Archive Page 2

The Seller sets the Price

As real estate agents we’re instructed to provide as much information as possible to the Owners of residential real estate for them to select the List Price for their home.  We provide Owners with a Comparable Market Analysis (CMA) with the most recent comparable Sales, homes that are Pending and, the Active Listings in the neighborhood.  After a thorough review of the information we provide, the Owner hopefully selects the List Price that will generate the highest Net Sales Price.

In this digital age where there are companies providing on-line valuations of homes based upon some algorithm or formula sometimes Owners believe more in the on-line valuations than they do in the professional real estate agent with many years of experience.  I have an idea.  When working with buyers we frequently visit numerous homes before they make the decision to submit an Offer to Purchase.  Buyers select the price they’re willing to purchase the home at based upon their comparison of the features and benefits of the properties they have visited.   Here’s the idea.  Prior to a Listing Appointment, I suggest you take the Owner to the 4 – 6 homes your feel are most comparable to their home.  If it’s Sold or Pending, do a curb-analysis with the color pictures.  If it’s Active, schedule an appointment and view the home in detail.  You’ll gain the Owners trust and confidence with your thorough analysis.  You’ll also increase your chances of signing the Listing Agreement at the List Price most likely to generate the highest Net Sales Price.

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The Changing Condominium Market

The market for condominiums in the Seattle Area is quickly shifting from a Sellers’ Market to a Neutral Market.  Sellers can no longer expect Buyers to waive their Inspection, waive their Financing Contingency, waive the Title Contingency, etc. and pay their List Price.  In the last 30 days Listing Agents are rarely recommending an “Offer Review Date” but are suggesting that Sellers review each Offer as it’s presented to them.  The number of days Condominiums are on the market for sale has double or tripled.  We’ve seen Sellers drop the List Price in the first 2 – 3 weeks to capture the attention of Buyers.

We haven’t seen this many price drops in 10 years, since the financial crisis of 2007 – 2008.  If this is a shifting market, how long will it last and where’s the bottom?  What’s causing the slow down in the Seattle condominium market?  I don’t think there is one answer to these questions but several.  First, many of the first-time Buyers were entering the market as the owners of apartment buildings continued to increase the rents every year.  With the glut of apartments on the market today property owners are lowering those rents.  The rental market is flat.  Thus, those Buyers feel less pressure to move.  Second, I think Buyers across the spectrum feel residential properties have appreciated above the values they feel comfortable with and don’t perceive appreciation to continue.  Third, higher and higher real estate taxes in the City of Seattle are causing potential to look at outlying communities where the taxes are lower and they can purchase nicer homes for their money.  Forth, Buyers perceive the political climate in the City of Seattle to be detrimental to the protection of their investments.  Fifth, the recent “Head Tax” passage, then reversal is causing companies to question whether they want to remain in the City of Seattle, thus their hiring has slowed down.

If you have any input that would be valuable to me with this article, please contact me.

Steve Meyers

Keller Williams Greater Seattle

Homeowner Association Dues

So, what are Home Owners Association (HOA) Dues and how do Buyers assess their relevance in their purchasing decision?  Are low HOA Dues better than high HOA Dues, the dilemma!

Home Owners Association Dues are typically assessed to condominium units on a monthly basis to pay for; Common Area Maintenance (CAM), Water/Sewer, General Property Insurance, Property Management and hopefully an amount to pay for future Capital Improvements and Repairs.  HOA Dues may also include Earthquake Insurance, basic cable or internet access, natural gas, heat and air conditioning, or other items.  Exactly what the HOA Dues cover is dictated within the original legal documents used to establish the Home Owners Association.

Even though low HOA Dues allow a Buyer to purchase a more expensive condominium unit based upon their available income, low HOA Dues may not necessarily be good.  Low HOA Dues will undoubtedly cover the monthly fixed costs like; CAM, Water/Sewer, General Insurance and Property Management but, they may not contribute enough to the Capital Reserve budget necessary for future Repairs and Capital Improvements.  Those Repairs and Capital Improvements will then be subject to Special Assessments which could be substantial.

The amount collected each month that goes towards future Capital Improvements and Repairs is recommended by the HOA Board of Directors and typically voted on by the majority of owners of the condominium units.  Lower HOA Dues are typically favored by owners of investment units, owners with fixed-incomes, new owners with limited additional cash available and, owners who are considering selling their units in the near future.

Buyers of condominiums should be concerned with low HOA Dues.  They should research the Re-Sale Certificate and supporting documents in detail and confirm the Capital Reserve Amount will pay for the future Capital Improvements and Repairs identified in the Capital Reserve Study.  The Capital Reserve Study is one of those supporting documents.

If you have any questions about this article, please send me an email at smeyers@kw.com.

Zillows’ Algorithm – A Joke

I have a 2 bedroom, 1.75 bathroom condominium with 1,113 square feet listed for sale over Lake Washington in Madison Park (Seattle) with a List Price of $825,000.  I thought I would take a look at the comparable properties Zillow is using to create their “Zestimate”.  The “Zestimate” is $760,101.  Follow me if you can.  They used eight properties for their “Zestimate”.

$165,000 = 2BR/1BA single family home with 840 square feet in Fall City, WA.  And, it had “Expired” in August of 2008, never sold.

$425,000 = 1BR/1BA condominium with 553 square feet in Madison Park that sold in December of 2017.

$420,000 = 1BR/1BA condominium with 773 square feet in Belltown that sold in October of 2017.

$618,000 = A House Boat on Lake Union at 2339 Fairview Avenue E., Slip D.  Neither the NWMLS nor King County have a record of this sale.

$910,000 = A property located at 5220  42nd Avenue South, #1-S6 in Rainier Valley.  Neither the NWMLS nor King County have a record of this sale.

$970,000 = A 1BR/2BA condominium with 1,370 square feet in one the nicest condominium buildings in downtown Seattle, The Market Court.

$1,430,000 = A House Boat on Lake Union with 2BR/1.5BA in 1,248 square feet that sold in January of 2018.

$1,900,000 = A single-family home with 11BR/7.5BA in 4,970 square feet in Bothell, WA that was “Cancelled” in October of 2015.  It never sold.

Now, I’m a pretty level-headed guy who doesn’t get riled too much.  But, this is ridiculous.  Please share this with your clients when they tell you what Zillow estimates the price of the home/condo is.

Over a year ago Zillow was offering $1,000,000 to anyone who could help them create a better algorithm.  They obviously haven’t found anyone.  I offer this to any agent to take it to Zillow and claim the $1,000,000 prize.

  • Search for condominiums. Do not include single-family homes and house boats.
  • Search the same zip code. Do not including homes 20 and 30 miles away.
  • Search properties that have actually sold in the last 30 – 60 days.
  • Search a similar square footage. Not between 553 square feet to 4,970 square feet.
  • Search a similar configuration. Not 1BR/1BA to 11BR/7.5BA.
  • If it’s a condominium, search the same building/complex address(s) for sales older than 60 days. How about the last 6 months and adjust for time?

I wish you the best of luck in this every changing real estate market.

Steve Meyers, Managing Broker

Keller Williams Greater Seattle

Inspection – Deemed Waived

When a Buyer of residential real estate in the State of Washington submits an Offer to Purchase they have the opportunity to request an Inspection of the property with the Form 35 – Inspection Contingency.  If the Seller agrees, the Buyer has a specific number of days to conduct the Inspection and request repairs on Form 35R – Inspection Response.  On the Form 35, the Buyer and Seller also agree to the number of days the Seller must respond to the request for repairs, as well as other response deadlines.

The Buyer will then conduct their Inspection and submit the Form 35R – Inspection Response, along with only the paragraphs in the Inspection Report that identify the items the Buyer would like the Seller to repair prior to “Closing”.  The Full Inspection Report should never be submitted to the Seller.  The Buyer will have the opportunity to Re-Inspect the property prior to “Closing” to confirm those items have been repaired.  The Buyer should also dictate who is to perform the repairs, ie. electrical work to be performed by a licensed, bonded, and insured electrician, with copies of all work performed submitted to the Buyer prior to “Closing”.

This Is Important.  When the Buyer submits the Form 35R to the Seller, the Seller has the agreed number of days to respond.  If the Seller doesn’t respond within those 3 days, this is a rejection of the Form 35R by the Seller.  The Buyer now has the agreed number of days to (a) reach an agreement with the Seller, (b) agree in writing to extend their negotiations or (c) terminate the agreement.  If, the Buyer fails to do either (a), (b), or (c) the Inspection Contingency is “Deemed Waived”, and the Buyer’s Earnest Money Deposit is at risk.

When preparing the Form 35R – Inspection Response with the Buyer, the Agent should also fill-out and have the Buyer execute the Form 51 – Rescission Agreement.  If the Buyers’ Agent delivers Form 51 prior to 9:00pm on the deadline date, the Buyer’s Earnest Money Deposit will/should be returned to the Buyer by the Escrow Company.

The Federal Government versus the Real Estate Industry

The Federal Government versus the Real Estate Industry

In 2008 the federal government and the real estate industry (NAR?) entered into a 10 year agreement where the government would not pursue what they perceived as anti-trust violations, if the real estate industry focused on cleaning-up some of it’s practices.  At the most recent Legal Symposium sponsored by the Washington Realtors Association it was revealed that the federal government is once again targeting the real estate industry and how it has failed in some areas.  Apparently, there is a joint Federal Trade Commission and Department of Justice Workshop on June 5th to explore and discuss potential options/penalties for them to pursue.

One area of focus is whether as independent contractors if we discuss with virtually anyone in the industry about the setting of standard commissions (price fixing), requiring specific terms and conditions be included in Offers to Purchase or, requiring the removal of language in Offers to Purchase (paragraph W) when receiving Offers (conspiring to restrain trade).  Stating in front of any competitor (and independent real estate agent) that you would not recommend using a specific lender, attorney, inspector, etc.  This could be construed as a “boycott” of that individual.

Not only does this apply to individuals within an office or agency, but it applies to every real estate Team.  For example, a Team Leader cannot state in any conversation with members of their Team that “they will not use a specific inspector again”.  Because every real estate agent on that Team is a potential competitor, now, or in the future.  That conversation would be considered “boycotting” and fall under federal Anti-Trust Violations.  A Team Leader cannot set a standard commission rate that any, or all, of their Team Members must adhere to.  The Designated Broker of an agency is the only person who can set the commission rates within that agency.

Food for thought.

If you have any questions or comments about this article, please contact Steve Meyers at smeyers@kw.com or (206) 972-3328.

Photographic Licensing

Photographic Licensing

by Steve Meyers

Prior to engaging a photographer, it’s very important to have them execute NWMLS Form 13 (specific property) or Form 13A (all photographs used by the agency) along with Form 13B (NWMLS use of photographs).  In this digital world where your photographs are distributed to many web-sites, it’s imperative that realtors protect themselves from allegations of copyright infringement for distribution of the photographs to sites that were not agreed to by the photographer and/or for a duration not agreed to.  The unauthorized distribution of photographs is the number one litigated legal issue for realtors across the United States with substantial monetary penalties.  You need to gain the broadest permission from the photographer for use of the photo’s to protect yourself.

If the home owner offers to provide you with photographs, ascertain their origin.  If the owner took the photo’s, have the owner execute Forms 13 and 13B.  If the owner received the photographs from someone else, you must have that person execute Forms 13 or 13A and Form 13B.



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