Realtors Help in Flood Relief

I am a Realtor. Not all real estate salespeople belong. But, for those of us who do, each of us ascribes to a written code of ethics, higher than what is required by the state's department of licensing. We also work within our communities to further the interests of real property owners. Of late, our organization has spearheaded continual efforts by the State Legislature to increase the excise tax on the sale of all real estate throughout the state. When I started in 1972, the excise tax was one percent and the medium sale price of homes sold was considerably less than it is today. Since then, the excise tax has grown to well over 1.8% in many communities of the state. Obviously, the medium sale price of a home likely exceeds many hundreds of thousands of dollars.

As I said, not all real estate salespeople are Realtors. I am proud to hold that distinction. This week I am particularly proud to be a Realtor because of our efforts to help flood stricken communities with aid and assistance. I received the following email from Pat Maddock, President of the Tacoma Pierce County Association of Realtors, concerning our continuing efforts to provide relief.

The email states, “Yesterday, the Executive Committee of the Washington REALTORS voted to deliver $50,000 in assistance to the local REALTOR associations in the Washington Flood damaged counties. So, they could help the REALTOR families whose lives have been so severely disrupted by the recent flooding. Sitting in that meeting I was very impressed by the unanimous vote by our state leadership to do the right thing, at the right time. During that meeting it was announced that the Louisiana Association of REALTORS has already been in contact and they are sending a check to help in the relief effort, too. They did not hesitate to do so, remembering that the Washington REALTORS (that's you and me) were the first to send assistance following Hurricane Katrina and that was more than $70,000. Also during that discussion a call came in from the Seattle King County Association President, Dan Kennedy, saying that SKCAR, with their 8,000 members would add $5,000 to this cause. Immediately Karen Schweinfurth, the Snohomish County-Camano Island Association President added $2,500 from her association and this morning, your Board of Directors here at the Tacoma-Pierce County Association of REALTORS voted to match the Snohomish donation. I was equally proud of them but they went a step farther and that's where you and your adult family members come in. In fact, we can't pull this off without YOU!

“As a former FEMA employee, I can attest that following a major flood event there is an endless list of unmet needs. They take many, many forms and they are real and some are dire. Well, having spent hours on the phone with emergency management officials from federal, state and local agencies over the past twenty-four hours I can tell you that in some ways they are desperate...desperate for help. Yes. The cash donations go a long way but they need helping hands, too. They need bodies and they need them now. The media hasn't even scratched the surface in terms of the length and breadth of this most recent Washington disaster and the degree to which it has affected families throughout the area. We can help.”

Yes, through the efforts of all people, wonderful things can be accomplished.

A Holiday Visit!

As a Realtor, one of the most enjoyable things I do is deliver a Holiday Thank You Baskets to all of my clients I’ve had since I reactivated my broker’s license in 2001. I say it’s fun because I usually get invited into their home and we are able to chat about their year and important developments that may have occurred. They also want to know about my year and whether I have any more grandchildren. Most everyone is interested more in life and living; raising their families or enjoying retirement than in the negative news concerning real estate or the economy.

Although I enjoy it immensely, it does require an extraordinary effort to get to everyone and spend time visiting with them. You know, there are only so many days between Thanksgiving and Christmas. But, I can assure you, I certainly enjoy it immensely. What’s more important, most of my clients have come to look forward to my Christmas Basket and my visit.

Who's Your Real Estate Agent?

When listing a home with a real estate agent, how many sellers ask about how many listings does that agent carry? Is your real estate agent an individual or a team? Will you be working with the real estate agent you selected or someone else or maybe even a less qualified assistant? Or, is there anyone who will know everything about my property listing and sale?

As I watch the daily posting of new listings, I’m always intrigued by sellers’ who select agents who carry thirty, forty, fifty, sixty and even more listings at any given time. These agents give every appearance of being great superstars. But, is it reality or simply an illusion?

As for myself and my business model, I am not a team and I don’t have any assistants. I have no one other than myself to rely on for complete and total knowledge or support about any given property listing or sale. As to the number of listings I carry, being committed to personalized and individual service, it’s hard for me to imagine myself with more than 10 to 15 listings at any given time; sometimes, depending on the circumstances, far fewer. For instance, I currently have two high-end properties where I have to be present to open the house for anyone interesting in viewing either property. Of course, such a commitment can sometimes be a waste of time. Yet, for me, they allow me to distinguish myself above and beyond my competitors. It’s my personal commitment to my clients. Besides, who knows more about those properties, me or an assistant or another associate?

Of course, these are decisions every seller has to make for themselves. But I’m unsure whether most sellers have given much thought to the value of personal attention in the processing of their home sale or purchase. With my business model, I believe I provide a great value to my clients. Perhaps it’s something I need to talk about more often.

Don't be fooled ...

Although my intent has always been to provide significant daily updates about the real estate world in Pierce County, Washington, thus far there have been way too many distractions. For this I apologize. However, I’ve had more projects and clients which required my immediate attention. In other words, being busy has been a good thing for me.

As to the real estate world in Pierce County, it seems to be in a conundrum; interest rates are at the lowest point in months and there is a great inventory of well priced new and used homes. Yet many buyers have positioned themselves firmly and squarely on the fence. Content to see if the bubble bursts or the bottom falls.

Sorry folks, I hate to burst your bubble but that fence you’re sitting on will likely fall before anything else will. Plainly and simply put, the real estate market is too important to our overall economy to let it continue to falter. I believe that, since Reagan’s Presidency, where he inherited double digit inflation with excessive interest rates, you could make a great case that our entire economy is being controlled; like hot water coming from a facet. If it gets too hot, someone has been there to cool it down. And when it’s too cold, someone has been there, monitoring it carefully, to help heat it. So it’s always the right temperature. I believe the same will happen with our real estate market.

Now realize, what’s happening here in Pierce County isn’t at all comparable with what is happening in other parts of the country. So don’t get caught up in all the hype. Our economy is still good. Employment is still good. And we have ever reason to remain confident in ourselves and our work product.

But for those of you who are still fence sitters, here’s my sense of a likely and logical scenario. One day, without any warning at all, you’ll awake and find that the whole scope of the real estate market has changed and prices have returned to normal expected levels. While those levels may not be as high as had occurred in the past several years, they will return. And all of those great prices that you were content to watch are no longer available. Interest rates might even be higher.

If you continue to hesitate, you will surely wake up and find you missed an excellent opportunity. All in all, now is a great time to purchase a home or an investment property.

The holidays are a great time to sell a home!

Yes, if your home is already “For Sale” or whether you’re thinking of selling your home, don't be misled. The holidays are an excellent time to step up your marketing effort. Why you ask? Well there are many reasons beginning with –

1. Many sellers will mistakenly keep their homes off the market leaving fewer good properties, a smaller inventory, for buyers to choose among when selecting a home.

2. Where corporate transfers used to coincide with the end of the school year, they now occur at the end of the calendar year. What this means for sellers is the prospect of more qualified and motivated buyers looking for properties to purchase.

3. Homes look fresh during the holidays.

4. And, we’re currently seeing more high-end buyers looking at our listings in the past several weeks than we had seen all year.

So, if you’re on the fence about what to do during the holidays, be sure and get or keep that home on the market. But make sure there’s lots of room around that tree and you decorate to the hilt.

11/26/07 Residential Real Estate Stats

As of this morning, the medium list price of the unsold residential inventory, 7,210 single family homes, in Pierce County was $313,950. The unsold residential inventory includes active listings, listings which have offers pending inspections (STI), listings with contingent offers and pending sales. However, the medium list price of single family homes closed in the past 31 days is $275,000. Interestingly the medium sale price of single family homes closed in the same period is also $275,000.

These statistics are significant in that they indicate that the homes sales occurring reflect more the willingness of sellers to bring their pricing to the market than buyers making low-ball offers. In other words, sellers interesting in selling are reducing their asking price and making their property more appealing. Now this certainly doesn’t mean that buyers aren’t making low-ball offers; it simply means that the impact of such below average offers isn’t being reflected in the data.

I'll be back soon!

With all of the activities of the Thanksgiving week, I've been spending time with my family. It's been very relaxing. Lots of good food. Lots of good conversation. And, lots of sharing. In the meantime, with a new week beginning, you can be assured that I will be back posting again very soon.

The Value of Owning Real Estate

Why is home ownership a good value? Why is the ownership of real estate a good value? For me it’s easy. My grandparents on my mom’s side homesteaded in Montana, grew their farm holdings and eventually sold when they retired. But before they retired, they had also purchased two single family homes in a nearby town. One was a rental and the other was their in-town home. Although my parents only had an apartment when I was born, they soon purchased their own home. As a young kid, the local Realtor lived just across the street. The point here is, as a youngster, home and land ownership was all I knew or had ever been exposed to. Even when my grandparents were contemplating the sale of their farm, I recall arguing with my grandmother that she should lease their farmland. But she prevailed and all of their property was sold. Heck, I was hardly 12 years old. Yet, even then, I understood that there was a value in owning land or homes.

Later on, in fact I hadn’t yet graduated from college, my family took a mortgage on their home and used the money to purchase a six unit apartment building. When I graduated from college, instead of pursuing a career in journalism, I instead earned my real estate license and began selling homes, investments and land. Later that year, I purchased my first home. Two years later my wife and I purchased another home. A year later a triplex and some time later another home and several lots where we had duplexes built. Again, the point here is, I really didn’t need anyone to describe or explain the benefits or value of owning property. It was something I inherited. It was in my DNA.

As a young Realtor, I think I was the youngest in the state in 1972, in observing people and the way they lived, it seemed evident that, “The wealthy invested in things that appreciated in value and the poor seemed to overwhelmingly invest in things that depreciated in value.” That point is further reiterated and emphasized in The Appraisal of Real Estate published by the Appraisal Institute where it states, “Land is also a major source of wealth which, in economic terms, can be measured in money or exchange value.”

Another value is, whether buying or renting, most of us will always have a monthly housing expense. As a renter, you pay monthly rent to your landlord who, in turn, gains all of the benefits and liabilities of owning the property. Typical repairs and updates to the property rely entirely on the landlord. On the other hand, when buying real estate the property owner gains all of the benefits and liabilities. Among the many benefits that exist, if when buying a property there is a mortgage, the mortgage interest plus the real estate taxes can be itemized on ones tax return. Let’s say that, during the course of a given year, the cost of mortgage interest and real estate taxes is $10,000 and a 30% tax bracket is applicable, a tax savings of $3,000 would result. However, if ones tax bracket is only 15%, the savings is only $1,500. If tax brackets ever get to 50%, savings of $5,000 would apply. Please consult with your tax adviser to review how those deductions would impact your personal situation.

Easy access to a variety of home improvement centers to correct, modify or update general maintenance issues has certainly changed what some might have previously considered a liability to another distinctive benefit of owning property. In today’s world, it is common for homeowners to change the interior colors of their rooms multiple times over a short period of time. But there are also so many choices of cabinets, sinks, countertops, floors and most homeowners are eager to take advantage of such products to further personalize their homes. Some of these changes even fall into the category of major household renovation. Unfortunately, as a tenant, you’re stuck with using decorations, wall hangings, throw rugs and furniture as your only means to personalize your space.

This is an important topic because, with so many attempting to liken the value of your home to a volatile security, we need to remind ourselves and find comfort that there is continued value in our homes and investments alike. As we’ve discussed, there are many reasons why real estate ownership is and continued to offer great value. Perhaps you have some you’d also like to add to what I’ve described. I’d love to hear from you. Write me at kthiem@msn.com.

Future postings will continue to explore additional benefits and values of property ownership. In the meantime, I hope you have a wonderful day where you allow yourself the opportunity to achieve great personal success.

This & That By Ken Thiemann

Author’s note: All of the materials written in this blog are original and based on observations, research, industry knowledge or actual interviews conducted by the author. The intent here is not to undermine or criticize other writers or publications but to offer my viewpoint and outlook. Having been involved in real estate in one manner or another for over 36 years makes me uniquely qualified to offer my perspective. If other writers or publications wish to use any of my material, in part of in whole, please acknowledge accordingly.

Regardless of who says or writes what, the fact remains that sellers who need to sell and buyers who need to buy are matching up and closed sales are resulting. However, especially in those market segments, like new construction, where there is an enormous inventory of existing product, buyers can be selective in choosing the best value. But, where value is thought to be ‘in the eyes of the beholder’, the ultimate value of real estate, referred to as market value, is the result of an negotiated agreement between a willing selling and a willing buyer. Of course all parties have to have knowledge of the market and neither party can be motivated by duress. That’s basically the definition of market value.

As to the market itself, the medium price of single family residential homes, excluding condos, in Pierce County was up 1.84% over the same period ending October 31st in 2006. The medium price of condo units for the same period was down 8.24%. But, don’t overlook the bigger picture. On June 30, 2003, the medium price of a single family home in Pierce County was $181,035. That compares with the medium price of $279,950 recorded October 31, 2007, a staggering 54.64% increase.

When I started in real estate in 1972, we told buyers that they would have to hang on to their homes for at least three years in order to break even. It was simply a matter that the average appreciation in the 70’s was something less than 3%-to-5% per year. Of course back then we referred to it as inflation. The point here is, as the accelerated appreciation, maybe inflation, drops to more realistic average levels, the homeowner may have to plan to stay in a home for a longer period than what had become commonplace during the past 5-to-6 years. With this though, the question becomes ‘What’s the value of owning a home’ or, put another way, ‘Is there still value in owning a home?’

Of course, I believe the answer is absolutely yes, of course there’s value in owning a home, in owning real estate. Of course, my grandparents and parents owned real estate so, in my family it was a tradition to own your own home or rental property. For others though, how about we delve into that on another day. Until then, I hope you have a rich and rewarding day.

Value in the Service

Yesterday, as I was desperately trying to get to the office, I realized I had unheard messages on my cell phone. Although I always carry my cell phone, the messages were from calls made the evening before which, for some unknown reason, hadn’t rung through to me. But each call required an immediate response. Not exactly what I had planned for my morning. What I really needed to do was to contact a number of potential sellers and buyers I hoped to be able to assist. Yet I knew those calls were priority things needing to my full and immediate attention.

As a professional Realtor I’m faced with dilemmas like this every day. Without the potential of ongoing new business, my future could be uncertain. Yet, on the other hand, without first taking care of existing business, I run the risk of alienating existing customers. For whatever reason, I’ve always chosen to take care of existing business before contemplating or concerning myself with the development of new buyers or sellers. As a result, I don’t normally carry as many listings or work with as many new buyers as some agents. But my supportive base of satisfied customers continues to grow.

Of course, at a time when so much of the competition is based solely on who can provide the least expensive service, I believe there is a direct benefit or value my customers receive when I am able to allow for flexibility in my work schedule. There’s a value knowing their needs come first.

I suppose I’m suggesting that, when choosing a Realtor to assist you, look for someone like me who is more concerned about servicing existing customers then looking for new customers; someone who can manage flexibility into their daily schedule; and someone you feel confident will make your call their priority.

In this sense, I believe I am that person and the flexibility I offer is a definitive value my customers automatically receive.

FHA Mortgage Limits Increased

FHA insured mortgage limits were increased yesterday on owner occupied two-to-four family dwelling units. Although major news outlets in Seattle reported that single family home mortgage limits had also been increased, Dale Golder, Branch Manager Mortgage Consultant of Windermere Mortgage Services in University Place, indicated that such increases had not yet been made. But, she added that, along with “dropping the FHA approved condo list and a further reduction in the minimum down payment” required to obtain a FHA loan, those changes were anticipated. Golder said, “Congress would ultimately make the final decision.”
According to Golder, “currently the FHA minimum down payment is 3%, but it is anticipated that it will be reduced to 1% to 1½%.” The FHA approved condo list relates to projects which are preapproved by FHA. But, with so many reasonable priced projects being condo conversions which hadn’t had the opportunity to be preapproved by FHA, it would seem that Congress is attempting to make affordable housing easier for the average homeowner to obtain. The same could be said for the reduction in the down payment requirements.
As to changes with two-to-four family residences, maximum mortgage limits were increased to:

King & Pierce County One-Family mortgage limits remained the same at $362,790; Two-Family was increased to $436,000; Three-Family was increased to $529,750; and Four-Family mortgage limites were increased to $611,250.

In Kitsap County One-Family limits remained unchanged at $361,000; Two-Family were increased to $406,600; Three-Family to $494,000, and Four-Family was increased to $570,000.

In Thurston County One-Family remained unchanged at $261,824; Two-Family limts are
$294,897; Three-Family is $358,286; and Four-Family is $413,407.

Golder added that the changes were increased to better reflect medium priced properties in each respective area.

Current Pierce County Real Estate Market Perspective

On this date, throughout Pierce County there are currently 7,735 active, contingent and STI (Subject to Inspection) listings and 704 pending sales. The medium price of that activity is $314,979. In the past 31 days, there have been 691 closed sales recorded in Pierce County with a medium list price and sale price of $279,950. The absence of a discrepancy between the medium list price and sale price is significant in that it suggests that as list prices are being reduced to the market, sales are occurring.

Although these numbers are simply an overview of market activity, they are nonetheless important in helping buyers and sellers to understand and recognize market tendencies and trends. They also point to the importance of using the services of a professional Realtor.

Additional updates to follow.

PierceCounty Real Estate Sales

Happy Thursday afternoon greets to my new blogger friends. The purpose of this blog is to use words to describe the status of Pierce County, Washington residential real estate sales. If anyone should have any questions, please get them to me and I'll respond directly. It is also my intent to use this as a means of answering such questions. Until I officially get started, I hope everyone has a terrific day. -- Ken T