Real Estate Update: Buying Property in the San Juans

1. Select an Agent to Represent You

As you may be aware, all of the brokerage firms on San Juan Island are members of the Northwest Multiple Listing Service; therefore, any of the agents can assist you with any of the properties listed with Coldwell Banker or other brokerage firms. One of the first steps in purchasing real estate on San Juan is to select an agent to represent you. Ideally you should select ONE agent that you feel will provide you with the level of customer service that you require.

It is important for you to understand the Law of Real Estate Agency. The State law allows for three types of agency representation:

Buyer’s representation is when the agent is representing the buyer and intends to obtain property at the lowest possible sales price.

Seller’s representation is when the agent has a listing with the seller and is attempting to obtain the highest possible sales price.

Dual agency is when the agent shows a buyer one of their own listings and the buyer decides to purchase it. In the case of dual agency, the agent represents the seller as well as the buyer.

Determine Your Source of Funds

Cash at Closing

Institutional Financing

Seller Financing

1031 Tax Exchange

If you intend to finance your purchase, it is prudent to meet with your lender and determine the maximum loan amount you are qualified for. This amount, coupled with the cash you have allocated, will determine the maximum sales price. We have numerous lenders that are active with financing in the islands if you are interested.

2. Determine the Type of Property You Desire to Purchase

One of the best ways to do this is to develop a list of your desired property features, and a list that details how you intend to use the property. Then prioritize those lists. For example, when I am working with a waterfront purchaser, I obtain the following information:

Is beach access required or is high bank OK?

Do you have a boat? Do you plan to buy a boat?

Bay protection or west side open with current?

Bay view or expansive wide open?

Do you want to be near crabbing and clamming?

Do you want to see the whales, boat traffic and/or sunsets?

Amount of trees, direction of sun exposure, and amount of privacy?

The responses received may direct me to property in different locations on the island. However, it may be that until a buyer has an opportunity to view the various types of properties, they may not be able to narrow down or develop their priorities.

3. Educate yourself on the Market and Inventory

You need to become acquainted with our market and inventory level in the categories that hold your interest. Even if your purchase plans are sometime in the future, it is beneficial to take the time to view property because it will save you time in the long run. This process allows you to get acquainted, relate your preferences and develop your knowledge of the market. This will also help me to customize all future information sent to you. Buying property is a process of elimination. You will view many properties which you will determine are not suitable; then you will buy the one that is.

One way to monitor our market is to review my Quarterly Real Estate Market Updates. You can also sign up for the service on my website located at www.sanjuanrealproperty.com.

4. Monitor the Inventory

You need to stay in touch with the inventory and market trends until the right time or right property becomes available. If you have viewed property with me or communicated your preferences, I will establish an account for you in our IDX and all new listings that meet your criteria will be emailed to you upon their origination. Purchasing property in the Islands can be a one day or ten year process - which is totally subject to your time frame.

Purchase and Sale Transaction

Once you have located the property you desire to purchase, I will structure a written offer to purchase containing the terms and conditions you have specified. The seller will either accept your offer as submitted or submit, through their agent, a counteroffer containing terms that are acceptable to them.

Important elements that should be included in the Purchase Agreement under the feasibility study provision are listed below:

Archeological Sensitive Areas

You want to make sure that the property you are purchasing is not located in an archeological sensitive area such as Indian Midden or near a cemetery. To confirm this information you need to contact Nadine Cook at San Juan County building department. She will look up the property on their maps and confirm the results. The maps are not of public record so you may not access the information yourself. If the property is located within an Archeological Sensitive Area, you will need to obtain a report from an Archeologist. The Archeologist will perform a site inspection, dig test holes and delineate the sensitive areas and their setbacks. Should you desire to dig in those designated areas for any reason, such as new construction, a remodel or landscaping, you must hire an Archeologist to standby and sort through the material while excavation is in process in order to protect any items with historic value. The reports are approximately $2000-$6000 and if excavation is needed in the sensitive areas, the monitoring is on an hourly rate. It can add thousands of dollars to the cost of your project.

Corner Stakes

Do you know what you are buying? Corner stakes can be located or re-staked by local surveyors. Full surveys may be required due to lack of original plat stakes. The cost of a full survey will vary, but for a four-corner parcel it is typically in the range of $2,000-$6,000; setting just replacement stakes can be much less. We have several surveying firms available on the island and I recommend: Andy Holman 360-378-0338, Bob Wilson 360-378-4300, or Bob Anderson 360-378-5072.

Feasibility Consultant

Some purchasers may want to commission a complete Feasibility Study that will respond to not only the existing conditions of a property, but also address the issues, if any, that may have to be satisfied to allow a proposed use of a property. Feasibility Studies can be one-stop reports; addressing conditions of the structures, septic and water questions. . Further, a report on relevant land use codes that may impact the proposed use of the property can also be processed; i.e., a Vacation Rental Permit or Conditional Use Permit. I have a list of consultants so contact me if you need one. The reports are in the range of $300-$5,000 subject to complexity.

Flood and Homeowners Insurance

If you are purchasing on the waterfront, chances are the Flood Zone Determination report will indicate that flood insurance is required. Not all properties need Flood insurance as the improvements are located above the Base Flood Elevation. I have a list of surveyors that can process a Flood Elevation Certificate which is required in order to obtain flood insurance and is also the information necessary to process a Letter of Map Amendment (LOMA) - Waiver of flood insurance.

Be sure to arrange for your standard homeowners insurance policy in the beginning of the process, don’t wait until you are only a few days from closing as the process can take 7-10 days.

Internet and Cell Phone

The majority of the islanders use Century Link or our local firm, Rock Island for their DSL internet connection. Rock Island is currently installing Fiber on all of the major roadways and numerous plats have arranged for their neighborhood installation. We still have a long way to go before fiber connectivity is throughout the islands. Some property owners have found LTE as an option subject to their location to the nearest tower. In some areas with DSL, there isn’t enough strength to stream movies from the Internet but Net Flick delivers. You should confirm that the service to the property you are considering meets your requirements.

The best cell service in the islands is Verizon. Some remote locations in the islands do not have cell service. T-Mobile has been installing towers in the County so cell service options may be increasing.

Rock Island can be reached at 360-378-5884. I can’t say enough about how great their service and sales departments are, I highly recommend them.

Permits

Was the home constructed under a permit and does it have a final certificate of occupancy? Was the home built under the “built by Owner” permit application and require a safety inspection prior to closing? You should obtain copies of the permits from the County Permit Center to confirm the permit status.

If the home was build prior to 1976 no permit may exist which was at no fault of the owner. Our Permit Department was not formed until the middle of the 1970s. These homes are considered grandfathered-in and non-conforming.

If you are contemplating new construction or a remodel, the current building codes and comprehensive plan can be accessed through the San Juan County web page at (http://sanjuanco.com/). You can request a permit package or review the County's building requirements through their website which is located at (http://sanjuanco.com/837/Permits-Forms-Information.)

Power

If you are buying unimproved property then you should confirm the distance from power to the proposed building site. OPALCO will provide you with the distance and you can obtain a bid from a local contractor for the installation. Installing through rock can be costly.

Seller’s Property Disclosure – Form 17

Pursuant to State statute, all property owners must provide a seller’s disclosure to the buyer. There are some exemptions to the law for Estates or Trustees. The disclosure is not part of the contract and doesn’t provide any representations or warranties. Buyers should share it with the Home Inspector so they may focus on any issues that the seller has disclosed. Ultimately, it is up to the buyer to process their due diligence and confirm if the property is suitable and the condition is acceptable. Buyers should not rely on the seller’s disclosures other than for informational purposes.

Septic System

For existing systems, it is prudent to obtain a copy of the "as built" filed with the County. This will indicate the number of bedrooms the system was installed for and its approximate location, which is helpful for future improvements or repairs. If you are purchasing an unimproved parcel, you should obtain a perc test, design and permit approved by the County. The permits have a validity period of four years and the cost is around $1,250. The two most commonly used designers are Jack Cory 360-378-4900 and Rick Petro 360-376-2762

Septic Inspection

Per the Purchase and Sale contracts used on San Juan Island, the seller must comply with San Juan County Codes related to on-site Sewage Disposal systems (OSS). Seller is required to have the system inspected; pumped if needed, and install all maintenance components required by the code. Typically, all costs for inspection, pump, and installation of maintenance components shall be the responsibility of the seller. Sellers typically pay $99-$200 for the inspection, $800-1000 to pump and maintenance components can run $300-$3,000. Generally, systems installed after 2000 are in compliance with maintenance components. I recommend Craig Starr 360-378-8060 or Ted at San Juan Septic 360-378-7255.

Setbacks and Buffers

You should review the Critical Areas Ordinance located on the County website. This ordinance was effective March 31, 2014 and implemented numerous setbacks that are actually restrictive “buffer areas” from wetlands, shorelines, and streams.

Storm Water Management Plans

As part of the permit process, you must create plan for during construction Storm Water Pollution Prevention which meets County requirements. Further, once the home is built, you must have on-going Storm Water Site Plan to address run off from the hard surfaces and the improvements. This process can be character building.

Structural, Pest and Dry Rot Inspections

It is highly recommended that all buyers obtain an inspection of the home prior to closing. The inspector physically examines all of the major components of the improvements and reports on their condition and recommends any repairs. For additional information regarding inspections and their benefits, you can contact one of our inspectors. The most commonly used are Tim Hance 360-298-1163, or Darrol Scheffer 360-378-4969. The Home inspection fees are in the range $550-$650.

Title Report

Shortly after the seller accepts your offer, you will receive a Preliminary Title report. It is imperative that you review that report for accuracy and question anything that is different from what was represented to you. You should review easements and encroachments directly with the Title Officer that examined the title and issued the report. The reports are complex and only the issuing source is reliable to explain them..

Transaction Closing Process

Due to the number of remote purchasers and sellers, the majority of our closings are handled through email or the express mail systems. We have local escrow firms and title insurers. We regularly cooperate with off island escrow firms, lenders, and 1031 facilitators.

Water Source – Private Well or a Community System

Private and two party shared wells should be tested for bacteria and a San Juan Short list is recommended to test organic elements. The quantity should also be confirmed. The cost for a bacteria and organic test will be approximately $300 including the sampling.

Class A and B systems are community systems in which the quality and quantity are monitored on a regular basis as required by the County. These need not be tested, but their current “standing” should be confirmed through the County.

For more information regarding wells and water systems, you can contact one of the two commonly used well service providers: Denny Martel 360-378-2842 or Al Mauldin 360-378-6975. San Juan County Health Department can be reached at 360-378-4474. The County confirms that community wells are in “good standing” via email which is defined as current with satisfactory Bacteria and Nitrate reports and County inspections.

Wet Lands

You need to determine if the property you are purchasing contains any form of wetlands. Pursuant to the Critical Area Ordinance update, all wetlands have some sort of buffer that must be respected. There is no sure way to confirm the land contains wetlands without a professional wetlands expert.

You can start by viewing the County’s wetland maps and note if the property is located within a designated area with possible wetlands, but that is not a formal confirmation and not reliable. If you are suspect, you can request a site inspection from the County or hire a wetland expert. Once you determine that you have wetlands on your property and they are close to your proposed building site, you need to have the area delineated and the wetlands typed and surveyed so that the required buffers, based on type, can be honored. The fee range for the survey and delineation is $1,000-$7,000 subject to terrain and site difficulty. I recommend Scott Rozenbaum from Rosewood Environmental 360-468-4448 as a wetland expert.

Conclusion

This article is for informational purposes and not meant to encompass the entire process. Hopefully the article doesn’t make the purchase process sound intimidating but if you select me as your agent then I will guide you through the rest of the steps and issues.

Written By: Merri Ann Simonson Managing Broker – Sales Manager Coldwell Banker San Juan Islands Inc.

[email protected]

360-317-8668

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