We recently returned from a business trip to New Orleans (and before everyone asks – no, it wasn’t during Mardi Gras!), which was host to the international convention for Keller Williams Realty International. The trip yielded many new ideas and philosophies for our business, but I won’t bore you with that right now. Instead, we want to share with you our five favorite things about The Big Easy.

5) Everything but Bourbon Street – We got to our hotel at about 1:00am on Friday night, and while our initial intention was to find a blues club and a glass of wine, I thought our late arrival would surely shelve these plans. One of our friends had arrived earlier, and in waiting for us, had brewed himself a pot of coffee, and there wasn’t any way he was going to let us go to bed without a quick walk down Bourbon Street. Our hotel was two blocks from Bourbon Street, so within a couple of minutes we were introduced to New Orlean’s most renowned destination.

I won’t get into everything we saw, smelled, or stepped on, but we all left a little wide-eyed. The street is woven in debauchery, and the seams are stitched with alcohol and waste. If you’ve been to Bourbon Street, I don’t need to describe it. If you haven’t been to Bourbon Street, you probably don’t want me to. I’m thankful that we were in New Orleans for several more nights, and that our experience of the city wasn’t defined by this one late night walk.

4) Architecture – Bourbon Street is located in a neighborhood called the French Quarter, and if you go on either side of Bourbon Street, the appeal of New Orleans grows considerably. The French Quarter is the oldest neighborhood in New Orleans, although not necessarily the most well-built. Most buildings share a wall with the neighboring building, and they don’t necessarily match in size, color, or style – which makes for an interesting study in contrast. Many walls aren’t square, nor are their floors level – but the exacting nature of the engineering is not what generates the appeal. These buildings give visitors a sense of history, and begins to impart a silent understanding of the city to its visitors. This city is resilient, as are its people.

3) Music - I told everyone that asked me about my upcoming trip to New Orleans that I was most excited about finding a blues club and enjoying the music with a glass of wine and a smoking cigar. Many of the clubs on Bourbon Street did have live bands, but they weren’t what I was hoping for. I thought for sure that off of Bourbon there had to be a place where I would recognize a familiar riff off a steel guitar, the warble of a harmonica, or the haunting melody of an organ. On Monday night, despite my exhaustion, Andy and Dennis talked me into delaying sleep to continue our search, and it resulted in the most memorable night of the trip.

We ended up on Bourbon Street, right at its start, at a watering hole called “The Blues Club.” We had had our doubts on previous visits, but when we walked in on this night, it was obvious that more locals than tourists were there, and they had come to hear “Rooster and the Chicken Hawks.” I don’t know anything about Rooster, and the club was dark, but I’m guessing he’s no younger than 75, and he was dressed to the 9’s in a powder blue, pinstriped, luminescent suit and pristine white leather ankle-high disco boots. My wine might have been in a plastic cup that night, but we were drinking the blues from a hose. If you’re ever in New Orleans, “Rooster and the Chicken Hawks” rock The Blues Club most Sunday and Monday nights.

2) Food - Andy should probably write this paragraph Andy is about 150 lbs and eats more than anyone I’ve ever seen. This was never more obvious than when we were in New Orleans. We ate gator sausage and crawfish remoulade  at “The Gumbo Shop” (although a couple in our attendance have had better gumbo elsewhere), we drank coffee and ate beignets at “Cafe Beignet“, filet blange and bananas foster at “Brennan’s“, pizza and calzones at “Angeli’s on Decatur“, and key-lime pie at “Crescent City Brewhouse.” All in all – the food here is decadent, and worth every one of the three-plus pounds we’ll all have to wrestle off at the gym.

1) The best part of New Orleans – the people. I have to think that the average living wage in New Orleans is far less than that of Seattle, but you can’t tell it from the faces of  the inhabitants. There are exceptions of course, but the people of New Orleans are either well-medicated or genuinely happy. There’s a sense of community here that we haven’t seen in other large cities – even more than what we’ve seen in most small towns. The cabbies all wave to each other, and you can’t walk down the street without seeing “Who Dat?” on a t-shirt or as graffiti on the wall. I have to imagine that enduring through an event like Hurricane Katrina and it’s aftermath will give an entire town perspective, and that a collective celebration of a recent Super Bowl victory might bring that same town some unity, but I think that what this town and its people share transcends an event or two.

Thank you New Orleans for being such gracious hosts to a bunch of real estate agents. Who dat?!

[View with PicLens]

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Tags: fun, New Orleans, thoughts

Pickett Street Properties is proud and honored to announce that all 4 of us just received the “2009 – 5 Star Realtor Award, Best in Client Satisfaction,” recently published in Seattle Magazine. This is a great honor for us – because our greatest desire is to serve our clients incredibly well. Only 758 local Realtors received this award of the over 20,000+ licensed Agents in our area.

Here’s how the awards are determined:

First, over 22,500 people who recently bought or sold homes were surveyed by mail and phone.  Next, professionals in the mortgage and title industry were surveyed for their nominees.  Stacks of surveys were received, screened and scored by Crescendo Business Services.  Finally, a blue ribbon panel of local industry experts reviewed the finalists list – and the winners were announced!

Those surveyed were asked to evaluate their nominees based on nine criteria:  Customer service, communication, finding the right home, integrity, negotiation, marketing the home, market knowledge, closing preparation, and closing satisfaction. We want to thank our clients and those we work with for nominating us.  We are thrilled with the awards, and will continue to do our best to exceed our clients’ expectations and goals.

Several Agents we know keep telling us how lucky we are.  I think Thomas Jefferson said it best: “Luck is a dividend of sweat.  The more you sweat, the luckier you get.”

While many in our area continue to complain that “nothing’s happening” – and that the real estate market is “still dead” – we beg to disagree: As a team, we currently have 15 homes Pending, and many more homes For Sale that are receiving regular showings!  And as a team, we’re currently helping  12 different Buyers find great homes and properties all over Puget Sound.

Finally, I’d like to quote one of my kids’ favorite burger-makers, Ray Kroc (founder of McDonalds): “If you work just for money, you’ll never make it, but if you love what you’re doing and you always put the customer first, success will be yours.”

We do love what we’re doing.  We strive to put our customers’ goals first.  And we’re thrilled to serve our clients, and to earn success. We’re proud to be winners!   And we’re looking forward to helping many more clients win in 2010!

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Tags: 5-star, Andy, Dennis, designation, Jesse, Lisa, Pickett Street, Seattle

I just listened to a great call with an eye towards what we can expect in the year 2010 in the housing and rate market.  A great point was brought up about the cost of waiting.  Right now the government has pushed some major incentives into the market.  In December of 2008 the government announced a purchasing program that pushed rates roughly 1% lower than where they were the previous month, and had been for almost a year.

The Government is also allowing for a TRUE TAX CREDIT of $8000 for first time home buyers that is set to expire in April.  These 2 things can make a huge difference for a first time home buyer.  If you wait to buy and rates go up the roughly 1% that most experts are forecasting, you would be looking at a cost of about 5% of your loan amount upfront to buy down your mortgage rate back down to current levels, on a $200,000 loan that is $10,000.  Add to that the loss of the tax rebate, that is nearly $20,000, or about 10% of the purchase amount.  A more impressive number is the lifetime cost of a mortgage that is 1% higher than the available rate today.  The 30 year cost of a $200,000 loan with a 1% rate increase is $45,000.

This is a call to action, if you are debating buying your first house, or moving up to a larger home, please consider the cost of waiting.

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Tags: buyer, tax credit, thoughts

One of the most frustrating forms of a real estate transaction of late is the “short sale.” We’ve had a lot of questions lately about this kind of sale, so I want to address some of the primary questions and myths.

1) A boy named Sue: There are a lot of misconceptions about short sales, starting with their name. A “short sale” is not a denotation of time – short sales actually take a long time to close. A short sale is a real estate transaction where the seller owes more for the property than the property is currently worth. In other words, the seller doesn’t have any equity and in order to sell, the bank is going to have to agree to accepting less than what they’re owed. For example, John Doe bought a property in 2007 for $380,000. It’s now 2010, and the local real estate market has tumbled. In a “choose-your-own-adventure” twist, let’s say that John (1) got divorced, (2) lost his job, (3) is transferred out of state, (4) develops a medical condition that forces a move, or (5) simply can’t afford his home anymore. John’s house is now worth $340,000, and since closing costs for most sellers run about 9% of the purchase price, if he was able to sell his home for $340,000 his net proceeds would be $340,000 (sales price) – $30,600 (closing costs), or $309,400. John owes the bank $380,000, so in order to sell, either John has to come up with $70,600 (which he doesn’t have), or (more likely) the bank is going to have to accept $70,600 less than what they are owed. The bank is going to end up short – so, this is a short sale.

2) Mr. & Mrs. Scott Free…: For a seller, deciding to sell your home as a short sale is not an easy one, and so we are always going to encourage our clients to consult with a bankruptcy attorney and their financial adviser. The primary benefits of a short sale to a seller will be reflected in their credit report – if they want to buy a home again in the next 2-3 years, then a short sale will be less damaging to their credit than a foreclosure and/or bankruptcy. The other benefit is simply timing – due to the overwhelming amount of short sales in recent history, the government has instituted The Mortgage Forgiveness Debt Relief Act which runs through 2012. Under the provisions of this act, sellers that short sale their home will be forgiven the potential tax burden that would otherwise occur because of debt forgiveness. For example, if the bank forgave John Doe (in the example above) a debt of $70,000, the IRS would normally treat that as taxable income, and now John Doe owes taxes on the amount the bank forgave. Because of The Mortgage Forgiveness Debt Relief Act, this forgiven debt will not be taxed, and John won’t owe taxes because of it. There are exceptions to this act, which is why we encourage our clients to speak to their lawyer and their financial adviser. Still – the primary benefit of selling a home as a short sale is that it can be less damaging to your credit.

3) …or not? Why wouldn’t I sell my home as a short sale? While the bank may agree to accept less to get the property sold, this doesn’t always leave the seller off the hook for the remainder of the balance. Indeed, there are cases where foreclosure is a better option for clients than a short sale (in short, talk to a lawyer and your financial adviser). If the bank (or banks) has agreed to a short sale, they’ll often forgive most of the debt, and may ask the the seller to sign a promissory note for a lesser amount, perhaps in the form of an interest-free or low-interest long-term loan. In a short sale the seller may not get off completely scott-free, and may have remaining debt after the sale of the home. Still, this debt will generally be much less than the amount forgiven.

4) I want to sell my home as a short sale – what should I know and do? Contact a bankruptcy attorney and discuss your options (if you don’t currently have a bankruptcy attorney, call us for a referral to one). It might cost a couple of hundred dollars, but it could save your credit and a lot of pain and suffering. Contact a financial adviser to see how a short sale or bankruptcy would affect your assets and the future of your assets. Contact a listing agent that has experience marketing short sale properties, and make sure that they work with an experienced negotiator that is going to negotiate on your behalf with the bank. Be prepared – this is usually a long and frustrating process, but working with a team of capable people will save you some suffering. We have enough experience to know what banks will and won’t pay for, and which banks are going to take a long time (national franchise banks) and those that might respond more quickly (local banks).

5) Who pays the real estate agents? And the excise tax? We don’t work for free (not on purpose anyway), and the State of Washington is going to want their 1.78% excise tax on the sale of your home, so a lot of people wonder how these get paid in a short sale transaction. For the most part the bank pays these fees. They usually negotiate these fees down, so the real estate agents might make a little less, and the buyer might have to kick in a little money to get the bank to move forward to closing. The State of Washington doesn’t forgive excise tax easily, so the banks have to pay excise tax if they’ve agreed to a short sale.

6) I’ve heard buying a short sale can be a great value. They can be, but for a buyer, there’s nothing short about a short sale. The process can take 6 weeks or 6 months (even longer – one of our short sales took 2 years!). The seller doesn’t have any money, so the properties usually aren’t in great condition and they aren’t going to be paying for any repairs. Yes – there is value to be had, but only for the patient. If you’re looking for a real value, focus on bank-owned properties. There’s a reason banks agree to short sales – on average short sale properties cost the bank about 15% less than if they were to take that same property through the entire foreclosure process.

Moral of the story: if you’re thinking about selling your home as a short sale (or if you’re a buyer thinking of purchasing a short sale property), you need to call us. Everyone’s situation is different, so the internet won’t give you the answers you need. Let us sit down with you and go over your options. We’re happy to help even if we don’t end up listing your property. Leave us a message at (425) 502-5397 or email us at info(at)pickettstreet.com.

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Tags: excise tax, short sale, thoughts

Among the many contentious issues of our day, the concept of being ‘environmentally conscious’, certainly strikes a few hot buttons for some. This post isn’t going to explore the politics of Al Gore, or Rush Limbaugh, because, controversial as that subject may be, there’s just not enough space to do the topic justice, and frankly, I don’t find it that interesting.

My personal angle on the Green Movement tends to slant more toward the practicalities of implementation, and looking at the cost/benefit balance for long term value. Given the condition of our current economy, and the impact of rising energy prices, and prices overall, I don’t think it’s an overstatement to say everybody’s looking for ways to save money.

From that perspective, the question becomes one of whether it’s more practical to save money now (which frequently means either making do with less, or doing nothing), or to take the preventive and holistic steps that provide for long term cost and resource savings through conservation, thoughtful design, and practical implementation of new home-building technologies.

The Green Movement is really just a convenient handle for the overarching conversation that revolves around the management and distribution of resources within a given community, and attempts to provide quantifiable benefits for the conscious, thoughtful, holistic use of those resources.

The holistic view can be overwhelming but done well, it brings together the critical elements of a home: location (both within the community, and the specific site), materials usage, durability, water management/usage, power usage, lighting, walkability/transportation, and landscaping to name a few.

As resources in our finite world become increasingly difficult to procure, and consequently more expensive, finding cost-effective ways to recycle old materials into new products, and avoiding the dead end of landfills, will become yet another major industry- as we’re already seeing in many third-world countries. It’s not a matter of ‘if’, this is truly a direction all developed nations are already heading towards- from mining turkey carcasses for oil, to reinventing formica countertops- the race is already on for renewable solutions to our most challenging environmental questions.

There are an endless array of opportunities within this shift, some of which have been proposed as elements of a recession-ending strategy, and others that feel truly sci-fi.

Having recently earned my Realtor, Green Designation, I find this topic to be an endless source of ideas and look forward to implementing as much as I can in my own home. If you have questions or ideas about green construction, I’d love to chat.

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Tags: Dennis, designation, environmental, green

Question: Is it still possible to get a zero down payment home loan?
Answer: For the month of September, yes. (Now extended through the end of December).

I received a phone call on Monday – a request from a young couple wanting to walk through a few of the floorplans available at the Summit View plat in Bothell. As we walked through the homes I asked the common questions – making sure that they were aware of the $8,000 tax credit, and it’s looming expiration date. They were. I asked if they were aware of the special financing available on these brand new homes, including zero down payment and a 3.875% interest rate if they made an offer in September. They were. In fact, they were way ahead of me…

She is a grad student, an unpaid intern on her way to a stable and well-paying vocation. He is self-employed, has been for five years. They have two kids in elementary school, so getting into an award-winning school district was important to them. If they would have tried to buy three years ago there wouldn’t have been a problem. “Stated income” loans existed then – a now extinct type of loan that allowed those that were self-employed to pretty much state their income with little verification to secure a loan. These loans were necessary because most people that are self-employed write off a large portion of their income for tax purposes – which means that they might be able to afford quite a bit in reality, but on paper they don’t make much of anything. This put a lot of faith in the person stating their income – if they liked the home enough they might decide to overstate their income. Then the economy stumbles, right around the same time that their rate adjusts, and suddenly “stated income” loans have a high rate of failure. As a result, stated income loans go bye-bye.

So the young couple puts off their home search. But as the market tumbles, they continue to keep their eyes open. Eventually home sales start to rise, the government offers an $8,000 incentive to home buyers, and the young couple talks to a mortgage broker. The mortgage broker approves them for $325,000, but for a family of four used to living in a large home in Queen Anne, this doesn’t buy much.

Eventually they come across Summit View, a new home community in Bothell built by Calibre Homes. These homes are NOT in their price range, priced from $385,000 – $440,000 for floorplans from 1,750 – 3,013 square feet. But the builder is offering special financing through Cascade Bank: including an interest rate of 3.875%, zero down payment, and no mortgage insurance. They aren’t actuaries, but all of sudden they start to think that $300,000 through conventional means might be more like $400,000 with special financing. So we meet, I go over the numbers, and sure enough, for the same payment as a $325,000 home they can afford to buy a $400,000 house at Summit View. I’ll get to how these numbers work out, but let’s take a look how these two loans stack up side by side:

FHA loans are the most popular right now, because they require less down payment. As the comparison above illustrates, an FHA loan is going to cost over $400 more a month, and it’s going to take $17,360 more out of the buyer’s pocket. So here’s the real question: if you can buy a $400,000 home through Cascade Bank for $2,305.95/month – what can you buy with Conventional or FHA financing and get the same monthly payment?

In the end, this young couple had a feeling that the special financing being offered could mean the difference between a $325,000 home and a $400,000 home. Truth is, when you factor in the cash-out-of-pocket difference as well, the difference between a 5% down Conventional loan and the financing being offered at Cascade Bank, it’s a difference of $96,000 ($77,300 more buying power + $18,7000 more cash due to no down payment and lower closing costs). Not only do they get to buy a new $400,000 home at the same payment as a $325,000 home, but they get to keep over $18,000 of cash in their reserves.

So, if you’re wondering, there are zero down loans available. There are very few of them available, but through the month of September, you can find them at the homes at Summit View in Bothell. If you qualify for $300,000, or $325,000, or $350,000 – wouldn’t you want to keep more cash in your bank account and buy a bigger, newer home for the same payment?

Makes sense to me, and at least one other enterprising young couple…

UPDATE: Zero-Down financing has been extended through the month of December and also applies to the homes at Wandering Creek and Inglemoor Crest in Kenmore. Please contact us for more information.

* I am not a lender or mortgage banker or mortgage broker or any way licensed to help anyone find a loan. I merely have access to people and resources that can help me figure out a few things. The rate and payment information above is reliable, but not guaranteed, and assumes a good credit score and a sufficient debt/income ratio.

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Tags: Calibre Homes, Cascade Bank, Inglemoor Crest, new construction, Summit View, Wandering Creek, zero down