VerraTerra loosely translates to Truth in Real Estate. That is what we are and what we represent to our clients. Many of the skills and traits we want in a team member are similar to those anyone one would ask for: honest and reliable, someone who is organized, an excellent communicator, has great computer knowledge, is personable, and has reliable transportation, etc. These are all a given, but what we’re looking for in addition is someone of a particular personality and mind set…something we cannot train you on. Take a look at these questions:

Do you find yourself often questioning what’s usually accepted as tradition?
Do you consider yourself somewhat of a rebel?
Do you like taking something, breaking it and ultimately rebuilding it into something more amazing?
Do you want to help guide an entire industry into a new era?
Do you relish at the thought of helping people in ways they never thought possible?
Do you want to be different than the norm? Are you different than the norm?
Do you have a real estate license in the state of Washington?
Do you like to speak your mind, even if it’s the unpopular thing to say?
Do you believe in the VerraTerra way? Look through our website before you answer that.

If you answered yes to all of these or even most of these, you’ve got what we’re looking for. Send us your resume and include in a cover letter that tells us how you are everything you said yes to above. Send it to jobs@verraterra.com.

Your role with VerraTerra is going to be paramount to our growth and success. We need someone that complements the skills we have and can bring their own flavor into what we do. We are great at ideation. We have a ton of ideas and plans that seriously kick ass, but need someone who excels at execution to help bring the ideas to life. That’s where you would come in. We need you to put ideas into action. Not a great idea? Then make it better. You can’t be afraid or worried if an idea flops. We’ll all learn from our mistakes and move on to better ideas.

In addition, we have buyers, sellers and properties that we manage that we need your help in handling. The more experience you have in real estate the easier it will be for you to get up and running with this part. Even with less experience, we can train you on everything you need to know.

In terms of compensation, we haven’t decided on what’s the best way. It kind of depends on you. Options include hourly, commission, or even joining VerraTerra as a partner and profit sharing. Any idea won’t be disregarded if it makes sense for everyone.

If you think you got what we’re looking for, …let’s talk.  If you think you got something we should have, but are not yet looking for, great! …let’s talk.

Welcome to VerraTerra.

Qualification

The first step to take when purchasing a new home is to speak to your selected mortgage advisor to find out a) what you qualify for by taking your application and pulling your credit and b) choose the financing option that works best for you and your goals for your new home.

Purchase and Sale

After you are pre-qualified you will likely look at homes with your real estate agent. Once you find the one that is right for you and in your price range an offer is made on the home. When you have an accepted offer, the purchase and sale is forwarded to both your escrow agent and mortgage advisor so they can take the necessary steps to process your transaction.

Collecting Documentation

At this point your mortgage advisor will give you a list of documentation that is needed for submission and underwriting. Disclosures are always part of that packet but these items also include and can vary from just a pay stub and 2 months bank statements, to every asset in your portfolio with 2 years tax returns, W-2’s and pay stubs. There are occasionally other items as well, depending on your unique situation. The point is to collect as much information as possible up front to make the underwriting process streamlined and therefore save time and close your purchase on time or early.

Submission

Submission of your loan takes place as soon as all the documentation necessary is collected and the package is put together and handed off to the processor for a pre-underwriting audit.

Audit

When the processor receives the file s/he will review everything in the file including the disclosures, income, assets, underwriting findings, credit and loan application to ensure we are in compliance and everything is complete for underwriting. If there are any questions or crucial information is missing, the processor will notify the mortgage advisor immediately and the mortgage advisor can then come back to their client to collect whatever is necessary. Then the processor orders all services for the loan including title, escrow, insurance if available, appraisal and any other necessary third party information. At that point the loan is ready to be submitted to underwriting.

Underwriting

The amount of time for review in underwriting depends on the turn times at the time of submission. It can be a quick as 24 hours or as slow as 3 weeks! Your mortgage advisor will tell you what the turn times are when s/he submits your loan.

Conditions

Once the file has been reviewed conditions are issued. What that means is the underwriter approved your file subject to the conditions they list. Conditions can be as small as an explanation letter for your credit inquiries to as large as tax returns to verify rental income. You can have as few as 0 or as many as 20 or more condition items depending on the specific loan situation. The underwriting process is the most time intensive during the path of the loan so it’s important to be prompt in returning conditions to your mortgage advisor and ask questions if you don’t understand why something is being asked for.

Requesting Documents

After all conditions are signed off by the underwriter, you will receive a final approval. This means your loan is officially approved and your mortgage advisor can request loan documents. When requesting loan documents, the mortgage advisor or their processor fills out the lender’s form verifying all the information on the loan transaction and all fees to be charged. Once the lender receives that form and processes it, along with any quality control procedures, they are ready to
draw documents.

Documents (docs)

When the lender “draws docs” this means they enter all the transaction information into their system and produces their disclosures and the items you need to sign to show you’ve acquired a new loan. When documents have been drawn they are emailed to your escrow agent who will then call you to schedule signing.

Signing

At signing you will sign the documents the lender draws for you including their many disclosures and acknowledgements. Some of the most important items to look at are the TIL (the lender’s breakdown of how much the loan will cost you), the HUD (the final settlement statement outlining all your fees), the note (document outlining the rate and terms of your loan) and the deed of trust (what’s recorded with the county to add the new lender to your title). It’s important to note that signing is often referred to as closing, it does NOT mean your loan has closed or you own your home yet. Signing is the final step before actual funding of your loan.

Funding

After your documents are signed your escrow agent will return them to the lender for review. The lender’s “funder,” or person who closes and funds loans, will review the documents and condition escrow and your mortgage advisor for the final conditions. Often these conditions are very minimal and taken care of quickly and you won’t even know about them. However, on occasions, the lender will ask for something from the borrower. It could be a missed signature or an additional pay
stub, regardless it is prudent to never assume nothing more is needed until the loan is closed and recorded. Once all conditions are received, the lender funds the loan, meaning they send the wire in the form of your loan amount to the escrow agent’s trust account. The escrow agent then uses those funds along with those you bring to closing to pay the seller and pay off their mortgage.

Recording

After the loan is funded and the escrow agent receives money, they send the documents to be recorded to the county. Once the county records those documents, typically same day (the only time a loan may not record the day it funds is if there is a delay in the lender’s wire and escrow doesn’t receive the money in time to have documents recorded), your loan is officially closed and you now own your new home. Your mortgage advisor and escrow agent, and often your real estate agent will typically contact you to let you know this has happened.

Congratulations! You are now a homeowner.

Coincidentally enough, as I was going through my usual news websites last night, I came across Nicole Brodeur’s post on the Seattle Times website about the business of books and the ins and outs of getting published.  The series is presented by Kerry Colburn and Jennifer Worick, former book editors and published authors, and it’s going to be right here in Seattle!  Check out their blog for more details and here’s a link to buy tickets to the event.  It’s one session per month starting January 13 …which is next Thursday.

I can’t be the only one out there that’s got stories and ideas that have been permanently shelved into the dark recesses of your mind.  Maybe it’s time to release the writer in you. This series should be quite interesting in understanding the business side of writing and getting published.  If you go, let me know.  Maybe we can meet up!

According to the Seattle Office for Civil Rights, there is proposed legislation to create a new protected class for people with an arrest or conviction record. The city is trying to develop a proposal by the end of this year (2010) for the mayor’s consideration and bring to the city council for a vote in the Spring of 2011.

Going over the documentation they have on their site, they make an interesting case as to why this would be good. You can read them from links on the site or download the fact sheet or the FAQ’s.

In general, I would prefer less government interference than more. Creating an additional protected class in my opinion would be more government interference. However, this proposed legislation isn’t horrible in intent, in my opinion. It prevents people from being flat out denied just because of a past arrest or conviction even if it was decades ago. It also has a few conditions to the law. As the city website says:

This law would not apply to arrests or convictions that:

• Are directly related to the applicant’s tenancy – for example, a conviction for arson.
• Create an unreasonable threat to the safety or welfare of employees, landlords, tenants or property.
• Involve jobs working with unsupervised children, vulnerable adults and law enforcement agencies.
• Directly relate to the job – for example, a conviction for embezzlement could exclude someone from being hired to handle money.

As good as those conditions sound, my primary concern will be how the new law would be worded, what conditions are put in the actual law and how it may get abused. I don’t have stats on this but I do not doubt that there are plenty of bogus discrimination lawsuits going on all the time. Someone’s rental application gets denied and regardless of what the legitimate reason was, the applicant will scream discrimination.  As everything is presented now, it’s still too vague in my opinion to be made a law. On the FAQ page, the answer for “Would this mean that landlords would have to accept people with a record of violent or sexual offenses as tenants?” shows me how easily this law could be abused. Say I get an applicant that has an arrest record for assault. Per the answer on this question, all I have to do is FEEL that this tenant will pose a threat to the other tenants and deny him. If the applicant disagrees with me and sues because  of discrimination because he’s in a protected class, what’s my defense? I felt he was a threat? Would I then have to prove it somehow? How do I defend or prove a feeling?  Having a vague law just for the sake of having a new law is probably more detrimental than not having the new law at all.

I can definitely see how a blanket rule of denying anyone with a criminal history would really suck for people who have really turned their lives around or if the record was from when they were a stupid teenager. However I still think it should ultimately be up to the landlord or property manager to make that decision and not have the government force them into that decision. If this were to become law, it needs to be very narrow and crystal clear in implementation. Otherwise we’ll have to deal with even more bogus lawsuits and it may add to the overall cost of providing housing which means rents may go up to compensate which isn’t good for tenants.

At VerraTerra Property Management we look at the whole picture. If the applicant is forth coming and willing to provide any documentation we ask to make us feel more comfortable with the situation, we will give that applicant serious consideration even with their record. If they aren’t or their story doesn’t match the documentation and we’re not comfortable with the applicant because of it, I want to be able to deny them tenancy without having to worry about being falsely accused of discrimination.

What are your thoughts?

The VerraTerra Way

If you are thinking about renting your house, give VerraTerra Property Management a call at 425-223-4828 or send us an email and we’ll show you how we do things differently. We offer homeowners options on property management and tenant placement services.   Each option accommodates different needs for different homeowners.  We are your real estate consultants and research specialists.  We provide the most effective and cost efficient marketing materials and strategies to find well qualified tenants. We’ve put together a solid and fast screening process that finds us great tenants and streamlined our management services to help you save money. This is what we do for you.  This is the VerraTerra way.

Are full fee agents quantifiably better quality than their “discount” counterparts?

The Real Estate License

Every practicing real estate agent in this state must be licensed. The “discount” agent (let’s call him Agent D for discount) and the “full price” agent (let’s call him Agent F for full) both have had to do the state required educational coursework and pass the licensing exam. From this prospective, each individual agent has one common denominator. They all have gone through the same coursework to get their real estate license.

Discount Vs. Full Fee

Per state licensing law, in order for an agent to conduct real estate services, they must operate under a licensed brokerage. A brokerage would be any company that offered real estate services like John L. Scott, Windermere, Redfin, Skyline or VerraTerra. Brokerages will choose to operate under a full fee or a discount model but rarely both…, at least publically. Some companies advertise which model they operate under. Redfin advertises rebates to their buyer clients. VerraTerra advertises flat fee listing and buying models. Other companies don’t advertise any business models. They simply call themselves “full service” brokerages. This usually means they are “full fee” brokerages. There is no definition of what full service actually means. VerraTerra may be labeled as a discount brokerage because of our flat fee models, but I will argue that we provide as much or more services than the “full service” brokerages. So can we call ourselves a full service, discount brokerage? Regardless, most agents will presume that an agent at a full fee brokerage is a full fee agent, and an agent with a discount brokerage is a discount agent. Since an agent can only work under one brokerage company at a time, they must belong in one camp or the other. So in order to answer the question at hand, we must also answer whether or not full fee brokerages are quantifiably better than discount brokerages.

The Agent

Each individual person brings their own work experience into the mix so someone could argue that Agent D is a better agent than Agent F (or vice versa), but it would be difficult to prove a correlation between previous work experience and whether that person chooses to join a discount or a full fee brokerage. The same can be said for previous knowledge. A person who worked in escrow or construction for years before becoming an agent definitely would bring more relevant knowledge to the table than someone who did product management for a cell phone company. However, neither work experience nor previous knowledge is a reliable indicator of which business model this agent would implement. It is just as likely that the former escrow agent decides to implement a full fee model as they would a discount model. Although relevant work experience and knowledge would likely give you a good agent, neither trait is an indicator of what kind of business model they would implement.

The Brokerage / Company

A common selling point I’ve heard is that agents from big name brokerages are better educated, better supported, etc. etc., all of which supposedly makes agents from the big name brokerages better than those that aren’t from the big name brokerages. In my years of working with other agents from big name brands and small independent brands, I found this belief to be unreliable. I have worked with and know many agents from the big name brokerages that are very good at what they do and are great people overall. I’ve also worked with agents from smaller name brokerages that have out classed, out smarted and out worked plenty of agents from the big names. The worst agents I’ve had to work with have come from both the big and small named brokerages. I’ll dive into the details of the different kinds of brokerages in a future post.

Most real estate brokerages make money from the monthly fees they collect from the agents they have working for them and commission cuts the office takes from their agents’ sales. As you can see, it’s a volume model. The more agents they have, the more fees they get and the more opportunity for commission cuts. It is in the company’s best interest to recruit as many agents as possible. By doing so, you’ll get agents that are awesome, horrid and everything in between. This can apply to any brokerage, full fee or discount. Which company an agent works for does not accurately tell you anything about the quality of the agent itself.

Then there are the agents that go from a big name brand to a smaller name brand. If the brokerage company actually mattered in the quality of the agent, then that would mean agents from the big name, full fee brokerages are all stellar and those from the small, discount brokerages are terrible (which was the consensus of most of the agents on the Trulia Voices discussion). So would a stellar agent from a big name, full fee brokerage instantly become a horrible agent if they decided to move to a discount brokerage? Would a horrible agent from a discount brokerage instantly become a stellar agent if they decided to move to the full fee brokerage? I don’t think so. Determining the quality of an agent simply based on the type of brokerage they belong to should be quite difficult, inaccurate and frankly, foolish.

You-Get-What-You-Pay-For

This was by far the most used catch-phrase in the discussion and is quite humorous to me. Let’s face it, real estate agents aren’t the most beloved profession in our society. Many people equate us as dirty or rotten and no better than your stereotypical used-car salesman. Well this perception must have come from somewhere. There are countless horror stories from consumers regarding a real estate agent they had. Most of them complain about their agent in relation to the service and work they provided compared to the amount of money they paid their agent on the transaction. There are countless buyers and sellers out there that have paid the “full” commission price and have been left mad and frustrated that they DIDN’T get what they paid for. Sure, the same can be said for agents that discount, but to base an argument that full price agents are better than discount agents primarily because you get what you pay for is ridiculous .

Discounted Real Estate Fees vs. Full Price Real Estate Fees

Let’s examine the label of a discount agent and a full price agent. A discount, by definition, is a reduction made from a list or regular price. In practice, the discount label is thrown onto someone that charges less than 6% (or 3% per side). By law, real estate commissions cannot be fixed or standardized. Therefore when agents talk about commissions, it’s always called the traditional or the usual amount…which in this area is 6% paid by the seller (half to the listing agent and half to the buyer’s agent). Given there is no standardized price, who is to say what is or isn’t a discount? Our full service listings (the sellSmart! listing plan)costs $5995. We have another plan (the FSBO Assist) that charges $1500. Both are “full” prices for the set of services they provide. If I charged only $4500 for the sellSmart! listing, then that would be a discount, but otherwise, what I charge is my full price. So in my point-of-view…I should be labeled a full-fee agent as well. Something is only discount if you really believe that the full price is the regular price.

Hyundai vs Honda and Toyota

Could a discount agent do everything a full fee agent could? Yes. Could the full fee agent do whatever the discount agent was doing? Of course. There is no law forbidding them to. It basically comes down to choice and the difference between perceived and actual value. Take the car manufacturer Hyundai for example. General perceived value (in my opinion) was that it was an inferior vehicle to the likes of a Honda or Toyota. In years past, Hyundai’s marketing message was one of value. People bought a Hyundai because it cost less than a similarly equipped Honda or Toyota. Looking at Consumer Reports’ historical reliability charts, it was true that Hyundai’s overall reliability was inferior to that of Honda or Toyota. You get what you pay for!! However, year after year, Hyundai’s reliability got better and yet they still maintained their value position as being less expensive than their competition. Fast forward to present day. One of Hyundai’s newest cars was one of only two, the other being a BMW 5-series, to get a 5-star crash rating from the National Highway Traffic Safety Administration. You get what you pay for!! According to a recent press release by the Insurance Institute for Highway Safety, Hyundai is one of two car manufacturers with the most vehicles (nine of them) that earned the 2011 Top Safety Pick award. More than Toyota. More than Honda. The Hyundai brand is arguably equal or better to their competition now but is still priced lower, sometimes by several thousand dollars. YOU GET WHAT YOU PAY … wait.. .what? Carry this analogy back over to real estate and real estate agents. A discount agent can be just as good, if not better, in every aspect, but just happens to cost less than a “full fee” agent. How much they charge you, has no bearing on whether they are great or horrible agents.

Conclusion

So are discount brokerages automatically worse than a full fee brokerages? Are full fee agents quantifiably better quality than their “discount” counterparts? I’m going to say no and hell no. To imply such a thing is like saying a white, cotton t-shirt bought from Nordstroms is automatically better than if it was bought from Walmart. How do you know the two weren’t made from the same manufacturer? If after reading this entire article, you still want to believe that an individual agent is automatically better than another simply because of the price they charge, please tell me why in the comments below.

• 35% – payment history
• 30% – amounts owed
• 15% – length of credit history
• 10% – types of credit
• 10% – new credit

Payment history is the most important part of a credit score. Most delinquencies aren’t reported to the credit bureaus until after they are 30 days late. What’s valuable to know is that delinquencies which occurred within the past 2 years are of greater weight than older items. That means that if you see an item sent to collections, it might actually hurt you to pay it off during the loan process if it’s more
than two years old.

The amount owed on current debts, loans, and credit cards is the second most heavily weighted part of the FICO credit model. There are point-breaks at 50%, 30%, and then around 0%. The best move by far is to have all debt paid off, but if that’s not possible, the next best thing is to spread the debt around so your proportions of amount-owed to credit-limit is as low as possible for every
card.

The length of credit history is worth 15% of your overall credit score. The best move is to make a purchase on each of your credit cards at least once every 2-3 months. If a card goes longer than that without any activity, it may show up as unrated, and you don’t get the points you might otherwise have received.

Credit bureaus like to see a variety of types of credit.

New credit (including inquiries) amounts to 10% of your credit score, but can have a surprisingly large impact. A hard inquiry can affect your score anywhere from 2 to 50 points depending on other elements in their report. Someone with derogatory or very little credit will be penalized much more than someone who has great credit. Either way, if a borrower needs 5 to 10 points, a hard inquiry could make the difference in immediate loan approval. The score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry. In addition, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping.

“It is all about you!”
At Mortgage Advisory Group, I specialize in conventional, FHA/VA, USDA and jumbo loan programs and also the ability to lend in several states including Arizona, California, Oregon, Idaho, and Washington.

As a mortgage banker and mortgage broker, I have access not only to in-house investors, underwriting, and funding but also to an array of wholesale products and pricing giving clients the best of both worlds. This contrasts with a bank or credit union, where only that institution’s products will be recommended.

In today’s complex lending environment, the process for purchasing or refinancing can be confusing and intimidating if it is not guided by an experienced professional. I pride myself on providing my customers with up-to-date information so that they can make educated decisions. My background in finance and accounting coupled with real estate finance will be an asset to meet your individual needs.

My goal is to be your trusted mortgage resource, and to exceed your expectations by giving you incredible service and excellent mortgage planning advice. I strive to have my customers be so thrilled with my services that you can’t wait to tell your friends and family about me. My business succeeds by taking care of you and becoming your personal lender. I believe in building strong, lasting relationships….one person at a time.

Thank you for allowing me to be Your Trusted Mortgage Source!

Suyny Tasaka MLO-118667 | CA DOC- 118667
Mortgage Advisor
WA: 425.939.0070 | CA: 626.638.3401
www.tasaka.net
CL-36212

Mortgage Interest Deduction Policy – Now and the Suggested Future

There are many benefits to home ownership. One of these benefits is the mortgage interest tax deduction. What this basically does is allows the homeowner to deduct that they’ve pad in mortgage interest from their taxes. Definitely a great benefit for homeowners.

The current mortgage interest deduction (MID) rules allows you to deduct all the interest you pay on your mortgage(s) as long as you itemize your deductions on your tax return and if the mortgages are for your primary and/or secondary residence(s) totaling $1 million or less. Your interest on home equity loans of $100,000 or less would also be deductible as well. For full specifics contact your tax adviser or look through the IRS page on mortgage interest deductions.

The Deficit Commission proposed the following changes:

• Change MID from entire amount of interest to a 12% non-refundable tax credit
• Lowering the mortgage amount cap from $1 million to $500,000
• Eliminating credit for interest from second residences and home equity loans

Since these suggestions from the commission are not actual policy, details on how they would be implemented are not available. One open question I have what the 12% would be applied to. One accountant I spoke with felt it could be a flat 12% off of the taxpayer’s income. It also could be a 12% on the total mortgage interest you paid. Regardless, this policy would mean a huge hit on what homeowners could get back in a tax refund. I plugged the new limits into my 2009 taxes to see what would happen and assuming it’s 12% of the mortgage interest (rather than total income), my tax liability went up about $4000-$5000. Obviously not cool, but definitely not as tragic

If you’re wondering what a non-refundable tax credit means, according to the accountant I spoke with, it means the deduction cannot take your owed taxes below zero, which in turn give you a refund in excess of the taxes you paid in. Meaning if after all your other deductions, your taxes owing is $0, taking an additional non-refundable tax credit would have no effect.

National Association of Realtors’ Flawed Case Against MID Changes

Ron Phipps, 2011 National Association of Realtors President issued a statement the same day the commission released its report. The statement expressed his disappointment that anyone would even suggest changing or limiting the MID claiming that by doing so it would threaten the “stability of the American housing market and economy.” As evidence, he cites a survey commissioned by NAR and conducted by Harris Interactive of nearly 3000 homeowners and renters that found,

…nearly 3/4ths of homeowners and 2/3rds of renters said the mortgage interest deduction was extremely important to them.

Okay. I’m not a survey expert, but to simply ask how important the mortgage interest deduction is to them is like asking how important is it to have money or have food. Of course it’s going to be important for pretty much anyone. Wouldn’t most people consider paying fewer taxes important to them? A better question would have been asking the homeowners if the reduction or elimination of the mortgage interest deduction would have an impact on their ability to keep their house. For the renters, a better question would have been how the interest deduction changes would affect their decision to buy a house in the future. As the NAR had it, the results of the survey provided absolutely no real value except to sound shocking. (Not being able to see the actual survey myself, I realize that it may have asked questions like I suggested, but those data points were not revealed anywhere publically so I have to assume they were not asked.)

With the NAR statement and the broadcast email calling on agents to take action, the NAR is understandably doing what they feel they must do… look and sound relevant. Unfortunately, their arguments are misleading, incomplete or simply mistaken. Take this quote from their statement as another example,

Recent progress has been made in bringing stability to the housing market and any changes to the MID now or in the future could critically erode home prices and the value of homes by as much as 15 percent, according to our research. This would negatively impact home ownership for millions of Americans, including those who own their homes outright and have no mortgage.

Word choice here is important. The NAR actually has no idea what would happen. It “could critically erode home prices” or it could be just a blip on the radar. It “could” bring values down by “as much as 15 percent” or it may not. I would love to see the research they referenced as I could not find it readily.

Let’s look at the issue with some common sense now. Every homeowner makes a mortgage payment, usually once a month. Whatever interest they are paying on their loan is paid through their monthly payment. Most Americans pay their federal taxes through their employers from every paycheck. It is not until the following year when the homeowner files their tax returns with the MID and may or may not get a tax refund a few weeks later. The negative impact to homeowners is that they may not get as large of a tax rebate the following Spring. If we lost the MID completely, would it have a direct effect on individual homeowners from making their monthly payments? I don’t see how it could. So if it doesn’t effect a homeowner’s ability to pay their monthly payments, how does it actually impact their ability to continue owning their home. What would have a negative impact on home ownership is the loss of income or reduced income. If you consider and depend on your tax rebate as a reliable source of income every year, … well, … you shouldn’t be and you should probably look at your spending habits carefully.

Then there’s the part that it would negatively impact home ownership for those “who own their homes outright and have no mortgage.” I’m scratching myhead on this one. If you have no mortgage, you inherently pay no mortgage interest. If you pay no mortgage interest, what mortgage interest deduction could you claim on your taxes? None! So if you don’t have any mortgage interest to deduct, then how would ANY change in the MID have ANY effect on people who own their homes free and clear? While it is true that if property values declined it would affect ANY homeowner, I don’t think NAR can reliably associate changes to the MID and a decline in property values …especially a 15% decline.

So what does affect home prices? I say it in my monthly statistics updates; prices are a function of supply and demand. How NAR determined that prices could fall 15% from a change in the MID is a mystery to me. I can’t see how the MID has any direct effect to supply or demand. With no direct effect, then any price erosion is from another cause and not directly from changes to the MID. However, according to Mr. Phipps’ email, he believes that the media attention being given to this issue will scare potential buyers away. The MID is a benefit of home ownership, a benefit that you will not realize until you get your tax refund the following Spring. If the loss or reduction of the MID has a real and negative effect on a person’s ability to buy a house, then I would suggest that this person isn’t yet ready for homeownership. Scott Burns over at Asset Builder wrote a pretty good piece in November that has another way of looking at how uneventful a reduction or loss in the MID would be.

The Effect of the MID Changes on Investors

How do these suggested changes apply to investment/rental properties? Based on my research on the IRS website and discussions with my accountant, I don’t believe the suggested changes have any effect on investment/rental properties. The changes apply to primary and second homes which are defined on IRS publication 936. Since a pure investment or rental property does not fit in this definition, the proposed changes to the MID should not apply. As with everything, there are limitations and restrictions, but generally any expense paid for an investment/rental property can be used to offset the income that the investment/rental property generates on a Schedule E form. This essentially lowers your taxable income which is arguably better than having a tax credit. Jonathan from MyMoneyBlog has it very well laid out in more detail if you’re interested to see. Bottom line, investment and rental property owners shouldn’t have to worry about these proposed MID changes.

Moving On

The deficit commissions suggestions are not law nor will they become law anytime soon. It actually may never become law. The point here is if it or some variation of what was suggested does become law, I don’t believe the effect will be anywhere near as bad as the NAR fears. Another thing to consider is if lawmakers pass any changes to the MID there’s a good chance the full change would be phased in over time. Another good idea would be to follow the structure of the mortgage industry’s conforming loan limits. The limits change based on the area of the house. This would help a lot of people who live in expensive areas like San Francisco to still be able to realize some tax benefit.

We won’t know the true effect of any changes to the MID until a real law is passed and integrated into our lives. Until then, be careful before you start drinking NAR’s kool-aid.

Sources/References

National Association of Realtors
The White House
National Commission on Fiscal Responsibility and Reform
IRS
Asset Builder
My Money Blog

The VerraTerra Way

If you are thinking about selling your house, give VerraTerra a call at 425-223-4828 or an email and we’ll show you how we do things differently. We offer the sellSmart! and the FSBO Assist listing plans.   Each plans accommodates different needs for different sellers.  We are your real estate consultants and research specialists.  We provide the most effective and cost efficient marketing materials and strategies.  We’ve built a website for our clients that provides near real-time reporting on your competition and the local market.  After all, we believe in giving our clients as much pertinent information as we can.  This helps both of us revise and refine our marketing strategy to get your house sold! This is what we do for you. This is the VerraTerra Way

Demand

November’s real estate figures are out and the seasonal slow down has finally presented itself. The most surprising part is this month’s pending sales volume was better than each of the last three years! Take a look at the graph. It just beat out November 2009 and 2007. What this means is consumer demand (even in a wintery, cold, and snowy month like we had) remains comparatively strong. In turn, this implies, to me at least, that a significant number of consumers are viewing real estate as a good investment again (or becoming a good investment again).

Inventory/Supply

Last month’s 4-county inventory was at 26,346 properties (single family and condos combined). Novembers active inventory went down to 24,346 which is a coincidental 2000 units exactly. This is good of course…overall supply coming down. However, I’m not to excited about this given it’s November and many homes come off the market for the holidays/winter and just come back the next year. So this supply drop isn’t significant.

Prices

Median prices fell in all 4-counties for closed sales.
King County with 1331 closed sales had a median price of $340K …down from $350K….3% decline.
Snohomish County with 572 closed sales had a median price of $255K …down from $260K….2% decline.
Pierce County with 625 closed sales had a median price of $208.5K … down from $215K….3% decline
Kitsap County had 187 closed sales with a median price of $230K ..down from $245K….6% decline.

This is supply and demand at work. Supply remains high, demand remains steady (or down a bit), therefore prices suffer. If demand was low, then prices would fall even faster.

Outlook

Expect to see this trend through the Winter and into 2011 until February/March 2011 when seasonal housing activity starts to pick up again. December’s prediction is that pending sales will beat the same month from the last couple years as investors and buyers look for good bargains. Overall prices will likely see a month-to-month decline of a of 1-2% based on past history.
Data courtesy of Northwest MLS.

The VerraTerra Way

If you are thinking about selling your house, give VerraTerra a call at 425-223-4828 or an email and we’ll show you how we do things differently. We offer the sellSmart! and the FSBO Assist listing plans.   Each plans accommodates different needs for different sellers.  We are your real estate consultants and research specialists.  We provide the most effective and cost efficient marketing materials and strategies.  We’ve built a website for our clients that provides near real-time reporting on your competition and the local market.  After all, we believe in giving our clients as much pertinent information as we can.  This helps both of us revise and refine our marketing strategy to get your house sold! This is what we do for you. This is the VerraTerra Way.

The Salvation Army, “America’s favorite and most trusted charity,” has been serving the greater Puget Sound area for years. The Salvation Army provides emergency assistance, sheltering, youth services, adult rehabilitation services and is the nation’s largest provider of housing for the homeless.

Images of red kettles and bell ringers are probably what come to mind when you think of Christmas and the Salvation Army. The red kettle fund raising campaign, which started in San Francisco in 1891, is a symbol of  love, light and caring during the holiday season.

Through the red kettle, millions of dollars are donated each year to aid needy families, seniors and the homeless.  Red kettle donations provide Christmas dinners, clothing and toys for families in need and many continue to receive assistance after the holiday season.

The following Washington stores have agreed to welcome the Salvation Army Red Kettles:  Albertsons, Bi-Mart, Big Lots, Fred Meyer, Haggen, Inc., Hobby Lobby, JCPenney, Kroger, Macy’s, Safeway, Sam’s Club, Shopko, Walgreens and WalMart (the final decision about kettles is left up to local management staff).

Salvation Army Volunteers Needed

This holiday season, volunteers are needed to help make the Salvation Army’s Christmas Assistance programs a success. Volunteering is a wonderful opportunity for families, church groups, civic organizations and corporations to come together in camaraderie and give back to the community.

Be a Bell Ringer

Ring a bell and embrace the holiday season, give back to the community, help raise the funds needed to finance social service programs in your neighborhood and experience the joy that comes with giving to others. 

For more information about volunteer opportunities as a bell ringer, please contact Michele Meyers at (206) 217-1281 or michele.meyers@usw.salvationarmy.org.

Man an Angel Giving Tree

Along with the familiar red kettles and bell ringers, the Angel Tree program is one of the Salvation Army’s highest profile Christmas assistance programs. The Angel Tree was created by The Salvation Army in 1979 in a Lynchburg, Virginia shopping mall to provide clothing and toys for children at Christmas time. The program has since grown to include Angel Trees across the nation, in shopping malls, and on-site at businesses, clubs, churches and organizations.

This holiday season, volunteers are needed to help man the Angel Giving Tree at Northgate Mall and collect toys for a child in need. Toys will be given to needy families at the Salvation Army’s Christmas Distribution. For more information about Giving Tree volunteer opportunities, please contact Michele Meyers at (206) 217-1281 or michele.meyers@usw.salvationarmy.org.

Help Out with the Toy ‘N’ Joy Program

You can help bring joy to a child on Christmas morning by helping out with The Salvation Army’s Toy ‘N’ Joy Program. Families who cannot afford toys for their children come to The Salvation Army to receive gifts through the program. Last year, more than 4,100 needy children in the Puget Sound area benefited from the Toy ‘N’ Joy Program.

Schedule for Volunteers:

• Monday, December 20: help sort toys to turn Qwest Stadium Exhibition Hall into a festive distribution center.
• Tuesday, December 21: help families shop for gifts for their children by being an “elf” personal shopper.
• Wednesday, December 22: help clean and return the Hall to its original state.
• To sign up by email click here or call (206) 217-1281.

Angel Giving Tree Online Program

Once again, the Salvation Army and JCPenney have partnered during the holiday season, offering an online option to Angel Giving Tree adoptions.  The annual Christmas drive provides special-needs gifts, clothing and other wish-list items for kids and senior citizens in need. You can visit jcp.com/angel and request an Angel. One will then be e-mailed to you along with a list of requested items. The Angel Giving Tree online program allows you to shop for an Angel online at jcp.com, at all JCPenney stores or any retail store of your choice.

Seattle Area Real Estate Services

VerraTerra is not your ordinary Seattle area real estate Brokerage.  Unlike most real estate companies that force you to do things one way or their way, we believe you should have choices to pick and choose what best fits your individual needs. We’re always looking for ways to make buying and selling Seattle area real estate more efficient AND less costly for our clients, without sacrificing quality or service.

We specialize in Seattle area real estate including:

• Seattle Real Estate – Seattle waterfront homes, Seattle, luxury homes, Seattle single-family homes, Seattle townhomes and Seattle condominiums 
• Bellevue Real Estate - Bellevue waterfront homes, Bellevue luxury homes, Bellevue single-family homes, Bellevue townhomes and Bellevue condominiums
• Bothell Real Estate - Bothell waterfront homes, Bothell luxury homes, Bothell single-family homes, Bothell townhomes and Bothell condominiums
• Kirkland Real Estate Kirkland waterfront homes, Kirkland luxury homes, Kirkland single-family homes, Kirkland townhomes and Kirkland condominiums 
• Redmond Real Estate - Redmond waterfront homes, Redmond luxury homes, Redmond single-family homes, Redmond townhomes and Redmond condominiums
• Mukilteo Real Estate – Mukilteo waterfront homes, Mukilteo luxury homes, Mukilteo single-family homes, Mukilteo townhomes and Mukilteo condominiums
• Seattle Area Homes for Sale in all surrounding cities

If you’re looking to buy Seattle area real estate or sell your home in the Seattle area, we will be happy to take care of your real estate needs. If you currently own investment property in the Seattle area and need property management services, VerraTerra Property Management can take care of tenant placement and monthly management for you.

Our mission is to provide outstanding customer service to all of our clients while utilizing the best practices and systems available!  For more information about VerraTerra real estate services in the Seattle area and how we can best serve you, please fill out the online contact form below or give us call at 425.223.4828.

Sources:
The Salvation Army
The Salvation Army Northwest Division
Angel Giving Tree Online Program