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Part 1 – New Construction In and Around Auburn WA

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framing9This post was originally published in March of 2012! I’ve recycled the post as there is still significant new construction in and around Auburn, WA, although many of these subdivisions are now completed. However, each of these builders continues to build homes locally and should be considered when buying new construct

Acquiring a new home is thrilling for every Buyer, but new construction, in particular, maintains an exceptionally high level of anticipation, followed by what seem to be endless delays and frustration, and then finally culminating in a near fever-pitch of excitement.

In addition to the shiny new finishes and new house smell, of course, new construction is attractive to many buyers because of builder financing and low down payment incentives, extended warranties, and the desire to decorate a home from the ground up, choosing plans, colors, cabinets, counters, and flooring. Not to mention that a contract written for new construction will close, unlike so many of the short sale listings that are prevalent in our area. There’s a sure thing happening in new construction … less so with distressed property listings.

It can’t be stressed often enough, however — If you have a plan to purchase new construction, whenever possible, visit the sites for the first time with your own broker/agent, who will register you in the community and help you obtain all of the important information. Your agent can then work on your behalf from the very beginning to be of help to you as you buy the home of your dreams.

If you can’t, or don’t, go with your agent the first time around, be sure to let the site representative know that you are working with your own broker/agent and that the agent will contact the site rep ASAP on your behalf. Then get in touch with your agent before visiting the site again and again!

While I haven’t worked from start to finish with each of these builders, I’ve visited a most of these communities, helped Buyers through the new construction process, and had a chance to talk with many of the site representatives. Over the years, I’ve resold many many of their homes as well!

Here’s a brief summary of new construction in the area and in no particular order; click the builder or community name to visit the associated Web site. Because there are SO many new construction options in this south King/north Pierce county area, I’ve split this list into a couple of different posts. Be sure to refer also to Part 2 – New Construction In and Around the Auburn WA Area, and especially 20 Tips to Buying a New Construction Home, also to be posted in the next few days.

One quick addition note – the builders and communities in this list are not custom build sites – all are based on preapproved plans and typically few changes can be made to the plans, although all offer a limited number of upgrades so that the look of the home can be personalized.

DR Horton

hammerOne of the biggest builders in the area is DR Horton. Prolific, that’s for sure! DR Horton tends to build similar plans in almost every community I’ve visited and can be a very good choice especially for first time homebuyers. In my experience, they tend to have great financing incentives packaged with their listings, which can be attractive if you are comfortable working with the DR Horton preferred lender.

There are a couple of DR Horton communities near Auburn – one on Auburn’s west hill (Lakepoint) with prices in the low $200’s, and another huge community in Covington (CornerStone), just past the Highway 18 and Kent Kangley interchange with prices in the higher $200’s to mid $300’s.

Schneider Family Homes

hammerThe folks at Schneider Family Homes are definitely one of my favorite builders for reasonable prices with nice quality finishes. I’ve worked with a buyer in the past who purchased a new Schneider home—it was a wonderful experience and those buyers are still thrilled with their house, and I’ve been involved with resales of several as well. While the folks at Schneider homes tend to build just a few homes at a time in each community, there are typically a few homes available in each neighborhood. You’ll find lovely true hardwood floors, solid granite surfaces and thoughtful designs. Most Schneider homes in the greater Auburn area tend to be priced in the low-mid $300’s, from about 2,200 square feet and above.

Soundbuilt Homes

hammerSoundbuilt Homes is another busy busy builder in the area with three Auburn communities currently under construction. Their basic price point is really attractive to many buyers, offering generous size for the $$.

Brandon Meadows may be their newest community – located on 312th just past the 132nd and 312th junction. Similar to the newest MainVue community almost across the street on 312th/132nd, this community’s property was cleared several years ago just before the housing decline in 2009 in our area. From the Brandon Meadows Web site, it looks as though pricing will be from the mid $200’s up into the low $300’s.

Two additional sites for Soundbuilt in Auburn are the small Sterling Court, located at about 304th and 121st with similar pricing, and Terrace View, a townhouse community located in Lakeland Hills.

Conner Homes

hammerConner Homes is a local builder with some delightful home plans and a couple of communities in the Auburn area. They tend to build about 20 houses at a time in each community, which means each build gets personal attention and the communities are not quite as “rapid fire” as some others. I like their finishes and floor plans a lot!

Monterey Park in the Auburn valley (just behind one of the Carpinito Brother farms) has both single family and duplex style homes ranging from about $175k to the high $200’s.

Lakeland East in the Lakeland Hills area of Auburn features homes from about 1,300-3,300 square feet (quite a spread!) fitting in to almost every buyer’s pocketbook.

Buy a House With Less Than 20% Down Payment

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Buy a House With Less Than 20% Down Payment
Avoiding Mortgage Insurance — You Don’t Need 20% Down Payment

It is possible to buy a house with less than a 20% down payment.

One of the most frequent and often biggest hurdles when assisting potential home buyers is their lack of a 20% down payment, combined with their desire or need to keep their payment as low as possible. Typically their credit scores are pretty good, say mid 700’s or so, and they otherwise qualify nicely for a mortgage. They come to me wanting to buy a house, but thinking it’s not at all possible because they believe their only choice is to buy with using a low down payment FHA loan and then pay the staggering and never-ending mortgage insurance.

Over the past several months, the loan officer with whom I work most frequently has suggested to some of my clients that they consider using lender-paid private mortgage insurance rather than trying to save an additional 10% or even 15% in order to buy with a 20% down payment. The lender-paid option bumps their interest rate up an eighth or quarter of a percent, but still brings their monthly payment in less than it would be were they to pay mortgage insurance each month. That means they can shop for a bit more house and still keep their monthly payments at goal!

There are a number of calculators available that can help you determine whether it makes sense to use the lender-paid mortgage insurance option. For example, FHA.com includes a very helpful calculator that includes a mortgage insurance payment. Here’s a typical scenario in my area:

  • House price: $200,000
  • Property taxes: about $2,600 a year, which is 1.3% of the price or approximately $216 a month
  • Homeowner’s Insurance: about $600 a year, or $50 a month
  • Typical minimum 3.5% down payment
  • With good credit of say mid-700’s, interest rate might in in the neighborhood of say, 4% or so (or maybe lower … or maybe higher depending on the day)

Anyway … plug all of that in to the FHA calculator and you’ll see a monthly payment of approximately $1,400 a month.

Now assume lender-paid private mortgage insurance. Using my favorite loan officer’s calculator with the same approximate scenario, an interest rate of maybe 4.25% and down payment of, say, 5%, this brings the payment to just over $1,200 a month! Higher interest rate, lower payment.

Remember that I’m using a very rough scenario here and that there are certainly other factors to consider … but it’s important to remember that there ARE options and you can buy with less down payment than you think. It is possible to buy a house with less than a 20% down payment.

(By the way, in my area there are also programs that can assist you should you not have sufficient down payment … but that’s a subject for another blog post.)

Here’s the disclaimer: I’m not a loan officer, I’m a Realtor®. You absolutely need to talk to a lender to get the real numbers. I love my loan officer, Amanda Finnegan, especially since she’s honest, accessible, well qualified, and her bank (HomeStreet Bank), typically doesn’t sell their loans.

(Amanda’s temporarily out on maternity leave, but’ll be back in early December … contact her anyway, or contact me.)

 

How Much House Can You Afford?

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Like most agents, I talk almost daily with folks considering a home purchase. We talk through all of their wants and picture their dream house in vivid color.

Within a very few minutes, however, I start asking the tough questions:

  • “How much can you afford?”
  • “Have you been preapproved?”
  • “With whom?”
  • “May I refer a few lenders to you that do outstanding work–they’ll help us nail down exactly how much house you can buy, and get you preapproved for a loan so you’re ready to go!”

… and so on.

These questions aren’t designed to be intrusive … they’re merely a way of helping me understand exactly where a Buyer really is in their purchase decision, to help them determine their balance point between their desired lifestyle and their desire to purchase a home … And, of course, to help them understand that this first step — the money side — is SO important!

Now, generally, my very first question is answered by: “I want my payment to be no more than $, although I could possibly stretch up to $.”

I’m not a mortgage officer, but it’s certainly part of my initial counseling session to help Buyers get started and to help them assess the balance point between their desired lifestyle and your desire to purchase a home. The question of “how much can you afford?” is just the first step. While providing them with a general feel for what they’ve described, I’ve also assembled a few tools that empower the Buyer to do a little research on their own.

With thanks to the folks at MortgageLoan.com, included on this site is a useful set of calculators to assist you in determining what your payments might be with various sorts of loans.

In addition, I’ve developed a handy little Excel-based FHA calculator that I’ll be happy to send to you–just give me a call (206.300.8421) or shoot me an e-mail message and I’ll get it right out to you.

From a Realtor(r) — Online Mortgage Broker vs. Local Loan Officers

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From a Realtor(r) — Quicken Loans (online) vs. Local Loan Officers

In a recent press release, JD Powers ranked Quicken Loans as #1 with regard to customer satisfaction for home loan purchase and refinance origination. I wonder how they’d rank locally or if this is a national statistic?

Online handshakeWhile we increasingly become an online population with little or no face-to-face  communication, I’m not sure I agree that using online mortgage brokers vs. local loan officers is the best method of completing a home purchase. In all fairness, however, I haven’t had an opportunity of working with Quicken Loans with any buyer. I can tell you that clients of mine have worked with several of the other companies in the JD Powers rating list…and with mixed satisfaction. 

From my perspective, once financial qualification is determined, the most critical part of completing a mortgage loan is communication between all parties involved, not just the borrower and their loan company.

Working successfully through a transaction requires that a real estate broker also be kept informed. We’re out here trying to coordinate things from our side and knowing timelines and milestones on the loan side is critical. After all, we need to meet those deadlines as well.

Local Loan OfficerI always want to be sure to know exactly who to talk to (not just a voice in a department), but a real person that follows a mortgage application from start to finish. That said here’s a list of highly successful mortgage representatives with whom I work continually. They do what they say they will do, they know their loan products and they are masters at communication! I know, without a doubt, that they’d rank right up there with Quicken Loans, if not higher.

By the way, I’m all for making applications online, using email, texts, whatever. I regularly share info electronically and I absolutely love the convenience and security of using digital signatures. I just think it’s critical to have a single person with whom you’ve met and talked handle your transaction from start to finish. And be there later when you have questions or want to refinance. Your talented and qualified mortgage officer should be part of your suite of regularly used professionals, along with your real estate broker. We’re here for the long term, not just a single transaction.

Other articles you may find useful:

Questions to Ask a Loan Officer

 Mortgage Approval for Buyers “and” Sellers

 

May 1st = Garden Time in the Pacific NW!

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Hard to believe as I look out the window that today more or less marks the unofficial beginning of garden season here in the Pacific Northwest. It’s a heavy grey day outside and has been raining and blowing like nuts since yesterday afternoon. Oh wait. The sun’s out. Give it a few minutes. Now it’s hailing. Actually, that’s about right for our Spring weather.

imageIn our yard, May 1st has always been the earliest that baby vegetables go into the garden, flower pots get hung and planters dressed up for the summer. We’re fortunate to have a huge garden plot, which also means that lots of weeding, soil turning, and fertilizing also takes place about this time of the year.

Gardening is a huge part of our PNW lifestyle, especially here in the suburbs where I work to assist Buyers in their home purchases so that they have a little of their own garden heaven. As I tour homes with them, it’s interesting to hear comments about the garden areas of the houses they like.

Some Buyers are so excited about green lawns and summer barbeques, some look forward to having a few fragrant roses to bring indoors during the summer months, and some have grandiose plans (like me) for full-blown vegetable plots hoping to grow enough produce to can and freeze for the year.

imageBecause of Buyer fascination with gardens, Sellers should also strive hard, especially at this time of year, to be sure that yards and gardens are well trimmed and productive. Have a vegetable garden area as part of the yard? Go ahead and plant it even though the hope is to have your home sale completed well before harvest time. Buyers love the idea of picking fresh tomatoes!

10 Tips to Buying an REO Listing

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houseboarded10 Tips to Buying an REO Listing for first-time homebuyers

Working with first time homebuyers makes bank-owned (referred to as REO … Real Estate Owned) properties seem like an attractive purchase opportunity. These properties on which foreclosure has been completed are now owned by banks (think Wells Fargo, Chase, Bank of America, etc.), HUD, VA or government backed investors (GSEs) such as Fannie Mae or Freddie Mac. They’re attractive to homebuyers because transactions involving such properties typically close fast, unlike short sales that can drag on for months.

Some REO properties have had some “fixing up” completed — the grounds have often been cleaned up, sometimes critical missing appliances like the range have been replaced, carpets have been cleaned, and rooms and exteriors painted.

Other properties, however, require fixing and updating, meaning buyers must have funds to present all cash offers or financing with significant down payments. These properties, in particular, are attractive to investors who are looking for investment properties they can fix up and re-sell (flip) or rent.

In addition, often REO properties are priced aggressively, meaning they’re subject to multiple offers.

First time homebuyers, however, often come to the purchase table with a financing goal of asking for closing cost contributions from a seller while using a rehab loan to complete the purchase. That can be tough when buying an REO listing.

What’s a first time homebuyer to do? They often don’t have deep enough pockets to be tremendously aggressive in pricing offers, nor do the REO folks (the Seller) like to wait the additional 2-3 weeks needed to close a transaction where the buyer will use a rehab loan.

Here are 10 Tips to Buying an REO Listing:

  1. Absolutely be preapproved before writing an offer. You  need to know what you qualify for and you’ll need to prove it to the Seller.
  2. Shop below your top financing approval number.  Understand that you may be involved in a multiple offer situation. You may need to offer MORE than the list price in order to “win” the purchase.
  3. Cash is king. Use your available cash to increase your down payment, thus perhaps enabling you to use conventional financing rather than an FHA or VA loan. If you have a 20% down payment,      conventional loans won’t require mortgage insurance, which can save you a couple hundred dollars a month.
  4. Check with your lender to see if you can include your closing costs inside your purchase loan. Sometimes it can be done, although it may increase your interest rate slightly.
  5. Understand and be prepared to try for several homes and lose several before you’re the accepted offer in a transaction. It’s a learning process and the more houses you see and tries you make will enable you to move more quickly each time you see a desirable house.
  6. Experience counts: Work with a lender and an agent that both thoroughly understand and have experience with Rehab loans and purchases. You’ll need every advantage in order to close quickly.
    1. An experienced agent can eyeball a house and know whether or not it will qualify for standard financing or whether a Rehab loan will be required.
    2. An experienced lender should be able to close a streamline FHA rehab purchase within a 45-day window.
  7. REO properties often have a window or so where only owner-occupant offers will be considered. You need to present your best offer right away, and then be prepared (if multiple offers are received) to present your “highest and best” offer again.
  8. Move quickly. If an intriguing property is listed, you need to see it as soon as possible. Some REO properties receive multiple offers within hours.
  9. Remember that the holder of an REO property is looking at a combination of the NET number (your purchase price less any concessions you’ve asked for), a quick closing, and their assessment of      whether you qualify for the purchase.
  10. Finally, be sure your agent has evaluated the pricing structures commonly used by the various Sellers. For example, Fannie Mae tends to price homes a bit higher at first, and then reduce prices slightly if no offers are quickly forthcoming. However, Chase aggressively prices properties, gathers multiple offers, and ultimately closes sales for more than list price.

Auburn, Kent, Algona & Pacific REO sales 2/7/2013-4/8/2013

Buying New Construction in south King County (Auburn, Kent, Renton, etc.)

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presaleAlthough pre-existing home sales were still in recovery mode over the last couple of years, new construction seemed to take on wings of its own, especially in our south King and Pierce County areas. From experience in working with several buyers of new construction in new communities, I can tell you that there are many things to consider. Here are just a few:

  • Can you tour model homes or previous construction by the builder? Especially in larger communities, builders often construct one or more model homes that display standard finishes and upgrades. Sometimes upgrades are a bit tricky to identify, so you’ll want to be sure you and your broker ask lots of questions about what is included in the base price.
  • Is there a HomeOwners Association and are there CC&Rs? If you anticipate buying new construction in south King County areas such as Auburn, Kent, Renton, or Federal Way, you’ll find that, typically, HOA administration is often retained by the builder until the majority of homes are completed. At that time, the Association will elect its own officers and be under its own control, typically still guided by a set of Covenants, Conditions & Restrictions (CC&Rs). CC&Rs are recorded document(s) that list what can and can’t be done as a resident of the community. You’ll want to be sure to review a copy to see if your lifestyle fits within its guidelines.
  • Can you choose both the lot and floor plan? You may find that the builder has already pre-permitted a specific home for each particular lot or may not be willing to build on a certain lot until other areas are completed. If you have your heart set on a specific floor plan, you may need to adjust your site preferences.
  • What sort of warranty is included? Most builders offer at least a one-year warranty, fixing anything that goes awry during that time period (other than normal wear and tear). Some builders, however, offer extended protection plans perhaps protecting you from foundation issues for 10 years, with peeling paint for maybe only 1-2 years.
  • Are there community playgrounds and events? As lot sizes have shrunk in many areas, builders and developers have often set aside areas for outside events. Can you see these by driving through the neighborhood? Does the number and size seem reasonable for the number of homes included in the community?
  • And finally, how long before you can move in? What a sticky question! Some of the most popular builders are completely sold out of current, standing inventory, while others have a few homes that are ready to go. Typically, if a builder can get started on your new house right away, you’ll find that it still takes 5-6 months or so to construct a new home. But be prepared for much longer time frames! If you anticipate buying new construction in south King County areas such as Auburn, Kent, Renton, or Federal Way, you’ll find that many of these jurisdictions seem to be painfully slow or just totally swamped in completing the permit process.

Questions? Please give me a call or send me a message about buying new construction. There’s a lot to learn!

King County Downpayment Assistance

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King County Downpayment Assistance

couple looking at house to buyWashington State’s Housing Finance Commission announced today that their House Key Plus ARCH downpayment assistance program has just received limited funding for borrowers purchasing in the Eastside Cities of King County, including areas extending from Bothell through about Issaquah.

This payment deferred program provides up to $30,000 in downpayment funds (depending on qualifications) for households earning 80% or less of the King County area median income. There are property purchase price limits involved and the buyer must still have about 2% of the purchase price (some gift funds can be used) to also contribute to the downpayment. There are also additional requirements relating to the property itself, whether the home is currently tenant occupied, and so on.

Documentation from House Key indicates that this time around funds are loaned at a 4% simple interest, with payment deferred until the time of resale of the property, when the property is refinanced, transferred to another owner, ceases to be the borrower’s primary residence, or at 30 years.

Additional information is available about the King County Downpayment Assistance program or through a Washington State Housing Finance Commission/House Key trained lender. In addition, because there are specific requirements for the home itself, you’ll also want to be sure to work with a House Key trained real estate broker.

From experience, I know that the amount of funds available go fast! If this is a program you feel might be beneficial to you, or if you have questions about the King County Downpayment Assistance program, please don’t hesitate to contact me.

 

Okay, Should You Sell … and Buy in 2012?

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sitting on fence-flicker by michaelkuhn_picsLike many, you may have been sitting impatiently on the fence for the last three years hoping for a miracle that would allow you to sell your existing home without sacrificing too much more equity … and buy at today’s price and interest rate.

At least once a week I get a call from a previous client or someone “just checking out the market,” wanting to do exactly that. And, who absolutely wouldn’t want to buy a house with the bargains out there??!!

Let me try to help you make a bit of sense out of this type of scenario.

The latest statistics from the Office of Federal Housing Economic Oversight (OFHEO) and Federal Housing Finance Agency (FHFA) indicate that home prices in Washington State, overall, lost approximately 8.67% from the end of 3rd quarter 2010 through 3rd quarter 2011, but gained 111.07% for the 20 year period ending 3rd quarter 2011. Okay .. math … 111.07% divided by 20 years = 5.55% a year appreciation!

Now, assuming that housing prices are getting to the bottom end of their free-fall, let’s also assume that housing prices will continue to appreciate overall at a safe rate of about 5% a year for the next 20 years. There’s still going to be some skidding when reviewed on the short term, but remember that real estate is a long term investment — 10-20 years.

Continuing with assumptions, let’s presume that housing prices in Washington State might fall another 7-8% over 2012 (I think that sounds like a bit much, but my crystal ball is a bit cloudy, so who knows? Note, that The Housing Predictor anticipates an approximate drop in the Seattle area of about 5.1%.)

So … your current house valued today at, say $250,000, might be worth approximately $230,000 or maybe $235,000 by year end. Yikes … another nosebleed of $15,000-$20,000. Perhaps you owe approximately $150,000-$200,000 … and you’re paying around 6% in interest on your mortgage. (Quick math … $200k at 6% = principal & interest payment is approximately $1,200 a month – but you’re paying more than that because you haven’t refinanced since 2008 and your house was worth more and your loan was bigger. I’m guessing you’re probably paying around $1,600 a month principal and interest.)

You want a bigger house, different neighborhood, lower interest rates. And you can buy that for, say, $275,000-$300,000 at today’s prices. At the end of the year (assuming you wait until next December), those houses might be priced at $255,000-$280,000.

Let’s look at what that means to your pocketbook by comparing interest rates.

Right now, rates are sitting right around 4%. They move around a bit … but let’s say 4% just for talking sake.

Analysts have been surprised that rates have stayed as low as they are, so let’s presume they go back up to 5%. If you buy in January rather than waiting until next December, your purchase might look like this:

 

   

Today’s Price

  

Price at End of 2012

Purchase Price

  

$275,000

-7%

$255,000

Down Payment

20%

($55,000)

20%

($51,000)

Amount Financed

  

$220,000

  

$204,000

Principal & Interest Payment

4%

$1,050.30

5%

$1,095.12

Interesting … buying now at a higher price still saves about $45 a month over waiting until year end and paying a bit more in interest.

Now, let’s look back at that historical trend for appreciation. Conservatively, let’s say that  house gains in value 5% a year overall for 20 years.

Therefore, if you buy a house today at $275,000, twenty years from now at 5% a year (hmmmm, 100% increase), historically, that house could be worth approximately $550,000. Plan to keep the house 10 years? How about approximately $412,500?

Should you sell … and buy new in 2012?  “I” think so; personally I expect prices to start to rise in 2013. But, of course it has to make sense to you. If you plan to buy a home and believe you’ll be able to stay in it for 10 years or more, then absolutely.

If your overall payment on a replacement home is within your budget, you have the funds to close the sale of your old home and a new one, then let’s get going while rates are amazing and prices are too!

*man on fence graphic thanks to Flickr, Michael Kuhn

The Value of Photos: It’s Good Seller Representation

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Buyers are hooked on photos. I mean REALLY hooked on what they see when searching online for a home. They read a home’s description in the marketing remarks, then expect to see a visual confirmation of all of the features mentioned. From there they go to Google maps, or Bing, or wherever and pull up aerial photos. They look at birds-eye views; sometimes they try to get elevation views so they can get an idea of what can really be seen when looking out of the living room windows!

Sellers are too! They want to see their home in all of its beauty up on the Web. Every feature. Every room. With flowers in bloom and counters gleaming. They’ve already looked at lots of houses on the internet and know that their house looks at least as good as all of the ones they see, and probably better.

And then there’s us Agents/Brokers. We do a quick MLS search for a home for a particular feature trying to find the perfect house for our clients, or in an attempt to begin evaluating the competition.

When working with clients, it’s so important to listen to what they want and/or why they bought the house they did. Perhaps it’s a great back yard. Or they want “this” kitchen. Or that master bathroom is amazing. That sort of thing. And, as agents, we tend to write all that down and include it in the description.

But sadly, so much of that glorious description isn’t borne out in the photos.

Case in point: Today I began searching for a Buyer who wants a mountain view. My MLS search pointed out 17 listings in his area and price range. Of those 17 listings, only three (3!!) actually gave some attempt at showing the mountain view they described or had included as a feature in the listing itself.

Now that’s a bit of a problem. The client wants to see photos and I’m left to question just how much of a view there actually is. One listing described an “amazing Mt. Rainier view.” Not a picture anywhere. Not even a mention that “The Mountain” really IS out there on a clear day. Of course I’ll drive out and take a look myself, but really? Is the mountain really visible?

Good photos are immensely valuable, especially to the Seller. This “amazing Mt. Rainier view” is intriguing enough to call the Buyer to go take a look. But just imagine how many folks would like to see that view and dream a little … perhaps just enough … to buy the house.

It doesn’t take an expensive camera to get good photos, but it does take paying attention. Both to the descriptions from the seller and to what we actually write. As agents, those are the things we need to emphasize in our photos. Rhapsodizing about the granite counters is one thing — showing a photo of a clean, decluttered, gleaming counter says it all. The potential buyer should say “Wow, Look at That!”

There’s value in that photo and it’s good seller representation.