Eastside Real Estate Working-for-you!

More Information on Real Estate Absorption Rates

By Greg Perry
Kirkland Realtor

A question was asked of me why we consider a Seller's advantaged market less than 12 weeks of inventory at the current rate of sale.  A Balanced  at 12-24 weeks of inventory and a Buyer's advantaged market for anything over 24 weeks.

Here's my take on why this is:

In a Seller’s market (<12 weeks), we have to remember that this number is for ALL ACTIVE AND PENDING inventory in a particular area. To get to this number, a LARGE number of homes have to sell quickly — very quickly–often with multiple offers. This happens when there are more buyers than sellers. As seller’s markets strengthen, and we get into 4 week territory, the market is virtually a feeding frenzy of buyers merely trying to acquire any house. There are still homes in these markets that WILL NOT SELL, because the seller has so grossly overpriced them for condition they aren’t in the ballpark. The Absorption Rate (AR) accounts for every active and pending in the area.

As supply increases, so does market time. Most any seasoned vet figures a well priced home will take 30-45 days to sell in a normal market (not hours or days like in recent seller’s markets). In a balanced market neither buyer or seller have a particular advantage and the good homes are still moving. Few bidding wars happen here. Normal marketing takes it’s course. Generally one buyer is negotiating with one seller at an arms length. Another way of looking at this is a normal, healthy real estate market.

As market time increases further, the sellers become starved for buyers. They see few showings. Weeks of inventory build. The buyer gains full advantage as they have so many choices. Only the cream of the crop (compelling homes) get sold. The rest just sit on the market….until the market changes…..or until the seller makes their home the compelling offering.

I started studying AR’s after listening to Larry Kendall, who owns The Group, which has the highest agent productivity of any real estate company in the US. Currently the CRS (Council of Residential Specialists) is starting to teach practical applications of AR’s in working with sellers and buyers.

I find AR’s incredibly useful in negotiations for buyers and useful to help sellers really understand the market.

Here is a link to some very graphic heat maps based on AR’s. This is for 3rd quarter 2007…..the quarter where the market shifted. I wrote this post in October of last year.

http://blog.seattlepi.nwsource.com/realestate/archives/124285.asp

Statistics are tricky and multi layered. AR’s are not the end all be all of RE stats. I am convinced after over 4 years of study and application, however, that AR’s are best way to measure the relative strength or weakness of a RE market…..and here’s why….. AR’s are the sales ratio of both supply AND demand numbers. We cannot just look at supply and have any real understanding of a market.

Used in conjunction with customary Comparative Market Analysis data, AR’s are powerful in assisting buyers and sellers understand what to do.

Seattle's Eastside Real Estate Absorption Rates

By Greg Perry
             Kirkland Realtor

Eastside Absorption Rates: (How long (many weeks) to sell through inventory at the current rate of sale.)

7 Week Averages. / Weeks of inventory:

	2-Jan	30-May	18-Jun
500	62.5	45.9	40.9
510	24.2	25.8	38.1
520	70.6	57.5	65.9
530	31.4	24.7	33.1
540	44	30.4	35.9
550	37.9	36.7	27.2
560	56.2	57.3	43.3
600	53.6	36.7	44.4

Absorption rates are calculated using the ratio of Active listings vs. Pending listings. Actives and Pendings are broken out by NWMLS Area and by Price range. 7 Weeks of activity are averaged.

Almost all Eastside area absorption rates have improved from the first of the year. (This is normal and should happen every year) 3 Areas absorbed inventory in the last 7 weeks, 5 areas built inventory during this period . Overall area 550 Redmond showed the greatest improvement. In the month of May, Pendings in 550 were up over last year (97 to 93). In the large Eastside areas of 500, 550, 600, the majority of sales are being made in the Western (closer in) portions. Overall the high end (over $900,000 in all Eastside areas is very slow and building inventory.

So keep in mind, even through inventory may be building in an area, some price ranges within the same area may in fact be absorbing inventory.

0-12 Weeks = Seller’s advantaged Market
12-24 Weeks = Balanced Market
24 Weeks plus = Buyer’s advantaged Market

(based on NWMLS stats not published or verified by NWMLS)

Monday's Inspiration -- The Miracle of Life

Two girls and two boys born to our Cairn Terriers, Kona and Hattie.

Meet Cali, 6 5/8 oz, Bug 6.0 oz., Zin 6.25 oz. and Merle 4 3/4 oz.  Born last night.  This was Hattie's first litter and she was just awesome!

Here are the two firstborn girls, Cali and Bug.

To see Kona and Hattie on other www.425Realty.com posts:
Hattie, The Flying Cairn Terrier
Hattie Earns Her AKC Championship! 
May Earthdog Antics

Visit our Cairn Terrier website: www.croftersdream.com

   

I'm Working This Weekend! Come By And Visit!

Brian Perry, Working-for-you
Saturday:
I'll be hosting an OPEN HOUSE for this beautiful Redmond English Hill home.  Join me at this lovely 2 story home on Saturday, June 28 between 1 and 4pm  The address is 17809 NE 131st St, Redmond.

http://www.windermere.com/index.cfm?fuseaction=Listing.ListingDetail&ListingID=33596315

Sunday:
I'll be hosting an OPEN HOUSE for this beautiful, updated Lynnwood listing.  Join me at this gorgeous, updated rambler on Sunday, June 29 between 1 and 4pm.  the address is 5910 190th Pl SW, Lynnwood.

http://www.windermere.com/index.cfm?fuseaction=Listing.ListingDetail&ListingID=33641323

Attitude and Negotiating

By Greg Perry
Kirkland Realtor

Sometimes a good answer makes a good post.  I wrote an answer on a post over on the rain city guide that sum up my basic attitudes on negotiating.

A strategy that worked for a buyer last spring, and has worked for me in the past:

I was working with a strong buyer (>20% down and had the ability to close quickly)

House listed at $670,000 in an outstanding neighborhood. In recent markets might have sold for over $700,000. House was vacant. Sellers lived out of town.

Market time was around 60 days or so at the time of first offer.

Client offered $630,000. Seller countered at $660,000 and agent informed me that he had other interested parties.

My buyer really didn’t want to pay much over the $630,000, so I advised him to “wait in the bushes” for at least 30 days. If something else came up better, we’d look, but in the meantime we watched.

IMPORTANT! I kept casual dialog with the listing agent. After a couple of weeks he admitted the other interested parties were investors and one had offered $650k, which the sellers refused. We chatted about current inventory and absorption rates, etc.

After 30 days we made the exact same offer of $630k. This time the seller countered at $647k. I advised my buyer to “lightly” soften his position and we countered at $634,000. The seller then countered at $640.

My buyer was set on his price. I went back to the Listing Agent again and extolled the virtues of my buyer’s strength and ability to close quickly. We also reviewed the absorption rates and market data. We countered back at our last position of $634,000 and had a signed around deal within a 1/2 hour. We also had no problems with legit inspection issues that came up.

The keys that lead to success were:
1. We were patient. It took us 6-7 weeks to put it together.
2. I kept casual dialog with the LA. I was never his adversary — in fact quite the opposite. I was helping him to move his listing.
3. We were always prepared with detailed market statistics.
4. My buyer had a strong financial profile, offered substantial earnest money and had the ability to close quickly.
5. In the end, the listing agent was sold on the fact we were his best option. He sold our offer to the sellers.

Other keys were market time, vacant house, out state sellers, etc.

I’ve assisted several buyers with this kind of strategy. There are risks, mainly with the house being sold, but frankly currently buyers have selection.

Sellers and buyers always need to remember this “law” of negotiation, “Time is the enemy of the seller”. (not the buyer!!!)

How many times have we seen a seller turn down an offer, only to accept much less down the road?

And…..an editorial comment. I dislike offers being labeled as “bad offers”, or “lowball offers” or “bottomfeeding”.

I believe all offers are good offers. It may not be an offer a seller chooses to accept, but it is an offer. Good things can happen when an offer is made. I don’t know how many times I’ve seen that “ridiculous” starting offer come together favorable to a seller. Or a piggyback offer comes in to compete. When I’m listing a property, I want to see offers! I would rather turn them down than never receive them. Sellers need to be coached with these principles to help them keep a business, rather than emotional perspective.

Negotiating is a matter of conversation and attitude. Agents are far better negotiators when they remove the emotion and “ego” and listen. A good agent helps sellers and buyers through the emotional issues as well. When the attitude is good, creativity is high. When creativity is high, things happen!

Is Your Condo Adequately Insured? -- Homeowner Insurance Concerns

Eric Horner, from Omega Financial & Insurance Services, an Eastside casuality insurance company, has written a fine article on Condo homeowner insurance concerns.  Eric spent years as an insurance underwriter before joining Omega as an agent.  He specializes in assisting his clients with Home and Auto insurance needs.  425Realty.com is pleased to welcome Eric's contribution in writing about homeowner insurance concerns.

More and more buyers these days are choosing townhomes and condos over the traditional free standing homes but once you decide to go this route how do you insure them properly?

As a former underwriter turned agent, I have addressed this question often over the years and there are two main things to consider; how much insurance do you need and which type of policy should that coverage be written on.

First let’s look at which type of contract is required. If the Homeowners Association (HOA) owns the outside walls and the roof then it needs to be written on a condo policy (even if it is a 3 story home with 2700 square feet). If the insured owns the outside walls and roof then it needs to be written on a Homeowners policy (even if it is a one story unit, attached to other units, with only 900 square feet).

The question of how much coverage is needed is an important one because most condo owners do not have enough. If it is a condo then you need to talk with your HOA to find out how much of the inside structure the HOA policy covers. Some do not cover anything including the walls, whereas, others cover everything including the fixtures and built in appliances. Once you know what the HOA does, or does not cover, then you should speak to an experienced agent to figure out how much it would cost to replace what you are responsible for. Most condo policies offer an endorsement which will increase the amount of coverage available for these items. If you have a home then a Replacement Cost Calculator should be used by an agent to determine the replacement cost. This includes what it would cost to rebuild the home from the ground up in the case of a catastrophic loss (such as a fire) including a contractor, labor and materials.

Once the coverage amount needed for the structure has been determined there are many other limits that need to be calculated.  These include how much personal property, loss of use and personal liability is needed. If you are renting a home or apartment you should still have these types of coverage written on a Renters policy.

Eric Horner
Omega Financial & Insurance Services
425-822-5722  Ext.11

Eric Horner and Omega Financial & Insurance Services is a 425Realty.com trusted Service Provider!

Monday's Inspiration -- Giving Back -- Windermere Community Service Day 2008

Once a year, Windermere agents everywhere take a day off.  We take the day off from real estate, that is.  Instead of heading in to the office or doing the routine of real estate, we assemble to work -- for our communities.  It's our way of giving back -- to say thank you.  Here are scenes from our Windermere Community Service Day, 2008.

4th of July Events - Eastside - Seattle - Puget Sound

July is one of the best times of the year around Seattle and it's Eastside communities.  Here is a list of events happening near you.  From fireworks over Elliot bay in Seattle, to Demolition Derby's in Monroe, there is sure to be a Fourth of July event around Seattle and the Eastside for you!

EASTSIDE

Bellevue Family 4th
Bellevue Downtown Park
4:30 pm - C-17 Flyover from McChord AFB
6 pm - Live bands begin playing
9:30 pm - Bellevue Philharmonic performance
10:05 pm - Fireworks Display begins
www.bellevuedowntown.org

Bothell’s Freedom Festival
Throughout Bothell
8 am - Pancake Breakfast, Downtown Fire House
11 am - Children’s Parade, Main Street
12noon - Forth of July Parade, Main Street
2 pm - Battle of Concord Re-enactment, Landing
www.bellevuedowntown.org

Issaquah’s Down Home 4th of July
Celebration & Heritage Festival
The Depot
11 am - Heritage Festival begins
11 am - Kids, Pets ‘N Pride Parade
www.ci.issquah.wa.us

Celebrate Kirkland
Downtown & waterfront
12noon - Fourth of July Parade &
Rotary Picnic
10 pm - Fireworks, downtown
waterfront parks
www.explorekirkland.com

Monroe’s Demolition Derby & Fireworks
Evergreen Speedway
12noon - Speedway Opens
Dusk - Fireworks display
www.evergreenspeedway.net

Renton’s Fabulous Fourth of July
Coulon Beach Park
12noon - Festivities: kids’ activities,
games, face painting
1pm - Stage entertainment begins
10pm - Fireworks display
www.rentonwa.gov

Woodinville Bluesfest
Wilmont Gateway Park
5 pm - Festivities: food, live music, arts,
crafts
www.ci.woodinville.wa.us

SEATTLE AREA

4th of Jul-Ivar’s Extravaganza
10pm-ish - Fireworks display over Elliott Bay
www.ivars.net

WaMu Family 4th at Lake Union
Gas Works Park
Noon - Festivities: food, crafts, games, kids’
activities
10pm - Fireworks display over Lake Union
www.wamufamily4th.org

Fourth of July Annual Dinner Cruise
Argosy Cruises, Pier 56, Seattle Waterfront
8pm - Cruise sets sail around Elliott Bay and Puget Sound. Cruise ends at 11pm.
www.argosycruises.com

A 425Realty.com Service Provider Spotlight -- Symbiosis Tree Care

Trees  They are all around us.  What do we really know about them?

Is this one healthy?  Is this the right tree for this location?

Today we're going to highlight Certified Arborist Kurt Fickeisen.  His company is Symbiosis Tree Care.  Kurt knows trees.  Here's our 425Realty.com interview with Kurt.

Tell us about who you are and about your company, Symbiosis Tree Care:
After 11 years working as an arborist for other companies, I started Symbiosis Tree Care.  I started by offering standard services like pruning and removal.  I enjoyed the direct contact it gave me with customers.  Over time, my business focus shifted to evaluating trees for hazard, and appraising them for their landscape value.  In addition, tree issues often start below ground.  I can help improve soil to increase tree health and deal with root problems to improve tree health and protect other assets close to trees from damage.

Services I provide:

• Tree risk assessment; rating trees for risk posed to people and property nearby.
• Tree appraisal; I can assign a dollar value that trees add to your property.
• air spade work to improve health of trees and protect your house and hardscape features from damage.
• Tree planting and recommendations.  I can help you get the right tree in the right place.

How long have you been in business?
I started my business in 1999.

How did you become interested in trees?
I grew up in a house with a forest behind the back yard.  I would spend days playing in it; through that I took a real interest in trees and nature.  At a young age, I also started climbing rocks and mountains.  after finishing college, I found that I could get paid to climb trees.

Working with trees was fun, and I started to learn more and more about their biology and behavior.

What are the most satisfying aspects of your business?
Helping people appreciate trees both around them and on their property.  Finding real problems that need attention and helping to resolve them.

What are your biggest challenges?
Explaining tree growth and characteristics to people who do not work and or study trees.  I constantly remind myself that what I may view as a standard term may mean nothing or confuse others.

I also feel it is my duty to explain correct and good quality tree work and encourage proper tree care.  Without proper education or experience, trees can suffer damage and increase long-term maintenance expense.  Many companies are out there who charge clients money for work that cost the client more in long-term expenses.

What are some of the things people should be looking to you for?
Is a tree going to fall on your house?  You may own several trees.  Several of them may be healthy and safe, but one or two may have problems.  I evaluate trees for structural problems and identify insect and disease problems.

Do you own a tree that a neighbor would like to remove, but you love?  I can put a dollar value to your trees value in the landscape.  Your neighbor can then compensate you for the loss.

Are your trees cracking your walkway?  I can prune roots without damaging your tree or provide solutions to replacing cracked walkways.  I also can help route utility lines under trees with minimal damage to the trees.  Soil remediation also benefits trees health.

Tree planting is often a tricky job.  I can help select an appropriate tree for a location on your property and platen it correctly.  Planting a tree that will thrive is more complicated than just sticking it in the ground.

What unique benefit can you offer potential clients?
I have twenty years of experience working with trees.  Over my career, I have seen many different situations where trees have both benefited and damaged a client's property.  I spent one year running a group of arborists working on all the trees in one community and seeing the long term outcome of our work.

What credentials and certifications do you have?
Certifications:

• International Society of Arboriculture Certified Arborist.  Certification number RM-451A.
• Pacific Northwest ISA Certified Tree Risk Assessor. Certification number 264.

Credentials:

• Member International Society of Arboriculture
• Member American Society of Consulting Arborists

I am also a member of Plant Amnesty and head of the Tree Programs Committee.

Symbiosis Tree Care
206-841-3158
kurtfick@gmail.com
Photo of Kurt removing a fir tree.  While healthy in appearance, this tree suffered from decay in the base of the tree.

Because we're so active in the marketplace, we continually come across the best service providers -- businesses you can trust.  425Realty.com enthusiastically endorses Kurt Fickeisen and his company, Symbiosis Tree Care.

Be sure to visit our online "Referral Directory!"  If you have a suggestion for a great service provider to include in our Referral Directory, email Greg at gregperry@working-for-you.com.  All service providers and businesses will be researched before inclusion.

If you have any tree question for Kurt, just leave it in "comments".  We'll pass it on and get an answer for you!

NWMLS 550 Redmond / Carnation -- Inside the numbers

Here's a current and historical look at NWMLS Redmond Area 550.

Click the link for an expanded chart:
Download 550_redmond_may_2008.pdf