Downsizing

Downsizer’s Dream home in Desirable Snohomish, WA

Live near the historic town of Snohomish in this Downsizer’s Dream Rambler! First, it’s on a golf course! Second, it’s minutes away from town with the shopping that Snohomish is famous for. Third, its a freshly updated rambler with 2 master suites, vaulted ceilings, new windows, 3 car garage, even cat 5 wiring! All on a .44 ac lot for gardening bliss! It’s priced right at only $310,000. Buyer Representation available.

Click here for more info and photos View listings in Historic Snohomish, WA

Questions to ask a financial planner

I am noticing  more and more clients are wanting to work with financial planners to get the larger perspective on their financial condition and goals in light of our new economic conditions before they make any real estate decisions.  I think it is a great idea.

My wife and I have started working a couple of times with financial advisors, but found pretty quickly that they seemed to end up recommending vague insurance products as something we needed to have. When we researched the products, we found that they were mainly designed to provide good sales comissions, but not necessarily good results for the policy holders. Furthermore, the interest rates were pretty low, and the investments are not insured.

Another recommended a pile of  mutual funds that her company has. After she left, we compared all the fee-laden funds to simple index funds, and found that 8 of the 10 were outperformed by simple index funds! Now, with the recent Wall St fiascoes, we have been more reluctant to trust our savings to any financial firms at all!

So we have begun researching the idea of working with a fee-only financial planner. I would much rather pay a planner for their time and expertise and have them recommend products that are appropriate for me, not them. To select a planner, I would expect them to work like I do: ask a lot of questions, provide a lot of options,  stick with the process until we have a plan that makes sense, and provide monitoring along the way.

I came across this blog post that has questions to ask a financial planner, and found some of the questions pretty interesting.  Most of them relate to finding a planner who has similar values to mine, and one who practices what he or she preaches by doing personal investments in line with what they recommend for clients.

Does anyone else have any recommendations for planners, or how to find a good one?

200 W Highland Condos Auction Date Set

An auction date of August 6 has been set by Bank of America for 18 unsold luxury condos in the new  building on Queen Anne Hill across from Kerry Park at 200 W. Highland. Some very nice water view units are still available, and hopefully will be in the auction as well. 11 of the units  have previously been sold, but the developer Lorig of Seattle has been unable to sell the rest, according to Seattle Times article.

I have show in the building a few times and buyers have liked it. The units are all over 1500 sf, going up to 2800 sf.  Due to MLS restrictions, I can’t say any more in the blog, but can tell you more personally.

Many buyers assume that they cannot have their agents represent them in condo auctions, but this is not the truth. I have been to several, and they are a somewhat confusing but always exciting  and usually profitable way to buy! For more info, contact me or call 206-713-2921.

Seattle Homes and Accessory MIL Apartments

Accessory units seem to be the theme of the week. I have buyers looking for them, looking at them, and figuring out how to create them. Also, more of my recent listings have had them.

As I show homes, more and more homes seem to have these extra separate living spaces.  Usually it is a finished basement that features a separate kitchen, bathroom, and entrance. Homes with basements seem to lend themselves very well to creating accessory units, although sometimes I see them as an addition onto a main level, or sometimes in a separate building in the lot, often a converted garage structure. (not all cities approve of converting garages to living space, check with your local building dept.)

Many of these units are built for extended family living, older parents come back home, or sometimes children, sometimes with families, moving back home. The separate living quarters allow extended families to live close, but keep some parts of their lives separate. For some people, when children grow up and move way, it is a way for the parents to remain in the home and resist the downsize move. Some rent to college students to keep youthful energy around the house.

Another reason so many have been built is to generate income in a house that is too big, or to pay a mortgage that has become otherwise unaffordable.  Later in life, having an extra unit in the house can allow homeowners to live independently for longer by utilizing the apartment for caregivers to live in.

Many apartments in homes are built illegally, in other words permits have not been taken out build them. I think its always a good idea to take out a permit to make sure the work is done safely and correctly, especially the electrical and plumbing.  As a Realtor,  I can say that homes with unpermitted work can be more difficult to resell at times. Most towns and cities allow accessory units either in or attached to an existing structure. Recently, the City of Seattle has been working on a project to allow more back yard accessory  units in the name of increasing density and affordability. Here is more info.

Here is a link to a nice USA TODAY Story on backyard cottages.

Skinny Houses a Good Downsizing Solution

Downsizers have been discovering that Seattle’s skinny houses are perfect for simplifying their lifestyles. They are also finding them to be much more livable than townhouses. Here’s why:

• Skinny houses are generally 1200 to 1600 sf, which are smaller than detached houses, but larger than most townhouses.
• Most skinny houses in Seattle are 2 levels instead of 3, and have more area per floor. Many have bedrooms on the main level, offering mostly one-level living.
• Their lot sizes are around 2500 t0 3000 sf, which leaves a manageable amount of yardwork and enough room for developing pleasant outdoor living spaces.
• Unlike townhouses, they are built in quieter, less dense single-family zoned neighborhoods.

SilverPlanet.com article on Senior Real Estate Specialists

SilverPlanet.com is a website with useful information on aging, housing, finance, health and lifestyles. I spent a few minutes looking at it and found many interesting articles. You can also take a look at their Facebook page.

Here is an article introducing Senior Real Estate Specialists and how they do business differently than traditional Realtors.  The most important distinction is that we look at the big picture of a downsize move, and help with decisions about different possibilities for a downsize, including aging in place, rental,  or purchase of a single home or condo.  We also look at the process as a longer one as there are many more important decisions to be made.

Another $8K Tax Break Extension Idea

Every day there are more rumors about ideas floating around in the Senate to extent the tax break.  Some make sense, some smell of compromise.  Below is today’s latest. I like the idea of extending it to buyers who “move up” after owning for 5 years, but why just “move up” buyers? Do they mean you have to buy a more expensive house? What about “move down” buyers who want to get into a home that makes more sense for them?

Senate Dems on Board with Credit Extension
Senate Banking Committee Chairman Chris Dodd (D-Conn.) says Senate Democrats have agreed to extend the first-time home buyer tax credit. The latest version extends the program to home sales signed — not closed — by April 30. Purchasers would have another 60 days to close the sale. The credit will also be expanded to include so-called step-up buyers who have lived in their current home for at least five years.

The credit would be cut nearly 10 percent to a $7,290 cap. Income eligibility for first-time home buyers would stay the same, but it would rise for step-up buyers to $125,000 for individuals and $250,000 for couples.

Source: Bloomberg News, Dawn Kopecki and Ryan Donmoyer (10/27/2009)

New Bill to Extend/Expand Tax Credit

Here’s what we have all been waiting for, and extension of the the current first time buyer $8000 tax credit expires December of this year.

A new bill, known as Home Ownership Moves the Economy (HOME) Act of 2009 is under consideratin by the House Ways and Means comittee.  It would:

1. extend the tax credit to anyone who buys a principal residence, not only first-time buyers as is the case now.

2. extend the credit through 2010

3. repeal the income limitation.

This is obviously great news for move-up and downsizing buyers, and will stimulate sales in the higher price ranges that have been relatively quiet, and let more Americans move on with their plans.  If this is passed in a timely manner, it will take the current momentum from the first time buyer tax credit and propel the market into full-bore activity!

Reverse Mortgage Rules Changed for the Better

With the difficult economic times, many more borrowers are taking advantage of Reverse Mortgages.  With recent changes, reverse mortgages can now be used to buy a new house, not just to take equity out of an existing one. Also, the loan limit has temporarily been raised to $625,000 as part of the stimulus package.

Here is an article that explains it.

Washington Post
Reverse Mortgages Come to the Rescue
By Mary Beth Franklin
Kiplinger’s Personal Finance
Sunday, August 9, 2009

Reverse mortgages have been around for nearly 20 years, but it wasn’t until the current financial crisis that they caught on. Seniors are turning to these loans to tap the equity in their homes and generate tax-free income to help them ride out hard times.

You can take it with you. A reverse mortgage can be a good option for people who want to relocate or move to a smaller home but don’t want to sink all of their cash into a new house or might not qualify for a traditional mortgage.

New rules that took effect in January allow seniors to use a reverse mortgage to buy a new home. Say you own a house in Massachusetts worth $500,000 and you want to buy a $400,000 house in Florida. If you were to sell your house and pay cash for your new home, you’d have just $100,000 left to add to your savings. But if you took a $100,000 reverse mortgage on the Florida house, you’d have twice the amount left — $200,000 — to add to your savings.

How it works. You must be at least age 62 to take out a reverse mortgage. Plus, your house (current or future) must be your primary residence, and your mortgage must be either paid off or have a small balance. Unlike a traditional loan, there are no income or credit-score requirements, and you may use the money as you wish. The older you are, the higher the appraised value of your home (up to the maximum federal loan limit) and the lower the interest rate, the more you can borrow.

As part of the economic-stimulus package, Congress raised the reverse-mortgage loan limit to $625,500 through the end of 2009. After that, the lending limit reverts to $417,000, unless Congress intervenes.

You can take your payment as a lump sum, a monthly cash payout, a line of credit held in reserve or a combination of all three. No repayment is due until the last homeowner moves out or dies, at which point the home can be sold to pay off the debt. The loan repayment can never exceed the home’s market value (even if it declines), absolving your heirs of any liability.

High fees. You’ll pay the usual closing costs, plus loan-servicing fees, an origination fee of up to $6,000 and interest over the life of the loan. Also, you’ll pay an initial insurance premium equal to 2 percent of the home’s value plus 0.5 percent per month of the mortgage balance.

If you are thinking that a reverse mortage may meet your needs, call Greg Bartell at DownsizeNW at 206-713-2921 for names of local reverse mortgage specialists.

Staging, Inspection, and Pricing Essentail for Sellers

I just finished two days in the classroom for the Seller Representation Specialist course. It was a sobering review of current industry standards and new technology for getting houses sold in this market. It can be best summed up with the three P’s: Preparation, Presentation, and Pricing.

Preparation

In this market, buyers are taking two bites out of the apple: once when they negotiate the purchase price, and again after the inspection. The first bite is about fear of the market, the second is about fear of what the house will cost them to own. The best way to eliminate the second bite is to have your house inspected in the pre-listing process. You will know the inspection issues your property has, and you will be able to address them before you put the house on the market. You will also have a clean report to show the potential buyers. Buyer’s agents still recomment their buyers have their own inspection, which is fine. But with your pre-inspection, surprises, and that second bite of the apple, will be eliminated.

Presentation

Presentation is all about how your house looks to buyers when they view it, first on the internet (87% of buyers look there for a home) and when they see it in person. The first step is de-cluttering and de-personlizing the home, followed by staging. Staging is no longer optional with this competative market, and it provides the drama necessary to get buyers into the home through the photos, and makes them feel at home when they get there to see it in person. When I list a property, I bring in a staging consultant early in the process, and I pay for the consultation. The consultant is an experienced decorator, and she looks at the house, the present furnishings, and recommends how to first work with the existing furniture, and then supplement if necessary. I highly recommend Pam Christensen of Staging for Charisma for her common-sense solutions and reasonable cost. A link to her website is in the right column of this blog.

Pricing

Here’s the dreaded third P, Pricing. Fortuantely, there has been an uptick in sales recently. This has at least given our market some sales prices to use as reference points when pricing and appraising property, and has to some degree arrested or slowed the free fall of prices. Now that we have somewhat predictable values, it is easier to predict what price will attract a buyer.

It is still VERY IMPORTANT to price right the first time, to avoid chasing the market down by over-pricing initally, then reducing slowly, but never enough to catch the market.  If you have been tracing the value of your property up over the years, it will be disapointing to know that we are at 2005 price levels in many area. The good news is that we can predict your homes sales price range easier now, and get it sold. And if you are buying again, there are some incredible deals out there!

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