The home purchasing and finance process is very important to your financial future, to that end we have partnered with Homestreet Bank to bring you Windermere Mortgage Services. There is no better way to approach the buying process then to do so with your financing in order and a pre-approval letter in hand to give peace of mind to not just the seller, but yourself as a buyer as well. Knowing the limit you are willing to spend, the cost of the loan, and taking the financial stress out of the process are important to your future decisions and your home buying experience.

I n addition to Windermere Mortgage Services, there are many other mortgage bankers and brokers in our communities to help you with financing your buying decisions.  Your Windermere agent is glad to give you his or her recommendations.

G ood news on the Jumbo loan front, the first securitization since 2008 closed late this spring which may point to the beginning of a recovery in the higher price range for real estate. Until this $238 million dollar securitized deal was sold all jumbo loans had to be portfolio loans which banks are reluctant to do. This transaction, representing 255 loans, may have broken the ice in the private mortgage securitization market, which will open the gates a little and allow for more banks to enter this market, and therefore more loans available for higher end homes.

With 14 homes over $750,000 going pending over the last 6 months in Anacortes we have seen a huge uptick in this market locally. Those 14 pending in a six month span outpace the prior year which saw 12 going pending in a 12 month period. Good news seeing this upper end pick up as savvy buyers understand there are bargains to be had, and the cheapest money we will likely ever see in the mortgage market.

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A n agent in our Anacortes office received the following email from an attorney client of ours who represents an Estate, we’ll call it the Estate of John Doe, to protect the innocent/dearly departed (I knew him, he was actually “dearly”). I share this email with you for two reasons, first, it’s hilarious and well written. Second, it’s very indicative of the ridiculous hoops folks who are dealing with selling their home short must deal with. The banks, the asset managers, and the government are so backwards and behind in this process it makes it very difficult to get through the process and get the asset (house) back into circulation. Here’s to hoping they get some processes and systems in place to make this easier on the underwater homeowners, or like in this particular case an owner who is no longer with us and whose estate is such that it will not be making any payments, ever.  Here is the email from our friend and client with only the names changed:

“Paul,

I am on the phone with B of A right now. I called at 12:00, and waited on hold for twenty minutes, listening to the most awful music I have ever heard in my life. When someone finally answered, I told him how long I had been waiting and how bad the music was. He said, “Yeah, lots of people tell us that.”   Why don’t they catch a clue?

After a bunch of personal identification information, and telling him that I was the executor of the Estate of John Doe, he asked me, “Is there some reason why John Doe can’t call?” I must say that this stopped me cold. Then, I told him that I didn’t think he took his cell phone with him.

It is now 12:40, and I have been transferred to customer service he couldn’t help me. I have just answered a bunch of questions that have no relevance at all. Now, I have just been told that I am in contact with a debt collection service. Back on hold, but the music is a little better.

12:42: “Please wait.” x 4. Now, the music is back with the message “Please stay on the line. We’ll assist you momentarily.” Time now is 12:45, and I am now being transferred to the short sale department. Back on hold, better music. I seem to be working my way up the music list. Maybe they’ll get to some jazz if I wait long enough. “Please wait.” x 5.

12:48: Live person. Speaks English. We’re making progress.

“What’s the state of this account?”

“Washington”

“No, I don’t mean what state is the property in. I mean what is the state of the account?”

“Its delinquent.”

“No. What is the state of the account?”

“Its past due. Its delinquent.”

“Let me put you on hold for a moment.”

“Oh, this is in an estate. That’s what I was trying to say . . . what is the estate?”

12:58: He is transferring me to someplace where I can give my email address so they send me a temporary I.D. and password.

Back on hold. Aha! Nice piano music. That’s because I am at www.equator and not B of A. You won’t believe this, but “All of our representative are currently assisting other customers.”

1:23: I give up. And, I thought our government was inefficient.”

Frustrating to say the least, more importantly it’s damaging to our economy and slowing a recovery. If these asset managers, banks and the government would operate as if they ran a real business and this inefficiency would allow their competitors to knock them out of business, things might get better. Right now however, our government doesn’t have any competition, and the banks are losing competition each day, so why innovate and excel when mediocrity will do.

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Great news on the First Time Homebuyer Tax Credit plan

The First Time Homebuyer Tax Credit gets you 10% of the value of the home up to$8,000! If you do not owe $8,000 in taxes, you receive the balance in cash via a check mailed directly to you.

You may qualify for the first time homebuyer tax credit program if you meet the following criteria:

• 1. Have not owned a home as your primary residence for the past three years.
• 2. Your income doesn not exceed $125,000 for individuals of $445 for married filing jointly
• 3. You must have a signed contract on a property by April 30, 2010 (you get an additional 60 days to close)
• 4. The home you are purchasing is going to be your primary residence
• 5. You are 18 years or older and are not a dependent of the seller
• 6. The home may not sell for more than $800,000 to qualify and if you resell the home within three years, there may be a credit repayment penalty 

For all the details visit WaHomeowners.com for complete details.

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Selling your house in this market is not a laughing matter, but just like a comedian, you need to know your audience to have a successful show (or - in this case - successful sale). Mortgage guidelines have changed significantly since the housing bubble came and went, and sellers need to know who is out there buying and where the money is coming from so that they can be competitive and get their properties sold.

 Below are a few fictional scenarios that represent some different types of buyers that we see in our area. All of these are assuming a straight 5% interest rate, a 30 year loan, and equal footing for all other conceivable variables. Obviously the numbers will vary for every individual situation - but this illustrates some general parameters regarding possible levels of purchasing power available to buyers in Anacortes.

 Keep in mind as you look at the data that the median annual household income in Anacortes according to the City of Anacortes website is currently just over $52,000 and, according to the Northwest MLS, the median average list price for homes in Anacortes as of this posting is $398,500. The median price for sold properties since March, 2009 in Anacortes is $296,000.

 The information below is what one excellent local mortgage banker recommended for each of these fictional buyers to maximize their purchasing power. Again, these numbers are general - individual circumstances can change things dramatically.

 Buyer A:
Annual Gross Income: $45,000
Monthly Fixed Expenses: $500
Savings: $5000
Credit History: Average
Suggested house price: $162,000
Notes: USDA Loan, zero down, use savings for closing costs.

 Buyer B:
Annual Gross Income: $65,000
Monthly Fixed Expenses: $1000
Savings: $50,000
Credit History: Poor
Suggested house price: $240,000
Notes: FHA loan, $50K down, seller pays closing costs.

Buyer C:
Annual Gross Income: $100,000
Monthly Fixed Expenses: $1500
Savings: $0
Credit History: Average
Suggested house price: $315,000
Notes: FHA loan, needs gift funds of 3.5%.

 Buyer D:
Annual Gross Income: $140,000
Monthly Fixed Expenses: $1500
Savings: $50,000
Credit History: Excellent
Suggested house price: $522,000
Notes: Seller pays closing costs, buyer pays mortgage insurance.

Buyer E:
Annual Gross Income: $200,000
Monthly fixed expenses: $2500
Savings: $200,000
Credit History: Excellent
Suggested house price: $810,000
Notes: Conventional financing, $190,000 down, $10,000 for closing costs.

I don’t have to tell you that there are a lot of factors to be considered when determining property values - some scientific, (probablities, sales histories, market averages, etc.) and some emotional (how motivated is the seller, can that one-in-a-million buyer live without the property, etc.).

One thing is certain, buyers need money to buy property, and most of that money comes in the form of a loan of some sort. Very few of us have the cash needed to buy property outright - so we need help. Usually that’s from a bank or perhaps the seller of the property. With most loans, even with seller financing, an appraisal is required at some point in the purchase and sale transaction. When an appraisal is required, it is generally the case that the property must appraise for the agreed upon price or there is no deal. That said, it is critical for potential property sellers to understand what guidelines the appraisers are operating under at any given time in the marketplace.

Typically, appraisers use similar, recently sold properties as comparables when they are determining an appraised value. You are correct if you assume that in this market, it is challenging for appraisers to find a lot of recently sold similar properties. There just aren’t that many. What they resort to then, is looking at properties that may have sold quite some time ago, or properties that aren’t as similar as they would be in a regular market. When appraisers have to get creative with comparables, they are required to make adjustments to account for the differences in properties.

In a recent conversation with a local appraiser whom I consider to be one of the best, I was informed that one of the calculations being used to equalize property values is a one-half to two percent PER MONTH decline in value over the past 24 months. I knew that math class I took spring quarter would come in handy - you gotta do the logarithm to figure that out! Here’s the equation:

C=P(2.7)^-it 

C= current value
P=past value
i=percent decline
t=number of months

If an appraiser felt your house was worth $500,000 24 months ago, and you are in an area or property type that declined 1% per month, the equation to calculate your present value would look something like this:

C=$500,000(2.7)^-.01(24)
C =$393,951. (The 2.7 is a constant roughly equaling the value of natural logarithm e.)

I was told that in our market, condominiums and vacant land would most likely be at the higher end of the percentage spectrum, and conventional single family residences would be at the lower end.

Now, you might not care what an appraiser thinks your property is worth, and not all properties are going to fit into neat equations and probabilities, but it is a good thing to know as much as you can about what might factor into a buyers ability to buy your property. It’s just one more way a seller can get the competitive edge in todays market.