Real Estate is Best When Kept Local

Using local real estate brokers and local real estate related service providers is very important when buying or selling real estate.  Boots on the ground here brings the level of expertise required.  Further, it is similar to buying locally sourced food and shopping to support local retailers and restaurants; any effort in this direction helps to reduce our carbon footprint.

Real estate is one of those industries where it is imperative to use the local experts.  There is no better time to start the benefit of using island services than in your initial search for real estate.  For all of us that already live here or for those that plan to move here in the near future, this can and should be accomplished.

AND HERE IS WHY

No one understands the importance of using local service providers more than an experienced real estate broker in the San Juan Islands.  All the successful brokers ensure that their clients, whether buying or selling, create relationships with the local service providers early in the process.  Failure to utilize the local expertise can result in failed sales, unexpected expenses, and delays.  Plus, the frustration and disappointment of a poorly processed real estate transaction.

Below I have recapped just some of the issues as it relates to using some off island service providers.  I am sure all off island individuals and firms are great in their local markets, but when it comes to the islands, they may be out of their area of expertise.

I recognize that many of our construction and maintenance service providers do come from off island on a regular basis and I deem those as local contractors as they have experience here.  Many employ local people at their business. 

REAL ESTATE BROKERS

This is a tough issue; I understand that the agent from the city wants to maintain their relationship with their buyer and provide them with the level of customer service that the buyer deserves.  Further, the buyer already knows them and trusts their advice.   However, it can be extremely risky for the client and their agent to do business in an area that the broker is not familiar with.     In fact, RCW 18.65 holds brokers to the standards of a practicing attorney, and that can be difficult to achieve when a broker is out of their area of expertise.

Of the 39 Counties in Washington State, San Juan County has many unique regulations, statutes and ordinances that exist in no other County.   In fact, we have created a custom form with our local attorneys that is used in our contracts to address many of these unique issues.  However, even with the form, it takes local knowledge to give clients the representation they should have.  Many off island brokers may not be familiar with these issues and the result may be legal and practical problems, delays and failed sales.

Further, a broker that lacks connections with the local service providers such as home inspectors, well water testers, septic inspectors, septic designers, surveyors, lenders, title and escrow, may also incur delays in the transaction as they may not know who to contact.   They may not understand the logistics of doing business here with our smaller auditor’s office, title and escrow offices who do not have the manpower the metropolitan offices enjoy. The broker may also lack knowledge of some of the rural aspects of our market.

How can the Off Island Brokers represent their client properly? 

·         Do they know that a buyer should obtain a draw down test on all wells that are within 1000 feet of the shoreline in order to obtain a certificate of water availability which is required for a building permit?

·         Do they know that we have sensitive areas throughout the County and if there is Indian Midden or other archeological sensitive materials found on the property that it can add thousands of dollars to the cost of construction and potentially long delays for a property owner?

·         Do they know that a buyer pays excise tax in San Juan County? 

·         Do they know who to hire to inspect the dock and /or mooring buoys? 

·         Do they know that we need a bacterium and San Juan Short water tests for the wells, and who can do that for them?

·         Do they understand the regulations and inspections around the Owner Builder Permit process? 

·         How do they prepare an opinion of value when they have never seen the comparable property sales or neighborhood?

·        Do they know that the sellers must have their septic system inspected and pumped, if required, as well as all maintenance components installed prior to a closing?   

·         Can they guide their client through the flood insurance requirements and/or Letter of Map Amendment (LOMA)?

·         Do they know where on the County website to find documentation such as past septic inspections, well logs, the links for community water systems, building permits, septic as-builts, wetland maps, and sensitive areas?

·         Do they know the internet providers and type/speed level of internet source that is available in the various neighborhoods?   Where are those cell towers anyway?

·         Do they know the impact to a property from neighborhood gravel pits or sawmills, the local flight paths?  Which areas have Growler noise from the Whidbey Island Naval Air Station Base? 

The answers to these questions and many others, are well known to the local professional real estate brokers.   Although, as a broker, we are not licensed to process the buyer or seller’s feasibility study, but an agent needs to have enough knowledge to help focus the client in the right direction and provide them with the right referral.   Local agents know that these issues can be “deal breakers” and they need to help their clients address the issue properly.  

For myself and my experience at Coldwell Banker San Juan islands, Inc., it is not all about our “commissions”.  Local real estate transactions tend to be more complex than transactions in the suburbs or cities.  We help guide our clients through these complexities using our knowledge, experience, and oversight.   I cannot imagine the struggle it would be to do business here if I did not have a good understanding about our regulations, service provider availability, their timing, and have the connections to process issues in a timely manner.

In addition, whether I am the listing broker or representing a buyer, I visit the site with or without the buyer at least 4 times during the transaction, and some properties require up to 10 site inspections for various purposes.  How is an off-island broker going to provide this level of service when their business model does not include spending this amount of time running up and down the freeway and being on the ferry for hours?   Did I mention carbon footprint?    

In the real estate industry, we have what is referred to as a “courtesy showing” by the listing agent.  Typically, the selling agent has a conflict and is unable to show the property within their client’s schedule, so they contact the listing agent and ask that broker to show the buyer the property.    Most local agents agree to process these with other local agents as it is in our seller’s best interest, and we generally work well together.  A listing agent, upon such a request, can be confident that the client is vetted and pre-qualified for the purchase. 

We also have off-island courtesy showing requests.  Many local brokers hesitate or even refuse to accommodate these requests as they may not be in the best interest of their sellers.  The request is originated because the client is on island, but their broker is not.  At times, these types of courtesy showings are because the buyer is here on vacation and the viewing of property was unexpected.  The client may not be vetted or pre-qualified, so it can be a waste of the seller’s time and their agents.

I believe that if the client was serious, the off-island broker would figure out a way to join their client or make a referral to a local agent that can represent the client while showing them the subject property as well as all the other properties that they may want to view.   When a listing agent shows as a courtesy, they just represent their client, the seller.  They are not able to advise the prospective buyer about the property.  Sometimes the off-island agents set up multiple showings for their client.  However, a   serious buyer may consider it very inconvenient to meet 3-5 different courtesy listing agents throughout the day to view their list of properties.  This is not a good experience for the buyer.   

With a courtesy showing, the buyer typically writes the offer through their off-island broker.  If the broker cannot come to the island for the showing for their client, how are they going to be present for all the inspections?  Both parties should seriously consider their next step as it can be risky to write an offer on property that the broker has never seen in an area that is outside of their area of expertise.

In addition, they are not familiar with our local custom forms, excise tax, area disclosures, service providers and timelines.  This type of contract exposes the seller to a transaction with higher odds that something will go wrong.  

Even though it may be that neither the listing agent nor seller did anything wrong, they will most likely get named when the buyer is unhappy and starts a lawsuit as they were not told or shown important information about the area, island, or property.

Out of the area brokers have a better option, they can adhere to industry standards and find a qualified local broker for their clients and make the referral. 

LENDERS

This one is critical, having a buyer select their lender based on their existing relationship that they have in their metropolitan location or to save .125% in interest is asking for problems.  Many national lenders do offer great products but have difficulty making loans on rural real estate. Their underwriters may struggle with understanding private wells, community water systems, private roads, septic systems, small encroachments, and selecting a local appraiser.  

Whenever I am working with a buyer that is reliant upon institutional financing, I immediately provide them with the list of the few trusted loan officers that I work with on a regular basis. This ensures that they are pre-qualified properly for the purchase of San Juan Island real estate.  Further the local lenders have knowledge of our rural issues, and their underwriters have previously approved numerous transactions that may have those same issues.    My experience has been that out of area institutional lenders are often alarmed by island rural real estate, which is what the San Juan Islands are considered.   

Most importantly, communication with the local lenders, myself, escrow, title, inspectors, and the appraiser is at a much higher level as we are accustomed to working with each other.

Something as simple and unique as our excise tax paid by the buyer can be troublesome for an off-island lender as they do not expect it.    We recently had a transaction where the lender overlooked the tax not only in the contract, but in the title report and on all estimated settlement statements.     The result was the day before closing, the lender had to credit the buyer an amount equal to the excise tax in order to close the transaction for the buyer and not risk losing their dream home and delay the seller’s next home purchase.  The expense to the lender was great but the damage to buyer and seller would have been worse.  This was not the first time an out-of-area lender missed the excise tax and had to ultimately pay it.

Many of the issues with off-island underwriting and lending can be resolved but not without cost; extra hours, documentation and effort are needed by both the listing and selling agents and the borrower to guide the lender through the issues.  In some cases, the issues are not resolved, and the buyer must start over and select a different lender which may trigger the need for a second appraisal and related costs to the buyer.    Sometimes the buyer’s loan is rejected, and they lose the property they had hoped to buy.

One of the largest issues is timing.  Off-island lenders do not know the time frames needed for appraisers, home inspectors, well and septic inspectors and surveyors, and will convince a buyer/borrower that they can produce the loan within an unrealistic time frame.  The result is the buyer enters into a contract based on their representations and is unable to perform and then may find themselves in default of their contract.

Whether you are using a lender for a refinance or purchase, make your choice wisely.

APPRAISERS

Unfortunately, due to the size of our market, we only have a few appraisers that service San Juan County on a regular basis. Those appraisers are on most every lender’s approved appraiser's list, however; because they are busy, some lenders will allow the assignment to an appraiser that does not service the area.   Local lenders always use Local appraisers. 

When the appraiser, for instance, from south of the Seattle area arrives on the island, the area is completely foreign to them, including all the closed comparable sales.    My all-time favorite, an agent used a telephoto lens and then the appraiser uses that exaggerated view to adjust the subject property’s value.  The appraiser never inspected the comparable property, so of course, the report ended up with an incorrect value.     A local appraiser would have seen the comparable property and be familiar with the actual view and know that the ferry does not pass within 30 feet of the shoreline on the channel nor is Mt Baker in the immediate neighborhood.

Often the reports must be reprocessed for the lender to be satisfied, this takes time and may incur extra fees charged to the borrower.   Homeowner Association information, private road issues, carbon monoxide monitors and hot water tank straps, are all common reasons for re-inspections and retyping the reports.

Bottom line: the appraisers that are out of their area of knowledge may take longer and may cause the need for a second inspection/report or transaction failure.   The national Tri Serve appraisal system allows the assignments to any appraiser that chooses it, regardless if they are out of their area, so I can’t blame the appraiser, unless their decision to accept the task is based on the opportunity to have a nice weekend at Roche Harbor with the family in addition to processing their report.  In my opinion, there is no good reason for an appraiser to accept an assignment out of their area.

HOME INSPECTORS

Again, unfortunately, due to the size of our market, we only have two local home inspectors that serve the County.   Both are exceptionally good but can be busy.   Some buyers opt to bring in an off-island inspector to meet their deadlines or as a matter of choice. These inspectors are not always familiar with rural real estate and can get stumped with septic systems, propane versus natural gas appliances and well systems.  The result can be an alarming report that may have errors.  Further the local home inspectors can aid the buyer with direction towards which local contractor to contact about the report.  This helps the buyer with their feasibility study and may resolve the home inspection issues easier.

ESCROW AND TITLE

We have several very qualified escrow and title firms in the County.  There is no logical reason for a buyer or seller to request an off-island company.   When the off-island firms are used, errors can be made in the preparation of the closing documents and conveyance instruments which may result in delays.    They may not understand the quirks at our County’s recording office, i.e., having an excise tax payment at the time of recording and their cut off for recording deadlines. They may not be aware that our County offices are closed on Friday, and no recordings are processed.   The logistics of doing business here are complicated as most of our transactions require remote notaries as many of our buyers and sellers are not on island during the closing.   Further, the off-island escrow firms’ software is not programmed for the split between the seller and buyer for the land bank and affordable housing excise tax.      

Even though we have remote notaries and programs such as Authentisign, many of our local buyers and sellers still desire to go into the office to sign their closing documents.   Whether it is just more comfortable for them or we have no other choice, it is always good to have the option of an in-person signing.

CONSULTANTS

We have numerous land use consultants that assist in the preparation of permits, engineering, and surveying.  We do lack some of the specialized inspectors, and in those cases, it is necessary to bring in the experts from off-island.   For example, a log home inspector, environment phase 1, 2 or 3, air quality testing, archaeological, and some aspects of geological and marine habitat as well.  These are all specialized service providers working with a defined science that does not vary from one area to another.  Due to our size, we are unable to offer every expert that may be needed during a transaction.   

ATTORNEYS

I can only speak to real estate for this category, but I feel just as strongly about your attorney selection as your agent.  Whether you need a view easement, a joint use agreement, encroachment solution or an LLC created, the local attorneys are well qualified.  With rural real estate, more detailed provisions may be needed versus the boilerplate forms that some attorneys subscribe to.  Further, you get to connect a face to a voice, as you may visit their offices as part of the process.

INSURANCE AGENCIES

Insurance is obtained with the purpose that someday, you may need to file a claim.  Using one of our local insurance brokers allows you to trust the process whether it be for real estate, car, boat or liability.    Most local firms are able to underwrite for all of the national carriers but most importantly, you are able to walk in and have a chat with your insurance agent during a very stressful time, which is priceless.  In most cases having a local agent will expedite the claim, inspection and settlement process.

 CONTRACTORS

We have a wide selection of general contractors on the island for all price categories. However, the subcontractors are limited. Especially in the trades such as electrical, plumbing, roofing, and insulation. It is for this reason that we recommend using a local general contractor as they have connections and relationships with the subcontractors to get the job done.  Whether it is a small repair or custom construction, using a local general contractor, designer and /or architect is essential to the success of your project.

CONCLUSION

Whether you are a buyer or seller, “shopping” local is important across the board.  One should never choose who you rely upon to process your loan, give you expert advice, make repairs, or navigate you through the technical aspects of a real estate transaction based on personal friendships.  You should choose a professional that has boots on the ground in the area so that they may refer you to the right service providers for that area.  I would never consider selling or listing property in the Bellevue area as I don’t have boots on the ground experience in that location.. 

In order to reduce the risk to our sellers and my Team, I encourage the selling agent involved to attend the initial showing and all of the various appointments that need to be processed during the transaction. The encouragement includes reducing their commission if they fail to attend all property appointments.  

As always, this article is for information purposes only and these are my opinions only.     I may have omitted a service provider category on my list as they did not come to mind, so I apologize if I did, it was not intentional.   If you are looking for a service provider recommendation, please feel free to contact me.  With 30 years of experience in real estate on San Juan I have a reliable list.  

Written by:

Merri Ann Simonson

Coldwell Banker San Juan Islands Inc.

simonson@sanjuanislands.com

360-317-8668

June 2025