Whidbey Island Real Estate Information
Updates, news and information about Whidbey Island Real Estate.
I’ve been saying that now is the time to buy if you’re in the market for a house. We’ve been in a buyer’s market for about 4 years, so you might ask, “What makes now the time to buy.” The answer has a number of variables; the first is availability, how many houses are for sale. Let us assume a price range between $250,000 and $275,000 and a search area of North and Central Whidbey Island. Presently there are 30 houses for sale in this price range.
The next variable to consider is seller motivation. We gauge motivation by how long a property has been on the market. The average time on the market for these 30 homes is 158.7 days or just over 5 months. This is a long time, so these sellers should be motivated to sell. Motivation determines how willing sellers are to lower their price.
The last variable to consider is the home loan interest rate. Interest rates have been at all time lows. Even today, interest rates are very low at 4.25%. However, it is important to consider where the rates will go.
Traditionally interest rates rise as our national debt increases. Our national debt is at an all time high and continues to rise. You might ask if the debt is so high, “why are interest rates so low.” This is an excellent question. The rates are low because the government is holding them low. Low interest rates allow consumers to borrow money cheaply. The government hopes that Americans will borrow money and spend it on consumer products. The spending will boost both the local and national economies. Unfortunately the plan is not working. Because of their lack of confidence in the economy, Americans are saving, not spending. It is important to know that these rates cannot be kept this low indefinitely. They will rise, and this is the point of my letter.
I have observed that there are buyers wanting to buy property but resisting because of the continued declining market. It appears they are trying to time their purchase with the bottom of the market. On the surface, it seems to be a great idea. Buy low and sell high is the oldest investment adage. What I want to point out to all buyers is watch the interest rates. Interest rates have a tremendous impact on house payments. Let us look at an example. Assume you are interested in a house that costs $270,000. Suppose you can buy that house today at an interest rate of 4.5%, with a zero down VA loan your house payments will be $1,368 per month. Now let us assume you wait until the price drops to $250,000; but while you are waiting the interest rate increases to 5.5%. Your monthly payments will now be $1,419 per month, which equals a $51 per month increase in your house payment. A 1% rise in interest rates negates a $20,000 drop in price.
Stop by and see me. I have much more comparison data between prices and interest rates. It is something you must see before you wait too long.
Recently I was reading an article regarding home seller tips in Money Magazine. I was so impressed by what the article had to say, I thought that I should share some of the highlights with our Whidbey News Times readers.
The essence of the article was that if you are a home seller in this market, you probably feel you can’t catch a break. To help overcome that, you need a bit of razzle-dazzle to nab a buyer today. The following attention-grabbing home seller tips will get prospects to your front door.
- Slash Your Price, Bigtime
Many sellers give in to the temptation to list the property above fair market value to see what happens. Big mistake. About a quarter of sellers in the past year initially listed too high and were forced to knock the price lower, according to Trulia.com. Think you can always drop the price if your home doesn’t sell. Bigger mistake. The first 30 days on the market are the most important. That’s when your home will receive the most attention and get the most showings. So get aggressive right out of the gate.
- Hire a Stager
Veteran real estate brokers interviewed by Money Magazine say that proper staging can speed the sale and often increase the price too. The key is to get it done right. Staging, increasingly popular with homeowners trying to sell mid-range houses, can extend from simply rearranging existing furniture to repainting, replacing fixtures, and bringing in new furnishings. The goal: to highlight the house’s best features while making it as easy as possible for buyers to imagine themselves living there.
Find the Right Hook
These days it’s going to take far more than a For Sale sign in the front yard and a spot on the multiple-listing service to get potential buyers in the door. That means getting the word out in a creative fashion-and finding a Realtor who is willing to do the same. “The more eyeballs that get on the listing, the better,” says Katie Curnutte of the real estate information website Zillow.com. To do that, you need a multi pronged marketing plan of attack.
To read the whole article in Money Magazine please click here.
To discuss these homes seller tips, plus many other ideas for getting your home sold, please feel free to contact us at anytime at Coldwell Banker Koetje Real Estate.
In my last post, I explained my answer to “How is the Market”. As part of that answer, we must consider what effect the distressed homes are causing on values. Because of the economic conditions in our country over the past few years, homeowners are losing their homes through foreclosure because of loss of jobs, changing terms of mortgages, inability to sell, etc. Foreclosed homes then sell at a price that is usually less than comparable homes in the market, driving down the prices of homes. Other homeowners that need to sell are experiencing another difficulty. Their home is worth less now than when they purchased it and they must sell at a loss. If they don’t have the funds to make up the difference, then negotiations with the bank may allow them to sell short, or as is commonly called, a Short Sale. Short sales also have the result of causing prices to decline in the local area. These are factors that have resulted in the way that I answer the question, How Is The Market.
North Whidbey Island 2010 Statistics for evaluating the effect of Distressed Home Sales:
- Short Sales were 11.5% of the active listings and 5% of the sold listings. Foreclosures were 9% of the active listings and 17.5% of the sold listings.
- The average listing price range of the overall market was $263,000. The median sales price of non-distressed homes was $250,000, Short Sales was $220,000, and Foreclosures was $160,000.
- The price per square foot for non-distressed sales was $150 per sq. ft., Short Sales was $124 per sq. ft., and Foreclosures was $112 per sq. ft.
Based on these statistics, it can be noted that a larger foreclosed home could be purchased for less money that a smaller non-distressed home. Also it can be noted that more Foreclosures were being purchased than Short Sales which will make the Short Sale homes probably result in Foreclosures.
With all of this being said, I do believe that prices have stabilized in our market. Over the next year, we will see some gyration of values but nothing like we have experienced in the last few years. It is still a great time to buy if you are a buyer, and if you are a seller that has owned your home for more than 5 years it is still a good time to sell. If you purchased your home within the last 5 years and don’t need to sell, then I would recommend holding on to it if you can. Call us about Property Management if you need to leave the area. If you are still living in your home and just need more space, than maybe a remodel would be best for you. We know of some outstanding contractors that we would be happy to recommend to you. Whatever the situation is, I can assure you that home ownership is still “The American Dream”.
I am often asked, “How’s The Real Estate Market in Oak Harbor?”
I was recently asked to speak at the Rotary Luncheon about the state of the real estate market in Oak Harbor. My speaking engagement was postponed for a few weeks, but I thought I would share some of the information in this blog. I will continue with a second blog that will address another area that affects the real estate market, Short Sales and Bank Owned Properties.
The first answer that I have after someone asks me about the real estate market is, “It depends”. Now I am not trying to be flippant with that statement, but my answer really does depend on if you are a buyer, a seller, when you bought your home, etc.
- If you are a buyer, the question is a no brainer. The Oak Harbor Real Estate Market is fantastic. In fact, I just helped my niece and her family make a purchase of a home. Interest rates are at all time lows (though they are starting to creep up). There is a large supply of inventory on the market for sale right now and sellers are being very generous in their negotiations.
- If you are a seller and you have owned your home for at least 10 years, than it is a good market. As you can see from the chart, home prices have appreciated 3-4% average over the last 10 years. So if you need to sell, than from an investment perspective, you have made a good decision and the Real Estate Market is good.
- If you are a seller and you haven’t owned your home for more than 5 years, than the value of your home is probably equal to or less than your original purchase price and you might want to consider other alternatives to selling, such as rent, or not moving. If you are in this situation than the Oak Harbor Real Estate Market is not so good but is getting better.
A large component of the Oak Harbor Real Estate Market is Short Sales and Bank Owned Properties. In my next post, I will explain the statistics for these sales and how they are affecting our market.
|“A house is not a home unless it contains food and fire for the mind as well as the body.” – Benjamin Franklin. Last week, the housing market received some food and fire for the mind, but not everyone was at home with the news.
First, the good news. The housing market received a serving of good news last week, as New Home Sales reportedly rose 17.5% in December to come in better than expectations. Overall, the report demonstrated that housing continues to recover – albeit slowly. Despite that good news though, the markets were keyed in on another more important event last week: the release of the Fed’s Interest Rate Decision and Monetary Policy Statement.
As expected, the Fed made no change to the Fed Funds Rate and even the Policy Statement was pretty much the same. But that didn’t stop the markets from getting a little fired up about the release. Let’s take a look at why.
It’s important to understand that the Fed has to be very careful with how bullish their economic comments are, as they don’t want to see long-term rates move higher. Well, the Fed’s comments certainly were not bullish as they said “employers remain reluctant to add to payrolls” and “the housing sector remains depressed.”
So why did Bonds initially improve nicely on the news and then crumble later in the day? The answer is, not everyone in the trading pits is buying what the Fed is saying. Instead, some people believe the Fed is talking down the true underlying strength of the economy, so that it can justify injecting the full $600 Billion of Quantitative Easing into the economy.
Speaking of comments that impacted the markets… President Obama delivered his State of the Union Address to members of Congress last week. Although the President’s call for a freeze on discretionary spending for 5 years may appear to be Bond bullish in that any reduction in the deficit would be good for Bonds, the reality is that so much more has to be done to really get our long-term debt in check. And some of last week’s weakness in Bonds was likely attributed to the feeling that the speech came and went without any real sense that the deficit is going to be reduced in a meaningful way, especially in the near term. The Bond market probably would have liked the word “cut” in spending rather than “freeze,” since a “freeze” suggests only a temporary halt in spending at current levels.
In the end, the news last week demonstrated that economic conditions are improving, but they are doing so gradually. As a result, the market remains volatile, as Bonds and home loan rates move up and down depending on what reports or speeches hit the news wires. The good news is that despite the volatility, home loan rates remain extremely low for now and present a tremendous opportunity for buyers who lock in at the opportune moment.
To learn more about the volatility and how you or someone you know can benefit from a knowledgeable advisor Coldwell Banker Koetje Real Estate, please call or email today.We would be happy to discuss the current economic climate and what it means to your unique situation.
Content courtesy of: AlaskaUSA Mortgage
1. What is a real estate short sale?
A short sale occurs when a lender agrees that it will take less than what the homeowner owes on their note. The lender usually agrees to this during the beginning stages of foreclosure when the they realize that the homeowner will not be able to meet the terms of their agreement and will be foreclosed upon if a short sale does not occur. This short sale would result in a substantially discounted purchase price for the end buyer of the home. The buyer would then proceed with the purchase of the home when the lender agrees to a price.
2. Will a lender allow a real estate short sale when the seller has some a good amount of equity?
If the home has some amount of equity, the lender may choose to continue with a traditional foreclosure proceeding to regain title to the property and dispose of it at a fair market price. Short Sales are generally discounted below fair market value, because the time value of money makes it more viable for the lender to sell it quickly rather than waiting through the redemption period, which in some states can be 6 to 12 months. Banks are not in the real estate business and generally don’t want to own the home.
3. What documents are necessary to proceed with a short sale?
The individual documents necessary to proceed with the short sale will depend on the lender. Typically, the lender will require hardship letter detailing the circumstances leading to a short sale. A signed, valid purchase and sales contract, preliminary HUD-1 settlement statement and a preliminary estimate of proceeds to the lender. There may be additional requests for more detailed information on the financial condition of the seller, ie; pay check stubs, bank statements, a personal financial statement and monthly budget assessment, amongst other things.
4. Will the seller’s credit be affected if they agree to a short sale versus a foreclosure?
While it is up to the individual lender to decide what to report, what often happens is the loan will report as “paid” on their credit report for a short sale, and sometimes with a reference that says “settled for less than originally owed”. A foreclosure will show as a default and can affect one’s credit for 3-7 years. It is absolutely less damaging to have the short sale referenced than to have a foreclosure on a credit report.
5. Will a lender allow the homeowner to make a profit on a short sale?
Absolutely not. The lender is taking a loss when they agree to a short sale and they will not agree to let the homeowner benefit financially.
6. If a seller is in bankruptcy, will that affect the short sale of the property?
Absolutely, as most lenders will not consider a short sale if the homeowner is in the middle of a bankruptcy proceeding. Negotiating a short sale between the parties is considered a collection activity and such a negotiation is prohibited during bankruptcy proceedings.
7. Will the bank or lender require an appraisal on the home in a short sale?
Most lenders will hire a broker to develop a Broker’s Price Opinion (BPO) to determine the value of the home. Some will require that a full appraisal be submitted in the short sale package. The lender will need some formal assessment of the value of the home in order to make a decision as to an acceptable offer. Settling on an agreeable price usually requires some negotiating between the end buyer and the lender and this can be an iterative process.
8. Are there tax implications for the short sale?
Much like the issue of credit reporting, the circumstances vary by lender. As a short sale represents a loss for the lender, they can report the amount lost as “debt forgiveness” to the seller. If a formal tax form 1099 is filed, the seller may be responsible for paying taxes on the amount of debt forgiveness. A CPA should be consulted by the homeowner in this situation.
9. Why would a lender agree to a short sale?
The lender doesn’t want to own the home because they are not real estate experts. Foreclosure proceedings can be very time-consuming and costly. The seller is relieved of the home they can no longer afford. The buyer is purchasing the home at an attractive price. A professionally executed short sale can benefit all parties involved in the transaction.
Courtesy of: Donna Sanford
Rick Schutte, Broker/Owner of Coldwell Banker Koetje Real Estate in Oak Harbor, Wa. interviews Lyn Bankowski, senior loan originator, from AlaskaUSA Mortgage about the need of checking your annual credit report.
In this interview, Lyn mentions the free reports can be found at https://www.annualcreditreport.com/. This central site allows you to request a free credit file disclosure once every 12 months from each of the nationwide consumer credit reporting companies. AnnualCreditReport.com is the official site to help consumers obtain their free credit report. You can also go to http://ftc.gov/freecreditreport for more information.
The Fair Credit Reporting Act guarantees you access to your credit report for free from each of the three nationwide credit reporting companies every 12 months.
For months there has been an ever-growing fear that our economy is headed towards deflation, which is when prices on goods and services are falling lower. Deflation is the exact opposite of inflation, which of course occurs when prices climb higher. Remember, inflation is the arch-enemy of Bonds, so fears of inflation negatively impact Bond prices and home loan rates. But fears of deflation are good for Bonds and home loan rates. That’s because the fixed payment that a Bond provides to an investor goes further in a deflationary environment. So, the recent fears of deflation have helped Bond prices move higher and home loan rates move lower.
But last week, future deflation/inflation expectations changed… and investors in the Bond market started betting that the Fed will be successful in “creating inflation” via their Quantitative Easing plans, and will thus avoid continuing down a deflationary road. This was evidenced by the results of last week’s 5-Year Treasury Inflation Protected Securities (TIPS) auction, which saw investors buying TIPS at a premium since they were confident they’d be able to benefit from the increased inflation that should result from the QE2.
Of course, investors aren’t the only ones impacted by this. The media has already been chattering that the Fed has to be careful not to let inflation get out of control in the coming months and years. In fact, just last week, there was a headline explaining how another round of Quantitative Easing brings the risk of “unleashing the 1970s inflation genie.” Consumers who are looking to purchase or refinance a house should also take note of that possibility – since even talk of inflation can impact home loan rates negatively. After all, a rise in inflation would be bad for Mortgage Bonds and, as a result, for home loan rates.
The good news is that home loan rates are still near historic lows for the time being. If you or someone you know would like to see how you can benefit from the current situation, call or email us today.
Information courtesy of Alaska USA Mortgage
Most Real Estate agents say spring is the season to sell a home, but don’t rule out fall just yet. There may be fewer buyers, but they tend to be more motivated. The key is to find them fast, because you don’t have much time before the holidays kick in and real estate really slows down. Try these selling tips:
Price aggressively. You don’t have the luxury of starting high and making incremental price drops. Be competitive – price your home 5% to 15% below comparable homes on the market.
Stage it to sell. Fall is one of the most beautiful times of the year, but it can also be hard on home maintenance. Make sure the front yard is clear of leaves, clean out gutters and downspouts, and touch up paint. Incorporate tasteful fall decor. If you have a fireplace, make it the focal point of the room.
Be flexible. Bargain hunters are out in force in the fall, so don’t be discouraged by low-ball offers. See them as opportunities to negotiate. If you don’t want to come down on price, be creative, such as offering to pay for closing costs or repairs.
In a short sale, your mortgage lender agrees to let you sell your house and agrees to take the amount you get for it-not the full amount of the mortgage.
Short sales help in many ways. For one, during the process of negotiating for and holding the short sale, you can live in your house. Also, when you have a short sale on your home, you don’t walk away with as big of a black mark on your credit as you do with a foreclosure. Of course, even if you start out with a short sale, you may only be delaying the time before you end up foreclosing if your house doesn’t sell.
Now, you can’t just walk into your lender’s office and say you want to have a short sale on your house. You are going to have to prove financial distress, and you’re going to have to walk in with proof of what your house is actually worth now. You will also need to have a proposal, complete with total costs of the sale. Your Realtor will work with you to create these documents.
But even if you qualify, you may have a hard row to how with your lender at first. Many lenders are still resisting, even though the sales save them thousands of dollars on foreclosing costs, property maintenance, and sales costs. So be persistent if you have to – someone at your lender may well see reason.
Also, there’s a new federal program that is giving money to both lenders and homeowners to help the process along. This program will also help if you have more than one mortgage on your house. We have more information about the Home Affordable Foreclosures Alternatives program. Please contact us for more information.
So before you get into a panic over your situation, realize that yu do have some power here. You can come out of this with your family, your pride, and even some of your finances intact. Just take the lead and start negotiating – home short sales save lenders money, save homeowners heartaches, and save communities from the blight of foreclosed, empty houses!
Don’t worry about finding an educated, certified short sale Realtor to list your home. Just contact us and we’ll be happy to help you.
Article Source: William Bud Gragg Jr.