The state of Washington has implemented a new law to allow a special endorsement for notaries so that they can notarize remotely. The new law went in place on July 1st 2018. We anticipate this to be a big change for real estate transactions, making it much more convenient for buyers and sellers when going through the closing process. This will also be helpful for those landlords and tenants who are signing longer leases that require a notary.
It was important for this new rule to be put in place as more and more buyers, sellers, and brokers use electronic signatures. There are three major reasons that a notary is necessary to verify a signing. First, they're there to confirm the identity of the signer. This is tremendously helpful in combating real estate fraud. The way that they identify the signer is through government-issued ID. They make sure to keep a log of the identification numbers they used to confirm this is the person that should be signing. The second major reason to have a signer appear in person with the notary is to verify their mental capacity. It's not expected the notary take the signer through a series of tests to verify their mental capacity, however, talking with them about what they are signing and interacting to verify their identity is a basic hurdle. This means making sure that the person signing understands what they're undertaking. Also, they need to make sure that the person isn't drunk. It's a last test or third-party verification of the mental capacity of the signer that the notary can provide. Lastly, having a document notarized is extremely useful in court. The reason is a notarized document is considered to be self-authenticating. If a document is self authenticated then the person or persons who signed it and had it notarized do not have to testify that they were actually the party who signed. The third-party notary has already done that and the document has been authenticated and doesn't need any further verification. This can be helpful especially when the signer is no longer available to testify to their signature. This is a great example as to why wills are so often notarized. By having it notarized the death of the party who signed the will doesn't affect its authenticity in court.
The new electronic notary standards will require specific technologies and are used in order to still meet the purposes they set out to fulfill. There will be standards regarding the quality of the imaging for government-issued ID, as well as technological fraud protection to identify the person through knowledge-based tests, such as confirming personal information about the signer. This is exactly like what you do when you call your bank. One of the proposed standards to meet the electronic notary requirements is keeping a video recording of the signing. This may be helpful in the event of a dispute, because they can always refer back to the video record.
As real estate professionals this is a welcomed addition to Washington state law that will help us to better serve our clients and keep up with technological changes.
The law that was changed was RCW 42.45.
The Department of Licensing (DOL) has made some new changes as they embrace the available technology. The DOL has offered the option to renew your license online, but is now going to be expanding the available options for brokers and managing brokers. They will be able to change their information (e.g. name, address, email), change their license status and order duplicate licenses. While the option to complete these tasks in paper form still exists, it is becoming a thing of the past.
The DOL is implementing the complete online system in three phases.
The statewide housing recovery has accelerated throughout Washington during 2013, led by strong home sales in the greater Seattle market. Housing construction, which had been limited to apartments, has now begun to improve in the important single-family sector. Home price increases have outpaced expectations, and caused some to worry if a new bubble is forming. The recovery is uneven, however, and risks abound. Discussions now focus on increasing mortgage rates, whether the automatic conversion of home equity loans taken out during the boom into amortizing loans will spur a new wave of defaults, and whether the continuing stalemates in DC over budgetary issues will trigger future economic dislocations.
Sales and Construction Activity
Home sales activity in Washington during the third quarter of 2013 increased 7.1 percent from the second quarter to a seasonally adjusted annual sales rate of 99,960 home sales. This is the highest sales rate since the second quarter of 2007, and markets the fifth consecutive quarter of increasing sales rates.
Despite the strong statewide performance, sales activity
declined compared to the second quarter (using seasonally adjusted annual rates) in seven counties, while sales declined compared to the third quarter of 2012 in just two counties. The quarter-to-quarter sales rates declined in four metropolitan areas: Lewiston, ID-WA; Olympia; Walla Walla; and Wenatchee. By contrast, sales increased from the second quarter by more than 10 percent in 20 counties.
Construction activity, measured by the number of homes and apartments for which building permits were issued by those cities and counties reporting data monthly to the Census Bureau, totaled 7,626 in the third quarter, 2.2 percent above the number in the third quarter of 2012. Once again the multifamily sector saw an increasing number of permits issued, while the number of singlefamily permits issued in the third quarter decline 0.4 percent from the same time last year. These building permit statistics are limited to the 32 counties where at least some of the permitting jurisdictions report to the Census Bureau. The value of single-family permits increased by 2.2 percent compared to a year ago, reaching $1.1 billion throughout the state, and that is exclusive of land values. Since the total value went up while the number of units permitted declined a bit, the value per permitted unit clearly increased.
Reporting home prices has changed dramatically in the last few years. The most common statistics are median and average sales prices, with most analysts preferring medians (half higher, half lower) as more indicative of market conditions, especially since average prices tend to run about 20 percent higher than medians. However, both medians and averages depend on what sold during the period, and are influenced by changes in composition, meaning they are not measures of appreciation or depreciation in the values of individual homes. During the third quarter of 2013 the median price in Washington was $263,400. This represented an increase of 8.4 percent ($20,500) compared to a year earlier.
Local medians ranged from a high of $438,000 in King County to a low of $70,000 in rural Lincoln County. Only five counties reported a lower median price than a year ago, and only one of those (Chelan) was in a metropolitan area. Double-digit increases in medians were reported in 12 counties, four more than during the third quarter of 2012.
Several groups, especially S&P Case-Shiller and the Federal Housing Finance Agency (FHFA), report repeatsales measures which are a better measure of appreciation. Those measures use only properties where they have access to at least two sales, adjust the sales prices for changes in quality (e.g. substantial rehabilitation or additions), and focus on monitoring changes over time. The data are reported as indexes and changes, not prices in dollars. Because of the sophisticated statistical modeling involved, the data are often released with considerable delays (especially CaseShiller).
No data on non-urban markets are available from either source. CaseShiller only reports 20 markets while FHFA reports all metropolitan areas and statewide measures. FHFA reported that the appreciation in Washington home prices was the fifth highest among the states in the third quarter at 11.92 percent. The four states with more rapid appreciation were hit much harder during the recession. Even after the rapid run-up, FHFA indicated prices remain 8.2 percent below their third quarter 2008 level.
Housing affordability is not defined exclusively by prices, although they are a significant component of affordability’s three legged stool. The other legs are the mortgage interest rate (since relatively few homes purchased by owner-occupants are cash sales) and the purchaser’s income. Mortgage interest rates jumped early in the quarter, then stabilized at a new higher plateau. Incomes continued their gradual improvement, but the increases were less the overall inflation.
The Runstad Center produces two measures of housing affordability, following the model developed in 1982 at the National Association of Realtors®. The All-Buyer Housing Affordability Index (HAI) compares the mortgage payments on a median price home to median FAMILY income (2 or more persons, related by blood, marriage or adoption) assuming a 20 percent downpayment and allocating 25 percent of gross income to principal and interest payments. An index of 100 means the family can just afford the median price home, and higher values are more affordable.
The statewide HAI in the third quarter was 144.4, meaning the typical family has 44.4 percent MORE income than the minimum required to qualify for a mortgage on the median price home. Only San Juan County reported an index level below 100. While this affordability level is high by historic standards, it must be noted that it declined by 24.4 points from a year ago, and 22.2 points from only three months ago. Such rapid reduction in affordability is worrisome. Among urban markets the affordability indices ranged from a low of 106.8 in King County to a high of 183.8 in Benton County (Kennewick/Richland).
Renters generally confront greater challenges becoming home owners. Accordingly, the Runstad Center’s First Time Buyer Affordability Index (FTBHAI) assumes a less costly home (85 percent of area median), a lower down payment (10 percent) and a lower income (70 percent of median household income, which includes often lowerincome single person households). The statewide FTBHAI in the third quarter was 80.6, down from 92.6 in the second quarter. That is a 13 percent reduction in affordability in only three months! First-time buyer affordability indexes ranged from 48.8 in San Juan County to a high of 264.0 in rural Lincoln County. The range is metropolitan counties was from 58.9 in King County to 120.5 in Benton County. For reference, it is always challenging for such income restricted households to afford a home of their own, and the Runstad Center believe a FTBHAI of 80 represents a reasonable opportunity for a well-qualified first-time homebuyer to find an acceptable home they can afford.
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