Category: Selling Advice

Advice for home sellers in Lake Oswego, Oregon

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Getting You Where You Want To Go

For some reason people love this tag line that I use. I think it’s because we all can relate. You are not selling and/or buying a home on a lark, you have something to accomplish. My approach in all things wherein I am giving professional advice is to discover what it is you want to accomplish (where you want to go), and then to assess the best way to get there given your own particular parameters (the journey).

Today I’m thinking about pricing and all the comparative things taken into consideration when looking at the market and deciding how to proceed.

We Realtors look at many aspects of the most current data available to help you accomplish your goals, and often the type of data or the methods used to assess them have acronyms or nicknames.  Here are a few of those & some things to keep in mind on your journey:

“Comping” – it is said that a Comparative Market Analysis is a product of both art and science. The reason this is said is that, depending on any given property and it’s unique features, there is rarely (except perhaps in a new development) an apples to apples comparison available. Therefore there is a lot of give and take in the assessment of any “comp” when compared to the subject property. Let me give you an example:
~ Let’s say we have a property with great location and large lot size that is also remodeled, but is not on a public sewer line. Let’s also say that no properties right close in to it with similar square footage and bedrooms etc have sold in the last 6 months. What will your agent do to comp it? Well, there are several ways to go:

  • One might go back farther in time to see if there are close-in comps. (This CAN be problematic given the volatile nature of today’s market… but might be necessary if no other options are available.)
  • One might look at other properties with different ranges of square footage. (This CAN skew your comparison of price per SF as a smaller home typically will sell for more per SF than a larger one.)
  • And/or one might go farther out from the subject property’s neighborhood while also looking at smaller lot sizes. (This can work if other neighborhoods with similar aspects are used to produce those farther-out comps. The Realtor really needs to understand the intricacies of the neighborhoods involved, and if moving into other neighborhoods, factors such as the desirability of being on a public sewer line may come into play, and additionally affect the picture.)
  • Another thing that might need to happen is looking at properties built in a different time-range (i.e. if no comps can be found built in 1920, then you might need to use some built in the 50’s or 70’s with hopefully similar updating etc)

None of these is ideal, but depending on what comps are available, you may see your Realtor incorporating some of these techniques.

I bring all this up to point out that, while your Realtor will use the best method available to your particular situation in order to give the most accurate look at what your property will likely sell for on the open market, a lot of judgment is called into play while coming to this assessment.  If a home has a completely remodeled kitchen and a comp does not, but has more bedrooms or a better location, or a much larger lot, then these might still be directly comparable depending on the other particulars involved, and how many of them are good matches to the subject property. Suffice it to say that your Realtor has the experience and discernment needed to weed through these brambles while bringing together the best information possible to help you determine market value, especially if they have expertise in your particular community.  So, trust their advice, and know that it is a lot more complicated in most instances than most believe it to be.

***Another note on “Comping” before I step off my soapbox- ‘Active’ comps (in my opinion) are interesting to note in order to gauge where you will fit in competition. However, the only real ‘Comp’ is one that has Sold. You really only ultimately care what someone actually was Paid for that comparative property.

DOM / “Days on Market” – It is really interesting to note how long a property was on the market before it sold. Many want to know what this means, particularly in the context of a Comparative Market Analysis. Basically speaking, when a house has been on the market for an inordinate length of time, it means one of the following:

  • It may have been priced too high to start. Most of the real excitement happens when a property is fresh on the market.  When it sits for awhile, it usually loses a little luster to those who have already become aware of it and therefore if the price is too high, it often eventually comes down in increments before getting to ‘Sold’. ‘Sold’ is what someone is willing to pay for the property.
  • It may be competing with properties that have more updates or better amenities.  In this market there are so many properties to choose from, that when putting your home on the market, these things really need to be considered when pricing.  This reason for a property sitting on the market still, again, boils down to price.
  • It may have onerous viewing instructions. By this I mean that, while a Seller’s needs and desires absolutely need to be accommodated, a property is most likely to be shown the most often if it is easy to show.  If a home has instructions that read “Call 1st”, then a call is made and an appointment time set fairly easily, and often for that same day while someone is, for instance, at work.  If a property reads “Appointment Only”, then it is possible, and in my experience likely, that it will be shown less often than one that is more accessible, and often stay on the market longer.  That said, when there are pets involved that need to be removed, or day-sleeping Sellers, or children whose nap times need to be taken into consideration, then your Realtor will do their very best to make the showing instructions as friendly as possible and assist in whatever way they can in order to make it as easy as possible for you. Just something to be aware of.
  • It may have mitigating circumstances like location problems, or curb appeal issues, or any number of things,
  • and/but the core reason can almost always be tied to price.

3rd party/REO’s – When looking at other properties and bemoaning the fact that there are so many that seem to be priced unfairly low (that is if you are a Seller wanting to list your own property), it is tempting to price your property differently than the ones in these categories if yours is not.  What you need to know is that even though your property is not in one of these categories, it is still competing with them, and the comparable data is still valid.  I know this is harsh, but the true value of your home is   determined by the Buyer, so the market is just what it is.   If a Buyer can get a comparable home down the street for a lower price because it is an REO (bank-owned) property or a Short Sale (3rd party), then those are just the facts, and you need to consider pricing accordingly.

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More Market Data

  • A comparison of Sept ’10 and the previous month in Portland Metro shows an increase in Closed Sales of 1.3%
  • Average sales price in Portland Metro fell by 3.5% comparing  Sept. 2009 with Sept 2010.
  • Comparing the 3rd quarter of 2009 with 3rd quarter 2010, Closed Sales in Portland Metro dropped 24.7%
  • Comparing the 3rd quarter of 2009 with 3rd quarter 2010, Metro Listings increased by 1.2%
  • Average Metro Closed Price in Sept 2010 was $279,900
  • Average Lake Oswego/West Linn Closed Price in Sept 2010 was $432,200
  • Metro “Time on Market” for Sept 2010 was 131 days
  • Lake Oswego/West Linn “Time on Market” for Sept 2010 was 186 days
  • Metro Active Listings as of Sept 2010 was 14, 714
  • Lake Oswego/West Linn Active Listings as of Sept 2010 were 1,025
  • From Oct 1, ’09 to Sept 30 ’10, Lake Oswego/West Linn Average  Sale Prices declined by 9.3%
  • Portland Metro saw 1,399 Closed Sales in Sept. 2010
  • Lake Oswego and West Linn saw 71 Closed Sales in Sept 2010
  • All data derived from RMLS Market Action Report
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Foreclosure Freeze/Shortsales/Market Conditions

The news has been full of headlines about the new crisis in the mortgage industry, this time affecting foreclosures. So it seems like an opportune time to look at not only foreclosures, but also shortsales and the latest market update from RMLS.

The Foreclosure Freeze
There is now discussion that the foreclosure process, which has pretty much swamped the big lenders like Bank of America and Wells Fargo, has been mishandled. The accusation is that the paperwork involved in the foreclosures was often reviewed and processed by unqualified people and by people who did not read what they were signing. I do not know if this is true or not, but I do know that I have counseled people who are in foreclosure who have not only felt powerless, but have felt that the bank was not answering their letters, returning their phone calls, or being responsive. Obviously there is going to be anger for a person in this position. That combined with the current media coverage does make me feel that we will see litigation.

Gregor Watson, a principal with McKinley Partners, recently gave a best to worst case assessment of what this means:
Best case: this is only a technical glitch. It will require some re-tooling of the process, but the process will get back on track and foreclosures will resume. This is needed to allow the glut of foreclosures to work their way through the market and then be out of the inventory.
Medium case: people will enter into significant litigation that could take years to sort out. This could slow and extend the downturn of the housing market.
Worst case: the housing market is brought to a halt because Title Companies refuse to insure mortgages involving foreclosed homes. (This would not bring the entire market to a halt: simply the foreclosures. Still, a big problem)

On the positive side the Philidelphia Inquirer reported yesterday that Bank of America intends to begin resuming foreclosure proceedings stating that they have a legal right to do so despite accusations that documents used in the process are flawed. This bodes well for the possibility that the better scenario may result. We shall see….

Shortsales
When the whole shortsale phenomenon began a few years ago I will admit that I was a skeptic. It reminded me of the buy-a-house-with-credit-cards schemes. Just too simple to be true. Really? You could just ask your bank to forgive part of your mortgage so that you could sell it for less? Really? As time has gone by I have come to see that not only are shortsales here to stay, they are a significant part of the market.

I think shortsales do present remarkable opportunity, as do foreclosures. It allows a house to be sold for market value and not have an asking price that is based upon a value/debt that is several years old. But shortsales are not for everyone. I want to make if very clear that if you are a homeowner considering a shortsale, you need professional and legal advice far beyond the scope of what I am discussing here. So I want to directly address buyers.

The buyer best suited to benefit from a shortsale is the investor. This is because the shortsale is so uncertain and the process takes months. A buyer who is shopping for a home may have the patience for this, but is usually not in a position to wait 3-5 months and then learn that they lost the house to another bid or that the shortsale was not approved. Whereas an investor is not waiting with a moving truck full of furniture. If it works, it works. If not, that’s OK too. For the investor able to be patient, it can present real opportunity. I have personally seen several homes here in Lake Oswego that sold for values that made my jaw drop in the shortsale scenario. Just know what you are getting into.

Keeping it Local
Here in Lake Oswego we currently have an active listing inventory of 626 listings (condos and houses). Of those 37 are Bank-owned Foreclosures and 70 are shortsales. And this means that about 82% of the market is neither a foreclosure nor a shortsale. It’s a home owned by someone who is not in it upside down and who has perhaps even taken loving care of it. So there is a house out there for you whether you are an investor, a home buyer looking for a personal residence, or even a home buyer looking for a personal residence with the patience of an investor.

Also keeping it local, the latest RMLS Market Action Report offers the following information about area 147, which is Lake Oswego and West Linn Combined
Total active listings = 1025
Total pending sales = 84, a decrease of 24.3% over the same time one year ago
Average sales price = $432,200
Average days on the market = 186
Change in values over the same time last year = -9.3%
Change is closed sales, year to date = -22.3%

I consider myself to be a very positive person. The thing to do in this economy is look for how it can work in your favor. That may mean waiting, but that may also mean pouncing on opportunity. The subject today is pretty complex. Please contact Linda or myself for more information, to ask questions, or to get property information. We are here to be of help.
Dianne

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News & Notes

  • Mortgage Rates: One thing to remember about what you hear on the news is that good news for the economy in general means rates are going to rise for buying a house.  Bad news for the economy means rates stay where they are if they are low or get lower.  Here’s what MBS Quoteline is saying:  ” The Fed’s recent announcement that it may purchase additional Treasury securities (quantitative easing) to stimulate the economy has magnified the importance of economic news and increased daily volatility. Investors now evaluate each fresh piece of data in terms of its expected impact on Fed policy, and mortgage rates receive an extra benefit from weaker than expected data. In general, weaker economic growth leads to lower future inflation, which is favorable for mortgage rates. In addition, investors now expect higher levels of bond purchases by the Fed after weak data, and the increased demand also would be positive for mortgage rates. Of course, stronger than expected economic news will have the opposite effect and will push rates higher more quickly than usual.”
  • Selling Tip Of The Week: Color is important when selling your home.  I’m sure you’ve heard that it is good to use neutral tones on the walls, and your Realtor can advise you on the latest/most popular shades, but I’ve noticed that some people misinterpret “neutral”.  Neutral does not mean white.  I know that white is fun to play with tone on tone, but if you do too much white, it will make your home feel “cold” and people will have a difficult time “feeling the love”  : )     So, if you’ve got white walls that you think look realy clean and make your rooms look bigger, and off white or white carpet throughout…   you need to talk w/your Realtor about some light taupes or other schemes to bring some warmth into those rooms.
  • Buying Tip Of the Week: Pay attention to the garage in your new home.  What are you going to use it for?  I say there are two kinds of people… those who park in their garage and those who store “stuff” in it.  Does the garage in the home you’re contemplating meet your needs?  I recently had a Buyer about ready to write an offer when they realized that her beloved long-ish minivan would not fit in the garage.  Now she had a choice to make…  the home that fit the rest of the family’s needs… or the car?  In many older homes, garages were not made to fit the longer/larger vehicles of today.  So…  try your car out in the garage if you have any questions about it.  And if you have trouble squeezing it in, you might consider “carriage doors” that open out, as they are mounted on the outer side of the frame as opposed to the inner side which is where up & down sliding doors are mounted, thereby reducing your space.
  • “Should-I-Buy-Now-Or-Wait?-Calculator” – Here is a nifty tool from First American Title Company (came to me courtesy of Pam Edwards in the Clackamas Office… Thanks, Pam!). It allows you to calculate the difference between buying now & waiting… So, let’s say you found a home that is priced at $500,000.  You know rates are good now and are expected to rise, and/but you are thinking that maybe the house will come down in price (let’s say you think it may eventually come down to $450,000.) and so you are considering holding off on your offer.  This tool will allow you to punch in parameters and see just how much the picture would change if interest rates go up and your home lowers in value.  Pretty cool!  Here’s the link:  “Should-I-Buy-Now-Or-Wait?-Calculator” There are some additional tools there as well: Buy or Rent, for instance.

Very Best,

Linda

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Home Warranties

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Home Warranties have become increasingly popular in real estate transactions. This is for several reasons. First, it gives home buyers some assurance that during the first year of ownership, after they have already financially spent so much money buying the house, they are not going to be caught by surprise with unexpected repair expenses. Second, for sellers it gives them some assurance that their buyer will be happy in the first year of ownership. Statistically homes sold with warranties have a much lower rate of post-sale litigation. And, third, Realtors like warranties pretty much for the same reason that sellers do. Happy buyers are the goal and home warranties help that to happen.

The Basics
The way a warranty works is that it is purchased at closing for between $250 and $400, depending on the plan. It can be paid for by any party to the transaction: buyer of seller. Once the warranty is in place it will be in effect for a full year. During that year if any mechanics in the house break down, the new owner calls an 800 number to order repair service. The warranty company contracts locally with approved workers who then come to the house and perform the needed repair. The buyer then pays the service charge (typically about $50-$80) for the visit and all other costs are covered by the warranty. It really is a great program. On average these policies are used at least twice in the year that they are in place.

Please notice that I am describing the policy as covering the mechanics in the house: the furnace, water heater, dishwasher, garbage disposal, electricals, etc. It does not cover the structure itself: the roof, walls, foundation, etc. Most basic policies do not cover refrigerators, washers and dryers, or air conditioning, but these can be added to the policy for additional costs. Be sure to read your policy. Some also have limitations. For instance, it may cover up to $1500 for a furnace, but not cover costs over that amount. So know the limitations and compare policies before you buy one.

There are quite a few companies that offer these policies. American Home Shield is probably the most widely known. There is also the First American Home Buyers Protection Plan, Choice Home Warranty, and Fidelity National Home Warranty. I’m sure there are others as well.

My Word of Advice
I do think a home warranty is money well spent. However, I also caution that these policies put a lot of emphasis on repair, and, in my opinion, are not quick to replace truly warn out items. Here is what happened to me:

When I bought my current home I opted for a home warranty because the dishwasher was obviously in really bad shape. The seals around the door were shot and the machine leaked when it was used. The technician who serviced it estimated that it could be repaired for $300. Why would I want to put $300 into a dishwasher that would then still be old? They offered me a credit in the same amount to apply to a new dishwasher, which I took advantage of and was happy to receive. Then I had trouble with my furnace that winter. Again, I called the warranty company and my furnace was repaired. The furnace went out a second time, again it was repaired under the benefits of my warranty. A year went by and my policy expired. The following winter, again my furnace went out. This time, with no warranty to use, I called a company of my choice. This time the technician said my furnace was so bad it was unsafe to use and he red tagged it. I then replaced my furnace. In hindsight I wish that when my furnace had gone out the second time, while it was under warranty, that I would have gotten another opinion. I think the warranty company did full fill the obligation of the policy because they were able to get the furnace to work, but I also think that I could have had the policy assist with the furnace replacement if I had taken the time to do my own inquiry.

I do think that if you are a buyer or a seller you should consider a home warranty when you are involved in your next real estate transaction. At least ask the question as to whether it would benefit you or not. And, as always, listen to the advice of your Realtor.

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“How Are Things In The Market Right Now?”

“How Are Things In The Market Right Now?” Hmmm… I guess I’m writing more of a philosophical or “opinion piece” today. This is such an interesting question… I hear it every day in one form or another.  Often it is accompanied by “Things are pretty bad, aren’t they?  I hear they’re getting worse.” or “I’m ready to buy but think maybe I should wait till prices drop more.” or “I read that….”   All of these are motivated by a combination of media influence, a desire to make good decisions, and some good ‘ole car-wreck-neck-jerking thrown in.  We are all in the same boat, and Realtors have some inside knowledge that folks would like to have. The truth is, aside from offering some statistics (local, please), and some of what I’ve heard experts predicting, I always say the same thing… “I don’t really believe in statistics… in my own life anyway.”   Real Estate is like that as a profession.  You need a combination of faith, perseverance, and real skill to offer clients in order to achieve successful outcomes. I usually say ( in addition to the numbers or current trends I’m aware of), “Things are pretty good here in my world”.  What you really need to assess is:  How are things in your world?.

You’ll notice that there are fewer Realtors around than there used to be.  One thing you can be sure of; The Realtors who are in business right now are in business for a reason…  namely the three I outlined above. Talk to your Realtor, and begin to assess your own situation.

Is the market in the right shape for your purpose right now?    I don’t know- Ask yourself:

  • Are you needing a bigger home/Is your family growing etc?
  • Is there a change in your living- or relationship-status that necessitates some movement?
  • Are you being transferred in your job?
  • Would you really like to (or do you need to) downsize?
  • Is a change of schools for your kids in order?
  • Have you been wanting a real estate  investment opportunity?
  • Do your friends all live on the other side of town?

These are just a few of the reasons you might want to take advantage of the current really low prices, and really low interest rates. So… for those three variations on questions I get about the market:

  • Assess your own local market data, and talk to a mortgage broker about your own unique set of facts pertinent to your choice to act or not.  Then make the Right Decision for you based on more than rumors or innuendo.
  • As far as prices go… no one really knows for sure, but one thing is true: According to the experts, interest rates are not going lower….  So even if you wait for home prices to lower a little more (assuming they do… locally in the metro area , according to RMLS, sold prices increased from July2010  to August 2010 by 0.8%… & 1% from August ’09)   you will have negated any benefit by most likely settling for higher interest rates.
  • When reading or listening to news reports about real estate- “Consider the source”… and the subject matter.  Very often folks are hearing national information on the national news, and while that can be interesting in gauging where markets might be headed based on experiences in the past (what states declined first… what states followed in both negative and positive trends, and in what order…) the only really relevant information to your particular situation is local.  The adjunct to that of course is how that information intersects with your personal goals.

Read our Market Activity Report every Monday. Talk to your Realtor.  Talk to a Mortgage Broker.  Get the facts and then decide for yourself.  Life is happening everywhere… all at the same time!  : )  Don’t let fear and natural but morbid fascination with negative news stories run your life.  (That’s MY two cents!  : ) Very Best, Linda

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A Market Snapshot

This morning’s Oregonian had a cover story on the decline of the housing market (such a nice story to wake up to). I thought it might be helpful if I localized the information and provided you with some stats.

Is our glass half empty? Or is our glass half full? Today I am comparing the inventory of various price ranges including what is currently for sale, what has sold in the last 6 months, and, in the case of detached homes, how that compares to the same time period a year ago:

Detached Houses
Price Range For Sale Now Sold in last 6 months Months of Inventory Sold in same 6 months of 2009
$100,000-$200,000 4 4 6 2
$201,000-$300,000 36 42 5 21
$301,000-$400,000 83 68 7 49
$401,000-$500,000 76 47 9 30
$501,000-$600,000 82 47 10 24
$601,000-$700,000 52 26 12 14
$701,000-$800,000 57 16 22 17
$801,000-$900,000 34 11 19 8
$901,000-$1,000,000 19 8 15 9
$1,001,000-$1,500,000 54 11 30 17
$1,501,000-$2,000,000 25 0 Indefinite 4
$2,001,000-$2,500,000 7 1 44 2
$2,501,000-$3,000,000 4 1 25 1
$3,001,000-$15,000,000 11 1 68 0
Condos
$50,000-$100,000 20 11 2
$101,000-$200,000 63 39 9
$201,000-$300,000 33 21 9
$301,000-$400,000 10 7 6
$401,000-$500,000 16 5 19
$501,000-$600,000 9 1 56
$601,000-$700,000 7 4 11
$701,000-$800,000 0 0 –
$801,000-$900,000 3 0 Indefinite
$901,000-$1,000,000 2 0 Indefinite
$1,001,000-$2,000,000 1 0 Indefinite
$2,001,000-$3,000,000 1 0 Indefinite

Observations on new construction:
As of today there are 42 listings for new homes that are listed in price from $449,900 to $3,700,000. In the last six months 11 new homes have been sold, the most expensive of which was for $965,000. There are currently 10 new homes listed for sale that are priced over $1,000,000. That is a huge reduction from 3 years ago when I recall counting them and finding over 100 homes that were new construction for sale priced at over $1,000,000. The builders are learning to work with this economy and are building their spec homes in much more affordable price ranges. There are a couple of new subdivisions in LO right now with home prices in the high 400’s and low 500’s.

My Observations
I think the most interesting bit of information I see in this is that the sales have actually increased substantially, although at lower prices. In the February to August time frame 199 houses sold in 2009 versus 283 that sold in 2010. That is a nearly 50% increase. Yes, some credit can be given to the tax credit that expired in June, but I think that there is another factor at play. As prices have come down, buyers who assumed that they previously could not afford Lake Oswego are now finding opportunities in homes that they can afford. The decline in prices is perhaps a boon to the LO housing market in general.

Another observation is that the condo market is really soft as the price goes up. Condos appeal to people seeking an ease of living with Home Owner’s Associations taking care of the yards and exterior maintenance, but another part of the condo market is people who buy into condos because they have been priced out of detached homes that they can afford. As detached home prices have come down, this has given buyers the opportunity to purchase a single family residence as opposed to a condo in the same price range. I see the condos that are currently for sale in the $700,000+ pricing and wonder just how many years it will be before they get an offer.

Highest and Lowest
The least expensive detached home currently for sale in LO is 912 square feet, built in 1963, with 3 bedrooms and 1 bath. It’s priced at $180,000. The most expensive home is still the 5 acre, private island in Oswego Lake. With 13,500 square feet, 4 bedrooms, 6 full and 2 half baths, it was built in 1930 and is priced at $15,000,000.

I hope this information is helpful to you. Please let me know if you have any observations of your own.
Enjoy the day!
Dianne

Photo courtesy of bing.com

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“Control Issues”

I seem to keep bumping into a concept lately that I thought might be nice fodder for a post in the Blotter.  How much control do you think you have in general in your life?  How much control would you LIKE to have?  …Are you sure?

In real estate there are certain things we can control and certain things we cannot.  I thought it might be fun to delve into some examples of this:

  • If you are selling your home, do you have control over the location? Well, no.  BUT, when making a decision about where to buy, that would be a good time to look down the road and take that property’s location into account for future resale purposes.  If you are getting a REALLY good deal on a home because of where it’s located, you might want to think twice.
  • If you are selling your home, do you have control of it’s condition? Absolutely.   Now, you may say, “I only have a certain amount of money to spend on getting this place ready for sale”, but in the end, you are making the decisions, and have been making the decisions… and now here you are.  Control of this factor aside though, no matter what kind of financial position you are in, this is always an issue when selling your home… “How much should I put into this home I am moving out of?”  When I am working with a client in a position where there are limited funds, we sit down together first and I go over my list of items that will make the property most appealing to the greatest number of Buyers.  THEN, we get real.  Some things, like paint, are inexpensive, and realistically can be handled by the homeowner themselves. Some things require professional assistance.  Sometimes it is just a matter of rearranging a few pieces of furniture and perhaps doing your moving “sort-through” now & considering it work you’ll have to do to move anyway… Tends to make it purposeful and even fun!  Goodwill will love you, and a storage facility or a POD might be a good option to clear your home of things that only make the rooms look smaller.  You’ve heard it before: “The way you live in a house is NOT the way you sell a house.”  So… you do have control of how your home will present to the Buying Public.  Just lay out the facts & pragmatically decide the best way to address each issue.  Buyers in this market are picky… they can afford to be with the number of homes from which to choose.  You have to reveal the gem that is YOUR home, and when you do, someone else will walk in and love it the way you did when you were in that position.
  • Do you have control over the terms of an accepted sale agreement? Yes.  You may not agree with me, but after all the options have been presented and discussed between you and your Realtor, you get to say yea or nay.  It’s your house and you don’t have to sell it for terms that are not to your liking.   Now… do you sometimes have to give a little here or there in order to make your transaction happen?  Yes.  For instance, when there are repairs requested that you are advised will, or may, be required by the Buyer’s lender, it might be in your best interest to make them so that you can close… that is if you want to.  If there are safety issues or other significant ones that have been uncovered in inspection, many will also want to address those prior to close.  The Golden Rule tends to work well here, and usually you are in the process of negotiating terms for your own purchase, so you get to enjoy a 360-degree view of how it feels to be on either side. Again though, you are in control.  You can always say “no”, and the chips will fall where they fall.
  • Are you in control of price & your home’s position in the marketplace? Yes.   You obviously don’t control what other people have sold their homes for around you, or what has happened in the market in general, but after your Realtor presents you with comparable data (i.e. available facts), you make the decision regarding what number will go on your flyers and on the MLS. Many Realtors will let you know that they will or will not take on a listing depending on the “reasonableness” of the price desired by the Seller.  You still are the one who makes the final decision on price, and perhaps the decision on whether to work with that person or not.  As a Realtor myself, I will tell you that most Sellers want to price their property too high for the market (sorry… it’s true : ).  Consider that a Realtor who is advising you does not have much of an incentive to talk you into pricing your home too low…  being as their compensation is based on the sale price.  Worth a thought.  I’d venture a guess that you are probably being given the straight scoop.  I like to tell my clients that all we are doing is looking at the facts, and pricing accordingly…  why would you do anything less?  Dianne and I have been reporting that the facts show homes selling now seem to be the ones either very new on the market, or very old listings that have dropped their prices considerably & often.  Ask yourself how long you want to be on the market, and how many price reductions you are willing to go through if you price against what the facts are telling you.  You will gain the most exposure when your home is fresh on the market.  Take advantage of that and price it right. Also.. remember that you are most likely buying as well…  any market conditions will be in effect on either side of the negotiation table.
  • Are you in control of marketing your home and the exposure it gets? Yes.  That is your Realtor’s job, AND, you are part of this conversation and deciding what kind of promotion you want.   Talk to any prospective Realtor about how they plan to garner exposure for your listing.  Look at the words they are choosing for your promotional pieces and make sure you like how the property is being presented. Make sure their is a good deal of Internet exposure, and that all the details about your home are factual.  It’s also a good idea to go over marketing with your Realtor on a periodic basis to gauge feedback and results. Give your input, and make sure to voice any concerns, but then trust your professional, and put your energies to how the house itself  is presenting each day to prospective Buyers, and to your own search for a new home.
  • Are you in control of the timing of your transaction? No.    You really never know when that Buyer will walk in your door and have the reaction “This is the one!”.  You need to have your Windex ready every day as you leave for work & at least briefly touch each of your sinks & fixtures.  You want them to shine when that Buyer walks in. Check your home’s entrance as you leave to make sure that there is that great first impression just waiting for the right moment. Once that happens, and your Buyer has arrived, there are a few things you CAN control about timing, such as when you are willing to be out of your property- unless there is a set date that the Buyer absolutely needs… If this happens, then you are back to “Do I want this transaction to go forward?”… I have not said that there may not be a few hard decisions here & there : )   For the most part, this is why you picked the Realtor you did.  Let them help you through any rough spots.  In the end stages of your transaction, the Buyer’s lender will truthfully have a good deal of control over what happens in what kind of time frame. Know that even if the timing seems like a roller coaster ride, all the dominoes will fall into place and the timing really will, most always, take care of itself with some good choices, and sure, steady footing as you move to close.  Accept help from your Realtor during this time, and get ready to move into your new home!

This seems like a lot for now.  The subject of “Control” and under what circumstances you have it and to what degree is such a rich subject.  I promise I’ll come back to it, and perhaps focus on the Buying angle next time.   In the meantime… Happy Summer!

Very Best,

Linda

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Analyzing Market Trends

Foothills Park, Lake Oswego, Oregon

I think the most common question I am asked is “How’s business?”, which I think really means “What’s the market doing?”  In my circle of friends, homeownership is the norm.  And in today’s economy, everyone is hoping that their home is holding it’s value.  For my clients, they are wanting me to give them insight into the buying/selling climate.  So staying on top of trends is pretty critical.  Today I am going to break down the Lake Oswego market and give you some specifics.

First, some good news:  Lake Oswego, according to the latest market action report from the RMLS, has done the second best job of holding value in the metro area comparing May of  ’09 to May of ’10.  Values are down in Lake Oswego, year over year, 7.8%.  The only part of the metro area that did better was North Portland with a loss of 6.3%.  The worst faring area was Yamhill County, which is down 13%.  Wow, did I really just call that good news?  We are down 7.8%!  Perhaps the better way to see it is that this is less bad news than it could have been.

The average sales price in area 147, which is Lake Oswego and West Linn combined, is $443,500.  The total days on the market is averaging 153 days.

I think it is important to do this analysis by price range.  Watching our weekly market action reports, it is pretty obvious that the houses priced in the less expensive range, such as $600,000 or less, are selling much more actively than the houses in the higher prices.  Here is a breakdown by price:

Price Currently for Sale Sold in Last 6 Months # Per Month Length of Inventory
$1,000,000 + 105 15 3 42 months
$900,000-$1,000,000 19 4 1 28 months
$800,000-$900,000 50 6 1 50 months
$700,000-$800,000 42 12 2 21 months
$600,000-$700,000 53 21 4 15 months
$500,000-$600,000 74 35 6 12 months
$400,000-$500,000 79 43 7 11 months
$300,000-$400,000 60 60 10 6 months
$200,000-$300,000 29 36 6 4 months
$100,000-$200,000 3 2 0 9 months

At a glance, the idea is that the lower the length of inventory, the stronger that part of the market is. And that makes it easy to see that the lower the price on the house, the stronger the market. There are also two surprising quirks. Notice that the market inventory is actually worse in the $800,000-$900,000 price range than it is in the houses priced at $1,000,0000+. Why? I am thinking that part of the market is competing with the houses that are at $1,000,000 plus and that when buyers get up that high in price, it is still easy to justify pushing the purchase up just a bit more to get what they really want. In other words, there still is not enough of a value difference at $800,000 vs $1,000,000. However, that idea is just my speculation. I also think at $800,000 you are seeing a lot of older homes. They do have a hard time competing against the newer homes, which there are lots of, that have the soaring ceilings and palatial kitchens and baths. Second, the houses priced under $200,000 just aren’t selling fast either. I am quite certain that this is because at that price the house is pretty much a tear down and in such rough shape that the value is in the land. That means the buyer is going to be a builder and the builders are still sitting on so much inventory that they aren’t buying up the land.

I also have to say that the market is very balanced between buyers and sellers in the homes valued $300,000-$400,000 and even up into $400,000-$500,000. This part of the market is moving well with homes coming onto the market and selling respectably within reasonable periods of time. If you are buying in this part of the market, and the house is in nice condition, be aware of values. If it’s priced right, it’s going to sell and your buying power is not as strong as it would be in the higher price ranges.

And for those of you in the upper pricing, you are still in a very strong buyer’s market. Sellers are still competing with way too many other houses. You should be able to negotiate hard on price and terms.

Affordable Houses: LO vs Sellwood
I periodically like to compare affordable houses in Lake Oswego to the same houses in Sellwood, a neighborhood I used to live in not too far away in SE Portland. I like to do this because I remain convinced that Lake Oswego is often overlooked by buyers who are seeking affordable housing. This is because of LO’s reputation as a wealthy community. Time and again I have been able to prove that there are more homes to choose from in LO than in Sellwood that are affordable. Today is no different. Affordable, by my definition, are homes price below $350,000.

As of today, there are currently 61 homes for sale in Lake Oswego priced below $350,000. The least expensive is a 3 bedrooms, 1.5 bath house with 1000 square feet and a single car garage that was built in 1957. It is actually in pretty nice condition,although close to I-5, and it is priced at $189,000. In Sellwood there are 19 houses priced under $350,000. The least expensive is a 2 bedroom, 1 bath house with a single car garage that was built in 1920. It has 838 square feet + 810 square feet in an unfinished basement. It’s priced at $234,500.

I think the most burning question today is what is going to happen to the market now that the tax credit is over. I do think that there was a huge boost in the market by people trying to get into escrow by the end of April. I also know that May was slow for me, as far as new business. However, June has got my phone ringing and I am very busy. So my personal observation is that our normal spring/summer upswing is happening. Time will tell.

Yours, Dianne

Posted on

News & Notes ~ All About Loans ~ (well.. maybe not ALL : )

  • How Long Will It Take to Close? This is an important question and factor in structuring your Offer and making plans around the Purchase of a new residence.  You are lining up dominoes, and you want to know!  Well,  if you are selling your home to purchase the new one, then you are timing your own Sale’s closing date with the move-in/close of your Purchase.  It used to be fairly standard to achieve a closing in around 30 days.  What you need to know is that when you write this into the Offer, it becomes a “Time Is Of The Essence” feature of your contract (An accepted Offer is a contract… and that’s a legal term for: “You must meet this date.”).  That means you need to be pretty sure you are going to be able to meet that time line, as it is contractual.The lender requires time to gather information, order & analyze your appraisal, successfully navigate underwriting, and draw up your documents.                                                                                                                                                                                                                        Are closing dates often extended? Yes. Does the Seller have to agree to extend you additional time beyond the “on or before” closing date set in your Offer? No. Now, most parties want the transaction to go forward, and so often agreement to do this is reached, but it is very important for you to know that your Earnest Money is in play…  and should, let’s say, the Seller have another Buyer who has approached them during your transaction and, perhaps said “Hey, it’s too bad you sold your house to those Buyers because I really want it and I’d give you more money for it!”  Hmmm… Would there be incentive for the Seller to perhaps be awarded your Earnest Money because you failed to “perform” per the stipulations of the contract?  I’ll leave that for you to answer.  Just remember- With the new RESPA guidelines that lenders must follow, there is potentially more time that needs to be built into the process, so instead of 30 days, it is prudent to allow around 45 days.
  • Rates: They are under 5% now for a 30-year fixed.  We all know prices are down… Good combination eh?         – More Detail: “Recent Employment data which fell short of Wall Street forecasts and uncertainty about the pace of the economic recovery caused investors to shift to relatively safer assets, including government insured mortgage-backed securities.  This plus economic data indicating extremely low inflation resulted in declining mortgage rates over the last few weeks.”  (Thanks to Pat Goodell from Academy Mortgage for this update.)

  • USDA Loans: Though these are back in the running now with funds having been declared available for Rural Home Loans,  most investors haven’t given the “go ahead” to lenders to begin issuing commitments and closing those loans yet.  We are told the details should be worked out shortly though, so get ready for this 100% financing option to re-enter the scene!
  • Do you know how many people are involved in a real estate transaction (minimum)? The answer is 13+ .  Here’s the Breakdown (thanks to Naida Paris of Valley Mortgage for this!):   Listing Agent, Selling Agent, Seller (s), Buyer (s), Loan Officer, Loan Processor, Underwriter, Document Drawer/Funder, Escrow Officer, Title Officer, Inspector (s), Insurance Agent, and Appraiser.
  • FHA is going to be dropping the amount a Seller can pay toward a Buyer’s closing costs, but the outlook for that to take effect is 2011.  So, for now you can still take advantage of the current rule which is that a Seller can contribute 6% toward a Buyer’s closing costs.  You’ll want to talk w/your Realtor & Lender about how much the closing costs will come to prior to writing this into the offer, however.