Team Reba Real Estate

If you haven’t seen Avenue Q then be warned that it’s coming to the Paramount Theatre in June: http://www.theparamount.com/artists/?artist=651  We saw this show in NYC back during our whirlwind trip in December prior to Xmas.  The show is a mix between Muppets or Sesame Street characters and onstage actors who are the people handling the puppets so it’s as though a parallel show is going on in front of you.

We had heard about this Broadway show via our friend, Jill, a couple of years ago.  Our first introduction to it by her was while we were in the Portland area of all things - out doing a little wine tasting in their nearby wine region.  Jill had seen the show in NYC when she and her husband had gone to visit family. She’s liked the show so much she bought the CD, which she typically never does, and because she wanted us to get a taste of the show she was playing a song on the CD full blast while doing a little dance and singing along to the music.  Suffice it to say “you had to be there” but it was funnier still when it was noted that a woman and her kids were about 10 feet away listening to this go on.

I will say that when we saw the show in NYC there was a VERY mixed reaction from the crowd. While we knew what we were getting into, not all the people who had purchased tickets did and there were some folks that were very offended.  When I say these are some naughty puppets - they were pretty outrageous.  It’s not kid’s fare, shall we say, because of language and adult content and I’ll guess you get my drift.

It’s a bit like South Park with puppets rather than cartoon characters.  I will say that we were highly entertained and laughed quite a bit. So, do your homework before you go and spend the money - and if you do go, open your mind and have a sense of humor.

So, while I’ve been writing on our own Team Reba blog for about a year now, I was writing on a site called Rain City Guide much earlier.  In a post back in February of 2007 I covered the topic of agents versus attorneys but with a focus on why it makes sense and covers the best interests (typically) for clients to have the capabilities of both of these professions at their disposal in a real estate transaction.

The article was in response to Russ Cofano’s comments on a post on RCG, but I can’t link it here because he no longer writes for the blog now that he works for a real estate company as their legal counsel and RCG has deleted all of his posts.  I’m guessing said competing firm made this a requirement of his employment.

Anyhow, a different attorney at RCG has been pretty clear about his feelings on the subject of agents versus attorneys in his own version of a slam on my own industry.  He’s been doing it for some time with yet another post here that discusses how buyers can negotiate commission fees from sellers, although there is little discussion that commission agreements are between agents and sellers - not the public.  The selling office commission (SOC) that is noted on every NWMLS listing for agents is not a public fee but a fee advertised among cooperating brokerages via the membership within the MLS.  But, he keeps on hitting the same topic over and over again.  Guess it’s time to get out the boxing gloves….

I wonder sometimes if he’s just hard up for business or if he can’t think of more interesting information to write about.  My guess is that for every time he writes an article on not using an agent to buy a home he gets 5 new clients.  Maybe with all the link backs to the RCG site he’ll come by and comment.

I don’t mind a guy running his own business because I do the same thing.  To me it doesn’t seem necessary to make it an “us vs. them” mentality.  What I find a little sad is that rather than developing a good rapport with agents to perhaps build a relationship like I have with my real estate attorney he ends up alienating an entire industry.  With regard to building a business plan, I could imagine where agent relationships could be developed into excellent repeat business that could sustain his practice more easily or as a secondary income stream to his direct business.  But, alas, such is not the case currently.  I’ll stick with my sources over at Garvey Schubert Barer (Rick Baroway, Lori Salzarulo, Tim Burkart and others), Chris Benis of Harrison, Benis & Spence, and Doug Tingvall - the people I use most frequently for client needs.

Beyond the obvious of engaging a good real estate practitioner, the choice of brokerage firm does impact the Time On Market (TOM).

If the price of properties account for different characteristics, then the TOM should be the same for all properties according to the market efficiency hypothesis. The results only partially support this argument. The variables determined to be significant in the TOM model are insignificant in the price model and vice versa.

An accurately priced property has an initial list price that is +/-3% of the final sale price. The range of +/-3% probably accounts for the fact that real estate has qualitative characteristics that may be difficult to value. Interestingly, there is no impact on TOM from the initial list price/sale price ratio for low or high priced homes. Over pricing and under pricing does not influence the TOM. I suspect the low priced homes are seen as a generic product in a large supply. The list price doesn’t necessarily signal the seller’s reservation price. The high priced homes are limited in supply. They have many more unique characteristics.

For medium priced homes, accurately pricing the property from the start has an impact on TOM. The smaller the percentage difference between the initial list price and the final sale price impacts the TOM and selling within the average number of days on market. Overpricing medium priced homes can result in a buyer perception of stale or shelf worn listings. When finally priced correctly buyers ask “What’s wrong with it to sit on the market?” Such overpricing can result in a final sale price discounted more than 10% from the FMV. That is 7% points from the +/-3% range for property initially priced correctly. In addition, with the Time Value of Money the longer TOM has as an economic oppurtunity cost to the seller. The proceeds could have been invested elsewhere at a higher yield.

Also, seasonality and brokerage firm choice impact the TOM. TOM is influenced by the season in which the property is listed for sale, the size of the brokerage and the number of listings.

Is it possible the large brokerage firms enjoy a competitive advantage from an economy of scale with general marketing and advertising cost? It seems plausible the large brokerage firms enjoy a cost advantage listing high priced homes and a large number of low priced homes. Strategic spending increases brand awareness.

Source: Yavas and Yang, Real Estate Economics, 1995.

This is a composite account of many cases we have worked on over the years.  The names and events have been changed to avoid disclosing confidential client information.

Parents usually pass their property equally to their children at their deaths, but sometimes “equal” is not “fair” and may cause serious rifts in the family.  Consider that Hank and Marilyn’s business owes much of its success to the efforts of their daughter, Mary; or that Fred and Evelyn’s family vacation home would not exist were it not for the efforts of their son, Bill; or Dick and Agnes who face the difficult task of providing for their autistic son after they pass away.

Co-owning real estate or a family business can be difficult, even in the best of families.  Using a limited liability company or, to a lesser extent, a tenancy in common agreement may help, but problems can persist.  There is often tension between shareholders who work in the family business and those that do not.  Moreover, a child may have earned a share of an asset through “sweat equity.”  Parents need to balance the needs of their special needs child against the needs of their other children.

We work with clients to develop a plan to deal with these situations.  We strongly advise them to discuss the plan with all their children so the children can understand why they are making an unusual disposition of their assets.  Otherwise, the children who receive less may feel their parents were unduly influenced or that their parents loved them less than their sibling.

Besides rewarding “sweat equity,” the parents’ Wills could also give a child the right to buy out his or her siblings’ shares of an asset.  Thought must be given to the method for determining the buyout price and the ability of the child receiving the asset to fund a buyout.  An otherwise great plan can founder if the parties cannot agree on price or the child who is buying cannot afford to do so.

The bottom line is that a well thought out plan that is fully disclosed can allow parents to manage their children’s expectations and avoid disputes down the line.

Recently, my team was contacted by a seller whose listing near the University of Washington, University Village (aka U Village), Children’s Hospital and just off Sand Point Way had expired with another agent.  It had been on market for several months and the owner had been convinced initially that she must buy a new place to live so that she could have her place vacant while it was for sale.  Sadly, she took this advice - which really wasn’t necessary in her case as she lived alone with her cat and is extraordinarily tidy - and she was distraught because now, months later, she is stuck paying multiple mortgages.  NOT a fun scenario for her, especially on an administrative type position salary.

The listing agent did what I would consider a poor job and messed up some pretty important items.  For one, he completely blew off the original date scheduled for him to come and take photographs of the town home.  The seller had made a distinct effort in preparing the home and she also had some nice furniture around that would have shown off the property in a better way than it ended up being portrayed over the internet.  The agent ended up showing up the day she was moving out and snapped poor photos of the place, which showed moving boxes, cleaning supplies laying about and other such displays of the home in disarray.  A copy of some of these photos is below… cleaning supplies on the floor of the dining room. Nice….(not)….

On top of it all, the pricing was wildly out of touch with reality.  This property was built in 2001 and the price placed on it initially was about 15% higher than it should have been.  This is one of the many reasons it sat on market from August till late March.  It also didn’t take into account what happened with the financing market at that time.  Do you remember?  That’s when the s**t hit the fan at a large number of lending organizations and chaos began to reign, rightly or not, depending on what market area you were in at the time. 

Outrageous pricing was not the right thing to do for a home that would require a JUMBO loan and whose marketplace had plummeted drastically in that one month period between July and August.  Granted, what we noticed was that most buyers backing off here in our area weren’t doing it so much because of financing issues but out of fear of what was happening in the marketplace and the media coverage of it - both locally and nationally.

Below, I’ll show you what the town home looked like after we got our hands on it.  We put it on market on April 6th, and had 3 competing offers within a week - the winning offer being an all cash, 2 week closing, just ahead of our client going on her vacation out of the country.  We’re very excited for her! 

You can see all of the photos here on the slideshow.

It’s amazing (and wonderful!) what a little hard work can do for a client.  Thanks again to Scott from Chytil Photo for yet another great looking property, after  finishing up our Concierge Services.  We hope that she’ll be relaxing a lot more on this well earned vacation now that this transaction is closed as of yesterday.  Congrats also to our client for her 20 year anniversary with the company she works for and the lovely bonus they gave to her that helped make this trip possible.  It’s great you get to use it for the trip and not to pay the mortgage!

A few months ago I was over at our cabin on Hood Canal.  It was a crisp foggy day and I decided to go for a ride in the woods on my mountain bike.   What I really wanted to do was  have a soak in the hot tub, but that’s another story…oh yeah, I already told you that one.   The Hood Canal State Forest lays just across the street from our cabin and that forest ties into the Olympic National Forest.  There is a wealth of beautiful riding trails through old-growth and second-growth forest.

Puffing up a hill about two miles into the ride, I came around a corner and found myself eye to eye with a big black bear!

The bear was startled, but he turned away from me and started to run.  Then for some reason he stopped and turned back towards me, giving me a good long look.

It’s at times like this that you gain a pure understanding of just how insignificant most material things in our lives are, except for maybe a .44 magnum or a jumbo-sized can of pepper spray, neither of which I had!

The mind does funny things when confronted with unexpected situations such as this.  My first thought was “what’s that big dog doing clear up here?”  Then, “idiot, that’s not a dog!”  Then, “his fur is so black and shiny!”  Then, “did I remember to lock-in the interest rate on my Peterson loan?”

Finally, my years of Boy Scout training kicked-in and I remembered that depending on the intent of the bear, I should either curl up like a ball and hope he goes away, or put up a fight.  The rule with a black bear is to lay low unless he is stalking you.  If he’s stalking you, you’re about to become today’s Blue Plate Special, and you’ll need to fight like hell.

And that got me thinking about another type of bear attack:  a “bear market” attack.  That’s what the financial world is suffering from right now.  Since last summer, the Fed has cut short-term rates significantly, but mortgage rates have not fallen, they have gone up.  In 28 years of banking, I have never seen things so volatile.  Rates hit a low point on January 23^rd…for literally three hours.  Then, over the next three weeks they rose by over a full percent!  Today, we are back down a bit.  Believe it or not, rates are actually pretty good right now.  But rates  remain extremely volatile and we just don’t know what tomorrow will bring.  The market is suffering from a combination of a lack of liquidity, a fear of inflation and a fear of a recession.  These forces are working against each other, causing turmoil.

So the question is, when facing a “bear market” attack, is it best to roll into a ball and hope it goes away, or is it best to attack? This may be a good time to go on the offensive and attack by locking-in a fixed rate loan.  The best advice I can give to you is to check in with me as often as you’d like.  There is nothing stopping you from “re-doing” the “re-do”, and at a very low cost.  The key, is to know when to strike!

So what happened with my bear encounter?  Well, after staring into each other’s eyes for what felt like about an hour (it was probably closer to about three seconds), I think I may have scared him off.  I’m not sure why he ran, but it could have been our uncanny resemblance.  After all, I wasn’t wearing a   shirt!

Since moving down to the Renton area again, I’ve been discovering all kinds of fun things about my neighborhood.  The other day while walking my dogs I realized that the little trail system between the houses was a bit more extensive than I initially thought and my dogs have been loving the change of scenery from the regular sidewalks and strolls into the cul-de-sacs.  I can also see how it will be useful in the summer with the tree cover so that I can have shade for my big black dog.

As I stroll around though I also see what is going on in the neighborhood. The other day a new listing came up so this house is for sale:

It’s literally on the other side of the block from me.  Won’t you be my neighbor?  It’s an estate sale from what the listing info says so I’m sorry to say I didn’t know the former owner since I’ve only lived in the neighborhood 6 months.  It looks like it got a new roof recently but I’ll expect the interior is dated - since I know it is vacant now, I’ll stop by and check out the interior on one of my upcoming neighborhood jaunts.  The house is also about 3 or 4 homes away from Thomas Teasdale Park - I take my dogs here to run around and play fetch but there are also baseball fields and a nice playground area. The park sits next to Talbot Hill Elementary.

Something else I discovered was another resident who works at, and possibly owns, a company called Natural Creations.  They make manufactured boulders and they also do water features in landscaping projects, or they are combined.  I couldn’t believe the stuff that was in his yard that looked absolutely real but is really a manufactured product.  For anyone that has wanted the look of naturalized boulders in their yard and was afraid of the cost and heft of moving them, this might be a really great alternative.

     These are some of the photos they have as projects they have done.  In researching them they have done numerous commercial projects as well as residential ones, including work at famous spots like Woodland Park Zoo.  I am TOTALLY going to have to take another look the next time I am at the zoo to see if I can figure which ones are real and which are manufactured.

Oddly enough, I had just been talking over the fence this past Sunday with my next door neighbor about how some real rocks he’s got in his front yard would be gladly accepted over at my place.  He wants to get rid of them and I like big rocks.  I feel it’s a much more natural element to have in a landscape and my yard already has several.  It’s also nice to have extra places to sit in the yard and not have to be down on the grass.

Anyhow, lots going on in the neighborhood.  Won’t you be my neighbor?

We’ve been watching a lot of what goes on in the Wichita marketplace because we’re taking some of our Team Reba investment/commercial business down there with the help of my real estate mom, Myrna Haas.  I’ve been writing regular updates when I travel there, which is very frequently now, and we’ve also been keeping an eye on what is happening in the business sector.  We’re big fans of the investment potential of this area for our clients so when something like this story comes up, we pay attention.

High Touch Inc is a technology firm in business since 1984.  Having had their offices in the area near my mom’s house in the Twin Lakes center for roughly 10 years they’ve decided now to move to the downtown area and across from a very cool historic sandstone building.  It’s these kinds of changes that keep me believing that the location of my 4-plex investment will pay off over the long term.  Keep the company moves comin’ into downtown!

The City of Seattle is ahead of the game when it comes to finding alternate energy and providing opportunities for its utility customers to get off the grid.  A couple of ways you can start your path to going green is by signing up for the GreenUp program which provides a choice of adding non-polluting power sources to your billing and usage.  Right now you can select either a 25, 50, or 100% participation level.  Check out the website at www.greenupseattle.org to get started with enrollment.

Another site you can check out to get other ideas about how to live a more “green” lifestyle can be found at www.seattlecan.org, the site for Seattle Climate Action Now.

Oh, and as an added bonus for signing up for one year of the alternate energy program you can get a free THEO Chocolate bar and a coupon for a 2-for-1 admission to one of their factory tours.  I’ve been on this tour and it is really outstanding.  Not only is it some of the best aromatherapy you’ll ever experience (HELLO! You’re walking around all chocolate!) but it’s a great way to learn about the process of making chocolate.  When THEO moved into the old Red Hook Brewery in Seattle’s Fremont neighborhood they became one of only 11 worldwide roasters of cocao, the main ingredient used in chocolate products.  They not only make fantastic chocolate but a large number of their products are organic and/or fair trade creations, which is much better for the planet.  Private tours can also incorporate food and wine pairings with the chocolate they produce, as well as the nibs that are a by-product.  Nibs can be used in food preparation and aren’t like regular chocolate.  I personally loved them but my partner wasn’t as thrilled.

Lastly, THEO also recycles the husks of the cocao beans and they can be purchased by the public for use as mulch.  Yes, that’s right, you can have your yard smelling like chocolate too!  I don’t know though, what if all my female friends and neighbors ended up wandering outside my house just to sniff the yard?  Could it be a selling point for a house?  Hmmmm…. I’ll have to consider it….

A friend of mine, Dana Lasswell, is an artist/potter and she sends out regular notices of upcoming pottery events at the Moshier Community Art Center.  Typically there is a show near the holiday season and now we have the Spring showing!  Dana thinks that perhaps if she can get the garden art out maybe we can shake off this bizarre series of April snow showers. :)  I’m all for it!!!!