Archive for the ‘Analysis’ Category

Not what RE professionals want to hear…

Tuesday, August 24th, 2010

Per a recent article in the New York Times, popular wisdom may now be off the mark in thinking that housing is a “good investment.” Most people have believed for their entire lives that buying a house made good financial sense. You need a place to live anyway, you get a tax break on the interest, and most importantly houses appreciate in value over the long term, like stocks (but unlike virtually every other “consumer” good, which of course depreciates in value).

But apparently there is a new reality: Given the hangover from the housing bubble, evidence now suggests that housing prices will not significantly appreciate for a very long time, particularly in those areas that were most susceptible to the bubble.

Why is this important? Well, many buyers of real estate do so for the investment. If housing is no longer considered to be a good investment, then many of those potential buyers will seek to invest their money elsewhere. And fewer buyers will translate into continuing downward pressure on buyers. Which in turn will make housing a less profitable investment. In other words, this cycle will feed on itself, depressing home values further in the process.

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Posted in Analysis | 1 Comment »

The Seattle market is headed…

Thursday, June 10th, 2010

Down. At least per the “really smart” people at Goldman Sachs. I use quotes because I imagine these same people were singing an entirely different tune two or three years ago — while shorting the market at the same time! So its not like they’ve got a lot of crediblity these days. That said, the Seattle market has historically trailed the larger national market. Since the larger market appears to have bottomed out, it makes some sense that Seattle would continue to decline for some period. Time will tell…

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Smoke ‘em if you got ‘em…

Tuesday, April 20th, 2010

and to heck with the neighbors! That’s the gist of a new case decided by the court of appeals here in WA. It is an unpublished decision and therefore has no legal authority (i.e., this decision will not apply to anyone else) but is still an interesting read.

Home-owning smokers smoked on their back deck, and the smoke blew into the neighbor’s house. Neighbor sued seeking first and foremost an injunction prohibiting smoking in any area that would cause second hand smoke to drift into his house. Court ruled in favor of the smokers and found no legal claim for second hand smoke emitting from a private residence.

Who says there is no justice in this world? Now excuse me, I’ve got to step outside onto my deck for my afternoon smoke break… ;-)

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WaLaw is selling houses!

Thursday, March 25th, 2010

WaLaw gits 'er done!

Here’s one of our recent listing success stories. This seller saved more than six grand ($6,000!) on the listing agent fee. The house sold in less than two months. The system works!

On a related note, I authored an interesting post on Rain City Guide about this picture. Specifically, what does the “Sold by…” sign indicate? I soft sell my point in the post, but here I’ll give my full two cents: It tells other brokers and agents that the buyer’s agent (Mr. Houston) will work cooperatively to get a deal closed.

This must be the purpose of the “Sold by” sign. It simply cannot be designed to promote Mr. Houston as a competent buyer’s agent, because most buyers don’t understand the role played by Mr. Houston based on these signs. The only people who completely understand the message are other brokers and agents. Therefore they must be the audience, and this is the only message to that audience that makes sense.

In the not-too-distant future, WaLaw should have its own “Sold by” sign — except it won’t say, “Sold by.” Rather, it will say something like “Buyer assisted by” or “Buyer’s interests protected by” (obviously we need to refine the message) because that is what WaLaw does. When representing a buyer, we don’t “sell” anything.

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Posted in Analysis, Press | 1 Comment »

Bowie said it best: “Ch-ch-ch-changes…”

Friday, February 5th, 2010

Turn and face the strain. Changing the real estate industry is not easy – a strain indeed. Thankfully there are many people out there who are putting their shoulder into this heavy work. One of the leaders of that effort has been and continues to be Glenn Kelman, CEO of Redfin, a longtime mover and shaker in the “Reform RE” movement. His recent post on the Redfin blog does a great job of identifying those changes that will improve the industry by putting the focus on the consumer.

And just for the record, no, we did not have ANYTHING to do with this post — even if No. 1 on the list is EXACTLY what we’re doing here at WaLaw. We don’t charge a commission, and our fee is not paid by the seller. Rather, we charge a flat fee paid to us directly by the client. When our client is a buyer, we rebate the entire commission back to the client. In other words, there is no conflict of interest whatsoever between us and our client in regards to our compensation.

Keep up the great work, Glenn!

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Posted in Analysis | 1 Comment »

Buying an REO property? Consider legal counsel…

Thursday, January 28th, 2010

This is not legal advice. For legal advice consult an attorney in person, not a blog.

If you’re considering buying REO (short for Real Estate Owned — the term used to describe the asset on the bank’s general ledger) you should seriously consider hiring an attorney. First, some background.

An REO house is a property that has been taken back by the bank. In other words, its a bank owned property. Banks acquire these properties most commonly either through a deed in lieu of foreclosure (where the owner/debtor agrees to deed the property back to the bank instead of going through the foreclosure process) or at foreclosure (where nobody bids more than the amount owed). Once the bank acquires the property, the bank wants to sell it ASAP. Banks are in the money business, not the real estate business.

As a general matter, a bank is willing to sell for a lower price than a typical homeowner. Accordingly, REO properties offer the opportunity for good bargains. The listing price may be lower, or the bank may be more willing to entertain a lower offer.

But there are downsides. The bank will probably have its own addendums to the PSA, which will almost certainly protect the bank at your expense. The bank will not convey title by a standard Statutory Warranty Deed, which will reduce or eliminate your ability to go after the bank if there is a title issue down the road. Similarly, the bank probably will not purchase title insurance on your behalf, again increasing your exposure if a title problem develops in the future.

So how can you get a good deal while still protecting yourself? That’s easy — hire a lawyer to assist you in the transaction. Unlike an agent, a lawyer can practice law. This means that the lawyer can review the contract to assure it sufficiently protects you. The lawyer see to it that title is ordered (even if at the buyer’s cost) and review the title report to identify any possible issues.

But what about cost — won’t a lawyer set you back and cut into your savings? Nope, not if you use us. We will assist you throughout the process, and we can address those issues unique to REO sales. We do so for a flat fee (a total of $3195.00) and then rebate to you the commission that is paid to us as your agent. That can be up to 3% of the purchase price! Comprehensive legal counsel to protect your interests, and you save money too? Now THAT’S a good idea…

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Posted in Analysis | 2 Comments »

It’s Official: WaLaw Realty is a “Game Changer”

Tuesday, January 26th, 2010

There was an interesting piece in Seattle Magazine regarding FindWell, Redfin, and changes in the RE industry generally. As you may know, both FindWell and Redfin rely on a robust web presence (primarily a search engine) PLUS a deeply discounted commission (about one half back to a buyer) as their business model. As noted by the author, this “alternative” model has yet to revolutionize the industry as some thought would happen, in large part because, when push comes to shove, EVERYONE still relies on the commission, the only issue being how big.

Of course, WaLaw is certainly not “everyone.” We are the true game-changing model, in that we charge a flat fee for the transaction. Hey, we work hard for everybody, not just those buying a seven figure house. Why should we be paid so much more for an expensive transaction? We don’t think we should. Plus, as the article notes, a commisison creates an inherent conflict of interest, particularly from the buyer’s perspective. The buyer wants to pay as little as possible, but the agent gets paid based on the price so the agent has a disincentive to negotiate aggresively.

On top of that — and unmentioned in the article — what happens if the buyer decides to not close at the last minute? I think its safe to say that the vast majority of agents would encourage the buyer to close, because no close = no pay. On a flat fee model, the attorney is not invested in the outcome at all and is happy to go in whatever direction you want.

So if you want “new and improved” go with WaLaw, not one of those other “alternatives” that really aren’t all that different.

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Posted in Analysis | 3 Comments »

Is it “immoral” to intentionally default on your mortgage?

Tuesday, December 1st, 2009

A recent piece in the Seattle Times raised some interesting issues about the interplay between contracts and morality.  Specifically, is it immoral to simply walk away from a mortgage where you owe far more than the home is worth?  At least one law professor believes that homeowners should indeed walk away, and they should so so without any guilt.

I tend to agree with Professor White. It seems to me that people are held to an unfair standard of “morality” when it comes to business decisions, a standard that is not applied to a business entity. For example, if a corporation stands to benefit from breaching a contract, you can bet your bottom dollar that the corporation will avoid its contractual obligations. Nobody will bat an eye.

A person, however, is held to a different standard. When a person enters a contract — including a mortgage — it is assumed that the person has given his “word,” his solemn moral promise. Even where the person stands to lose money by performing his contractual obligations, many people think that the person simply must soldier on and must comply with the contract or he has acted “immorally.”  Don’t believe me?  Check out these comments.

From my perspective, people should do what is in their best self interests. If defaulting on a mortgage is the best course of action, all things considered (including damage to credit score), then the borrower should default. The lender took a risk when it loaned the money, a risk reduced but not eliminated by securing that loan with the house at issue. Thus, the lender — just as much as the buyer — took a risk that house values would decrease, thus jeopardizing the security for the loan. The lender, then, should be prepared for the consequences.

I think Professor’s point is a good one: people don’t default because of social pressures to not do so, social pressures that are applied only to borrowers and not lenders.  This exacerbates the burden on people, to the benefit of the lenders, as a result of the market implosion.

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Posted in Analysis | 1 Comment »

Our “Sister” Blog: Rain City Guide

Tuesday, October 27th, 2009

 

Craig Blackmon, one of the owners of WaLaw Realty, is also a contributor on a popular Seattle-area real estate blog, Rain City Guide.  He’s accumulated an interesting body of work over the years while posting on that site.  Other contributors include agents, loan officers, escrow agents, professional educators, and others who work in the real estate industry.  Check out his (and everyone else’s) stuff!

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Can a Buyer or Seller Sue her Real Estate Agent? Yes, But…

Wednesday, July 15th, 2009

Two years ago, the Washington Supreme Court issued a ruling in the case of Alejandre v. Bull, 159 Wn.2d 674, that dramatically changed the legal landscape surrounding the purchase and sale of residential property. At the time, everyone quickly realized how this case changed the relationship between the buyer and seller in regards to an allegedly undisclosed defect in the property.   (more…)

Posted in Analysis | 5 Comments »