Archive for the 'Residential Real Estate' Category

Seller Disclosure Statement

by Steve Meyers

My 29th, 2017

The Seller Disclosure Statement is a document required to be transmitted to buyers in every real estate transaction in the State of Washington, except if a court appoints an executor of an estate, who has no knowledge of the property.

The seller must answer every question on the Seller Disclosure Statement correctly.  If any question is left blank, the document is not complete and the contract is voidable by the buyer up until the Closing of the transaction and, the earnest money may be returned to the buyer.  The seller must not only answer every question but, some of the answers may require detailed explanation of their response.

The Listing Agent is required to review the Seller Disclosure Statement in detail.  The Listing Agent should assure that every question is answered properly.  Questions that need additional comments should be attached to the Seller Disclosure Statement.  If you, as the Listing Agent, knows an answer to be incorrect, you should ask the seller to make the correction.  If the seller refuses, you can allow the document to be released but, you’re required by Washington State Statutes to communicate your concerns to each buyer as soon as possible regarding that issue if it may be a “Material Fact” or “Material Defect” of the property.  “Material Facts” and “Material Defects” are defined in the RCW’s (Revised Codes of Washington).

Disclaimer:  I’m not an attorney or accountant.  I advise you to seek the advice of an attorney and/or an accountant to review and evaluate the Seller Disclosure Statement and provide you with their professional opinion.

If you have any comments or questions about this article, please email me at

Steve Meyers is a Managing Broker at Keller Williams Real Estate in Seattle, Washington.  He can be reached at (206) 972-3328 or

Escalation Clauses

by Steve Meyers

March 29th, 2017

In this market where buyers are waiving inspections, presenting Offers without financing contingencies and, signing-off on their review of the Re-Sale Certificates without questions (condominiums), we’re also seeing “Escalation Clauses” that increase their Offers far above the List Price.  I attended a presentation of four of the top residential real estate attorneys last week where they unanimously disliked the “Escalation Clause” because it is fraught with potential for errors and miscalculations. There suggestions were to seek the highest and best Offer from the top two buyers based upon the “Escalation Clauses” but, then cross-off the “Escalation Clause” from the Offer and write-in the agreed upon purchase price on line 6 of Form 21 – Residential Real Estate Purchase and Sale Agreement and, have all parties initial the new purchase price.

The attorneys are seeing more and more disputes with the “Escalation Clauses” and recommend eliminating the Form from the Offer to Purchase, if possible.  A couple of suggestions were to present the “Escalation Clause” from the secondary buyer to the agent for the primary buyer to substantiate the higher price for them to submit / change the existing Offer.  Either cross-off the “Escalation Clause” on the front of Form 21 or Form 28 and then insert the new price with initials by all parties.  An alternative would be to submit a Form 34 with the appropriate language or, the Form 36 – Counter Offer.  However, any changes to the initial Offer to Purchase would be considered a Counter-Offer and would allow that buyer to not proceed with their initial Offer to Purchase.

If you have any comments or questions about this article, please email me at

Steve Meyers is a Managing Broker at Keller Williams Real Estate in Seattle, Washington.  He can be reached at (206) 972-3328 or

Understanding your Resale Certificate

by Steve Meyers

February 27th, 2017

As the seller of a condominium in Washington State, you’re required to supply the buyer with a resale certificate and all supporting documentation shortly after you enter into a purchase and sales agreement with the buyer.  The HOA’s professional management company will produce these documents for you and you’ll sign to attest to their accuracy.

There will be numerous items in the resale certificate which may cause the buyer to terminate the agreement.  It’s best to learn about these items prior to listing your condominium for sale with a real estate agent and disclosing those items in the listing information on the multiple listing service.  Those items will include whether there is a “Rental Cap”, any special assessments, the minutes of the general HOA and specific B of D meetings, the minimum rental period, pet policy, the amount in the capital reserve account, information in the most recent reserve study, delinquent assessments, FHA approvals, controlling interests, assigned parking and storage, etc.

Buyers want to know if there’s a “Rental Cap” in the building in the event they’re transferred with their company to another area or, they seek employment in a different location.  There are many scenarios for how to qualify for renting your unit so you should understand these may limit the number of buyers submitting Offer to Purchase.

The biggest issue with buyers will be the amount of capital reserves and the information in the most recent reserve study.  Buyers want to know of any additional financial obligations they may have if the current capital reserve account will not pay for all of the repairs and maintenance items that come up in the future.  Low HOA Dues may result in a poorly funded capital reserve account and high HOA Dues may indicate there’s a significant financial obligation in the near future.

Recently, VRBO’s (vacation rentals by owners) and AirBnB’s (air bed and breakfasts) have become popular.  Some condominium Declarations, Bylaws and CC&R’s address the minimum rental periods within buildings but, there are some buildings without restrictions.  Surveys have found that short-term rentals in condominium buildings have a negative effect on condominium values and are an overall negative impact to the community of owners.

If you have any comments or questions about this article, please email me at

Steve Meyers is a Managing Broker at Keller Williams Real Estate in Seattle, Washington.  He can be reached at (206) 972-3328 or

Blocked FHA Mortgage Insurance Cut

by Steve Meyers

January 28th, 2017

The new Trump Administration halted the previously announced FHA mortgage insurance rate cut from 0.85% to 0.60%.  What does this all mean?  Let me give you a little historical perspective and then discuss the Pros and Cons.

One of the missions of the FHA (Federal Housing Authority) is to provide mortgage insurance on loans to low and moderate income families with modest credit scores, to allow them the opportunity to purchase homes.  These families can borrow up to 96.5% of a homes’ value and have a credit score of 580.  Mortgage loans greater than 80% of the purchase price require either FHA mortgage insurance or mortgage insurance from a private company like MGIC before they can be bundled and sold on the Capital Markets.

Following the housing bust in 2008, the FHA experienced an unexpected number of borrowers who went into default and they ultimately had to foreclose on their loans.  The FHA’s capital reserved of 2.0% of their entire portfolio, as required by congress, was severely diminished.  The Obama Administration raised the FHA’s mortgage interest rate 4 times since 2010 to increase the capital reserves back to its’ required 2.0%.  To help the Agency, the Federal Government had to infuse 1.7 billion dollars into the Agency in 2013.  That was the only time in the 79 year history of the FHA that Congress had to bail out the Agency.  In fiscal 2015, the FHA finally reached its’ required reserve of 2.0% of its’ portfolio.

In late 2016, the Obama Administration made the decision to reduce the current FHA mortgage interest rate from 0.85% to 0.60% to allow more low and moderate home buyers to purchase homes and, to reduce the monthly insurance payments for over 700,000 existing borrowers by 0.25% of their outstanding loan amounts.

So, what is the biggest advantage in halting the announced plan to reduce the mortgage interest rate?  Housing prices throughout the country are growing at historically higher rates than normal.  This cannot continue and there is sure to be a correction in the market.  If the FHA reduces their mortgage insurance rates and the bubble bursts again as it did in 2008, the FHA should increase its’ capital reserves today so Congress does not have to bail it out for its’ second time in a decade.

What are some of the disadvantages in halting the reduction of the mortgage interest rate?  As mentioned earlier, roughly 700,000 current home owners will not receive a reduction in their interest rates and between 30,000 and 40,000 potential new home buyers will not qualify to purchase a home.

If you have any comments or questions about this article, please email me at

Steve Meyers is a Managing Broker at Keller Williams Real Estate in Seattle, Washington.  He can be reached at (206) 972-3328 or

Appreciation, is it real?

Appreciation, is it real?

by Steve Meyers

On the surface, the generic statistics given to reporters and the media may be correct.  The single statistics that are accumulated by the aggregators of this information like Zillow and provided to reporters and the media leaves out an explanation of how these statistics can be misapplied or mis-interpreted.  Here are two examples.

In downtown Seattle if you were to compare the sale of two-bedroom condominiums over the last 12 months the appreciation may be reported to be, say twelve percent (12%).  So, if in June, 2015 the average sale price of 2 bedroom condominiums were, say $700,000 and in June of 2016 the average sale price of 2-bedroom condominiums were $784,000, that would be your 12% appreciation.  However, when you understand that Tower 1 of the new Insignia Condominium Project closed a significant number of 2-bedroom units during that same time frame with sale prices between $800,000 and $1,000,000, that will skew the average sale prices of other condominium projects in downtown Seattle.  What was the appreciation in those existing condominiums, say 5% or 6%.  I don’t know but, it wasn’t 12%.

Let’s look at single-family homes in the Ballard Neighborhood.  If the media reported the appreciation rate of single-family homes went up 14% in the last 12 months in Ballard, that would be wonderful.  However, if you take out, or consider, there have been a significant number of single-family homes that were purchased by developers to construct 3, 4, and even 5 townhomes on those single-family home sites, how will that skew the appreciation rate?  If your Ballard home were outside the areas in Ballard that allowed the re-development of your single-family parcel into 3, 4, 5 townhomes, would your site have increased in value by 14% …. No.

Granted, there has been significant appreciation in the two sectors above but, the statistics reported to reporters and the media by the aggregators of this information is many times incorrect because they take a broad brush look at the prices and have no idea what other things to consider.

If you have any questions or comments about this article please contact me.  Steve Meyers, Managing Broker, Keller Williams Greater Seattle, (206) 972-3328,

“Under Contract”, dont jeopardize your loan

By Steve Meyers
August 1st, 2014

I “Close” on the purchase of my new home next week, Thursday. It’s a much larger home than I previously lived in so I purchased some additional furniture for the third bedroom and living room. I put it on my credit card. I’m so excited.

Unfortunately, it’s very likely this Buyer no longer qualifies for the loan they needed to purchase the home. They purchased the furniture using a credit card and the minimum monthly payments on the card went up, thus reducing his available cash flow to pay his monthly mortgage. He just lost his dream home.

OR….I “Close” on the purchase of my new home next Thursday. Because it’s further away from work and my old car was on its’ last leg, I decided to lease a car for 2 years until I could afford to purchase a used car. Unfortunately, the periodic monthly car lease payment will reduce his available cash flow to pay his monthly mortgage. He just lost his dream home.

OR….I “Close” on the purchase of my new home next Thursday. I made an application for my loan back in November and it’s finally closing. At Christmas time I only had 8 people to purchase gifts for so I opened credit cards at Macy’s and JC Penney because of the fantastic deals when using store credit cards. Unfortunately, opening the two new lines of credit lowered his FICO Credit Score. The lender must now increase the interest rate on the loan which impacted his ability to buy his dream home.

What are the do’s and don’ts when looking for a home to purchase and prior to “Closing” on the transaction. When you meet with your lender to get Pre-Approved for a loan, ask him/her to supply you with a list if the important financial do’s and don’ts. There are many things that you might do that will jeopardize your ability to borrow money to purchase a home.

The Do’s and Don’ts of Borrowing

a.) Changing jobs
b.) Trying to qualify for a loan with a recent raise
c.) Losing your job or reduction in hours
d.) Not working full time or on the job for less than two years
e.) Having a paycheck that does not have your name, address or year-to-date income on it
f.) Being self employed with declining income
g.) Being self employed less than two years
h.) Declining income


a.) Late mortgage payments
b.) Credit lates, collections, or judgements
c.) Recent inquiries into your credit – they need to be explained
d.) Undisclosed litigation including filing for separation or divorce
e.) Address discrepancies
f.) Undisclosed debt that we discover during processing including child support/alimony
g.) Fraud alerts/homeland security


a.) Recent deposits over $ 250 – they will need to be explained and documented to the lender
b.) Missing pages of bank statements or brokerage statements
c.) Internet print outs that do not have names or account numbers
d.) Transfers between accounts that are new and unable to trace
e.) Gift funds not documented properly

Rules to follow:

a.) Do not make any changes to your job. If something changes involuntarily advise the lender immediately
b.) Do not apply for any new credit cards or obtain any new debt. Do not let anyone look into your credit without telling your lender ahead of time
c.) Do not make any late payments. Pay all fines, traffic tickets and, return all library books.
d.) Do not spend assets over $ 1000 without discussing it with your lender
e.) Do not go on vacation or out of town without advising your lender
f.) Respond to your lenders requests for documentation within 24 hours
g.) Understand that the underwriter will “find out”. There are no secrets.
h.) Understand that if your lender asks you for something it’s because they need it not because they want it.
i.) Understand that this process is stressful but as a team you’ll get through it together.
j.) Understand that your lender must follow federal regulations and agency rules and guidelines even if they don’t make sense.

I’m looking forward to working with you on your purchase. Send me an email and let’s schedule an appointment to meet and discuss your needs and wants. If you know someone else who would like to read this article, please forward it to them.

Steve Meyers, Managing Broker
Keller Williams Greater Seattle
(206) 972-3328

1031 Exchanges, how do they work?

1031 Exchanges, how do they work?
by Steve Meyers
January 23rd, 2015

So…what is a 1031 Exchange and does it make sense for me to pursue this mechanism to defer my tax liability when I sell my property? Does my property qualify for a 1031 Exchange? What needs to happen to defer my tax liability into the future?

A 1031 Exchange is a method for deferring the tax liability on the sale of real or personal property into the future. Using this mechanism created by the IRS, you’re allowed to sell your real or personal property and not pay taxes on the Capital Gains if you re-invest the proceeds into another Like-Kind property within a specific period of time. This allows the owner to defer taxes they would have paid at the time of sale, to a later period when it is more advantageous to the owner. The common threshold is that if your tax liability is less than $10,000, there’s no real advantage to a 1031 Exchange.

What qualifies for a 1031 Exchange: Property that is held for a “trade, business, or investment” purpose qualifies for a 1031 Exchange. The definition of Like-Kind real property is very broad. For example, you can trade raw land for income property, a rental house for a multiplex, or a rental house for a retail property.

What does not qualify for a 1031 Exchange: Your primary residence or second home do not qualify for a 1031 Exchange.

The law requires you to work with a registered “Qualified Intermediary” to facilitate your 1031 Exchange.

To qualify for the 1031 Exchange you need to follow very specific rules and time-frames. You need to “designate specific properties” that you intend to purchase within 45 days of the sale of your property, known as the relinquished property. Here is a very simple explanation. If you intend to purchase between one (1) and three (3) properties, you must identify those properties within the 45 day time period and, you need to “Close” on any, or all, of those properties within 180 days from the “Closing” of the sale of your relinquished property. If you intend to purchase four or more properties (4+), you must identify all of those properties within the 45 day time period and, you must “Close” on all (100%) of those properties within 180 days of the “Closing” of the sale of your relinquished property.

If you have any comments or questions about this article, please email me at If you know of someone who would also like the information in this article, please forward it to them.

Steve Meyers is a Managing Broker at Keller Williams Realty in Seattle, Washington. He can be reached at (206) 972-3328 or

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