The Real Kirkland

This condo can be financed through a special program with Cobalt Mortgage come October.

 
Kirkland, WA –

Why wouldn’t someone, who was an ideal buyer, want to buy a home in Kirkland today? After all, Kirkland currently boasts listings of all prices ranges and styles. The government and banks are handing us tax credits and low interest rates. One only has to walk down Lake Street past Hallmark Realty to get a taste of what the city offers: Three bedroom condos for as low as $137k. A three bedroom, updated rambler listed with TEC Real Estate’s Todd Mitchell in Bridle Trails for only $310k. This home is currently tax assessed at $372,000. Right now a 2,900 square foot, updated bungalow with Lake Washington views,  only 1.5 blocks off the water and Houghton Beach Park, sits, waiting for an offer at….would you guess $1 million? $900,000.? Try just $719,000. And the agent will tell you that they’re motivated. And I have to give an honorable mention to several homes in West of Market that have lowered their prices over $200,000. since going on the market in the last year. Call it affordable luxury. An oxymoron? Not in this market.

 But it’s true that some buyers-  make that many buyers –  are not jumping in quite yet. I hear from clients that there are 2 main reasons why this happens.

1.)    Buyers are skittish. Buyers in recent years have been burned all over the country and lost equity in ways that we haven’t seen for decades. New buyers think that maybe this isn’t the bottom and the market may turn on them, too. It’s scary to make the leap when everyone knows someone who has or is losing a home to foreclosure. Many people are waiting to see if they will have a job going forward. Many are just simply waiting for someone else to make the first move.

2.)     Buyers are not sure if they can qualify. When the credit crunch of last year happened, lending came to a screeching halt. Even credit worthy buyers were having difficulties qualifying for a home mortgage if they were self-employed, retired, act.,  Zero down payment loans came to a furious end (thank goodness) and condo financing was questionable at best.

The series of unfortunate events has lead us to today. We have all braced in and most have a pretty good grip on the fact that we now need to live within our means, and begin rebuilding what we might have lost.  Time is the school from which we learn – Delmore Schwartz.  We ask the questions: What smart, conservative strategies can we use moving forward? How do I rebuild? How do I jump back in? Will it be warm waters or roaring seas ahead? Can I and should I now or in the future invest in real estate– the very vehicle that may have just chewed me up and spit me out last year? So, what is the temperature of the mortgage market today?

I believe that real estate, as a long term play, is unequivocally a good investment. These are not normal times. For many homeowners, their home will be a main source of retirement income. Done right, it can provide monthly cash flow and necessary tax benefits. I also believe that right now is an excellent time to invest in the housing and commercial real estate markets in the greater King County area. In the years that I have been a Realtor I have never seen such a conducive market to investing for those that have the means to buy. Rates are incredibly low (as we speak, rates on a 30 year fixed are at 5.16% and 4.67% on a 15 year fixed. ), our government has mandated a $8,000 tax credit for first time buyers (meaning those who have not purchased a home in the last 3 years), and home prices have fallen considerably to more balanced and affordable prices. And many sellers are negotiating down even beyond those prices. It also occurs to me that if we can close on more sales in Kirkland, we can help boost the local economy. Sales beget sales. Excise tax comes back to us. When foreclosed homes are occupied rather than vacant, neighborhood values increase.

98033, Kirkland Homes For Sale

If you look at the stats and believe the same, perhaps maybe the only thing standing between you and this market is your ability to qualify for a loan. Today, it can be a huge question mark for even typically qualified buyers. And with so many loan officers and real estate agents getting out of the business in the last year, it’s possible that your old broker isn’t even around anymore. How can one find a new, reliable broker that truly knows what’s going on, is current, and willing to tell you the truth about things?  I don’t even pretend to know all that there is on the loan side of things. I also find that the rules of the game change often and are fueled by news.

So let’s ask a local, veteran mortgage team from Kirkland, what a buyer today can expect if they want to take advantage of the current buyer’s market. What is the bank going to say to them? Scott Estes, founder and leader of the Estes Team with Cobalt Mortgage, shares his insight.

Jen: How is the lending market compared to 6 months ago – better, worse, or the same and why?

Scott: The lending market is pretty much the same however a few new rules have been implemented. A big rule is the HVCC (home valuation code of conduct). A loan officer must order an appraisal through a third party company that will then assign an appraiser to the file. The issues that can arise with this new system are that an appraisal costs more now (about $100. more) and they are taking about 2-3 weeks instead of 2-3 days. Appraisers that get assigned to a file are often out of the area so their values are much lower, and if there is a condition needed on an appraisal it again can take much longer to resolve.

Jen: If a person bought a home that was worth $500k last year and today it is worth $400k, can they still refinance?

Scott: It depends on how much they put down when they bought it and their current loan to value. FHA, Fannie Mae, and Freddie Mac all have programs that can help people with high loan to values but if you owe $500k and it is worth $400k, you cannot refinance.

Jen: How are loans for self-employed people these days?

Scott: They are still available however self-employed borrowers get the advantage of taking large deductions. In the past they could state their incomes to qualify for a specific loan. Today this can be a double edge sword because now if they deduct too much it can cost them the ability to qualify for a loan. Self employed borrowers were also able to put off filing and now they must have 2 full years of tax returns.

Jen: What should a buyer/ borrower do to help position themselves for a loan right now?

Scott: The best thing a buyer can do is pay down consumer debt and save money.

Jen: Tell me about the timeline for the $8,000 tax credit and what a borrower needs to do to meet that deadline.

Scott: The deadline for the tax credit is November 30^th, 2009, however the safest thing to do is to plan on closing by the week of November 16^th because the next week is the Thanksgiving holiday and county offices will be closed Wednesday through Friday. Closing on or before Thursday the 19^th will avoid the hassles of trying to close during peak vacation times along with all of the other buyers trying to close at the same time. It will be important to have a contract in place as soon as possible because you may not get the first offer you make, or a home inspection may uncover unacceptable conditions that keep you from moving forward.

Jen: Yes! And I also want to mention that you should plan on it taking 45 days for your transaction to close from the time of mutual acceptance. So working off the deadline you’ve recommended here, a buyer would need to obtain mutual acceptance on a contract no later than October 7^th if you want that $8,000 in your pocket. And that is basically in only a few weeks. It’s time for buyers to really hunker down because there’s no time to waste.  And it really doesn’t make sense at all for a buyer not to take advantage of this because as an agent, I can tell you that the quality of homes or the price of homes is not going to drastically change from what they are now – at least not “missing $8,000 in your pockets” worth – in the next few months. BUT rates may go up and your tax money will be GONE.

So from a lenders point of view, is it a good time to buy?

Scott: It is a GREAT time to buy! The $8,000 tax credit is very nice for those that qualify for it, but if you also look at the median family income, property values, and mortgage rates being at historic lows, home affordability has never been so good. There are two variables that will eventually go away and those would be the tax credit and interest rates will increase. We don’t know when, but we know they will.

 To contact Scott Estes directly, please call (425) 891- 8260 or email him at scott.estes@cobaltmortage.com  

My best suggestion is to get a solid consultation from a knowledgeable mortgage lender to find out where you stand today and in the future. Only then can you begin to build and maintain wealth through real estate.

Jennifer Nilssen with TEC Real Estate can be reached directly at 206.853.1491 or at  jen@tecrealestate.com. Learn more about the Kirkland real estate market at www.livekirklandwa.com