As it happens, the law was just changed, effective 1/1/2017, and here are the changes. One part, section 105(1), states
A power of attorney must be signed and dated by the principal,
and the signature must be either acknowledged before a notary
public or other individual authorized by law to take acknowledgments, or
attested by two or more competent witnesses who are neither home care providers for the principal nor care
providers at an adult family home or long-term care facility in which
the principal resides, and who are unrelated to the principal or agent by blood, marriage, or state registered domestic partnership, by subscribing their names to the power of attorney, while in the presence of the principal and at the
principal's direction or request.
then 105(3) states
A signature on a power of attorney is presumed to be genuine if the
principal acknowledges the signature before a notary public or other
individual authorized by law to take acknowledgments.
That leaves open the possibility that there could be a dispute over the legitimacy of your signature if you use two witnesses. A related reason to prefer a notarized version is that it is "acknowledged" under Sec. 119 (1):
For purposes of this section and section 120 of this act,
"acknowledged" means purportedly verified before a notary public or
other individual authorized to take acknowledgments.
The reason why an "acknowledged" POA is a good thing is that there is also (new) law that gives such a POA special (good) status. Sect 119 continues:
(2)A person that in good faith accepts an acknowledged power of
attorney without actual knowledge that the signature is not genuine
may rely upon the presumption under section 105 of this act that the
signature is genuine.
(3) A person that in good faith accepts an acknowledged power of
attorney without actual knowledge that the power of attorney is void,
invalid, or terminated, that the purported agent's authority is void,
invalid, or terminated, or that the agent is exceeding or improperly
exercising the agent's authority may rely upon the power of attorney
as if the power of attorney were genuine, valid and still in effect,
the agent's authority were genuine, valid and still in effect, and the
agent had not exceeded and had properly exercised the authority.
A prudent person would not hand over your stuff to a stranger or someone claiming to have power of attorney, unless they were sure that the person with a POA form actually had a legitimate POA form. They would be liable for damages if they gave away your stuff to an unauthorized person. An acknowledged POA is better than a POA with two neighbors as witnesses, because the acknowledged POA further establishes that the signature is valid.
Section 120 also requires acceptance of an acknowledged POA within 7 days (whereas with neighbor signatures, further investigation may be called for, meaning delays).
The existing statute is here, which is the law at the moment. There is no mention of a notary requirement, and no witness signature requirement (that changes). Section 40(1) says that "Any person acting without negligence and in good faith in reasonable reliance on a power of attorney shall not incur any liability" – now, is it negligence to accept a signature (of a principle) without investigating its validity? I really don't know. If you follow the new rules and get it notarized, that is covered. RCW 11.94.010 addresses the "what type" question, that is, whether the POA remains valid if you are incapacitated, or becomes effective once you are incapacitated. The point is that you have to say what they can do, and when they can. There is in fact a site with templates that gives you some idea what the kinds of POAs there are. I'm not vouching for the correctness of their templates.