to ask questions about a prospective tenant's rental history, current employment and financial history, it's important to ask every applicant the same questions to avoid the appearance of discrimination. If you have a problem renting to anyone in a protected class, then don't rent your house at all.
Use the right forms. Although there are all-purpose leases available at office supply stores, it makes more sense to use a lease tailored to your specific property type and state laws, including the landlord-tenant law. Good sources are your local REALTOR association or state bar association.
Make your lease as specific as possible. Spell out exactly what is expected of your tenant and you, as the owner. Who's going to mow the lawn? How should emergency repairs be handled? Consider making tenants responsible for repairs of less than $100 and you cover the major repairs.
Write a roadmap for defaults. Your lease should identify the particulars and penalties of rent payments. It should state when the rent is due, where it must be paid, what late fees and interest you charge and at what point late payments will result in an eviction rate.
Don't treat security deposits as a potential for profit. Security deposits are intended to cover only repairs needed because of excessive damage to your property. They can't be used to cover routine cleaning of a property prior to releasing or to add upgrades. Also remember that in many states, security deposits must be kept in a separate account and you must pay interest to the tenant. Ask for the first and last month's rent plus a security deposit.
Don't be fooled by appearances. A fancy car and lots of bling do not necessarily a good tenant make. Run a credit check on every prospective tenant. Tenants must sign an authorization to permit you to check a tenant's credit and you can charge them for the cost. Also remember to keep credit information confidential. Don't disclose what you know to others.

Although not addressed by Mr. Roth, I recommend you consider hiring various professionals including a cleaning service, accountant, maintenance person and an attorney. These people would be part of your team and should be able to advise you on most issues and situations you will encounter.

Click here to see information on the Washington State Tenant-Landlord Act.

Most Recent Real Estate Scams

2008-03-29T22:12:00.000-07:00

This is a link to the lastest scams involving real estate and identity theft. If you live in Kitsap County, here is a link to the tax assessor's office which you can use to get information on your house and rental properties (either by tax account number or address).

What Was I Thinking?

2008-03-07T08:27:00.000-08:00

Yesterday's Wall Street Journal contained an editorial that addressed the government's attempts to assist homeowners having trouble making their mortgage payments.

One of the conclusions was the attempts to assist will only prolong the inevitable, i.e., eventual foreclosure. So why not just foreclose, sell the property as owner-occupied or to investors for rentals? Obviously there are pros and cons to this discussion; however, I want to go in a different direction.

Although you won't find this in writing anywhere, the federal government has longed for the homeowner rate to reach 70%. An enviable goal (we've been hovering at 68%+ for the last two decades). The thought is that homeowners rather than tenants take better care of real property because they own it. Sounds logical to me.

The problem is that a free market economy and 70% home ownership aren't necessarily mutually compatible. If one espouses the "laissez-faire" approach, it's "hands off" by the government which means no government interference (price controls, building moratoriams, etc.). There will always be competing market forces and because of this some folks simply can't afford to purchase in this environment. So the question becomes, "how important is the 70% figure?" What's the difference between 68% and 70%? Does anyone really care, except the families who may never be able to buy?

We've gotten ourselves in a royal mess that is going to take years to get over. Notice that I said "get over" instead of "fix" because this can't be fixed. Lots of families are going to be ruined financially and emotionally before this is over. You would have thought we'd learned our lesson with the Savings & Loan debacle 27 years ago. A sad state of affairs but I guess not!

Tips for Sellers in a Buyer's Market

2008-02-14T07:08:00.000-08:00

I just finished checking my morning "hot sheet" which gives me information about all the new listings and changes to existing listings (i.e., price change, status change, etc.) since I reviewed the MLS data late yesterday afternoon.

Aside from incorrect pricing, the most serious situation I continue to see is that sellers are ignoring to stage their houses.

Sellers, LISTEN UP, if your house is on the market for sale, especially if it's vacant, YOU MUST HAVE IT STAGED. And don't do this yourself unless you're an interior decorator or staging professional. You have lots of competition and if you want THE contract from a buyer (and there aren't many these days), your house had better stand out from the competition!

If you live in Kitsap County or adjacent areas, here's a link to a professional stager. Nonnie is an expert at what she does. Take advantage of her experience.

If you have any questions, contact me and I'll see what I can do to help.

General Real Estate Information from National Association of REALTORS

2008-02-08T09:08:00.000-08:00

Click on this link that will take you to the National Association of REALTORS website which provides some interesting statistics and general information.

Credit Scoring Changes Implemented

2008-02-03T17:00:00.000-08:00

The folks at Fair-Issac are modifying the FICO system used to provide credit scores for mortgage applications. Click here for a link that Cheri Kesti, our in-house mortgage officer provided to me last week.