I often get asked if I believe the market is going to continue to go down, or when is a good time to buy? In my opinion, we are nearing the bottom. Especially, in the markets that seem to always be fairly stable. Kirkland, Bellevue, Redmond and other east side spots have not had as extreme downward trend as the rest of the county, or state.

Kirkland real estate prices are down only about 3.5% from median price in 2009 to median price in 2008. The county is down approximately 10% or more depending on which statistic you quote. Prices were down from 2007 to 2008 both in Kirkland the rest of the county by a much higher rate. One skewing factor is an increase in short-sales and foreclosures. This tends to bring Kirkland real estate sales and prices down.

Also, the number of Kirkland houses for sale has trended downward. This statistic can tell you that the foreclosure mess is getting cleaned up and those who wanted to sell their Kirkland house have done so.

So, why do I think now is the time to buy a house in Kirkland, Bellevue, or Redmond? Here’s why:

- House values in Kirkland, Bellevue, Redmond are down less from 2008 to 2009 than from 2007 to 2008.
- A good chunk of the foreclosure homes and ARM’s have been cleaned up. (there are still more)
- Interest rates remain relatively low fluctuating around 5.25% to 5.75%
- Federal Tax credit available to ALL home buyers ($8,000 to 1st time home buyers who haven’t owned a home in more than 3 years, $6,000 for home buyers looking for a new residence)
- Great values abound. Sure, the median home prices in Kirkland and surrounding areas is down 3.5%. However, there still are a number of short-sales and distressed properties that you can pick up at a 10% to 20% discount or more. (Call me and I can point you in the right direction.

In a nutshell, if you’ve been waiting on the sidelines trying to time the market to catch the bottom, strap on your helmet and get in the game. There are great values, the interest rates are awesome and you can pick up $6,500 to $8,000 tax credit to boot.

As I’m sending clients listings in Kirkland and other parts of Washington, the listing will occassionally say “Short-Sale”. This isn’t a new term, although it has certainly been used more in the current economy. I’ve been doing short-sales for 10 – 15 years. I have purchased a few houses myself using the short-sale process.

What Short-Sale means is simply the bank is willing to take less (or short) of what they are owed. For example, a home owner relocated to Kirkland, WA in 2005 to join Starbucks as a barista. She bought a house in Kirkland at the top of the market for $600,000. (She’s a well paid Barista). She’s loving life living in Kirkland by the waterfront and hanging out at the great restaurants and parks.

Fast forward to August of 2009. Starbucks lays her off as not as many people are buying $5 cups of coffee. In large part this is due to the lag in the economy, but in Seattle, people are not buying coffee because Howard Schultz sold the Seattle Sonics professional basketball team to an out of state schister who moved the team to Oklahoma City! (my personal view inserted here). The Barista ends up getting laid off and can’t afford her house near the lake anymore. She needs to sell as soon as possible. The problem is that her house is now only worth $500,0000. She misses several months of house payments and she has been given a notice of default and has entered the foreclosure zone.

She uses me as her agent. Knowing the bank is owed more than the house is worth, I contact the bank and ask them if they will do a short-Sale on the house. The bank agrees to take less than is owed if she can find a buyer. I immediately start marketing the house and find a buyer. The bank has sent me a short-sale packet. The short-sale packet includes a request for the seller to put a letter of distress together. This letter explains how the seller got into her predicament. (primarily it’s due to Howard Schultz selling the Sonics to a schister). She is also required to show her income if she has any, bank statements, tax returns, other investments, etc.,. We also put together the purchase agreement with the buyer. We send all of this to the bank.

The bank reviews all of the documentation. They then will send out an appraiser to appraise the house. A smart real estate agent who is on top of things, someone such as myself, will meet the appraiser at the house. He will have his own appraisals alrerady in hand along with a well written spreadsheet showing the appraiser his version of the appraisal. Appraisers usually like this as it saves them time from having to pull their own comparable homes.

The appraiser then sends the Kirkland house appraisal to the bank showing what the Kirkland housing market is like. The bank then approves or rejects the short sale. If approved, the parties proceed to closing. Generally, the bank offers what is called a full reconveyance to the seller. That means, she’s off the hook for owing any money to the bank. (note, rumor is they may be changing at some point). She also avoids foreclosure and having the foreclosure record sit on her credit for 7 to 10 years. Everyone wins and everyone is happy.

If you have any questions on the short-sale process as a seller, or buyer, please feel free to give me a call at 206-979-2660, or visit my website at rodjohnstonre.com.

As we enter 2010, I can sense buyers coming out of the fox hole they were in for most of 2009. More Kirkland residents have gone from an attitude of let’s wait and see to let’s think about finding a good deal on a house. I’ve had several clients looking for a good deal on a house for investment purposes, or to upgrade from the home their in. Since Kirkland is a desirable location, being close to Microsoft, I-405, 520, 20 minutes to UW, etc., getting renters is pretty easy.

Other Kirkland-ites are upgrading their homes. If you look at the current inventory of homes, you’ll notice several houses that are 90% complete, but the developer had to walk away as they ran out of money. The hottest priced houses tend to be either the lower end of the market, or the higher end of the market. These are the homes tending to move a little quicker than those in the medium-high range. It’s hard to say why this is. I think in part, the mid-level kirkland home buyers are families that have kids in middle school and don’t want to move for a while. The first time home buyer credit has pushed some would be home buyers to act a little faster. The luxury home buyers are those looking to get a great deal on a bigger, nicer house.

I expect this trend to continue in 2010. The first time home buyer credit has been extended through May. There still are good deals on high end homes and the mid-level homes are still selling at a slower clip. Hopefully, interest rates can remain relatively low allowing the recovery process to continue at a steady pace.

Whether your luxury home is in Kirkland, Bellevue, or downtown Seattle, selling a luxury home in this market is a tough proposition. You have to be 100% sure you use an agent who knows how to market a luxury home. Not only in a normal market, but especially in a down market. I’m writing this blog as I live in Kirkland. There are at least four Luxury Homes on my block that have been sitting on the market for the past eight months. The amazing thing is the listing agents are not doing hardly any marketing to help get the homes sold.

I don’t mean to put these realtors down, but even in a normal market, you have to put some dollars towards marketing the home. It’s no different than any business selling a product. If you don’t market to buyers, you won’t have anyone coming in the door. The realtor listing a brand new $1.8 million home right next to my house has not had one single open house. The house isn’t even listed in Luxury Homes magazine, Wall Street Journal, or anywhere else. When deciding to list your luxury home on the market with a realtor, you need to at least ask the agent how they will market the house. It’s best to even get it in writing.

Here’s how a Luxury Home needs to be marketed:
- A big marketing SPLASH the first day the house goes on the market. Open House, Brokers Open, newspaper ad, etc.,
- A luxury home should have numerous brokers opens the first few days the house is on the market.
- I would hold an Open House the first weekend where I would send out special invites to those in the area with household incomes exceeding $250,000 per year. I would have a digital presentation of the community, including the schools, shops, restaurants, etc., in the area. I would make it a special event.
- I would hold Open Houses a minimum of every other week for the first three months. Open House will at a minimum draw more attention to the house. Most agents view them as too much work and boring. But, they work.
- I would send hand addressed direct mail to the residents around the house to let them know it’s for sale and if they know of a buyer, please send them to the next Open House. Offer a little incentive to find a buyer. (something within the law).
- Run newspaper ads to attract attention to the house. If it’s a special, or historic house, offer to write an article about the house and have it published in the newspaper. Or, better yet, get it on the news. Maybe it’s the most expensive or largest house in the neighborhood.
- Keep consistent marketing going throughout the time the house is on the market and until it sells. If no one knows it’s for sale, no one’s going to buy it.

It’s frustrating seeing realtors who list homes, especially luxury homes and then they move on to the next listing without putting hard work into selling the listings they have. You can avoid a lot of these problems by making sure you list with a hard working realtor in the first place.

Are you relocating to Washington State as a result of a new job offer, job change or life change? Perhaps it’s at one of the large companies on the eastside of Lake Washington like Microsoft, or perhaps Google, AT&T Wireless, or any of the other high-tech companies in the Redmond/Kirkland/Bellevue corridor. If so, you may want to check out Kirkland to meet all of your relocation requirements.

I’m sure you’re the organized type and have put together a checklist of all of the things you need to look for in a house and community. For a bit of advice, the list should include:

- Proximity to your new employer (Kirkland is minutes to the major employers on the eastside of Lake Washington)
- Proximity to your place of worship if that’s important to you
- Quality of Schools (Kirkland Schools are ranked in the top for the entire state)
- Closeness to Shopping – both for food and clothing
- Diversity of the population. You want a diverse ethnic and income range for your area
- Are there parks, theater groups, and other activities in that area.

These are just a few of the “must-have” items for your list. Frankly, Kirkland meets or exceeds all of these criteria. Kirkland has a new Performing Arts Center and has a play, or concert three or four nights per week and sometimes more. One of the things I like about Kirkland is that it still has a small town feel, yet it’s only 15 minutes to downtown Seattle. There are a lot of “quaint” shops in the downtown area that are not chain shops. They also have a lot of Art Galleries on top of the theater arts. Restaurants in Kirkland are also excellent. I highly recommend Restaurante Paradiso. It’s a great hole in the wall Italian Restaurant. The chef is actually from Sicily.

One other big advantage to Kirkland is that it sits on the shores of Lake Washington. There are beautiful spots on the water including several parks and restaurants. Many residents have boats so they can simply put their boat in the water on the weekend and go out for a ride. Kirkland is also a healthy town. There are always residents walking along the sidewalk, or the trails of Lake Washington.

So, if you’re relocating to Washington State and are looking for a city with a small town feel, great attention to the arts and close to downtown Seattle, I highly recommend you check out Kirkland when you get the chance.

The Northwest Multiple Listing Service reported that the number of closed sales of single-family homes in King County was up 4% over June 2008 Home Sales. “The first year-over-year increase since the market peaked nearly two years ago”. Here’s a link to the article: http://seattletimes.nwsource.com/html/realestate/2009426109_homesales07.html

On the eastside, including Kirkland, Redmond and Bellevue, Home Sales were up almost 4% overall. The housing market in the Juanita/Woodinville/Duvall area was up 31 percent year over year.

The housing market, previously driven by first time home buyers, is now moving towards buyers who are upgrading looking to get a good deal on a luxury home. The trend makes sense as several months ago, first time home buyers dominated the market taking advantage of the $8,000 first time home buyer credit. They purchased homes that were on the lower end of the price range. Those sellers who sold to those first time home buyers are now in the market for a home. They typically upgrade to a bigger or nicer home. Some even upgrade to luxury homes. There are also the empty-nesters who downsize. Those represent less than 10% of the market.

Interest rates are beginning to creep up and that may also play a role in the housing market picking up a little steam. This may be the beginning of a long and slow trend back to a normalized market. In the Kirkland market, I do see luxury homes moving at a somewhat normal pace. The entry-level homes are also moving. On average, Kirkland homes stay on the market for 63 days. In a normal market, Kirkland homes stay on the market approximately 52 days.

There still are quite a few homes “in trouble”. This will continue as all of the bad loans filter through. Those loans will either be refinanced with the current homeowner, or those homes will be sold and new loans put in place. The effect being that if the houses are sold, they will be distress sales and put downward pressure on the market. Offsetting this in Seattle is a decent job market compared to some of the other markets around the country and the fear of interest rates beginning to rise.

The conclusiong from all of this is the housing market in Kirkland and the rest of King County is solidifying. Interest and the job market will continue to prop up the market. There are still going to be distress sales for quite some time. Keep an eye on the commercial market. “Experts” are predicting a bust in the commercial real estate market within 6 to 12 months.

Living and working in Kirkland near major employer’s such as Redmond’s Microsoft campus, Expedia in Bellevue, Boeing, AT&T Wireless and others, I run across a lot of client’s relocating from other parts of the country, or relocating from other countries. Since these major employers are constantly recruiting top talent, it’s a wonder there are so many new faces relocating to places such as Kirkland, Redmond, Bellevue and Seattle.

Many of these new recruits face a few challenges when moving to the Northwest. Amongst those are learning how to pronounce Sequim, drink coffee nearly intravenously, and getting excited over the latest X-Box game (for the Microsofties). On a financial front, sticker shock is another challenge that hits them when they look at their first house listing. I’ve seen many a jaw drop and eyes pop as we look at houses in Kirkland under $300,000 (both of them). They’re about 800 sq. ft and they need $100,000 of work.

But, after they put their eyes back in their head, we can actually look at some great areas in what is known as the eastside of Seattle (Bellevue, Kirkland, Redmond), East of Lake Washington to relocate to. With the housing market beginning to level off, there are good values to be found. Especially in the price range below $450,000. Granted, this will still seem high compared to housing prices in Arizona and Florida, but is a great value in Kirkland/Redmond. Knowing the area and where the deals are will allow you to reduce the sticker shock. Locations such as Juanita or Rose Hill in Kirkland, Education Hill or Novelty Hill in Redmond, and Lake Hills in Bellevue are all fabulous areas that provide houses with great values.

Granted, you need to have a realtor who knows the eastside very well always help. Look for someone familiar with not only Kirland, but the rest of the Eastside as well. Having someone with experience and knowledge of the area will help you get the best bang for your buck and avoid the stress of relocating to a new housing market.

As a commercial real estate investor, you should be familiar with all the tools necessary to be successful. One tool often overlooked is the 1031 or Tax Free Exchange. In a 1031 exchange, you can sell your investment property and not pay capital gains tax on the sale if you purchase a “like-kind” property within a certain period of time.

You can do a 1031 exchange in not only commercial real estate, but you can also exchange other “like” property such as selling a professional practice and purchasing another “like” professional practice tax free. Consult your local 1031 attorney to ensure your exchange qualifies as Tax Free.

Of course, the IRS, for job security purposes, has numerous rules to follow to make the exchange legal. Some of the main ones include:
– The replacement property must be of equal or greater value than the property being sold.
– Neither the property sold or the property purchased can be for personal use. It must be for investment purposes.
– You must declare a 1031 exchange when you are selling the commercial property.
– You have 45 calender days to identify a replacement commercial real estate.
– You have 180 days from the date you passed title to the property you sold to close on the replacement property you will
be purchasing.
– You must use a 1031 facilitator or intermediary to act as an independent third party. You cannot touch the proceeds from
the intial sale. Doing so may void the 1031 IRS rules and trigger a taxable event.
– The final rule is to check the 1031 rules or with your attorney prior to entering into a 1031 exchange. The IRS changes the
1031 rule quite often.

Use 1031 Exchanges to your advantage. Doing so will help save you thousands of dollars in Capital Gains tax.

You would be amazed at the number of people who pick realtors who do not know the ins and outs of the housing market where they are looking to buy a home. By doing so, you run the risk of not getting the best value for your dollar, buying a home with hidden baggage, or buying a home where a future municipal or private project may devalue the home.

In the Kirkland, Redmond and Bellevue housing market, there are a number of questions to ask your realtor candidates before choosing them. Here are a few key ones to ask:

- Does your realtor live in or near the housing market you are looking to buy?
- Does your realtor know where the quality neighborhoods are and where the neighborhoods that may be a little more run down are in Kirkland?
- How many deals did your realtor do in the past year in Kirkland?
- What are the pros and cons of living West of Market? East of Market? Totem Lake? Bridle Trails? Rose Hill?
- Is it worth buying a luxury home on the waterfont in Kirkland?
- What is the latest from the City Planning Department?
-When was the last City Planning Meeting the realtor attended?
- Do you (realtor) list the home for sellers or show the homes for buyers? Or, does your realtor have a team of underlings who do all the work and the lead realtor just gets the listings and new buyer clients and you never see them again?

By asking these questions, you can have a happy, fun buying or selling experience. Happy House hunting.

With the economy in flux, including the housing market and the job market, it may be difficult to decide to buy or rent if you have to relocate. The housing market has been on a downward trend and the mortgage rates are up and down like a yo-yo. There are a number of things to consider when making your relocation and considering your housing needs.

First, locate a good real estate agent in the market you are relocating to. If, for example, you just landed a job at Microsoft in Redmond, you’ll want to find a real estate agent who knows the Redmond/Kirkland market and surrounding areas. Knowing the micro-markets is important as the Redmond/Kirkland market is different than the market in Seatle. The local real estate agent should be able to tell you what is the market outlook, where are the good neighborhoods, what are the local schools like and how’s the rental market.

Second, you will want to sit down and do a little financial analysis. If you can find a cheap, nice rental house in Kirkland while the market and mortgage rates stabilize, would you be better off? Or, does the real estate agent think the market has hit its’ floor and could you possibly get an awesome deal on a house, or even a luxury house at a rambler price. Would your mortage and subsequent deductions put you better off with future equity than if you just decide to rent. (side note, if you need help with this let me know, with my background in finance and accounting, I can help you figure this out.)

Finally, what can you afford. If you are selling your home in your current location, will it sell quickly? If so, you may be able to do a contingent offer on a house in your new market. If not, you may need to rent in your new market while your house in your previous location is sold. Or, maybe you can sell quickly and upgrade to a luxury home in your new market.

With the housing market and mortgage rates going crazy, relocation brings on a whole new set of challenges. By following some of the safe steps above and doing your own due diligence, you can set yourself and your family up for the best possible scenario.