Feb. 27, 2006 - The Future of the Real Estate Industry

What does the ultimate real estate company look like?  What does it do differently?

These are the questions begging to be answered.  I am studying the various business models hoping to found "The Ultimate Answer!"...or at least the next and best step forward in that direction.

Obviously this company must empower the consumer, both the buyer consumer AND the seller consumer.

Obviously this company has to have an element of discounting, and yet the ability to survive financially.

Obviously this company has to incorporate some of the old, but be primarily NEW, particularly with regard to new technologies.

I have a basic framework in place that takes the best of what we have, and adds that which no one yet has dared to dream.

I dont expect the fanfare of a ZILLOW...but maybe an opening as significant as REDFIN :-)

Still a work in progress.  Submit your ideas...looking for talent...potential owners welcome to respond.

Ardell DellaLoggia

"I'm Just a Girl in the World...But, Give Me That One Moment In Time" 

Feb. 26, 2006 - Escalation Clauses - Downtown Kirkland Condo Market

I wrote an offer yesterday with an escalation clause on a Downtown Condo that has been on market for 2-3 days. As I have said before, while there appear to be many things on market, most agents are waiting in the wings for something better than what is for sale at present.  This is what causes properties to be on market, as opposed to being sold. 

When that special property at the right price appears, it is likely to have multiple offers, as happened yesterday.  Just before we write an offer, we call and speak with the listing agent to determine how best to write the offer.  As soon as we hear there is another offer being presented in a few hours, we know we need to add an escalation clause.  Problem is that everyone knows this, so you have multiple escalation clauses in play. 

An escalation clause has an increment of increase and a cap.  Example: Asking price $450,000.  Offer might be $450,000 plus $1,000 more than any other offer in hand before this offer expires, up to a total price of $475,000.  You need a cap value,  as the reason everyone wants it is because of the location, condition and price.  If the price bids up too high, you might as well have bought something else on market that was overpriced by offering a lower bid.  So you have to be careful not to place your cap at a point where you wouldn't have bought it in the first place. 

It is amazing to me at times that no matter where I work in the Country, everyone seems to want the same thing.  They all want the thing that is not for sale, especially this time of year.  So as soon as something comes on market that fits the profile of what everyone REALLY wants ---multiple offers. 

There can be 150 properties on market, but everyone is waiting for that one property that isn't for sale yet.

Feb. 25, 2006 - WHERE DOES THE EARNEST MONEY GO?

Some of the most Frequently Asked Questions in a Real Estate Transaction involve the Earnest Money Deposit. The Earnest Money usually follows with the transaction from day one all the way through to the last day, as in follow the money. 

The buyer usually writes a check for the Earnest Money deposit at the same time that they sign the offer and they hand it to their Buyer Agent. The check can be made payable directly to the Escrow Company they chose in the contract, or to the Buyer Agents Company if they have an in house Trust/Escrow Account. More and more these checks are made payable to the closing agent.  

When the seller accepts the buyers offer, the check gets deposited. Lets assume the check was made payable to escrow and went directly to the escrow company for deposit.  

At close of escrow this money comes back to the buyer as a credit against his costs or downpayment. If it is a zero down loan and the seller is paying the closing costs in full, this $1,000.00 can be returned to the buyer at close of escrow. 

If you know you really want the house when you make the offer, and you have no problems at all throughout the transaction, the Earnest Money just slides like butter from your hand and back into your hand. Whether it actually goes into your hand at the end or is paid against your costs varies from transaction to transaction. But it still simply comes back to you like a boomErang.  

The only time you should be worried about handing over an Earnest Money check, is if you are not sure you want the house at the time you make the offer  

Feb. 21, 2006 - The True Value of a Home for Sale - Zillow Buzz

Got my first issue of ZILLOW BUZZ this morning.  Or actually an email announcing that ZILLOW BUZZ is coming.

ZILLOW really is exciting news…Im not being sarcastic when I say that.  We need a shot in the arm in this business.

That being said, I would like to say something about how real agents really value property.  I read the about us notation on the ZILLOW BUZZ email and it showed how one of the partners had used spreadsheets to value his property.  I just saw an elaborate spreadheet done by an owner at The Newmark in a downtown Seattle condo.  Boy was it elaborate, and boy was it wrong.  No way that condo is worth what that excel spreadsheet says it is worth.

The way we value property is on a comparison basis.  The more we see the better we can value.  That is why we go to Brokers Opens (at least those of us who arent just looking for a free lunch

We have a mental running calculation in our brains.  It goes like this.  Johns listing last month sold for $700,000 and it was on the best view corner of the building, remodeled and up on the 21st floor.  Better window configuration.  Crappy cabinets, but otherwise a great remodel.  The wall was knocked out around the kitchen.  Penelopes listing down stairs on the 9th floor had the best unobstructable view, but was 600 square feet smaller.  Poor presentation.  Owner left his clothes all over the place and it smelled like sweat.  Original condition, no remodel and had a handicapped bathroom that gave it that hospital feel.  That one sold for $400,000, but it was a pre-foreclosure with the owner under the gun.  So I can list this one at $550,000.  It is between the 9th and 21st floors.  It is remodeled as to aesthetics, but no walls knocked out.  Its really worth $500,000, but I think I can squeeze an extra $25,000 out of it because its the only game in town at the moment.

I dont think a computer can do that.  Robbie, can you do a Vulcan Mind Meld?  LOL. 

Feb. 20, 2006 - STI - Status

Internet Home Search  

When you look for property on market at www.SearchingSeattle.com, you will see two types of property. 

The ones on which you can make an offer, that is not a backup offer, will show ACTIVE. 

The others, that I have asked you to pay more attention to in my previous entry entitled USING THE INTERNET TO BUY YOUR NEW HOME, will say OFFER STI. 

STI (Subject To Inspection), is not necessarily about an inspection at all. It is what we might call a very broad escape hatch or an out clause. This out clause can be used for many, many reasons that have absolutely nothing to do with an inspection at all.

 If a buyer makes the offer contingent on an inspection, especially if it is a 35A inspection clause and not a 35B inspection clause, they have a huge timeframe to change their mind based on many things. In fact, in parts of this country, a buyer may tie up five properties all at the same time, and cancel four based on the inspection as he only tied them up to have the time to consider which one he really wants to buy. 

That is why our mls system internally, calls these ACTIVE STI vs. the public sites that call them OFFER STI. Sometimes the very best property on market is the one that falls out of STI status and comes back on market. 

It is very important to note that you, as a buyer, should ALWAYS have an inspection, even when you do not make that inspection a contingency. The Home Inspection Addendum makes the seller responsible in some way for the results of that inspection. Sometimes you make an offer without a home inspection contingency to get a better price. The property status then goes straight to PENDING and skips the STI phase, but that does not mean you do not do an inspection. It means you are willing to lose your Earnest Money if you are not happy with the inspection. 

Sometimes you can save 5% or more off the price by being the one offer without an inspection contingency, and only lose $1,000 if you want to cancel based on the inspection. BUT, please do not think that not having an inspection contingency means that you do not do an inspection. You still need to close on that property with full knowledge of its total strengths and weaknesses.

Feb. 20, 2006 - USING THE INTERNET TO BUY YOUR NEW HOME

I have recently been enlightened on how grossly inadequate many of the home viewing sites are, and how misleading they can be. 

Maybe I should have known this before, but frankly, those sites rarely come into play in my everyday life.  I use the mls and clients use me.  I truly haven't considered until recently how people use the internet in the home buying process and why they do that. 

Now that I am viewing the world through your eyes a bit, with the help of my most recent clients, I would like to give back by making a few suggestions on how to use the internet more effectively. 

Do not use a site that does not give you both Active listings and Offer STI listings.  My site does do that, but I wish it would also give you Pending and recently Sold listings as well.  This is why.  If you base what you want on what is for sale, you will be buying the barking dogs of the marketplace.  Dint get sucked into that. 

Here's an example.  Go to my site and do a realistic search, not homes you personally can't afford.  Look at all of the inside photos of a few Active and Offer STI properties and you will quickly see that the Offer STI properties look a whole lot better than the Active properties, by and large.  That is because the very best that life has to offer you in your price range is more likely to have been sold yesterday or be listed tomorrow and not Active today.  

(Agents who want to yell at me right now for telling people this, don't waste your breath.  I know how you feel about my telling people not to just let you open doors and say "Do you want to buy this one?".  Get over it, we both know I'm right.  Buying a good property is more about the next one out the gate, than the one that is easiest for you to find and sell.)  

I really didn't realize that most people didn't know this until I started paying attention.  My clients over the last 15 years have just depended on me to know this, so they didn't have to.  But if you are using the internet in the home buying process, you really do need to learn this very quickly or you will be buying all of the homes that agents are not selling to their clients.  We all have buyers in that price range, but we are saying don't buy that one for some reason, or it would be sold.  That's just common sense, isn't it?  

They are not for sale for weeks and weeks with no good reason, and most are not bargains even if you negotiate them down.  A few are simply at the wrong price, but if you rely on that fact, then look over your price and not at it, or you will be buying a lesser home than you should. Not the best strategy, but better than buying a home you will later have trouble selling. Hold out for the better ones and don't touch a stale one until you really, really know why it is not sold.  Don't guess, don't, don't, don't rely on the seller's agents advice in that regard, and look really hard for the monster that is causing it not to sell. 

Multiple bid situations are not created because the market is hot.  Multiple bid situations are created because most times the property listed an hour ago is better than all of the ones no agent has sold yet.  We all jump on it at the same time like cats on a mouse.  Because it is better, priced right, and in the best location.  

We (at least those of us who understand that "we represent people" for a living and do not sell houses for a living.) are overlooking most of those homes you might be buying through that really cool site.  They are just not good enough for our clients for some reason.  Do you really think that some companies have removed their liability for selecting the home, without good reason?  If a company is going to sell only from the Active pool of homes, and not look for the next best one out the gate, they make you the one primarily responsible for the selection of the home.  That's good business for them, and bad news for you.  

Did you really think with all of the agents in this marketplace that you found some treasure on the internet that we all missed?  Get real.  If you are using the internet to buy a home, do it with some smarts.  Use that RSS feed thingie that Robbie knows how to do, and catch the next one out the gate.  Look at the STI listings really, really hard, and know that you want the next one like THAT and not just the best of the leftovers. 

If you do not have an agent who is looking hard at what is coming on market, versus just what happens to be for sale today, dump them.  If you look at 8 homes and they don't hate 6 of them, dump them.  A good agent isn't the one who does what you tell them to do, it is one who refuses to let you be your own worst enemy. 

A dog has 6 pups.  Four people on the waiting list rush in and grab the four best ones.  You get there and there are two left.  Do you take one of them?  Or do you put your name on the waiting list to be the first in line for the pick of the next litter?  Think about it. 

Feb. 19, 2006 - It's always sunny in Kirkland!

I have to say, that when I lived in Bridle Trails Bellevue, I used to say "it's always sunny in Kirkland!"

Even coming across the 520 Bridge from Seattle, there always seemed to be one big dose of sunshine right over Kirkland, even when it was rainy and cloudy everplace else.  I know, there goes "Ardell in Ardell's World" again .  I just love Kirkland, I can't help it.

It's a beautiful, sunny morning here, and has been pretyy much every day.  It's Sunday and I am going out with a young couple, he from California and she from Japan, who are being relocated here by Microsoft.

Looking at the inventory of homes for sale, I have to say that the condos and single family homes are picked over and overpriced for the most part.  At lesast the ones in their price range. 

What's standing out are the townhomes...so we're off to see what we can see this afternoon.  Maybe we'll get lucky.  Or maybe I'll just find out a little more about what makes them happy and what doesn't, so I can preview for them or find homes "not for sale" for them. 

In any case, it's going to be a great day.

Feb. 18, 2006 - Closing Costs vs "Prepaids"

A short mention here of the difference between closing costs and prepaids.

Many people lump these together, but a prepaid is something that will not be paid and done with at closing.  It is an advance payment of an ongoing cost.  The cost of the prepaid item will continue for many years, while the true "closing costs" will be paid and done after closing.

Here are a few examples:

The real estate commission is a seller closing cost.

The escrow fee is a closing cost paid half by the seller and half by the agent.

The requirement by the lender that a full year paid hazard insurance policy be paid at closing is a PREPAID item.  You will have to buy and pay for insurance every year thereafter.

The requirement that you pay interest to the last day of the month, at closing, is a PREPAID item.  You will have to pay interest continually for the life of the loan.

Sometimes your lender will not allow anyone else (seller/agent/mom/dad or cousin) to pay your prepaid items.

So noting the distinction can be necessary to a successful real estate purchase.

Feb. 18, 2006 - Homes for Sale in Bellevue, Washington

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One of the best kept secrets in Bellevue, is Bridle Trails.  Not only Bridle Trails State Park, but the housing commuity known as Bridle Trails.

Kirkland also has a neighborhood called Bridle Trails, because the park is at the dividing point between Kirkland and Bellevue on 132/134th Ave and 60th. 

The biggest "claim to fame" of the Bridle Trails community is huge lot size.  Most people think of Bellevue as that 2nd Seattle Downtown area across Lake Washington.  Or they think of it as Bell Square or Factoria or that place on the way to Microsoft on the other side of 148th.

If you have never considered calling the Bridle Trails neighborhood your home in Bellevue, you should.  It is one of the best kept secrets in all of Bellevue, aside from that Issaquah side of town...shhhhh.

Feb. 18, 2006 - The Real Estate Transaction - Seller

1. Seller and Agent determine price and marketing strategy and ascertain where and how the seller will get to where they are going once the property is sold.

2.  Seller and Agent prepare home, sign paperwork, take photos, make flyers, review showing instructions and put the property in the mls.

3.  Agent does Open Houses (public open and/or Broker's Open)

4.  Offer is received.  Agent and seller review the offer. Offer is negotiated and "signed around".

5. Escrow is opened and if a condo, resale certificate is ordered and paid for by the seller.

6.  Seller contracts on their home purchase, if they have not already done so, so they have a place to move out to.

7.  Home Inspection is done and negotiated.

8.  Seller packs and hires mover.

9.  Loan documents arrive at escrow and escrow makes a signing appointment with the seller. (sometimes done prior.)

10.  Escrow faxes estimated closing cost details to agent.  Agent reviews seller's net proceeds with seller prior to the signing appointment.  Agent adjusts figures as needed with escrow.

11.  Seller goes to escrow to sign closing papers with escrow officer.

12.  Escrow calls all parties when the transaction is recorded at the county and agent gets keys from seller' to deliver to buyer's agent.

There a few more steps shown in "Anatomy of a Real Estate Transaction" which has more detail and color coding of who does what.  The Title Company portion is not elaborated upon, as it generally happens in a more "behind the scenes" manner.  However it is an important part of the process as well.