Trilogy at Redmond Ridge Market Report – February 2012

Sales despite the weather!

THREE HOMES SOLD IN FEBRUARY

The Northwest Multiple Listing Service, NWMLS, reports that in February, two Trilogy homes closed escrow along with a short sale for a Whidbey that had been pending since last July. That property might have gone into foreclosure but for the closing of another, nearby, short sale held by a different bank. Doubtlessly the Whidbey listing made sure the negotiator for her property was fully informed about the first short sale.

Some folks visiting my Vashon open house and a couple of callers seemed confused about emails and reports which offer conflicting information about monthly sales. The word “sale” has different definitions. Folks selling new construction have one. But we conventional real estate brokers have another.

Here are the typical steps in a resell broker transaction:

1. “Active” means a home is listed for sale on the NWMLS. That’s step one. Step two begins with an offer to buy which leads to…

2. “Mutual Acceptance” meaning both buyer and seller agree to all conditions of a sales agreement and earnest money goes to escrow. Then the listing broker reports to NSWMLS that the property is sold “STI” -subject to inspection. Usually buyers have an inspection contingency as part of their offer. If not, then the home is reported as…

3. “Pending” which means that the home has passed inspection and the buyer has agreed to move toward the closing of escrow. Finally, there’s…

4. “Sold.” That means that the home has closed escrow and the listing broker will report it as such to the NWMLS. This is when the deed to the home is recorded, the seller of their home receives any proceeds, the real estate brokers collect their commissions and the new owner gets the keys. Only then is the sale truly a “done deal”.

Here is the difference with a “new construction” salesperson transaction:

There are two different types of homes offered for sale in new construction:

SPEC HOME: This is a home built on speculation, a home without a buyer. In Trilogy, Shea calls them “designer homes.” From the time the home is ready for a concrete foundation and King County has issued a building permit until it has a new owner, it’s a “spec home.” These are the homes that a “new construction” home builder would list on the NWMLS and they would follow the same pattern as listed above.

NEW BUILD: In your neighborhood, this may also be called a“from the ground up” home. In this scenario, a customer would select a lot and a floor plan and then sit down with a new construction salesperson (Trilogy’s “community representative”) and sign a purchase and sale agreement just as above. Here’s where we come to a couple of differences between a “new build” and a “spec home”.

“New build” homes are typically not listed on the NWMLS because:

The home does not yet exist.

The property is not listed on the NWMLS as “Land for Sale” since at Trilogy, the builder sells a package, land and house. That precludes someone from buying land and building later. In this case, a buyer has purchased the complete package even if the county has not issued a building permit. Elsewhere you can buy land and build later; it’s not an option at Trilogy.

Here’s the fundamental difference. When a “new construction” salesperson says “I sold a home” what they really are saying is “I got an agreement signed between the seller (the builder) and the buyer that says the builder agrees to sell for a certain price and the buyer agrees to purchase for the same price when the home is completed.

But it’s not really sold. Escrow hasn’t closed. You have just reached Step 2. But, if you are working with a Preview Properties broker, or one from any of the traditional agencies, well, you know from your broker that “the fat lady hasn’t sung.” She’s barely cleared her throat. A quick aside, please. As far as I know, everyone selling in Shea has that type of license although a real estate license is not required to sell “new construction.”

So that’s why market reports, emails and bulletins might have different numbers. It all depends upon if the reports are from new construction salespeople, or licensed brokers and agents. My reports are for FINALIZED SALES, only, where money has changed hands, the county’s records are up to date and a new owner has the keys. My resource is the very accurate and reputable NWMLS. No rumors, no “blue sky,” just facts so you can accurately analyze your investment opportunities.

The one exception to this rule is that “new builds” eventually close escrow and become “sold.” But, the sale most likely will never be reported to NWMLS because it was never listed as “Active” or “for sale” with them. Reporting it to NSWMLS is time consuming, an expense and effort a builder might not want.

The bottom line is, if you want to know the real sales numbers (sold/closed escrow homes), take my reports and add the number of new “occupied homes” signs you see within Trilogy. Remember that the “designer homes” are being reported through NWMLS reports and are in my newsletters. The “new build” homes, which I can count on very few fingers, are not.

I hope that clears any confusion you might have that was caused by “high pressure hype.” And, as I have said before, if you want more clarification, or if you just to talk about the market, that’s why I have a telephone. Please, call.

Let’s move on to some good news, some welcome facts.

SIX TRILOGY HOMES ARE PENDING CLOSE OF ESCROW

Six pending homes is a great indicator that we will have significantly larger sales numbers for March. New construction has four “spec homes” pending, including Washington, Whidbey, Hemlock and Cedar models. The average time on the market for these new construction “spec” homes has been 151 days and the average asking price is $496,500.00. The two remaining sales include an ARCH Washington and a short sale Madison. They average 201 days on market with an average sales price of $309,000.

WHAT IS CURRENTLY AVAILABLE, WHAT’S ACTIVE?

Right now there are 26 resells on the market. Of these, 3 are ARCH homes (A Regional Coalition for Housing which sets up special pricing for low income buyers), one “short sale” and one “foreclosure”. There are 8 new construction homes available, 4 completed and ready for occupancy.

SUMMARY: THE MARKET IS VERY ENCOURAGING!

Anytime a builder begins to build on speculation and the homes actually sell, it is good for everyone. This month’s numbers are a beginning indicator that things are getting better. The higher the price when those homes are sold, they faster your home’s value will rise.

What’s up with all the Washington floor plans selling? No, please, it’s not Washington State patriotism. Maybe there’s a rush of younger and fit buyers who enjoy stair climbing. Maybe it’s because buyers are appreciating the value of getting more dollars per square foot than one would pay for a one story home or that the builder is pushing that particular product. The “close of escrow” will tell us if incentives are the reason.

That’s it for this past month. Watch for us next month.