Stats By Kat King & Snohomish County Copy

Snohomish & King County Real Estate Market Update

Happy New Year! As your dedicated real estate consultant, it is my goal to provide you with timely updates on the local market and valuable insights into investment opportunities. Snohomish and King County real estate markets are pretty intense for this time of year!

Snohomish & King Counties Real Estate Market Update:

15 January 2024

 

The month’s supply of inventory in Snohomish and King Counties has continued to decrease, indicating quite a few more buyers are making offers than new listings coming on the market. Between 55% – 62%  of “New Listings” in both counties were snapped up within the first 7 days on the market if they listed between December 31st & January 6th. At this point, many of the homes that remained on the market from last summer and fall are now getting under contract. The Average Days on Market (DOM) are up to nearly 30 days in both counties, but with shrinking inventory, the DOM will likely start coming back down soon.

Looking Forward:  With the decreasing housing inventory, lower interest rates and a higher than usual demand for housing, January is starting to see quite a few bidding wars on the “New Listings” coming on the market. The craziness has begun and activity is ramping up with increasing number of buyers going to Open Houses. I’m also hearing from buyers and sending them to lenders to get Pre-Approved so we can begin their house-hunting Journey!

Let’s Talk About the New Rules in Real Estate:

Effective 1 January 2024

As in all professions, laws and regulations change over time, hopefully for the good. As of January 1^st, when Buyers’ Brokers represent a Buyer, we now should have the Buyer sign a Buyer Brokerage Services Agreement (BBSA) before we show them properties. This agreement can be non-exclusive or exclusive and can be limited to 1 property or    1 day but will need to be executed each time we continue to show the buyer properties until, the buyer feels comfortable enough to sign an agreement over an extended length of time (ex. 90 – 180 days). The form also allows for the Buyer to disclose whether they have entered into an agreement with another broker/s.

 

 

Here is a summary of the revisions:

For years, real estate brokerage firms were only required to enter into written agreements with sellers, not buyers. Beginning on January 1, 2024, the Agency Law will require firms to enter into a written “brokerage services agreement” with any party the firm represents, both sellers and buyers. This change is to ensure that buyers (in addition to sellers) clearly understand the terms of the firm’s representation and compensation. The services agreement with buyers must include:

• The term of the agreement (w/default term of 60 days & an option for a longer term);
• The name of the broker appointed to be the buyer’s agent;
• Whether the agency relationship is exclusive or non-exclusive;
• Whether the buyer consents to the individual broker representing both the buyer and the seller in the same transaction (referred to as “limited dual agency”);
• Whether the buyer consents to the broker’s designated broker/ managing broker’s limited dual agency;
• The amount the firm will be compensated and who will pay the compensation; and any other agreements between the parties.

• Any other agreements between the parties.

 

Revised Agency Law Substitute Senate Bill 5191 sets forth the revised Agency Law in its entirety.

https://lawfilesext.leg.wa.gov/biennium/2023-24/Pdf/Bills/Session%20Laws/Senate/5191-S.SL.pdf?q=20230717112702.

The pamphlet entitled “Real Estate Brokerage in Washington” provides an overview of the revised Agency. Please see the full pamphlet at the bottom of the page.

Happy New Year! As your dedicated real estate consultant, it is my goal to provide you with timely updates on the local market and valuable insights into investment opportunities. Snohomish and King County real estate markets are pretty intense for this time of year! Snohomish & King Counties Real Estate Market Update: 15 January 2024   The month’s supply of inventory in Snohomish and King Counties has continued to decrease, indicating quite a few more buyers are making offers than new listings coming on the market. Between 55% – 62% of “New Listings” in both counties were snapped up within the first 7 days on the market if they listed between December 31st & January 6th. At this point, many of the homes that remained on the market from last summer and fall are now getting under contract. The Average Days on Market (DOM) are up to nearly 30 days in both counties, but with shrinking inventory, the DOM will likely start coming back down soon. Looking Forward: With the decreasing housing inventory, lower interest rates and a higher than usual demand for housing, January is starting to see quite a few bidding wars on the “New Listings” coming on the market. The craziness has begun and activity is ramping up with increasing number of buyers going to Open Houses. I’m also hearing from buyers and sending them to lenders to get Pre-Approved so we can begin their house-hunting Journey! Let’s Talk About the New Rules in Real Estate: Effective 1 January 2024 As in all professions, laws and regulations change over time, hopefully for the good. As of January 1st, when Buyers’ Brokers represent a Buyer, we now should have the Buyer sign a Buyer Brokerage Services Agreement (BBSA) before we show them properties. This agreement can be non-exclusive or exclusive and can be limited to 1 property or 1 day but will need to be executed each time we continue to show the buyer properties until, the buyer feels comfortable enough to sign an agreement over an extended length of time (ex. 90 – 180 days). The form also allows for the Buyer to disclose whether they have entered into an agreement with another broker/s.     Here is a summary of the revisions: For years, real estate brokerage firms were only required to enter into written agreements with sellers, not buyers. Beginning on January 1, 2024, the Agency Law will require firms to enter into a written “brokerage services agreement” with any party the firm represents, both sellers and buyers. This change is to ensure that buyers (in addition to sellers) clearly understand the terms of the firm’s representation and compensation. The services agreement with buyers must include: • The term of the agreement (w/default term of 60 days & an option for a longer term); • The name of the broker appointed to be the buyer’s agent; • Whether the agency relationship is exclusive or non-exclusive; • Whether the buyer consents to the individual broker representing both the buyer and the seller in the same transaction (referred to as “limited dual agency”); • Whether the buyer consents to the broker’s designated broker/ managing broker’s limited dual agency; • The amount the firm will be compensated and who will pay the compensation; and any other agreements between the parties. Revised Agency Law Substitute Senate Bill 5191 sets forth the revised Agency Law in its entirety. https://lawfilesext.leg.wa.gov/biennium/2023-24/Pdf/Bills/Session%20Laws/Senate/5191-S.SL.pdf?q=20230717112702.     The pamphlet entitled “Real Estate Brokerage in Washington” provides an overview of the revised Agency. Please see the full pamphlet at the bottom of the page.   Following is one example of the new Buyer Broker Services Agreement. Taking a Second Look at Investment Opportunity: 1303 Elizabeth Ave, Bremerton, WA   There are many ways to think about best perspective for purchasing multi-family investment properties. Here are a couple scenarios. Turnkey Ready: If you do not want to do any work and would like it to be turnkey ready, then look for properties that have been updated, should require very little maintenance for the next 10 years (these will likely be rented at market value). Those properties will usually be priced the highest. And some of these do pencil. Elizabeth Ave could be an example of an updated property with market value rents! Rents Below Market and/or Needs Updating: Another way to look at investing in multi-family is to consider buildings that need cosmetic updating and/or may be leased far below market. Again, Elizabeth Ave is a good example. The current owners purchased the Triplex in March 2022 (almost 2 years ago) for $479,000. It appears that the units had already been updated, but the rents were under valued by quite a bit. The monthly income for the 3 units was $2,850/month. They are now getting $5,800/month. It looks to me like they literally just raised rents and are now trying to justify a price of $675,000.     Elizabeth Avenue Triplex Cash Flow Analysis!   Following is a summary of the Cashflow/Investment Analysis and the associated assumptions for the Bremerton Triplex at 1303 Elisabeth Avenue (Listed for $675K, which I think is too high). My calculations are based on a Purchase Price of $600K.   Assumptions:   3 Units, 1 bed for $1,850/month and 2 bed for $1,850/month and the 3 bedroom unit at $2,100/month.   Purchase Price of $600,000 (75K less than List Price) 25% Down: $150,000 Term: 30 years at 8%   Total annual gross income: $69,600 Total Expenses: $18,745 Property Taxes: $4,095       Property Insurance: $1000       Property Management: $6,960       Repairs & Maintenance: $2,400 Other: $150       W/S/G: $4,140 Vacancy: 5% – $3,480/year NOI (Net Operating Income): $47,375 Annual Debt Service (total loan payments for the year): $39,623 Pre-Tax Cash Flow: $7,752 After Tax Cash Flow: $9,143 (assuming effective tax rate of 20%)   Depending upon the physical condition of this property, this property looks very appealing at the Purchase Price of $600K. A solid investor could be fine paying a bit more if the inspection is fairly clean and no major maintenance should be required in the next 5-10 years. Call me if you have questions regarding purchasing or selling real estate, investing in multi-family or if you know of a builder looking for building plat or getting ready to sell a plat. I look forward to hearing from you!

 

 

Snohomish & King County Real Estate Market Update

I hope you all had a wonderful Christmas Holiday! As your dedicated real estate consultant, I aim to provide you with timely updates on the local market and valuable insights into investment opportunities. Snohomish and King County real estate markets are COOKING!

King & Snohomish Counties Real Estate Market Update

24 December 2023

 

The month’s supply of inventory in Snohomish and King Counties has continued to decrease, indicating quite a few more buyers are making offers than new listings coming on the market. In Snohomish County Average & Median home sales prices rose 16% since January 2023. Average sales prices are up 14% in King County. Nearly half of “New Listings” in both counties were snapped up within the first 7 days on the market if they listed between December 10^th & December 16^th! The listings that don’t get under contract within the first 7-14 days are seeing a bit longer market times and many are reducing price.

Looking Forward:  With the decreasing housing inventory in December, this January could see some more bidding wars. If considering a home purchase during the first few months of next year, getting Fully Under-Written with a lender before submitting an offer may provide necessary leverage and enhance competitiveness.

All letters from lenders are not created equal! There are Pre-Qual Letters (nothing has been verified and not worth the paper they are written on). Pre-Approvals are the most common financial qualification letters submitted with offers. But being Fully Underwritten is the best way to go for most buyers who may wind up competing against another buyer/s. For this Fully Underwritten letter, the buyer has submitted ALL of the required documentation and the underwriters have verified absolutely everything about this borrower. The buyers’ loan has been approved (to a specified dollar amount) and the underwriters are just waiting for an address, appraisal and insurance binder to close on the loan.

Please see Robert’s explanation of the different types of Letters from Lenders to be included when making an Offer.

Exploring another Investment Opportunity:

952 Highland Avenue, Bremerton, WA

 

Following is a summary of the property in Bremerton with 5 units (studios and 1 bedrooms) cashflow/investment analysis and the associated assumptions. This would be a typical investment purchase and would not qualify for conventional financing.

 

Income (Gross Rents + Additional Income)

5 Units:

#A – $1,125/month

#B – $875/month

#C – $1,350/month

#D – $1,150/month

#E – $1,050

 

Additional Income:

Laundry – $150/month

Utilities paid by tenants – $320/month

 

$6,020/month Gross Income ($72,240/yr)

 

Purchase Price of $948,000

25% Down: $237,000

Term: 30 years at 8%

Monthly Payment: $5,217

 

Traditional Investor Scenario:                                       

Total annual gross income: $72,240

Total Expenses: $22,667

Property Taxes: $5,397                                        

      Property Insurance: $1,800               

      Property Management: $6,660

      Repairs & Maintenance: $2,400

      W/S/G: $3455

                     Other: $2,955

Vacancy:  $3,330/year

NOI: $46,243

Annual Debt Service: $62,605

Pre-Tax Cash Flow: -($16,362)

 

At a purchase price of $948,000, this investment property does NOT pencil. This property is way over-priced. I thought it was interesting because it has a coin operated laundry for additional income and the landlord appears to be charging the tenants for some of the utilities.