Distressed Property- Rent, Short Sale or Foreclosure?

With the decline in the real estate market, many home owners are now upside down on their mortgage.  They may have over borrowers and over paid related to what our market can produce today.  There are many options for homeowners to consider.  You should also consult your financial or tax advisors when making these significant investment decisions.

Foreclosure- the option that everyone should try to avoid and only use it if it is your last resort. A foreclosure on your credit history can drastically affect how you can borrow and spend money in the future. It can lower your credit score up to 200-300 points. It is not the choice to take unless someone has lost everything else and has no other options.

Renting- a homeowner might need to change their thinking about their home.   Real Estate is a long term investment. During the fast days of 2003-2007, people were buying and selling so quickly because the market was shooting up so fast. Those days are gone and so real estate appreciation has slowed to a steady level once again. The value of your home WILL go up again but it might not be at the level you purchased for quite some time. If you can consider a rental and stomach covering the additional amount of the mortgage, taxes and insurance- then you might not lose your equity, it would have no affect on your credit and you could move and rent another home that is within your budget. You might have to change your thinking about her mortgage payments- think of it as a payment into an IRA. You might have to tighten your belt a bit but at least you won’t lose your equity.

Short Sale- we are doing a lot of short sales now. Short sales are a good option for home owners that have lost a lot of equity and now owe more in their mortgage than the home is worth. The paperwork and length of time it takes to get a reply from the bank takes a lot of patience so you have to be prepared to make it wait once you submit the paperwork. The bank assigns you a negotiator and then you work with them to lower the loan pay off amounts and release the debt deficiency. Often, there is none or very little affect on one’s credit score. The bank is usually more willing to work with people that are in some type of financial distress- job loss, income reduction, etc. But I have seen sellers will high net worth’s have success with short sales. If you are considering a short sale- you will need a real estate agent with short sale experience that can assess your situation and see if a short sale is a viable option.

Loan Modification- this is also an option but a difficult one to obtain.  Your bank might be willing to work with you to modify your mortgage to decrease your monthly payments if you are in a financially distress situation.  Contact your mortgage holder’s loss mitigation department for more information.

December 31, 2009 · Filed Under Coaching for Sellers, Market/Pricing Assessment, Real Estate, Real Estate Trends

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Priced to Sell and Show Well

The direction of pricing in our current market is no longer “priced right and looking food.”  Rather homes that are “priced to sell and show well” are compelling buyers to take action.

What I have seen a lot of in this ‘recessionary’ market is that buyers have become even more demanding than they ever were before.  They almost have an attitude of entitlement – like it is their turn to be the winners in negotiations.  They take it for granted that they are going to get a good buy and wait and they have no compunction about making low offers and standing firm.

The problem is that with all the choices and the many houses on the market these buyers are often successful with their posture, and if they are not it is not uncommon for them to wait on the sidelines for a better deal on the next one.  Sellers- do you want to wait for a better market or sell now in the market you have?  All homes for sale get “priced” in the marketplace, and the ones we see selling are priced at very compelling values.  Otherwise, there are many houses on the market that are waiting for something to change.  And the problem is that we have learned that change in this market has mostly been moving lower, not higher.

Value seems to be the primary focus of current buyers and can you blame them?  With the present fear in the financial market- everyone is acting more conservative with their investments. Property condition has become secondary to property value.  Perhaps this market has allowed buyers to seek more potential in their home’s condition rather than the appreciating value of the home.

December 31, 2009 · Filed Under Coaching for Buyers, Coaching for Sellers, First Time Home Buyers, How to Choose..., Market/Pricing Assessment, Pricing Your Home, Real Estate

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Sometimes it takes a village to close a transaction

Our team closed a transaction yesterday that proves that even in a tough market, difficult transactions close– it just “takes a village!” We faced and overcame the many surprises outlined here, and if you’d like to read the whole saga – the narrative is below.

Sequence of surprises for Grant Park Duplex transaction:

  1. Buyer chose a duplex after seeing mostly single family homes
  2. Seller accepts offer as written – no counter offers – signed on the spot
  3. Home inspector finds that significant repairs are needed throughout the entire house. There were issues with a cracked sewer line, defective LP siding, cracking foundation, rotted sill plate and posts in the crawl space and basement, old roof, bad plumbing and electrical throughout the home, and the list went on and on
  4. Seller accepts the buyer’s repair addendum as written requiring over $40,000 in total repair costs
  5. Lender requires clean pest and dry rot report and the work turns up even more dry rot behind the siding, under the porch and in the crawl space. Seller says they’ll fix it.
  6. After 3 oil tank scans, soil under the foundation is found to be contaminated by underground oil tank – over $6500 in DEQ required repairs. Seller says they’ll fix it.
  7. Appraiser requires all peeling paint to be removed and repainted on the inside and outside. Seller says they’ll fix it.
  8. Siding company gets behind on siding installation due to the extent of dry rot repair and weather. Closing has to be extended.
  9. Price has to be changed because the exterior paint will not be done by closing so the buyer has to pay for painting after closing
  10. The transaction actually closes with no last minute mistakes to manage

The Jackson Group relationship began with these clients about 2 years ago when they started searching for homes with classic charm and character in NE and SE Portland. We focused our search on homes that were in great neighborhoods like Clinton, Abernathy, Hawthorne, Ladd’s Addition, Grant Park, Alameda, etc. and most of what we were finding was older homes that needed some work. We even had an escrow on an REO property that ended up being a little uneven on its foundation. When that one failed we took a break for a while.

We started our search months later and prices had come down. We expanded our search to duplexes with the possibility of renting out the second unit until the buyers could someday expand into the entire home. One hot summer Sunday evening, we looked at 3 properties and the last was a duplex in Grant Park right behind the high school. From the outside with the peeling paint, vines growing up the chimney, old roof, cracked foundation and original windows, it was an obvious fixer. But on the inside the original charm was still there. The rooms were large and stately but there was still a lot of work to be done. We were surprised when the clients wanted to write an offer.

The sellers had owned the home for many years and had never lived there but had a steady stream of loyal tenants in both units. The home had gone through quite a history since it was built in the 1910s- it was even converted into a boarding house in the 1950s. It had only been on the market for a few weeks and our offer was below the asking price, so we made the extra effort to present the offer to the listing agent and the sellers in person.

Our client was a very strong buyer with a solid loan approval through one of our favorite mortgage brokers, Mike Hall of Pacific Residential Mortgage. The presentation of the offer went well and on the way back to the office the call came that our offer had been accepted as written. I was so surprised that I almost hit the car in front of me! I called the client right away to deliver the good news. But we all knew that we had quite a ways to go to get through this transaction because of the extent of the needed repairs.

After the 5 hour inspection, Don Hatch of Assurance Home Inspections discovered that almost every element of this home needed some repairs. And, we’re not talking about “the kitchen sink leaks when the hot water is on”. No, we’re talkin’, this home needed a new roof, new siding, new foundation supports, new posts and beams in the basement, code violations in staircases, peeling paint, electrical and plumbing, and more. We could not even find the underground oil tank that we knew existed somewhere. So our work was cut out for us.

Over the next week, I went out to that house at least once a day to meet contractors to get proposals on the repairs. And after about 2 weeks we had most of our numbers in order. We were ready to draft the repair addendum. I presented the repair addendum in person again due to the extent of the request (over $40,000 in repairs). We continued to re-iterate our client’s wish to be as reasonable as possible and focus on repairs that the lender would require as a condition of closing such as structural and safety hazards. The buyer was even willing to raise the purchase price to help with the cost of some of the repairs.

The seller accepted our repair addendum as requested. We then had to mutually agree to choose the contractors for each job. Sorting through those numbers took another 2 weeks and 5 additional addendums but we finally set the dates and chose the contractors to do the work. Now there was only the work to be completed and to close.

WRONG! Another surprise hit us when we finally found the oil tank using a geo-tech specialist. The underground oil tank was leaking underneath the foundation of the home. DEQ requires that the soil not be contaminated by leaking oil and, if found to be unsafe, the tank and soil around the tank must be removed. The sellers took charge and found the right contractor for the job and cleaned the site – phew!

The siding company got behind schedule with the installation of the new hardy plank because of poor weather and more dry rot found behind the siding. The lender was requiring re-inspections by the appraiser, the pest and dry rot inspector and our home inspector so we scheduled them all for the same day. But because of the extent of the repairs, there were still some items that needed to be addressed during our final week of escrow. The seller went to task on the remaining list and finished 4 days later. I gave him my pink camera to document the additional repairs to send to the inspectors. Finally, all that was left to do was to get the okay on the paint from the appraiser and push a little paper.

The transaction officially recorded yesterday. Our clients were out to the house last night measuring rooms and creating their “to do” lists for moving in and making the home “theirs”.

I give the most credit in this transaction to the sellers. They were there at every step of the way to make sure that we had everything covered. I even had the seller’s phone number plugged into my phone because we were in such good communication. Our team has never done more paperwork or had a thicker file. This closed real estate transaction shows that even in a really difficult market, tough deals can come together if everyone works together to make it happen. The buyer never stopped wanting to buy, and the sellers never stopped wanting to sell, so everyone did their part and made it work.

Thanks to everyone that helped make this long shot become a success for all!

October 20, 2009 · Filed Under Business Philosophy, Coaching for Buyers, Coaching for Sellers, Home Purchase Process in Oregon, Preparing your home for sale, The Jackson Group, What to expect from the Jackson Group

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SOLD! In Five Days!

Yes!  it can still be done.  Last Tuesday The Jackson Group put a new listing on the market in Bridlemile at 4907 SW 39th, which, by Saturday, received 5 offers and sold for over asking price!

SOLD!

SOLD!

There are several bits of good news in this.

  • The new buyers are thrilled with their purchase – they have been waiting and watching for the right home to be for sale and now they can move out of an apartment (they already sold their prior home) and into the home that is the right fit for their family now.
  • The sellers are thrilled to have the deal done so that they can move on with their relocation out-of-state without delay or separation of the family waiting for a house to sell.
  • And, for those of us watching the market or selling a home, it is encouraging that there are still 4 buyers out there who are ready, willing and able to purchase a home provided the right package of features, location, condition and price are in place.

The lesson here for home sellers and brokers is that a good property, priced right and looking good, will sell in any market.  That says something about the 11,000 listings in the Portland metro area that are not sold!  Sure, sometimes there are issues about a property that make it more challenging to sell, but there is a point here that if presented well – starkling clean and professionally staged – and priced for the market - properties will sell.

Backyard- one of the highlights of the home

Backyard- one of the highlights of the home

May 18, 2009 · Filed Under Coaching for Sellers, Neighborhoods, New Jackson Group Listings, Pricing Your Home

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March Statistics for Portland area Home Sales

Here is the latest march-2009-market-action report from the RMLS. This is the monthly summary of the real estate sales statistics for our region published by the Regional Multiple Listing Service.

In February both the increase in sales and the decrease in listings relative to last month (January) had a positive influence on the amount of inventory for the Metro area. Inventory now is just over 16 ½ months, down from the record breaking high of 19.2 months in January. While this is both good news and a positive change, we are still in a market that is hugely biased in favor of buyers due to high inventory and very low demand. Until this imbalance changes we can only expect that pricing pressure will continue to be on the downside. This means that for selling listings our strategy must continue to hold to these tenets: very competitive pricing, excellent condition and showing preparation, showing convenience for buyers’ brokers and multi- focused marketing strategies for reaching all possible prospects. We also keep clients well informed by offering regular reports on the number of showings for properties and feedback from the brokers or buyers about those showings, plus the competitive picture specific to each listing.

Another report we provide is the “market analyzer” which shows market demand and inventory absorption in a specific property area and type, among other things. This report is key to understanding why pricing much be considered in terms of demand as well as property comparison. For example, we may be able to determine that a property is priced competitive to all other listings, but still have sales challenges because there simply is such light demand.

For buyers we provide all the same detailed information for the areas and specific properties that are of interest in their home search.  Knowledge is power!

Our intent is to provide legitimate statistical information that i useful to you for taking care of your plans for moving.  We know that a big decision like buying or selling a home cannot be done without the analytical information possible to help with those decisions. There are a lot of good things about our business that are emotional and subjective – we need to have personal and emotional connections to our homes. Added to that ‘emotional connection’ I welcome the ‘proof’ of statistics to help us with strategies and decisions. This is true for both buyers and sellers alike.

As always, if you have any questions or want to discuss something specifically, please give us a call at 503-416-4177.

Becky

March 23, 2009 · Filed Under Home Purchase Process in Oregon, Market/Pricing Assessment, Pricing Your Home, Sales Trends and Statistics

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How are you doing in this real estate market?

Our neighbor states in The West have been known for their high market volatility, yet we know that here in Portland our markets are characterized more by slow, steady and small changes. Have a look at our recent report.  statistics-by-zipcode

We show you the real statistics about your own neighborhood in charts of homes sale values by zip code for the last four years for many of the areas of Portland that we know matter to you. There are some ups and some downs, but the high volatility we associate with the busting of the housing bubble is not the reality of our Portland area. The information comes from sold data from the RMLS and may not include sales that were done privately.

If you are interested in our report, please contact us with a request and we will send it on. Or, if you have received our report and want more information, or want to learn about a zip code or area that is not included, that’s another good reason to get in touch. .

In recent conversations, many of our friends and clients have asked how we are doing in this credit crisis. While the current market has brought us significant challenges, we are managing through it. We have worked with several buyers recently for whom new loans could have been a challenge, but we have sourced stable lenders with programs that have enabled us to do some loans with 5% and 10% down payments. Credit is available if properly documented and sourced with good lenders. Additionally, we are working with a number of buyers who see this part of the economic cycle as an opportunity to be exploited and they are actively seeking the right property at advantageous terms.

For our sellers we are doing our best to promote properties – especially online, where most buyers are looking – with quality photos and virtual tours and we recommend staging or top notch condition for all showings. We are advising sellers to do everything possible to prepare their homes to ‘shine’ compared to the competition and to price them to be positioned strategically and offer value relative to other homes for sale. We keep our sellers informed about market activity and buyer feedback with weekly reports as we know good communication and information is essential for all of us to make important decisions about how to take care of business today.

We have great properties for sale – and if you see anything on our website that may be of interest to you or a friend of yours, just let us know how we can help.  503-416-4177

Becky

October 20, 2008 · Filed Under Coaching for Sellers, Home Purchase Process in Oregon, Real Estate Trends, Sales Trends and Statistics, The Jackson Group

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