Port Angeles water view property on the Olympic Peninsula is abundant, but not necessarily easy to find.  Most who own beautiful water view property do not want to sell.  The turnover is low.  This is true of Sequim water view property, too.  I stood on the beach of a gorgeous property yesterday with an incredible water view.  The sounds of the waves rhythmically crashed onto the beach as I inhaled that familiar smell of the sea, and my eyes completed the experience as I looked down the beach at the old sun-bleached logs that now lay in a twisted and apparent chaotic pile.  After a therapeutic pause, I realized this isn’t chaos, but nature’s ultimate order of harsh beauty.

There is definitely something about the sounds and smells (and the sight) of the ocean that is soothing to the soul.  As I stood on the beach of this Port Angeles property and talked with the owner, I thought about how many people from the Seattle metro area and California, Nevada, and Arizona would kill to own a water front property like this.  This particular property still has the original 1931 house, which was built at a time when the area was considered way out in the country.  In 1957 it was purchased by a gentlemen who also purchased the adjacent lot.  He later sold it at his cost to his brother who finished raising his children there.  Imagine growing up as a child on a beach front property, building forts on the shore with sticks and logs, and being able to surf and fish right from your front yard.  Father and son added some bedrooms in the 1960s.  The concrete sidewalk still bears the hand print of the son (now an adult heir to this property).  This property is full of family memories.

This is the kind of property that retirees would love to call home, not so much the old house, but the property and location itself where a new retirement home could be built.  This is the kind of property that dreams are made of.  The owner asked if I would consider listing and marketing this property.  Of course, my answer is that I would love to, but my reasoning goes deeper than earning a commission.  To handle this property would mean passing on generations of fond memories to a new family who would begin to build their memories on one of the most stunning beach front locations in the world.  This would be a rewarding assignment.

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Foreclosures have hit tens of thousands of Americans, and one can imagine the financial stress and devastation that causes a family.  The foreclosure event and its aftershocks can implode a family, resulting in divorce and separating children from parents.  As if a foreclosure isn’t bad enough, there is another threat that looms after the foreclosure.  Homeowner Associations around the country are hiring attorneys and collection agencies to threaten the foreclosed homeowners after the foreclosures.  Here is a quote from an attorney’s letter to an elderly woman who lost her home to foreclosure and has suffered from cancer and poverty:

We are a collection firm for Sabre Springs Neighborhood Homeowners Association.  Your maintenance assessment debt has been referred to us for collection.  We understand your property was foreclosed on [date], however, you are personally responsible for all association assessments up to the date of the Trustee’s Deed Upon Sale is recorded [a good writer the attorney is not].  As such, the amount due includes our charge for reviewing the documents, processing the paperwork, skip tracing costs and sending you this letter.  . . .

If we do not receive payment or a written response disputing the validity of this obligation within thirty (30) days of the date of this letter, we will assume that you agree the amount set forth above is correct.  In addition, it will also be assumed that you do not want a payment plan and that you simply are not going to pay, therefore, we will begin legal action on the thirty-first day following this letter.

This is the kind of offensive letter that has endeared attorneys to so many people.  The attorney who wrote this letter is not a nice person, regardless of what he would say is just doing his job and enforcing a contractual or legal obligation.

The front page news here is not that attorneys can be such unpleasant human beings–it is that homeowners who get foreclosed upon may also be responsible for homeowners association assessments.  That’s not a surprise if you think about it.  What is a surprise is that the homeowners associations would make a decision to go after foreclosure victims who are themselves struggling to survive.  Ninety five percent of these debts are probably uncollectable anyway.  My suggestion for the board of directors of homeowner associations is that such debts should be written off, unless the homeowner is wealthy or is otherwise very capable of paying the debt without personally being forced into poverty.

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Water views in Sequim and Port Angeles are one of the great attractions for retirees, and we probably have more homes and land with water views than almost anywhere.  Of course, being on a peninsula does help our cause.  Because a water view is so important to most homeowners when they purchase their home or their lot, you will often find a view easement in the CC&Rs (Covenants, Conditions, and Restrictions).  There are many kinds of easements.  There are driveway easements, well maintenance easements, water line easements, trail easements, utility easements, septic easements, and view easements.

A view easement is intended to protect a homeowner’s view, whether that view is of the Strait of Juan de Fuca, the Olympic Mountains, or a valley of fields.  A water view may be absolutely beautiful from a vacant lot or a home, but are there trees and shrubs that will grow and hinder that view in the years to come?  It’s no big deal if those trees or shrubs are on your property, since you can just trim them anytime you want.  The challenge comes when those trees or shrubs are on the neighbor’s property.

If the trees grow into your water view four years after you move into your new home, and you ask your neighbor to cut or trim so your view will not be hindered, will your neighbor quickly respond with a cheerful, “Yes.  I’d be glad to.”  Let me help you out.  In 20 years of law practice I never heard of that happening.  When it comes to real estate, everyone tends to become very protective.  In the vast majority of cases, this kind of situation ends up in an not-so-polite discourse between neighbors who were otherwise quite friendly with each other.  Lawyers are soon sending hate letters, and the two neighbors might  as well set up automatic payment withdrawals from their checking accounts directly to their attorneys’ accounts.

The answer to avoiding this nightmare scenario is to have a written view easement that protects your water view, or your mountain or valley view.  A written view easement can be a provision in the CC&Rs, or as is the case so often, there will be a separate document entitled “View Easement,” and it will be recorded.  The View Easement will define exactly which property is burdened with the easement and which property is the benefited property.  The language should clearly spell out what must be done and by whom, and who will bear the expense.

If you have that written view easement, when it comes time to ask your neighbor politely to trim the trees, you can point out that this is a legal obligation in the covenants that run with the land.  If the hair on the back of his neck goes up and he refuses, you can sue him to enforce the view easement, and most well drafted View Easements have a prevailing attorney’s fee clause.

A water view easement is especially valuable in Sequim and Port Angeles, and your view is worth a lot of money.  Be sure you protect it, but ask your Realtor before you make an offer if your view easement is protected by a written recorded instrument.  (There is such a thing as an implied view easement, but we’ll save that for another time.)

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Sequim is home sweet home.  There’s nothing like traveling to another city in the country to remind me that Sequim is a great place to live.  I visited my son, Bristol, who lives in Las Vegas.  When he was young I was stationed at Nellis AFB as a Captain and JAG.  Nellis is in north Vegas.  The last time I was there was 1994.  As you might expect, there have been a few changes, like another half million homes.  Neighborhoods have changed.  Some have become gang and drug infested.  And of course there are entirely new developments–lot’s of them.

Chuck Marunde with Son Bristol at Red Rock Canyon in Nevada

Sequim doesn’t have gangs or major drug problems.  Sequim doesn’t have the traffic nightmares.  In Vegas, like Phoenix and Los Angeles, if you want to drive anywhere, it’s at least 45 minutes one way.  In Sequim, make that five minutes to any business or any friend’s home.  Give or take a few minutes.  Sequim has a few annoying billboards, but not like Vegas.  Vegas has got to be the billboard capital of the west, and guess what they are advertising in your face?  Let’s just say they aren’t pushing healthy lifestyles and whole wheat goodness.

Sequim is green.  Vegas is not.  Sequim is a low crime city for sure.  In Vegas you need a security system, and you really ought to live inside a gated community.  Vegas has had a serious real estate crash.  Homes are down 30% to 70%.  Sequim prices are down, of course, but more like 10%, give or take.  Vegas is flooded with foreclosures.  Sequim is not.

I will admit that the sun shines more in Vegas than in Sequim, even Rain Shadow Sequim.  And I’ll admit that we don’t have those incredible buffet lunches and dinners the Casinos sponsor.  They are good.

Overall, I vote Sequim the winner–the best place to live, the best place to raise a family, and the best place to retire.  I enjoy visiting my son in Vegas and jogging in the desert, but I love living in Sequim.

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Buyers are using the Internet to search for their next home, and this technology is the greatest advancement for home buyers in decades, at least since the invention of the MLS itself.  Online MLS search tools have made finding a home or land so much easier and more efficient, it’s really amazing.  While buyers can browse hundreds of homes for sale with very specific parameters, there is still something the Internet won’t do for you.

The Internet won’t give you the 3D real life experience with the ability to see everything in person, experience the visual reality (as opposed to virtual reality), experience the smells and all that your senses tell you about a neighborhood and a house.   Looking at a data sheet and some photos and maybe even a virtual tour is all good.  It’s all incredible, and so much more than buyers had even a few years ago, but until you put boots on the ground, you won’t be able to get the full experience of any home or lot.

This becomes glaringly evident when you look at homes for sale in different cities and states.  The real estate markets are different around the country.  For example, if you live in an area like Phoenix or Mesa or Las Vegas, you can find some absolutely gorgeous foreclosure homes in the MLS, and some great prices that may be as much as 30% or more below their normal FMVs.  In fact, you can find not just a few homes like this, but hundreds.  There are foreclosures that are beautiful and listed at incredible prices, the kind of homes that buyers want and could say, “I could make this my home forever.”

But in an area such as Sequim, Washington (and many cities and towns around the country), you cannot find such nice homes readily available in the MLS at great prices.  In fact, in some of these areas, it is almost impossible to find a foreclosure that is nice enough to live in, doesn’t need major work, and is priced very low.

Some of these differences can be interpreted by an online Internet search, but unless and until you actually put boots on the ground, you won’t really know precisely what these homes look like.  Use the Internet to filter through available homes, and then plan your trip to view the best prospects.  But don’t be surprised if everything looks different on the ground.  It always does.

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One of the challenges of living in one part of the country for many years and then shopping for a home in a new area where you intend to retire is that markets tend to be so different around the country.  I’m in Las Vegas as I write this visiting my son, and it’s a great opportunity to look at houses.   How different the Sequim and Port Angeles real estate market is from the Las Vegas market.

Las Vegas has a much bigger market and inventory, and there is a large inventory of foreclosures, too, that dwarfs the Sequim market.  The architecture is dramatically different, and neighborhoods are different.  And the state of the real estate market has driven the prices of homes in Vegas way down.  A home can be purchased in Vegas for $150,000, and a very small home can be purchased for around $100,000.  A beautiful custom home with 4,000 square feet, two levels, four bedrooms, and bathrooms in each bedroom can be purchased for around $500,000.  This same home would have been closer to $800,000 a few years ago.

The Sequim market has been much more stable, and nice homes are not cheap.  You can find a beautiful home in the $275,000 to $450,000 price range.  Incredibly beautiful.   Lots are priced very low at this time, too.

It seems to me that when coming to Sequim or Port Angeles to look at homes, you have to shift your thinking from the style of homes and neighborhoods and prices where you live now to the local market.  Our Sequim market is unique and most likely quite different than the market where you live now.  As I jog through Vegas neighborhoods this weekend, I can see how dramatically different the market is here.

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Is the Sequim Sunland Golf Course going bankrupt?  This is the question on the minds of 844 Sunland residents, 119 resident golfers, other Sequim residents who are watching this story unfold, and potential buyers from outside the area.

Sunland is one of Sequim’s early real estate developments and the first to have a golf course within the subdivision.  In the 1970s the developer sold land to 100 resident golfers who started the Sunland Golf Course Club (“SLGCC” or “Club”).  The Club is a private entity, owned by its members, and it owns the real estate and the clubhouse in Sunland.  The homeowners in Sunland have a Homeowners’ Association (“SLOA”), which is also its own entity with no affiliation or financial connection with the Club.  The two are now at odds, and the issue has created open animosity among some Sunland residents.

The cause of this dispute?  The Club is sliding toward bankruptcy, and it is asking the non-golfers in Sunland to save it.  Club membership has been declining, as is the case with golf courses around the country, but the cost of operation and maintenance has not declined.  There are three logical resolutions to this dilemma:  1. all homeowners chip in, 2. Club members ante up and save their Club, or 3. The Club files bankruptcy and liquidates.

The months long campaign by the Club would require all homeowners to contribute.  What is the most persuasive argument that all homeowners should chip in to help save the Club?  The primary argument is that property values will be negatively impacted, and some have suggested that property values could decline by as much as 30% in Sunland if the Club goes bankrupt.  The Club has suggested that the fairways could become fields of weeds, or that the land could be sold and a developer could come in and put up tract homes.

Many homeowners are not convinced and are politely saying, “No.”  Unfortunately, no is not working.  The campaign to force all Sunland homeowners to help pay for the golf course has intensified.  The battle for the mind of homeowners has turned into an all out war.  Facts, assumptions, and perceptions are getting entangled.  Rumors are flying about what would or could or might happen.  The elderly on limited pensions are feeling pressured to participate even though some widows have expressed their financial inability.

Homeowners are being told their homes will lose value if the Club goes under.  Will Sunland homes be worth less if the Club goes bankrupt and closes?  Will homeowners suffer a loss if they choose to sell their homes without a golf course in Sunland?

Stated like this, these questions can lead a person to any number of tangential arguments, depending upon biases, assumptions, and one’s personal stake in the outcome.  Let me state up front that this author has no stake in the outcome.  I am a Realtor and retired real estate attorney, but I have no office in Sunland, no current listings in Sunland, do not own a home in Sunland, am not a member of the Club, and I am not a noteholder to whom the Club owes an unsecured debt.

It has been said that the answers you get are only as good as the questions you ask.  I believe a better starting place for a question about the impact a bankruptcy (or no golf course) would have on Sunland homes would be questions like this:

Do homes in Sunland now command a premium that can be attributed to the existence of a golf course in Sunland?  This is a question that can be answered with a careful analysis of similar homes that have sold inside and outside of Sunland.  The homes must truly be comps with similar qualities and features and with similar lots and generally similar neighborhoods.  This kind of analysis will take some experience and careful thought, because it would be easy to distort the data with a few homes that are not true comps.  It would also require some differentiating, because there may be some homes in Sunland that would be effected or effected more than the majority of Sunland homes because of their unique location.  Lastly, the data in this analysis must include homes sold from the Olympic Listing Service (not the Northwest MLS which does not include all local listings), and it should include data over a reasonably long period of time, such as five to seven years.  This would cover our peak years of sales in the area as well as the current recession.

This kind of analysis is important.  This is not a time to shoot from the hip on home values or the impact the Club closure may have on home values.  Even professional Realtors can have substantially different opinions if asked to shoot from the hip. Impressions and assumptions have no place in this analysis.  Too much is at stake for the Club and for the homeowners.  Accurate facts are vital to intelligent discussion and freedom of choice in what may be the most important decision Sunland homeowners will ever make.

If the answer to that question is, “No, the current market has not historically brought a statistically significant premium to the value of homes in Sunland simply because of the golf course,” then Sunland homeowners have nothing to fear from the closure of the golf course or the Club, and they should not be pressured to contribute financially.

If, however, the answer to the question is, “Yes, the current market has historically brought a premium to Sunland homes because the community has a golf course,” then homeowners might be motivated to participate, but not without more.  Homeowners are not going to blindly write checks.   The Club has other options, such as Club members increasing their dues.  Homeowners have posted a review of the facts and arguments on the Internet at Sunland-facts.info.  This Sunland blog includes links to important letters and links to the Club’s position.

As a Realtor I listed one home and sold two homes in Sunland last fall in October of 2009.  My buyers purchased a beautiful three bedroom, two bath home on a lot that is well landscaped.  Like all of the other clients I showed homes to in Sunland in 2009, these clients are not golfers.  As we shopped for homes that suited their parameters, we looked at homes inside and outside of Sunland.  The home my clients did purchase was purchased on its own merits without regard to the golf course, and the comps indicated no premium value in the listing price at all.  My clients would not have paid a premium to be in Sunland because there is a golf course.  They found the perfect home on the perfect lot at a great competitive price, and they bought it.  Their feelings were that Sunland is a great little community, but the golf course was not a factor.

One might argue it was an indirect factor, since there are green fields of grass that contribute to the beauty of the community, and while that may be true, it is the green grass or the fields that are attractive, not golfers with clubs or golfers riding on carts.  This means that it is not the Club itself that ads value, but the open spaces.  Even this is debatable.  But my experience is a microcosm, and surely another Realtor could be found to say that they sold to some clients precisely because there was a golf course in Sunland.  But this still begs the question, “Do homes in Sunland command a premium because of the golf course?”  This is why a more authoritative answer to the question involves a thorough analysis of homes sold inside and outside of Sunland over the past five to seven years.

There is one more step in looking at values.  Even if one could show that there is not a premium attached to home values in Sunland because there is a golf course, or that such a premium is negligible, we then must take the next step and ask how this issue of closing the Club will affect perceptions of values on the part of buyers.  The cliche is, “Perception is reality,” and there may be some truth to that statement even if there is not to the underlying claims.  If buyers are hearing that there is animosity within the community, that there are arguments about the effect the bankruptcy of the Club will have on home values, and that there is uncertainty about whether homeowners are going to be required to pay an additional $300 per year, or more, this could turn buyers away from Sunland, or it could motivate a buyer to try to negotiate a lower price.  Perceptions can become reality, but they don’t have to.

The answer to false perceptions is education, promotion and good marketing, honest dialogue, and diligent efforts by homeowners or the SLOA itself.  Alexander Solzhenitsyn once said, “One word of truth will outweigh the whole world.”  From my perspective, Sunland homeowners are some of the greatest people you could ever hope to know, and I would suggest that if Sunland homeowners are fully informed, they will make the right decisions.

One thing that is clear is that there is a massive breakdown of communications.  Several homeowners have worked diligently to gather facts and openly discuss the issues and potential resolutions for everyone.  The homeowners have asked the Club for a plan that would show them how much they want for how long, what will happen in the years ahead, and what the projections are for more financial contributions from homeowners in the years ahead.  The Club has apparently not provided satisfactory answers to the homeowners, and the Club has apparently been unwilling to provide detailed and accurate financial statements of income and expenses and proformas for the next few years.  This comes from my interview of Sunland homeowners.  I also emailed the Club to seek an interview but never received a response.

Persuading the 725 non-golfers in Sunland to contribute $300 per year and possibly more in the future would be no small task.  But this is where the responsibility to communicate openly lies entirely with the Club.  Because the Club is the one asking the homeowners for money, and especially because it is an open-ended request, the Club owes the homeowners a duty of full disclosure, transparency, and that includes opening the books of the Club to homeowners for review (at least complete financial statements).  It would be entirely unreasonable to ask any homeowner to contribute money to a cause that is unclear and managed by others who will not share specifically what they will do with that money and precisely how the homeowner will be effected.  If homeowners feel this way, guess who is responsible for not articulating their position?  Some homeowners feel that they are being asked to subsidize the social and recreational habits of golfers.  I cannot imagine how the Club could overcome that objection.

It was and is the Club’s responsibility to sell their plan to the homeowners, and thus far they have failed.  The animosity among homeowners and the uncertainty hanging in the air is proof of that.  But this is about much more than just number crunching.  It is about respect and fairness.  Selling the Club’s position to homeowners requires diplomacy and gentle persuading.  It requires both the left and right hemispheres of the brain.  Financial statements, proof of the Club’s financial need, and justification for homeowners’ contributions from a financial perspective is all left brain logic.  The other half of persuasion is a matter of speaking to the homeowners ‘right brain, their concerns about the future, connecting with their emotional distress, and treating them with humility and respect.  If the Club cannot do both, any vote to help the Club will fail.

It is unfortunate that an otherwise peaceful community now has hostility brewing.  It is important to note that the hostility is not between homeowners and golfers.  The hostility is between the Club and the homeowners.  It also seems apparent that the mismanagement of this important issue is not the fault of homeowners.  The Club had the lead on this one.  The Club had the responsibility to explain, educate, and persuade homeowners of the need and justify their request.  They have clearly not done that well, and now the tension in the community is high.

For more information about the Sequim Sunland Golf Course, see Sunland-facts.info.

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A number of Sequim and Port Angeles homes have been for sale subject to short sale approval.  This means that the selling price agreed upon by the buyer and seller will require the bank holding the mortgage to agree to accept less than the balance of the mortgage.  The practical problem here and in many parts of the U.S. is that we can’t get these short sales approved through the banks if our lives depended on it.  I’ve written about how impossible it is to get bank cooperation, even when the offer is very reasonable.

The Feds have compiled new guidelines for banks to implement a short sale, which take effect in April of 2010.  This may  be good, although I’ve seen the guidelines, and even though I was a lawyer, I dreaded the idea of having to read this massive document full of legalese and bureaucratic phraseology.  I’m not going to read it.  If you want to, here it is:  Short Sale Guidelines.

I will cut to the chase for those of you who want the 411 without further ado.

Basically, these guidelines, which are voluntary, will allegedly provide a template of procedures for banks to use around the country, so we can get these short sales done in a reasonable period of time with some sort of standard.

Two points of interest to me.  First, the guidelines are to provide standardized forms, procedures, and timelines to allow the borrower to receive pre-approved short sales terms prior to the property listing.  Wow!  That would be a miracle if it actually happens.

Second, the borrowers are to be fully released from future liability for the debt.  Wow!  That would be miracle two if that happens.  According to the guidelines, these are supposed to happen, at least for the banks that agree to voluntarily participate.   Let’s hope they all do.

You can read more about short sales, the process and the challenges at Sequim Short Sales.

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The real estate market is up, no it’s down, wait . . . well, it depends on what day you read the news and which news you’re reading.  Two days ago I wrote this in an article:

The Wall Street Journal reported that, “California’s inventory of unsold, previously owned homes shrank to a five-year low in December, in a sign that the state may be coming out of its worst housing slump in decades.  The supply of unsold single-family homes dropped to 3.8 months from 5.6 months a year ago and 16.6 months in January 2008 . . . In Northern California’s Santa Clara County, where inventory has dropped to 50 days from 243 a year ago  Amanda Garcia said she and her father Luis Garcia finally gave up a nine-month search for a home last month, after they kept losing out on homes priced in the highly competitive sub-$500,000 market.  ‘It’s more like an auction nowadays,’ said Ms. Garcia.”  [California Housing Shows Revival Sign, Wall Street Journal, January 23, 2010]

And this morning in Market Watch’s Economic Report, we have this title, Existing Home Sales Plummet 16.7% in December.  “The 16.7% percentage decline from November to December was the largest on record, dating back to 1968, the National Association of Realtors reported.”  But the same article then states that, “Sales in December were up 15% compared with December 2008.”

Watching statistics as they are reported and interpreted by the news media can be depressing and often misleading.  Retirees who are moving to Sequim and Port Angeles and buying or building their retirement homes are focused largely on what is best for them financially and consistent with their long-term goals.  They are intelligent and discerning, and their decisions are certainly within the context of a larger economic picture (their retirement fund, their savings, expected future income, etc.), but they are governed by their own wisdom about buying in Sequim and Port Angeles and not tossed about by every wind and rumor.  And that is a good thing.

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Clients ask me periodically if they should make certain improvements on their home to make it more sellable.  What I’ve learned from hundreds of buyers who have looked at thousands of homes is that buyers generally do not care if some minor improvements are made.  In other words, it does not impact their decision to buy a home.  Now, if you have a major visual problem, such as a hole in the sheetrock in the hallway or a hole in the living room ceiling, yes it will make a difference to buyers.  A light fixture that is hanging at an angle in the dining room should be fixed.

But if you are considering a major remodel of the bathroom at a cost of $3,500, you will not get that money back from the buyer.  Will it make your home more sellable?  Probably not, unless the bathroom was such an ugly disaster that it would gross a buyer out.  The general rule is that whatever money you put into your home to get it sold is money you will not get back.  If it helps sell the house sooner, then do it, but only if it is cosmetic and doesn’t cost much money.

If your home is not the right home for a buyer from out of state, some improvements, other than minor cosmetic improvements, are not going to get them to sign an offer.  If your home is the right home, the right floor plan, the right location, and within their budget, not spending money on improvements is not going to push them away.

You can see that these same rules apply to the methodology for professional appraisers.  They do not add value to a home for the kinds of improvements I’m talking about.  Want to see exactly what goes into a lender’s appraisal?  Here are the rules on values and appraisals.

For Fannie Mae, Click here

For Freddie Mac, Click here

For FHA, Click here

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