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The Queen Anne Hill Writing Team

Things that can make a home sale hard to close or not close at all…

If the buyer wants to buy a home contingent on, i.e. before, selling their primary residence the transaction can sometimes get very stressful as deadlines near. This situation can sometimes be remedied by a bridge loan. Bridge loans are temporary loans that bridge the gap between the sales price of a new home and a home buyer’s new mortgage, in the event the buyer’s home has not yet sold. The bridge loan is secured to the buyer’s existing home. The funds from the bridge loan are then used as a down payment on the move-up home.

Delays can be caused by the agent not having previously worked with the lender. Communication between the two parties may not be as open as with people who have worked together before. Ensuring open communication can make all the difference!

When phone calls or email are not responded to it’s amazing what glitches can come up. All parties need to stay in close contact with each other throughout the entire transaction right up until closing.

An out of town appraiser can often cause a bump in the transaction time line if they are unfamiliar with the area, types of property in the area or area pricing. Neither banks nor mortgage companies will lend above appraised value. This can be remedied by the buyer bringing in a larger down payment, reevaluation of the original appraisal or ordering an entirely new appraisal. These are not cures but could be options.

Inspections are utilized to find hidden defects even the seller might not be aware of. There may be issues that would not normally be recognized by the consumer. These can generally be remedied by price adjustment or repair.

Improper permits can often delay a transaction. Additions to garages, MIL’s, work sheds etc. When work is not properly permitted nor is grandfathered in it can sometimes disrupt the appraisal or inspection process.

Be sure you understand what the rules and regulations are for sewer systems and underground oil tanks in the area in which you are buying. Some of those guidelines are ever changing in regards to various environmental regulations. Some oil tanks can be filled with sand, some have to be dug up, some can be certified as is and won’t disrupt anything. Regardless, be aware.

Mold, lead based paint or homes where there was illegal drug manufacturing can all be environmental issues that can derail a transaction.
Certain changes in the financing terms can be limiting factors as well. Change of terms or fees can affect an outcome of a loan. Be sure that the good-faith estimate of fees and rates is seen by the buyer within 3 days of receiving an application. This is a pretty accurate disclosure of what the loan is going to cost the buyer.

The Preliminary title policy commitment is the best way to see if the property is “encumbered.” Encumbrances can be anything having to do with water rights, property lines, easements, clouded ownership or workman’s liens, among many others. Often a good title officer can find solutions to these situations. However, they can be the cause of some stressful hurdles in the transaction.

You don’t have to know everything about everything in order to buy a house. But, the pertinent things that apply to your loan or the property you want to buy are important enough to have enough information to ask the questions. . . . .

Hire a good agent!

Backyard cottages are just that; Cottages. They are a spacious “MIL” mother-in-law. However they cannot be more than 800 sq. ft. They are allowed in single-family zoned properties throughout Seattle under an ordinance approved unanimously by the Seattle City Council. Owners of the property must live on the premise and Seattle would allow about 50 new cottages a year. The lot size along with height and depth requirements are covered under city ordinances as well.

Cottages or DADU’S (Detched Accessory Dwelling Units) are an additonal way to support needed housing in Seattle. They can be a nice niche for students, relatives, elderly or low-income rental property. They are small dwelling units that are on the same lot but separate from a single-family home.

Permit fees for backyard cottages will vary according to whether they are “new construction” or existing structures. It can take time to go thru the permit process. For more information about legalizing a currently occupied backyard cottage, please contact Dianec.davis@seattle.gov. For information needed on permit requirements go to www.seattle.gov/dpd/BackyardCottages or call Applicant Service Center (ASC) at 206-684-8850.

Welcome to the National Realtor Open House Weekend on April 10^th and 11^th 2010.  This event is backed by the Washington Association of REALTORS.  You’ve probably already heard it on the Radio, TV and read it in the Newspapers.  This is a state wide event. . . .along with other parts in the nation.

The market and pending sales were  sparked with increased confidence due to the positive response of last years event. This year REALTORS hope to have even a bigger and better event by inviting buyer’s to view homes and possibly take advantage of the last minute buyer’s tax credit, coupled with a  great time to buy with record-low interest rates and a  great selection of homes across the price spectrum.

The National Open House weekend will showcase the wide selection of homes offered for sale for both move-up buyers and first time buyers.  Informing buyers of the  extended/expanded homebuyer tax credit which expires on 4/30/2010.

Get out and take a look. . . . . . . .

Bank of America, one of the hardest hit lending institutions in the country, plans to offer nearly $3 billion in loan forgiveness beginning in May. The bank said Wednesday that it will forgive up to 30 percent of some customers’ total mortgage balance.

It was determined that to help the company stem greater losses, keeping people in their homes was their solution. By keeping homes out of foreclosure, Bank of America, while taking a loss initially on total principle, would be able to keep people in their homes, and paying a reduced mortgage.

Bank of America is taking an innovative “earned principal” forgiveness approach to HAMP modifications where mortgages are at least 60 days delinquent and the current loan-to-value ratio is 120 percent or higher.

• An interest-free forbearance of principal that the homeowner can turn into forgiven principal over five years which would result in a maximum 30 percent decrease in the loan principle balance, aiming to achieve 100 percent loan-to-value ratios.
• In each of the first five years, up to 20 percent of the forborne amount will be forgiven annually for borrowers that remain in good standing on their mortgage payments.
• Forgiveness installments for the first three years are set at the 20 percent level.
• In the fourth and fifth years, the amount of forgiveness will be updated based on the home’s value at that time.  This is toensure that the loan-to-value ratio won’t be reduced below 100 percent through principal forgiveness.

Hopefully other institutions will follow suit and will help distressed homeowners recover from the housing market collapse in 2007. This is a bold, progressive move on behalf of Bank of America to encourage a recovery of homeowners in distress.

For more information, see Bank of America’s website.

The Bullitt Foundation is devoted to helping the Northwest achieve environmental sustainability. The foundation offers grants to organizations, offices, and businesses, who want to direct their company in the direction of sustainability and “to go green”. Despite the foundations very determined stance to help the region attain a more sustainable human presence and interaction with the environment, the foundations main building and headquarters doesn’t reflect that sentiment. Currently, the Bullitt Foundation Headquarters is operating out of a historic First Hill house at the Stimson-Green mansion. The mansion, isn’t insulated, and doesn’t perform to the high standards the foundation sets for itself and for the grantees it helps. This is why, the foundation has set in motion the plans for a 6-story office building, that will be the city’s, and regions “greenest building ever”.

The Bullitt Foundation is calling its new building the Cascadia Center for Sustainable Design and Construction. It would house the foundation’s headquarters and serve as a showplace for cutting-edge green engineering, eco-friendly energy consumption, and architecture.

The building is planned to use only one third of the electricity that conventional office building use. All of which the building will generate itself.

All of the water the building uses will come from treated rain water from it’s roof, and treated water from it’s drains and toilets.

All six of its parking spaces would be devoted to hybrid vehicles.

The building is being designed to last 250 years.

The Cascadia Center aspires to meet the most difficult green-building standards on the planet: the Living Building Challenge. The Living Building Challenge was developed by Seattle-based Green Building Council in 2006. The group administers the LEED (Leadership in Energy and Environmental Design) rating system. The idea behind the living building challenge is analogous to how a tree interacts with its environment and surrounding. The tree produces it’s own energy and water and it doesn’t pollute. Living buildings aim to have that kind of minimal footprint. The building would be virtually self-sustaining.

The hope is that eventually, more companies will follow in the footsteps of the Bullitt Foundation and help make the Northwest and Seattle area a more sustainable, and eco-friendly region.

For more information, please visit the Cascadia Center for Sustainable Design and Construction pdf.

There’s been a lot of talk about what might be better when choosing either to custom build your home vs. fix an existing home. Between the two, here’s some pros and cons, so, lets explore them!

Custom Built Homes

Pros:

1. Your own unique “stamp” on where you live and how you live. The ability to step back and say, “this is how I wanted it.”
2. Endless potential to design from the ground up.
3. Everything in in the home is usually brand new.
4. Customize not only the interior, but the exterior as well as the landscaping.
5. Build directly for your budget and needs.

Cons:

1. Time. Building a custom home can take months of planning and 3 – 4 months of construction.
2. In some instances and locations, building a home can be more costly. Hiring an architect to draft plans can be spendy.
3. The cost of new appliances and other household needs can be spendy as well. Despite the fact that they’ll last awhile, the initial monetary setback can be difficult to accommodate.
4. Too many choices to make. If you’re the type of person who can make the hundreds of decisions on a “from the ground up” design then this might not be a con. For most of us though, the number of decisions to make can be overwhelming.
5. People can make mistakes. A mismeasured angle can cost you at the least time, and at the most, more money.

Fixer-Uppers

Pros:

1. Structure is already there. You have the tracings on the canvas done, now you just have to have the time and money to mold it how you picture it in your mind.
2. You can sometimes move in and make the changes/repairs gradually over time.
3. Sometimes less expensive. Fixer-uppers can be less expensive to get into as the sellers realize that the home or property needs some serious TLC. However, hidden problems that might be missed could cost you later.
4. A fixer-upper in a good location is a great pro. Whereas with a custom built new house, you need to find some vacant land to build on.
5. You can work at your own pace. The point of the fixer is that you can usually “do it yourself”. Having the freedom to put your efforts into something you care about means you can ensure you’re involved in every step of the modification.

Cons:

1. Unless you know ALL the facts and everything about the property, there’s always the chance that something can go wrong, fixers can be costly.
2. Fixer’s can be time consuming. Usually, when you invest in a fixer, you are often the one that will be doing the work to restore or modify it. For those who have little experience, remodeling/restoring/fixing up a home for the first time can be a tough learning experience. These projects aren’t for the faint of heart.
3. Fixer’s can be overwhelming. Unless you plan to hire someone to do the work, doing it yourself can be exhausting and overwhelming. This could generate some resentment towards your investment.
4. It can be hard work. Most likely you’ll have another job that requires 8 or more hours of your attention per day and it might be hard to motivate yourself to get home and start work again.
5. Possibility of injury. Working closely with any tools or anything of that nature, there’s always the chance of injury.

Summary

It all comes down to what you want to do, and what you think you can handle. Before you consider building new, or remodeling/buying a fixer-upper, weigh what makes more sense. Try to estimate the time-frame you’re looking at, gauge your funds, and understand what it is you really want to accomplish.

Here are some questions you can ask yourself to help you decide:

• Can you handle the decisions associated with building new?
• Can you handle working every day on your fixer-upper?
• How much time do you have?
• What location do I want to be in?
• How can I accomplish the work?
• Who will decide?
• How will we decide what I/we want in my home?
• What matters to me? Do I want brand new or do I want to do everything myself?
• How much space do I need?

Again, it comes down to what you are looking for in a home. Remember the three tenants of real estate. Location, location, location.  Happy house hunting! Feel free to contact us if you’d help or information on real estate in your area, and don’t hesitate to ask us questions.

Dear friends,

We encourage you to participate in STAND WITH HAITI. Please donate now to help Partners In Health’s efforts in Haiti: https://donate.pih.org/page/contribute/haiti_earthquake?source=earth

We appreciate your support!

SREA Development Team

Microsoft announced that its interest in expanding its operations is now on hold due to the deteriorating economy. This move puts further strain on an already struggling city economy. For months, Microsoft had been in negotiations to lease all 300,000 square feet of office space located at 2201 Westlake. However, due to the degrading national economic situation and changing market conditions, Microsoft has decided not to pursue those negotiations.

Microsoft’s decision to not continue leasing negotiations is indicative of CEO Steve Ballmer’s statements at the company shareholder meeting. Ballmer stated that the company would have “much, much slower growth” pertaining to the size of its work force for this year and the year after. This is evidenced by the hiring disparity between October and November where the company went from hiring 1,000 new employees, to 380 in November.

Microsoft has also mentioned that its recent expansion and new campus buildings aren’t necessarily being used for new workers, but more to consolidate their employed workforce. Rather than having teams in different buildings, Microsoft is redistributing where teams for different endeavors are being located.

The impact this will have on Seattle is a loss of a small economic boon to the city that would have opened up a number of opportunities for local businesses. For example, gym memberships, restaurants, and any myriad of different businesses would have benefited greatly from the move.

Until the market stabilizes, it seems Seattle will have to wait before company expansion into the city will be considered again.

Adjustable Rate Mortgage (ARMs) – Mortgages which can go up or down as interest rates change.

There could be trouble. In the next several years, many adjustable rate mortgage loans will be scheduled to reset and will most likely have the monthly payment increase. This is not good news for those who are already starting to struggle with the current economic situation. Many subprime adjustable rate mortgages (borrowers who borrowed with a sub-par credit score), have already been removed from the market. Some may have been able to sell their home, many of which they may have been unable to refinance as many home owners now owe more on their home than they’re home is worth. This spells disaster in the form of foreclosure.

However, the alarming part is that the adjustable rate mortgages are about as low as they’ve been for many years. The worry is that another round of misfortune and stagnation in the housing market may occur when these mortgages reset and start increasing. Prime borrowers won’t be affected as quickly as those with subprime loans in the next year, but several years down the road, as the market regains it’s footing, the mortgage rates will rise and we may go through another round of foreclosures.

Usually, if interest rates adjusted as an increase, borrowers would be able to refinance their homes to reduce their monthly payment. However, in combination with a housing market that is extremely depressed. Home values for many of these borrowers are less then what they owe, preventing them from refinancing their home. In further addition to the economic woes of the housing market, the job market has seen very little job creation in the last decade. This means that families who have lost some of their income are having extreme hardship trying to pay their loans. The result is people walking away from their homes.

Borrowers seem to be getting the message now that adjustable loans can have devastating consequences. Applications for adjustable rate loans peaked at 36 percent at the climax of the 2005 housing boom, according to the Mortgage Bankeres Association. Now, applications are down to 6 percent.