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Home Forum Extra

Seattle Times business reporter Elizabeth Rhodes posts the answers to your real estate questions as they pop up during the week. Join this ongoing discussion, which also features reader reaction to real-estate articles appearing throughout The Times.

Home Forum, Seattle Times, P.O. Box 1845, Seattle, WA 98111

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November 29, 2007 11:00 AM

Owner fears neighborhood character threatened

Posted by Elizabeth Rhodes

Q: In my neighborhood, Ballard, a number of charming Craftsman homes have been torn down and replaced by bland town homes. This is undermining the neighborhood's architectural legacy. What can I do as a citizen to stop the demolition of historic homes and buildings in Ballard?

A: "This is happening nationwide. It's not just Ballard. It's not just Seattle," says Christine Palmer, who heads the advocacy program run by Historic Seattle, a nonprofit historic preservation organization.

Concerns like yours are common, Palmer says. And it's been an issue in Ballard for years. However, there are no simple solutions.

Washington has a law, the State Environmental Policy Act, or SEPA, that requires a property over a certain square footage be assessed before it can be demolished. Its historical significance is part of the assessment.

"But if a house is average to small, it falls through the cracks of SEPA and the owner can get a demolition permit over the counter," Palmer says. "My personal advice as a preservation advocate is: don't wait until a demolition sign goes up."

Instead, people everywhere who are concerned about this issue should see if their city or county has a historic preservation officer. Many do, including Seattle. Write to the officer about your concerns; include why you think a particular structure or structures are historic and worth saving.

Will that do the trick?

"There's not a great chance," Palmer concedes. That's why she says people in your situation need to "generate lots and lots of letters to your local officials" asking them to tighten up on the demolition of older homes and their replacement by dissimilar structures.

In your letter say, "I'd like to see more strict design review of insensitive infill construction." Those are the terms to use, says Palmer.

"Ultimately saving the character of older neighborhoods goes to the political will of the community. It has everything to do with how the local politicians feel about development," she says.

For more on Historic Seattle and its advocacy program, go to www.historicseattle.org.

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November 28, 2007 10:00 AM

Figuring taxes on inherited property

Posted by Elizabeth Rhodes

Q: Do we pay tax on selling an inherited property (in my case a house)? If we do, what is the tax rate?

A: As attorneys like to say, that depends. Only this time it is certified public accountant Robert Christopfel of Seattle saying it.

Here's the way he breaks down the issue.

The value of the inherited property is its fair market value upon the death of its owner. So if you inherit Uncle Bruce's house, and it's worth $500,000 on the day he died, that's its basis value for your tax purposes no matter whether you take possession two weeks or two years later.

You don't pay taxes on the basis value. But you may have to pay them on any profit (also called gain) you realize when you sell the property.

"If you sell it at a gain, even if it's just two weeks after you inherit the property, the gain is treated as a long-term capital gain," Christopfel says. Fifteen percent currently is the highest tax rate on long-term capital gain.

So let's say you keep Uncle Bruce's house for two years and use it as a rental. Then you sell it for $550,000. You could potentially owe 15 percent of the $50,000 profit you realize. Or less if you use a real-estate agent; selling costs can be deducted from that $50,000.

But what if you move into Bruce's old home instead? In that case you may be eligible for the capital-gains exemption given to owners when they sell their primary residence. That's $250,000 for single owners, $500,000 for joint owners so long as they've lived in the home two of the previous five years when they sell it.

Under this scenario, you obviously would owe no capital gains tax on your $50,000 profit.

There's more. Christopfel says the government allows exemptions to the two-year rule for sellers moving because of medically documented health conditions or job relocation.

In those cases sellers get pro-rated exemptions based on the amount of time in residence. So say you move into Uncle Bruce's home, but live there just 15 months before selling. Then you'd enjoy 15/24ths of the exemption (the 24 referring to 24 months or two years).

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November 27, 2007 4:00 PM

Double dues have owner fuming

Posted by Elizabeth Rhodes

Q: Several years ago I set up automatic condominium dues payments through my bank's bill payer service. Now I've discovered that by mistake I've made double payments totaling at least $5,400. I feel pretty stupid for letting this happen, but I'm also surprised that the large management firm that collects my condo dues didn't catch this and notify me. When I brought it to their attention, they quickly repaid me, but said it's not uncommon for homeowners to pay extra. I think that's lame. Should I instigate an investigation of them for bad business practices and potentially to get additional remuneration?

A: Seattle attorney Michael Brandt, of the Brandt Law Group, says you can't ding the management company for extra bucks because Washington courts, unlike those in California and many other states, generally don't allow the awarding of punitive damages. The law prohibits it, except in a few narrowly defined situations, and this isn't one of them.

But he does think you should pursue an inquiry into your management firm and how well it's doing the work your homeowners association is paying it to do.

"What would be good would be to write to the board and tell them of your longstanding problem that was not caught," Brandt says. "It could well be happening to other association members."

You should also suggest that the board have a financial audit done (if it's not doing so already). Associations are not legally required in this state to undertake an audit, but many do annually anyway.

An audit will reveal situations like yours as well as demonstrate how the association's funds are being spent.

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November 21, 2007 4:00 PM

Protecting against diminished value

Posted by Elizabeth Rhodes

Q: I may buy my first home (probably a condominium) in the next few months. However I'm concerned that prices could fall after I buy and I could lose money. Will mortgage insurance protect me in case my home eventually is worth less than I pay for it?

A: Karl Newman, president of the nonprofit Northwest Insurance Council, an industry group, says he knows of no mortgage-related insurance homebuyers can purchase that would protect them against "diminished value." And if it were to exist, he expects the premiums would be expensive.

What does exist, and is common, is private mortgage insurance, commonly called PMI. Many first-time buyers purchase PMI because their mortgage lenders require it. That's commonly the case when a borrower makes less than a 20 percent down payment. However PMI doesn't protect the borrower. It protects the lender in case you default on your loan and the lender has to take the property back. That's statistically a greater possibility among borrowers who have little equity to lose. They may choose to walk away if they get in financial difficulty, rather than trying to save their home.

PMI insurance is a mixed blessing: good in that it allows those with slim down payments to own a home, bad in that these premiums can continue for years and add markedly to monthly homeownership costs.

However it's good to remember that the federal Homeowners Protection Act of 1998 requires lenders to cancel PMI once the owners have reached 20 percent equity in their home. There are exceptions to this. Borrowers with blemished credit and those who took out reduced-documentation loans are among them.

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November 20, 2007 4:00 PM

Renter questions extra fee

Posted by Elizabeth Rhodes

Q: My lease is expiring and my landlord has given me two options for staying. If I sign a six-month lease, I'll pay base rent plus an additional $25 a month, which is described as a month-to-month fee. If instead I sign a 12-month lease I was told there would be no extra charge. This doesn't seem right. Is it legal?

A: Tacoma attorney Everett Holum says it's unusual to see an add-on fee for a short-term lease, but not unusual for landlords to charge a higher rent for short-timers.

Either way, "there's nothing in the law that says they can't do that," Holum says. Further, in signing a lease that stipulates an extra charge, the tenant has agreed to pay and has no legal right to complain later.

So why would a landlord charge less for a longer lease? Because "that means they won't have to get a new tenant for the next year," Holum says. "The fee is being charged because the landlord is taking a detriment for having the reduced term."

A reduced term means potentially higher costs to the landlord in the form of cleaning costs, advertising fees and lost revenue if the unit sits vacant for any length of time.

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November 14, 2007 6:12 PM

For Sale By Owner survey shows flat market

Posted by Becky Bisbee

LAS VEGAS -- As real estate information has became ever more Web-based, sales agents voiced fears that their jobs would become obsolete.

A new survey by the National Association of Realtors, meeting here this week, has put that fear to rest.

It found that just 12 percent of this year's real-estate transactions were for-sale-by-owner, the same as last year.

Moreover, only 60 percent of those properties involved were sold on the open market. The remainder changed hands among parties who knew each other, such as family members.

The number of FSBO transactions has been declining since 1997, when a record 18 percent of all sales where transacted without a real-estate professional.

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November 14, 2007 6:04 PM

Zillow founder outlines future plans

Posted by Becky Bisbee

LAS VEGAS -- Rich Barton, Zillow's founder and CEO, told the audience at the National Association of Realtors convention here this afternoon that the 2-year old Web site, which attracts 4 million unique visits a month, will continue to push the technology to innovate.

"We're very passionate about our homes. What we're trying to do is bring all that passion into the marketplace. What Zillow wants to be long-term is an online version of the neighborhood newspaper," he explained.

While Zillow never intends to sell houses, its bread and butter is selling ads to firms involved in the real-estate industry, although it does allow real-estate brokers and agents to post some content for free.

Now they can feed their complete listings of homes for sale onto Zillow.

Sometime next year, Barton said, they'll be able to add "virtual sold signs" online so site visitors can easily see which agents sell the most homes in any neighborhood.

Another new feature, aimed at garnering ads for its site, is based on predicting which homes are in flux.

"We believe we can make a good prediction about who's about to move or remodel. That will provide marketing opportunities," Barton said. He didn't give any time frame for adding this feature.

Barton said Zillow plans to become even more interactive. In the future the site will allow visitors to counsel each other about home matters. "Should I paint my house white or yellow? In the future they'll be able to ask others that," he said.

Also on the drawing boards is a feature that would allow people driving through a neighborhood to receive a flow of information about the homes they're passing.

While some real-estate firms already offer a version of this, Zillow's would have data on all homes, not just those for sale.

Zillow is also working on adding information on raw land to its database and is also eyeing the international market.

The owner of a vacation home in Whistler, B.C., Barton said he'd like to replicate Zillow's offerings in Canada. The challenge right now is getting access to the necessary home data. But he sounded confident that eventually the problem could be solved.

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November 14, 2007 9:32 AM

Lennox Scott takes the podium

Posted by Becky Bisbee

LAS VEGAS -- The national speakers at this week's National Association of Realtors annual convention here are all talking in one way or another about the current market downturn. Some are also talking about what can be done to help it rebound.

Lennox Scott gave his perspective on how things are playing out in the Seattle area. He is the CEO of John L. Scott, the real-estate firm founded by his grandfather.

Lennox Scott has worked through many market cycles in the decades he's been in real estate and predicted many months ago that the Seattle market would slow.

So he's not surprised that it has. Nor is he particularly worried about, calling it no more than "an adjustment phase."

Currently there is a five-month supply of for-sale homes within the Seattle city limits, Scott noted. Last year some neighborhoods had a month or less. In South King County there's a six-month supply.

If that inventory sounds high -- and Scott says it's not -- consider this for some perspective. Florida's Palm Beach County north of Miami currently has a 50-month supply of homes for sale. Las Vegas is also in dire straits with a two-year supply.

Both had market forces Seattle never had: runaway homebuilding plus thousands of investors who flooded those markets hoping to get rich quick by buying and flipping houses. When prices in those areas flattened,many simply walked away from their properties.

In Las Vegas, foreclosures and excess for-sale inventory have led to a 13 percent dip in prices. So Scott doesn't see last month's slight decline in year-over-year Seattle prices as worrisome at this point.

Still, things can be done to help buyers and sellers, he said.

Both Fannie Mae, the congressionally chartered company that funds a large share of the nation's mortgages, and the Department of Housing and Urban Development, which offers FHA loans, are trying to get Congress to modernize their programs.

At a seminar here Tuesday, Scott pointedly asked top officials from the two entities why Congress seems to be dithering despite widespread support from Realtors, lenders and others.

He didn't get a straight answer. But he made it clear that increasing loan limits, which both Fannie Mae and FHA are trying to get through Congress, would be a huge help to Seattle buyers.

"The FHA modernization bill to raise loan limits is all to the good," Scott said. In particular it would help borrowers with subprime loans and blemished credit transition into more favorable FHA loans, which they currently can rarely do in Seattle because home values generally exceed FHA loan limits.

Ditto with Fannie Mae. Its upper threshold for loans is $417,000, which means anyone who needs a larger loan -- and in a pricey Puget Sound area many buyers do -- must get a more expensive jumbo loan.

"We want a healthy Fannie Mae," Scott said.

Meantime, he says the current slower market is providing a window of opportunity for Seattle buyers. "After the first of the year we'll get a little momentum boost," he predicted.

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November 13, 2007 4:02 PM

National outlook gloomy for 2008

Posted by Becky Bisbee

LAS VEGAS -- At the National Association of Realtors convention here, the big question on everyone's mind is: When will the real-estate market rebound?

Economist John Tuccillo is predicting the end of 2008 or beginning of 2009 for the nation as a whole.

However the Virginia-based consultant and former NAR chief economist stressed that "there are hundreds of thousands of real-estate markets, so it doesn't matter what the national picture is."

What really matters to buyers and sellers is what's occurring in their own area.

Here's what Tuccillo says they should watch for. It could be as simple as keeping an eye on neighborhood "For Sale" and "Sold" signs.

-- The number of homes on the market. A decrease means more buyers are buying.

-- How long homes stay on the market. Faster turnover is another sign of a market pickup.

- The ratio of sales price to asking price. Disappearing price cuts signal a turnaround.

When the market does rebound, Tuccillo says, it will bring "a tsunami of first-time buyers." They're Gen Y'ers born after 1976.

Larger in numbers than Baby Boomers, Gen Y's will generate tremendous home sales between 2010 and 2015, Tuccillo said.

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November 13, 2007 2:07 PM

Realtors conference kicks off

Posted by Becky Bisbee

LAS VEGAS -- The National Association of Realtors' annual convention started with a bang -- literally -- this morning when an old hotel, the Frontier, was imploded nearby sending up a huge plume of dust and making the ground shake.

As chance would have it, that was a decent metaphor for the current state of real estate. The boom is over and the dust is now settling, Lawrence Yun, the NAR's chief economist, told the thousands of real-estate professionals meeting here.

This is the first year since the Great Depression of the 1930s to register a nationwide decline in median home prices, Yun said. His latest numbers put the drop at 1.7 percent. "We're in a time of fear," he said.

For 2008, Yun, who holds a doctorate in economics from the University of Maryland, is predicting a slightly improved sales climate -- if zero percent appreciation can be considered an improvement.

In other words, prices nationally will be flat, Yun said, as buyers react to gloomy housing-industry news by sitting this one out.

But as Yun stressed repeatedly, real estate is intensely local. National trends mean about as much to buyers and sellers in any one city as a national weather forecast would mean to them.

That's why things will be bad in some areas (like Ohio, which has experienced significant job losses) and good in others.

Yun suggested Seattle will continue as one of the bright lights, which it's been this year. Median year-over-year home prices have risen every month save October, when they were down slightly.

But Seattle's strength may go beyond the usual reasons: a strong local economy and good job growth propelling housing demand.

Yun suggested that Seattle may be joining such cities as New York and San Francisco as "superstar cities" whose desirability attracts affluent newcomers who bring the buying power to continue pumping up housing prices.

He conceded that there's no accurate way to get a handle on the number of these buyers, or their wealth. So for now, it's just a theory. But an intriguing one.

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November 2, 2007 6:00 PM

Posted by Elizabeth Rhodes

Home Forum Extra is taking a break until Nov. 12 while Elizabeth Rhodes is out of the office.

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November 2, 2007 7:27 AM

Deciphering a leaky roof

Posted by Elizabeth Rhodes

Q. Our roof is leaking. We have lived in the house for seven years. The neighbors tell us they thought the previous owner of the house replaced the roof shortly before putting the house on the market. "New roof" was not listed as a selling point and the home inspection report makes no judgment on its age or condition beyond it looks fine. The roofing companies that have come out to look at the roof are non-commital. How can we tell how old our roof is?


A: At this point it probably doesn't matter how old the roof is because there's probably no benefit to knowing.

Once a home sale is completed you have to sue the seller for failure to disclose a defect if you want any relief from the seller.

But that's problematic for a number of reasons.

First if the roof wasn't leaking when you bought the house, it wasn't defective then. Plus a lawsuit is expensive and hard to win if you had an inspection prior to the purchase, and your inspector didn't flag the roof as a problem.

If the seller did get a new roof, it's possible it has a warranty, but whether that warranty has expired or would even transfer to you are the questions.

If you can find the seller, you could ask. Maybe you could get lucky there.

Beyond that, there's really nothing else to do but fix the leak.

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November 1, 2007 8:14 AM

Is condo board overstepping its bounds?

Posted by Elizabeth Rhodes

Q: Our condo, in a recreational area, is used only by our family. It's not a timeshare and not in a rental pool. The homeowners' board of directors recently authorized management to inspect each unit for "safety items." We received a letter stating that we had a "loose bathroom fan" and the tub needed caulking. It also stated that there'd be a $100 inspection fee if we did the repairs ourselves. I resent this intrusion. Does the board have the legal authority to do this? Does it have a right to have a key to our unit? We had previously put a new lock on the unit but they replaced it with their own.


A: Attorney Josh Rosenstein, of Hanson Baker Ludlow Drumheller in Bellevue, says it's possible your condo board has overstepped its bounds. But whether it has or not likely depends on language in the association's governing documents.

Under state condominium law, the board has the authority to enter a unit to maintain common elements, Rosenstein says, but it doesn't have a general right to enter to inspect or to maintain elements individually owned.

State law also doesn't give a board the legal right to have keys to all the units. In fact that's not addressed in the law.

Your documents, however, may grant both those rights to the association. If so, Rosenstein says, you'll most likely find permission written into your declaration, rather than the bylaws or rules and regulations.

As for charging you $100 to check self-made repairs, Rosenstein says state law grants associations the right to charge a fee if it's related to some cost incurred by the association.

"I don't know how these people are going to show that," he says. "Unless you can show there's some pattern that people doing these repairs do them wrong, and there's a danger to others, the $100 fee is too speculative."

An attorney can help you resolve these situations with your board.

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Recent entries

Nov 29, 07 - 11:00 AM
Owner fears neighborhood character threatened

Nov 28, 07 - 10:00 AM
Figuring taxes on inherited property

Nov 27, 07 - 04:00 PM
Double dues have owner fuming

Nov 21, 07 - 04:00 PM
Protecting against diminished value

Nov 20, 07 - 04:00 PM
Renter questions extra fee

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