January is the month of reflection for a lot of businesses, as year-end results often have a direct affect on production goals for the coming year. We like to take a look at our sales stats as a team and compare them to MLS averages. Before I jump into 2008 results, let me remind you of 2007 stats for comparison.

Closed Sales, King County ’07: 33,210 (down 11.5% from ’06)
Closed Sales, Sno. County ’07: 12,940 (down 21.45% from ’06)
Median Home Price, King County ’07: $400,000
Median Home Price, Sno. County ’07: $349,500

Overall sales in 2007 were down drastically from 2006, but the median price continued its rise (4.63% in King County, 7.53% in Snohomish County). The average time on market (King and Snohomish Counties combined) was 57.5 days – 14.5 days longer than the year before. For Snohomish County the percentage of list price received was 99.09%

That was from last year’s “year in review” post. The post continued with our stats:

One stat that we’re especially proud of is our time on market for 2007. Of our listings that sold that year, on average our sellers only had to wait 29 days to have a signed-around contract – which is almost half the time of the market average, and actually an improvement over our time in 2006, which was a stronger year by all accounts. We’re also proud to report that homes listed by the Pickett Street team sell for more money: Pickett Street listings in 2007 sold for 99.86% of list price – 0.77% better than the market average.

For the sake of brevity I’m going to jump right to 2008 stats. I think virtually everyone is aware that 2008 was not an ideal year to sell real estate, and on almost every count the stats reflect this.

Closed Sales, King County 2008: 21,133 (down 36.37% from 2007)
Closed Sales, Sno. County 2008: 7,842 (down 39.40% from 2007)
Median Home Price, King County 2008: $390,888 (down 2.28% from 2007)
Median Home Price, Sno. County 2008: $325,000 (down 7.01% from 2007)

I mentioned last year that as we transitioned into a slower market that we believed our listing program included tools that will continue to work even in a slow market. Exhaustive print and internet marketing coupled with strategic alliances with staging, photography and graphic design partners result in our homes selling for more in less time. That proved to the be the case in 2006 (when we began tracking our efforts) and in 2007 (when sales began to slump).

The trend continued in 2008! Of our listings that sold in 2008, our listings were on the market an average of 80 days , which is a week better than the market average of 87 days. We’re also proud to report that homes listed by the Pickett Street team still sell for more money: Pickett Street listings that sold in 2008 sold for 99.43% of list price, which is 1.47% better than the market average of 97.96% of list price. This stat is better relayed in dollars: with these stats as our basis, a home listed for $400,000 would sell for more than $5,880 above the NWMLS average.

We say this every year, and we’ll say it again: these numbers really don’t get to the heart of what we feel separates us from the crowd, but it’s encouraging to step back and see the results of the systems we employ. Thanks to all of our clients in the communities that we served in 2008.

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MLS #: 29008180 & 29008190
Price: $110,000 each
Address: 9310 50th Avenue NE, Marysville, WA 98270
Lot Size: 8,935 square feet / 7,747 square feet
Price / Lot Sq Ft: $12.31 / $14.20
Click HERE for property flyer.

Contact Jesse D. Moore at 425.876.0766 for more information.

This is your chance to build a home of character in Arlington. One of the only lots available within the city limits, this private lot is over 8,000 square feet in size and backs to a park. Zoning does allow for a modular installation, and might allow for a duplex, but final approval has already been obtained for a single family residence. House plan has already been designed, and could be made available with offer.

MLS #: 29007586
Price: $85,000
Address: 5xx N. Alcazar Avenue, Arlington, WA 98223
Lot Size: 8,935 square feet
Price / Lot Sq Ft: $9.51
Click HERE for property flyer.

Contact Jesse D. Moore at 425.876.0766 for more information.

UPDATE: If you’re looking for information on the short sale process in regards to real estate transactions in Washington State, you might want to read “The Anatomy of a Short Sale” instead. The post below is a response to a policy from the Washington State Department of Revenue on short sales that has since changed.

To tell this story effectively, I’m going to have to explain a few things – assuming that not all of you are up on the real estate vernacular of the day.

Excise tax: In the sale of real estate, Washington State charges a tax in the amount of 1.78% of the home’s value (to be paid by the seller). One would think that the easiest way to determine value on a property that recently sold would be to…I don’t know…maybe…look at the sales price?!?! But we’ll get to that in a minute.

Short sale:I would think that most of you would be familiar with this term, but in talking with friends and clients, I think that many are unclear of its true meaning. A “short sale” is different from a foreclosure or pre-foreclosure sale, in that the seller may be absolutely current on all of their payments and not in danger of foreclosure at all. That being said, these sellers are definately in a situation where they need to sell their home (think job transfer, medical leave or disability, divorce, etc). In a declining market where home values may have shrunk 10% in the last year, and closing costs for a seller are an additional 9% on top of that, many sellers just don’t have enough equity to cover the existing loans (or liens) against the property. Many may have had plenty of equity at one time, but they refinanced when values were high, borrowing against their home’s value to pay off car loans or credit card debt. Whatever their situation, these sellers are in a position where they have to sell their home in a declining market, and the value of their home is less than what is owed to the bank, so the sellers are “short” on the funds necessary to successfully close a sale through conventional means. In “short sale” situations, the purchase price and terms have to be approved by the underlying lien holders, since they are being asked to release their liens against the property without getting full satisfaction of the loans.

Which leads us to this: The Washington State Department of Revenue recently issued a letter to the President of the Escrow Association of Washington in regards to their position in assessing the amount of excise tax owed on a short sale transaction. The staggering amount of short sale transactions in the last 18 months has prompted a lot of questions and new legislation within the industry, and one of the questions that came up was regarding the assessment of Washington State’s excise tax (remember the 1.78% tax defined above?). To better explain the state’s response, let me give you an example:

Seller A and Seller B buy identical homes at identical times. Seller A put down $125,000 on a $450,000  purchase, while Seller B secured a zero down loan on a home of the same price. Two years later, the value of the homes that they purchased has dropped to $350,000, and both parties are in a position where they have to sell. Both homes sell for $350,000, but according to the Washington State Department of Revenue, one seller is going to pay more in excise tax. Any guess who?

Seller A bought his home for $450,000, but only got a loan for $325,000 because he put $125,000 down. He sold his house for $350,000, was charged 1.78% of the sales price as excise tax, so he paid the State of Washington $6,230.

Seller B bought his home for $450,000, and he got a loan for $450,000. He sold his house for $350,000, and was charged 1.78% of the home’s value as excise tax, so he paid the State of Washington $8,010. Seller B paid $1,780 more in excise tax than Seller A. Why is that?

Well, in the letter that they issued to the Escrow Association of Washington, the Department of Revenue stated that they understood the tax statute to allow them the right to charge excise tax against the amount originally owed by the seller when the amount owed on the property is greater than the sales price. The reason that this interpretation is even slightly plausible is because the language of the statute is purposely vague on how a home’s value is determined. It appears to me that it was intentionally vague for those that might try to avoid the tax by selling their $400,000 house to their daughter for $5,000, thus reducing their excise tax. While the statute is vague, I don’t think that it should be interpreted to mean that the state can tax sellers at their property’s peak value – further punishing residents that are already in a terrible situation by making them pay higher taxes for buying and selling at the least opportune times.

Many fear that sellers, when faced with the possibility of paying higher excise taxes, will simply let their homes slip into foreclosure (foreclosed properties happen to be exempt from excise tax). Good people, people that pay their mortgages on time, keep up their homes and their neighborhood, are going to vacate their homes entirely and force the bank to sell the property at a reduced value, further driving down the prices of the homes around them.

What’s even more inflammatory about this is that the Federal Government took steps in 2007 to prevent this from happening, enacting The Mortgage Forgiveness Debt Relief Act. This act cancels the taxes that would otherwise be owed by short sellers on the amount of debt that was forgiven on their primary residence. In the last month our own state has promised to increase the taxes owed to those that the Federal Government hoped to relieve.

Please contact your State Representative and ask them to enact and support legislation that would force the Department of Revenue to re-evaluate their position on this issue. I understand that excise tax is a necessary evil, but let’s make it subject to the sales price and quit trying to kick residents while they’re down.

UPDATE: The Department of Revenue has changed their tune after a meeting with Washington Association of Realtors. They’ve agreed to change their policy to tax based on the sales price on the home and not the amount owed on the property. I still think that it’s interesting the the Department of Revenue didn’t reach this conclusion on their own, but at least they were smart enough to realize that the issue wasn’t going to go away. Click HERE to read the full story.

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There are several links in this post, which will take you to some lengthy audio and video pieces I’ve collected. I feel these pieces encapsulate the mood of 2008 in a way that words alone don’t capture. Please bear in mind that the aggregated clips you’ll find here are intended as a collection of interesting viewpoints and theories, and not necessarily a representation of any particular agenda or beliefs.

They say, if you can’t say something nice, don’t say anything at all….  that silence is me, trying to think of something nice to say about a year that had very little nice to say for itself. When I start drawing parallels from my own experience, two stand out: 1989, the year of the Exxon Valdez oil spill, and 2000, the year of the dot bombs. Now there’s some great company. With friends like that….

When historians start pinning titles on 2008, it will undoubtedly be something along the lines of,                ”the Year Credit Stood Still”. In light of all we’ve heard about the various causes for the world’s economic challenges, from mortgage tronches, (follow the link, and click the ‘full episode’ link to download the radio clip) and the mortgage fraud that followed, there appears to be plenty of blame to go around. I thought I’d pretty much heard all the options, but then a fresh one popped up just this week.

It’s likely you’ve all heard of Enron, and the accounting scandals that brought about their demise, but before today no one I was aware of had put Enron together with the credit crunch. Well, if you know anything about the Sarbanes-Oxley bill, you’re well on the way to guessing the connection. It seems there is a downside to oversight.

As Neitzsche said, “That which does not kill me, makes me stronger”. While I wouldn’t wish trouble on anyone, it’s true that the struggle serves some purpose. Another quote I’ve heard a lot of lately is the one about the number of millionaires who came out of the Great Depression (Can anyone tell me what’s so ‘Great’ about depression?). So, it must be true; we need the downs to create the ups. Following that logic, I’m ready for a NEW YEAR!