Real estate contracts in Washington have undergone an enormous change greatly impacting buyers'future rights against sellers. 

On March 1, 2007, the Washington Supreme Court in Alejandre v. Bull applied the Economic Loss Rule for the first time in Washington real estate case law.   But it was only until recently that this ruling affected the transactions of real estate agents in Washington state.  

Negligence v. Intentional Misrepresentation 

On October 15, 2007, the MLS implemented a forms change that forced the buyer and seller to negotiate the level of the seller's responsibility for misrepresentation after the transaction closed.   The court determined that because the parties had not negotiated this issue in the contract, the seller could only be held liable for intentional misrepresentation and not negligent misrepresentation.  In this particular case, which had to do with a failed septic system, in order to prevail, the buyer had to prove more than the seller SHOULD have known, but rather that the seller intentionally defrauded the buyer by failing to disclose known defects with the septic system's drain-field.  The economic loss rule requires that remedies for any losses suffered by buyers be found in the contract between the parties.   If it isn't in the contract, then the buyer will have to show intent, which as a practical matter,can be very difficult to prove, as we saw in Alejandre v. Bull.

Practical Effect

Hence the change to the real estate contracts.   Now the parties have the opportunity to negotiate the seller's culpability with respect to misrepresentation in their disclosures to the buyer.  There are form changes all the time--why is this one such a big deal?   Well it makes it more difficult for agents to put deals together.  Right on the first page, the buyer must check a box, yes or no, whether the seller will be held responsible for negligent misrepresentations.   It can likely frighten an unwary buyer as well as a seller once they see the offer.  One would think that a seller would not want a buyer to be able to come back and seek recourse for mere negligence.  It's even more likely that a buyer would not want to give up that option.   If I'm representing a buyer I can't see any reason to give up that option--the seller owns the property, there is noone more knowledgeable about the property than the one that owns it.   The effect?   Seller's will just have to be careful about disclosure.   It also raises the level of responsibility for home maintenance.    Real estate agents will have to be able to explain in plain english to all parties of a contract how the clause affects each party and refer them to legal counsel if they are unsure of their rights.

The NWMLS recently sent me a letter from their legal counsel that my website was in violation of one of the rules.   The local MLS in the Pacific Northwest is a large one, with over 22,000 members and it just recently added a smaller MLS from a neighboring county so now it is actually even larger.   Of course the MLS has a plethora of rules to ensure the tidy order of business while it's member brokers list and sell the real estate inventory.

The rule in question prohibits agents from using the word "NWMLS" or it's derivatives on any public website.  It also says that agents may not state or otherwise imply that the website is an MLS or that the public may have access to listings from the MLS.  Now, I understand why they made this rule--they want to unsure the integrity of the local Multiple Listing Service, making availability of MLS listings through all licensed agents, not just those who have a website.

Several months ago, I already had to adjust the wording on my website to remove indications that people would be searching MLS listings if they used the "Property Search" solution right there on the front page.   Now, you ask, what is the big deal here?   Well, the NWMLS allows its subscribers to use what's called an IDX search solution on websites.   It's been around for years and it evolved along with broker reciprocity--every broker can advertise every other brokers listings.  In one rule they allow me to display listings and in another rule I can't tell the public that those listings are from the MLS.   Isn't that stupid?  

I just don't think they can tell anyone that they can't use the term MLS.   It isn't copyrighted like the term Realtor.   In fact, the term MLS has been around for many, many years and it's a universal term used all around the country.   Anyone who is looking to purchase real estate would look for MLS listings in what ever area they were looking to relocate to.   If they were looking for real estate in Seattle, they'd do a search for MLS listings.  Even if my website didn't have one use of the term MLS, a 12 year old using the IDX search feature would think that they were searching the MLS.   But, the reality is, of course, that they are not searching the MLS.   They are searching a COPY of MLS listings.   It's simply a feed from the MLS that all brokers use to access the listing data.

So, if you go to my website and use the property search feature, you're NOT searching MLS Listings, Ok?  I'm glad we have that straight.

Although Seafair in Seattle is an annual event that lasts three weeks, one of the premier events is always the Blue Angels Airshow. If you missed this weekend's Seafair Celebration on Lake Washington, I would encourage you to go next year.   It was a very impressive display of showmanship and there is nothing like being there to witness it in person. 

I won't spoil it for you but a lot of times a great performance is all in the presentation. Just when you think the show is over, the Blue Angels return for an encore that ups the ante even more than the first time. The air show is sandwiched between two heats of Hydroplace racing. This year's racing featured a flip by the "C-9" boat but the driver was pulled from the boat unhurt.

More action photos of the Keybank Blue Angels Air Show are on my website along with tips on where to park, activities for kids, food and spots for best viewing.

I'm excited to announce another home buyer seminar this Saturday, July 14th from 10am-3pm, at the Transnation Title and Escrow offices in Tukwila, Washington.   Geared towards qualifying buyers for the House Key State Bond Program, attendees receive a certificate allowing their lender to reserve below-market mortgage funds subsidized from the sale of municipal bonds.  

Currently, the House Key rates are 5.75% for the 30yr mortgage.  The rate is fixed, with no pre-payment penalty.   With conventional mortgage rates at an average of 6.625%, using the House Key loan is a significant savings especially when you consider that 2nd mortgage rates are close to 10%.   This makes the blended rate close to 7.5% using traditional financing, making the House Key program a huge overall savings depending on the loan amount.   5.75% vs. 7.5%?--it's a no-brainer.   Funds are limited and the stated interest rate doesn't fluctuate during the availability period.

Classes are sponsored by the Washington State Housing Finance Commission and advertised locally in the Seattle Times.  See you there.

Most everyone is usually on the lookout for good deals on homes and mortgage rates but most of the time once you look closely at all the details, there isn't really a lot to write home about.   Houses that are priced right can have a lot of off setting challenges with them and could be why they're seemly priced right, so is it really all that good a deal once you factor those issues in?  I'm not a lender but I imagine it's probably much the same thing with mortgage rates and products.

The House Key State Bond program is probably as close to the real deal in terms of a home buyer assistance program that I've seen in a long time.   Administered by the Washington State Housing Finance Commission, the House Key program provides opportunities for home ownership for low to middle income families.  Utilizing proceeds from the sale of municipal bonds, the WSHFC then purchases below market mortgages underwritten by participating lenders.  If you can believe it, the State of Washington is actually subsidizing below market interest rates for the public benefit. 

A Commission approved lender will qualify an applicant on a typical 30-year mortgage loan program using the Commission's lower interest rate. A single family home, town home, condominium, and in some instances, a manufactured home, can be financed with the House Key State Bond program to purchase Seattle real estate. All borrowers that will be listed on the mortgage note and Deed of Trust must attend a Homebuyer Education seminar that has been registered through the Commission. Classes are taught by certified instructors and the curriculum must meet standards set by the Commission.

Currently, the 30 fixed rate is 5.75% with one point. The bottom line is, on a purchase of a $300,000 home in the Seattle area, a borrower can save upwards of $400 a month using the State Bond program versus conventional 80/20 loan programs on comparable terms. Additional information on the benefits of using the House Key Loan Program, first-time home buyer definition and current rates.

How's that for a screamin' deal?

Although the Seattle real estate market is fairing far better than most areas in the country, we are seeing an increasing number of short sale listings come on the market.   Even in a strong sellers market like we experienced in 2004-5, there was always the occasional short sale or pre-foreclosure listing, but nothing like the increase in supply that we're seeing now.

I already have a search solution on my website for buyers who want to search for homes in the Seattle real estate market.  But because many buyers and investors are always on the lookout for bargains, I started another search based solely on pre-foreclosure listings that were subject to bank approval of a short sale or were in pre-foreclosure status.    The search pattern is updated everyday so my current and potential customers have access to the fresh inventory as it becomes available.

Realtor webpages by and large have been a hit and miss proposition.   We set them up not really depending on them for business but more to promote our brand in the marketplace and keep our name out there.   It's largely the same with print advertising--the top agents will tell you that it's just a part of their overall market budget and they don't really expect a lot of direct business from it.

Well if you do have a website, you should seriously consider a property search that buyers can easily access and use.   Make it convenient, free and ideally, with no sign-up requirement.    You see, that's what Buyers want.   Why do you think they were searching the internet and found your site and sites like it?   They're looking for MLS listings, homes for sale, right?  Many times sellers are thinking of moving and they just want to get an idea of what similar style homes are going for in their area.  They're not ready to talk with a Realtor, they're really just thinking about the idea of a move.   Using an accurate tool to find homes on the market is a great way to start that process.  When and if people do decide to contact an agent, they'll call you.

I have a map-based property search tool on my site and once they get there, they can be looking at real estate for sale in the greater Seattle area within 5 seconds with no sign-up, no registration, free.  In addition to that, I just added a specialty search that most buyers would be interested in--new listings on the market at the best price point.  Every morning I add the new MLS numbers from a specific MLS search to my IDX code string and upload it to my site so it's fresh and updated.

What's the point of doing that?   If you give people what they want with no strings attached--they'll use your  services if you helped them unconditionally.

Are you giving customers what they want?

Whether the market is strong or soft, the greatest challenge for a seller has always been setting the correct price.   That price which will bring the highest net to the seller within the desired time frame.   In this two part series we'll step through the process a prudent seller must take to hit that sweet spot and still get the house sold.

Throughout this discussion it's important to remember that a ready and willing buyer will pay for the features and benefits of a home only in comparison to other homes offering similar features and benefits.   In any market, strong or slow, there are buyers waiting to making purchasing decisions but have excuded the existing inventory because it is over-priced.   Part 1 will focus on the features and benefits of what you're going to be offering to the market.

There isn't much you can do to change the structure of your home--it is what it is, so don't even thing of putting in a new kitchen. What you do have an affect on is condition and appearance.   Now a lot of people reading this will question how much money can be gained by spending money to improve the gerneral appearance of a home let alone paying to catch up on deferred maintenance prior to putting the home on the market.   Oh and by the way, everything mentioned here happens before you go live; you'll be giving away much of the benefit of doing these things after those ready and willing buyers have already seen the house.

Not enough credit is given to improving drive-up appeal.   First impression isn't just a cliche, it shows the buyer what they're getting on the outside and it also sets the stage for the inside.  You'll get repaid for the time and relatively small amount of money you spend on the exterior and landscaping.   You'l lose far more if you don't do it.

• make sure the roof is free of moss and debris.   Use a moss treatment if necessary but don't use a pressure washer as it will remove much of the granuals and an inspector will make note of it.  Clean out the gutters.
• lightly pressure wash the siding and facia boards.   This will remove loose dirt on the exterior that has made it look like it needs a paint job.
• place an emphasize on sprucing up the landscaping.  Have yard maintenance guys come in and trim and thin out hedges, trim scrubs away from the siding, edge the lawn, pull weeds and bring in beauty bark.  Remove weeds from driveway and sidewalk cracks.  (Applying RoundUp 2-3 weeks prior to this will make this a much easier task.)  Apply weed-n-feed, water at night and mow twice a week to get the grass growing green.
• paint the exterior only if necessary; a lot of times just re-painting the trim can do the job. (Remember, we're trying to focus on the best use of dollars and time.)
• Consider the use of container planting on the walk up to the front door as well as on rear deck areas.  Obvious touches like these signal to buyers a level of care and attention to the home beyond the basics.  To recoup the cost, the buyer's agent may purchase them as a closing gift for the buyers if given the idea.

The Interior

If the outside is appealing to the buyer, they will be looking forward to seeing if the inside matches the outside.   If it does, buyers will be seriously considering making an offer on your home.  Remember, it's all in the presentation and you only have one chance.

• Give the house a thorough cleaning.  Consider bringing in a cleaning person to give you a running start on getting your home looking and smelling fresh.   An experienced Realtor should be able to give you the names of a couple cleaning people--they charge by the hour and will usually bid the job when they get there.   If you have aluminum windows that tend to sweat, clean out the mold that collects in the bottom of the frame--people will inadvertantly notice if they look out a window into the backyard.
• Start packing!  Box up your non-essentials and stack them in the middle of the garage.   It's Okay, buyers understand.  They'll open up the garage and see that you're getting ready to move!   Yet they can still get around to see the sides of the garage and how they can utilize those spaces. 
• If you can, consider moving larger items out of the house that will make the home feel like it has more space.   Large pieces of furniture that you've collected and lived with may only show the buyer how little space they would have for their possessions.  Take a hard look at what needs to go.
• Have the carpets cleaned even if they are worn and you're thinking of offering a carpet allowance.   You may not have to offer the allowance unless there are damaged areas.
• Finally, have a handiman come through to take care of all those fix-it's you've been meaning to do.   Fix sticking doors, replace those toilet guts, faucet/value repair, correct double-tapped lugs in the electrical panel as well as other minor electrical issues.

By this time you're ready to meet with your Realtor and go over the numbers.  Part 2 will cover this as well as other strategy and market issues for netting top dollar in today's Seattle real estate market.

For years now, one of the local Title Officers in my area has consistently made these handy, post-card sized collections of business builder tips.   They just randomly appear in my mailbox at the office.   The topics range from time management tips, to goal setting.   She doesn't seem to have any shame about giving me the same one over and over again either--she must know I don't get things until the 6th or 7th time!

Little does she know, I have developed a habit of putting these little business helpers all over the place.   One at the office, one in my home office taped to my printer and there is even a complete set of 5 taped to one of my kitchen cabinets at eye-level.   That's so I can easily see them and intergrate them into my daily routine, right?   eh, eh, right.

Well last night I went to get some ice cream after dinner and thought I'd actually read one!   That's right, folks, I've been getting these quick-tips, taking the trouble to post them where I could see them and yet I was always "too busy" to really absorb something that might be good for me.   I chose the one titled Enemies of Successful Salespeople which I vaguely knew was about listening better, or so I thought.   I then sat down to eat my ice cream and see if I could learn anything.   Well, after reading it carefully a couple of times I realized the message really wasn't about listening better, it was about our egos letting us talk too much which are really two different things if you think about it.   I thought about how many times I could have worked on being more prepared for my clients so they could make the right decision for themselves instead of me "telling" them the way it should be.    Your helpful "life" tip for the day!  

Ego

Our egos make us think that what we have to say is more important than what the customer has to say.

Too Much Talk

The best salespeople know that the pay in selling is far greater for asking the right questions than for knowing the right answers.

Poor Listening Habits 

If you want to listen better, don't talk.  The person who talks will monopolize the conversation, while the person who listiens will control the converstation. 

Assumptions about What's on the Clients Mind

When we talk too much we think we know what the customer wants rather than what they really do want.

Talking about things that Don't Interest the Customer

Customers buy for their reasons, not ours, which may be for only 1 or 2 primary motives.  By dumping your entire sales pitch on them, you may only cause confusion, frustration with your presentation or just plain boredom.

Not Asking for the Order

Don't be afraid of rejection and don't take it personally.   Many times people are ready to move forward if only you'd ask.   You can dispense with the rest of the presentation and complete the paperwork.    

Lack of Well-Defined Goals and Objectives

If you don't know where you are going, how will you know when you have arrived? 

Not Taking Notes

If you don't write down what is important to the customer we will forget and talk about what we think is important.  The strongest memory is weaker that the palest ink.  

Although gas heat is a predominate source of heat throughout the state of Washington, oil heat is very common as well.   I've been selling Seattle Real Estate for several years now but until my most recent transaction I haven't had to deal with oil tanks (UST) very much other than having it decommissioned if it was no longer in use.   http://www.epa.gov/swerust1/   I thought it would be helpful to others to show some of the pitfalls to be aware of in your transactions if you list or sell a property that is heated by an oil furnace.

First of all, the CARDINAL RULE of oil furnace maintenance is to NEVER allow the oil tank to run dry.   As the oil tank nears empty, the flow of oil from the in-take line becomes uneven and starves the pump, causing it to work harder.   This puts extra strain on the pump and reduces it's effective life--so repeated incidents of allowing the tank to run dry can burn the pump out.   As the tank nears empty, sludge from the bottom of the tank enters the system, clogging the filter thus putting further strain on the pump.  Other elements of the furnace, such as the fan motor, can suffer the same fate and the costs to service the furnace mount as the technician attempts to trouble-shoot the problem.

Be careful of what you agree to in the purchase and sale agreement because it can result in unnecessary costs for the seller.   Asking the seller to "fill and have the oil tank inspected" sounds like a reasonable request at the time but it can end up being an unintended expense.   Inspection is a function not performed by the oil provider.   It's a separate service involving removal of all the oil in the tank, straining it, cleaning and pressure testing the tank for leaks, then placing the strained oil back in the tank.   When the oil company comes out to fill the tank, they normally "check" the tank for the presence of water before they pump.   So, in our deal, we simply agreed to "fill and have the oil tank checked" and the buyer was fine with that.

Never negotiate a clause for the seller to "obtain insurance" for oil tank leakage (if you're in Washington).   Insurance is provided by the State at no cost--all that needs to be done is for the owner to "register" their tank to be covered.   The next section covers this in more detail.

Liability Insurance

In 1988, in response to the possible widespread closure of petroleum USTs throughout Washington State, the Legislature made liability insurance available through a state administered reinsurance program.   Because homeowners are responsible for cleanup of contamination if a leak occurs and coverage is often not available from homeowners' insurance companies, reinsurance by the State would enable an insurance company to provide less coverage, therefore, lower premiums, while the UST owner would still have the required coverage.  Originally the reinsurance program was intended for rural communities with one or two gas stations, then in 1985, the Legislature made pollution liability coverage available for owners of active (in use) heating oil tanks.  (PLIA)  Pollution Liability Insurance Agency

The program provides up to $60,000 of insurance coverage for cleanup of contamination from active heating oil tanks that are registered in the program prior to the contamination occurring.  The program is funded by a fee that heating oil dealers pay per gallon of heating oil sold.  There is no cost to the homeowner for this coverage.  All that is required is that the owner fill out the required pdf form and send it in along with a copy of their most recent bill from their oil company.   Coverage does not run with the property--once the property changes hands the new owners must also register the same way.     

Oil Tank Decommissioning 

An oil tank that has been out of service for a period of one year, must be:

• Removed from the ground, or
• Permanently closed in place.

If an underground heating oil tank is closed in place all of the following requirements must be met:

• Flammable and combustible liquids, as well as sludge, must be removed from the tank and connected piping.
• The suction, inlet, gauge, vapor return and vapor lines must be disconnected.
• All remaining underground piping and openings must be capped or plugged.
• A record of the tank size, location and date of abandonment must be maintained.
• The tank must be filled with an approved, inert solid material. (there is an exception to this requirement--if the tank is below grade, the local Fire Cheif may allow the tank to simply be capped.) 

One final note:  the oil in the tank is considered personal property (perhaps this is not the case in other states) and the escrow officer should credit the value of the oil remaining in the tank to the seller.   Since the buyer will be using the heat it only makes sense that they should pay for it.

Well, I know this is dry stuff but it was tough on me too!   If you're a working agent, there's your primer for dealing with properties served by an oil furnace.