Seattle Condo Real Estate 101 Feed

Fannie Mae Changes Lending Guidelines for Condos

Fannie Mae recently changed their condominium lending guidelines. These changes were meant to simplify policies and increase underwriting flexibility.

Here is a list of some of the most beneficial changes:

  • Waive the single-entity ownership percentage requirement when the purchase transaction will result in a reduction in the single-entity ownership concentration People Holding Moving Boxes
  • Not include units held by non-profits, affordable housing programs, or institutions of higher education in the percentage of single entity ownership calculation
  • Allow single-entity ownership in projects with 21 or more units to increase to 20%, up from 10%
  • Increase allowable commercial space to 35% of the projects total square footage, up from 25%
  • Exempt commercially owned or operated parking spaces from the project’s commercial space calculations
  • Allow a new condo project to be reviewed as an “established” project if requirements are met
  • Condo properties approved by FHA's HUD Review and Approval Process (HRAP) will only require a limited review
  • Waive project review requirements on smaller properties (two to four unit condo projects)

These updated guidelines better reflect current trends in condo development and provide additional flexibility for condominium lending reviews. The loosened requirements permit many condominium buildings which previously did not meet lending review criteria to qualify for conventional financing, creating additional inventory for home shoppers and a simplified financing process.

Specifically in Seattle, the commercial space percentage limits and calculation changes will be helpful for condo communities such as 2200 Westlake, Enso and Tribeca.

By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.


The Secrets to Buying Right Now! Really, This is Good Info.

Ppw 11It’s a long and detailed article, but I highly recommend you read the article put out by the Seattle Times earlier this month, How to Buy a Home in the Seattle Area: The Survival Guide.  It includes data collected from lots of interviews with buyers, agents, and industry players and I really think it’s a great read.

Although this isn't condo specific, we feel it is important for our readers who are buyers, and even those who are sellers, to understand what is happening in the market out there and what things buyers should be doing to better their chances of success.

Some of the key points in the article that I loved and can absolutely agree with and endorse:

  • Discount brokerages, such as Redfin, are a 'you get what you pay for' situation. There is a reason they can offer a discount and that discount may not save you any money in the end by the time you factor in how long it took for you to finally get a house.
  • Lenders- pick the right one, and make sure they are local. This is key right now.  As listing agents, we give much higher credibility and weight to pre-approval letters from local lenders who have a good local reputation and who we know can close quick and close on time, without surprise delays.
  • Look for stinkers. Buyers that have flexibility in terms of doing repairs and are open to condos or houses in not perfect condition, can benefit in this market by buying a proeprty with less competition.
  • Make the offer about the seller and what they need.  Not all offers are just about price.  A good agent will research, connect with and find out what’s important to the seller.  Certain offerings such as rent backs, guarantees you are not an investor that will rent the home out, etc. can go a long way to winning in bidding war.  Not all sellers are created equal, and not all offers are either.  Be creative and make sure your agent knows how to communicate with the other agent effectively.
  • Be aggressive and do it early. Don’t take 7 or 8 offer attempts to realize you need to be aggressive. As Mike wrote in the article, “ Home prices in Seattle have increased an average of $226 per day through the past year” so by the time you finish reading this editorial post, and the article itself, that 6-7 minutes is costing you another dollar or two in home price.  My point being, the longer your learning curve is as a buyer, and the more offers you need to write before you get that figured out, the more money it’s costing you. So let’s get you educated, armed for success, and ready to buy.

Great read and great article.  Check it out.


How Are My Property Taxes Determined?

How are my property taxes determined? They should be 1% of current market value, correct?

Well, no not really.  Last week, I covered why property taxes are estimated for new construction condos, this week I want to dig deeper into how your property taxes are determined, especially in light of the recent news about the upcoming Local Improvement District (LID) tax that will be used to help fund the new waterfront revitalization in Seattle.

Taxes10First a Couple of Myths:

  1. Aren’t my property taxes supposed to be 1% of current market value? No, this is a common misconception. While there is state legislation that caps the regular combined property taxes at 1% of your property's assessed value, this cap does not include voter approved special levies such as those for schools, or local improvement district (LID) taxes. So, your property tax bill could be more than 1% of your assessed value, or it could be less.    
  2. Current market value and tax assessed value should be the same amount. Not true. Your tax assessed value is determined by the county assessor’s office. The current market value of a property is just that, what the buying market is willing to pay for your property.  This can change from month to month in any given year based on the market activity and recent sales in that area. While it’s true that the market value of your home may influence whether your taxes go up or go down over time, your tax assessed value will remain the same for the year of the current assessment, until the assessor reassesses it for your next year’s tax bill. 

Now that we have that out of the way, where does the actual tax amount come from, you might wonder?

Well, it’s based on the specific tax district that your property is within, and what the specific levy rate is for that district.  And it’s assessed per $1,000 of assessed value. In the city of Seattle’s case, most of the city falls under levy code 0010 which for 2018 is $9.56207 per $1,000 of tax assessed value. However, there are 8 taxing districts within Seattle so it does depend where the property is located within the city.   

But to keep it simple, here is an example. Say you own a condo up on Queen Anne that has a tax assessed value of $500,000 for 2018.  The levy code for this area is 0010, which like most areas of Seattle is $9.56207 per $1,000 of assessed value. So, in this example, the annual total property tax would be $4,781 assuming there are no other special assessments or LID taxes for the tax district.  Further, let’s assume the condo was recently on market and sold for $650,000 after multiple offers.  In this example, even though the “market value” of the condo is $650,000, which was verified by the buyer’s lender’s appraiser when it sold, the tax owed is still based off the last tax assessed value of $500,000 and will remain that way until the tax assessor reassesses the property value.

For more information on tax levy rates, and the specific levy codes for Seattle,  you can visit the King County Tax Assessors website at www.kingcounty.gov/assessor

By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.


Client Question: "Why When Buying New Construction Condos are my Property Taxes Estimated?"

Client Question: "Why When Buying New Construction Condos are my Property Taxes Estimated?"

Tax9Dear Why Are My Taxes Estimated,

If you are buying a new construction condo, such as our clients who just purchased at the recently completed Gridiron condominiums, the exact amount of your annual property taxes will not yet be known and an estimated amount will be used.

This is because the county tax assessor’s office takes some time after a condo building is completed to separate the one tax parcel, for the lot the building was built on, into individual condo units with individually assigned property values and tax assessed amounts based on those values.  Because of this, there will only be an estimate at the time of closing that will be used by the buyer’s lender and/or escrow company to pay those estimated property taxes upon closing. How much do they estimate you might ask? Well, it does depend on the lender, but it’s fairly common that they will use an amount equal to 1% of the purchase price as the estimated amount for the year. Then, at closing, they will pro-rate that amount to pay the taxes to the county and take an additional 3-6 month’s worth of the estimated taxes (called impounds) to fund your mortgage’s escrow account so your lender can pay the taxes on your behalf when they come due again.

So for example, if you are buying a $700,000 condo unit, the estimated annual property tax bill will be $7,000. This amount will be pro-rated to reflect the time you owned the condo during the current tax bill period and used to pay your taxes current with the county.

Once the county tax assessor's office separates the tax parcel, they will update your property tax account to reflect the actual tax amount and then your mortgage company, who pays your property taxes on your behalf, will adjust the amount that is owed and will send the property owner a notice. If you have over paid based on the estimated tax amount, then your account will show a credit and if you have underpaid (which is likely not the case) then they would adjust the account and send a bill for the difference.

Next week, more on how the property tax amount you owe is actually determined.

By Marco Kronen with Seattle Condo Review: A guide to Seattle downtown condos.


Coffee Table Chat Video Series - How do we compete as Buyers in this Highly Competitive Seller's Market? Lending Strategies.

Coffee Table Chat - Episode 7

Our video series addressing actual client questions and concerns in our current market. They will cover whatever issues our clients are experiencing and will typically feature a guest who also works in the industry such as a lender, an Escrow closer, a Title rep, etc.

Hopefully you find the videos informative and helpful!

Enjoy Episode 7! "How do we compete as Buyers in this Highly Competitive Seller's Market?" Lending Strategies.



By Marco Kronen with Seattle Condo Review: A guide to 
Seattle downtown condos.


Increased Conventional Loan Limits for 2018

Mortgage_AppWhen you are thinking of purchasing property and getting a loan the qualifications required and your interest rate are affected by whether or not your loan amount is beneath the conforming loan limits set by Federal Housing Finance Authority (FHFA). If you borrow above that limit, your loan is considered a jumbo loan and your interest rate is typically higher and the guidelines to qualify are typically more strict.

Effective January 1, 2018 the confirming loan limit is increasing! In King County, the limit is rising from $592,250 to $667,000, an increase of $74,750.

How does this affect you as a buyer? It allows more loans to be be underwritten using conventional guidelines versus jumbo guidelines, which makes for an easier and faster process for you. You as a buyer will have more flexibility, and potentially lower rates, when financing a higher priced home. Basically, it provides you with increased buying power under conventional guidelines.

If you are looking to purchase a home or condo, but want to stay in a conventional loan product, this increase might mean the time is finally right!


Coffee Table Chat Video Series - In This Market is it Cheaper to Rent or Buy?

Coffee Table Chat - Episode 6

Our video series addressing actual client questions and concerns in our current market. They will cover whatever issues our clients are experiencing and will typically feature a guest who also works in the industry such as a lender, an Escrow closer, a Title rep, etc.

Hopefully you find the videos informative and helpful!

Enjoy Episode 6! "In this market, is it cheaper to rent or buy?" There is a tool for that!



By Marco Kronen with Seattle Condo Review: A guide to 
Seattle downtown condos.


How Dog Friendly is your Seattle Condo Building?

Dog Run- Zoomed out with ViewIn a previous post called Pooch Friendly Buildings, we talked about how pet friendly some Seattle condo building are.  It was fun to see the list of those with pet specific amenities. 

Well, things change, and this week I was put to the challenge to find a great condo building in the downtown, midtown, SLU or Belltown area that would allow 3 dogs for my great new client who is relocating from the Bay Area.  Wow, I quickly learned this is quite the challenge.  Most condo buildings, that do allow dogs, seem to cap the number of pets at 2 per unit.  Only a couple don’t have a pet limit. 

I’m on a mission to update my condo database with the most updated list of 'Seattle’s Dog Friendliest Buildings’!  So, I need your help!

We’d love to hear from you on what your rules are on dogs in your specific condo building.  If you are a concierge, building manager or member of your HOA’s board, or an owner that has the scoop on your pet rules, you can help us update our list of dog friendly buildings. We’d be happy to share the results of our findings with you!

Please email us at marco@seattlecondoreview.com with your pet rules and regs and feel free to add a brief summary in your email of whether you have any limits on the number of dogs a resident can have, if there are any weight or breed restrictions, if your building has any dog specific amenities such as pet wash area, dog run, dog relief area, etc.  

We’ll share our results and crown the top 5 dog friendly condo buildings in Seattle.

Cheers and thanks for you help!


Coffee Table Chat Video Series - Want to Buy Place for Child in School, What are My Loan Options?

Coffee Table Chat - Episode 5
Our video series addressing actual client questions and concerns in our current market. They will cover whatever issues our clients are experiencing and will typically feature a guest who also works in the industry such as a lender, an Escrow closer, a Title rep, etc.

Hopefully you find the videos informative and helpful!

Enjoy Episode 5! "I want to buy a place for my child while they go to school, do I have to use an investor loan program? What are my options?"



By Marco Kronen with Seattle Condo Review: A guide to 
Seattle downtown condos.


Coffee Table Chat Video Series - What is the Cost of Waiting to Buy?

Coffee Table Chat - Episode 4
Our video series addressing actual client questions and concerns in our current market. They will cover whatever issues our clients are experiencing and will typically feature a guest who also works in the industry such as a lender, an Escrow closer, a Title rep, etc.

Hopefully you find the videos informative and helpful!

Enjoy Episode 4! "What is the cost of waiting to buy?"



Want to check out the Cost of Waiting Analysis tool? Click here! Have questions, reach out to myself or Jay Crowell and we can help you out.

By Marco Kronen with Seattle Condo Review: A guide to 
Seattle downtown condos.