New day in the world of home inspections in Washington State

The licensing of Home Inspectors is now being phased in.  Since 1991 home inspectors in Washington have only been licensed by the Dept. of Agriculture to perform Wood Destroying Organisms Inspections.  The rest of the inspection was unregulated.

In 2008, new legislation established a Home Inspector Licensing Advisory Board to develop a Standards of Practice and Code of Ethics, Reporting, Education, and Knowledge Testing requirements.  Now, 24 hours of Continuing Education every two years are required. 

Experienced inspectors had until 9/1/2009 to become “Grandfathered.”  These inspectors are now licensed and their license number is to be on all advertising.  Other inspectors are being “phased in” and all must be licensed by July 1, 2010, in order to operate in the state of WA

To become licensed, a new inspector without any experience has to complete 120 hours of classroom training, 40 hours of field training (including 5 inspections) and pass both the National and State Home Inspector Examinations.  Realtors are to only refer “licensed” inspectors.

When do we know the bottom is here?

The answer to this question will not do you much good unless you ask for details of the specific market segment you are looking at.  Housing markets are segmented by many factors and usually determined by demand.   The demand for three bedroom ranches in East Vancouver is  different from, say  the demand for $800,000 two stories in Camas. 

Weather you are a buyer or seller it is important to know how the house you are trying to buy or sell stacks up against the rest in the particular market segment where you are competing. 

Since price range is usually the first limiting factor it will help to first segment by price range.  If we take a look at the pending chart below,  we can see that in the price rang of $150-$200 thousand  23 homes sold last week and there were only  17 added to the inventory.  This means that we used up some inventory that had been unsold the week prior. 

Move over one column to the TA column and you will see that we have a total of 282 in inventory.  If the trend continues we will continue to shrink this inventory and begin to see those prices climb.  The $250-$300 price range is in a similar situation, while the $200-$250 price range had inventory added.  This chart only gives us one week of numbers but if we watch these numbers we can usually predict where the prices are headed.  

At Scott Mikel & Associates we have been keeping track of these numbers for about three years now and its interesting to see where the market has been and where it’s going. 

Price range is only one segment of the market but it is usually the most limiting.  Area and style will also play a part.  Downtown Vancouver has had some interesting changes as the market has begun to shift. 

Next week I will discuss another important market segment, location.

The Good House…

 

In the market today you can find a lot of good deals.  Prices in Clark County have lost between 15% and 25% of value.  This does not necessarily mean that every seller is facing this kind of a hit from the crazy days pricing of a few years back.  Good houses, in good locations, on good lots, that are staged to standards that appeal to the widest range of buyers still bring top dollar, and often multiple offers. 

Think about this when making your offer.   We have seen some disappointed people who were determined to get a “good deal” try to low ball a good house and then end up in a bidding war with the shortest straw.  Perhaps twenty percent off 2006 prices might be the best deal anyone would get on a “good house.” Be happy with it.  Here’s a clue:  if you are in a bidding war in this market, you are making an offer on a “good house”.  Stay in.

Much of the noise about the purchase of real estate is about price.   As I have said before a house on the interstate ramp will always be a bad house in any market.  When the market contracts, the value of the  I-5 house heads south at a faster pace than the rest of the market and when the prices head north, the same house will never reach values of similar houses not positioned on the off ramp. 

If you are tempted by the $/sq ft price of a bad house don’t forget how this will affect you in five years.  This may be one you could low ball and be happy when you don’t get it.

No matter the market A bad location is still…

With all of the noise and advice about short sales and foreclosures, it’s easy to lose focus on the fundamentals of house value.  If a buyer wants to come out with a sound investment at the end of this downturn he best pay attention to what has always affected real estate.

When shopping in this market it’s best  to look at a variety of possibilities but  keep in mind that location is number one! 

There are houses in the market that whould have sold for $500 that now are not worth $300k because they have a view of SR 14.  Don’t be tempted by price if the location is a problem.  When we come out of this market  and values begin to rise, you will still be the last to sell, and you will not see the appreciation that everyone else is getting because you ignored the fundamentals.  A bad location is still a bad location no matter the market conditions or the price.

And now for the self serving comment:  The people at Scott Mikel and Associates suggest that you “Ask your Realtor”.

Short Sales? One in 5 actually close.

Short sales, what can I say. It’s like the car ad that sounds too good to be true and the guy that talks really fast gives you the VIN number of the car that sold yesterday.

By now everyone knows that a short sale is a home that is priced below what the seller owes on the property, but how (and why) do real estate agents and sellers come up with the “too good to be true” prices that we are seeing today? Here are a couple of ideas. If a low price can attract a couple of buyers and start a bidding war he (the seller and his agent)  just might get the price up to or at least closer to what he owes. This might cause the bank to accept the short sale. Good strategy for the seller, not so good for the buyer.

More often the prices are just a reflection of the current market and the price is reality. The fact that the seller is underwater has no bearing on the price. At the current market value the seller has two choices. Let the property be foreclosed or attempt a short sale and hope the bank will take less than what the seller owes.

Why would the bank take less than is owed on the property?   If the numbers work it may be more economically viable for the bank to take what they can get rather than foreclosure costs.   It is this decision that must be made by the bank that has made short sales so troublesome. They have hundreds of  requests and each one has to be looked at individually.

In the mean time you, the buyer, who has made an offer,  are in a “wait and see mode”, and sometimes the “wait” can be up to six months, and the “see” is a 1 in 5 chance of an acceptance.   Sometimes short sales are acompanied by an addendum requiring the buyer to “stay in the deal” for a period of time.  causing him to be sidelined for up to 60 days.

Today some 20%-25% of the houses on the market in Vancouver are priced below what it would take to cover the mortgage.

Foreclosure “where “as is” really means AS IS

When working with a bank on a foreclosure purchase there are a few important differences to keep in mind.  First off the bank has no emotional investment in the property so you can make what would  normally be considered a ridiculous offer and not insult the seller.  You might get laughed at but not run off with a shotgun. 

Another point to remember is that the bank has no interest in what your inspection may turn up.  “As Is” really means as is.  It might be a good idea to take you favorite fix-it man with you to your inspection.  When working with a foreclosed property it is good advice to have an experienced Realtor representing you.

   The Pending chart this week is showing bank-owned properties holding at  a steady 4.6% .  Not a huge market segment.

Foreclosures and Short sales

The best deals are where the buyers aren’t 

Many bargains still exist in the housing market even though the market has begun meander its journey back to what real estate pundits call “normal”.  

Foreclosures and short sales are often of interest to our buying customers looking for a “deal” on a home or an investment property.  Both of these circumstances present opportunities as well as traps where an inexperienced person might find himself paying too much or wasting a lot of time and effort only to loose at a game that a bank might be better at. 

Foreclosures are bank owned properties that are put on the market in the usual way and most often are marketed by a real estate agent.  They are listed in the MLS and compete with other properties.  

When deciding what you want to look out when house hunting don’t focus on one segment in your price range.  Owner ocupied homes have to compete in the market and often are price to compete with foreclosures.   We get many people who have heard that foreclosures are a “good deal” and that is all they want to look at.  Include all homes in your search and do the comparison. 

The pending ratio chart that I have posted each week has a column labeled BO.  This is the foreclosure column and you should use these numbers to tell what price range has the most inventory.  Also you can move over to the pending column and see where the most activity is i.e. your competition.  The best deals will be where the buyers aren’t.

Inventory continues to drop…

With several weeks of a reasonably healthy market behind us it is becoming increasigly important that would be homebuyers get started on the process before the window of opportunity closes. 

Interest rates are back down, and the government is still trying to pay you if you will purchase before the end of the year.  There is still time to get in on the $8000 tax credit, low intrest rates and good inventory, but this may not  last much longer. 

If our total inventory drops below 3500 (in the TA column on the chart below) we will begin to see multiple offers on the best properties which is what led to the feeding frenzys of the past.  It won’t be the same now that the government controls all the money, but it will be interesting to watch values as supply dwindels.

We shall see, but for right now, time is running out on the current advantages for  a home purchase.

 

Not much change in the market this week…

The market is holding steady this week with a couple of areas to watch. Check the BO and 3rd party column and notice that it has increased a bit. These are foreclosures that were most likely recorded several months ago and given the lag time between first foreclosure notice and the point where the house is listed these numbers are really a reflection of the actual foreclosure market 6 to 12 months ago. Some say that these are the very same houses that were in 3rd party column prior to them moving into foreclosure. I’m not so sure, there are other possibilities.   . Stay tuned…

 

Clark County real estate market continues to improve…

 

 

 

 

 

 

 

Nearly 2oo people decided to get into the market last week, while 160 got the good news that their home had a serious buyer and went under contract to sell.  Our inventory is lower than it has been in many months and one could argue that there will soon be a shortage of homes in the $100-$150,000 price range at the current rate of sales.  The inventories in the next two price ranges are also in decline.  The upper priced homes are selling one for every three listed, indicating that a price correction still may be needed.

These numbers point to a strengthing market in some price ranges and while others are stagnate or declining.  June, July and August are seasonaly good selling months so some of this is expected. 

On another note time is running out on the $8000 tax credit for first time home buyers.  If you know of someone who fits the criteria  i.e. (hasn’t owned a home in 3 years)  and can come up with 3.5% down payment they can get into a house and get $8000 from the government too.  They need to close on their home by Dec 1, 2009.  Not much time left.