A PUBLICATION OF THE CAPITAL CITY WEEKLY
SOUTHEAST ALASKA
JULY 2017
Ccenic view of Silver Bay and Pacific Ocean from Bear Mountain on Baranof Island PHOTO BY CHAD ZUBER
The Southeast Alaska Home & Real Estate Guide is a publication of the Capital City Weekly, a division of Morris Communications www.capitalcityweekly.com 3100 Channel Drive Juneau, AK 99801 907-523-2250 Fax 907-789-9097
General Manager Brian Naplachowski, brian.naplachowski@juneauempire.com Designer Matthew Wilkinson, matthew.wilkinson@juneauempire.com Advertising Director Kathryn Fritz, kathryn.fritz@juneauempire.com Distribution Manager Jack Marshall, jack.marshall@capweek.com
TABLE OF CONTENTS On The Cover: Photo by Lianne Harrold 3 Coldwell Banker: Gwen Place 4 Ricker Real Estate Consulting AlaskaUSA Mortgage: Minerva Carandang Platinum Real Estate Valley Auto Parts 5 Ask a Broker 6 Selling your Home: 5 Modern Strategies Quick-Sell Strategies. 7 Southeast Alaska Real Estate: Jocelyn Miles By The Numbers 8 The A.R.M. alternative 9 Millenial Homeowners Exit Realty 10 Fix a HELOC Homeowners Reluctant to Tap Home Equity 11 First Bank Mortgage 12 Try this on the Grill 13 Bad Neighbors 14 Cornerstone Homelending Tips to Stay in Money Love 15 Residential Mortgage State Farm: Malia Hayward 16 Southeast Alaska Real Estate: Karen Wright
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June 2017
ASK A BROKER By Peter G. Miller QUESTION:
Our real estate broker says we need to get both an appraisal and a home inspection to buy a house. We don’t get this. Isn’t it the job of the appraiser to tell us if the house is in good condition?
ANSWER:
Your real estate broker is seeking to protect your interests, a proper thing to do. When you buy real estate with financing, the lender will require you pay for a property appraisal. The appraiser will be hired by the lender in an effort to determine the fair market value of the property and prevent “over lending,” the origination of a loan that is too big. The job of the appraiser isn’t to endorse or repeat the contract price for the property unless justified by the fair market value. In turn, the lender will make a loan based on the appraised value or the contract price, whichever is less. The appraisal effectively limits the ability of a purchaser to pay too much because if the contract price is too high, the lender simply won’t make the loan. The appraiser asks what’s the fair market value of the property while the home inspector asks if stuff works. The inspector will try appliances, look for leaks and check various household systems while the appraisal will consider the property and nearby homes. While there is some overlap between appraisers and home inspectors, what they do is very different. For example, if a borrower purchases a home and requires a mortgage, the lender will demand an appraisal, but not necessarily a home inspection. Looking toward the future the current arrangement could change. For example, it used to be that borrowers could get property insurance simply by signing a
check. Now, however, insurers are increasingly concerned about the property’s condition. In some cases, and in some areas, if a home is 20 or 25 years old, the insurance company may require a “four point” inspection before it will issue a policy. The insurance company’s inspector will look at the electrical system, the home’s heating and air-conditioning systems, plumbing and roof. If the insurance company is unhappy with the results, the homeowner will either have
to make changes to the property or find insurance elsewhere. In states where property insurance is hard to come by, the decision of the insurance company to require an improvement is effectively final, regardless of how ridiculous or costly to the owner. It won’t be surprising if down the road mortgage lenders adopt a similar standard. After all, a home is security for the mortgage and lenders have a very big incentive to make sure that the property is in the best possible condition.
peter@ctwfeatures.com Peter G. Miller is author of “The Common-Sense Mortgage.'
0.7
%
percent Juneau home values have gone up over the past year. The median price of homes currently listed in Juneau is $339,900. Source: Zillow
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SELLING YOUR HOME By Madhusmita Bora
Smartphone photos no longer make the cut: 4
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M O D E R N
Q U I C K - S E L L
S T R A T E G I E S
➤ ONLINE PRESENCE
➤ QUALITY PHOTOS
➤ VIRTUAL TOURS
➤ TAKE IT TO YOUTUBE
“The No. 1 strategy (for selling fast) is good Internet exposure,” says Elizabeth Weintraub, a Sacramento-area broker who writes on real estate expert for about.com. “People who keep their homes a secret hurt their chances of getting the highest price. You want to be everywhere online.” Agents need to focus on their online debut, says Martha Webb, an author and producer of the “Certified Home Marketing Specialist” course. “You get about 9 seconds to get people’s attention.”
Smartphone photos no longer make the cut. Agents are increasingly relying on professional photographers and high-tech equipment to shoot pictures of homes on sale. “You need to take lots of photos and choose a few that are emotionally appealing,” Weintraub says. Webb recommends developing a story through the photos. “That’s your first showing,” she says. “The biggest task is to prepare the home for compelling photography.”
Many agents and brokerage firms are offering virtual tours to nab buyers. At Redfin, a national real-estate brokerage firm, agents use software that gives buyers a high resolution, interactive tour inside a home. It helps people who are looking for a specific layout. If they don’t like what they see virtually, it saves them a trip to the property while also saving the sellers time.
Many agents are relying on videos for storytelling. “The key is to have a well-produced video with good sound and crisp clear visuals,” Webb says. “Think how you can bring emotion to it.” Her advice is to hire a professional and to keep the videos short. Sometimes the owner could get in front of the camera and talk about the home. “Tell a story,” she says. “Don’t just stand there and say the home has two bedrooms, fabulous dining room – they already know that.”
July 2017
By the Numbers
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15
Source: Taylor Morrison’s 2017 Consumer Study
Source: Zillow
%
of homebuyers that believe the idea of a “forever home” is outdated.
%
of listings in August 2016 that had price reductions — the month with the highest percentage of reductions.
5,400
$
Increase in sale price for homes with blue bathrooms (especially hues such as powder blue or light periwinkle) – the highest sales premium of all colors analyzed. Source: Zillow 2017 Paint Color Analysis
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HOME INVESTORS By Erik J. Martin
The A.R.M. Alternative
WHY YOU MAY WANT TO CONSIDER AN ADJUSTABLE-RATE MORTGAGE When you’re buying a home, it’s natural to want to reduce your stress level and eliminate as much uncertainty as possible. It’s a big reason why many mortgage borrowers opt for a rate that’s fixed in order to nix any notion of interest variability. But that could be shortsighted and costing you money, say the experts, who recommend trying an adjustable-rate mortgage (ARM) on for size, despite their lack of popularity. Consider that ARMs accounted for nearly 40 percent of all mortgages in 2005, per the Federal Reserve Bank of New York; but by 2015, they represented only around 5 percent, according to Ellie Mae. The good news is that ARMs work pretty much like they always have: the usual term is 30 years, with a low initial fixed rate provided in years 1 to 10 depending on the product. After this fixed-rate period expires, the interest rate will adjust annually for the remainder of your loan, according to an index (often the 1-year LIBOR or 1-year Constant Maturity Treasury), plus a margin (typically around 2.25 percent) that’s added to the index rate. As of this writing, that would equate to a rate of a little more than 4 percent, which would reset again every 12 months. Your adjustable rate will also have initial, interim and lifetime caps that limit how high rates can go. Why pursue a loan where the rate is unpredictable and risky after the initial fixed-rate period expires? Because you can save a lot of dollars in those initial fixed-rate years compared to a conventional fixed-rate mortgage. “The rates on ARMs today are often at least 50 basis points lower than the 30-year fixed rate, which means you probably can claim an ARM in the mid three-percent range with no points,” says Steven Maizes, vice president of mortgage lending for Guaranteed Rate in Los Angeles. And that can add up to some serious savings. Hypothetical case in point: if you borrowed $200,000, your monthly principal plus interest payment in each of the first five years on a 5/1 30-year term ARM (with the first five years providing a fixed rate of 3.5 percent) would be $898.09, versus $954.83 monthly for a 30-year fixed-rate mortgage set at 4.0 percent. You’d also pay $4,905.35 less in interest over that five-year period with an ARM. 8
That’s all well and good, you say, but what if your variable rate goes sky high after year five? How can you sleep at night? Perhaps you’ll be sleeping in another home before that time, says Keith Furer, senior vice president of GuardHill Financial in New York City. “Actuarial tables have shown that most homeowners won’t have their mortgage for more than five to seven years. Most will either refinance or sell within that time period,” Furer says. Even if you stay put, your adjustable rate may not be as scary as you think; tracking the 1-year LIBOR over the last five years, the rate has ranged from as low as 0.53 percent to as high as 1.82 percent. That’s not to say an ARM is ideal for everyone. The best prospects are folks who plan to move before the fixed-rate period ends, including firsttime purchasers and “younger buyers who are growing their careers, income and families” who may move up to a bigger and better home in a few years, Furer says. “Other good candidates are those who can absorb a higher payment, if it becomes necessary – someone who has more income than needed to qualify for the loan, a good history of saving money, uses credit sparingly or a combination of these,” says Casey Fleming, self-published author of “The Loan Guide” (2014). “Someone on a fixed income that’s not likely to rise, who barely qualifies income-wise or who carries big balances on their credit cards should probably avoid ARMs.” Gene F. Thompson, president of Houston-based InterLinc Mortgage Services, says most lenders offer ARM products. “Fully understand the product and how the rate adjusts before committing yourself,” says Thompson, who recommends consulting closely with an experienced mortgage professional on your options. Additionally, be cautious about an ARM with too short of a fixed interest period, such as one-year, “especially if you are unsure about your future plans,” Furer says. “Also, consider paying points in the transaction (1 point equals 1 percent of the loan amount), which could significantly lower your monthly interest payments.” July 2017
NEWS By Jesse Darland
Millennial Homeowners Follow Convention Despite online-only services, millennials sticking with traditional lenders and agents
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Bucking accepted wisdom, a recent survey revealed that when it comes to homeownership, millennials are more traditional than previously thought. The survey, conduced the online financial wellness community CentSai, interviewed 2,050 Americans between ages 18 and 34. It’s no surprise that nearly all millennials surveyed (91 percent) use online sites or mobile apps to gather information about homes, neighborhoods and prices. However, millennials as a whole tend to put a high value on the knowledge a local real estate agent provides. Three quarters of those surveyed (75 percent) said they wanted to work with a real estate agent local to their area instead of using an “online agent.” “We were surprised to learn that online providers are not yet as big a disruptor in this sector as we first thought, despite purported cost savings,” says Doria Lavagnino, CentSai co-founder and
president. “We found that millennials place a high value on the personal touch and knowledge of a local agent. Buying a home for the first time is daunting, and working with a local agent – particularly an agent referred by a parent or friend – could provide peace of mind.” That preference for local resources extends to lenders as well. More than seven in ten respondents (71 percent) planned to use a local bank or other institution to finance a home purchase. The millennials surveyed expressed a preference for homeownership, with a slim majority (56 percent) stating they plan to purchase a home within the next two years. For the 44 percent who said they were not planning to purchase a home, 68 percent stated the primary reason is they can’t afford to do so presently. Ten percent identified student loan debt as their reason not to buy, while 12 percent cited the freedom that comes from renting.
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FINANCE By Peter G. Miller
‘Fix’ a HELOC
Looking at using a home equity line of credit (HELOC) for your grand remodel?
A HELOC can be an alluring form of financing — but one with risks that should be understood. Let’s say you have a home worth $300,000 and a $140,000 mortgage balance. If the lender requires 20 percent equity to refinance, $60,000 in this case, then it might be possible to get a $100,000 HELOC ($300,000 less $60,000 = $240,000, and $240,000 less the $140,000 mortgage balance leaves $100,000). The interest rate is adjustable and it’s 15-year financing. In the first five years, the draw period, the homeowner can borrow against the line. In years six through 15 the owner must repay the debt. The interest rate is adjustable, maybe 3.25 percent to start in the first year. If the borrower takes out $75,000 at closing, the monthly interest-only payment will be $203 at 3.25 percent. But at the start of year, six things may be very different. If the interest rate has climbed to 5.5 percent and $75,000 still remains unpaid, the monthly payment will be $814. Why so much? Because only ten years remain to fully repay the debt. If the rate goes to 8.25 percent — 3.25 percent plus 5 percent — the monthly payment will soar to $920. Some HELOCs have 7 percent lifetime caps. Will the bigger payment be affordable? That depends on the borrower’s income. So is it a good idea to get a convertible HELOC, one that starts out as an ARM
but can convert into fixed-rate financing? It can be a very attractive proposition because you can’t be turned down (no new loan application is required) and you don’t have to pay the costs for a new closing (because the loan is being “modified” and a new loan is not being “originated”). Converting to a fixed rate is not a sure winner either. If interest levels go up, the new fixed rate might mean higher monthly costs — and maybe very much higher costs. Also, how will the fixed rate be determined? Will it be more than the prevailing rate at the time of conversion? Is there an additional fee to get a convertible HELOC or a special fee at the time of conversion? Or both? Whether you have an adjustable or fixed-rate HELOC, you need to look ahead. What is the worst possible combination of loan balances and interest rates the loan can produce? If the worst happens will you be able to handle it?
NEWS By Jesse Darland
Homeowners Reluctant to Tap Equity Many unfamiliar with or reluctant to try home equity lines of credit Even though the housing crisis ended a decade ago, most homeowners are reluctant to take out home equity lines of credit (HELOCs), according to a recent survey. The survey also found that one in five homeowners are unfamiliar with these types of loans and 30 percent do not know how to apply for one. Sixty-five percent of respondents said they had never taken out a HELOC loan, and 78 percent indicated they were familiar the concept of a HELOC. Just more than half of respondents indicated they have more than $100,000 in equity in their home. Asked if they knew what a HELOC loan is, one
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in five (21 percent) said they did not, while nearly one third (30 percent) said they did not know how to open one. For those who had thought about opening a HELOC, home improvement projects were the most popular way that respondents said they would use the funds. Paying for a medical emergency was the second most common expense at 48 percent. Nearly a third stated they would use the funds to pay off another debt (32 percent), while credit-card consolidation was cited by 18 percent of respondents. Eighteen percent cited unemployment as a circumstance that might drive them to use home equity to meet expenses, while 15 percent said
they might leverage the funds to purchase another home. When it comes to borrowing for financial needs like tuition, medical expenses or debt consolidation, 22 percent of respondents said they would consider a HELOC. “Homeowners are using debt for responsible reasons, like affordable improvements that increase the value of their homes,” says Jeff Taylor, managing director of Digital Risk. “Remodeling is at an all-time high and it’s much more efficient to fund that activity with a four percent HELOC than a credit card charging 17 percent interest.”
July 2017
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TRY THIS ON THE GRILL
Fish on the grill
Cooking on a grill is not just conducive to making steaks or burgers. Seafood is something that also cooks easily and tastefully over an open fire. Grillmasters too often shy away from cooking seafood on the grill. They may feel it's too complicated. Although cooking fish on the barbecue requires a little know-how, it tends to be just as easy as cooking traditional barbecue fare once you get the hang of it. Fileted fish tends to break apart quite easily once it is cooked. If you have reservations about cooking fish on a grill, you may want to start with a thicker cut of fish, or the entire fish itself. Fish steaks are thicker cuts and, though they take longer to cook on the grill, they'll also hold together better than thin, filet slices. Many different types of fish can be cut into steaks, including halibut, salmon, shark, tuna, and more. Even if the fish you are cooking is thick, there is still a chance of making a mess of it while grilling unless you follow two important rules: Cook on a well-oiled grill, and don't touch the fish too much during cooking. A well-oiled surface is essential to keeping the steak or filet from sticking to the rungs of the grill. Many people like to flip grilled foods several times to check for doneness, but doing so with fish can cause it to flake apart. Instead, leave the fish alone until the edges have become opaque and are just starting to flake apart before you turn it. Then do not handle the fish again until you are ready to take it off the grill. Cooking directly over the flame is fast, but you also can use non-stick foil and steam the fish within a foil packet. With this method of cooking you can better seal in juices and even top the fish with lemon slices or vegetables so the items cook together. Using a foil packet also helps keep the fish from breaking apart on the grill, and can be a safe method to try if this is your first foray into grilling fish. Finned fish are not the only types of sea-dwelling creatures that can be cooked on the barbecue. Everything from clams to shrimp can be tossed on the barbecue. Oysters and clams can be cleaned and placed directly on a well-oiled grill. Simply cook for 3 to 4 minutes until the shells of the oysters and clams open up widely. Shrimp can be grilled using a seafood basket that keeps the food contained for easy flipping en masse. Otherwise, slide shrimp on kabob skewers or bamboo sticks (soak wood sticks in water before putting on the grill) to cook easily. Shrimp cooks quickly. Check for a pink color after a few minutes so the shrimp don't overcook and become rubbery. You can also cook lobster or crayfish on the grill. Parboil the lobster inside the house for a few minutes. Then take the lobster out of the pot and dunk into ice water to stop the boiling process. Halve the lobster and brush each side with melted butter. Then place the lobster, meat-side-down, onto the grill. Cook for an additional 5 minutes per side, or until the meat looks opaque in color. Grilling seafood is nothing to fear. Once you master some of the techniques for success, delicious meals will follow. 12
July 2017
TRENDING By Erik J. Martin
Kind words and a calm head may solve a nuisance neighbor problem better than litigation
Robert Frost once wrote that good fences make good neighbors. But even the tallest, strongest barrier can’t always keep the peace between two owners on the block – one of whom usually inspires the other to harbor resentment or take action because of an inconsiderate act or oversight. Indeed, nearby nuisance neighbors can be a real headache, whether they’re making a recurrent racket, have an irritating pet or are infringing on your property somehow. But it’s how you choose to address these problems that may determine whether they’ll be resolved the easy or the hard way, say the pros. “The most problematic issues are often noise, pollutants, animal waste not being cleaned up and landscape issues – like trees planted far too close to the fence line or a fence that falls over and no one steps up to repair it,” says Alexis Moore, a Sacramento-based attorney and real estate broker. www.capitalcityweekly.com www.capitalcityweekly.com
neighbor may not be aware of the issue perturbing you, or there may be innocent extenuating circumstances that caused the problem to happen, such as an illness in the family that’s resulted in a neglected yard. Additionally, live by the residents’ golden rule: love (or at least try to coexist peacefully with) thy neighbor, and do unto him what you would want him to do to you. “Try contacting the neighbor face to face, or via phone, text or email if they’re not around, and attempt to resolve the issue,” Moore says. If that doesn’t improve matters, consult with local authorities: your municipality may have ordinances or laws that can pressure the offending party into compliance. “Recently, I sold a home where the seller’s next door neighbor had a lot of junk vehicles, an overgrown lawn and kids toys galore in the front and side yard – all of which were bringing down my for-sale property,” says Brett Maternowski, Realtor with Spring Hill, Fla.headquartered RE/MAX Marketing Specialists. “We tried engaging the problem neighbor, but he didn’t want to play nice. A couple calls to code enforcement resulted in a notice of citation and potential heavy fines. Their yard was picked up Other common gripes include unkempt front the next day.” or back yards littered with weeds or abandoned Not every disgruntled owner has the luxury of cars, a home in general disrepair, chronic dog moving away, however. The next logical step may barking or someone building across your proper- be to call a lawyer. ty line, according to Nikki Bernstein, associate “Contact counsel early in the game – not to broker with Coldwell Banker Residential pursue litigation but to become educated and get Brokerage in Scottsdale, Ariz. legal advice,” Moore says. “There’s nothing worse Human instinct may be to hurl insults over the than realizing you have no legal stance after fence, initiate a shouting match or retaliate in threatening to sue your neighbor.” some secret or blatant way. But those approaches If the issue becomes a serious legal one, docuonly make the matter much worse, says Scott ment everything you observe with accurate Reidenbach, attorney/founding principal of times, dates and details, and attempt to quantify Reidenbach & Associates in Wayne, Pa. any damages or losses you suffer. Find witnesses “The best solution? Walk over with a cold bev- that can back up your beef and possibly testify in erage and say, ‘hey, let’s make amends about this court on your behalf. issue.’ You might be surprised at their reaction,” If a lawsuit is inevitable, be prepared for disapReidenbach says. pointment. “In general, the winners in litigation In other words, keep a calm head, approach are the attorneys,” Bernstein says. “Pursuing a the neighbor in a kind and non-confrontational lawsuit is mentally and financially taxing. Often manner, and use gentle language to bring up times you can win the suit, but end up paying what’s bothering you. Be cognizant of the fact the more in legal fees than the judgment.” 13
“There’s no doubt that when the numbers in the bank account start dropping, the tempers can start flaring,”says Dan Carter, an investment advisor representative for Safeguard Investment Advisory Group.Below are his top tips to find financial harmony:
30%
experience weekly financial stress
42%
51%
have a monthly household budget
have discussed long-term financial goals
3 Tips to Stay in Money Love Tip #1 Talk about your priorities - if your financial goals are at odds, it could cause trouble.
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Tip #2 Strike a balance between spending and saving. Plan special occasions to splurge.
Tip #3 Enjoy life but live within your means. Don't try to keep up with the lifestyles of friends.
July 2017
TEXTING AND DRIVING MAKES GOOD PEOPLE LOOK BAD. STOPTEXTSSTOPWRECKS.ORG
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APRIL 2015