Lake at Home - Glenn Roberts

Maximun Seller Contribution to a Buyer's Loan

2011-05-02T20:10:09Z

What is the maximum Seller Concession for a Buyer's Loan?

Well, that depends, and it's always best to consult with the Buyer's lender before your offer includes promises your lender can't keep. When you are negotiating for a buyer, keep the following in mind.

Type of Loan	LTC/CLTV	Maximum Seller Concession Allowed
Conventional Primary and 2nd Homes	Over 90%	3%
Conventional Primary and 2nd Homes	75-89.99%	6%
Conventional Primary and 2nd Homes	Under 75%	9%
Conventional Non-Owner Occupied	N/A	2%
FHA	N/A	6%
VA	N/A	4% Maximum for prepaid closing costs, funding fee & debt payoff

This information provided by Eileen Burke with Cobalt Mortgage in Seattle, a preferred lender.

Eileen also counsels that Seller concessions can not be paid in cash to the buyer, so if you are leaving money on the table, apply it to future home owner's insurance, property taxes, or *HOA dues.

We are in a very unusual market. For listings where the Sellers properly prepare the home and agree to list at a price the market recognizes as current, we are seeing very short market times and multiple offers. The other half of the market consists of homes that were priced too high originally and/or the Sellers are unwilling to lower them. It's this homes that the seller is often willing to assist the buyer in making the loan more attractive and sometimes just possible.

Representing a Buyer involves getting the best deal possible and this is one avenue to explore.

Representing a Seller and suggesting a Seller contribution in a counter offer may just be the ingredient that makes for a happy transaction.

Previously published on Active Rain

On Clutch, a book by Paul Sullivan

2011-04-25T16:01:36Z

Clutch, a book by Paul Sullivan is all about the ability to do under pressure what you can do under normal circumstances. The concept applies constantly in sports events as athletes who have practiced for years suddenly need to excel in real time under "other" circumstances. Those in the military discover who can and who can't perform in combat sometimes with dire consequences.

How does "being a clutch player" pertain to real estate? What traits do clutch players have and how do you recognize them as you decide which Realtor to use when buying or selling a Seattle home or small business?

The five traits are focus, discipline, adaptability, being present, and the awareness of the push and pull of fear and desire. Without all five character traits, will your selected agent stumble through the preparation, searching, marketing, negotiating, inspecting, and closing steps involved in the typical transaction in the very different market we now face?

The well-developed ability to focus, to concentrate like a laser, on the client's needs is the first and most important of the five traits. Solid discipline keeps the Realtor on track. Adaptability allows your agent to recognize trends and keep you advised to slight as well as major changes in the market. Being present involves meeting the market where it is today. Past successes are nothing but ego strokes for the agent. Today's market is substantially different from anything seen over the past 30 years. And lastly, is your agent keyed into your desires, and is he aware of the consequences of failure? Are you?

Overconfidence and pride are enemies of a clutch player. If anyone tells you that making a move and successfully completing a transaction in the current market is going to be easy, they are missing or ignoring many important factors that they cannot control. Loans and appraisals are very uncertain elements these days. Buyers remorse is frequent. Sellers okay at one price may be coming up short at the offered price.

Choose a Realtor® wisely. Choose a Lake and Company agent to help you find success in real estate.

Understanding Negotiations

2011-03-09T18:47:04Z

Not one real estate agent in the country has ever admitted publicly to being a poor negotiator. We all claim to be experts. And most of those claims are based on agent experience developed between 2002 and 2007. Everything sold, no matter what. Boasts like, "I averaged 12% over listing price for my sellers," abound. Buyer agents claim that, "I got it for my buyers over 8 other offers," were pretty much the norm. But I don't think that this had anything to do with negotiating skills. A pleasant, professional appearance, a pre-inspection and a strong offer usually carried the day.

Let's take a rational look at negotiations to understand the process see if real estate agents are even in the game these days. There are two ways to negotiate. You can negotiate from a position or you can negotiate from merit. If, as buyer, you want to negotiate from a position you are essentially saying that you won't go over $xxx,xxx for that house. Your reasoning might be comps or condition. But you take a stand and see if the seller rolls over. If your agent has to deliver that message, or a message that contains the clause "only if," then you are in a fixed position and decrease your chances of making a deal. The message is, the buyer doesn't really care about the house; only care about getting a deal. The same rationale applies to sellers. On the other hand, if the offer has merit, if it explains your needs, your financial abilities, and if it assesses the situation rationally, then it's worth trying to find a way to understand the merit of the other party and determine if the needs of each can be attained.

Once you've established how you and the other members of the negotiation are looking at the situation, you will need to determine the style of each person who has something to say. The five basic negotiation styles consist of defeatism, accommodation, compromise, withdrawal and collaboration. Non of these styles is necessarily wrong, and it is important for an expert negotiator to recognize how these various styles are being used an any conversation.
Someone who uses the defeatism style is often perceived of as aggressive and as a bully. It is often used successfully when that negotiator discovers a weakness in the other party and tries to use it to their advantage. If such a person has a habit of using the technique, at some point they may make an error in evaluating the weakness of others and destroy the negotiation progress.
If, at the beginning of a negotiation, one party adopts an accommodating posture, the others may see that as a weakness. This type of person, a person who doesn't want to make waves, would be wise to have a skilled negotiator on his side to help him keep his original objective in mind.

Some negotiators are compromisers. It often works well for each party to to give up something in exchange for something else. In some cases this can get confusing and again, one or both parties may loose sight of their original objectives.

For offers that are too low to start with, or counter offers that don't seek resolution other than in price, and usually the original price, some parties to a negotiation will just withdraw. Nothing stops a discussion faster than one party refusing to speak to the others. The final style of negotiating is for the parties to collaborate. It stakes a skilled negotiator to sincerely ask and discover what the opposing party really wants, and yet be confident enough to disclose the prime objectives and goals on his side. The result, when successful, will have one negotiator finding ways to teach the other to collaborate so that both parties reach their objectives.

My next post will deal with the emotional side of negotiations. When choosing a broker to work with, it is important for you to determine how he interacts with you. It may be a good indication of how he will represent your interests in the purchase or sale of a property.

When The News Gets Old

2011-02-27T16:36:29Z

Newspapers and television keep talking about the housing recovery. Hello? The housing industry has recovered. If you've ever had a serious disease, major surgery, or been significantly injured in an accident, you long for recovery. You endure physical therapy, medication, and rehabilitation processes to, one day, get back to being your old self. But then one day you are old, and you've always been yourself, but you know that where you are now is not the recovery you hoped for. The housing market went through a period of drug induced euphoria between 2002 and 2007. Place the credit or blame where ever you want. I call it financing on crack. Investors wanted to make big money fast. Wall Street was doing anything to get bundles of loans they could then sell to investors. Lenders were going to 70% ratios (the norm always was, and is again 30%) on stated income (not anymore) just to make loans because Wall Street was buying. And the American public just had to buy a bigger and better home because next week it would be worth 50% or 80% or 100% more and we would have money to spend, spend, spend. Granted: Not everyone thought his way. But in retrospect, it should be obvious to all that the values reached in the real estate industry were not sustainable. They were not true values. In Seattle we have drifted back to the prices of 2005, and we linger at this point. That seems like a good thing to me. Prices on well kept homes are inching up. Prices on fixers are still trickling down. Why down? Because there is little upside for most DIYers in this market. The "it's fast money, honey" days are over for now. Look at any graph and you will see that we are in a stable market. For example the second and third graphs on the SeattleBubble Website show the decline percentage from the peak in many areas of the country has stopped. In Seattle, the price of homes sold over the past 36 months has changed only 3%, while in the 20 months before that it fell 23%. Lenders are being extra cautious to only make loans to people who can

Pay them back
Avoid default in the event of unexpected expenses
Demonstrate financial stability

This is the market. The recovery is here and we are living it. Throw away that crack pipe, you're not addicted any more. Buying a home is not for everyone. Only do so if you want to, and if you are able to. You don't need to wait for verification from all of your friends. You don't need to wait for the newspaper to tell you that it is okay. You only need to see value, and move forward.

Also published on Seattle Real Estate with Glenn and Marjie

Some Seattle Times Articles Miss the Mark

2011-02-23T16:22:44Z

Okay, Admitted. A little more Times bashing for today. The Wednesday Seattle Times has two articles in the business section. The feature is headlined "U.s. Home Prices fall, more declines seen." This article is datelined Washington (and they mean D.C.). It's from information released a week or so ago put out by Case-Shiller, a company that claims to follow same house resales over long periods of time.

Two things about Case-Shiller's information.
1. It is always two months old based on closed sales which are also two months behind the current market. So, figure 4 months stale.
2. In following the sale of the same house over time they don't, as far as I know take into account remodeling/deterioration. Back between 2002 and 2007 home improvement stores were booming because people were pouring money into their homes and re-tapping them for equity. Houses were getting improvements so the values should have gone up. Essentially they were not the same homes that sold two or three years earlier, even though they had the same address. And from 2007-present, most people stopped putting money into their homes and many of them have deteriorated, resulting in a home of less value. Same address, but now a fixer/shortsale/REO. Selling for less: No DUH!

Despite their cachet as a national authority, the model of the American Home has changed. Think about it. A spreadsheet model devised back in the 2000 is no model for today.
Article #2. An enlightening article given by Froma Harrop datelined Providence. I'm assuming that's Rhode Island and not some ethereal point of wisdom. Her article is based on Zillow.com statistics which by Zillow's own admission have a median error of between 8.5 and 15.4%. Median would mean that half of the estimates are above and half below, so some can be pretty far off.

Ms Harrop continues her article in the political vein and advises elimination of any government incentives which encourage home ownership, citing Canada as a model. Harrop likes to write about everything from where ever her apartment is.

Her article is not in the online Times edition so I can't link to it. John Talton regurgitates the same Case-Shiller information as above in his piece about the American Dream. Apparently the Seattle Times can't afford local writers for most of their work and one would do just as well to read the pulp in USA Today. Or maybe local writers won't write articles with messages they are instructed to convey.

I'm glad to see the Times' prices rising. It will make it easier for me to stop the subscription come April 1st. No joke.

Also published at www.glennaroberts.com

Cost Verses Value on 5 Home Projects

2011-01-25T03:35:00Z

Realtor Magazine just published a story on cost vs. value in a sale for 5 different home improvement projects. Interesting in some ways but hard to apply. These are averages from input by realtors from 80 cities across the USA. Markets are different in each area. What the basic inventory is, make a difference. For example, in Seattle we have a mix of homes from the teens through the nineties and a smattering of townhouses built in the last 15 years. And just 20 miles away you can find communities that were second growth forest until the 1980's and other areas that were developed in the 60's and 70's.
A kitchen remodel in a 1927 Tudor is a whole lot different that a redo of a 1980's northwest contemporary. But anyway, here is the table comparing the 5 projects, their costs and value.

Project	Cost	Resale Value	Recouped
Entry Door	$1,218	$1,243	102.1%
Garage Door	$1,291	$1,083	83.9%
New Siding	$13,382	$10,707	80.0%
Kitchen Remodel	$21,685	$15,790	72.8%
Deck Addition	$10,973	$7,986	72.8%

Before you rush out and do something, do some more reading, go to a few open houses and above all, talk to your favorite Realtor®. You might even want to take him to lunch and pick his brain. If you are going to sell, you want to do the things that make the most sense for your home, in your market, under current conditions. And the best way to insure that is to get the opinion of someone working in the trenches every day.

If your Realtor® is still in the business after the last three years, then he knows what he is doing.

The realtor magazine article: Cost vs. Value.

How Do You Negotiate?

2011-01-11T14:44:18Z

Glenn Roberts | Ravenna Park | My Seattle | Lake & Co Real Estate

How Do You Negotiate?

I got an email from a buyer a while back. I had met him at an open house I was holding. It wasn't my listing and he acted like he knew more about the listing than I did. Maybe so. There is a lot of information out there. I asked if he wanted to look at some comparable properties. He said maybe.

I got an email from him a few days later. "How would you negotiate for me?" he asked. I could tell from talking to him at the open that he had read about the bubble and then the shadow inventory, and he was sure prices were going down more. He told me about how much less than asking other homes were selling for. So I pretty much guess that more than anything, he wanted the deal of the century.

I wrote back: There are two ways to negotiate. you can negotiate from a position or you can negotiate from merit. If you want to negotiate from a position you are essentially saying that you won't go over $xxx,xxx for that house. Your reasoning might be comps or condition. But you take a stand and see if the seller rolls over. That would tell me that you don't really care about the house, you only care about getting a deal. On the other hand, if the house has merit, if it meets your needs, if you can afford it, if there isn't any other property that meets your needs as well, for the same price, then it's worth trying to find a way to make the purchase work so that the seller's needs are met as well.

He wrote back: No, I want to know how you will make the seller sell at a lower price.

I knew the seller had received an offer at a lower price and it didn't work out. It might now and I would help the buyer with it, but it had to make sense.

I wrote back: It sounds to me like you are trying to defeat the seller. That is one style of negotiating. It will work if the seller and his agent are both accommodaters. They may just roll over, and give you the house for what ever you want. But they didn't to the last person. If both the seller and you were compromisers, we might reach agreement, but you would have to give up some of your desired features. I really don't know what they are other than a lower price than the home is currently listed for. On the other hand, with an offer too low, as you suggested you might make, the seller might just withdraw. We would go no where with this if the other party will no longer speak to us. I suggest we try to collaborate with the listing agent and the seller. We'll need to negotiate more after the inspection and possibly after the appraisal. Some how we can tweak their needs with ours, once I know what yours are. I need to know why you want this house so I can build a case for you. Or maybe, there is a better house somewhere else that will work as well.

Apparently this buyer, a buyer who wouldn't sign a buyer's agency agreement, a buyer who didn't seem to have needs other than to get a house for way less than the listing price, a buyer who is perhaps, not a buyer at all, didn't like my idea that we try to work with a plan that would accomplish the goal of closing a sale. He seemed to want a negotiator who would help him make it fail. I didn't hear from him again, nor did I pursue him as a client. I don't think he really wanted to be a homeowner. I think he only wanted a deal.

Be a Smart Buyer

2010-10-27T00:45:21Z

The savvy buyer in Seattle wants all of the information they can get. They want to know the history of the property and of the neighborhood. The savvy buyer reads blogs and reads the newspaper. Just a few years ago buyers wanted to have it all in a house and they wanted it now. Banks accommodated them and many bad decisions were made. You know that story.

Unfortunately, what we see on TV and in the news media today is all about the extremes. We hear and experience around us the effects of the millions of foreclosures and short sales. We read how the incomes of the top execs in the country have risen while the unemployment rate nationwide remains around 10%. Most of the media is thriving on the bad and the ugly.

Will things get better or will they get worse? Consumer Reports came out with an interesting article in their November issue. People do expect that inflation is one way that home value increases and over time that increase is slow and steady. Yes there are stunning surges and sometimes declines that match. The magazine has determined that there has been a 4% average per year increase in home values from 1987 to the present. They've contrasted that with the Case-Shiller Home Price Index for the same period. Years 2003-2006 certainly show an abnormally high increase in the price index. And 2007-2010 show a just as dramatic correction.

We've all heard the spiels of the television real estate evangelists touting get rich quick methods for real estate investing. Some "investors" still subscribe to those practices. Now, these same preachers are letting off steam on how to make millions in the short sale and foreclosure market. Why? Because there is always someone out there who wants to believe that they can have it all...now, and is willing to pay for the dream.

This Consumer Reports Chart pretty much tells you where we've been and where we are headed. Will greed make us make the same mistake again? The average buyer will only get in the market after all of their friends have made that move.

From the article:

The optimists say the market will eventually catch up to the historical trendline with larger-than-average price appreciation. Record low mortgage rates will make homes even more affordable for those with the means to borrow. Put the two factors together, and buying a home might be an incredible bargain as long as you're not looking to make any quick profits from it.

The savvy Seattle buyer pays more attention to slow growth and debt reduction. The savvy buyer knows that the scrupulously cared for property will fetch a good price when the time to sell comes. The savvy Seattle buyer knows you cannot participate in the gains unless you are in the market.

The old adage to buy when everyone is selling, and sell when everyone is buying continues to hold true in Seattle and likely in your city, too. Prices and interest rates are low. Don't get left out in the cold.

Ballard RainWise Open House

2010-10-20T17:10:15Z

On Saturday, November 6th from 10:00 AM until 1:00 PM you can go to the Sunset Hill Community Club (3003 NW 66^th Street) and pick up information to begin your self-guided walking tour of the Ballard RainWise street project.

Ballard has taken the lead in Seattle to prevent pollutants from entering our waterways. How so? One of the biggest causes of waterway pollution is run-off from roofs and driveways. This water is normally diverted to the storm drains in the street or in some cases to the city sewer system itself. In the latter case, this puts a burden on the sewer treatment plants. In the former, pollutants that could be filtered on the property are wisked away to streams, rivers lakes and out to Puget Sound.

Here is what this free tour offers:

· Learn from experts at each tour site how and why Ballard is leading with green.

· Discover how easy it is to receive a RainWise rebate and create a beautiful yard.

· See neighborhood rain gardens and cisterns that have already received a rebate.

· Visit planting strips transformed into roadside rain gardens.

· Explore porous concrete and how it works in green alleys.

Be a part of cleaning up this valuable resource of ours. At the same time, you might discover a way to install a water retention site on your property and enjoy the rebate to help defray expenses.

Where to Have October Fun

2010-10-16T18:31:27Z

Here it is - almost the end of October. Have you taken the kids or grand kids to a corn maze, a pumpkin patch yet? Do they have any idea what bobbing for apples is all about.

Here's a great link that will tell you all about where to find Pumpkin Patches and More.

Get on out there an have some fun!

Seattle Times Says Home Not a Nest Egg Anymore

2010-08-23T17:07:54Z

The Seattle Times reprinted an article by David Streitfeld of the New York Times today. Your home a path to wealth? Experts say no quotes exectives from various companies as if they have a clue as to what's coming down over the next 20-50 years. Even the cheif financial officer of Zillow says, "There is no iron law that real estate must appreciate."

When was the promise that home ownership would create wealth, except on late night TV? Most of us know that there are a great many tangible and intangble benefits to home ownership, that span one's lifetime. The home isn't and never was intended to be the monthly ATM machine to meet expenses. Nor was it the path for everyone to create wealth.

Perhaps only executives of major corporations know that the true way to weath is gigantic bonuses funded by investors through IRAs and other investment plans. Maybe there is a flaw in the Wall Street model for the little guy to get ahead.

Of course you could put you money in a CD or bank account, now paying a whoping 1%, more or less. The beauty of compound interest has pretty much gone down the tubes.

Renting is the only option besides buying, unless Mom and Dad will allow you a little comp time in the basement. Have you ever noticed that rents do go up? With a fixed rate mortgage your house payments will stay the same. Have you ever noticed that sometimes the landlord is non-responsive to your requests for small repairs? Could you do a better job of that yourself?

Home ownership is not for everyone. For one thing you are either going need a lot of cash, or good credit. And then you have to be a responsible person, willing to take care of your home. Sometimes you will have to cancel the trip to Cabo, because, just maybe you didn't plan ahead for the new roof. Oh, well, the sun shines here once in a while, too.

When you are ready to own, give us a call. I'd be happy to help you find that special home, or one that you can make just right.

Know Your Options

2010-08-05T13:40:06Z

Fannie Mae has a new site designed to help homeowners. It's called Know Your Options and here's what Fannie Mae has to say about it:

If you are struggling with your mortgage payments or facing foreclosure, you may feel overwhelmed and frustrated. Many homeowners simply don't know what to do or where to go for assistance, and they feel too helpless to take action.

In Seattle, at the present time, less than 10% of homeowners are in one phase or another of the foreclosure process. In outlying areas the figure is higher. While our problem is not as serious as the problems in Arizona, Nevada, Florida and a few other states, this is a concern for us all on a neighborhood level. If you know of someone who is having a problem with a home modification loan, a short sale, foreclosure, or just currently having trouble making their house payment, this site is a good place to send them. It's easy to navigate and will clarify issues that are often hard to grasp.

The Inspection Addendum

2010-07-28T20:18:08Z

The inspection addendum to the purchase and sale agreement in Washington State covers a lot of territory. Buyers should take the opportunity to do a thorough inspection and also do the attending actions that are allowed during the inspection period. The inspection addendum states:

This Agreement is conditioned on Buyer's subjective satisfaction with inspections of the Property and improvements on the Property. Buyers inspections may include, at Buyer's option and without limitation, the structural, mechanical, and general condition of the improvements to the Property, compliance with building and zoning codes, an inspection of the Property for hazardous materials, a pest inspection, and a soils/stability inspection.

The onus is on you, the Buyer, to line up and proceed with an investigation of the property to the extent you choose. A broker working on your behalf will have good suggestions for you, such as a list of licensed inspectors, a number of companies that do sewer scoping, and where and how to test for lead paint, asbestos and other hazardous materials. Plan to take two to five hours off from work and attend the inspection. You will learn a lot more about the property from accompanying the inspector than just reading the report later. Expect that an inspection for the average house will cost around $400 and a sewer scope another $200. This is all money well spent.

There is a neighborhood review clause in the inspection. You may take the opportunity to investigate crime statistics with the local law enforcement agency, determine the time required for your commute to work, check noise levels at different times of the day, and anything else that may affect your quiet enjoyment of the property.

I learned from a client years ago that the best neighborhood review process was to take a couple of hours and go knock on neighboring doors. Ask they people there how they like the neighborhood and what kind of problems might be anticipated. She was exactly right and I've been recommending that process ever since.

Your attitude and that of your broker are very important in the approach to the inspection and how you handle the results. There are three options open to you as you near the inspection deadline:

Perhaps you just want to walk away and that is within the bounds of your allowed choices.
There is also an option to negotiate with the seller, and minding the timelines is of utmost importance. Sellers in the recession market are already feeling put upon and will likely dig their heels in with requests for repairs. Work through this with your Broker respecting that, but still with a goal of getting the property at a fair price.
No house in perfect, and in spite of its flaws you may still love the house and elect to purchase it as it is. Some buyers forget that the original goal was to own a home.

Remember that the inspector is not there to pass or fail the house. The inspector is there to give you an idea of the condition of the house and its elements. You, the Buyer, make the decision to proceed or not.

On July 1, 2010 the State of Washington enacted a number of laws concerning the real estate industry and one of them: WAC 308-408C is all about what an inspector is required to do and what an inspector is not required to do. For a PDF summary of the law as put out by The Washington Realtors®, drop me an email and I'll send it to you.

Seattle: Police Department Mapping Tool

2010-07-10T20:07:38Z

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Glenn Roberts | Ravenna Park | My Seattle | Lake & Co Real Estate

Seattle: Buying a Home? What about Crime?

In This Post

Comprehensive tool by Bing Maps and The Seattle Police Department

The Seattle Police department has come out with an interesting crime mapping tool that will certainly be interesting to buyers and also to sellers, homeowners and renters. Part of crime prevention is being aware of it and then taking proactive steps to correct problems by cooperating with your local law enforcement agencies.

Here is a link to the what's called My Neighborhood Map. In conjunction with Bing Maps the Seattle Police Department has put together a wide variety of information besides crime and crime statistics on this site. One can find listings for Art and Recreation, Community Services, Education, Parks, Permits, Public Safety, Transportation and Utilities. This is a bookmark link for anyone who wants quick information for in and around Seattle.

It takes a little orientation to figure out everything that is available on the map but I can see many uses for it besides giving a buyer a link to check out crime statistics in the neighborhood where they are considering purchasing a home.

Forbes Mobility Map Tool

2010-06-28T15:14:07Z

I recently ran across an interesting tool put out by Forbes Magazine. It takes all of the national data concerning where from and where to people moved in 2008. Over 10 million people moved from one county to another. Here is the map looking at the Seattle in-bound and out-bound movers.

I found it interesting to look at different locations and see if there were more people moving in or moving out. Here is the link to the FORBES INTERACTIVE MIGRATION MAP.