Northsound News Round-up

I'm a bit short on time today, but I've been saving up tidbits for the blog in my Google Reader, so I'm going to round 'em up and head 'em out!

This year's Seattle Street of Dreams home show is now in progress. This SOD differs from previous years in that the show is incorporating a focus on green building techniques. Though the homes featured are still large by any definition and of course they feature all manner of bells and whistles (this is about dreams after all!) , square footage is capped this year at just under 5,000 asf. Street of Dreams takes place in Quinn's Crossing, a community of 48 homes near Maltby.

Redfin has announced that it has received $12 Million in VC funding from Draper Fisher Jurvetson, and is now open for business in the Washington DC market. This has been covered with varying degrees of seriousness all over the blogosphere, but I'm going to chime in with my own two cents here anyway.

The real estate industry today reminds me very much of the IT industry about 8 or 10 years ago. I was involved in that industry at that time, and I recall that retailers were very concerned that their brick and mortar business model was doomed to go the way of the dodo, with the advent of companies like Amazon.com, Drugstore.com, etc. There was a huge influx into the Internet marketplace of online retailers and discounters. Some of these retailers have lasted, and others burned bright and flamed out.

Take as an example, HomeGrocer.com. The media played it up that ordering groceries online was the wave of the future, and competing grocers were concerned that it was a threat to their business model. HomeGrocer soaked up huge amounts of VC funding, but never turned a profit and eventually went out of business.

Even those pure-play dot-com retailers that outlived the dot-com bust, such as Amazon, still struggle. Meanwhile, those companies that effectively combined the best of the web with a brick-and-mortar presence eventually won out. Look at Nordstrom--fabulous website, and fabulous service whether you visit their store online or in real life. At Windermere, we often look to Nordstrom as the gold standard of service and what we should aspire to in our business.

The major real estate brokerages had it good the last few years, with lots of easy sales and plenty of cash to go around--very reminiscent of the 90s dot-com boom. The industry has NOT been quick to adapt to changes in the marketplace but by and large we have a business model that still works. It could be more consumer friendly, and we need to be more proactive about adopting technology.

Technology will revolutionize real estate and the way we do business will change. But the real estate agent will survive, even if we do our jobs somewhat differently, because we provide a service that people want and need. Maybe not EVERY person will need a real estate agent in the future, but enough of population values what we do that we are in no danger of following the dodo into extinction. Though, I would say that the easy money of the last few years has inflated our ranks, and it's likely that there will be a thinning coming. And frankly, it will be good for the industry to have that happen.

What I hope from all this is that companies like Redfin will help the industry move in a more consumer-friendly direction, and that it will force the industry to embrace change, rather than resist it. But will Redfin be the one to outlast the field? I don't think so. They just don't seem to have a business model that will take them to profitability, and they don't have the kind of universal appeal that will allow them to work with the population at large. They are and will always be a niche player. But we do NEED what they are bringing, even if we don't always like it.

Okay, moving on!

There's been ongoing talk of converting the Smith Tower office building in Downtown Seattle into condominiums. Looks like we are a step or two closer to having that happen. The developer is down to the last city approval before they can move forward with the project. Seems like that would be a pretty cool building to live in, if they can upgrade the systems to modern standards. In particular, a faster elevator would be good! And it's a great way to preserve an important piece of Seattle history.

Last item. 3Oceansrealestate blog ran a great feature this morning on how to know when it is the right time to buy a home. Regardless of what the market may or may not be doing, here are the factors buyers should be thinking about:

• You found the home you really want and you can see yourself living
  there.
• It’s affordable.
• You can get a reasonable loan.
• It will serve you and your family for years to come.
• You’re not looking for perfection.
• No home is perfect.
• You’ve given up trying to beat the market.
• You’re comfortable with your compromises, whether it’s location, size,
  price, features, or condition.
• You’re confident the home you’ve chosen is desirable enough that you will be
  able to sell it in any market.

While it makes sense for investors to try to time the market, with home-buyers, it makes less sense since you are talking about a longer holding period, and also, there are other reasons--tax relief, pride of ownership, stability, etc.-- to buy besides the investment possibilities.

Okay, that's it for today. I. Am. Outta here!

Northsound Weekend Calendar

There are lots of fun things to do in the Mukilteo and Everett area this weekend. With a slight cooling in the weather, it's a great time to get outside!

Friday, July 13th

Wine Tasting - Wicked Cellars
Everett's Wicked Cellars is hosting a wine tasting of eclectic wines from around the world. 4 -6 pm, 2616 Colby Avenue, Everett. Call (425) 258-3117 for more information.

Everett Cinema Under the Stars
Take advantage of a balmy evening and see "Over the Hedge" at Everett's Cinema Under the Stars, an annual, summer-long festival featuring movies shown at Thornton A. Sullivan Park at Silver Lake."Over the Hedge," a family-friendly animated film, will begin at 7 p.m. tonight at the park, at 11405 Silver Lake Road in Everett.

For more information, call 425-257-8322.

Saturday, July 14th

Mukilteo Garden and Quilt Tour
The Mukilteo Garden & Quilt Tour promises to be an outstanding event for local gardeners and quilt lovers. The tour runs from 10 a.m. to 5 p.m., rain or shine

Jetty Island Sunset Harbor Cruise
Be dazzled by the splendor of the sunset over Port Gardner Bay. Enjoy the sights and discussions with a Jetty interpretive naturalist. This popular cruise happens only four times in conjunction with late-night campfires, and it always fills up. Call the Jetty Kiosk for reservations at 425-257-8304.

Sunday, July 15th

Sand Castle Building Contest
Test your sculpting skills against some of the region's most creative amateur builders in this increasingly competitive contest. Or just come to have fun! Bring digging tools, buckets and your imagination. Prizes awarded.All ages welcome for single or group entries.

All Weekend

Jetty Island Days
Jetty Island Days are still in progress. Ferry runs on the half hour between Everett 10th Street Marina and Jetty Island dock. Take the ferry or rent a kayak to get to the island (or, hitch a ride with a friendly boater).

For more ideas, see this article from the Everett Herald, Top Ways to Spend the Day.

Northsound News Bits

Here are a few of the stories that are of interest in North King/South Snohomish counties today.

1. The Weather! The temperature yesterday was in the upper 90s, prompting many north end residents to suddenly become sick and have to leave work. Most parts of the country see temperatures in the 90s pretty consistently during the summer, but here in the Northwest its not that common. In fact, it's so uncommon that it tends to precipitate a lot of sudden illnesses. Illnesses that can only be cured by going to the beach, or taking out the boat.

2. Kenmore Redevelopment: According to to the Seattle Times, the city of Kenmore has signed an agreement with Kenmore Partners LLC to redevelop a large, city-owned parcel of downtown into a new city center with pedestrian-friendly shopping, in accordance with Kenmore's downtown master plan. Kenmore Village by the Lake will include housing, retail, and a central gathering space. The 9.6-acre site, at 68th Avenue Northeast and Northeast 181st Street, is now home to a temporary City Hall, a park-and-ride lot and a shopping center that dates to the 1960s and is currently home to Ostrom's Drug. The public comment period will begin in the fall.

Kenmore is one of the areas where I work, and I think this is great news given that one of the things that is less desirable about Kenmore is lack of this kind of infrastructure. It's actually a neighborhood that has a lot to offer in terms of its location and the kinds of homes that are available, but home values have been somewhat lower here than other nearby communities because of the lack of a central core. The completion of this project should increase home values in the area.

3. Arlington Fly-In is In Progress: The 39th Annual Arlington Fly-In began yesterday at the Arlington Airport and runs through Sunday. The Fly-In is one of the leading air shows in the country for experimental and "sport" aviation.

Snohomish County's Best Architecture

Okay, so you're thinking "what architecture? Snohomish County has architecture?"

Yes, we are out here in the 'burbs but we do have some examples of good architecture. Architecture that fits in with and enhances its environment. Some of the great architecture is residential, and some of it is public. Today I will focus on public buildings.

Several of the best works of architecture in Snohomish County are new. They are in downtown Everett, and symbolize the revitalization of Everett's downtown.

Here is a short list:

Snohomish County Jail

Snohomish County probably has the best looking jail in the country. It won an Honor Award for Washington Architecture from the Seattle chapter of AIA in 2005, which stated,

"the unusual urban placement and innovative form of a corrective
facility introduce a new way of conceiving the process of rehabilitation as a
civic function. Having this building in the middle of the city helps us all to
overcome our reservations about incarceration, transcending connotations of the
jail as a place removed from society and hiding transgressors. The designers and
the client have challenged conventions here, and we commend them for it."

Hm. Well, I'm not sure that I've overcome my reservations about incarceration, but I will say it's a very nice looking jail.

University of Washington-Bothell/Cascadia College

This also received an award from the Seattle Chapter of AIA, back in 2003. What they found commendable about the project was:

Extended eaves shade and shelter the pedestrian walkways while the lively
structural rhythms make an allegorical reference to trees

Everett Station

Reminiscent with it's rounded roofline of a European train station, the Everett Station was designed both as a transportation hub and also a gathering place. The Amtrak Cascade and Empire Builder lines stop here, as well as Sound Transit's daily Seattle commuter train and multiple bus lines. It's also home to the University Consortium, classroom space that is shared by Everett Community College, the University of Washington, Western Washington University and Washington State University. Don't miss the art gallery space inside.

Everett Events Center

With "sail" structures on the roof that give the building height, as well as reminding us of Everett's standing as home to a Navy homeport and one of the largest marinas on the West Coast, the Events Center pays tribute to and enhances its surroundings in Everett's downtown. As host to the Everett Silvertips, minor league basketball, arena football, and a variety of concerts and events, it is playing an important role in the revitalization of downtown.

Cool tools for finding property information

Here in Snohomish County, we are fortunate enough to be able to find a whole lot of real estate information online, for free, through the Snohomish County website. Snohomish County actually has won prizes for their website because of its extensive collection of online public records, and the tools are invaluable for anyone who's interested in buying or selling real estate in the county. You don't have to be a professional to use the site, either. It's all public information and free.

You can look up property information in a variety of different ways. For instance, if you drive by a parcel and are wondering who owns it and what they paid, you can search for it using satellite mapping of the county. If you know the street it's on but not the street address, you can use the map to find it. The property lines are overlaid the display in either the map or satellite imaging mode. So if you know the property is 3 parcels south of a particular intersection, you can look for it that way. Or, if you know the street number you can enter that into the search mode.

Once you find the property, you can click on it and all the tax information will come up, including the owner, date of sale, what they paid for the property, the assessed value, etc. This is valuable if you want to make an offer to the person who owns the property. Just write them a letter and send it to the address on the records. A lot of times, you can pick up a property this way for less than you might find one on the MLS. At any rate, if it's a particular type of property you are looking for that is hard to find, it opens up the possibilities beyond just what's on the MLS.

Another type of information that Snohomish County makes available is notices of foreclosure sales. For investor buyers, this is a great tool for identifying distressed properties for rehabs or flips. I use it all the time and love it. I check the notices, move over to the mapping and assessor's information to check further data on the property, pull up a radius search in the MLS to determine the loan-to-value outstanding on the homes, and then compile all of this information into a report that I email to my investor clients once a week.

Anyway, these are just a few of the tools that are out there, public and free, that anyone can use to find out property information. I'm sure other counties offer similar information though I think Snohomish County's site is one of the most robust and comprehensive. Anyway, if you have any questions about how to use these sites, feel free to contact me at sandy dot kaduce at gmail dot com for a tutorial.

Snohomish County Online Property Information (SCOPI) - this page takes you to the property mapping. Once you find a property using the map, you can click on it for a link to the county Assessor's online tax records.

Snohomish County Online Public Records - This is where you can go to find out about foreclosure notices and other types of public filings. Also, marriage records are available here if you are doing any genealogy projects, although I am not sure how far those go back. Also, if you ARE interested in doing genealogy and your search leads you to Snohomish County, you should know that a lot of historical records prior to 1910 are missing due to a fire at the original county courthouse. Little-known historical trivia!

Foreclosures, Pre-Foreclosures and Short Sales

I have had an interesting week, working with a investor buyer who is trying to acquire a property that is in the foreclosure process. We weren't able to get the seller to bite on my buyer's bid, but nevertheless, it's been a very interesting few days.

When I very first got into real estate, I met a woman who worked for one of the big title companies who said to me something that at the time I thought was just a terrible thing to say, but now I realize was quite prescient. She said that I should be saving my money so as to be able to invest in the wave of foreclosures that she predicted was coming. Not being the kind of person who WANTS to profit from others' misfortunes I thought this was pretty heartless but in retrospect, I think she was right on the money.

Unfortunately, the last 4 or 5 years have seen lenders really lowering their standards as far as who they will lend money to. In one sense, it's good because it has allowed a lot of people to qualify to own their own homes who years ago would have been turned away. But it also means that a lot of people are in homes they can't afford, with 3 and 5 year ARM loans that are approaching the end of their fixed period. And, a lot of loans are what are called "no docs" loans, which means that people can claim a means of payment that may or may not exist, just to get into the house of their dreams. There are also negative amortization loans, which, rather than paying down interest and principal, actually ADD interest to the outstanding principal against the home. So, your interest rate is 2% as far as what you pay for now, but the extra interest (4% or more) is added to the principal, and counts against any equity in your home. So, when you sell it you end up owing money!

These loans suck. They prey on people who don't have a lot of income, have poor credit, and are not very financially savvy. Not surprisingly, the chickens are starting to come home to roost.

Back to my investor client. He was looking for a property that met a very specific, difficult to find set of criteria, and it so happened that I found a house that was a perfect fit. So we went out to take a look at it. Something about the house (perhaps it was the dirty diaper that greeted us at the bottom of the basement stairs, or the dead pet rabbit in the backyard? Don't believe anyone who tells you that real estate is a glamorous profession!!) made us feel that something about the place wasn't right. When you've been in enough houses, you start to get a feel for when a divorce, a death or financial problems are part of the picture. Anyway, we did some research and sure enough the house was subject to a pending Notice of Trustee's Sale. In other words, it was in foreclosure.

A search of the county records will usually tell you if a Notice of Sheriff's Sale, or a Notice of Trustee's Sale has been recorded against a property. Typically, if you haven't made a payment for 6 months, and you haven't made any arrangements with your lender to catch up on your payments, your lender will begin foreclosure proceedings. The first step is one of the two above Notices. I would explain the difference but that would get us into a discussion of different ways to hold title and it would probably be boring.

Anyway, these Notices are intended to inform the public that the house will be sold at auction unless the "arrearage" is "cured" or cleared up before a certain date. Here in Washington, that certain date is 11 days before the auction. Any money from the auction will go to pay off the creditors with a claim on the house. If the situation is bad enough, there won't be enough money to pay them all, and some of them will remain outstanding against the house, and the new owner can end up taking them on. This is a risk you take when you buy a house at a foreclosure sale. You also don't get to inspect the property.

A seller can stop the sale from happening if he is able to make arrangements with the lender, or if he is able to sell the house for enough money to pay off all outstanding debts recorded against the house before the cure date. If he gets an offer to purchase the house but it isn't enough to pay off all the debts, then he has to get his creditors to agree to a payoff that is less than they are owed. This is called a short sale.

If none of these things occur, the house will go to auction. The lender doesn't really want this to happen because the price they get at auction is often less than they are owed, plus, they aren't in the real estate business. They are in the lending business, which means what they really want is just to be paid back. But, if this is the only way they can get what they are owed they will do it.

From an investment perspective, buying a property at auction or on a short sale can be a good way to pick up a house for less than the market price. However, there are risks involved. For instance, you can get stuck with any outstanding liens against the house, or there can be problems with the house that are expensive to fix, such as needing a new roof. But if the price is right, a lot of investors are willing to take this risk in order to reap the profits on a flip. A lot of the time it works out pretty well.

Unfortunately, this particular house was also subject to more liens and judgements than the house itself was worth, and it was still the seller's right to accept or reject an offer to purchase the house. So, in order to obtain clear title, we needed to work with them as well as their lender to get them to accept our offer. The only way the sellers could pay off all their creditors and also pay closing costs would be if a buyer paid more than $50K over the fair market value of the house. My buyer wasn't going to do that.

So, we came in with a pretty low offer that was enough to pay off the first mortgage but not the home equity line, and we offered to pay closing costs. If we'd have gotten the sellers to agree it would have just been the beginning of the process. Sometimes it can take months to get a lender to agree to a short payoff. Doing so can be to their benefit--actually foreclosing on a property costs a lender quite a bit of money in terms of legal fees and so forth, so sometimes it makes more sense to cut their losses before it gets that far.

It can also be to a seller's advantage, because it reduces the damage to their credit rating of having a foreclosure recorded.

And it is obviously to a buyer's advantage, because they don't have to overpay for a property or take on the seller's debts.

But it's a complicated process and a lot can go wrong. Unfortunately, we didn't get out of the gate with this one. The seller didn't go for it--maybe they were not desperate enough yet! But it was a real eye-opener, and gave me something to talk about in ye olde blog. These sellers were a perfect example of WHY we will probably see a lot more of this kind of transaction in the years ahead. They had no way to make a payment (no verifiable income!) yet, they received a loan for a $400K house, then a 2nd home equity loan just 7 months later. They had a no down payment, negative amortization loan, and this wasn't even the first time they'd been in foreclosure!

Seattle Mayor Pulls Support From Monorail Project

Transportation issues aren't really my forte, but there is something about the whole monorail project that has never made sense to me. I don't have an issue with the cost, because it seems like any large-scale transportation project of this nature, whether it's monorail or light rail or roadway improvements or whatever, is going to cost a lot of money and take a long time to pay off. The problem I have had with it is that the proposed monorail project would not really do very much to alleviate what I perceive to be the major traffic problem facing the Seattle metropolitan area.

Combine that with the fact that we have a light rail system also going in. Now to me, as a person living in the 'burbs, it makes more sense to have one mode of transport capable of alleviating our traffic problem not just in the city, but out in the 'burbs as well. And, as a person who has at one time or another done just about every commute you can think of (Eastside to Seattle, Queen Anne and Capitol hill into the city, Capitol Hill to Eastside, Bothell to Kirkland, Fremont to Kirkland, Mukilteo to Kirkland and even Whidbey Island to Seattle!) I don't think the in-city commute is the most pressing transportation problem. The more pressing problem is the people sitting in stop and go traffic from Seattle or Bellevue to points as far north as Marysville and Arlington, as far east as North Bend, and as far south as Pierce County.

People who do those commutes don't do them just because they like their cars, they do them because decent affordable housing is hard to find in Seattle. A family looking for a 3 bedroom house with a yard and in a good school district that only has $300K to spend is going to have a hard time finding that in the city. So they feel they are forced to make the longer commutes. Snohomish county is now one of the 5 fastest growing counties in the nation and Pierce is right up there as well. So you end up with more and more people making these long treks every day. Bus service out to these areas exists but it can literally take hours both ways, only runs at limited times, and just isn't a very viable option for most people.

So, we have these huge traffic jams on I-5 and I-405. It's even a problem for businesses like Boeing that have to use the roadways to move products around. So, it isn't just a quality of life issue for the people who've "chosen" to live in these areas, it's a jobs issue as well.

So just to throw my hat into the ring on this, I'm in favor of the light rail system, and would rather see us spend 11 billion to make that a viable option (for instance, more service on the north-south lines so that it actually becomes convenient to use, and getting the east-west lines built), than continue putting that money into a transportation system that only benefits a small number of neighborhoods.