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8 Jul 2016
Bluff stability has not been a major concern in the Sequim to Port Angeles area until recently. In the last few years we have seen large sections of people’s high bluff peel off and fall to the beach 100 to 200 feet below. The area that is most susceptible to bluff stability problems encompasses an area along the bluff to the west of the Sequim-Dungeness Lighthouse spit all the way to Port Angeles. In this article I’ll show you how to identify properties that are at risk, and if you’re looking at buying a home on a high bluff, this will help you with questions about bluff stability. I’ll show you how to do this online, and it’s easier than you might think.
The image above was taken from a Google Satellite view. This is an area just west of Port Angeles on West Bluff Drive, and you can see a massive section of the bluff that recently fell away. The bluff is now approximately 80 feet from the road and about 76 feet from the corner of this home. This bluff is 175 feet high, so as I stood on the edge of the bluff and looked down, it was a devastating example of why bluff stability is a concern for anyone wanting to buy a home on a high bluff in areas where bluff stability is at risk.
If you are considering a high bluff property, here’s how you can do an online analysis of bluff stability, and while this is not definitive by any means, it is helpful to recognize when there may be grave risk. When I talk about grave risk or any significant risk of problems with bluff stability, I’m looking at the obvious. Examples of obvious bluff stability risk would include a major section of bluff that has recently peeled off near a home, or a bluff that is less than 100 feet from a home, and if a bluff is only 50 feet, more or less, from a home, I would consider this grave risk. Remember the context here is high bluff property, which is higher than 50 feet by my definition. A low bluff presents much less risk. Another important factor that determines risk is vegetation along the bluff with deep root systems.
All of this is viewable online now. You open your Google search engine, and type in the property address. Then click on “Maps” and you will get a nice Google map with your property at the center. Now choose the Google map option called “Satellite” view. This will show you exactly what the property and the bluff look like, and you can see how far the bluff is from the house and how much vegetation is on the bluff, if any. Less vegetation or no trees or shrubs means less bluff stability. You can also see how steep the bluff is.
You can measure the distance from the house to the top of the bluff with this Google Satellite view. You right click to show the option “Measure Distance,” and then you place a marker at the house and one at the top of the bluff. Google will measure the distance in feet. This is an incredibly accurate measurement, although I will qualify that by saying that it is possible the bluff has peeled off more since the Google Satellite image was last taken. Although Google Satellite maps do not show you the date the image was taken, you can find out by using Google Earth, discussed below. Google maps and Google Earth use the same image, and when you are in Google Earth, the date is shown at the bottom of the image. The date of the image above is 7-15-2013.
As long as I’m giving you powerful free tools to do a cursory bluff stability analysis, here’s another fantastic tool to tell you how high the bluff is at a particular location. You cannot use Google maps for this, but Google has another tool to measure elevation, and it requires that you download a free tool called Google Earth. Once you have that installed, you type in a property address, and then you use the “path” tool to mark the property in two spots at the bluff and down on the beach, and then you will find the option to measure elevation. If you need help with that, do a Google search on “how to measure elevation” and you’ll get specific instructions.
There you go. Now you know how to do your own quick analysis to examine bluff stability. You can drag your Google Satellite view along the bluff from Port Angeles to Sequim and see how many homes are at risk. It is surprising how many homes are right on the bluff or within 25 to 75 feet.
Read more about local Bluff Stability. Bluff stability on the Olympic Peninsula has become a greater concern in recent years.
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5 Jul 2016
3D Virtual Tours are the latest rage in real estate listings and one of the most powerful marketing techniques available today. Buyers love 3D Virtual Tours, because they can walk through an entire home interactively on their own computer from wherever they live. The tour below is an example of a great 3D Virtual Tour, and you can enlarge the tour full screen. But what about privacy and security for the sellers? Do 3D Virtual Tours expose sellers to thieves?
First, we must acknowledge the effectiveness of marketing a home this way. Compared to the old virtual tours that simply use photos and have the software move around on still photos, 3D Virtual Tours are like a modern luxury car and the old tours are like a Model T. Oddly enough, iRealty Virtual Tours in Sequim and Port Angeles and Port Townsend is the only brokerage giving sellers this powerful marketing tool. Several buyers have bought their homes this year sight unseen based on the 3D Virtual Tours.
Second, we need to ask about privacy and security, especially in this day of identify theft and Internet exposure of private information. I met with a security expert and discussed the 3D Virtual Tours and the issue of security. Anyone who is sensitive to the whole issue of privacy will be concerned.
When I do one of these tours with my incredible nine lens camera, I make sure there is no confidential information on desks or on walls, but having done that, does the tour expose more information than is normally available on the Internet?
A typical MLS listing includes interior and exterior photos, and that includes every room in the house. 3D Virtual Tours take lots of interior photos and piece them together, but they don’t add photographic views that are not already available with still digital photos. Some listing agents like to include a floor plan of a listing in the MLS, because buyers want to know the floor plan and where rooms are located throughout the home, and so 3D Virtual Tours share that information, too.
The county tax assessor already includes a ton of information on every single home in the county, including a floor plan, dimensions, square footage, age of the home, their best estimate of the fair market value, and even photos of the outside of the home. The assessor even reveals the full name and address of the owners, and whether they are in default on their taxes. All of this information has been available for years online to anyone.
My conclusion is that 3D Virtual Tours do not expose any more information that burglars would not already have access to online. Having said that, I would say that while everything in 3D Virtual Tours is already available, there is one thing these tours do allow a person to do online. They can walk through a house to help them get a better feel in a real 3D view. So if someone wanted to case your home, they could use a tour, but they already can see if you have nice furniture and a beautiful home based on the regular photos in the MLS, and the tax assessor already gives them the floor plan.
Whether you feel comfortable or not with 3D Virtual Tours, there is a big upside to using one. Buyers absolutely love them, and they are probably the most powerful marketing tool available today. I listen to what buyers want, and they want to be able to compare homes, which means they want 3D Virtual Tours.
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28 Jun 2016
Bidding wars for homes began in the Bay area in California about two years ago and in the Seattle area about a year ago. Bidding wars hit the Sequim area about six months ago, although with a different flavor than in the metropolitan areas.
Supply and demand in housing determines prices, and when the inventory gets so low that buyers are competing to buy a limited number of homes, prices start to rise until we reach a crescendo of activity resulting in bidding wars.
The inventory is low in Sequim, and there are more buyers than available homes. But I need to qualify the phrase bidding wars here, because there still are homes that have been on the market for a long time and so it is not a seller’s market for all homeowners. And there are homes that are selling, but there is no bidding on those homes. Bidding wars are a reality for a small percentage of Sequim homes.
Bidding wars only happen on what retirees would consider the ideal home in the ideal location on a beautiful lot, and the listing price is at least a very reasonable fair market value. When that home shows up on the market, it can get more than one offer. Bidding wars usually happen when a listing is underpriced and buyers who have been searching for a while know when a nice home is underpriced. They pounce on it. I’ve sold several homes sight unseen for buyers who are out of state and can’t get back to Sequim immediately.
There are not very many of these ideal homes available on the market, and that’s where supply and demand creates a sense of urgency on the part of buyers. I have a couple of recommendations on how to approach this market.
First, you need to set up email alerts for new listings that fit your parameters, or at least watch the MLS daily for new listings. Many real estate MLS sites or syndicated sites do not have accurate data, so you need a Sequim MLS site that is 100% accurate. That site is Sequim-Homes.com or Sequim4Sale.com. Either domain takes you to the same Sequim MLS site.
Second, when you find a new home in the MLS that looks good, you need to have a Sequim Buyer’s agent who will go out immediately and preview the home for you if you are not here and cannot get here immediately. And thirdly, you need a buyer’s agent who knows exactly how to draft an offer in this competitive market and has the experience to advise you if the home is one that could be the subject of this article–bidding wars. You don’t want to pay too much, but you need to pay enough if you are going to beat out other potential buyers.
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24 Jun 2016
Real estate referrals can be a blessing, but did you know a referral can also be a curse? It’s true. Let me “make the point as delicately as I can,” as the Russian Ambassador said in the movie Red October. Everyone has a friend, right? Every accountant, every lawyer, every doctor, and every real estate agent has friends. Friends will freely give real estate referrals, right? But where is the filter protecting you from getting referrals to someone less than qualified? People hand out the name of a friend or an acquaintance they don’t really know professionally to other people all the time. But accepting a referral without your own careful research could turn into a well intentioned curse.
A gentleman hired a real estate agent just because he/she was in his circle. Circle in this context can be any group, association, club, union, political affiliation, gym, company, non-profit, or even a church. It turned out his agent didn’t have the experience to deal with what turned out to be a difficult client, a negotiation that required advanced skills, and complex due diligence issues that had to be addressed diplomatically. The transaction was on the ropes several times. Had it not been for an experienced professional agent on the buying end of the transaction, the transaction would never have closed. The seller simply hired an agent referred to him, and the only filter was that he and the real estate agent were in the same “circle.” He did no other due diligence on his agent.
Now let’s pause for just a second, because there’s a lot of money at stake here–yours. If you only have one filter, one qualification for selecting a real estate agent, and that one filter is he/she belongs to your club or association or gym or church or whatever, that’s no filter at all.
If the only filter is a referral from someone you know who knows a real estate agent, then where is the filter protecting you? Where is the filter for important things like real estate education, real estate negotiating experience, experience in marketing and sales, experience in legal issues, knowledge and experience of due diligence items, experience in handling difficult and numerous real estate issues, honesty and integrity, availability, and other relevant qualifications. Granted, if the person giving you the referral already did all this due diligence to protect you, that would be great, but in 95% of the real estate referrals I’ve seen in several decades, this is not happening. Read the rest of this entry »
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16 Jun 2016
This is the place to get your real estate questions answered, but we have a very unique approach. Earnest Hemingway once wrote, “There is nothing to writing. All you do is sit down at a typewriter and bleed.” I understand what he meant.
I’ve been answering real estate questions for a couple of decades, specifically questions that buyers have been asking about buying homes and land in the Sequim area. I enjoy answering real estate questions, and I answer them very carefully, but a blog must be more than just cold calculated answers, right?
Who would bother reading a blog if it was boring or written poorly, or if it was just boilerplate staid facts? So every day I write an article on this blog, I seek to connect with readers on an emotional level, too. Any author worth his or her salt connects with clients on an emotional level. But that is not easy.
Many years ago this blog received an award for being “Content Rich,” and that’s a good thing, but that’s not enough. So in my striving to make this blog enjoyable for buyers to read, I find I have to pour myself out emotionally. To do that consistently is hard work, and this is why I identify with Hemingway’s statement, “There is nothing to writing. All you do is sit down at a typewriter and bleed.”
The last year I looked at the stats, the 2,000 articles on this blog were read over 3 million times in one calendar year. This blog has a lot of readers around the United States who want their real estate questions answered.
So that’s what I do here. Well, I don’t use a typewriter any more, but to answer your real estate questions I do sit down and type at the keyboard and . . . I bleed.
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15 Jun 2016
The Sequim real estate market is unique, and if you’re thinking about buying a home in the Sequim area, it might help to know more about the Sequim real estate market. Sequim has been well known for decades for it’s Blue Hole or “Rain Shadow” as it is sometimes called, and the nearly perfect climate and extraordinary beauty of the Olympic Mountains and the gorgeous pristine bays along the coast have become known all over the United States through retirement magazines and coffee house conversations.
For almost 10 years the Sequim real estate market suffered the worst real estate recession in the history of the area. But that came to a quiet end this past year. With real estate prices increasing in other major markets around the country, retirees once again were able to sell their homes and buy their retirement home in Sequim.
Home builders did not build homes during the past 10 years, because buyers were not buying land and building homes. There was still a steady stream of retirees moving to Sequim, and so existing homes were selling even if it was slowly and at discounted prices. But that meant the inventory was slowly shrinking, and here’s an interesting but obvious reality–retirees all seemed to want the same kind of property, a three bedroom, two bath 1,800 sq.ft. to 2,400 sq.ft. single level, modern home, with a little privacy. Within this past six months to a year, homes began selling again, and prices have been slowly creeping upward.
Today the Sequim real estate market is healthy, although the challenge for many buyers is finding the home of their dreams, because the inventory has been depleted. This calendar year started strong, but slowed down surprisingly in May. In other words, buyers came in fewer numbers in May. May tends to be a busy month for many people, and children and grandchildren are graduating in May.
But this is likely to change for the balance of the summer. I expect buyers will arrive in increasing numbers during these summer months, and the competition to find the ideal home will be greater.
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12 Jun 2016
Sequim weather is cloudy and overcast, wait . . . Sequim weather is sunny and beautiful. Well, it all depends on the time of day lately. Sequim weather is famous for its blue hole or as it is also known, the Sequim Rain Shadow.
Retirees from all over the United States find Sequim when they are researching the best place to retire, and part of that decision includes the best weather, an even climate without extreme temperatures and without natural disasters. Voted one of the 10 Best Places to Retire in the U.S., Sequim keeps showing up for all those who diligently search.
I understand extreme temperatures, because I have lived in the two greatest extremes in the U.S. In Alaska I learned what 70 degrees below zero was like almost every winter, and in the summers in Nevada I learned what it felt like to work in 100 degrees in a military uniform. Sequim winters are in the 40s and 50s, and the summers are in the 60s and 70s. How sweet it is.
Whatever you are looking for in your retirement years, it’s hard to beat such an even climate and only 16 inches of rain a year, one-third the rainfall of Seattle. Sequim weather is delightful, although it’s not always sunny. Don’t tell anyone.
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11 Jun 2016
How much would a pier or boat dock add to the price of a home? Many buyers would like a waterfront home with a boat dock, but they aren’t willing to pay a huge premium for the dock. So let’s take a closer look at what is involved. First, the Olympic Peninsula may be surrounded by water, but there are not very many waterfront homes for sale with a pier or boat dock. If you would like a waterfront home, and you would like a pier, these numbers will help you evaluate the prices of homes with a pier.
The value of a waterfront home has three components. The first is the land itself. Of course, location is everything and the view is a part of the value attributed to location. The second is the value of tidelands ownership. If waterfront property includes ownership of the tidelands, that adds significant value, although it’s hard to say precisely how much. Tidelands can be owned all the way to the low tide mark, or tidelands might be only partially owned, which means not all the way to low tide. And there is also something called “commercial tidelands,” and that would add more value. Adding $30,000 or more for non-commercial tidelands would be reasonable.
The third component of value is the dock or pier itself. This is where you may be surprised by the cost or the amount that a pier adds to the total value. I just talked today to a gentleman today who has a pier, and between the permits and costs of obtaining the permits, which took many years, plus the construction of a basic pier with posts and timbers, he has about $100,000 in hard costs.
What does all this mean? It means that if a vacant waterfront property is worth $300,000 by itself, then add another $100,000 in costs for the pier and maybe $30,000 to $50,000 for the full tidelands ownership. This vacant land would then have a value of at least $450,000. Then it’s a matter of what a ready, willing, and able buyer is able to negotiate with a willing seller. Now you know how much value a pier adds to waterfront property.
Here is a list of all the waterfront homes in the Sequim area with either a boat launch, marina, dock slip, or moorage: Sequim Homes with a Pier.
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9 Jun 2016
This article is written to home buyers like you. You’ve been planning to retire in Sequim and now you’re looking at homes online, doing some research on the Internet about Sequim, and you’re anonymously peeking at a few real estate brokers’ websites. You’ve even looked over a few of their resumes. You’re still in the planning stage. You’re not worried about making every decision with absolute perfection, but you definitely don’t want to make any bad decisions, especially at this point in your life. Below is my graphic of “One Chance to Get 4 Things Right.” Enlarge this graphic by clicking on it, and you can read the detailed article at Retire in Sequim.
The challenges you have as you transition to Sequim are not insignificant. But you can only do so much. You can only know so much. You may not have all you need to make wise decisions and avoid every possible mistake. After all, you’ve been a professional in your own area of expertise, which is probably not real estate. So what do you do? You do what most home buyers do–they hire a real estate broker they trust. But did you know . . .
Did you know that online MLS sites like Zillow have their own profit center, and you are not their client, nor are you their priority. Many other MLS sites are not getting accurate source data, and you could be looking at inaccurate information on a home. Many online MLS opt-ins will connect you with a real estate broker or a mortgage broker, but that is not because that person is necessarily the most knowledgeable, the most professional, or the most honest. It is only because they are paying to show up on that site to capture leads . . . leads like you. If you follow the money, you might be surprised how often your interests are low on the priority list of many you do business with as you go through the process of searching for a home, hiring a real estate broker, and all the other parties involved from the offer to closing. There are so many traps for the unwary buyer, it would take a book to list them all. (Actually, I’ve written that book, but this is intended to be a short readable article.)
So my question to you as a buyer is, “Who is watching out for you?” As I said earlier, you can’t know it all when it comes to real estate transactions, so who do you trust with your money, and who do you trust to help you with such major decisions? When it comes to buying your next home, do your due diligence on the agent you hire.
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2 Jun 2016
The Sequim Water Management Rule, aka the Dungeness Water Rule, was adopted by the Washington Department of Ecology in 2013 to manage surface and groundwater within the Dungeness Watershed, which effects about 3,600 property owners around Sequim. The basic idea is to attempt to manage drinking water and to protect fish, wildlife, and other natural resources.
The Sequim Water Management Rule requires mitigation for any new groundwater withdrawals. In other words, any new water use within the geographic area governed by the rule that is not an allowed private well use, will require the equivalent of what some are calling a tax. Under the rule is it called a mitigation fee.
To implement the Sequim Water Management Rule, the State of Washington works with a non-profit organization called the Washington Water Trust, which administers the water certificates for people who are required to mitigate their water use.
A lawsuit has been filed against the Department of Ecology to litigate the validity of the Sequim Water Management Rule (technically the Dungeness Water Rule). The trial is scheduled for October 21, 2016 in Thurston County Superior Court. The facts and the legal arguments are so complex, there is virtually no possibility I can summarize them here, and I was a real estate attorney for 20 years.
You can learn more about the Sequim Water Management Rule at these two sites online:
Read our early explanation of the rule at Sequim Water Management Rule.
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29 May 2016
Yesterday I spent the day looking at homes with clients, and it was a very interesting day because of the homes we viewed. The first home was a beautiful custom built home, but there were two deal killers for my buyers. One was the view would be blocked when another home was built on the adjacent lot, and that would destroy so much of the value of this home’s appeal. The second deal killer was something a little unusual.
The main room with large windows facing the best view would normally be a room with comfortable chairs or sofas or some kind of sitting area. The idea would be that you could sit and enjoy the view. Instead the room was designed to be an exercise room only. While that is a cool idea, it is probably cool to less than 1% of the buying population. Substantial reconstruction would be required to convert it to a sitting area, so this home would not appeal to over 99% of the potential buyers in this market.
Now we get to one of my pet peeves. If you build a house so unique or with some extremely unique features, you have severely limited your ability to sell the house to the vast majority of future buyers. Granted, you have created the “perfect” retirement home for you and your spouse, but not for anyone else. Ten to twenty years later when you want to sell your home, you will enter a nightmare scenario, because you need to sell the home but cannot, and to eventually get it sold, you must take a devastating financial loss in your senior years. That was the first home we viewed.
I never get tired of looking at homes with buyers. The second home we looked at also happened to be unique, but for different reasons. It was a home with a million dollar water view, but it had small windows peeking out at the water view. The living room had little windows, the dining room had little windows, and the kitchen and bedrooms all had peek-a-boo water views. Crazy! A million dollar water view and the people who built the house did not take advantage of it with large windows! Read the rest of this entry »
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28 May 2016
Realtor referral sites are a major trap for the unwary consumer. Whether you are a buyer or seller, it would not be wise to rely on the many online sites that claim to offer you a reliable and credible Realtor referral. I’m about to tell you something few consumers know, and the implications are huge for you personally, not only financially but legally.
Online Realtor referral sites do not filter and promote only Realtors who are experienced, professional, competent, and honest. Realtor referral sites have one and only one qualification: Money. Realtors who pay get promoted. The many referral sites claim to qualify Realtors or want to give you that impression, but they do not. You’ve heard the rule, “Follow the money.” Never was that more true than on these Realtor referral sites. Randomly hiring a Realtor from a Realtor referral site is like tossing the dice and hoping you just get lucky and end up with a qualified and honest Realtor.
There are many Realtor referral sites online, such as Zillow.com, Trulia.com, Realtor.com, Homelight.com, AgentSearch.com, Yelp.com, AgentHarvest.com, MyAgentFinder.com, TopAgentsRanked.com, UpNest.com, and there are many others.
HomeAdvisor.com is a similar type of referral site for home contractors, but it suffers from the same kind of disqualifying lack of credibility–whoever pays gets promoted. It’s all about money, not experience, not professionalism, and not integrity.
Where there is an opportunity to make money, someone will create an organization that appears to help consumers by pre-qualifying professionals and filtering out the bad ones. It sounds like a good idea, and it is, but consumers are unwilling to pay for such a service, so where does the business make its money? From the professionals it is supposedly rating. Will business owners pay to be rated badly? No. But they will pay to show up on these sites so consumers will think they have been vetted and hire them. Read the rest of this entry »
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23 May 2016
There is such as thing as architectural chaos. It’s hard to define, but I’m reminded of how Justice Stewart Potter described pornography in a 1964 Supreme Court case. He famously said, “I know it when I see it.” That’s how architectural chaos is. It would be virtually impossible to define, but I definitely know it when I see it.
I showed three homes yesterday to a couple who are very excited about moving to the Sequim area, and each of the three homes was unique and substantially different than the others. The first home was nice and fairly traditional, but as we walked through the home, nothing happened. In other words, it wasn’t emotionally thrilling, exciting, or moving. It was just a floor plan. Nothing weird, but nothing particularly noteworthy.
The second home we walked through was a delight from the moment we walked in the front door. There was no architectural chaos in this home. This was a home built in the ’70s, but the floor plan was especially pleasing. It was a little different than the traditional living room, dining room, kitchen combo, but it was somehow very pleasing on a deep emotional level. The kitchen and dining room had been remodeled nicely, and everything seemed to flow. This is what really wise architects do. A great architect creates a floor plan that flows and is pleasing to the emotions and the subconscious. On paper, the average person cannot tell the difference, but when you walk through a home with architectural chaos, your spirit will know it immediately. You may not be able to define it, but when you see it, you’ll know it.
The third home we viewed was a modern home, probably 40 years newer than the second home, and it was built with excellent materials and workmanship. But . . . this home instantly sent messages of architectural chaos to me and my clients. It was subconscious at first, but then as we walked around the home and discussed its features, the good, the bad, and the ugly, we began to recognize the architectural chaos we were feeling deep inside.
A good architect will not create architectural chaos, but clients often have an idea they will insist an architect put to paper. What’s an architect to do if the client insists on a certain floor plan if the client is the boss and the client is signing the checks?
This home had a combination of big archways Spanish style adjacent to contemporary obtuse angles and something that appeared to be a combination of several architectural styles. The result was architectural chaos that you could feel, but not necessarily describe. No wonder this home had been on the market for a long time. While no one probably understood why this home had not sold for a long time in a very hot market when almost everything was selling, I believe the reason had more to do with architectural chaos than anything else.
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22 May 2016
I’ve reflected on how it is that happiness is so prevalent in Sequim among so many retirees. I’ve written about how Sequim is the happiest place I’ve ever lived, and my own research in communicating with hundreds of Sequim residents who have retired in Sequim from all over the United States has proven that many others feel the same. A national survey by the Huffington Post concluded that Sequim, Washington is the Number One Place in the U.S. to Grow Old and Be Happy. [Read Happiness in Sequim.]
In an earlier article I wrote, “While the list of things in Sequim that contribute to our happiness are important, I think retirees who move to Sequim have figured something else out from a lifetime of conscientious learning and growing. I think they figured out how to answer the question, “how can I be happy?” [Read How Can I Be Happy?]
Years ago Sequim was named one of the 10 best places to retire in America in a national travel magazine. Here’s what I think. Happiness in a place is not just the result of a wonderful climate and weather, or great recreational opportunities, or one’s career work or retirement activities–it is also and primarily the result of a person’s deepest beliefs about happiness. Happy people have a way of thinking that is different than unhappy people.
Life’s journey is different for each of us, but I believe our elder years are meant to be the best years of our lives. Wisdom comes with age, if we are teachable and humble. There’s a peace and contentment that comes with a lifetime of experiencing life in all its dimensions. We gain a control over our emotions, and we have balance and moderation in our lives. There is more stability and predictability, less stress and uncertainty. We know what we want, how to live, and what not to do in order to be happy.
What I find amazing is how so many incredible people are retiring to Sequim. In what is almost mystical, Sequim is attracting extraordinary people, but I don’t think it’s coincidence or happenstance. These are people who know what happiness is, and how to live it, and they know how to find the ideal place suitable for a retirement that is full of happiness. These are people who are mature on every level, mentally, emotionally, psychologically, and spiritually. [I recommend my book Manage Your Energy Not Your Time.]
I’ve lived in Sequim for 22 years, and I am one example of thousands who find living in Sequim to be a big factor in my own happiness. And my work as a real estate broker representing buyers from all over the country brings me a great deal of joy. Working with so many genuinely happy clients is also a big factor in my own happiness.
What would you attribute to your happiness?
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21 May 2016
What happens if get a low appraisal that comes in below your purchase price? This could turn into a nightmare scenario, but there is a seasoned approach to handling a low appraisal. First, we’ll look at the immediate consequences, and then we’ll look at the solutions.
It does not happen very often, but once in a great while a low appraisal comes in below the purchase price. When that happens, the contract language provides options for the buyer and seller. Upon receiving a low appraisal, the buyer issues a Notice of Low Appraisal to the seller. The Notice of Low Appraisal presents the seller with three options:
Option 1: Seller hereby gives notice that a reappraisal or reconsideration of value has been completed in an amount not less than the Purchase Price. Buyer shall promptly seek lender’s approval of the reappraised or reconsideration of value.
Option 2: Seller hereby consents to reduce the Purchase Price to $______ (an amount not more than the amount specified in the appraisal or reappraisal by the original appraiser, or an appraisal by another appraiser acceptable to Buyer’s lender, whichever is higher).
Option 3: Seller hereby gives notice that Seller rejects Buyer’s notice of low appraiser and (1) will not cause a reappraisal or reconsideration of value to be completed; and (2) does not consent to a reduction of the Purchase Price.
While these look like logical options for a seller, and they are, there really is only one practical option for a seller in this real estate market: lower the price to match the low appraisal value. Why is this the only practical option?
I represented a buyer in the purchase of their home in Sequim, and the appraisal came in $30,000 less than the agreed price, which was just under $400,000. That was a surprise to all of us. The sellers were quite disappointed naturally, but here’s why their only practical remedy was to accept the lower price.
The buyer’s lender will only extend a loan based on the loan to value ratio (i.e. 80%) of the purchase price or the appraisal value, whichever is lower. The only way a buyer could pay a higher price above the appraised value is if the buyer came up with the additional cash for the difference. In this case, the buyer would have to come up with their 20% down payment of the appraised value plus an additional $30,000 in cash to make up the difference. That simply doesn’t work for most buyers, and buyers would generally be adverse to paying more than the appraised value anyway.
If a seller chooses the reappraisal option, the entire closing will have to be extended for weeks to have time for another appraiser to come in and then what do you get? You get a second appraisal that probably comes in fairly close to the first appraisal since they are using the same sales comps and replacement costs in their evaluation. If the second appraisal comes in higher, you would still have the challenge of getting the buyer’s lender (the underwriter) to accept the second appraisal, and that simply may not happen. Meanwhile everyone’s plans have been delayed by weeks, and the buyer’s are in a nightmare scenario, because they have no place to live during all of this, and the seller’s probably packed everything up in boxes and are practically moved out of the home. In addition, the sellers are also probably buyers for a home where they intend to move to, and that is means they have another pending transaction that will have to have the closing date extended, and that might not work for those sellers.
In my buyer’s transaction, the sellers did agree to reduce the price by $30,000, and everyone will be able to move on with their plans. A low appraisal is rare, but when it does happen, it is unfortunate for the sellers especially. The practical solution in most cases of a low appraisal is for the sellers to agree to reduce the price. There are exceptions to this rule, but those exceptions are as rare as the low appraisal itself.
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19 May 2016
Cows are a common sight on the Olympic Peninsula, including Sequim, Port Angeles, and Port Townsend. Many who move to this area want a little acreage, and enjoy having a horse, or a cow or two, and perhaps some sheep or goats. Chickens are also popular. If you’ve lived in a condo or on a postage sized lot in the Bay area or any metropolitan area, you may long to have room to breath and have a few animals. Moving from Los Angeles to Sequim is like a breath of fresh air literally, and walking around on two acres in Sequim is like being set free after sharing a neighborhood area no bigger than a prison playground.
No wonder many who retire to Sequim want to spread their wings and have some cows or a horse or some sheep. Some retirees have told me they feel like they are free for the first time in decades. I understand the feeling. I have a cow and two sheep on my 2.58 acres.
If you do want cows or other animals, make sure the property you want to buy does not prohibit animals in the covenants. Of course, if you’re looking at property in the city limits of Sequim or Port Angeles, the zoning code prohibits farm animals.
It’s not easy to find a property that is suitable for animals like horses and cows and sheep, but you do need enough acreage to support the animals, and there are other obvious questions about fencing, grass, watering (and irrigation if the property is within the water management area). We don’t have any pig farms in the area, but if you intend to have a “sounder of swine” you’ll need to do a lot of due diligence, because you could get some push back from neighbors.
If you have several acres as I do, you may want a couple of grazing cows or other animals to keep the grass in the fields neatly mowed right up to the fences and around the fence posts. I don’t have to mow or use a weed eater in my fields, because the cows and sheep do all the work, and they do an exceedingly good job.
The other important feature to look for would be a small barn or horse stalls, or at least shelter that can protect the animals during storms. Cows and horses are tough, but in cold or rainy weather, they do need shelter.
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18 May 2016
Loyalty is earned, not automatically deserved. This subject comes up periodically because some buyers have the mistaken notion that they owe their undivided loyalty to the first Realtor they talk to, and other buyers will use several Realtors at the same time with no sense of loyalty at all. The first approach is not wise if you want good representation, and the second is unfair to the Realtors. So where is the balance?
How do we define loyalty, or where is the line in the sand that defines when a buyer owes their Buyer’s Agent undivided loyalty? This article is less concerned with a Realtor’s hurt feelings than it is on focusing on what is right and reasonable and courteous, consistent with a buyer’s best interests.
First, it is surprising that some buyers will hire the first Realtor they talk to with no research, no due diligence, and no idea if that Realtor has a foundation of real estate knowledge, or if they are competent, professional, honest, good with contracts and legal language, understand the extensive due diligence a buyer needs help with, are top notch negotiators, and have good communication skills. Believe it or not, according to the National Association of Realtors about 85% of buyers hire the first Realtor they talk to on the phone, no questions asked. With the power of the Internet today, there really is no excuse for not doing research on your buyer’s agent to help you filter agents in the very beginning, so the question of whether a Realtor has begun to earn loyalty should be addressed right away. Even if the answers are positive with your preliminary research online, an agent has not yet earned your undying loyalty. [Read about Loyalty at Buyer Beware.] Read the rest of this entry »
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13 May 2016
The topic of discount real estate commissions comes up in articles published a couple times a year by journalists, which then enourages FSBOs (For-Sale-By-Owners) to try to sell their own homes or find a broker who offers discount real estate commissions. I’m a real estate broker and real estate attorney (ret.) who is in constant pursuit of the truth on all things real estate (and in the rest of my life). Because of misconceptions about discount real estate commissions, today I want to share some important truisms on this subject.
There are a number of brokers across the country experimenting with discount real estate commissions (as well as multi-level commissions or “profit sharing” as they like to call it), but none are setting the world on fire or attracting top talent. A full time professional Realtor cannot make a living if they only get paid $50 for showing a house and $100 to present an offer. That’s simply not a sustainable service. [Read about one broker offering Discount Real Estate Commissions.]
Redfin is the largest brokerage offering discount real estate commissions, and they have struggled to survive, although they’ve been in business for 10 years. Today they are still not profitable, which means they are losing money every year. Their investors are still hoping that someday Redfin will become profitable, but it hasn’t happened after a decade. It is not a sustainable business model. [Read more about Redfin’s failure.]
Another Seattle broker offers discount real estate commissions by listing property for a flat fee of $350.00. For that the property owner gets their property listed in the Northwest MLS, plus they get a little sign and some flyers. I’ve personally interviewed a half dozen people who used that service over the past decade, and all of them were angry at what they perceived to be misrepresentations in the services they thought they were going to get, and none of them sold their homes with that service. Read the rest of this entry »
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11 May 2016
Covenants or CC&Rs are officially called “Covenants, Conditions & Restrictions.” Covenants are the documents that define what you can and cannot do on your property. If you want to have a horse on your property, read the covenants to make sure there is no restriction on horses. If you want to convert a home to a B&B (bed & breakfast) or rent out the home as a vacation rental, make sure you are not prohibited from doing so in the covenants. In this article I’ll share when and how do you can get a copy of the covenants for the property you want to buy.
Covenants are created when a real estate developer creates the plat and the separate document known as the covenants. The covenants may authorize a homeowner’s association (HOA), which may be incorporated or unincorporated. The HOA can be organized with officers, a board, and the membership, or an HOA may be an informal creation that does nothing and has no meetings. The size of your subdivision, and the complexity of the issues will determine whether a formal organization is necessary.
The HOA can create Bylaws, which define how the HOA functions, how officers and board members are elected, and how voting is handled. The percentage of votes required to pass a motion will be spelled out in the covenants. Some HOAs required a 100% vote on motions, others required 75%, and others just a majority.
Covenants are recorded in the county auditor’s office, and since about 1986, all the real estate documents are available online now. Covenants for a particular property are hard to find, but with some practice they can be found . . . sometimes.
First, go to the Clallam County Auditor’s Site. Once inside the site, you’ll need to enter the appropriate reference number for the property’s covenants. If you have a recording number, enter that in the right box. Sometimes you can get that from a reference in the Statutory Warranty Deed, which you can also find on this same site by typing the current owner’s name in the “Grantee” box, and a search will pull up the deed. If you don’t have the recording number, you can use the volume and page number, which is also found in the legal description on the Statutory Warranty Deed.
If you have trouble finding the Statutory Warranty Deed on that site, go to the Clallam County Tax Assessor’s site and search for the property by address. At the very bottom of the property detail page for an individual property you will see the current and past owners with the recording numbers of their Statutory Warranty Deeds. You can copy that recording number and paste it into the right field on the Auditor’s site referenced above, and that will pull up the Deed. Again, in that deed you can usually find reference numbers to the covenants.
Once you find the covenants, go to the section that deals with the specific restrictions. That is the section that will answer all your questions about what you can and cannot do on the property. Read more about Covenants here.
If you need help finding the covenants for a property, and if you need help interpreting the covenants, email or call me. I’m Chuck Marunde at email@example.com.
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8 May 2016
What is your Realtor’s job when he or she is representing you as a buyer’s agent? This may surprise you, but as a buyer you probably have a more realistic understanding of what your Realtor’s job is than most Realtors. Today, I want to take a look at what you are entitled to expect of your buyer’s agent.
On the legal side your buyer’s agent owes you strict loyalty, agency and fiduciary duties. In other words, your Realtor’s job is to represent you well and protect you, too. Your Realtor’s job is not to act as a lawyer, but you cannot escape the fact that your buyer’s agent will be drafting a lot of contract documents for you, and so they had better know which ones to use and how to use them.
All this means your buyer’s agent should represent you honestly, competently, and professionally. You are entrusting your agent with a lot of money (possibly several hundred thousand dollars to a million), and that requires a level of knowledge and skill that rises to the same level of responsibility and importance as your CPA, your lawyer, your Registered Investment Adviser, and your doctor.
Your buyer’s agent should know the subject of real estate upside down and backwards. He should be a master negotiator when it comes to your hard earned money. He should know exactly how to protect you with a buyer’s due diligence. He should be able to answer all your questions along the way, and he should be honest, articulate, and a pleasure to work with.
Hiring a buyer’s agent is one of the most important decisions you will make as you go into your retirement years. Be careful. Be wise, and do your research before you hire a buyer’s agent. Your Realtor’s job is very important . . . to you.
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