Monday, June 28, 2010

Q: You told me that Vashon has not experienced as many foreclosures as most other places.

But I keep hearing stories about local people who have lost their homes. I think you were wrong.

A: Me? Wrong? Oh, surely not. I’m kidding of course, since I can be wrong just like anyone else, but in this case, I don’t thing so. Some markets around the country have had as much as 50% of their housing stock foreclosed on. That’s tragic. Although our region has done much better than that, we have still had too many foreclosures.

However, in looking at the sales figures for Vashon, by my calculations less than 4% of all homes sold on Vashon last year were foreclosures. So far in the first half of this year, the figure for foreclosed homes is only 1% of all sales. While each of those individual sellers faced an agonizing situation, they represent a really small part of our market. That’s reassuring I think. In case you’re interested, there are currently only five foreclosed or bank owned properties for sale on the Island.

There is another kind of situation, called a short sale, which may account for some of the rumors you hear. These homes are not foreclosed on by the bank. Instead, the bank cooperates by negotiating the mortgage so that they take less than what is owed. That becomes part of the negotiations that the agents involved must handle. In a few cases, sellers may simply pay the short fall owed on the mortgage, which is one of the reasons that it’s called a short sale.

The tragedy of so many of these short sales is that many of the sellers got caught up in thinking their homes were really an ATM machine. They kept taking out equity loans to buy things they wanted and then ended up owing more than their homes were worth. Hopefully, we’ve all learned a lesson from watching that happen.

Thursday, June 10, 2010

Q: We tried to sell our house last year but there were no offers.

Of the agents who showed the house, only one said anything specific to our agent. She said that we didn’t really have waterfront as far as her clients were concerned because there was no access to the beach. We sure pay higher taxes because we’re waterfront so I don’t know what she was talking about. We’re thinking of trying to sell again this year but that statement keeps bugging me. What do you think?

A: The good news is that the market has improved significantly so you may have better luck this year. However, most buyers expect to be able to get to the beach from a waterfront house and so, if you have a high bank home with no access to the beach, I can see why buyers would be less impressed.

What you have to realize is that probably won’t get the same price as a similar home that does have access to the water. Most waterfront buyers are looking for a beach. Frankly, many of our beaches are rocky and filled with barnacles anyway, so getting past that is often difficult enough with waterfront buyers. To add the complication that they can’t even reach the water makes it particularly challenging.

I always stress the value of controlling the view when showing high back waterfront homes. To know that nothing can be built in front of you and that the view is protected is a great selling feature.

Be sure that you have your listing agent tour you through all the homes you will be competing against once you go on the market. Be as realistic as possible about how your home stacks up against the competition. Plus, you’ll really need to deduct for the high bank location and lack of access.

Being realistic about price is the key to selling a home. We’ve had some well priced homes sell quickly, even in these days of a depressed market. The sellers priced it right and were able to move on with their lives.

Monday, June 07, 2010

Q: What is going on with appraisers?

When we tried to sell our home the appraiser gave a value way lower than the King County assessment. The buyers walked and now we don’t know what to do. The real estate people who looked at it agreed it was worth what we were asking.

A: The world of appraising has been turned on its head by new regulations intended to put a stop to some bad practices of the past. Unfortunately, in the opinion of most people in the lending and real estate industry, they sort of “threw the baby out with the bath water.”

On a recent sale I was involved with, we had a sales price that reflected a recent appraisal done to set the price as well as several real estate brokers price opinions. We all agreed it was a fair price and the buyers and sellers were happy. Then the appraiser showed up. He was from a completely different part of the state, had never been to Vashon Island in his life, and had no clue about our market.

His appraisal was almost 30% under the sales price! We were stunned. The buyers knew that wasn’t right even though they would have loved to have paid less for the house. The sellers were unwilling to sell at that price and even the lender involved knew that something was seriously amiss.

After much stress and disappointment we decided to ask the mortgage broker to go to another lender and order a new appraisal. The new appraiser was from the local area, knew Vashon very well, and had no problem appraising the house for the sale price. He understood that in our small market disparate properties can still be comparable. He also knew that certain locations on the Island, construction styles and property types bring a premium price.

I don’t know if that solution would have saved your sale, but if you read the financing contingency form you’ll see that as a seller, you have the option of paying for a second appraisal if the first one is unsatisfactory.