Real Estate Information

Understanding the Credit Scoring Process

Thursday, April 17, 2008

by Don Havre

With lenders following more stringent rules, we are seeing more caution being exercised by lending underwriters. Last week, one lender cross-checked the square feet reported on the appraisal versus the county’s web site. The difference was over 200 square feet and the lender insisted upon clarification. Unfortunately, it is not uncommon for the counties to have incorrect information. If this trend continues, I foresee the county assessor offices doing more field work in the verification of structure sizes.

With credit being more closely watched by lending institutions, it is critical to understand the credit scoring process. One’s payment history is the most important factor. A close second is amount of debt one carries on credit cards. Lenders look at the “revolving credit” percentage. This percentage is calculated by dividing all current card balances by the total credit limits and multiplying this figure by 100. For example $12,000 (total balances) divided by $25,000 (total limits) equals .48. .48 x 100 = 48%. The lower the utilization score, the better.

The following categories are important, but have a much lesser impact on credit scores. Among these are (1) the age of one’s credit history, (2) new credit inquires and (3) credit mix or different type of accounts.

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Should Home Sellers Stage Their Homes?

Saturday, April 12, 2008

by Don Havre

Prior to placing a home on the market, we strong advise clients to get the home market ready. Essentially, a home must be at its best for showing purposes. The way we normally live in homes is not the same as having it market ready. Every aspect of the home must be de-cluttered. Non-seasonal clothes in the closet need to be stored. The windows must be spotless and the walls and woodwork touched up it required. Home buyers are looking for faults in homes for sale. Once buyers discover minor items, they start looking for other flaws.

How about furniture? Should a home have furniture or be shown without? The answer frequently depends if one is living in the home and secondly how well the furniture shows. Home staging is becoming a popular option. For more information on home staging listen to this month’s podcast at http://www.talkrealty.com/donhavre

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Tri-Cities April 2008 Market Data

Saturday, April 05, 2008

by Don Havre

Our sales for the first quarter of 2008 were significantly less than the 1^st QTR for 2007. With 773 homes selling during this period in 2007, and 552 homes during 2008, indicates a decline of approximately 29%. What is interesting is that available inventory has remained similar.

The weakest part of our market seems to be above $375,000. We only had eight homes in the Tri-Cities area closing above this price point during March 2008. With 49 homes available in the price range $375,000 to $400,000 and zero closings, this appears to be the weakest price range in the market. Homes in the price range of $200,000 to $225,000 seemed to be in highest demand.

If this trend continues in the upper price ranges, we are likely to experience some softening of prices for more expensive homes.

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Certified Green Built Homes

Sunday, March 30, 2008

by Don Havre

This past week I was invited to view the Devoted Builders’ homes. What make the visit memorable is that Devoted Builders builds all homes to “Certified Built Green” standards. The homes reduce the impact on human health and the environment. The homes are built air tight with a special heat and air filter recovery system. The exterior wall are R-32+ and the ceilings are R-49. The windows are close with special latches thus eliminating the air flow normally with sliding type windows. Landscaping is designed for natural yard care using a minimal amount of water; and the homes incorporate Energy Star appliances.

It is my understanding the Tri-City Home Builders Association will be adopting this program in the near future. Once adopted all home builders will be exposed the knowledge to build to this standard. The cost of construction is more; however the energy savings in the long term can be an overall savings.

If you interested in owning a “Certified Built Green” send us an email.

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How Strong is Tri-Cities Real Estate Market?

Sunday, March 23, 2008

by Don Havre

Two measures of the real estate market are (1) Notices of Trustee Sales and (2) New platted residential lots. The national news media leads us to believe that the entire US market is going through a real estate recession because of the number of foreclosed properties being reported.

When I count the number of trustee sales in our community for Jan-Feb 2008 as compared to a year ago during the same period, the data shows 135 sales last year versus 145 this year. This indicates a slight increase over one year ago.

When one compares new platted residential lots of 2006 to 2007, the City of Kennewick experienced an increase from 193 to 448. However, the City of Richland experienced a drop from 503 to 304; while the City of West Richland increased from 30 to 249 lots. The City of Pasco remained fairly constant at about 463 lots. The data provides a good oversight where the growth is in the Tri-Cities. Franklin County (the Pasco area) continues to be one of the fastest growing areas within Washington State.

Overall, the Tri-Cities housing market continues to look healthy. March sales versus inventory may show some signs of weakness. March 2008 market data being reported next month should be interesting.

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March 2008 Tri-Cities Market Data

Wednesday, March 05, 2008

by Don Havre

Our homes available for sale are about the same as they were last year during the month of February. Normally increasing inventory is a sign of a softening market. What is interesting is that our sales this year versus last year during the same period are about 27% less. Pending sales are also down. The median sales price is also lower.

Normally March through June is our primary marketing period. The month of March should give a good indication whether our market will remain strong or show signs of weakening.

We are experiencing more and more buyers using the internet to search for homes. Craig’s list is gaining in popularity and maybe overtaking the newspapers’ classified advertising. The Home Magazines are very dated by the time they are published. For updated Tri-Cities housing information go to www.Tri-CitiesHomeBuyer.com

For access to our Home Buying Process Web Site CLICK HERE

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Why Some Homes Do Not Sell

Monday, March 03, 2008

by Don Havre

As we continue to represent Buyers looking to purchase in the Tri-Cities area, we experience many reasons why home sellers are not successful as they could be. Among the top five reasons we see in our market place are as follows.

Reason #5: The sellers are not providing terms that attract both buyers and give incentives to real estate agents to show their homes.

Reason #4: The homes are not market ready. Previously owned houses are competing directly with new construction. The homes must be spotless. One method to identify houses that are not market ready is to identify those requiring 24 hours advance notice prior to showings. The home sellers try to use the added time to get the “stuff” picked up and provide some sense of an organized appearance. This reason also leads into the next reason.

Reason #3: Most home buyers give their real estate agents little notice about their availability to view homes. Most home sellers allow viewings of their homes with one hour advanced notice. For those home sellers that insist upon “appointments only” for several hours or days in advance, they simply are not providing the flexibility required by prospective home buyers. Some home sellers do not allow lock boxes which means that someone must be available to open the homes. Trying to coordinate several showings within a limited period, can become a challenge.

Reason #2: This reason will undoubtedly bring criticism. When agents show homes, frequently home buyers request additional information about the properties. If the home sellers have hired limited service providers, it becomes nearly impossible to get the information to satisfy the buyers’ needs. In some cases, the agents even advertise, do not call them while others simply do not return telephone calls. One way to identify these agents is to look for those advertising their rates rather than the services they provide. I am convinced many of the limited service providers cost their clients several thousands dollars during the marketing process.

Reason #1: The houses are overpriced. There are many reason why home sellers fall into this situation. Sometimes the sellers try to identify market value without assistance. Other use false assumptions in identifying value. Some use agents not qualified to identify value. Some have false expectations. One home seller recently informed me that she only wanted serious home buyers to view her home. Apparently, they had several showings and no offers. Therefore, the problem was people viewing their home were not serious buyers. Upon the viewing the home, the answer for no offers was clear. The home was overpriced.

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Buying A Home...You May Want to Consider Absorption Data

Sunday, March 02, 2008

by Don Havre

When representing Buyers we frequently ask the clients how long they plan to live in the home. The reason for this question is that if a client intends to live in the home only a few years, absorption data by neighborhood becomes important. For years the South Richland neighborhood (area) in the Tri-Cities was considered a prime resale area and many real estate agents recommend this area for this reason.

When one compares the absorption rates or months of inventory of West Kennewick versus South Richland, the absorption data indicates that West Kennewick is a better location for resale. For instance, presently South Richland presently has 10 months of inventory as compared to 4 months for the West Kennewick area.

One factor contributing to this situation is that West Kennewick has more lower to median priced “new homes” as compared to South Richland. There are several locations in West Kennewick where one can purchase a new home under $250,000 while South Richland has limited offerings. Newer homes are simply in higher demand.

If you are shopping for homes and find two options that are possible, you might ask your agent to provide absorption data to help the decision making process.

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When I Hear Buyers are Not in a Hurry

Sunday, February 17, 2008

by Don Havre

I continue to meet couples who inform me that they want to upgrade to a new home, however, they are not in a hurry. When I hear this comment I can only say to myself that they may not understand market conditions. New construction home prices continue to escalate as lot prices and materials rise yearly. We are living in a world economy where we must complete for all building materials including concrete, forest products, metals etc. Additionally, if the products are depended upon fuel prices, the products continue to cost more with higher energy costs.

Today’s interest rates are among the most competitive we have seen in years and the most likely trend is for them to go higher.

If costs associated with new construction continue to climb and interest rates are most likely to climb also, waiting to build a home can only mean one situation. The longer one waits to start the construction process, the more expensive it is likely to be. So, when I hear that “we are not in a hurry” that only translate to we are not concerned about paying more or money is not the issue.

One young couple about eight years ago informed me they were not in a hurry; however, they had a fixed budget. They simply could not reach an agreement on what they desired in their next home. Today, they have been priced out of the market.

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Tri-Cities Wa Housing Market Data February 2008

Sunday, February 03, 2008

by Don Havre

As we closed out January 2008, we had fewer homes available for sale than the two previous years during the same period. At the same time, we had fewer sales than the previous two years. It seems that fewer are selling and at the same time fewer are buying than previous years. While we are experiencing less activity overall, our community continues to grow. This must translate into more families living in apartments and rentals. The market also seems to be more active in the lower price ranges since our median sales price dropped from $169,000 in January 2007 to $160,000 in January 2008.

While the market overall seems to be less active, our team could not be more involved. We find ourselves working seven days a week to provide the appropriate level of service to our clients. More and more clients are using the internet to assist in the real estate buying/ selling process. The traditional methods of advertising real estate are becoming challenged to be competitive in an “instant information” society.

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