Staircases are funny.  They look rather simple but contain a lot of interesting parts with interesting names.  My two favorites are “balusters” and “newels”.  Newels are the fancy posts that one can find at the end of the staircases, while balusters are thinner and comprise most of the staircase.  Typically you’ll have ten or more balusters in between a newel.

Now that you know what a newel is, we are currently redoing our staircase.  We found a contractor who specializes in staircases and he worked with us to come up with a parts list for Stairwarehouse.com.  They have some beautiful pieces on their web site and I highly recommend them despite the mishap – which was entirely our fault.

We decided to do red oak for the treads (to match our flooring) and Brazilian cherry for the railing and newels.  The balusters are iron.  For the newels, we went all out and purchased gorgeous intricately carved box newels.

The newels are hand crafted by an Amish craftsman in Ohio and when they arrived were as gorgeous as we expected.  We couldn’t wait to install them.  When our contractor arrived, he took one look at them and exclaimed

They’re too big.

Huh!  Weren’t you right there when we measured all of this!  Unfortunately, because they are hand crafted and custom to order we cannot return them.  Stairwarehouse did give us a great discount on replacement newels, but we are now stuck with $3,000 in newels we cannot use.

I am of course trying to sell them through numerous channels.  My hopes are that one of the builders we work with can use them.  The reality is they are too big for most homes.

When we started this remodel, the goal was to make our home nice enough that we will not want to leave it for some time.  However, we now have these newels to remind us that there are just some things about our home that will never work.

Therefore, the true price of these newels is not $3,000.  They are two million dollar newels.  It will take approximately two million dollars to buy a home large enough that we can redo the staircase with these newels.  So we’d better start saving!

Not long ago I mentioned a property not far from where I live.  The property started out as a normal listing, then failed to sell over time.  After numerous price reductions, it became a short sale.  After even further price reductions, it finally sold.

The agent who sold the house served as a dual agent in the transaction.  Approximately one month after the home sold and a few small changes were made to the property, it was listed again with the same agent.  The remarks for the property mentioned that it was a recent short sale and had been updated so it now is an even greater bargain!  Of course, the home is again going through price reduction after reduction.

If I were the original owners, I would be extremely suspicious of the agent.  Was the agent entirely neutral in this transaction?  Did the agent honestly try to sell it before the prospect of dual agency arose?

There is another agent who also sells a number of homes in my area.  What I find remarkable is she serves as a dual agent on almost all of her properties.  I don’t know about you, but when I list properties at a good price I tend to receive offers.  Shouldn’t the odds favor that most of her homes are not sold through dual agency?

These are just some examples of why I believe dual agency should not be allowed.  When I sign a contract with my sellers, they are paying for the following.

- My advice for preparing the home for sale and pricing

- My marketing and sales skills

- My negotiation skills

However, in the case of dual agency they suddenly lose the third item.  I now must remain a neutral party between the buyer and the seller because by law I cannot disclose any financial information to the other party.  Therefore I cannot even suggest a response for either the buyer or the seller without the advice being tainted.

This also applies to the buyer.  Sure, we have the buyers sign papers informing them what dual agency is, but how many of them truly understand this?  The purpose of the selling agent is to bargain hard for a price and conditions for the buyer, which I cannot do while under contract with the seller.

The argument I hear from many agents is that if the listing agent finds buyers for the property, it is in the best interest of the seller.  This is true, but the listing agent does not need to actually represent them.  I have found buyers for my properties before, and I always refer them to other agents.

This is a win win situation for all parties.  I can still negotiate hard for my sellers.  The buyers have their own representation.  I am paid for finding buyers for the property and the selling agent receives a solid lead.

In the cases above, if you were the sellers wouldn’t you honestly be a bit suspicious?  In the case of dual agency, how are the sellers to know that their interests were kept secret?

Say a home is for sale for $450,000.  According to the realtor it is worth this much but hasn’t sold for a month.  The sellers are willing to go as low as $400,000 and the realtor knows this.  Now all of the sudden a dual agent deal arrives for $400,000.  The realtor cannot provide any advice to the sellers about whether to accept or counter to the deal.  Doesn’t this sound a bit suspicious?

The fact is, a lot of people out there do not have good opinions of realtors as a whole.  This is one of the reasons.  Imagine you pay an attorney in a lawsuit to defend you and he goes to the other side and accepts a fee for disclosing all of your secrets?  This is the same thing that occurs with dual agency.  Sure, it is illegal for the agent to do this, but it is also extremely difficult to prove in court that he/she did it.

For these reasons, I think we should not allow dual agency.  It is just too easy to abuse.

It is well known that the vast majority of hardened criminals do not start out with severe crimes.  They start out with very small crimes and when they discover that they can get away with them, they move on up from there.  Many of the criminals of tomorrow, though, will be of a completely different start.

The simple fact of being foreclosed on has turned out the worst in people .  Say you have a car that you want to sell, and someone comes up to you to buy it.  The buyer only can put a small deposit down on the car, so you agree to let him pay you monthly for the rest.  After some time, he stops paying you monthly.  You keep asking for payment, but he does not give it to you.  After a year and a half, you demand your car back.  He takes a sledge hammer and smashes it to pieces.  Wouldn’t you be a bit perturbed.

Yet this is exactly what is happening now.  People who simply made bad financial mistakes take absolutely no responsibility for it themselves.  They blame the banks entirely and proceed to trash the property.  Some of them even return to the properties while they are on the market and do more damage.

In one particular case, the previous owner complained that her appliances were expensive and that it wasn’t fair to leave them to the bank.  On behalf of the bank, I arranged for cash for keys to buy the appliances at brand new prices and the owner agreed.  Shortly after the transaction and after the property had new locks, she broke into the property and stole the appliances and ripped the doors out.

What this person did constitutes theft.  I called the police and took all the necessary steps. Now, she has several children who live with her.  What lesson did she just teach them?  These children now believe that theft can be justified.

Thefts like this are becoming more and more common.  In one case where someone broke into the home and stole all of the faucets and light fixtures (the day before inspection) I called the police and the response was that they could not due anything due to ‘humanity laws’ concerning the previous homeowner.  In this case, I believe it was someone other than the previous owner but still was quite upset that the police considered it a non-issue.

These people committing these crimes will not stop here.  They now fully believe they can act with impunity.  They can take a loan out for something they cannot pay, get away with not paying for over a year, then trash it without repercussions.  They can then continue to break into that property and steal with impunity.  Do you really think they won’t translate that to other crimes?

Yet the public sympathy continues to be on the side of the poor homeowners being booted out by the evil banks after living in the house rent free for over a year.  Certainly the banks can be faulted for giving out loans that should never have been given and then investing these funds in poor places, but that argument is akin to me giving you a gun, you shooting someone, then blaming it on me.

 After a home has been foreclosed, I work with banks to sell them.  Typically, I am the one who informs the previous homeowner that he/she no longer owns the property and must vacate.  Different people respond to this in different ways of course.

What I am seeing though, is a very dangerous trend.  It is a trend that must be stopped in its tracks, or it will have very serious complications for us all.  This trend is the previous homeowner destroying the property.

One recent case really boils my blood.  All the more so since I went out of my way to work with the guy.  While the bank was rekeying his home, he called me crying that his stuff was still in the house.  I spoke to the vendor who was changing the locks and told him to stop so the previous owner could reclaim his things.  Instead of retrieving the few belongings left at the house, he trashed it.

The electrical panel was ripped out and the water heater was torn out of its place and left in the front yard.  When I stepped inside the house I could hear the buzzing of live wires and thank god I did not step into the flooded utility room which due to the live wires could have been a death trap.

He even left the door wide open and I shudder at thinking what could have happened had a neighborhood child happened to walk in.  The neighbors were so dismayed at seeing the carnage that they called the police.  When the police officer arrived he called for backup and upon finding the owner – who admitted to doing all of this damage – they told him to leave and never come back.

 Why was he upset?  He was upset because he could no longer pay back money he had borrowed because his store had less business.  He had also stretched himself too thin by buying more properties than he could afford.  And this is the bank’s fault?!

What we don’t realize is when these people do these things to houses, it affects not just the bank.  The bank will obviously sell the house for less, which affects the property values of the neighbors.  This in turn affects taxes and the economy in general.  The money lost when the house is damaged does not come out of thin air – it is paid for by the rest of us.

There are also the safety aspects.  Someone could have been killed fixing the electrical issues in this home.  The home could have caught fire and spread to neighbors’ homes.  This is an extremely dangerous issue.

Sadly, I only see this trend increasing.  The sympathy out there right now is for the homeowners – who find nothing wrong with the fact that many of them chose not to make house payments for a year or more and the bank had the ‘nerve’ to take the house back.

Every part of the world is different, so these tips will certainly not apply to all cultures.  I happen to be from Central Asia, so these customs will certainly apply to that area.  Iran and the Middle East have similar customs and many of these apply to Russians as well.

When entering a house, remove your shoes

When we first bought our house, a salesman from a security company came in with boots.  As we stared at his boots on our beautiful new hardwood floors he noticed that and responded – “don’t worry, I wiped them first”.  We did not buy anything.  Note that most people provide slippers for guests in the entry.  For us real estate agents, this is probably obvious.

If you are male, always shake the hands of other men in the room upon entering and leaving

I still have to tell my husband to do this.  Not doing so is a mark of disrespect and considered rude.

If you cannot make it to an event, call to say you are not coming

Most people from my country come very late to events, but if they say they’ll be there they come.  If they cannot make it they call.  I have noticed that when many people are invited, Americans will often say they are coming and then never show up.  This is extremely rude, as in my culture it is custom to not serve the food until all guests are accounted for.

If you are a man, when dealing with a foreign couple do not speak too much directly to the wife

Most likely, the wife is truly the decision maker, but may not say very much.  She will listen carefully to what you say to her husband, but addressing her directly too often will be considered rude by both the husband and the wife.

When food is served, try to eat at least a little bit

Not trying the food is considered very rude since a lot of time was likely spent preparing it.

As many of you know, I myself was not born in this country.  I emigrated here at the age of nineteen from Tajikistan.  I now of course am an American citizen, but I still empathize with immigrants.  Still, I find myself rather disgusted at a trend that I am seeing.  I offer to specific cases I know of.

Case 1

Igor buys a home in 2005.  He has $70,000 to put down, but still makes too little to buy the type of home he wants.  An agent from his country approaches him and says he’ll get him the home he wants.

They quickly find a nice home selling for $350,000.  He applies for a loan and has no problems.  What he doesn’t know (because he does not know English and has to trust his agent to explain what he is signing) is that he has a negative interest loan.  In addition, to qualify for his loan the agent and mortgage broker colluded to list his salary at $6,600 per month instead of the $2700 he actually makes.

After several years, he figures out about the negative equity loan.  After two years, the interest rate skyrockets past 9% and he cannot refinance his home.  His reaction is to stop paying.  He also drives to Olympia (capital of WA state) and complains about the agent and mortgage broker (by now he has figured out what they did).

For a year and a half he does not pay his mortgage.  His home goes into foreclosure, but to try to prevent it the bank offers to lower his loan amount to 2%.  He considers it, but now the mortgage is $390,000. (100k more than original loan amount)  The home has fallen to the original sales price and he feels it is not worth owning the home any longer.  He rejects the bank’s offer and lets the bank foreclose on his home, figuring he will just rent for the next several years or return to his home country.

Case 2

A Canadian couple have been working here for the past several years, but plan to move to Canada in a year.  They decide to sell their home so they place it on the market.

The home is not a short sale as they still have equity in it.  However, they still want to make a small profit from the home so they price it about 5% more than what it is worth.

They speak to their attorney about what they should do and his advice is to be firm with the price.  It is not in their interest to have to bring anything to the table.

They stop making payments on the home with the idea that one of two things will happen.

1) Someone will buy the home and they will make a small profit.

2) No one will buy the home and the bank will foreclose it.  By that time they will return to Canada and their credit score will not follow them there.  They will then buy a property in Canada.

What do you think?

As many of your know, I primarily sell bank owned homes.  Part of my job is working with the previous owners to vacate the homes, and I hear my share of stories.  However, I have noticed these stories changing.

For the first homes, I can honestly say that I had absolutely no sympathy.  These were the type of people someone could say that it was not all bad that they lost their homes.

Along with an increasing number of foreclosures here, I have noticed a sharp change here.  Most of the people I now meet are ordinary people.  They are nice and friendly but have made poor financial decisions in their lives.  They are often clueless that they have now lost their homes and it is difficult to explain to them that they have no recourse.  They have lost their homes and must now vacate the premises.

There are numerous causes.  Several of them are results of a divorce.  The husband leaves and the wife can no longer make the payments.  Other cases are people just spent more than what they could afford and when the ARM period ended and the interest rate increased, they could no longer afford to make payments.  Others were making more money before but are now making far less.

 It is difficult to lose a house, but it is also a financial decision that must be weighed very heavily.  When making these decisions one must be absolutely sure he/she can afford the payments.  They also needed to fully understand what an ARM loan truly is.

There is a tendency here to spend and spend and spend and the feeling that a lot of debt is good.  What is happening with the foreclosure market right now is an adjustment.  While it has never been advisable to spend beyond your means, the penalties for doing so now are far more severe.

Once in awhile I receive a good laugh from a property visit.  I’m sure all of us have these days.  I suspected that the property was going to be interesting.  It was recently sold as a short sale, then flipped and placed on the market with the same agent that listed it originally.

First it is rather odd in today’s market to flip a property, but I digress there.  I had a buyer interested in it, so we took a look.

In the description for the property, it mentioned that the lot was huge enough for horses.  I don’t know about you, but an 8,000 square foot lot is pretty darned small for horses.  This was not your sprawling Bridle Trails lot but your standard suburban lot near the city.

My buyer was not interested in horses at all, but did get a kick out of the description.  When he saw the unfenced back yard he exclaimed “oh no! my horse will get away!”

Another funny aspect was the kitchen.  I have seen many remodels and am in the process of doing my own, but never have I seen someone combine appliances literally from the 1950’s (and we’re not talking about the fashionable ones) combined with granite slab.  Why would you do that!

While looking a the kitchen, I noticed something below me and was surprised to find the kitchen island!  It could not have been more than two feet tall.  It was a great step stool, but not functional as an island.

The entire property was similarly entertaining.  Perhaps someday someone will buy it, but it definitely looks like this flipper will wind up in the negative.

Keeping with the monthly tradition of examining housing prices in Bellevue based on the area defined on the different high schools, here are the results for July.  Data was obtained using this method and consists of the median house price sold. By the way, you can see a map of the high school boundaries here. High School January 2009 May 2009 June 2009 July 2009 June-July Change Interlake $467,000 $445,000 $435,000 $435,000 0% Sammamish $496,000 $414,900 $415,000 $418,500 +.8% Bellevue $957,000 $850,000 $850,000 $930,000 +9.4% Newport $585,000 $480,000 $505,000 $510,000 +1%   In my opinion, these numbers are very positive.  For the second month, prices in Bellevue have not dropped.  In fact, they actually increased slightly.  Do not look too much into the large increase in sales for Bellevue Highschool.  This does show though that higher priced homes are selling too.  This seems to follow well with what I have been seeing in the field.  Although I have seen a sharp rise in foreclosures, very few of them have been in Bellevue.  I have also seen most of our Bellevue homes sell relatively quickly. High School Median Active Home Price May 2009 June 2009 July 2009 Number of Homes May 2009 June 2009 July 2009 Interlake $625,000 $645,000 $675,000 52 26 54 Sammamish $550,000 $529,990 $574,950 176 159 161 Bellevue $1,299,999 $1,395,000 $1,350,000 338 340 336 Newport $815,000 $795,000 $815,000 96 103 120   Inventory is still increasing slightly, though sales have picked up a bit so months of inventory has likely decreased.  Clearly it is still the case that if you do not price a home well, it will sit on the market and not sell.  That is why we are still seeing high inventory levels. In terms of the increase in sales price, I do think that it is still tougher to sell higher priced homes and these homes tend to sit on the market.  However, lower priced homes are now selling quite well, so as they disappear from the market while higher priced homes enter the market, the average price is driven up. Overall I do believe these numbers are positive for our area.  I have heard many negative comments from people these days about their home equity and about waiting things out before prices drop even further.  However, given the recent market activity, at least for Bellevue that is not proving to be the case.

Recently I have seen a large upsurge in the number of buyers approaching me about purchasing REO properties.  Until recently, I preferred to not work with buyers.  Most of my sales come from listing REO homes for banks and that keeps me quite busy.  However, I came to realize that with my specialized knowledge I could help buyers navigate this tricky market as well.

What many buyers do not realize though is that not every buyer is ideal for an REO property.  If you match any of the following criteria, REO properties are probably not for you.

1) You are not exactly sure of what you want.  Given a nice home, you are not sure whether it is your ideal home or not.  You want to see a great number of homes before making your decision.  You figure that when you find the right house, it will stay on the market for awhile so you can see a lot of other houses.  After seeing those houses, you may go back to this house to make an offer.

2) You are not financially and mentally prepared to buy now.

3) You are not prepared to do some work on the home – for instance install appliances that are missing.

4) You are afraid that the bank does not disclose any defects about the home (because it does not know about them) and therefore you may buy a home that has problems.

There are two types of REO properties – overpriced ones and well priced ones.  Most people tend to shy away from the overpriced ones.  Well priced REO properties, on the other hand, do not stick around for long.  They often receive many offers and buyers need to be prepared to move quickly on them.

If you are not prepared to jump when the right property comes up, then my recommendation is to clear your mind of getting a great deal of an REO property.  By the time you make your decision to purchase it, the property will already have closed.