Seattle Real Estate Market 2007

Q13 Interview Sunday, May 13, 2007 with me in front of an Open House in Magnolia. I'm not sure of the appropriateness of the "elevator / escalator" analogy that Derrick decided to use, but the general idea about the Seattle's market resiliency was accurate, IMO.

Waiving the Financing Contingency

In the last couple of years we have seen a number of strategies to strengthen offers made on homes in order to win out in multiple-offer situations. Probably the most common is to do a “pre-inspection” of the property with a building inspector, then waive the Inspection contingency. This assures the Seller you will not just walk away after your inspection if you change your mind. There is now even a check box on the second page of the NWMLS Form 35 Inspection Contingency for the Buyer to acknowledge they are waiving the right to an inspection Contingency.

Recently in multiple-offer situations it’s become common to also waive the financing contingency to make the offer even stronger. This is often done even though the Buyer intends to get financing to purchase the home. While this has some value to the Seller, it also carries some risk for the Buyer. Perhaps more importantly, many agents are just removing the addendum without any further modifications or disclosures to the Seller and are potentially inadvertently putting their Buyers into fraudulent contracts.

In the fine print of the NWMLS Purchase and Sale Agreement it states, “Buyer represents that Buyer has sufficient funds to close this sale in accordance with this Agreement and is not relying on any contingent source of funds or gifts, except to the extent otherwise specified in this agreement.” So by just removing the 22A Financing Addendum, the Buyer is saying they do not need to get a loan, which is untrue.

The proper way to approach a financing waiver is to disclose that the Buyer is getting a loan and where the funds are coming from, while at the same time acknowledging that this is not a condition of the contract. In other words, if the Buyer is unable to obtain a loan they are forfeiting the right to use that as a reason to have their earnest money refunded.

Coldwell Banker Bain has generated a great form for this called the 22PNF, which is available to any member of the NWMLS under CB Bain’s company forms. However to date, I have never seen any other agents except Coldwell Banker Bain agents take the time to use this form or clarify this issue in their offer.

The wording also takes care of the need for the Buyer to have access to the property by their lenders appraiser, if needed. This wording would have been in the 22A Financing Addendum, if they had not removed it.

Another strategy that is common is to keep the 22A Financing Addendum, cross out everything but the bottom part of the page where it has the Appraisal Condition. The intent here is to not have the offer be conditioned on getting the loan, but assure the Buyer that he will not have to move forward and can get their earnest money refunded if the property does not appraise for at least the sales price. This may give them some security, especially if the price escalates very high during the multiple-offer process.

This situation is another example of why it is so important to have a knowledgeable Realtor on your side. They can extremely valuable in helping you prepare a compelling, yet legal and proper Purchase and Sale Agreement.

The information above is not intended to be legal advice and should not be construed as such. Please consult a licensed attorney regarding any legal matters.

Dustin Luther gives Blogging Presentation

As many of you know, Dustin has taken a job with move.com, the parent company of Top Producer and Realtor.com and moved to sunny southern California. Yesterday he came to Seattle downtown Hilton and gave a great seminar on the “Basics of Blogging” to a bunch of real estate agents. This was sponsored by his company, but there was very little hype and lots of information packed into a few short hours. This was my first time to meet Dustin face to face and I was impressed with his presentation skills. He has a natural passion and enthusiasm for the subject that is infectious and his own personal success with Rain City Guide makes a great example for those wanting to get started in blogging. He was brutally honest with people in letting them know it was no cakewalk, and that just creating a blog was not going to automatically change their real estate businesses. I am a good example of that. I have a bit of a tech background and started a blog when I first heard about them back in 2004. I did NOTHING with it because I was so busy, blah, blah, blah (fill in the excuse). Now I am busy playing catch-up to some very good bloggers out there who have quickly dominated the Seattle real estate blogosphere.

Dustin also spent a fair amount of time talking about online community networks and the interactive nature of newer web 2.0 websites and the value and synergy that they bring to blogging. MySpace, Linkedin and biznik and others were discussed and links, links, links, were emphasized. In the end, it was a Dustin gave a very thorough lecture of the basics of blogging, what it takes to get started, and why it is important in the world of real estate web marketing.

Why Workforce Housing Matters

The City of Seattle began a new 4-part speaker series, Housing our Future this Thursday, February 15, 2007. This series focuses on the increasing challenge of providing housing for working individuals and families. It was held at Seattle City Hall and there were several hundred who attended.

The speaker series was kicked off with a presentation by Henry Cisneros, chairman of CityView and former HUD Secretary. Cisneros discussed the need to view housing as an essential component of a strong, healthy community. He was able to point to several trends and statistics that show it is increasingly difficult for working families to afford to stay in the city. He gave examples around the country of other areas where this is a problem, and other areas that have come up with some innovative solutions that have made a difference. This was an insightful evening that gave a macro-view of housing concerns and what a vibrant, healthy city needs to insure that the housing component is appropriate and not problematic.

2007 Puget Sound Economic Forecast*
These are the highlights of the annual growth and forecast report given by Mike Grady – President and Designated Broker of Coldwell Banker Bain at their annual award ceremony.

• More than 30,000 net new jobs will be created each year for the next 3 years.

• The Average population growth will increase nearly 3% each year for the rest of the decade – 180,000 new people annually.

• Building permits will be further restricted by Growth Management and Critical Areas ordinances to less than 50,000 for the entire state, resulting in fewer subdivisions and more expensive building lots.

• Due to fewer building permits than jobs or population growth, housing prices will continue to appreciate in value significantly.

• Interest rates will remain “reasonable,” around 7%, in 2007 and will probably hover in that range for the balance of the decade.

• Gen X and Gen Y – the largest combined demographic segment of the population – will continue to purchase their first and second homes.

• Baby Boomers, the next largest segment will continue to lead the charge as they purchase or sell their last “big” home.

*Forecast derived from information from The State of Washington Department of Financial Management, The Real Estate Research Center at Washington State University, Herbert Research and Washington State Employment Security.

Jim Reppond of Coldwell Banker Bain #1 in Seattle

The Coldwell Banker Bain Awards Ceremony was held today at McCaw Hall at Seattle Center. The Reppond Team was awarded the President’s Premiere Award for the second year a row, The President’s Premiere Award is the highest designation awarded by Coldwell Banker and only the top half of 1% of agents nationwide achieve this level of sales. There were a total of nine agents for Coldwell Banker Bain who were awarded this designation and Jim Reppond of The Reppond Team was the only agent in Seattle to receive it.

2^nd + Pine development renamed to “1 Hotel and Residences”

It’s official. The much anticipated hotel brand name that is associated with Second + Pine has been decided. Starwood’s new addition to its already prestigious hotel line will be called “1” Hotel, and the Second + Pine project from here forward will be referred to as “1” Hotel and Residences. This will be their flagship hotel and will be the first luxury, eco-friendly global hotel brand. This planned to be above and beyond the LEED Certification level. Details to follow in Spring of 2007.