Buying Seattle Real Estate, Seattle WA Homes

There has been a lot of discussion about how Real Estate agents get paid. The Real Estate commission is traditionally 6% under $700K and 5% over $700K. It used to be 7% when property prices were lower.

Now that property prices are falling again the commission is an even bigger topic of conversation. People are stuck, having less equity in a home makes it harder to sign up for a fee that takes away 6% of the purchase price.

In commercial Real Estate the commissions can be between 5% and 10%. It depends on the price, and difficulty, but all commissions are negotiable.

I used to charge 3% as a Buyer’s Agent, and if you bought through me it was 1% for me to list the property. In order to sell I could charge 1% if you did what I asked. If the property was in good condition, it photographed well, and it was priced well I had no problem listing for 1%.

In my opinion working with a buyer is harder because there are so many variables. The second part about that is that you have to buy well in order to have any value in a property. There have been times when a transaction was so easy that I only charged a fee to get the property closed, and pay my expenses. Some times I would refer the client to an attorney who could handle legal issues, and I was only paid a fee for the referral, usually about $200.

You can get a Real Estate transaction closed through an attorney for as low as about $1200, to $1600 including escrow fees. The agent is paid, we hope, based on the expertise they bring to the transaction.

There is a discussion about looking for properties online. For me my first experience was in about 2000. That seems like a long time ago.

The Multiple Listing Service stored data in a central location. The company that handled the data for the Northwest Multiple Listing Service was called Moore Data. I bought a software program from them to do Comparative Market Analysis. It worked great. It made a nice presentation at a time before it became a common tool.

With the program I was also able to share information with other people on line, through e-mails. The e-mail system quickly became a common Real Estate practice. The Real Estate agent would e-mail clients a list of properties. Soon after our Multiple Listing Service began offering an online version of the data base Real Estate agents use.

John L Scott was the first Brokerage that I recall who invested in the technology of online searches in conjunction with Microsoft. Windermere seemed to be dragging their feet. Coldwell banker made the most significant strides nationally.

Then a company called Zillow began the ambitious project of a national data base for Real Estate. Governments had converted sales data to an online system from microfiche. It opened up a whole new world of analysis of tax data.

The next question is, if all of this information was available how did Real Estate prices get so high?

HUD stands for the office of Housing and Urban Development.

HUD sells homes that have been foreclosed. arehttp://www.hudhomestore.com/HudHome/Index.aspx 

When you buy one of these homes it is with the understanding the property is sold as is. HUD does not negotiate work orders on properties. There are ways to finance a home using a variety of means to get a loan to close around a work order issue.

It’s best to work with a HUD Specialist in your area who knows what to do, and how to get the financing in place.

Many think HUD Homes are a good “deal” because the price is lower than Fair Market Value. I haven’t found that to be the case. HUD Homes in many cases need work. You are also competing against “investors” or more accurately want to be investors. The days of buying, fixing, and selling HUD Homes for a profit are behind us.

If you are looking at HUD Homes you should look for a conventional lender who has some experience with the HUD process. You should also have a cash reserve for things that need to be done. Last, but not least you need to be aggressive, and be prepared to walk away.

Once you decide on this path you should stick with it. Something always comes up, be patient.

This is a new topic for a lot of people who are in the market to buy a family home. Bank Owned Properties have traditionally been an area that Real Estate investors dabbled in. More properties are finding higher prices from being listed with a Real Estate agent than they could sell for at a Real Estate auction.

Auctions are something to avoid unless you can afford to lose money. I’ll do another post about that. With REOs, Bank Owned Properties, listed through a Multiple Listing Service, you have the right to an inspection, appraisal, negotiation, and in many cases a stronger title position. Title is a topic for another time, it is a very complex issue.

There is a strategy to buying Bank Owned, that I have repeated in this blog a number of times. The Bank wants to clear the property for as much as the market will bear. That’s why listing the property with an agent gets them more than from a person paying cash, at an auction.

In that regard the thing you have to your advantage is being prepared to buy. Get financing from a lender who can perform. Give the lender all of your information, set up some price parameters, and get pre approved for a loan. Figure your worst case scenario, and get your lender cracking on the best deal you can make on a certain price point.

When you shop, be prepared to buy. Be prepared to negotiate. Make your offer fair, but reasonable to you. Never let the bank dictate terms. Make your offer strong, with a good Earnest Money, and hammer on the fact you are able to close.

You may need to make several offers over the course of time, or something may hit right away. Just be ready, be prepared.

What most people don’t know is that Real Estate agents can represent a wide variety of properties. Most people come in contact with an agent when they buy or sell a family homes. Some people buy rental properties, and fewer buy commercial properties.

Business Opportunities are as the name implies, businesses.

Restaurants, and grocery stores are the most common businesses bought, sold, and traded. There are retail stores that usually boil down to inventory. Some services sell for the value of the good name, or if you will, the brand recognition. A plumbing company can change hands without the customers ever being aware of the difference.

When you get into larger business deal there are terms like mergers, and acquisitions. Businesses are bought, and sold all of the time. It’s a niche that most people never encounter.

In most cases the company is selling a cash flow. It’s similar to apartments, or rental property. There is income, and expenses. If anything is left over it is called profit.

When pricing a business there are many parts to consider. In a restaurant people look at the equipment, what is owned, and what is leased. The lease itself can be an asset to the business depending on the terms. There is also an inventory on hand, and in some special cases the recipes.

This article will dove tail into a commercial property over view that will be coming up next.

The way all Brokerages work is that they belong to an association that catalogs properties for sale, that buyers can search. In our State agents input the Listings, and in most cases agents write the Purchase, and Sales Agreement for those listed properties.

Anyone can actually write an offer on a property, and any seller can offer a property for sale by a variety of methods. Multiple Listing Services have proved to be an efficient way of “Brokering” property.

The data base that holds the property, and sale information has been a national company. There has been hope, and discussion of having a National Data Base for listed properties. Some companies, like Zillow, have spent a lot of money getting a national data base together. Ultimately there would need to be a lot of agreements in place, at least one for each State, and some States have more than one Multiple Listing Service.

Craigslist, and E-Bay have both tried having Real Estate Listings. That is a difficult position for an entity larger than a local representative to be in. There may be a lot of quirks to a property that sellers may want to conceal.

The North West Multiple Listing Service that we have is State wide, with the exception of a few counties. It collects, then manages, the data of Brokerage sales. Recorded sales are reported through the Counties. It’s a lot to keep track of, but we do have one of the best systems thanks to our head start on computer, and internet technologies.

About three months ago a property I liked sold for a price I thought was fair. It was completely redone from the studs out. Everything was new, and the finishes were to the period of the house. I was told in an online chat that the property was way over priced.

During my market analysis it did seem that the price was reasonable, but for that price you could get more from comparable properties, like a view.

Since then I have spent much more time looking at property. What I am finding is that sales prices are all over the map. If it were just up to sales data everything would be over priced, and it starts in the lower tiers of pricing, and works it’s way up.

The other thing that has thrown the value of property is that low interest rates make CAP Rates, or rental income rates, seem higher than they should be. What a property will rent for used to indicate a rate of return. If a property is losing value while the rental income is paying a fixed mortgage, you would have to count those losses into the equation.

I don’t see a formula, or pattern yet, for getting to a fair purchase price. It only seems to me that 1998 may have been where we end up for today’s residential Real Estate prices.

We were dressing up a house for sale so we took a trip to Restoration Hardware. They have a lot of vintage fixtures, drapes, and decoration. In one house we threw in a leather couch, and arm chair with the sale of the property. http://www.restorationhardware.com/

You may laugh, but on this particular occasion we ran into two other Real Estate agents who were there doing the same as us. We were making a property more appealing to a buyer.

Today I was talking with a very happy seller who just sold their home for what I think was at least $K more than the house was worth. We did some cleaning for them, but the Crate, and Barrel look of the home was all them. If you aren’t familiar with Crate, and Barrel here is the link: http://www.crateandbarrel.com/ 

The lines are clean, simple, and elegant at prices that are reasonable. The Wikepedia link explains more about the history of the stores: http://en.wikipedia.org/wiki/Crate_%26_Barrel

The home decor that many stagers try to achieve kind of falls into this idea of something simple, but attractive. This seller used the concept but achieved the look with simple home items, and designer paint colors.

The conclusion that we came to is that the buyers paid more for a lifestyle, and decor than if they had just bought a house. I’m calling it the Crate, and Barrel factor.