The Craig McKenzie Team Blog

Is the Market turning around?

The Craig McKenzie Team — Tue, 15 Apr 2008 12:31:00 GMT

With all this discussion about recession and the adjustable mortgage rate crisis, you may be thinking that its a good time to stay on the sidelines and as far away from the Real Estate Market as you possibly can. You're not alone in those concerns. A recent article on Realtor.com states that foreclosure filings are up 5% over February of 2007, and a whopping 57% over March of 2007.

According to the National Association of Realtors (NAR), although the first half of the year is predicted to only improve slightly, the last half should see us starting to turn things around, and next year even better.

For me personally, things have definitely started to pick up. I have several solid listings in inventory, and also have several transactions in pending status. Its not as busy as 2005 & 2006, but its definitely an improvement over the first few weeks of the year.

I suppose the bottom line is that the market is a living, breathing animal, subject to the wants and needs of consumers. And while its true there are fewer qualified buyers out there, there are still plenty of people who want and can afford to buy. And we'll continue to provide them with the best client care possible.

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It's Spring!!

The Craig McKenzie Team — Fri, 04 Apr 2008 16:50:00 GMT

I realize that not everyone reading this blog resides in the Pacific North West. But if you do, then you have a solid appreciation for a warm, sunny day. When these days first start to appear, the Sun not only warms the Earth, but the soul as well. You're revitalized, awakened, and energized.

So get out there and put that energy to good use; go for a walk in the forest or on the beach, and be reminded why you live in the Pacific North West (because its beautiful).

On the home front, use that surplus energy to spruce up your home. This is particularly important if you're thinking of putting your home on the market. Right now, there are more homes for sale than there are buyers. So you really want your home to jump up and say, "Look at me!!!"

Start by looking at your house objectively, as though you were thinking of buying it for the first time. What do you see? Is the paint peeling or faded? How about the trim: could it use a touch-up?

Here are some suggestions to help get you on your way. Even if you're not planning on selling your home, it always feels good to purge away the winter doldrums.

Outside:

Pull the weeds in your flower beds, and while you're at it, any plants that didn't survive the winter. Add some new, brightly colored flowers and add a fresh layer of topsoil/bark.
Get that lawn mowed, trimmed and weeded before it has a chance to get the upper-hand. (Now's also a good time to re-seed those bald spots in the yard.)
Prune your trees, especially the ones that might block light from your house. The brighter the inside of your home, the more spacious it feels.
Make any repairs you've been avoiding. Replace lightbulbs, clean out the gutters, paint/repair the fence.

Inside:

Wash your walls. Repair and repaint any scratches or dents. If you're planning on selling, you may just want to paint the walls. If you do, be sure to stick with lighter, neutral colors. Again, the brighter a room, the more spacious it feels.
Check around the windows and sills for mold or mildew buildup. If you find it, you can use a mild solution of bleach and water to clean and disinfect (be sure to do this only in a well ventilated area!!).
Go through your closets and dressers, and purge all of the things you haven't worn in at least a year. Worn out shoes, too-small belts, and socks with holes in the toes really have no further use to you, other than to take up space (which, as we all know, is truly at a premium already).
Clean in places you wouldn't normally think to clean: the top of the kitchen cabinets, the light fixtures, under the bathroom sinks (might as well purge in there, too), under the beds. Remove the filter from your hood range and clean that as well (most of them are dishwasher safe).

These are, of course, just a few suggestions. I found a wonderful article on About.com that includes checklists, cleaning supply lists, etc. I hope you'll find it useful as well.

Well, because of all of this Springtime energy, I could probably go on forever. But rather than keep you tied to your computer any longer, I'll let you go so that you can jump into all those projects, and burn off some of your own Springtime energy.

Until next time, Happy Spring!!

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Short Sales in a Tough Market

The Craig McKenzie Team — Fri, 28 Mar 2008 16:26:00 GMT

You may recently have been hearing a lot about a home sale transaction called a "short sale." Although this is not a new term, the adjustable rate mortgage crisis has given it renewed popularity. Simply defined, a short sale occurs when a bank or lender agrees to discount the outstanding balance on a mortgage. The homeowner then sells the home for less than the amount owed, and gives all of the proceeds from the sale to the lender. The lender may then forgive the remaining balance of the loan.

This can be very beneficial to the homeowner who is in danger of foreclosure. Although they still have to sell their home, they avoid having a foreclosure on their credit report. It can also be a better situation for the lender, as they don't lose as much money as they would have if they'd had to foreclose.

Although there are positives for both parties, it isn't a given that the lender will agree to the short sale. There can be a lot of "red tape" involved. Most lenders have specific criteria to determine who's eligible for this type of transaction.

Wikipedia has a great article that explains short sales a bit more in depth. Another article, from the Tucson Sun, also gives a bit more information and perspective.

What it boils down to is that each homeowner has his/her own set of circumstances that can influence both the availability and outcome of a short sale. Talk this over with your lender and an experienced real estate agent to ensure that you know what you're getting yourself into, and that its the right fit for you.

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Real Estate Language Part 3

The Craig McKenzie Team — Fri, 22 Feb 2008 16:49:00 GMT

Hello Again -

Well, its turning into a pretty busy year here for the Craig McKenzie Team. Although the year started off a bit slow, we seem to have created some strong, forward momentum, and are really seeing some positive changes in this market.

Our last two blog entries focused on the definitions of some more common real estate terms. There's one final installment, and then we'll wrap up this series. As always, if you have any questions about these definitions, don't hesitate to let us know.

Note rate: The interest rate stated in the legal document (note) used as evidence of the borrower's debt to the lender. The document also describes how the loan will be repaid.

Origination fee: Fee charged by the lender to process a loan application and underwrite the loan. It is usually 1 to 3 percent of the loan amount.

Points: The amount equal to 1 percent of the principal amount of the loan. For example, if the loan is $50,000, a point would be $500. Points are charged by the lender to increase the yield on a loan to make it comparable with other types of investments.

Rate lock-in: A guarantee that the interest rate will remain the same for a specified period of time. Whether the loan's interest rate index rises or falls during that period, the borrower pays the rate which was current at the time of the lock-in agreement.

Replacement cost: The cost of replacing property without deduction for depreciation.

Second mortgage: A mortgage placed on a property which has a second claim (or secondary rights of foreclosure) to a first mortgage on the property.

Secondary market: Investors who purchase loans from lending institutions, providing those institutions a secondary source of funds other than deposits from which the institutions can offer more loans.

Title insurance: A policy which insures current ownership of the property regardless of previous claims against the property and insures the lender's claims on the property resulting from the loan.

Underwriting: A series of criteria used by the lender to determine whether a loan application should be approved or denied.

Wraparound mortgage: Seller keeps original mortgage. Buyer makes payments to seller, who forwards a portion to the lender holding the original mortgage.

Well, these are the last of the definitions, unless there are terms not listed here that you would like us to define. If so, just send your request to us @ mckenzie@whidbey.net. We'll respond to you as quickly as possible, and then add that to your list of definitions for future installments.

We hope that so far this year is proving to be successful for you, both personally and financially. Please check back again soon for more additions to The Craig McKenzie Team Blog.

Thanks!

Craig, Dawn & Tammi-

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Real Estate Language (Part 2)

The Craig McKenzie Team — Thu, 27 Dec 2007 16:47:00 GMT

Hello again!

Welcome back to our team's blog. We hope that you've had a safe and happy holiday season so far. We also wish that the coming new year is the best one yet!

In our last blog, we started a list of definitions of common real estate terms. These terms may be common to us, the title and escrow companies, and the lenders because we use them everyday. However, they may not be so familiar to someone who is buying a home for the first time, or maybe making their first property investment. If you need clarification of any of these definitions, please let me know...I'm happy to explain further.

Discount: A reduction in the interest rate offered by the lender, usually for an additional fee referred to as discount points. A form of loan fee, sometimes called a buy-down.

Earnest-money agreement: Also known as the sales contract, it is a written agreement between the purchaser and seller setting forth all terms and conditions of the sale. This "good faith" agreement is accompanied by a sum of money (earnest money) given to bind the sale.

Escrow: Process which is performed by a third party which makes certain the interest of the buyer and seller and lender are satisfied.

Equity: The interest or value which an owner has in real estate, over and above the mortgage or debt against it.

Mortgage insurance: Lenders require this when the borrower makes a low down payment, usually a amount less than 20 percent of the purchase price.

Loan to value ratio: The relationship of the loan amount to the appraised value of the property or the sale price, whichever is the lower. The ratio is usually expressed as a percentage.

Lien: The right given by law to satisfy debt. A legal claim of one person or company on the property of another for purposes of securing a debt.

And last but not least...

Negative amortization: Occurs when the monthly payment is not enough to pay interest on your loan. The unpaid interest is added to the unpaid balance of the loan. Instead of reducing the amount you owe, negative amortization means you owe more than you initially borrowed. This usually occurs only on certain adjustable-rate mortgages.

Well, I think that's enough for this post. Again, please let me know if you have any questions about these definitions, or again, would like to ask for a definition I haven't covered.

We hope you have a fantastic, safe, and prosperous new year. Thank you for your friendship, trust and business throughout the year...we wouldn't be here without you!!

Sincerely,

The Craig McKenzie Team

Craig, Dawn & Tammi-

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Real Estate Language (Part 1)

The Craig McKenzie Team — Fri, 07 Dec 2007 14:32:00 GMT

13+ years of real estate experience has made me very fluent in the language of real estate. Sometimes it's easy, after all these years, to forget that first time buyers (and even experienced buyers) can be confused, bewildered, or overwhelmed by the terminology that I use everyday. So I thought it would be useful to share the definitions of some of the more commonly used terms. Now, this can turn in to quite a lengthy list, so I plan to cover just a few terms in each post. Please feel free to email me with questions about terms I haven't listed, or if you need further clarification on any of the terms I have listed.

Adjustable-rate mortgage (ARM): This particular type of mortgage has received a lot of press in recent months. It's a mortgage in which the interest rate increases or decreases over the life of the loan based on market conditions, resulting in possible changes of your monthly payment. Some of these loans have rate "caps" that limit the amount your interest rate may change. An ARM, which has many variations, generally has a lower initial rate than a fixed-rate loan because the borrower assumes the risk of the rising or falling market. This is part of the reason it has received so much attention as of late; many homeowners have been unable to afford their new payments, have defaulted on their loans, and have ultimately gone on to foreclosure. If you are considering an ARM, be sure to have a thourough understanding of it's details before making your final committment.

Amortization: The gradual repayment of debt by means of systematic installments of principal and interest (monthly payments) over a set period (term of the loan). At the end of the period, there is a zero balance.

Closing costs: All costs, other than the loan origination fee, paid by the seller or the buyer when the loan is finalized. Examples include lawyers' fees, title search fees, title-insurance premiums, deed recording and transfer tax.

Conventional (fixed-rate) mortgage: A mortgage in which the interest rate and payments remain constant over the life of the loan.

Deed of trust or Mortgage: Establishes the lender's legal status in the property.

Depreciation: Decrease in the value of property over a period of time due to use, wear, tear or obsolescence.

Disclosure statement: There are actually different types of disclosures required by law. In a residential mortgage transaction, the lender or credit arranger is required by the Federal Government's Truth in Lending Act (also known as TILA) to provide the buyer with a good faith estimate of the loan's finance charges within 3 days of receiving the written application. These charges include the total finance charge (the sum of all fees and charges the borrower pays in connection with the loan) and the annual percentage rate (the expression of the total cost of the loan as an annual percentage of the loan amount). These figures enable a borrower to "shop around" by comparing loans with different prospective lenders.

Another type of disclosure is the Property Disclosure Statement, which is required by law in the State of Washington. This is a statement that discloses to prospective buyers the seller's knowledge regarding the property's condition and other material information. It's imperative that the seller complete the form to the best of their knowledge, as inaccuracies can be costly.

That's probably enough information for one day. As I mentioned earlier, I'll continue this list of definitions in future entries. In the mean time, I'm happy to answer your questions, or, if you have a specific term you'd like defined, let me know, and I'll be sure to get that definition to you right away.

Have a great week!

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Welcome to our blog!

The Craig McKenzie Team — Mon, 03 Dec 2007 15:34:00 GMT

Hello All -

Welcome to the first installation of The Craig McKenzie Team blog. Here we'll be discussing the different trends in the Real Estate Market, Real Estate language, current events both nationally and locally, and "goings-on" with The Craig McKenzie Team.

We have a lot of changes coming up that we're hoping will spice up the local market, so check back frequently to stay informed.

We look forward to chatting again soon!

Craig, Tammi & Dawn-

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Thoughts on the market

The Craig McKenzie Team — Mon, 03 Dec 2007 15:33:00 GMT

It seems these days that everywhere you turn, you hear that the real estate market is crashing to an all time low. While it's true that nationally, the country is experiencing a rough, and rather scary, market, here in Washington, our market is quite stable. Home appreciation in Washington continues to out-perform the rest of the nation with year-to-year price increases every quarter since the spring of 1995. Washington has a robust economy with it's roots in aerospace, technology and exports. Our unemployment rate is extremely low, and we continue to add jobs to the marketplace.

One reason that Washington is different is that the home market isn't keeping pace with the growth of the state's population, which continues to increase at 1.8% per year. The state's population will increase by nearly one million over the present decade and reach 6.8 million by 2010. About two thirds of the growth is due to in-migration; the rest is a result of the growth of families now living in Washington (these statistics are from the WA State Office of Financial Management).

Home prices here continue to increase an average of 8.1% since the same time last year. In fact, many counties have experienced price hikes much higher.

Fewer than one percent of mortgages end in default in Washington State, and the foreclosure rates are the same as they were 10 years ago. Financial guru Suze Orman calls owning a home "the absolute best investment out there, bar none." And as rates are low, purchasing a home in Washington is an excellent long term investment.

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