2007 Year End Real Estate Letter

I hope this annual letter and calendar find you and yours doing well. Please note that your calendar starts on December 1^st so go ahead and start planning next year today.

2007 has been an interesting year in real estate. The good news is the northwest has done very well in these turbulent times (except Tacoma Pierce). Even though we have seen our value increases flatten, our inventory grow and our market times lengthen we are still far better off than many other areas.

Some Stats comparing 2007 to 2004-2006 in Kitsap County (through Nov. 1 2007)
2004 2005 2006 2007

# of New Listings: 5038 5237 5634 6007

# of transactions: 3823 3871 3406 2836

Avg. Days on Market: 65 58 63 89

Avg. Sale Price $254,809 $307,235 $336,299 $367,730

You have heard a lot of talk about our real estate market. Much of the discussion has been framed by the media in a very negative light. When you add to it new highs for the price of oil, a lot of discussion about subprime lending and a falling stock market there is some room for jittery nerves. Real estate is a very local discussion. Sweeping generalizations of the real estate market cannot do it justice, you have to talk with local Realtors to get the straight scoop about their area.

Some facts about our area that make it a great place to live, buy and own a home. Our economy seems to be stable, unemployment is at 4.2%. Though subprime loans in the US accounted for upwards of 20% of the loans made in 2006, in our area only 8% of them were subprime. Money Magazine has listed Silverdale in their top 100 list of best places to live. We are close to the amenities of a large city without having to live with the drawbacks. The increase of population in Washington state for the foreseeable future will continue to outstrip construction.

As promised in last year’s letter, our market has shifted from a seller’s market to a buyer’s market. Though sellers are having to be a bit more patient than years past, and cannot afford to be as aggressive with their pricing, homes are still selling. Buyers are in the best position right now. There is plenty to choose from, sellers are being a bit more negotiable and interest rates continue to stay low.

I believe this trend will hold through the first half of 2008, we should begin to see a shift next summer or early fall. If you are thinking of investing in real estate I would recommend doing so before the end of the first quarter 2008. As this cycle works through, the fed will feel pressure to increase interest rates.

I’ve included with this year’s letter a graph showing how our inventory has grown. Should you have any questions about the graph or other market statistics let me know.

Please have a wonderful holiday season and a safe, healthy and prosperous new year. Should you know of anyone thinking about buying or selling real estate in 2008 please let me know or if you just want a market update please feel free to call or check out one of my web resources. Web Page: www.FranklyRealEstate.com or my Blog: www.FranklyRealEstate.Blogspot.com.

PS....sorry for the formating. Blogger just has never done well with cut and paste from MS Word.

Washington State Foreclosure Facts

Just the word "foreclosure" can send many running or begin to make a person sweat. It carries such negative energy that I think it needs to be put into perspective in Washington state.

Current foreclosure rate in WA:
.49 %

Current foreclosure rate in the U.S.:
1.4 %

1997 foreclosure rate in WA:
.5 %

1997 foreclosure rate in the U.S.:
1.08 %

Even though there is a lot of press right now about foreclosures the nation and WA state are actrually down from highs in 2001/2002 when WA reached 1.24 % and the Nation was 1.51%.

Without perspective the media can drive our real estate market into a holding pattern. Buyers will stop buying and sellers will stop putting their homes on the market.

Bottom line.....this may be the best time that I have seen in 17 years to purchase in our area. There are a lot of homes to choose from, Sellers are much more flexible and to top it all off....interest rates continue to stay very low. To those that ask the question "will interest rates go lower" I respond maybe....but it is not worth the risk. With rates being so low, there is a better chance that they will be higher 12 months from now than they will be lower.

U.S. Housing Market Update

Just reviewed a report from the Office of Federal Housing Enterprise Oversight.

This one paragraph gives a big overview:

The states with the greatest rates of appreciation between the third quarter of
2006 and the third quarter of 2007 were: Utah (12.9%), Wyoming (11.8%),
Montana (7.7%), New Mexico (7.4%), and Washington (7.0%). The states
with the largest depreciation for the same period were: Michigan (-3.7%),
California (-3.6%), Nevada (-2.4%), Massachusetts (-2.3%), and Rhode
Island (-2.2%).

The full report can be seen here....

Silverdale WA voted in top 100 of best places to live 2007.

Those of us who are fortunate enough to live in the area have known it for years. Silverdale was chosen as one of Money Magazine's best 100 places to live in 2007.

See the stats here:

Silverdale top 100 best places to live.

Response to Mad Money’s, Jim Cramer’s comments about real estate on the Today Show

Response to Mad Money’s, Jim Cramer’s comments about real estate on the Today Show:

Jim Cramer is as sharp as they get when it comes to stocks but missed some basic points about real estate.

Buying real estate is not like buying stock. You don’t buy houses low today and sell them high in a few days. Buying a home is a long term vision. How long term depends on your situation and the local economy.

My advice to buyers:
1) Look at your situation. If you are only going to live in the area for a year or so, buying a house may not make sense. If you are going to own this next home for 3 or more years it begins to make more sense in a normal market.

2) Talk with your local Realtor. They know the market history, they know the current inventory and they know the current influences on today’s market in their area.

Generalizing about the real estate market in the United States is as dangerous as generalizing about stock investments. I think even Jim would agree that in a bear market there are still specific companies or sectors that are doing well and would be a good investment even though a large part of the market is down.

New Fangled Fruit......or.....Tools of the Real Estate Trade

New tools of the trade.....

Well I finally made the move to a smart phone. I had been lugging around a MotoRazor, a Palm T-5 and gasp....a pager. I'd been putting it off as communications is not as intense for me as a broker as it might be for an active real estate agent. What pushed me to the next level is remembering basic leadership......lead by example. If I think consistent communication is important for my agents with their clients....if I feel technology is a tool to help buyers and seller feel more involved in the transaction and if I want my agents to use more of the tools that are available to them......you've got it...I better use it as well.

Two weeks ago I picked up my BlackBerry 8703e. So far so good!! I like it a lot better than my Palm and I'm finding I can respond to e-mail questions from my agents a lot quicker.

I added a couple of software items that have made it even better:

Google Maps

Google Search

Google News

Web Messanger (allows for Instant Messaging)

One of the reasons I chose BlackBerry is because e-mail arrives so quickly. It is based on push technology instead of having a device like a Treo which has to go out on a scheduled time and pull the information.

Some drawbacks:

This device does not have a camera or an SD slot which an active agent may find helpful.

A caution:

Spending time with your family does not mean sitting at the same table or in the same room while you cruise your smart phone. It is very tempting to pull it out and respond to messages but resist the temptation. When you are at your kids next ball game, take a look around. Many of the parents that are there have their noses buried in their laptop or smart phone......are they really there??? What experiences are they missing and what messages are they sending in the most wireless of ways to their kids who are looking up to them for encouragement and support.

A new mantra...."It is just a tool.....It is just a tool"

Impassioned discussions about commissions

Below is a response to a blog entry that I placed on my blog in Active Rain where we are discussing use of Realtor.com. There is a lot of passion, opinion and misinformation out there. The whole topic of agent commissions comes up every few years and seems to be quite the blaze right now fueled with discussions about limited and full service brokers, the introduction of new business models like Redfin and Zillo as well as the one sided 60 minutes show.

In my opinion where 60 minuets went wrong was in airing such a one sided view, they lost creditability. Consumers have more options available to them today than ever before. More options means a better experience for home buyer and sellers.

You can see by the below post this ladies frustration, I hope I did an adequate job responding:

THE LISTING BELONGS TO THE HOME SELLER - WHO WANTS TO KNOW WHAT YOU SPENT HIS 6% ON, IF ALL YOU WANT TO DO IS FIND A WAY WHERE YOU CAN MAKE MORE MONEY FOR YOURSELF, AND NOT FOCUS ON GETTING EXPOSURE TO MARKET HIS HOME TO THE MOST QUALIFIED SELLER IN THE SHORTEST PERIOD OF TIME FOR THE HIGHEST PRICE POOSSIBLE. STOP THINKING THESE ARE YOUR LISTINGS. YOU WERE HIRED TO DO A JOB. FOR A LOT OF MONEY. MAYBE YOU SHOULD FOCUS ON THAT.

SO THE SMARTEST THING YOU DID FOR YOUR CLIENTS TODAY IS TO NOT ADVERTISE ON THE SITE WHERE THEY ARE SPENDING ALL THIER TIME... LIGHTS ON - BUT NO ONE IS HOME.

06/01/2007

by MARY RIGGIO

---

Mary, Thank you for your comments. Your message in caps tells me you are very frustrated with the process and perhaps have had a bad experience. You touch on several important issues, lets see if I can address them.

1) "THE LISTING BELONGS TO THE HOME SELLER - WHO WANTS TO KNOW WHAT YOU SPENT HIS 6% ON," I think sellers are always entitled to know what they are getting for their money. Agents should be prepared to meet or talk with their sellers on a weekly basis to cover things like marketing/advertising, showings and showing follow up, homes that have sold in the past week as well as new homes that are now competing with yours.

2) "IF ALL YOU WANT TO DO IS FIND A WAY WHERE YOU CAN MAKE MORE MONEY FOR YOURSELF, AND NOT FOCUS ON GETTING EXPOSURE TO MARKET HIS HOME TO THE MOST QUALIFIED SELLER IN THE SHORTEST PERIOD OF TIME FOR THE HIGHEST PRICE POOSSIBLE." The focus of any listing agent is to help the seller accomplish the goal of selling their house in a time frame and at a price point comfortable to the seller. If the home does not get sold everyone looses. Good agents spend a tremendous amount of time and resources in marketing. Personal marketing as well as property specific marketing. This helps build traffic and momentum which leads to more people seeing more homes. Real estate is like any other business. We are in it to make a fair profit. When profit margins are cut too thin something needs to give, and that is typically service.

3) "SO THE SMARTEST THING YOU DID FOR YOUR CLIENTS TODAY IS TO NOT ADVERTISE ON THE SITE WHERE THEY ARE SPENDING ALL THIER TIME... LIGHTS ON - BUT NO ONE IS HOME." Not all listing are on Realtor.com. A consumer who thinks so is being short changed. The reason why it is important for the listing broker to own the listing data is because we need to bring our knowledge to bear when deciding where to place our listing information. Realtor.com is a case in point. How angry do you think you would be if you had just done a price reduction but it does not show up on their website for a few weeks. This is true with many "third party" websites. They do not have to answer to the department of licensing for accuracy of information. All they care about is having valuable content which will drive traffic to their site so they can charge more for banner ads.

Like any other business relationship. You should choose an agent you trust, who is knowledgeable about the prcess and who shows good judgment and offers good advice. When you choose the right person the rest will fall into place.

Attention + Sevice + Tools + Knowledge + Enthusiasm + Reputation = Value

06/01/2007

by Frank Wilson

The benefits of a home warranty when buying or selling a home.

Home warranties come in as many packages as any other insurance you might have used. In this case we are discussing an insurance policy that might cover various systems in the house that you are buying or selling. Depending on the policy, this could include electrical, plumbing, appliances, furnace, hot water tank, septic, well, pool or spa.

Some policies will cover the house while it is listed and will continue to cover it for a period of time after closing. In many cases if there is a problem the home owner pays only a small fee to have the work done. The policy I use requires a $55 fee which is paid by the home owner at the time of the breakdown. The rest is covered.

A few months back I purchased as a closing gift for one of my buyers a standard policy and added the well rider. Turns out that a few months after closing the well pump burned out. My client simply called the phone number provided, paid the $55 fee and a new pump was installed.

Policies can be paid for by the buyer, the seller or the agent. If you are in a negotiating type of market as a buyer you could ask that the seller provide one. If you are an agent this might be something you offer as a "value added" item.

Regardless of who pays for it, this is something that you would want to at least consider while working through the process of buying or selling a home. Ask your agent for their opinion and recommendation. Like any other insurance policy or product make sure you read and understand all of the documents before signing them.........yes....even the fine print.

To list or not to list....listing information on Realtor.com

A friend of mine by the name of Karen used to work with me here in our real estate office in Silverdale, WA. She had been both an agent and an assistant manager. Some years ago (they fly by way to fast to count) she moved to the east coast and eventually to Florida where she practices real estate.

Karen e-mailed me this morning asking for my take on this article; http://realtytimes.com/rtapages/20061130_seattlepullout.htm

Here are some of my thoughts:

This article comes from an interesting angle….”why are brokers choosing not to put their listings with Realtor.com”. I would come from the other side…why would brokers want to???

The Realtor organization is a fantastic organization for providing services to its’ members like; education, a consistent code of ethics, cost savings from third party vendors and for acting as a political watch dog regarding property rights, land use and legislation that affects our business.

They were not used for marketing or promoting our listing inventory. That has always been the broker’s job. In some areas there may be a crossover. Some Multiple Listing Services (MLS) are owned by the local Realtor organization.

So lets break this discussion into a two pieces; context and reasoning:

Context:

Some years ago, National Association of Realtors decided to start Realtor.com. They hired a third party to put this whole thing together and it is now operated solely by this third party as NAR has distanced themselves from it. The third party was Homestore, but is now known as Move Inc. and trades on the NASDAQ as Move.

The reason NAR felt there was a need for Realtor.com is because real estate firms in the midwest and on the east coast did not share their listing information in a way that the public could access it on line. The consumer would have to access each broker’s webpage, one company at a time to see what was on the market.

This is very different than those of us in the northwest. From the beginning we felt it was a benefit for the public to get their listing knowledge and market information right from the horse’s mouth. So each of us share with the other all of our listings. We would rather have the consumer go to our competitors website and get accurate up to the minuet information then to a third party vendor.

So now we have a for profit company, who looks and feels like NAR but really isn’t and they want to collect, distribute and profit from the listings that our agents have worked so hard to get.

Here is some of the information from their web page, italicized: Stock Quote

Top of Form Bottom of Form MOVE (Common Stock) Exchange NASDAQ GS (US Dollar) Price $6.29 Change (%) 0.03 (0.48%) Volume 1,403,481 Data as of 02/26/07 4:47 p.m. ET Minimum 20 minute delay Move, Inc. provides consumers with the real estate content, decision support tools and professional connections they need before, during and after a move. For the last ten years, MoveT, the new Homestore®, has been providing information and decision support tools for consumers looking for home and real estate-related information on the Internet. Visitors to Move's Web sites, including operates REALTOR.com®, Move.com™, (formerly Homestore.com®, RENTNET® and HomeBuilder.com®) and SeniorHousingNet™ have access to the most comprehensive selection of existing homes for sale, new homes, apartments for rent and senior housing. Consumers also have access to home plans and construction-ready floor plans through Move's Homeplans Company . This information is provided so that you may put Realtor.com in context. Realtor .com is not the “Mother ship” as the author of the referenced article would have you believe. In fact it is just like many of the marketing vehicles currently available to brokers such as newspapers, home magazines and other third party website vendors. Some reasoning: Now that we know what Realtor.com is, or isn’t, let’s talk about the reasoning behind the decision not to turn listing information loose. In an earlier blog I addressed “whose listing is it?” If you’ve taken a moment to peruse past articles you’ll see that I firmly believe that the listing is the property of the listing broker. It is their privilege to be able to help sellers sell their home but it is also the broker’s responsibility to ensure the information is true, accurate and up to date. It is also the broker’s responsibility to market the property in a way that reflects positively back on the seller and the brokerage. In its simplest form, a website is much like a flyer. If done correctly it can illuminate the high points and features of a home as well as carry an image of the broker. They can also look pretty poor if not done well. We have all seen a flyer that is a third generation copy that does not carry the image the broker or the seller would be proud of. So why turn this responsibility over to a third party web designer whose goal is to sell banner ads? In essence they increase the value of their site by publishing our listings. This drives more traffic to the site which means their electronic real estate becomes more valuable to advertisers. While I appreciate the importance of earning a profit and running a business, it is important to keep in mind our goals. A third party internet web companies goal is to attract traffic to their site so that they can sell advertising and or spin a lead off to an agent to earn a referral fee back. The goal of a real estate firm is to promote a listing, provide accurate and timely information, provide a searchable data base, allow the public to meet our agents and promote the image of the company. Lets take a moment to talk about accuracy. Currently the Department of Licensing in Washington state (I’m sure other states as well) requires a broker to promote a listing with accurate information. If we were running a listing in the paper that was already sold, or contained incorrect information we could be called to task. This same standard is carried out to the internet as well. While I’ve not heard of DOL prosecuting agencies for improper internet advertising their light will be shining in that corner soon. No one will be as responsive as the broker to make appropriate changes. Before we had our listings removed from a local home magazine website we had a lot of calls on listings that had long ago closed but had not yet been removed by this third party vendor. The same has been reported about Realtor.com. Different solutions for different companies: If you are a small company who has just surfed in on this latest real estate market then Realtor.com may be a good solution. You need to employ every tool possible to make yourself appear larger than you are. If you are a larger company who has successfully invested marketing money into a website, then there is no better tool for providing the consumer with the best experience. That is the benefit of running a business or being an independent contractor….you get to make these decisions. Don’t forget to read the fine print……”all decisions are subject to change.”

Real Estate Statistics for Kitsap County, WA 2/18/2007

Watching stats like these will help you determine what kind of a market you are in.
For Kitsap County Washington as of 2/18/2007
1350 Active Listings
71 Homes went Pending last week
77 Average Days on Market

$305,601 Average List Price
$300,937 Average Sale Price

98% List price to sale price ratio

19 weeks of inventory

Learn more about Defining Your Market.

Who owns the listing data?

I just finished reading and responding to a discussion in the INMAN blog

http://www.inman.com/hstory.aspx?ID=61445

The reason I think this is an important issue is because it comes down to, who is responsible for the way your home is marketed?

In my opinion that should be your real estate professional.

Many websites are building traffic to their site by using other peoples information. The challenge with this is that information becomes dated or is entered on the third party site incorrectly or incompletely. By ensuring the chain of ownership and responsibility you can be sure your property is marketed in it's best light.


Here is my response or comment in that blog:

To answer who owns the listing information you need only follow the chain of responsibility.

The real estate broker/agent enters into a contract with a seller, which allows the real estate broker/agent to offer and market the seller’s property for sale.

The real estate broker/agent is responsible for entering the information into their local MLS, print media as well as any internet marketing that is done. If the information is incorrect or incomplete the broker and agent are held responsible.

If it were not for the listing agreement the information would not be made available. The listing information provided is usually above and beyond what is public record through county records.

The photos added, the descriptions used and the pricing strategy are all services brought to bear by the real estate firm and its agents.

Since real estate agents can not practice real estate unless they are a broker or work for a brokerage firm, ownership of the listing, the data and the responsibility lands squarely at the broker’s feet.