So the real estate news is starting to show signs of life.  Headlines across the country are touting great news such as; the bottom is here, that foreclosures are stabilizing in key areas and signs that the end of the recession is near.

Alan Pope & Associates are reporting that here locally over 22% of the homes on the market are being absorbed by the market and Quadrant Homes is planning to step up construction for the first time since the real estate downturn.

So buyers in the market are finding, it's like picking through the last bin of the clearance bin, the really good deals in the lower price range (under $350,000 in South King County) and the new home options are fewer and further between. 

So are there any deals left? Yes, the luxury home market is where the real deals are.

Now that we know that flipping properties should be left to those that can afford the risk and a home should be bought for what works for yourself and/or your family, it is my opinion that there has never been a better time to buy a luxury home.  Why? Because in real estate it's all about percentages.

Let's look at a luxury home development, The Reserve at Newcastle.  This neighborhood saw its first home built in 2004.  If we look at the sales in the Reserve for the first 6 months of 2007, which was arguable, the peak of the market, we see a median home price of $1,862,995 versus a medium home price of $1,252,500 in the first 6 months of 2009, that's a savings of 33% or $610,495.

One of the homes that I am selling in the Reserve was purchased in 2005 for over $1,415,000 and upgrades well over $200,000 for a total purchase price in excess of $1,615,000.  Today it's on the market at $1,350,000, over a quarter million dollars in savings.

And an even stronger argument for today's luxury home buyer is that the inventory today will be unique in what to expect from home builders in the very near and distant future.   It is doubtful a builder will expose themselves to the luxury market without a non-refundable cash deposit before construction even begins. 

The features that made the homes built between 2003 and 2008 will become a moment in history unlikely to be recreated on a grand scale and certainly luxury neighborhoods will be isolated to this moment in time.   From beautifully landscaped yards, to high end millwork and scrollwork, to superb architecture and design, these features will be replaced with dense housing and energy conscience elements.

So if you are looking for a luxury home, this is still your time.  The selection is vast, the prices are unbelievable, and the mortgage rates can be very attractive.

If you would like to know more about any luxury home or neigborhood, just give me a call at 425-432-9430 or visit my website.

Thanks,

Jana

Whether it's the tax credit, the low prices, the low interest rate, the amount of available homes to sort through or simply because it's your time in life to buy your first home, there is one thing there seems to offer a lot of confusion for First Time Buyers and that is how do I find the right agent for me?

The most common error first time buyers make is that they do not interview their agent whereas it would be rare for agents not be interviewed by a seller client.  Start by setting an appointment with your potential agent with the express purpose of interviewing before you ask them to show you any homes. 

When interviewing an agent, these are the absolute minimum attributes you want to look for:

•·         Are they are REALTOR? There is a difference between licensed real estate agents and members of the Board of REALTORs.  REALTORS belong to a self governing community with an emphasis on both ethics and continuing education.  Most agents are REALTORS, avoid those that are not.  See www.Realtor.org for more information

•·         Is the REALTOR professional in both in appearance and written and verbal communication? 

•·         Is the REALTOR business minded? Do they have regular working hours, what is their policy for returning telephone calls and emails, not just your calls but those of other agents too?  Are they running a successful business? Do they take time off regularly?   I've had some clients in the past who felt it was necessary for their agent to work 24-7; I personally don't believe it would be an enjoyable experience to work with someone who didn't take a day off. 

•·         Is the REALTOR versatile and adaptable? You wouldn't want a hairstylist that cut everyone's hair the same way or a doctor that prescribed the same medicine to every patient.  I truly believe that the most important skill a REALTOR can have is that of being versatile and adaptable.   Ask questions that require the Realtor to give you details of how they handled a challenging situation, look for an answer that shows the Realtor is mindful of other people's perspective.

•·         Does the Realtor have a variety of experience?  You might be a First Time Buyer but the Realtor you choose may represent you buying a home from an investor, builder, savvy home seller, or another amount of infinite possibilities.  You want a Realtor that can help you negotiate with the seller whoever they might be.

•·         Does the Realtor love what they do and why?  Avoid agents that are part-time, semi-retired, semi-housewife or househusband.  Choose agents that love the business for what it is.  A people oriented business that requires dedication and commitment, a love for helping others and a zest for what real estate means to you as a first time buyer.

•·         Choose an agent based on skill, not on personal traits.  Don't pick an agent because they go to your same church or because of their political beliefs or any other equal employment protected status.  If you have a well qualified agent in your church and you've interviewed them and feel comfortable they are qualified to represent you, by all means, hire them.

So with all the above being said, here is just a partial list of questions you may want to ask.

•1.       How long have you been selling real estate and why did you choose this occupation?

•2.       What is the most rewarding and challenging aspects of your job?

•3.       What did you do when you had to work with someone that you didn't get along with?

•4.       How many homes have you sold?  What percentage did you work with the buyer or the seller?

•5.       What are the best traits you bring to the home buying experience?

•6.       Do you have regular hours and what is your policy on returning telephone calls and emails?

•7.       What would another real estate agent in your office say about you?

•8.       What experience did you have before selling real estate and how has that helped you in your career?

•9.       How long do you intend to be in real estate?

•10.   Are you a member of the Board of Realtors?

•11.   Can you give me an example of a challenging real estate transaction and how you handled it?

•12.   Tell me about a situation where the buyer or seller may not have had a satisfactory experience with you.

•13.   Tell me about a situation where the buyer or seller was very happy with you?

•14.   Why should I choose you to be my REALTOR?

As a final note, have fun in the process.  Competent and experienced Realtors win and lose all the time when trying to win the trust of new clients.  We understand that you cannot win every single transaction and that every opportunity helps you learn and grow both personally and professionally.   Let your candidates know why you choose them or why you didn't.  

The above process isn't a guarantee that you'll love the home buying experience, but it will get you on a good path to do so.   Remember, I'm here for you when I can be.

Jana

I bought my first home in 1992.  When I bought my home I was warned of two things, #1) don't buy it unless you are going to live it in for five years and #2) be prepared for the mortgage company to look at every hair on your body with a microscope.

Now I can't believe how long ago that has been and today I find myself reminding myself of that experience when working with both buyers and sellers.  Buyers get it #1; real estate is a long term investment.  The difficulty I find is that so many of my clients are making very subliminal decisions based on unconscious assumptions that the mortgage or refinance process is going to be easy based on recent experience. 

At GMAC, I learned the three golden things that are looked at when a loan officer considers a loan approval.  #1) the borrowers desire to pay, this is illustrated via a credit report and an established history of good credit practices like making your payments on time and not overextending yourself by maxing your lines of credit out.  #2) the borrower's ability to pay, what is the debt to income ration, can the borrower afford what they are about to borrow?  And finally #3) the condition of the collateral, is it worth securing the loan? Can the bank sell it at a profit if the borrower defaults and the collateral is reposed or foreclosed?

If you are thinking about taking a loan out for a home purchase or refinancing, these are the things you need to know in the way it relates to the credit crunch of today's mortgage market. 

#1) a good credit score (also known as a FICO score) is essential.  If you have questions about your credit score or would like to know how you can improve your credit score, check out this helpful site: http://www.myfico.com/CreditEducation/CreditScores.aspx  it's a good idea to know what your score is before talking to mortgage brokers.  That way you can tell them your score and save the hassle of running your credit report until you've decided that you want to work with that mortgage broker.

#2) your ability to pay.  It's easy to determine your debt to income ratio, first add up all your monthly recurring debt like car payments and minimum credit card balances.  Next add the amount of your desired new house payment.  Separately add up all your household income (to include your spouse if you are married).  Divide your total monthly debt by your gross monthly income to determine your ratios.  See the example:

It's also a good idea to know what your ratios are before talking to mortgage brokers.  And as you share with your mortgage broker what your ratios are, they can start giving you sound advice based on your individual situation.

#3) The collateral.  In real estate, banks use appraisers to determine value.  And today, it's likely in  King County that you're appraisal is going to be much lower than you would like or expect.  Also be prepared that the loan underwriter may ask for repairs be done on the home prior to giving final loan approval and if they question the value, it's not uncommon anymore in real estate to see a second appraisal ordered.

So where to start?  First learn your credit score, determine your debt to income ratios and then call your mortgage broker to advise you on your particular situation.  As always, if you need a good recommendation for the Renton area, please let me know.

Jana

http://www.janaschmidt.com

This weekend a good friend of mine asked my opinion on whether or not I thought Lease Options (sometimes referred to as lease-to -own or rent-to-own) were a good idea, and of course the answer is, depends.  The question was dove tailed with another call where I actually recommended a lease option route to a buyer client of mine.

The first recommendation when it comes to lease options is to get a professional involved.  I would recommend an experienced agent and a real estate attorney as these agreements can be complicated and possibly a tax professional.

The second comment, look at the reason why you are looking at a lease option.  Typically, there is some reason that a buyer needs time before actually taking title to a home.  It could be that the buyer is repairing their credit, waiting for an inheritance or some other type of lump sum of cash or perhaps rearranging debt by refinancing existing mortgages into lower rates before taking a new mortgage debt on. 

Here are just a few advantages to a lease option or lease to own can include all of the following:

•1.    Negotiate today's price if you feel that prices will rise before your purchase

•2.    Buy time to take care of other obligations

•3.    Avoid moving twice while waiting for the sale of your current home

And now for a few disadvantages to a lease option,

•1.    Smaller selection of homes to choose from

•2.    These terms typically allow the seller a higher purchase price or sell a property with red flags (see earlier blog on red flag checklist)

•3.    You might lose out on today's really great interest rates

•4.    You will typically pay for the option up front and that money is non-refundable if you don't exercise your option.

To illustrate item number 2 on the disadvantage list, today out of 639 homes available for sale through the NWMLS in Renton, only 6 are offering a lease purchase option and of those 6 the average days on market is 269 days versus average days on market of 127 for all the available homes in Renton.

In today's market, it's hard to argue for a lease option to most buyers.  There are too many advantages for buyers who choose to make a purchase.  The low low interest rates being offered see https://www.wellsfargo.com/mortgage/rates/ the first time buyer tax credit http://www.johnlscott.com/information-johnlscott-1.aspx and the huge selection of inventory to choose from, see http://janaschmidt.com/ .  Please do be careful not to procrastinate, like any good sale, the best choices go first.  And the real estate market is no exception.

Thanks,
Jana