Real estate development Archives

Hey Mike! Guess what day it is! Nope, its not hump day!

Computing time lines in your real estate contract

With Thanksgiving coming up, its a good time to review the terms of local real estate contracts as they relate to dates… at least those pre-packaged purchase and sales contracts provided by the Northwest MLS or the Commercial Brokers’ Association. Clients and even agents can be confused calculating due dates and deadlines. But, its actually not that hard.

You just need to know the following information:

Which days are considered holidays
Is the timeline 5 days or less, or more than 5 days?
The start date you are calculating from

What holidays count for real estate contracts?

Check the official holidays in your state (http://dor.wa.gov/content/contactus/localoffices/con_hldy.aspx) and the federal holidays (http://www.opm.gov/policy-data-oversight/snow-dismissal-procedures/federal-holidays/#url=2013). The combined list counts. Washington state’s holidays are pretty much the same as the federal ones, but we also have an extra day for Thanksgiving.

Why does it matter if the timeline is 5 days or 6 days?

In the local CBA and NWMLS contracts, if a timeline is set to be 5 days or less, then the timeline does not count weekends or holidays. So, if you are calculating from Monday, and the timeframe is 5 days, then it ends on the following Monday (from this Monday, count days… Tuesday is 1, Wednesday is 2, Thursday is 3, Friday is 4, don’t count the weekend, so Monday is 5). If Monday is a holiday, the day 5 is Tuesday.

Or, to put it in context of Thanksgiving. If you get ‘signed around’ on Monday (the 25th), and you have a 5-day time limit to finish something, then your deadline ends on the Wednesday (the 4th), because we don’t count Thursday or Friday (holidays) or the weekend.

OK, what about time-frames longer than 5 days? Per the contracts, the timeline includes the weekend. Lets look at a 7 day period, because it causes something interesting to happen. If your time-frame starts on Monday, the 7 day period ends on Monday (just like the 5 day period did).

Lets calculate it: From Monday, count days… Tuesday is 1, Wednesday is 2, Thursday is 3, Friday is 4, Saturday is 5, Sunday is 6, and Monday is 7. So in this scenario, 5 days and 7 days are equal.

What happens with a holiday like Thanksgiving? In that case, if we start this Monday, the 25th, the end date is still next Monday, the 2nd, because we still count those days when the time period is more than 5 days. So, oddly enough, you actually have LESS time with a 7 day period than you would with 5 days!

What is my start date?

Most dates are calculated from “mutual acceptance”. As a general rule, mutual acceptance (MA) is defined as the day when everyone is in agreement and has signed the same version of the contract. Generally, this is the date of the last signature on the contract. (We can’t have agreement until everyone has signed.) Your timeline starts from that day, but does not count that day. So, if your Mutual Acceptance date is Monday the 25th, a 1-day timeline would end on Tuesday the 26th.

There are exceptions to the mutual acceptance definition, but those will be spelled out by your contract. The most common in recent years has been in the case of short sales, where the mutual acceptance date will often be defined (at least for some portions of the contract) as the day the seller accepts their lenders’ terms for approving the short sale.

Also, there are many timelines that start after some other occurrence… for example, deadlines for reviewing and approving the title report start once it has been received, if that option is chosen.

Are you still confused?

OK. We are used to these calculations. So, perhaps it is confusing for people who don’t deal with it all the time. If you have questions, just let us know and we’ll try and help. If you have an agent you are working with already, please ask them for help first, though.

Dupre+Scott takes the mystery out of vacancy rates

The fine folks at Dupre+Scott are demystifying vacancy rates this past week. My takeaway from the info they’ve been sharing lately? Smaller units are a better investment than larger one (aka, for multifamily go 1-bedroom, not 3-bedroom). Of course, I’m sometimes accused of oversimplifying things. Check out the video (always entertaining):

Patagonia Vs. Apartments from Dupre + Scott Apartment Advisors on Vimeo.

Check out the article that goes with the video at the Dupre + Scott blog http://www.duprescott.com/productsservices/articleinfo.cfm?ArticleId=613

Multifamily update from Dupre+Scott at RHA’s Spring Workshop

On Wednesday before last we helped sponsor RHA’s (http://www.rha-ps.com) Spring Workshop. One of the featured speakers was Mike Scott of Dupre + Scott (www.duprescott.com). This weeks’ update is a summary of his presentation.

Check out the article that goes with the video at the Dupre + Scott blog http://www.duprescott.com/productsservices/articleinfo.cfm?ArticleId=606

Multifamily update from Dupre+Scott (Feb 8, 2013)

Dupre + Scott (www.duprescott.com) has released their latest apartment update for the Puget Sound market. Check it out and let us know what you think. This week’s article is on expenses

Check out the article that goes with the video at the Dupre + Scott blog http://www.duprescott.com/productsservices/articleinfo.cfm?ArticleId=602

Apartment update from Dupre+Scott (Feb , 2013)

Dupre + Scott (www.duprescott.com) has released their latest apartment update for the Puget Sound market. Check it out and let us know what you think. This is a great article on prices, especially for new apartment buildings.

Check out the article that goes with the video at the Dupre + Scott blog http://www.duprescott.com/productsservices/articleinfo.cfm?ArticleId=597

Apartment update from Dupre+Scott (Feb 1, 2013)

Check out the latest apartment update for the Puget Sound market from the great folks at Dupre+Scott (www.duprescott.com)

Check out the article that goes with the video at the Dupre + Scott blog http://www.duprescott.com/productsservices/articleinfo.cfm?ArticleId=596

Vacant Land Feasibility Process

Because of my lake-front land listing on Lake Marcel, I've been asked about what the purchase and development process looks lke for vacant land. In particular, what does it look like for a water-front property like this one? The process can take quite a bit of time, up to several months or even a year in some cases. This is why where the land is in the process greatly affects the price. As a rule of thumb, the closer the land is to actually being ready to build on, the more expensive it is. And, of course, what you have to do to build make a difference, also. Land in an area where there is public water, sewer, and power already available is more expensive than the same land where you need a well, septic system, or where you have to run power lines. Lets look at the case of property that does not have sewer or water, but has power. (Note that the Lake Marcel property I have listed has water, but not sewer.) One of the best explanations for the development process, in King or Snohomish counties, is available on the website for Amman Septic Design. The basic process is:

Get a Septic Site Feasibility Evaluation done. This is relatively painless to the pocket-book, and quick. This will tell you if a septic system can be installed and what kind can be installed.
If the site perks, then you will need a Critical Areas Ordinance site-plan in King county. Hire a consultant to do this, not the county. They will work with you to find the solution that works best for you and your site. This could be the most costly and time consuming piece of the process before building.
Once you have a site-plan, then you can get your septic designed.
And, about the same time you'll need to work on the plans for the well, since the placement of the well and septic system affect each other. Getting a well can be challenging also, so check out the process as described by JKA Enterprises.
Once the well and septic designs are approved you are ready for:
Design your home and get building permits! This will be the most expensive part of the process, but the most fun, since its the results are what you get to see and use everyday.

Where does this fit into the feasibility contingency of your Purchase and Sale Agreement? That depends, but its pretty typical for the first 2 items to be part of the feasibility period, if they have not already been done. Who pays for this will depend on your negotiations. But, if the seller is handling it, then expect to pay more for the property.

It is possible to find property where all of the leg-work has been done. In fact, you may find property that already has a well and septic on site. Having trouble finding vacant land like that? Check for mobile homes on land. You can probably build on the property and then remove the mobile home. Be sure to check with the county because the rules regarding development may have changed between the time the mobile was first placed on the property and now. You may not be able to build exactly where you wanted or expected to. An experienced real estate agent can help you out and point you at good resources to work with.