Seattle Real Estate, Fixer, Real Estate Seattle

I’ve put up yet another www.FixerFixer.com site.

This site has almost two hundred articles, and has been reinvented about six times. FixerFixer was my first blog.

I love working on properties. I have a ton of absolutely useless knowledge from working on properties for forty years. My business partner and I did all kinds of crazy stuff with property in the 1970s. It was like a kid, I was a kid, in a candy store. Property was cheap and people with money spent it on houses.

A guy paid me for two months to strip a hand rail in his house. The hand rail was all turned mahogany. When it was done it was spectacular. There was no way to recreate it. There were huge beams of mahogany in the living room ceiling which is how he knew about the banister.

I guess I did some plaster work, and painted a room or two along the way, but my point is those were the days.

FixerFixer is a national site, it started as a national site. I wanted it to be more local so I interjected Seattle into the title. Well, now we are recreating it.

This site will remain the same, but new posts will go to FixerFixer.

A developer puts deals together with financing. When I first started in business one of my clients was my age, and a Real Estate developer. He put together a half dozen projects around Seattle. The guy bankrupted more than a few contractors by finishing projects out of his own corporate protected bankruptcies. It wasn’t pretty, and the projects also didn’t turn out well.

The projects were just thrown together. He had a partner who did grow up in the building trades, but was lead astray, to hear him tell it. The fact is he was a greedy little nickle, and dimer. His greed is what got him in business with this sociopath who just wanted to make a buck, and didn’t care who got hurt.

Just to be clear, I was paid, got out, and away by fulfilling my contract.

By contrast my Broker in the first Real Estate office where I worked was a Real Estate developer. He did everything well. He ran a tight ship, was generous, and every body made money. He turned out a quality product at a reasonable price.

A developer finds the dirt, contracts to add the systems, and infrastructure, then contracts to have the project built. They take bids, secure the entire package by contract then puts the financing in place. They can sell the project at any point in the process. Some developers only secure the dirt, do the surveys, soil samples, grading, and site prep. They may permit the process, or have some one else permit the process, like a builder who they sell the site to. Some developers build, some builders develop.

The profit, or the poison, may be in the financing. It may also be in the permitting process, or lack of permit over sight, but that’s a topic for another time.

The point is that you can be completely inexperienced, and still get a project permitted, built, financed, and sold. It’s something that has left us over built with projects that are worth less than the effort to build.   

A property above I-90, but on the Rainier Avenue side of the hill closed for $400K. It’s an Estate Sale. It’s big.

For the past two months people have been painting out side, and inside. I went in this week to see that even though the systems of plumbing, and electrical are being updated it’s being done by patching the walls. The lathe, and plaster are still there, but holes were cut to run the wire, and plumbing. The walls were then patched and skim coated.

OK, let’s say that’s fine. The wood work is utility grade, but of the era. The floors are hardwood, and all of the trim is original.

None of the cabinets, or fixtures are in yet, and they are still painting. There is drywall debris all through the house, and in the basement, which has high ceilings, there is a defined need for some leveling.

It’s been two months, and they are maybe half way done.

Will it pencil? Will it sell for more than $650K?

For my money this was a house for a family to live in while they fixed it up over the course of time. There may be a profit, or maybe it is a family who wants a property for $560K, and this is the way they figured they could get there. Even at that, the expense to me doesn’t pencil.

Just as an example a house sold, and closed for $1.7 million dollars this week. They were asking $2.2 million due to the extensive remodel. It’s in the same neighborhood of another house that was taken down to the studs, and rebuilt. When that house supposedly sold for $1.1 Million I thought that was a good deal for some one. Unfortunately that house sold to a straw buyer to get the construction loan out of the way.

The sale for $1.7 Million maybe a good price, I don’t really think so, but then again it is in a prime location. The lot was appraised for $800K.

The point is that in both cases, even though the work was a good thing in terms of updating all systems, the bells, and whistles didn’t get a sales price.

We have been cleaning some places over the course of years. What I have noticed in the past two years is that every one of our cleaning clients who put a property on the market had the property sell. Well, there is one that the people bought at the top of the market who can’t sell for what they paid for it. One out of 24 is pretty good though.

I have about six blogs, one is at www.aspringcleaning.com that is getting good traffic. It keeps rising on the Google search even though I pay it little attention. A commenter mentioned today that they would like to see more about what we do in terms of cleaning, so I’m going to put some of those posts here.

This site has had a long hiatus. There hasn’t been much to say about fixing properties. I see projects, spot lot development, and remodels all over town. There is a lot of activity that seems pointless. The market place has changed, globally.

Not many people agree with my point of view. There is a stubborn way of thinking that Real Estate will go back to the way it was, before we built thousands, if not millions of housing units that were dumped into an already saturated buyers market.

The only reason it seems like housing is tight is because builders stopped building Apartments. Less than 5% of the building permits issued between 2003 and 2008 were for apartments. Everybody was on the building condo, and town house craze. Buyers snapped them up, and as I understand 15 million of those units are vacant in some stage of foreclosure purgatory.

If some one were very smart today they would begin building or converting to rental units for cash flow. I know that auction buyers are doing that, but that is for cash. I think some one with a 15 year amortization, of low rent rental property could hold dirt, while having an income.

We have prepared thousands of properties for sale. Thousands, more than a couple, and more than your Real Estate agent can imagine doing in a career that tops out at about 50 transactions per year. Actually 24 transactions a year seems to be a lot.

This past year some really nice properties sold quickly. Many of those were project houses that were either done well for sale, or were in good original condition.

Were going to be cleaning a couple of houses for sale this week. We clean at least one house that will be going up for sale a week now, every week. Over the summer it was two, to four a week.

Requests for hauling, or yard work have stopped. Some people ask about painting, or light carpentry, but no one has asked for a whole house make over. There are thousands of contractors out there selling jobs for themselves that pay them only wages. As one client said to us, now is a great time to remodel, but is it really.

We work with a lot of savvy people in the Real Estate business. Some of my oldest clients have been Real Estate investors, in the past. A smaller number are Real Estate investors now. It was my opinion last spring that we would see a Real Estate market that could turn around and start climbing in price again. My opinion now is that we are in for a long steady decline in pricing that will leave a lot of projects in homes worthless.

We’re going to concentrate on our cleaning business. I don’t mind looking at projects, but I doubt much will change until after the next Presidential election.

Last night I stopped at another fantastic property value across from Green Lake. I can’t discuss the specific property because it has an offer working on it. That reminds me of another great property sitting above Green Lake that also had an offer. The offer went away, there has been a price reduction, and as of this last week the property is still available. Buyers tying up a property pending inspection is another technique some agents use to get a better deal. I’ll talk about that in another post.

Both properties are unique. They are older, and in somewhat original condition. The one I saw last night has a kitchen remodel that could have been nice in a new construction home. Fortunately that was all that was spoiled. The rest of the house has true architectural integrity.

When you buy something that is classic, and restorable, you can do that over time. Once the house is finished you still have the value, if you bought at the right price. For some houses the price may be secondary to the value. Some people have paid a million dollars for a property of exceptional value. That’s OK as long as the value, the integrity, is maintained.

If you listened to Bernanke today it sounded to me like he was stumped. Stumped is a good thing. Stumped is what we’ve got.

Let’s back up to the Bush Presidency, and 9/11. A friend made a comment to me on Monday that Bush could have raised taxes to pay for a war on Al Quida. I would have paid for that. I think all Americans would have paid for a war. Instead we got a tax credit at what now has proved to be the worst possible time.

My feeling has been that Obama got elected by default. He was in the right place, at the right time, and America did want change. America still wants change, and that’s why we have the Tea Party members in Congress.

While I was in college another friend was a member of Young Americans for Freedom, a right wing, conservative group. He said that the extreme left, and extreme right are exactly the same. They want less government interference.

Today, that’s what we got. We got less government involvement in the economy. That is a good thing.

Real Estate prices will continue a decline. More money will be made in stocks, oil, Treasuries, and particularly innovation, than holding on to property. Property needs to be maintained, and managed. You can invest in a multinational growth fund for better returns, with far less work.

The opportunity to buy into a Real Estate is now. Bernanke said the Fed rate will remain low for two years. That means there will be two years for people to dump property. That means two years of a buyer’s market. That means that after the next Presidential election, no matter who wins, there will be a bump up in the economy.

By the end of the decade Real Estate should be a good place to hold equity. The planning should start now.  

David Rush at Windermere phrased it best, that what we do is create desire, and calm fears. We talk a lot about preparing properties for sale. Our company, A Spring Cleaning is the result of thirty years of experience working on properties with property owners, and Real Estate agents.

Staging is something we have always left to people much more design orientated than I. Barb Schwartz built a career on training people to stage. It’s an art. It’s a matter of seeing the possibilities with the spaces.

What we do is work on the structural, or cosmetics of a property. Twice we have worked with stagers, decorators, and designers, over extended periods until 2008, when the Real Estate market changed. Now we follow the advice of a long time agent who has since retired who said: “if it’s clean enough some one will buy it.” She staged extremely sparingly, and always with what was in the home at the time. If it was vacant, that’s the way she presented it.

We’ve never covered anything up, or done any of the low brow tricks. As a matter of fact I was very out spoken about our need for home inspections, and the Form 17. In my opinion staging was never meant as a tool to conceal anything.

Most stagers will tell you that the purpose is to give people the opportunity to see themselves living in the property. It helps people to define spaces. People want to know if a couch will fit, or how much of the bedroom a queen size mattress takes up. It’s common sense that goes along with giving ideas on how to decorate a room.

It’s actually very technical, and we did lose one of the best stagers here in Seattle last year. There are others that are less expensive, some more expensive, still it comes down to your property and presentation.

These are pictures of Machu Picchu in Peru. It was constructed in 700 AD and these two pictures don’t show the entire planned community.

The first time I saw stone stacking was in 1994 in Greece, at a site along the Mediterranean’s edge. They were also mixing cement is a hole they dug, but used that after they had whittled the rocks with tools that looked like axes, but blunted. The rocks fit together perfectly.

They used plum strings, and levels to work the way up the walls using some slender tree trunks for the roof supports, door, and window headers. It went up quick. There was the master architect, and a couple of workers. It was also obviously a training period for the workers.

That is exactly how these houses at Machu Picchu were constructed in 700AD, without the cement.

There are other sites in Peru where the rocks are as large as those in the pyramids so there must be some truth to the idea that mathematics is universal.

I just wanted to show some history of construction so when you look at your house it might make some sense on how it’s all supported.