Flood Insurance and the new proposed FEMA Flood Zone Maps

R ight now in the Skagit River Valley area there is lots of buzz about the new, proposed FEMA flood zone maps. If adopted by FEMA, these new maps will change the flood insurance designation for many Skagit County properties from “B” properties (relatively low risk of flood damage) to “A” properties (higher risk of flood damage). FEMA is currently in a public comment period and there may be appeals by some of the local municipalities. What does this all mean to the average Skagit Valley homeowner?

Property owners currently in “B” areas who do not already have flood insurance (most don’t as it is not currently required by lenders) have an opportunity to be “grandfathered in” at existing “B” insurance rates should they be re-designated as “A” properties when the maps are adopted. The savings could be tremendous. Current flood policies are averaging under $400/year and new “A” zone policies for properties that do not have grandfathered policies could be over $2000/year. Once the maps are adopted, mortgage companies will require property owners who have a mortgage to purchase flood insurance if they are rezoned into the “A” areas. Time is of the essence, as the maps will likely take effect within one year.

Not adding a flood policy now could severely impact the resale value of a property in the future. The annual premium at the “A” rate could be a sales barrier to many buyers.

We encourage all property owners in the Skagit Valley to check immediately with their insurer to determine the current flood designation of their property. Those that are slated for re-designation should consider purchasing a flood policy now to avoid unwieldy insurance costs later.  

Who Will Buy My House??

Selling your house in this market is not a laughing matter, but just like a comedian, you need to know your audience to have a successful show (or - in this case - successful sale). Mortgage guidelines have changed significantly since the housing bubble came and went, and sellers need to know who is out there buying and where the money is coming from so that they can be competitive and get their properties sold.

 Below are a few fictional scenarios that represent some different types of buyers that we see in our area. All of these are assuming a straight 5% interest rate, a 30 year loan, and equal footing for all other conceivable variables. Obviously the numbers will vary for every individual situation - but this illustrates some general parameters regarding possible levels of purchasing power available to buyers in Anacortes.

 Keep in mind as you look at the data that the median annual household income in Anacortes according to the City of Anacortes website is currently just over $52,000 and, according to the Northwest MLS, the median average list price for homes in Anacortes as of this posting is $398,500. The median price for sold properties since March, 2009 in Anacortes is $296,000.

 The information below is what one excellent local mortgage banker recommended for each of these fictional buyers to maximize their purchasing power. Again, these numbers are general - individual circumstances can change things dramatically.

 Buyer A:
Annual Gross Income: $45,000
Monthly Fixed Expenses: $500
Savings: $5000
Credit History: Average
Suggested house price: $162,000
Notes: USDA Loan, zero down, use savings for closing costs.

 Buyer B:
Annual Gross Income: $65,000
Monthly Fixed Expenses: $1000
Savings: $50,000
Credit History: Poor
Suggested house price: $240,000
Notes: FHA loan, $50K down, seller pays closing costs.

Buyer C:
Annual Gross Income: $100,000
Monthly Fixed Expenses: $1500
Savings: $0
Credit History: Average
Suggested house price: $315,000
Notes: FHA loan, needs gift funds of 3.5%.

 Buyer D:
Annual Gross Income: $140,000
Monthly Fixed Expenses: $1500
Savings: $50,000
Credit History: Excellent
Suggested house price: $522,000
Notes: Seller pays closing costs, buyer pays mortgage insurance.

Buyer E:
Annual Gross Income: $200,000
Monthly fixed expenses: $2500
Savings: $200,000
Credit History: Excellent
Suggested house price: $810,000
Notes: Conventional financing, $190,000 down, $10,000 for closing costs.

Live In Anacortes! What’s going on the week of September 17

Here’s a look at the week upcoming in Anacortes. If you need more information about anything you see here, please call or email me and I’ll hook you up! If you have an event you’d like to see on this schedule in the future, please send me an email at meredith@windermere.com. Enjoy your weekend!

Thursday September 17
Brown Lantern - Open Jam, 9pm
Johnny Picassos - Open Mic, 7-9pm

Friday September 18
Star Bar - Savage Jazz Quartet, 7pm

Saturday September 19
Brown Lantern - Red Jacket Mine, 9pm
Rockfish - Chris Stevens and the Surf Monkeys, 9pm [Read more...]

What is Your Property Worth in the Current Market – or – Who Invited the Appraiser, Anyway?

I don’t have to tell you that there are a lot of factors to be considered when determining property values - some scientific, (probablities, sales histories, market averages, etc.) and some emotional (how motivated is the seller, can that one-in-a-million buyer live without the property, etc.).

One thing is certain, buyers need money to buy property, and most of that money comes in the form of a loan of some sort. Very few of us have the cash needed to buy property outright - so we need help. Usually that’s from a bank or perhaps the seller of the property. With most loans, even with seller financing, an appraisal is required at some point in the purchase and sale transaction. When an appraisal is required, it is generally the case that the property must appraise for the agreed upon price or there is no deal. That said, it is critical for potential property sellers to understand what guidelines the appraisers are operating under at any given time in the marketplace.

Typically, appraisers use similar, recently sold properties as comparables when they are determining an appraised value. You are correct if you assume that in this market, it is challenging for appraisers to find a lot of recently sold similar properties. There just aren’t that many. What they resort to then, is looking at properties that may have sold quite some time ago, or properties that aren’t as similar as they would be in a regular market. When appraisers have to get creative with comparables, they are required to make adjustments to account for the differences in properties.

In a recent conversation with a local appraiser whom I consider to be one of the best, I was informed that one of the calculations being used to equalize property values is a one-half to two percent PER MONTH decline in value over the past 24 months. I knew that math class I took spring quarter would come in handy - you gotta do the logarithm to figure that out! Here’s the equation:

C=P(2.7)-it 

C= current value
P=past value
i=percent decline
t=number of months

If an appraiser felt your house was worth $500,000 24 months ago, and you are in an area or property type that declined 1% per month, the equation to calculate your present value would look something like this:

C=$500,000(2.7)-.01(24)
C =$393,951. (The 2.7 is a constant roughly equaling the value of natural logarithm e.)

I was told that in our market, condominiums and vacant land would most likely be at the higher end of the percentage spectrum, and conventional single family residences would be at the lower end.

Now, you might not care what an appraiser thinks your property is worth, and not all properties are going to fit into neat equations and probabilities, but it is a good thing to know as much as you can about what might factor into a buyers ability to buy your property. It’s just one more way a seller can get the competitive edge in todays market.  

Live in Anacortes! 8/27/09

Here’s a look at the week upcoming in Anacortes. If you need more information about anything you see here, please call or email me and I’ll hook you up! If you have an event you’d like to see on this schedule in the future, please send me an email at meredith@windermere.com. Enjoy your weekend!

Thursday August 27
Brown Lantern - Open Jam, 9pm
Johnny Picassos - Open Mic, 7-9pm

Friday August 28
Port Marina Boat Launch - outdoor movie Madagascar II, dusk
Rockfish - Deadwood Revival, 9pm; Star Bar - Fidalgo Swing, 7pm
Department of Safety - Summer AIR Mark Tallowin Music and Art, 7pm

Saturday August 29
Rockfish - Mike Mulder, 9pm
Brown Lantern - SloMo Erotic, 9pm
Star Bar - Howlin’ Lane and the Angels of Sin [Read more...]

Anacortes Cinemas

We are so very lucky to have Anacortes Cinemas in our town! I saw Star Trek there this weekend (awesome movie - go see it) and I was reminded again that it is one of many great reasons to live in Anacortes. The folks that run the Cinema do a terrific job of bringing us first-run movies, making the theater available for private events, parties, etc. and showcasing local filmmakers whenever possible - please support them as much as you can. They make our town a better place to live! Here is where you can find their current schedule:  Anacortes Cinemas

Anacortes Real Estate Info…Trulia

Have you ever seen Trulia? It is a pretty fun website that is all about real estate.  They have very interesting and very pretty stats to look at, and you can check out listings from all over the country! Here’s the link to the Trulia Anacortes stats page -(Thank you in advance for politely ignoring all those other Anacortes agent advertisments!)

Trulia Anacortes Info

 

Fun with Graphs and Tables!

Here are some fun graphs and tables to keep you busy this weekend! If you read my newsletter, you know I am not one to sugarcoat a situation, but I do feel a bit of a warming in the market. Or, at least a bit of a slowing of the slide. Is that creaking noise the ice beginning to move? Let’s hope so! Better yet… let’s go househunting!!  Click here for Market Graphs and Tables (The above link is to a PDF file - if the type is too small to read, use the magnifying tool on the reader. If you don’t have a PDF reader, you can download one HERE!)