Working as a real estate agent presents some interesting situations. Here’s one story you probably haven’t heard before. It includes my being deputized, or ‘sworn in,’ since a local, short-handed police force is about to commence a house eviction.
This Happened to Me!
A fellow Realtor and I had been asked by our seller client to assist with the removal of squatters on her property and also make homeselling suggestions prior to her placing the home on the market. As a result, we were told to meet police at the property to assist with access, so the house could be vacated. Little did we know that we would not just assist with access, but were also about to become deputized as temporary police officers!
As promised and on time, we drove down the unimproved gravel road into a sketchy part of SE Portland and arrived in front of our seller client’s house. To be clear, let’s call that neighborhood extra sketchy, because along with that rough, gravel road in the middle of the city, imagine a ‘run down’ neighborhood with ‘cars on jacks’ nearby front yards, to get a better picture.
We dutifully introduce ourselves to the waiting Multnomah County Sheriff’s deputy and are told he’s waiting for ‘back up.’ Now our ‘extra sketchy neighborhood’ meters are really going off. Why do we need backup?
We wait a bit, then are told that the requested Portland Police contingent asked to stop by for ‘back up’ is unavailable. Eventually they arrive, but not before the ‘fun’ begins. We’re then asked to raise our right hands and are sworn in. That’s right, deputized. There in the parking lot. Two mild-mannered Realtors now represent law enforcement.
After our knock on the door, we enter the house. From there, pandemonium ensues. The scene turns surreal as a gun is located, along with much hollering and a wandering pregnant lady is led out of the house to safety. Yet much more commotion is about to occur, only this time not in the house. Under the house.
A Trap Door & More
During a much earlier tour of the house before problems developed, the owner had revealed a rather unusual ‘trap door’ above an unfinished basement, located under a main floor rug in the kitchen. Later, additional officers arrive, including Portland Police. Standing in the kitchen, I review my notes. I recall the ‘trap door’ and mention it to a nearby deputy.
How Low Did They Go?
Law enforcement appears readily interested in this new ‘trap door’ information. So with a group of officers circled around the ‘trap door’ with guns at the ready, the door is lifted. Staring up at us from under the house are several people, including one rather dazed looking fellow, who suddenly bolts out of view. But there doesn’t seem to be anywhere they can go, trapped under the house in the unfinished basement. In due time, each suspect seemingly comes up out of the hole to the unfinished basement. At least that’s what we think. Believing they have everyone captured, a police officer proceeds to hammer the ‘trap door’ shut with nails, ensuring no one gets in…or out.
Police Officer with Bean Bag Shotgun
Bean Bags Aren’t Just For Kids Later as the police are about to leave, one officer is insistent a particular person they’re seeking is still in the home. Yet they haven’t found him. ‘He must be here somewhere,’ the officer insists. This has him prying open the previously nailed access area. As soon as the ‘trap door’ is lifted, the officer yells ‘We’re going to send the dog in.’ No response. Again he yells ‘We’re going to send the dog in.’ Still no response. If the fugitive thinks they’re bluffing, he’s about to be sorely mistaken. That’s because a police dog is lowered and released into the basement. That quick canine has their man in a flash. A ‘bean bag’ round helps complete his capture.
In all, we count 7 police cars, 11 trespassers (including several convicted felons), 1 K-9 unit and a bean bag round. Local TV news covers it all. It’s not every Realtor who can truly be called ‘Deputy Dad’ by his kids. So now, whenever someone suggests real estate must be a boring ‘desk job,’ I ask if they’d like to hear my Realtor story about a house in SE Portland.
Oregon Realtor Roy Widing, CRS
Thinking about selling your Oregon property? Go with results! Contact expert Realtor Roy Widing with Certified Realty for a free consultation using the contact form below, or call him at 800-637-1950 today.
As with the sale of most things, there are a few factors for homesellers to consider. One of the usual seller costs includes a real estate commission, plus factors like title insurance, escrow and recording fees. There are other attendant costs, too, like the ‘hassle factor’ and moving expenses.
Spoiler Alert: The answer to the question of how much it costs to sell your home is, ‘it depends.’
Why is this the case? Well, for starters, Realtors frequently work using different commission rates. On top of that, you don’t always know with precision every single cost you may incur as a homeseller, such as negotiated home repairs. Yet despite all this variability, sellers can still receive an estimate of the cost to sell their home from a Realtor and while sometimes it’s within a given range, that estimate is typically close to reality.
First, let’s focus on specific hard costs to actually sell your home. When considering your ‘bottom line,’ it’s important for homesellers to include in their calculations any liens (like an existing home loan, home equity line of credit, or unpaid property taxes) that need to be paid at closing.
Price vs. Cost In selling a home, it’s helpful to understand the difference between price and cost. Here’s a summary for homesellers to consider when looking at most efficiently selling their home for the least cost:
Price = The ‘sticker’ amount of what you’re buying, like hiring a Realtor to sell your home.
Cost = What you stand to lose if you don’t consider your return-on-investment. For example, if the agent you hire does a poor job, you can:
1. Lose time (say goodbye to opportunities like that particular ‘dream home’ purchase you planned to make, since you expected your home to quickly sell before someone else got it).
2. Receive less buyer activity and fewer offers.
3. Experience frustration (lost sleep, headaches and more).
Cheap Dentists & Realtors Are Often Hardly A Bargain
For example, if you find a dentist to work cheaply, but end up with an infection or need to pay another dentist to get the job done to your satisfaction, the case can be made that a cheaper price is hardly a bargain. That’s because the cost can be significantly higher than the price you initially agreed upon.
Commissions Are Negotiable
The Realtor fee to sell a home is usually called a ‘commission.’ Regarding the real estate commission amount, because Realtors are independent contractors, if you ask more than one real estate agent, you may receive a few different answers. This article gives one attorney’s view of a Realtor’s value. A Realtor fee is truly the free market in action. Cream ‘rises to the top,’ so better agents usually are paid as much (sometimes more) than less experienced brokers, who may be less successful and/or offer fewer services.
Give Me A Number By far the most common commission arrangement is that unless your home actually sells and closes, no real estate fee is paid. According to this 2017 Realtor.com article, the average prevailing commission for a home sale is about 6%. That said, you can expect the majority of professional agents to approximate each other. The commission amounts quoted are likely to be different, but so is the service and expertise of the agent. Like you, Realtors only have 24 hours in a day. When an agent is working with you, that’s time he or she could be spending with another client. And because commission sales are a results-based, expect to pay a competitive rate to hire a successful Realtor.
This isn’t so surprising, since if you were to pay for a doctor’s visit, a home furnace service call, or a mechanic to fix your lawn mower, there is usually a range of what is considered reasonable. Similarly, throughout our region that range can vary. This explains why it’s difficult to provide a precise and accurate dollar figure on seller costs when selling a home. It can also depend on the property itself.
Don’t Get Burned On Your Next Transaction
Feeling The Burn
Expect ‘bargain’ commission rate quotes from less experienced or desperate agents. Also expect a low quote from less diligent agents who may simply stick a sign in the yard and either hope it sells, or intend on ‘beating the seller down in price’ in order to increase their odds of eventually being paid. If a ‘churn and burn’ attitude is not what you want, consider working with a helpful consultant type Realtor who actually represents your best interests and doesn’t use ‘strong arm’ tactics. To summarize, if a commission seems to good to be true, it probably is. In the end, you may pay considerably more than you bargained for, to become someone else’s ‘on the job’ training.
The Volume Discount
If a property is priced very low, such as a vacant lot located in a small and distant town, commissions frequently are higher to help make up for an agent’s considerable time and effort. Why? Consider that the real estate commission on a $25,000 lot can be around 1/10th of a $250,000 home, yet both require plenty of paperwork and attention to detail. Marketing the $25,000 lot may even take considerably longer and involve more sheer work. To attract a good, diligent agent may require paying a bit more in the real estate commission to adjust for the reality of that Realtor’s lost opportunities with other more lucrative properties while selling yours.
How A Lower Commission Hurts Homesellers The thought that sellers are potentially damaged by a lower commission paid to their Realtor is counter-intuitive, right? Think again. Here’s an example using the above 2017 Realtor.com statistic of 6% as the ‘average’ Realtor commission.
Real estate is a business. And because Realtors are salespeople, they expect to be paid what they’re worth. This is especially true of experienced agents who are typically among the best at their profession. So let’s consider a seller, Mr. Jones who wishes to save some money. As a result, he talks with several Realtors and finds one willing to work not for 6%, but 4%. Great for Mr. Jones, right? Possibly not and here’s just one of numerous reasons.
Not All ‘Splits’ Include A Banana
Doing ‘The Split’ It’s helpful to understand that the Realtor representing Mr. Jones doesn’t typically get the entire commission, regardless of the amount. It’s common for commissions to be split four ways. There are exceptions, but here’s how the commission distribution usually breaks down:
1. Part to the seller’s Realtor 2. Part to the seller’s real estate company
3. Part to the buyer’s Realtor
4. Part to the buyer’s real estate company.
Given such a ‘split,’ no one is getting rich and compared to the national average of 6%, suddenly a 4% commission is looking pretty skinny. Here’s why that matters.
Commission ‘splits’ or distribution can vary, but if the Realtor and company working with Mr. Jones receive around half of the commission, or about 2%, that leaves a less-than-customary 2% commission to be shared between the buyer’s Realtor and the firm they represent.
Why does that matter?
Because the buyer’s Realtor can easily look at the listing sheet and see precisely what commission is being offered to the buyer’s agent who writes an acceptable offer for the home of Mr. Jones. If the commission structure pays a percentage or two less than what that buyer’s Realtor is accustomed to receiving for selling a home, expect a tepid response, or possibly no response at all. After all, there are frequently other homesellers who ‘pay the going rate,’ whose homes are just as easy to show and sell.
Given this usual similarity, it’s not difficult for a buyer’s agent to get enthusiastic for those homes that pay what is seen as a competitive commission. So much for Mr. Jones ‘saving’ money. That’s because the end result of a lower commission could instead be fewer showings, a longer market time and diminished offer activity on his home. Remember, a main reason for multiple listing is to get more offers for a seller’s property. It’s generally a good idea not to work against that principle. Pay professionals a market rate and you usually won’t regret it.
There are different ways to sell your home. The most common and (usually most profitable) is to hire a full service Realtor. Another method is to go it alone, ‘by owner.’ Yet one more alternative is to work with a ‘discount broker.’ Let’s look at each of these scenarios to see which might be right for you.
Even After Paying A Commission, Sellers Make More Money With A Realtor
Homeselling ‘For Sale By Owner’ If you do decide to try selling your property by yourself, you will soon realize there are good reasons why even real estate agents pay a commission to sell their own homes. That’s because in addition to taking on a second job, from a ‘bottom line’ standpoint, hiring a Realtor is usually the most profitable way to go.
The irony for ‘by owner’ homesellers is that in their attempt to save money, they frequently ‘leave the most money on the table.’ That’s because ‘by owner’ is often the least effective and most expensive way to sell your home. Since your property isn’t in the Realtor’s multiple listing system, you can expect to have far fewer qualified buyers aware of your property. Fewer buyers means less competition and less offer activity.
Home & Personal Security
Before offers, come showings. This brings the security of yourself and your possessions into play. Realtors routinely scrutinize buyers before agreeing to represent them. Don’t like the idea of unscreened and unaccompanied strangers in your house? Then selling ‘by owner’ may not be for you. The simple fact is that working with a Realtor provides one more layer of scrutiny and seller security.
A Good Realtor Detects Potential Transaction Landmines
‘By owner’ sellers routinely must deal with ‘tire-kickers’ who are unqualified to buy and therefore can be a significant waste of time. And if you do happen to get an offer when selling ‘by owner,’ there’s no Realtor to deal with under-handed offer tactics, contingency ‘landmines’ and other potential pitfalls, plus no documents to help protect your interests, such as the arbitration and mediation clause. As a result, lawsuits can become more of a likelihood. Didn’t complete a property disclosure or lead paint form? Don’t know a good repair contractor? Dislike ‘legalese’ in documents you’ve never seen? If you plan to sell ‘by owner,’ be prepared for some expensive surprises.
Fraudsters Are Usually Smooth
Convicted fraudsters can appear very unassuming. Some ‘sketchy’ buyers take advantage of ‘for sale by owners’ too. That’s because there is often less buyer competition, since you’re not in the Realtor multiple listing system and therefore buyers typically have both time and less buyer activity working for them. If you happen to be a real estate attorney with a ‘hot property’ that has buyers knocking on your door and you have it priced right, plus you don’t mind doing a lot of legwork, going ‘by owner’ may work for you.
Want A Second Job? But if you already have a full time job, want maximum exposure and a professional to assist in pricing, marketing and transactional minutiae, involving a Realtor simply makes sense. Remember, sellers with a Realtor net a better return at closing compared to ‘for sale by owners.’ Some of the most parsimonious banks realize this. As a result, financial institutions routinely hire real estate agents to sell their REO (real estate owned), which are often foreclosed properties.
Discount Restaurants Aren’t Always A Bargain-You Get What You Pay For
Homeselling by Discount Broker For homesellers, a step up from ‘for sale by owner’ is the ‘discount broker.’ Some consider it akin to a low budget buffet, the kind where the food and service may find you walking away wishing you’d gone somewhere else. You could get lucky, but don’t be surprised if you get heartburn, instead.
That’s because while you’ll now probably be placed in a Realtor multiple listing system, a potential downfall is a possibly reduced commission paid to buyer’s Realtor. Unless you’re paying the buyer’s Realtor a competitive rate, don’t expect agents to rush to your door and sell your property. On top of that, some discount broker agreements require the seller to handle showings, negotiate the transaction on their own and even handle much of the paperwork. So much for being easier!
Homeselling by Full Service Realtor This is the ‘full meal deal.’ You’re in at least one multiple listing system, have full representation, plus the abundant resources of a licensed professional at your disposal. Showings are followed up on, paperwork is handled on your behalf and you can expect priority to be made for your questions and scheduling.
The Bottom Line Because any commission charged by your Realtor is only one piece of the seller’s ‘net at closing’ puzzle, it’s a good idea to request an estimate of closing costs, including real estate commission, prior to listing your property. This provides you with a better picture of what to expect at closing. This is a free service provided by Realtors and helpful in gauging an approximation of the funds you can expect at closing.
Thinking About Selling? Consider working with full service Realtor Roy Widing with Oregon’s Certified Realty. For a free consultation of what your Oregon property could sell for in today’s market and your ‘bottom line’ of seller’s proceeds at closing, use the convenient contact form below or call 800-637-1950.
Before entering into a business relationship, it’s helpful to know your real estate agent is nice, patient, available when needed…and honest. So while many of us assume we’re ‘safe’ in the hands of our doctor, attorney or pastor, what about your Realtor? Find out here, or use the audio player below for this edition of the Oregon Real Estate Podcast.
Of special note is the OREA ‘Administrative Action’ section, which provides information about decisions regarding Oregon real estate violations. The resulting consequences to untrustworthy real estate agents could include a reprimand, license suspension, license revocation and/or a civil penalty. So while no screening process is foolproof (as witnessed by crimes committed by doctors, attorneys and other professionals), the state of Oregon does considerable due diligence to vet real estate agents.
As part of the application process to become an Oregon real estate agent, any felony and misdemeanor convictions and arrests must be disclosed. The disclosure requirement is fairly high, because in addition to any criminal activity, also requiring disclosure are any administrative proceedings, plus civil and even financial issues. For example, if a prospective Oregon real estate agent has an unsatisfied judgment or bankruptcy, each must be disclosed.
Whom Can You Trust?
A Matter of Trust
Trust is an important factor when buying or selling real estate. Thankfully, trusting your Realtor is not super risky. That’s because consumer surveys consistently reflect a high level of satisfaction with Realtor performance. One study by Forbes magazine revealed 96% satisfaction for the real estate industry. So if many real estate agents were dishonest, we could expect that figure to be much lower.
This doesn’t mean blindly signing off on every suggestion one receives from their Realtor. But obsessively hand wringing over transaction minutiae is one sure way to make the process less enjoyable. A recommended approach is for Oregon homebuyers and homesellers to carefully read all documents, ask plenty of questions and work with a recommended professional with a solid track record.
Trust For Homesellers
Looking at trust from a seller’s perspective, for starters there’s significant trust needed to deal with buyers. For instance, trust is needed to allow strangers in your house. There’s also trust in taking your property off the market, in the hope a sale will go through. And trust in finding a replacement home.
Trust For Homebuyers
Trust is needed for homebuyers, too. Trust is necessary in working with a lender and that the discomfort of prequalifying will be worthwhile. Trust they’ll find a home they like and can afford. Trust their lender will come through.
Trust For Both Homebuyers & Homesellers
So what do homebuyers and homesellers share in common? Trust. And there is perhaps no greater trust that homebuyers and sellers have in common than in their Realtor.
After all, your Realtor is someone you expect to be there to help navigate your way through what is frequently the largest financial transaction of a lifetime. Similar to an attorney or priest, Realtors are expected to keep confidences.
But let’s first look at a few situations which underscore why it’s important to be able to trust your real estate agent.
Trusting your Realtor means you don’t have to second guess suggestions you receive. Let’s take pricing your home, for example. If you can’t trust your agent to provide meaningful comparable home activity information, how can you possibly expect him or her to advise you once an offer comes in?
Trusting your Realtor means you can breathe easier with less stress. Buying or selling a home is considered to be a particularly stressful activity. In addition, most homebuyers and homesellers don’t want to take on real estate as a second job, especially when making a house move. So expect that by having your bases well-covered by a professional you can believe, you’ll find the entire process far less taxing. If a Realtor is ‘pushy’ and won’t listen to your concerns, it’s likely a good time to find a new one.
Trusting your Realtor means you can access his or her reliable resources. Speaking of taxing, if you need recommendations for an experienced 1031 tax exchange professional, or real estate attorney, or home inspector, or mortgage lender, or home repair contractor, expect those recommendations to be even more valuable from a trustworthy agent.
Trusting your Realtor means you can focus. There’s usually enough to deal with throughout the course of any real estate transaction. Dealing with lenders, appraisers, inspectors, contractors, title companies and the like can be overwhelming. As a result, you’re more likely to be far more effective if you can concentrate on what you’re best at, while having your real estate agent handle what he or she is best at.
Trusting your Realtor means more time. Just like you can expect to have more time to go fishing if you hire a contractor to build your new deck, working with a trustworthy real estate agent allows you to do other, more enjoyable tasks than scheduling a home inspection, constantly dealing with escrow details, or meeting an appraiser.
Chemical Equation for the Explosive Called TNT
Relationship Chemistry Trust is easier when there is good ‘chemistry’ between a Realtor and their clients. When seeking an agent to refer for out of area homebuyers or homesellers, there are many things I can readily confirm. These include an agent’s years in business, designations earned, coverage area, plus areas of specialty like homes, farms or commercial property.
As a result, I’m frequently able to locate a very good Realtor to ‘match’ with an out of state homebuyer or seller and it’s not always difficult. That said, the one challenging element to know with certainty is the ‘chemistry’ that even a highly qualified, out-of-area Realtor will have with a new client.
People are different and that includes real estate agents. Most times relationships work out swimmingly with the referred agent. On rare occasions, it doesn’t work out. But going in and at least on paper, the homebuyer or homeseller who interviews a previously unknown, yet vetted Realtor, knows the agent is qualified and experienced, along with some important other facts about him or her. Plus, knowing these facts up front is typically less risky than taking a ‘shot in the dark’ with an unknown agent.
Does The Company Matter? Because agents are independent contractors, the individual Realtor is who typically matters most. After all, you don’t expect a faceless corporation to answer your late night question, or go over the details of your settlement statement. For example, I don’t care that much about what hospital I go to, but I want to have a say in the surgeon who will do the operating. Similarly, it’s the individual agent who is in a position to make the most difference, whether from a small or large office. However, longevity of a real estate firm can be helpful in determining that they are probably doing something right. So if a company you’re considering has been in existence for half a century or more, they’re likely not a ‘fly by night’ outfit.
Alternative Agent Finding Methods One of the ‘little secrets’ about real estate online is that they’re often paid ads. Realtors frequently buy what are known as ‘leads’ online. Examples include Zillow and even Realtor.com. Sometimes this is done by the agent buying incoming inquiries regarding a specific zip code. Sometimes, the agent pays for better placement on a real estate website page in order to stand out.
If you decide to use a magazine or the Internet to locate an agent, it may be best to consider that as a first step of information gathering. Promotional materials can be misleading and if carefully crafted, can leave out a lot of important information. For example, if an agent is brand new, he or she may focus on how many agents their company employs, personal community involvement like donations to charity, or sponsorships. While these could be nice facts, they may not have a lot to do with the agent’s proficiency, professionalism, or trustworthiness.
Referrals Are Built on Trust One good way to find a trustworthy Realtor is to ask people you trust and get a referral. The ‘proof is in the pudding,’ so if your friend or family member is happy with a specific real estate agent, there’s a good chance for a similar repeat performance.
What Color Hat Does Your Realtor Wear?
White Hat or Black Hat?
One area where certain real estate agents are sometimes revealed to be wearing either a ‘white hat’ or ‘black hat’ is in the area known as ‘dual agency’ or ‘disclosed limited agency.’ This is a situation when an agent with a listed property also works with the buyer. To be clear, most Realtors are aboveboard and honest, continually looking out for their client’s best interests.
That said, the challenge to some agents comes when the agent attempts to ‘elbow aside’ other buyers, their agents and/or offers, in order to push his or her offer through. Why on earth would a Realtor push hard to get their offer accepted, since it’s all about simply selling the house, isn’t it? Not exactly. That’s because if the listing Realtor also sells your home, they typically get paid more.
Dueling with Dual Agency In Realtor circles, the topic of dual agency has proponents and detractors. As a result, don’t expect every real estate agent you run into to have the same opinion. In reality, dual agency can be a very good thing, as seen in our previous article titled “5 ‘Insider Oregon Real Estate Tips.’ There, the topic ‘Having A ‘Double Agent’ Can Be A Good Thing‘ ranks as item #1 out of thefiveitems listed. The advantages to having an agent on both sides of a real estate transaction are clear.
The result, good or bad, can significantly depend on your agent’s trustworthiness. For example, hurriedly accepting the first offer can work out. That’s because sometimes the first offer is the best offer. Alternatively, acting without as much available information as possible sometimes comes at significant expense to the seller, who may be urged to quickly accept the offer their listing (seller’s) agent has written. The problem is that the listing Realtor can be expected to reasonably know how much activity there is on the property for sale. Again, trust is key here.
Plus, given the amount of agent and buyer activity, along with the quality of inquiries (such as highly motivated, qualified buyers), the seller’s Realtor may have even heard comments from other agents about possible future offers. So by pushing his or her own offer, is the listing Realtor providing the seller with all known information in order to truly serve the seller’s best interest? Sometimes the only person to seemingly know the answer is the listing agent. This Harvard Business Review articlenotes why this can be a problem:
“Take cheating. Claremont McKenna psychologist Piercarlo Valdesolo and I have conducted many experiments on the topic, and one surprising (if disheartening) result we have found, time and again, is that 90% of people—most of whom identify themselves as morally upstanding—will act dishonestly to benefit themselves if they believe they won’t get caught. Why? Anonymity means no long-term cost will be exacted. Even more startling is the fact that most of those who cheat also refuse to characterize their actions as untrustworthy; they rationalize their behavior even while condemning the same in others…”
More than once, an honest real estate agent working with a highly qualified and motivated buyer has inquired about a property, even written up that buyer’s offer, only to have the listing agent hurriedly put together his or her own offer and submit it to the seller in order to ‘tie up’ the property (and presumably make more money), before other offers can be considered. It’s a fact of the real estate business and as a result, unethical agents develop a reputation and are often viewed warily by others in the business.
The ‘Commission Effect’ If all these elements don’t sufficiently complicate the task of finding a trustworthy Realtor, there is also a phenomenon you might call the ‘commission effect.’ This is outlined in a previous article titled ‘5 little Known Realtor Insider Tips:’Realtors Can Calculate Their Paycheck by Viewing a Property Listing Sheet. This means that for agents truly focused on maximizing their payday, you might expect them to guide you toward homes that pay a higher commission structure. However, the listing sheet is typically only seen by multiple listing members. Thankfully, most Realtors simply don’t do business in this manner.
The Bottom Line President Ronald Reagan sometimes used the term ‘Trust, but verify’ during his high level negotiations. This old Russian proverb could be a helpful approach to grant you peace of mind in finding a trustworthy agent for your next real estate transaction. Do your research and ask family and friends for Realtor references. Be open and honest, then make your best decision based on relevant, reliable information for your situation.
Roy Widing, Oregon Realtor
Do you have an Oregon real estate question? Contact Roy with Certified Realty today for a free consultation using the convenient form below, or call him at (800) 637-1950.
To adults and kids alike, superheroes seem to have time-tested appeal. Some think it’s because they look different. Indeed, some superheroes dress uniquely. Others believe superheroes represent the ‘good guy’ and these days, we can always use more good guys and gals. Yet others suggest that superheroes are in the rescue business and we all have an area in our lives where we could use help. Whatever the reason, it’s undeniable that superheroes hold a unique place in our imagination.
Do Real Estate Superheroes Exist? Fighting bad guys is an expected vocation for a superhero. So how could there possibly be real estate superheroes? And would they use x-ray glasses to view inside homes to find potential problems, carry an anti-kryptonite pen to protect against real estate ‘evil doers,’ or hold their trusty multiple listing lockbox keycard in a utility belt?
The Realty Reality
While not superhuman, some real estate agents stand far apart from others. And when hundreds of thousands of dollars are literally on the line during your next home sale or purchase, chances are you’ll feel better throughout the entire process when working with a truly ‘super’ Realtor. But is it possible to easily locate a terrific real estate agent that’s not only experienced, but also dedicated, plus recognized for excellence among his or her peers? Find out in this edition of the Oregon Real Estate Podcast.
‘Superhero’ Defined Superheroes are considered to be more than mere heroes, in part because their achievements transcend what is humanly possible. Superheroes are often portrayed as heroes with extraordinary, superhuman powers. So while no Realtor is superhuman, in comparing performance, it’s clear that sometimes a single real estate agent can outperform several other, less productive Realtors. There are different reasons why this is true and part of it relates to the ‘Pareto principle,’ better known as the ’80-20′ rule, where 20% of a group is frequently responsible for as much as 80% of the results.
Some Superheroes Have a Handy Utility Belt to Get the Job Done
What’s In Your Utility Belt? Effective Realtors are more likely to avail themselves of advanced tools on behalf of their buyer and seller clients. But it doesn’t stop there. That’s because in addition to ‘high tech’ expertise like sophisticated monitoring of real estate activity for their clients, a ‘superhero’ Realtor also combines it with ‘high touch.’ This means they help buyers and sellers with access to not only their own specialized experience and knowledge, but also to an often vast and diverse network of other experienced professionals, such as reputable mortgage lenders, roofers, 1031 tax deferred exchange experts, electricians, surveyors, title companies and repair firms.
“Luke…I Am Your Appraiser”
But Why Even Hire A ‘Superhero?’ In considering the use of your own real estate ‘superhero,’ it helps to understand what they’re able to achieve better than other Realtors. After all, why use a ‘superhero’ when any old hero will do?
To begin, it’s helpful to understand that an agent is your representative. He or she advises and acts in your best interest, which includes ‘fighting’ on your behalf. So who or what might a real estate ‘superhero’ fight? Enter the real estate ‘super villain.’ In Oregon real estate, you’re not likely to run into comic book characters or movie baddies like Darth Vader, Lex Luthor or The Joker. Instead, the kind of ‘super villain’ behavior you’re more likely to encounter is both real and potentially ‘deal-killing.’
The potential list of treacherous adversaries is long. Issues that could put the kibosh on your real estate transaction (while potentially costing you a lot of money) include dry rot, deferred maintenance (think leaky roof), a poor home inspection, title report issues, a low appraisal or a picky loan underwriter.
If you’re a homebuyer, you can add certain challenging homeseller attititudes to the potential list of transaction implosions and if you’re a homeseller, you might include certain ham-fisted home buyer attitudes. The bottom line is that in order to deal with a multiplicity of potentially detrimental factors affecting your home purchase or sale, it’s clearly best to be prepared. And when you’re knee deep in transaction challenges, that’s not the time to wish you were working with someone more qualified.
It’s A Bird…It’s A Plane…It’s The CRS Realtor There are literally millions of real estate agents and as you might expect, not all of them are the same. As with any profession, experience, proficiency and dedication to clients can vary widely.
Most Realtors are indeed capable of providing good service, reasonable counsel and some helpful information. The fact is however, that some Realtors have considerably more experience, training and better results. It’s also undeniable that CRS designees are equipped to provide their home buying and home selling clients with advanced real estate insights, knowledge and competence. CRS holders hold an average of double the experience of Realtors without the Certified Residential Specialist designation. This illustrates a clear track record with elite standing.
Realtors Holding the CRS Designation Outperform Those Who Don’t
But what differentiates a real estate superhero from other real estate agents? Here are a few examples.
X-Ray Vision Because CRS Realtors are experienced and complete far more transactions than the average agent, many times they see can through and avoid problems, before they occur. This helps prevent missteps from an agent’s ‘on the job training.’
Benefits Beyond A Single Transaction Another key benefit to working with a CRS Realtor is their networking advantage. So whether you expect to buy or sell in Oregon, or if you’ll have a real estate transaction in another state, the CRS referral network is a proven way for you to connect with another ‘high caliber’ Realtor who holds the CRS designation.
Speaking of High Caliber: Faster Than A Speeding Referral The CRS organization has an entire system devoted to a virtually seamless referral system for buyers and sellers who seek a super Certified Residential Specialist Realtor. For example, I recently received a phone call from an Idaho CRS agent working with buyers from Oregon. These buyers found their ‘perfect’ Idaho home and needed to sell their Oregon home in order to purchase the Idaho property. The Idaho CRS Realtor suggested they work with a local CRS agent to most effectively sell their Oregon home. Mere minutes upon receiving a phone call from the Idaho CRS agent, I was in contact with these Oregon homeowners, then proceeded to list and successfully sell their property, all in short order.
Only 3% of Realtors Have Attained The CRS Designation
You May Never Have Met A CRS It’s hardly surprising if you don’t recall ever meeting a Certified Residential Specialist. A CRS Realtor is in the top 3 percent of real estate agents in the United States. That means 97% of the Realtors you’re likely to run into aren’t a CRS. So what makes working with a CRS so much better?
Clinical Specialization Meets Bedside Manner
To put the topic of Realtor proficiency in another context, if your 5 year old has a broken arm, do you want a pediatric orthopedic specialist to examine, accurately diagnose, then properly set the youngster’s bone, or would any young intern fresh out of medical school be your first choice? After all, both are doctors. A similar principal applies to selecting an agent. The surprising thing here is that in choosing your next Realtor, it typically costs the same or less to go with the professional having more experience and proficiency.
Similarly, there’s an understandable difference between an agent who just received a real estate license and one who has been diligently working full time in the field for decades. But taking it another step beyond mere experience are those who hold accreditation for advanced real estate performance. The CRS designation isn’t easy to earn. It involves what is usually a multi-year advanced course regimen, plus documented real estate production and typically years of ‘in the field’ real estate experience. These recognized levels of education, training, production, time-tested experience and provable success amount to a higher standard of achievement.
A Bundle of ‘Keys’ to Your Next Real Estate Transaction To most Oregon homebuyers and homesellers, one key to a Realtor’s stellar real estate performance is consistent performance. Another is experience. Yet one more is education. The advantage to you as a homebuyer or homeseller in working with a CRS Realtor is that you get the entire bundle of keys and reduce your chances of being ‘locked out’ in your next transaction.
The Answer: While the usual term for CRS is Certified Residential Specialist, some might consider agents holding this esteemed real estate degree as being more of a Certified Real Estate Superhero. That’s because it takes a lot to attain the CRS designation and the positive results of working with a CRS designee speak for themself. Some have even compared CRS credentials as akin to the CPA of real estate.
Roy Widing, CRS Realtor
It’s Your Move
What if there was a way you could locate a real estate ‘superhero’ for your next Oregon transaction? Thanks to the CRS referral network, there actually is an easy way to find a ‘super’ Realtor, no matter where you live. Perhaps the simplest is to contact a CRS, like Oregon Real Estate Podcast host, Roy Widing, CRS with Certified Realty. If you’d like to reach a CRS Realtor in a different state or region of the United States, Roy can connect you with a number of qualified Certified Residential Specialists near you and at no charge. From there you can interview one or more CRS Realtors and make your own decisions.
Do you have real estate questions? Contact Realtor Roy Widing, CRS using the convenient form below.
With That Suit & Tie, James Bond Resembles A Well-Mannered Realtor
Compared to the life of famed superspy James Bond, buying or selling Oregon real estate is dull and monotonous, right? Au contraire. You might be surprised to see how such a comparison actually sizes up.
Click here or on the play button above to hear the audio podcast of this article.
Not So Mundane, After All How could the seemingly routine tasks associated with Oregon real estate possibly compare to the life and adventures of ultra-suave Agent 007? Initially, it seems like a ridiculous question. Of course Bond’s life is far more treacherous, risky and ‘on the edge,’ right? As we’ll soon learn, not exactly. Buyers and sellers of Oregon real estate have a lot more in common with the famous spy than first meets the bullseye.
Oregon Real Estate is More Daring Than You Might Think
Deceptively Daring Many actors have played Agent 007 in film, yet each brings to the Bond character their own unique imprint on the multi-faceted Bond persona. But while each person playing 007 is unique, in every iteration of the well-known agent we recognize Bond’s uncanny ability to ‘land on his feet’ and ‘avoid being bested,’ while inching (or sometimes speeding) toward his well-defined goal. Let’s examine some of the super spy’s cinematic character traits and how they might relate to your next Oregon real estate transaction.
Spies & Realtors Both Use Photography to Their Advantage
Turning The Tables
To an Oregon homebuyer or homeseller, ‘landing on your feet’ might not equate to jumping from a high rise building. Instead, it might mean effectively dealing with endless surprises…like a low appraisal, or poor home inspection. It’s helpful to understand that one of Bond’s classic techniques is to shift bad odds to his advantage. Your way to ‘avoid being bested’ may not mean beating the tables at Monte Carlo like James Bond. Instead, it might be skillfully negotiating the terms of your Oregon home transaction. And to an Oregon homebuyer or homeseller, Agent 007’s ‘inching to his goal’ could simply mean patiently completing key tasks in order to close the sale. It’s nice to know that unlike the production of a Bond film, Oregon homebuyers and homesellers typically complete their ‘mission’ substantially under budget and in a relatively short time span, with no loss of life or limb. This makes you arguably ‘better than Bond.’
Diamonds Are Forever…And So Is Real Estate
Here are some factors that make the so-called ‘average’ Oregon homeseller or homebuyer more daring than even Agent 007.
Risk Agent 007 is frequently seen as daring and a tremendous risk taker. But while it’s true some of Bond’s actions are potentially perilous, it’s helpful to realize that his risks tend to be thoughtfully calculated. 007 is usually well-armed, whether that means carrying his Walther PPK, or preparing mentally for the task at hand. If he’s without a gun, James Bond is able to adapt and improvise, like using a fire extinguisher in the middle of a firefight to provide cover and escape.
You Don’t Need A Gun to Effectively Buy or Sell Oregon Real Estate
Charmingly Disarming But if James Bond gets into a ‘jam’, he usually has his trusty sidearm to help take care of business. Yet using a small caliber handgun to get your way is not an option for Oregon homebuyers and homesellers. As a result, your options are limited to less obviously coercive means than Agent 007 can wield. Requiring the use of ‘wits, not weapons’ takes certain things off the table for you, since Oregon real estate demands non-lethal resourcefulness. By having to use safer and more creative methods of persuasion, it’s fair to say that once again, the average Oregon homeseller or homebuyer is arguably ‘better than Bond.’
Reducing Risk Can Pay Off Handsomely
For an example of Bond’s risk reduction techniques, have you ever seen Agent 007 gamble great sums of his own money on a dice throw? The usual answer is ‘Not a chance.’ That’s because Bond virtually always plays with his government’s money, not his own. Yet you on the other hand, as an Oregon homebuyer or homeseller, are laying your very own hard-earned capital on the table. So once more, in comparison you can arguably be seen as ‘better than Bond.’
Even Agent 007 Might Find Oregon Real Estate Challenging
Oregon Real Estate Tip #1 From James Bond: Maintain Your Humor A superspy like Agent 007 doesn’t constantly walk around like a tough guy. It’s actually quite the opposite. Bond knows how to work a room and deliver a well timed joke. ‘Breaking the ice’ to disarm and/or relax the other side with a joke takes some guts…especially when someone means you financial or physical harm.
Savoir-faire Savoir-faire is a French term that roughly means: knowing what to do in any situation. Those with savoir-faire respond appropriately in a wide variety of circumstances. One dictionary reference suggests savoir-faire as demonstrating “a polished sureness in social behavior.” In other words, classic James Bond behavior, whether it’s disarming a bad guy, nuclear device, or flawlessly ordering the best item off a French menu.
Ordering in French is an Acquirable Skill
Savoir-faire can be adapted to Oregon real estate, where a wide variety of ‘tough to predict’ situations occur with surprising frequency. For sellers, this could mean having a buyer’s loan fail, possibly due to buyer disqualification like a credit score drop, or job change. Or perhaps your home needs a new roof and there simply isn’t sufficient equity to pay for it. Or there’s rampant dry rot. Or severe mold. You get the idea.
How 007’s Savoir-faire Can Work for Oregon Homebuyers and Homesellers A prepared and practical approach to problem solving is what both James Bond and successful Oregon homebuyers and homesellers bring to the table. Agent 007 is able to adapt and navigate in almost any environment, whether he finds himself in a high-stakes casino in Monaco, a posh ski lodge in the Swiss Alps, or a poor fishing village in Asia, Bond knows what to do. When buying and selling Oregon real estate, you can adapt and navigate in different environments, too, including such changing factors as housing inventory (which can indicate if you’re in a buyer’s or seller’s market) and fluctuating interest rates.
Just realize that no matter how things appear, some factors and outcomes are not completely determinable and sometimes virtually unknowable. For example, let’s say you’re selling your Oregon home and have three offers on the table to consider. In this scenario, let’s suppose all buyers appear well-qualified and each offer is very similar to the others. Which one do you decide to accept? Which will actually close? Which buyer will be reasonable to work with? Which lender will have even-handed underwriting and not require needless delay or costs? Working with your Realtor, you can reduce risk, perhaps by focusing on how much each buyer is willing to pay, their down payment (where a larger down payment makes it easier for them to get a loan) and even the earnest money deposit and time to your closing date. Such an analysis can help boil things down to those that might make the most difference.
Oregon Real Estate Tip #2 From James Bond: Always Have a Backup Plan
The key is to limit your downside risk by making the best decision possible under the circumstances and remain alert. For example, if after accepting one offer on your Oregon home, the buyers begin loudly complaining about minor issues, have your Realtor stay in touch with other prospective buyers who expressed interest. That way, you keep the door open for a ‘Plan B’ and later, possibly a ‘Plan C’ if initial buyers bail on your home sale.
James Bond Defines Debonair
Debonair Agent 007 is often described as debonair. How can that possibly apply to your next Oregon real estate transaction? There are varied definitions to the term debonair, but related terms include courtesy,graciousnessandhavingasophisticatedcharm. These traits can be powerful and disarming when dealing with the other side on a home sale. An example of courtesy might mean allowing buyers to schedule a tour before closing for measuring room dimensions or determining paint colors. Being gracious could mean as a buyer you allow the home sellers an extra day to move out, particularly if their moving van broke down. Sophisticated charm might mean leaving a box of chocolates or champagne after you sell a home for when your homebuyers finally move in.
Small details perhaps, but such activities are often long remembered. If after moving out, you remember leaving priceless heirlooms in the attic of your former home, imagine how much nicer it will be to request the return of your precious items from the current owners with whom you’ve been civil and friendly. They are also more likely to even contact you if they find something you mistakenly left behind.
Oregon Real Estate Tip #3 From James Bond: Secrecy There’s good reason undercover agents are also known as secret agents. ‘Don’t let them see you sweat’ is an adage Agent 007 works with aplomb. So you don’t want to lose out on your home purchase and are willing to substantially increase your offer, yet don’t want to overpay? Keep those cards discreetly close to your vest and understand that by doing so, you’re modeling James Bond, who can definitely keep a secret. He’s a spy, after all.
Humility Though James Bond can swagger with the best of those who hold the ’00’ license to kill designation, he’s usually discrete and avoids attention or bragging about his prowess. Such meekness is supremely beneficial in situations to disarm adversaries, while catching them off guard. Agent 007 doesn’t often talk about how many people he’s put in the hospital, or his annual income. Simply by observing him, it’s clear Bond has gravitas.
Courage Having courage when buying or selling Oregon property doesn’t mean you don’t feel fear. It does involve pushing that fear aside to rise above whatever obstacle you are facing. Agent 007 pushes himself out of his comfort zone to face serious fears on a daily basis. This gets him used to feeling comfortable with the uncomfortable. As an Oregon homeseller or homebuyer, once you desensitize yourself to fear, it will become easier to perform courageous acts, like counteroffering that offer you really don’t want to risk losing, or agreeing to substantial repairs in order to pass a home re-inspection and close the deal.
Be Patient In the middle of a real estate transaction, it’s easy to be overwhelmed. To be successful, it helps to have a well defined plan executed with patience. You also should allow sufficient time for your plan to work. For example, if you’re an Oregon homeseller who doesn’t receive an offer in the first few days on the market, understand that if you’ve already examined the latest market data and the average market time is measured in months and not days or even weeks, realize your anxiety may be premature. Keep cool.
‘Q’ Is On Bond’s Team to Keep Him Out of Trouble
Consult An Expert When buying or selling Oregon real estate, it doesn’t hurt to have an experienced Realtor as your own ‘Q’ to keep you out of difficult situations. An experienced real estate broker is someone who has been ‘over the road,’ thereby saving you needless expense, time and worry.
So rather than having Bond’s sidekick ‘Q’ demonstrating gadgetry and armory (like a blowtorch on Bond’s Aston-Martin convertible), Oregonians can rely on the calm, cool and collected experience of a proven Realtor to more successfully navigate pitfalls sometimes found in regional real estate.
Do You Have Oregon Real Estate Questions? Contact Roy with Certified Realty using the contact form below, or call him at 800-637-1950.
Superabundant Oregon Real Estate Information Can Seem Like Drinking Water From A Fire Hydrant
TMREI: Too Much Real Estate Information Sometimes absorbing the sea of Oregon real estate information is more like drinking from a fire hydrant. Yet, out of all the seemingly helpful real estate data bandied about, there is one especially helpful number, which when understood,can provide near-magical clarity to both homebuyers and homesellers.
You Needn’t Be a Magician to Understand Home Inventory
What Is It?
What is this ‘magic’ number and what does it represent? Simply put, it’s the current figure for housing inventory, typically expressed in months of projected home supply.
Oregon Real Estate Inventory is Different Than Bingo
Housing inventory is also sometimes known as home inventory or housing backlog. Why is this number so important? Once you understand the single figure that defines our current supply of local available Oregon homes for sale, you have an instant ‘snapshot’ on whether you’re in a buyer’s market, seller’s market, or more of a balanced real estate market. Armed with that information, you’re far more ready to do battle in the real estate trenches and more likely to avoid some usual minefields.
Normal Home Supply
Among real estate experts, a ‘normal’ range for home supply in parts of Oregon is frequently cited as somewhere between three to six months. For example, if the home supply figure is three, then hypothetically our market would be ‘out of homes’ in three months, provided no new homes were placed for sale. In other words, if our regional home inventory figure is within three to six months, we’re typically experiencing a normal market, meaning one not far from a balance of supply and demand, also called equilibrium. In a way, it’s kind of like an absorption rate for how fast supply is used up.
Your Mileage May Vary It’s helpful to understand that home inventory figures are more of an average for a region. In Oregon, major real estate regions include Portland, Bend, Eugene, Salem and the Oregon Coast. So if your property is located in Beaverton, you’re likely to use the Portland area figure as the bellwether for housing backlog. If your home is located in Keizer, you’re likely to see the Salem inventory figure as the closest approximation of local home supply. It’s also likely that your specific area could be somewhat different altogether, based on a variety of hyper-local factors affecting both demand and supply. That said, home inventory is a convenient ‘thumbnail’ sketch to help assess what kind of market you’re in.
What’s The Practical Impact of Housing Inventory? Consider real estate and inventory like a pipeline. If more flows through it, the product is plentiful and therefore the cheaper it is to buy. So with a lower, dwindling home supply and the spigot turned down, the reverse is true. That’s when the local real estate environment favors sellers, because there are more buyers and it’s considered a ‘seller’s market.’ In that case, expect a short market time and an environment where homesellers receive multiple offers, often at or above listing price. If the supply of homes is higher, it’s considered a ‘buyer’s market.’ This means you can expect a longer market time, with homesellers seeing few, if any offers…and frequently for less than the asking price.
Negotiation is Expected, But Most Homesellers Don’t Like ‘Armwrestling’ With Buyers
It’s routinely a good idea for buyers to get a ‘heads up’ before making an offer to determine how ‘hot’ or ‘cold’ the market is. Otherwise, if you ‘lowball’ a just-listed home in a seller’s market, you may be lucky to even get a counteroffer instead of an outright rejection by sellers experiencing lots of calls and showings on their property. Coming in with an offer that’s too low sometimes causes offended sellers to refuse to seriously consider a possible follow up offer.
The Number of Competing Homes for Sale Affects Market Time
What’s the Big Deal About Housing Inventory? One reason housing inventory is so important is because it helps buyers and sellers to better manage expectations. Most buyers are interested in how long it may take to find the ‘right’ house. Inventory affects this. Alternatively, most sellers are interested in how long it may take to find a qualified buyer. Inventory affects this, too.
Oregon Homesellers Can ‘Jumpstart’ Activity With Accurate Pricing
That’s because a high home inventory tends to slow down the market time and low inventory frequently provides a ‘jump start’ to activity. One way sellers can help to avoid an excessively long market time is to review comparable local home sales information provided by their Realtor to ensure proper, market pricing.
Another reason housing inventory is crucial is because it can significantly impact so many other important factors. In other words, inventory is a ‘driver’ for market time, selling price, appraisal results, lendability and more.
Okay, So Inventory Is Important. What Does It Look Like?
Portland Metro Sample Home Inventory
The above image provides a good example of fluctuating home inventory. As Oregon’s real estate market bounced back from the severe market downturn of the Great Recession, the home inventory for some areas reduced from more than 20 months of housing supply to less than three.
It’s Wise to Consult An Experienced Realtor Before You Leap Into the Market
Contact the Experts Thinking about selling your Oregon property? Know the market before diving in! Contact veteran Oregon Realtor Roy Widing with your questions and for a free consultation on what your property could sell for today using the contact form below or call (800) 637-1950.
There are many good reasons why homesellers hire a Realtor, including the handful of sellers who first try the ‘for sale by owner’ or ‘FSBO’ route. Here are ten of the most common reasons why homesellers hire a Realtor to get the job done right.
2. Legalese, Sometimes with Different Rules for Each County and/or Municipality. Realtors use continually-updated forms written by experienced real estate attorneys designed specifically for regional transactions, with clarity and simplicity in mind. Such documents include important protections for both buyer and seller. While no document is perfect, Realtor forms include key clauses, like for home inspections and appraisals, along with arbitration/mediation mechanisms. These time-tested documents help prevent potential issues, while at the same time deterring ‘nuisance’ litigation.
3. More Accurate Pricing When Buying & Selling. These days the average Oregonian moves about every 6 years years or so. As with any activity, it’s easy to get rusty. Realtors are in the real estate market all day, every day. This means an experienced real estate agent can provide significant market awareness to help you price what’s likely to be your single largest investment.
Armed with access to multiple listing, sales and tax data, Realtors provide significant pricing experience and real life insights, whether you want to know what the property you’re selling is worth, or once you sell, how much to offer on the home you’re buying.
4. Objectivity. We all deal with subjectivity from time to time. Does your home smell? Perhaps you’ve gotten used to having multiple pets in your small home, don’t notice the mold growing in your bathroom, or haven’t realized how gloomy your living room appears. One role of a Realtor is to be helpfully honest. That means being truthful if there’s something you as a seller don’t see (or smell).
Most Homesellers Don’t Like A Rapidly Exiting ‘Conga Line’ of Mum Buyers
Far better to be forewarned and forearmed by your Realtor, than witness a rapidly exiting conga line of mum homebuyers who don’t want to offend you. Or perhaps you don’t think disclosing settling water in your basement each Winter is a big deal. The reality is that disclosing such a potentially material fact is something dutiful agents will advise in order to keep you out of much hotter water after the sale.
5. Junk the Junk. Have you ever studied a real estate earnest money agreement (also called an EMA or purchase agreement), or seller’s ‘net sheet?’ Over the course of a transaction, it’s easy to accumulate an abundance of ‘junk’ fees. Sometimes seller-paid closing costs are necessary to make a transaction work. However, paying for a buyer’s home warranty is typically more of a buyer ‘want’ than a ‘need.’ Count on your Realtor to go over such factors with you for a ‘heads up’ of what to expect. An experienced agent knows what’s usually ‘routine’ and what’s not.
6. Marketing. Even if a seller has a sense of what his or her home is worth, effectively reaching the the widest number of buyers increases your opportunity to find more motivated and qualified buyers, even creating a ‘bidding war.’ The simple act of listing your home with a Realtor means your property is immediately promoted on a host of proven, effective home marketing venues. But it doesn’t stop there. Successful Realtors use many different tools to reach buyers for your specific property.
Connecting your property with the right buyer can mean the difference between a fast close at full price (or higher), compared to a continuous stream of ‘sale-fails’ where your property is needlessly taken off the market by buyers who were marginally qualified.
Calm Seas Never Made a Good Captain…or Realtor.
7. Experience. There is simply no substitute for ‘hands on’ real estate experience. If your home hasn’t sold, at what point should you consider a price adjustment? How much of a price adjustment is necessary? Is there something other than price causing my property not to sell? These are not new questions to an experienced agent, who can help address these and other important questions.
When it Matters, Experience is Good to Have on Your Side.
It’s comforting in especially difficult situations to rely on an experienced Realtor, who is the duly able real estate ‘captain’ of your transaction. Most people prefer an experienced surgeon or pilot, so it’s understandable to want experienced representation with the important task of selling your home. It’s also helpful to know that a professional real estate agent makes the entire home selling process appear easier than it is.
Most people are nervous and ‘en garde’ when buying or selling a home.
The best way to navigate through a potentially difficult transaction is to be represented by one who has been over the road before. So whether you’re in negotiations with a ‘bargain hunting’ buyer, experience an unpleasant ‘surprise’ in a home inspection, or a seriously low appraisal, each unique situation presents an opportunity for difficulty and reaching common ground. Your Realtor can assist in ‘end gaming’ your best strategies and in dealing with a wide variety of buyer personalities.
Having a Realtor ‘Buffer’ Between Buyer & Seller Can Avoid Headaches
9. The ‘Buffer Effect.’ Having an agent represent you makes it easier to maintain civility between ‘warring’ parties. Ever say something you regret? An experienced Realtor can often use more constructive language to accomplish what can sometimes be an emotional and/or provocative comment.
10. More Money. National Association of Realtor statistics reveal that homesellers who use a Realtor actually net considerably more at closing than those who don’t, even after taking into account paying a commission. Consider that when banks (which are renowned for watching the ‘bottom line’) sell their foreclosed homes, they hire an expert, a Realtor. From a financial standpoint, it really does ‘pencil out’ to hire a Realtor.
Oregon Realtor Roy Widing
Thinking about selling your Oregon property? Contact Roy with Certified Realty, Oregon’s choice since 1950 using the form below for a free consultation.
Failure or Flying Colors?
When real estate agents are perceived to have ‘dropped the ball,’ a good first step is to see if there’s an explanation behind it. Let’s take one common example, the case of the ‘disappearing Realtor.’ Unless you’re in the midst of a transaction, if your real estate agent has fallen out of touch, it’s entirely possible that he or she is no longer in the business, moved, is ill, or perhaps decided to focus on another field within real estate, (such as commercial, or property management). Another likelihood is a transition to working with other client types or geographical areas.
One reason for a ‘disappearing agent’ may also be because your lender informed the agent that you are not qualified to purchase a home. While ceasing to contact you because you’re not in the market to buy right now isn’t illegal, it could be considered rude. Being human, sometimes agents are unartful. But as when dealing with any professional, it’s instructive to distinguish between the unartful and activity which is unethical, or illegal.
While most Realtors are diligent, honest and hardworking, there can be a broad range of Realtor behavior, ranging from ‘normal’ and reasonable, to impolite, to unethical, or even criminal. So let’s analyze some comments about Realtors. Sometimes the agent is ‘out of line,’ yet sometimes it helps to better understand differing perspectives to get the whole picture. Here are some examples of Realtor behaviors you may have heard about.
1. ‘Why Don’t Realtors Return Calls (or e-Mails, or Texts)?’ Unless it’s an isolated incident or emergency, this kind of Realtor behavior can be inexcusable, especially in an industry where communication is key. It’s true that some agents have a difficult time responding in a timely manner. A common reason is that some agents are simply disorganized. Simply put, if it’s chronic, this is bad form, bad business and outright rude. Such non-responsiveness even drives other Realtors nuts, particularly if they wish to show a home that is listed, present an offer, or simply find out if a home is still for sale.
Other explanations for not returning phone calls may be a personal habit among such agents, a sign that he or she is seriously overly busy (still no excuse), or perhaps is trying to tell you in a passive-aggressive manner that your business relationship is on the wane. Realtors sometimes have been known to ‘fire’ a client. What to do? Be clear with your agent about what you expect. Given a myriad of possible communication forms these days, if you have a preference for being reached by text, phone, e-mails, Facetime or Skype, explain that to your Realtor early on. Not everyone has the same communication style or tools.
2. ‘A Realtor Insisted I Get ‘Pre-Qualified’ Before Showing Me Homes.’ This is an easy one. First, let’s imagine you’re a seller. Early on as your home is placed for sale, you notice many ‘tire-kickers’ and ‘looky-Lou’s’ traipsing through your house, including a large number of neighbors, with little apparent intention to buy, along with unqualified buyers, who are likely unable to buy. Yet, each time you receive a request to tour your home, you spend half an hour or more getting it cleaned up and leaving for showings. The result? Sellers want buyers to be pre-qualified.
Now, let’s imagine you’re a Realtor. You’ve just spent the past two weeks showing homes to buyers. Then you learn the ‘buyers’ can’t buy because the lender said their credit, income or other disqualifying factor disallowed it. The result? Realtors want buyers to be pre-qualified.
3. ‘My Realtor Says My Home is Overpriced.’ It’s entirely possible that your home could be overpriced, yet there are several issues you may first want to sort out. For example, when you placed your home for sale, what was the process you and your Realtor used to arrive at a list price? How long has your home been on the market? Has your property been receiving showings? Did you discuss what kind of market response might suggest the need for a price adjustment? What is the average market time for similar homes in your neighborhood?
4. ‘A Realtor Bought My Property And I Feel Cheated.’ State real estate regulators cite the majority of claims against agents is due to ‘self-dealing,’ where an agent acts on his or her behalf. For example, a Realtor may be asked to list a property, but instead after speaking with the owner, buys it for him or herself. There are strict rules for Realtors to follow when buying or selling real estate in Oregon. Given disclosure laws, real estate agents are on notice that they are being watched closely by various regulatory bodies, particularly if an agent is ‘self dealing.’ If you ever feel cheated by a real estate agent, you can contact the Oregon Real Estate Agency, or your local association of Realtors.
Crime Victim Realtor Ashley Okland
5. ‘A Realtor Refused to Meet Me At A Home!’ Personal safety has become an important Realtor issue, especially since Realtors often work with the public alone, at night and in unfamiliar surroundings. As a consequence, agents are advised not to meet prospective first time clients alone in a remote location or vacant home. Realtors Ashley Okland and Beverly Carter were real estate agents who did and their tragic stories are mentioned in educating real estate agents about personal safety.
Fact is, open houses most often benefit Realtors, not homesellers. That’s because most buyers don’t purchase through an open house. However, open houses are one way real estate agents can find new buyers. This isn’t to say that open houses will never sell a home. But given a variety of factors, it’s considered among the least effective ways to sell a home.
Thinking about buying or selling an Oregon home? Contact veteran Oregon Realtor Roy Widing with Certified Realty using the convenient contact form below for a free consultation.
Simultaneous/Consecutive Home Transactions
Selling one home and buying another are frequently linked activities. In this article and podcast, we reveal how to maximize the efficiency and minimize the bother when simultaneously home buying and home selling.
We’ll also examine options to help decide if either simultaneous or consecutive real estate transactions may be best for you.
Timing The singular act of buying or selling a home is often the foremost concern of many. Whichever immediate task you may be considering, it’s common to have twice the activity anticipated, but in two steps. That’s because home buyers often have a home to sell…and home sellers are frequently seeking a home to buy. So what’s the best way to navigate this potential real estate quagmire without getting entangled in a morass of stress and needless extra costs?
First Steps To begin, it helps to examine three common dual home sale/home purchase options:
Selling your existing house first, then buying your next house.
Buying the next house first, then selling your existing house.
Simultaneously moving from your existing house to your next house.
Your challenges, benefits and results will largely depend upon which of these three decisions you settle upon. Here are three quick takeaways for these three usual options:
Option #1. Selling your existing house first, then buying the next house This option usually requires a ‘double move.’ Yet one advantage of this approach is that you won’t have double house payments. One disadvantage is that you may have to move twice. An added benefit of this ‘selling first’ approach can include negotiating with strength in the purchase of your next home. That’s because your purchase needn’t be contingent upon the sale or closing of your sold home. As a result, you are seen as a ‘cash in fist’ buyer, or at the very least, a buyer who is considerably more likely to qualify for a home purchase, given that you ostensibly now have access to the equity in your now-sold home. This helps you negotiate with more power in the purchase of your next home.
Option #2. Buying the next house first, then selling your existing house When first buying a house, then selling yours, one advantage is that you know where you’ll be moving. The reduced stress of ‘knowing where you’ll land’ is empowering.
Unless you’re a cash buyer, you’ll likely need to qualify with a lender. And if you have an existing loan in place on the house you’ll be selling, this may mean you need to qualify for two loans, your current home loan and the loan on the house you’re buying.
As long as your current home sells in a timely manner, added financial obligations can be minimized. For more information about bridge loans, see the below ‘A Bridge Too Far?’ discussion.
Option #3. Simultaneously moving from your existing house to your next house This situation is very common. Provided your activities are clearly thought out, well-executed and contingencies are in place for protection, it’s also one of the more affordable options.
Think far ahead and shoot for impeccable timing, in order to make your move the smoothest possible. In order to have sufficient time to move out soon after closing on your current home’s transaction, you will need to locate your next home, write an accepted offer, have the home inspection and if you’re getting a home loan, likely an appraisal…all before you close on the purchase and can actually move in.
One advantage of this approach is that you won’t have double house payments. You also know where you will be landing, and you won’t likely have to move twice. One disadvantage is that your timing needs to be good and possibly have a little extra ‘cushion’ to allow for emergencies, like delays with appraisals, inspections and repairs. Otherwise it’s easy to feel ‘squeezed’ by your being in the middle of two time-sensitive transactions.
That’s one challenge of going this route; It’s complicated by not knowing with precision the timeline of certain key activities. That’s because while home inspections can usually be completed within a set time frame, like 10-14 business days, other requirements like appraisals, can take much longer, with less certainty of the completion date. On top of that, most transactions involve two appraisals, one on the house you’re selling and another on the house you’re buying. So if you plan on a simultaneous sale/purchase, huddle up with your Realtor to create a well planned timeline, then build in some extra breathing room, as necessary.
A Bridge Too Far? One way to do purchase a house without first selling your existing home is with what’s called a ‘bridge loan.’ This is effectively a loan against the equity on your existing home. There are plenty of added details, but for the sake of simplicity, just understand that if you use a bridge loan to buy your next home, until your current home is sold, you will likely have double house payments. So if your current home doesn’t sell in a timely manner, hopefully the squeeze on your wallet won’t be more stressful than if you were to have simply sold your existing home first.
Tools of the Trade To accomplish the job of simultaneously buying and selling homes, among the most common protective tools is called a contingency. Consider contingencies as akin to safety goggles. They’re designed to prevent a mishap, only in this case, the mishap could be losing your earnest money.
Earnest Money Earnest money is usually a certain dollar figure placed on deposit as a sign a buyer is earnest, and later applied to the home purchase. This helps convince sellers that a buyer is serious and take their property off the market. Earnest money essentially helps to ‘hold’ a property for a buyer. Earnest money is not often the total down payment, although it can be applied as part of the down payment. Earnest money is important to homesellers, because without it, a buyer could otherwise tie up the seller’s property with virtually no obligation.
A large part of contingencies relate to a buyer keeping their earnest money, or the initial deposit showing the buyer is ‘earnest’ in proceeding to closing on a home sale. If a homebuyer does not have a sufficient contingency in place during a home sale, forfeiture of a buyer’s earnest money becomes possible. It’s not terribly common, but it can and does sometimes happen.
Types of Contingencies Home inspection contingencies provide buyers with the right to have a house inspected for a variety of conditions, all within a specified time frame. Another common contingency is the loan contingency, so if for some reason a lender does not approve a buyer or the property for a home loan, the earnest money deposit is returned to the buyer. Buyers have lost out on qualifying for a home loan because they went out and bought a car during the home purchasing process, thereby disrupting their loan ratios.
The Reality of Earnest Money Deposit Risk As long as appropriate contingencies are in place and they’re followed in a time-conscious manner, it’s relatively uncommon for buyers to lose their earnest money. It’s always a good idea to keep an eye on your timeline.
Buying And/Or Selling? Use the form below to contact our Oregon Real Estate Podcast host, Realtor Roy Widing with Certified Realty for a FREE consultation. Whether your real estate situation involves homebuying, homeselling, or if you simply have questions about our current Oregon real estate market, Roy can help!
Price & Market Time. Statistics show homes sell faster and for more money in Winter. One way to understand this phenomenon is by considering a motorist with a flat tire in bad weather. That motorist has an urgent need and is less likely to haggle, or even seriously consider less expensive options, in order to meet an immediate need. Winter homebuyers can experience the same kind of urgency and this helps to explain the premium that homes can command during the real estate ‘off season.’ Another way to look at the Winter market dynamic is if you want to buy snowshoes in July (at least in Oregon), expect to pay more, since availability is typically lower.
High Quality Buyers. Because home touring is generally less convenient, there tend to be fewer ‘Looky-Loos’ during the Winter. This means Oregon Winter homesellers have fewer buyers tracking dirt into their house, with less energy spent preparing for real estate ‘Tire-Kickers.’
Less Seller Competition. Let’s face facts: It’s convenient to sell in the Spring and Summer, especially in Oregon. The weather is usually better, flowers are blooming and with plenty of homebuyers looking, it’s a ‘target-rich environment.’ Yet while it’s easier and more convenient to sell in sunny weather, this convenience often comes at the cost of increased competition from other sellers. Conversely, Winter homesellers can expect fewer like-minded sellers competing for buyers. Just like the successful contrarian investor who sells when everyone else is not, avoiding a ‘herd mentality’ can pay off with a higher price and faster sale.
Higher Buyer Motivation. Is your idea of a fun time getting into a car on cold drizzly nights to look at houses? Probably not…unless you just got a job transfer. Or a nice raise. Or you received an inheritance and want to get out of your tiny apartment. It’s helpful for prospective Winter homesellers to know that corporate relocations are common in the first quarter. Plus family changes can occur anytime and estates are settled year around.
The Hunt for Red December: Get a ‘Jump’ on the New Year’ s Competition. The best time to get your property on the market could be when everyone else isn’t. Placing your home for sale in Winter gives you access to hyper-motivated buyers who have made homebuying a New Year’s resolution. That way, when these eager homebuyers begin their ‘hunt,’ your house will be a prime ‘target’ as visible as Rudolph’s nose. So if your home is market-ready and available to tour leading up to the New Year, expect to tap into this highly focused ‘pent up demand.’
Your Home Looks Inviting During the Holidays. Who doesn’t enjoy the happy glow of a Christmas tree or other holiday decorations, along with the pleasant smell of fresh-baked pumpkin pie, cinnamon buns, or a vanilla candle? Homes often look their most inviting during the holidays. And given the pleasant, even emotional attachment so many have during that time of year, expect some homebuyers to fully embrace the holiday theme of ‘Peace on earth, good will toward men.’ As a result, such positive feelings can spill over into the home selling process and make it easier.
Your Lawn & Landscaping is Virtually a Non-Issue. Forget to mow your lawn? No worries. Some buyers won’t care if they tour your property and it’s covered in snow, raining hard, or after sundown. Buyer landscaping expectations can be quite reasonable during Winter months in Oregon.
When Your Home Sells, You May Buy With Less Competition. Few homesellers stop to consider that given good timing with their sale, their own future home purchase may also benefit from similar, unique seasonality. So depending on a variety of factors in the market where and when you buy, homesellers can sometimes take advantage of lower Winter activity levels to successfully negotiate with a motivated seller. This is because some sellers place their home on the market during Winter not for convenience, or desire to maximize their selling price, but from genuine need. In other words, they are highly motivated. Such homesellers could therefore provide a good buying opportunity.
Fewer people relocate in Winter, so this means you’re likely to have an easier time booking a mover. Competition for moving companies can be challenging during the real estate ‘high season.’ As a result, expect less difficulty scheduling your moving company when you sell in Winter.
You Can Dictate Which Days & Times Are Available for Showings. As a homeseller, you typically have control over tour times and dates for your home. This includes during Winter months. Given holiday-related gatherings and events, buyers are likely to understand their need to schedule their tour of your home. Your Realtor can help by specifying days and times your home is available for showings. For example, you could have your house available for tours on Saturdays from 2 to 5pm, weekday mornings after 9:00am, or between 5 and 8pm weekday evenings.
Thinking about selling your Oregon house this Winter? Use the convenient form below to contact veteran Realtor Roy Widing, host of the Oregon Real Estate Podcast for a FREE consultation!
Regardless of the kind of market you find yourself in when buying your next home, there are key tactics buyers can use to make the process both more successful and considerably less stressful. What are these key homebuying tactics and how can you use them to navigate your next home purchase to a successful close? Find out in this edition of the Oregon Real Estate Podcast.
How Homesellers Think
There are plenty of factors that can influence how sellers think. Among the most important of these is motivation, or a seller’s reason and/or need to sell. For example, expect different seller responses depending on if a homeseller is in no hurry, compared to other sellers needing a fast sale in order to purchase their ‘dream home’ or move for a job transfer. That’s frequently among the most frustrating elements for homebuyers, the variability not just in homes and seller pricing strategies, but navigating homeseller personalities and motivations.
Given the significant tasks involved with selling a property, some homebuyers may understandably wonder: Aren’t all sellers motivated? Sometimes the answer is both ‘yes’ AND ‘no.’ Consider a divorce situation, where one spouse desperately needs money and the other does not wish to move at all. Or consider an estate, where there are multiple family members, each with varying degrees of interest in selling; One family member may greatly need proceeds from a home sale, while the others are independently wealthy and perfectly willing to wait to sell, perhaps for tax purposes.
This means it’s helpful to first realize that as when fishing, you’ll never really know what you’ll be dealing with until you have them ‘on the line.’ Looks can be deceiving and no matter how a homeseller may outwardly behave, their motivation for selling is sometimes hidden and an important factor to determine as early as possible. The situation can be further complicated if sellers have a large mortgage on their property being sold. In such a case, they’re not really negotiating with ‘extra’ money. They simply have little price flexibility in order to pay off their home loan and pay closing costs.
For Example For an example of how disparately homesellers can behave, let’s say you drive up to a house your Realtor found for you. Walking up the steps to the porch, you begin your home tour. Upon entering, you immediately see the home is immaculate, the view grand, the layout ideal. It’s a great house. Yet compared to other homes you’ve seen, the price still seems a little high. In fact, you’re pre-approved, but purchasing the home at the seller’s asking price would be a tight squeeze.
Because it’s a great house and you’re ready to buy, you meet with your Realtor that night and write a ‘clean,’ yet not quite full price offer. Your Realtor forwards the offer to the seller’s Realtor and makes sure to include your lender’s pre-approval letter. The next day, your Realtor calls you with an update.
“Your offer was not accepted. But the sellers sent you a counteroffer at full price.”
You’re stunned: “Full price! Why is that?”
“Well, they just placed the property on the market, are not in hurry and figured they could do better than your initial offer.”
Welcome inside the world of seller motivation.
Knowledge is Power
Given situations like this, it helps to know as much as you can about the local real estate market, the property, the sellers and details about their situation. For example, sellers frequently exhibit less price flexibility early on in the listing period. That’s because if the property is new to the market, their opinion is often strongly in favor of their home’s benefits and sometimes they don’t even know where they will move yet. It’s also common for sellers to think ‘I can always come down in price if it doesn’t sell.’
Fast forwarding a month or two into a property’s market time, the situation and seller’s attitude can look considerably different. By then, buyers have ostensibly toured and rejected the property as being ‘too high’ by a handful (or more) of qualified buyers. ‘Why doesn’t someone just bring us an offer,’ some sellers might then ask. The saying ‘Price cures all ills’ is sometimes hard for sellers to hear, but generally true. Buyers are constantly comparing the home they’re looking at to others they’ve toured. One home may have a more desirable floorplan, another home may have a better view, another may have an extra bedroom, bathroom, or larger garage.
So why don’t some buyers write an offer for less than asking price? Here are just a few reasons:
Buyers not wanting to offend the seller
Buyers not thinking the seller would respond favorably
Buyers not even aware the property is for sale, given the high price
Buyers concerned that the property would not appraise high enough
Buyers plan to make changes to the house, which requires additional cost
Another independent, yet primary factor to consider when homebuying is inventory, or the amount of competing homes on the market. If the real estate market is flooded with properties, expect different behavior from most homesellers compared to a market where homes are scarce. Let’s briefly consider the concept of equilbrium, buyer’s market and seller’s market.
Equlibrium When neither buyers or sellers dominate, a real estate market is considered to be balanced or in equilibrium. In our region, the range of 3 to 6 months of home supply is generally considered to be favoring neither buyers or sellers and otherwise ‘normal.’ Inventory figures are released monthly by multiple listing services.
Buyer’s Market A buyer’s market exists when there are more sellers than buyers. Usually this means there is an abundance of homes to choose from, so it’s considered a market favorable to buyers. In our region, more than 6 months of home supply is generally considered to be favoring buyers. Home prices are typically falling, market times are longer and sellers are competing for buyers.
Seller’s Market A seller’s market exists when there are more buyers than sellers. This is indicative when there is low home inventory to choose from, so it’s considered a market favorable to sellers. In our region, fewer than 3 months of home supply is generally considered to be favoring sellers. Home prices are typically rising, market times are shorter and buyers are competing for properties. Interest Rates A relatively minor shift in interest rates can price some of the properties a buyer might consider buying ‘out of reach.’ And while interest rates are a factor outside the control of both buyers and sellers, they remain part of the market landscape through which everyone needs to navigate.
Market environments are important, but unless the element of seller motivation is well understood, you could even be dealing with an unmotivated seller in a buyer’s market and see poor results. That’s because the factors of seller motivation and home inventory, for example are not linked, but variables for homebuyers to consider. If homes are scarce and prices are rising, understand that buyers are likely to feel pretty good about their property. As a result, presenting a clean and very strong offer is likely to work best in any market, but especially in a competitive situation with other homebuyers. Also include your lender’s pre-approval letter to confirm that you are able to afford the home you’re bidding on.
In Real Estate, It Helps to Level the Playing Field
If the market is balanced, with neither buyers or sellers holding the ‘upper hand,’ the playing field is more level. But you still must deal with seller motivation. As a homebuyer, it’s to your advantage if the seller has a real, time-sensitive reason for selling. If you’re buying in a buyer’s market with lots of homes to choose from, realize that while most sellers will adjust to the market with reasonable prices in order to compete, there are still ‘hold-outs’ who remain less motivated.
Dealing with marginally motivated homesellers can be frustrating, but sometimes helped by determining if there are any areas that matter to them. For example, if your offer gives the seemingly unmotivated seller an extra two weeks to move out at no added cost for ‘rent back,’ he or she may then reconsider a less-than-full-price offer. Figure the ‘pain point’ of a seller and you may be able to craft a ‘win-win’ offer.
Keeping the important consideration of seller motivation in mind, here are five tactics to make your homebuying more effective and less stressful:
Homebuyer Tactic #1: Do Your Homework
Have your Realtor research the property before you consider making an offer. The answers to certain questions can help reveal insights. How long has it been on the market? Have there been any price changes? How many different listing Realtors has this seller gone through? Observing that more than a couple Realtors worked with the same seller within a relatively short time period can suggest an unreasonable seller who is either not willing to seriously look at the market, or one that is simply ‘difficult.’
Understand that even if a property is significantly overpriced, early in the process many homesellers remain enthusiastic about any interest in their property. In this situation, each showing early on confirms the seller’s belief that theirs is the best home in town. Experienced Realtors know the process well and by simple observation can become astute in understanding seller behavior. And sometimes the occasional ‘lightning strike’ will occur, where a seemingly above-market price offer is made for more than a property appears to be worth. But generally speaking, this is the exception and not the rule. And by staying with an above-market price over an extended period of time, sellers then run the risk of their property becoming ‘shop worn,’ with buyers wondering ‘What’s wrong with it? Why hasn’t it sold already?’
As a result, most experienced agents understand a seller’s price that turns out to be ‘above the market’ can change with time, or until at least a few qualified buyers walk away without making an offer. Further complicating the situation is if a seller is not particularly motivated, which is sometimes difficult to address. This underscores the importance of homebuyers understanding the homeseller’s motivation. Does the homeseller have a deadline, such as a purchase agreement already in place, a time sensitive job transfer, or an expiring interest rate lock, in order to purchase another property?
Homebuyer Tactic #2: Write a Strong Clean Offer, with Minimal Contingencies Offer close enough to avoid triggering a counteroffer. Sometimes a homeseller will not want to ‘rock the boat’ if an offer is fairly close to their asking, despite not being full price. Once a counteroffer is ‘triggered,’ additional items in the original offer may be changed, since a counteroffer essentially restarts the negotiation process anyway.
This is also where comparable research can be helpful. If you’re convinced that the property is overpriced and you’re unable or unwilling to offer what the seller is asking, consider including a market analysis with your offer and include truly comparable property information that shows why your offer is not for full price.
Back it Up A pre-approval letter made for the exact purchase price can help make your ‘strong, clean offer’ stronger . You may not want to telegraph that you’re qualified for a home loan in excess of your offered amount, which is why lenders frequently will send your Realtor a pre-approval letter that precisely matches your offered price. Otherwise, if you show a seller you’re approved significantly above the offered price, the seller may simply respond with a full price offer, figuring you’ll pay more because you can afford it.
Homebuyer Tactic #3: Escalator Clause If you expect the property you want to buy will have multiple offers, one way to both stand out and enhance your odds of success is by using what’s sometime known as an ‘escalator clause.’ Under this scenario, your offer is made and in it, you agree to beat any other offer up to a certain maximum dollar figure and usually in an increment of say, $1,000 or other specified amount. There can be various elements to an ‘escalator’ clause. If your ‘escalator’ offer is accepted, proof of the second best offer is typically provided to confirm the appropriate purchase price above which the winning buyer then must pay.
Homebuyer Tactic #4: Activate ‘Stealth Mode’ If you’re a ‘choosey’ homebuyer, or seeking to buy in a certain area or neighborhood with few homes for sale you’re interested in, consider having your Realtor go into ‘stealth mode.’ This could mean having your agent knock on doors, collaborate with other Realtors having a ‘pocket’ or unofficial listing, or simply become hyper observant. Many buyers don’t even consider this approach, which while unconventional, can sometimes pay off with work, persistence and a little luck.
The Pre-Listing Stage
In the early phases before a property is formally placed on the market, there are various pre-listing indications you might notice. For example, a location company is often contacted to spray paint where utility lines are located. This prevents a real estate sign placement company from digging a hole and hitting a gas or electric line. How does this matter? If you or your Realtor observe such ‘utility locator’ paint, or a dumpster, a storage ‘pod,’ a moving truck, a U-Haul van, or a ‘hanging signpost’ without a real estate sign yet placed, these hints can sometimes indicate a property is being put up for sale…giving you a headstart before other buyers find out about the home. If the average market time for a given area is weeks or months and you have a ‘heads up’ even before day one of the property hitting the market, you have a tactical advantage.
Stealth Research Can Provide a ‘Direct Hit’ of Otherwise Little-Seen Information
For currently listed properties, other examples of ‘Stealth Mode’ could include your agent researching information on a property or homeseller for potentially helpful tidbits. This might be helpful legal information such as an estate, lawsuit, divorce or inheritance. Other possibly helpful records to consider may involve tax records, old listings from the local multiple listing system (or a separate more distant MLS altogether), since sometimes property history will not always be found in the usual multiple listing system.
Homebuyer Tactic #5: Prepare for a 2nd Bite of the Apple Once your offer is accepted, that’s it, right? Not necessarily. A well-prepared homebuyer always keeps an extra tactic or two ‘tucked away.’
So as ‘back up’ tactics go, one might consider such ‘deep concealment’ techniques much like an ankle holster: Maybe not your first line of defense, but nice to have, ‘just in case.’ What is an example of such a ‘back up’ homebuyer technique and why might it be considered so stealthy?
Being ‘En Garde’ Helps to Prevent Needless Surprises
First, it’s important to understand that like homebuyers, homesellers are typically most ‘on guard’ during formal negotiations. This period usually begins once an offer is written, plus during any ‘back and forth’ by buyers and sellers. Once an agreement is reached, even though there remains significant time, work, patience and even negotiation until the sale is officially closed, most buyers and sellers relax a bit psychologically. But therein lies the problem, since realistically, two key factors usually remain that could interrupt, or even destroy the existing sale now in place.
These two key factors include the inspection and appraisal, both which the seller has little control over. So if the home inspection reveals there are now plenty of heretofore unknown repairs, there are several possible scenarios on the inspection alone:
Seller pays for everything
Buyer pays for everything
Buyer and seller negotiate
Assuming any home inspection items are successfully ironed out, this still leaves the appraisal. What could go wrong there? Two of the more common appraisal ‘minefields’ are (a) value and (b) additional repair and/or code factors. If a barn does not have a permit, the home inspector missed an issue important to the appraisal, or the appraisal comes in low, expect more potential negotiation between buyer and seller to close the transaction.
Most buyers don’t necessarily focus on getting a ‘second bite at the apple.’ But if you feel your initial negotiation in purchasing a property didn’t go perfectly, sometimes the inspection and/or appraisal provides a renewed source of redress. And if the property has material defects, the seller is required to either disclose or fix them, in the event your transaction doesn’t go through. And regarding the appraisal, there is no guarantee a different appraisal will come in much different. So if the appraisal is low, renewed negotiation can occur here, as well.
Do you have questions about buying or selling Oregon real estate? Contact Realtor Roy Widing using the convenient form below or call 800-637-1950 for a free consultation.
Homeselling Strategies There are key strategies for homeseller success. What are these strategies and as an Oregon homeseller, what is it that you might need to know? As an Oregon homebuyer, you may find it helpful to view the following insights on the homeselling process with an ‘insider’s’ view.
Strategies that Benefit Homesellers There are some proven strategies that benefit homesellers. Chief among these is the appropriate mindset, even before implementing a well thought out ‘plan of attack.‘ Experienced Realtors routinely guide homesellers through a ‘minefield’ of common and avoidable missteps in their many forms.
Proactive awareness is one mindset that can significantly benefit homesellers. Proactive awareness includes addressing potential problems before they disrupt or delay a home sale. Specific examples might include items buyers expect to be addressed or lender required repairs :
1. Making sure required permits for any prior remodeling are ‘finaled,’ 2. Replacing leaky gutters, 3. Trimming shrubs that touch the house, 4. Confirming there is no obvious peeling paint, or 5. Replacing windows that have broken seals.
Besides removing such items as a possible source of contention, proactively addressing relatively simple maintenance items helps to alleviate buyer concern. That’s because if a house has numerous obvious signs of deferred maintenance, buyers may wonder about other, less obvious repairs.
Proactive awareness can also mean that you understand homebuyers have options and that as lovely as your home is, some homebuyers may prefer to live elsewhere. This mindset provides a homeseller with fortitude and the advantage of not being crestfallen when their home doesn’t sell the first week on the market.
Homesellers also benefit from strategic thinking. Based on your needs and pricing strategy, for example, this might mean setting up alternative schedule scenarios for homebuying, moving and budgeting, depending upon whether your home sells in 10 days or 100 days.
Thinking Ahead is Beneficial for Homesellers
Combining proactive awareness with strategic thinking provides the kind of forethought that allows fewer surprises throughout the already stressful process of selling a home. Then, given the reduced stress that comes with having to react to negative news, you’re (1). able to focus on those issues that matter most, (2). spend less time worrying and (3). possibly even enjoy the homeselling process.
The word ‘strategy’ is derived from the Greek word strategia, meaning the ‘office of general, command, or generalship’ and as such is considered to be a high level plan to achieve one or more goals under conditions of uncertainty.
Degrees of Uncertainty Exist in Gambling, Battle and Homeselling
The Certainty of Uncertainty
As we saw in the Oregon Real Estate Podcast program titled ‘The Art of War for Homesellers,’ selling a home is frequently conducted under conditions of uncertainty. Awareness and anticipation helps homesellers to better predict and influence their real estate outcome, as situations dictate, often in ‘real time.’
Kicker Tom Dempsey Accomplished his World Record Field Goal with Half a Foot!
Goals can come in many forms. A primary goal for homesellers is often a prompt, uncomplicated transaction. Reasons cited by sellers for wanting a fast and easy sale include feeling like ‘living in a fishbowl,’ or the need to constantly be ‘picking up’ to keep the home ‘show-ready.’ Other reasons might be a time-sensitive job transfer, or a firm deadline to purchase the next home before a favorable interest rate lock expires. Whatever your goals, some homesellers benefit by prioritizing them early in the process on a sheet of paper or computer printout. This roadmap can help to track progress and maintain focus on the desired outcome.
Missions, Strategies & Tactics
First, it’s helpful to know how missions vary from strategies and tactics. If the overarching mission is to move in a timely manner while selling your home for the most money possible, then a variety of planned strategies to sell your property faster and for top dollar could employ numerous, effective and specific tactics.
One If By Land, Two If By Sea
Think of it this way: Tactics are specific, detailed actions that often use diverse, pre-planned strategies to accomplish your mission. For purposes of this article, we already know the mission: Selling your home without needless delay at the highest price. This means that in order to enumerate tactics to sell your house sooner and for the most money, it’s helpful to first arrive at appropriate and achievable strategies to accomplish such a mission. Let’s begin with the immutable real estate characteristic of location.
Strategy #1: Address Your Home’s Location Your property’s location is a key factor to consider when you sell your home. It is also the one element which cannot be changed. To properly determine real estate value, location must be considered and accounted for with respect to what buyers are willing to pay for like homes in similar locations.
Mission: Sell your property faster, for the highest price.
Strategy: Maximize your property’s locational advantages. Tactic: It’s helpful to know that many buyers for your property may not be far away. Ensure awareness among local or even hyper-local buyers, who may either have relatives already living in the area, or existing residents who may sell and wish to remain in the neighborhood. While it’s true that buyers frequently appear from outside the area, some neighborhoods have an inordinately high ‘retention factor.’ Such homebuyers know the area and are already living there ostensibly because they like it. They may want a larger or smaller home, but don’t wish to move away from their family, friends or desirable commute. Generating a ‘bidding war’ among buyers likely to strongly desire your property can be very successful.
The good news is that even homes in areas generally considered to be sub-optimal (near loud factories or industrial parks) sell. The market for these buyers may be skewed toward a particular price bracket or the hard-of-hearing, but when the locational aspects are acknowledged and adjusted for, buyer resistance to a poor location can be overcome.
If location is a major objection, it becomes especially critical to match the home to what the market will accept. Otherwise, sluggish showing activity, low offers, low appraisals and potential sale-fails are common outcomes.
Similarly, a property on a busy street may have less demand from parents with young children. However, to a disabled person whose requirements include close access to public transportation, this same property could be ideal. Some locations are more challenging than others. When dealing with high power lines, nuclear waste contamination or crime infested areas, location is more of a major limiting factor.
Secret #1: To determine an accurate list price, review comparable properties with locations that closely match the subject property. Make certain that the location of each comparable is truly similar.When performing a market analysis on your property, your real estate professional should compile a list of comparable sales that take location into account.
Specific criteria among similar homes assist in evaluating exactly what constitutes a comparable location to the subject property. This is accomplished by determining whether these residences share the same neighborhood, school district, zoning/land use restrictions, view, commute time, park proximity, street condition and volume. Only by utilizing accurate comparable sales information can maximum accuracy be achieved to understand how locational issues affect your property.
Recent, accurate and supportable market evidence is therefore essential. Real estate is unique in that it is considered “non-fungible.” Unlike a textbook, no two homes or properties are considered identical. This being the case, a degree of professional judgment must be exercised when establishing real estate values. Once your home’s actual market value is determined, you can then proceed to maximize other advantages through the remaining “7 Strategies to Sell Your House Sooner.”
Strategy #2: Address Your Home’s Condition The condition of your home greatly affects how fast it will sell. One reason for this is that many buyers lack the “vision” required to imagine what a minimally maintained home could look like in its improved state. Another reason is that bargain hunters are always eager to point out deficiencies to justify their “low-ball” offers. Don’t give the bargain hunters ammunition!
Mission: Sell your property faster, for the highest price Strategy: Minimize negatives of your home’s condition and enhance the positive features. Tactic: Address all significant and obvious needed repairs. Consider paint, if needed.
You can sell sooner and avoid headaches if you take the following steps:
Focus on “curb appeal” – Step out to the street and take a long look at your home. Try to view the home through a buyer’s eyes. Are bushes overgrown? Does the lawn need mowing? How’s the roof? Are the gutters drooping? Is there an old car up on blocks in the driveway? Your initial task is to enhance the appearance of the home’s exterior, including the yard. Secret #2: Realtor studies confirm you won’t get the buyers inside your home if they don’t like it from outside.
Clean & uncluttered inside – Everyone prefers a clean home. Buyers will forgive clutter before they’ll forgive dirt. A thorough housecleaning is advisable prior to putting your home on the market. Be sensitive to odors in the home and neutralize them. Get rid of the clutter by storing any non-essential items which do not enhance the appearance of your home’s interior. One helpful ‘trick’ is to remove half of the items in your closets to make them look bigger. If you lack storage space, consider renting a mini-storage unit on a short-term basis. It could be a great investment!
Light and bright – Dim lighting and dark colors can dissuade buyers from considering your home. If you decide to re-paint and re-carpet the interior prior to selling, choose light colors. Off white paint and light, neutral-colored carpeting have the broadest appeal. Avoid white carpet, as dirt shows more readily.
Remedy deferred maintenance – Almost every home that’s more than a few years old needs a repair or two. Fortunately, many home repairs are minor and require little time and effort. Those little jobs around the house that you’ve been meaning to get to – the leaky faucet, the loose handrail, the cracked light switch cover – all could be seen as “trivial” items by a seller. Yet to buyers, these may be viewed as signs of neglect and symptomatic of larger, unseen problems.
Disclose all known property defects – Don’t try to hide your home’s defects from the buyers — It could come back to haunt you.
Strategy #3: Address Your Home’s Price You don’t determine the sale price. Your Realtor doesn’t determine the sale price. Your well-intentioned relatives don’t determine the sale price. Sentimental value doesn’t determine the sale price.
Your financial needs don’t determine the sale price.
Your investment in the property doesn’t determine the sale price.
You get the point.
Mission:Sell your property faster, for the highest price.
Strategy: Maximize your seller’s net proceeds at closing by provoking a bidding war. Tactic: Aggressive pricing at, or barely under, the current market value.
Secret #3: The market determines the sale price. Your home is worth what buyers are willing to pay. Listen to the market.The strategy of aggressive pricing is one method to provoke a ‘bidding war’ and make buyers compete for your property. Banks sometimes use this tactic and it sometimes means not taking the first offer that comes in. What you want are clean offers, preferably cash if possible, with minimal offer conditions and a short closing timeframe.
Strategy #4: Address the Marketing of Your Property The maximally effective marketing of your home requires a multi-pronged approach. This includes not only featuring your home in the local multiple listing system, but how it is featured, including quality photos and compelling remarks in both the ‘public’ and ‘Realtor only’ versions. In addition, even if the property is correctly entered in the MLS, if showing access is limited, expect a damper on showing activity. For example, if you require 24 hour notice to show the property, then some agents working on short notice simply won’t be able to comply and there will be a missed opportunity.
Secret #4: Put the ‘Multiplier Effect’ to work for you. This means ensuring your property is promoted in the most effective venues and to the most logical buyer groups for your property type. For residential homes, this includes professional signage, flyers, plus at least one multiple listing system along with an advanced web presence. Each marketing ‘mix’ can vary, depending on factors like property type, price range and location.
Mission: Sell your property faster, for the highest price.
Strategy: Maximize your home’s marketing advantage to make it more attractive to buyers.
Tactic: The larger your ‘buyer pool,’ the faster your home will sell and for the most money. To accomplish this, have your Realtor include the use of key ‘searchable’ phrases referencing your neighborhood, district or other recognizable words denoting where you live in the remarks section of your property’s listing. If seller financing is an option for you, consider offering ‘seller terms’ to further broaden your buyer base. Also helpful are yard signs and directional signs.
Selecting the Right Buyer Pool for Your Property Could Mean Rewarding Yourself at a Pool Like This One
Strategy #5: Address the Buyer Pool of Your Property Mission: Sell your property faster, for the highest price. Strategy: Increase the buyer pool of qualified buyers for your property in order to potentially increase your net proceeds at closing and sell your property faster. Tactic: Offer as many terms as possible; The more terms a seller offers, typically the faster the sale and higher the price
“Terms” in real estate parlance refers to the form in which consideration or payment is made. Common terms include cash, conventional loan, seller financing, 1031 exchange and other trade methods, a government insured loan, non-conforming loan or private investor and assumptions. Below are explanations for a few of the most commonly used terms in real estate transactions. Secret #5: Higher sales prices and shorter marketing times are benefits of offering the greatest variety of terms.
TRUE CASH BUYERS are able to close transactions rapidly without the usual lender requirements such as loan underwriting or an appraisal. Buyers also have no loan fees. Cash buyers may expect price flexibility in their negotiations with home sellers. Cash purchasers are a minority of buyer types.
CONVENTIONAL LENDERS are the most common source of residential real estate loans. Lenders assess purchaser qualifications through income, credit history and tangible assets. They also routinely require appraisals, a pest & dry rot report and other inspections, depending on the property. Most conventional loans are 80-95% loan to value, which means the buyer has a 5-20% down payment. The majority of home sales involve conventional loans.
SELLER FINANCING involves sellers willing to act as the “bank” when selling their property. Payments can be made directly to the seller, or through an intermediary, such as a collection escrow account. Often a substantial down payment is expected with a balloon payment due on the remaining balance at a pre-determined date. Because of the seller’s willingness to assume a degree of risk while also offering serious savings (buyers have no loan fee or appraisal to pay), seller financing tends to deliver higher sales prices. Interest rates vary depending upon the motivation of the parties involved and other negotiated factors. Typically, seller financing is secured with a trust deed or land sales contract. Unless the property being purchased has either no loan remaining or little owed on it, a current lender’s “due on sale” clause may prevent seller financing as an option.
NON-CONFORMING LENDERS are a financing option for those unable to secure financing under conventional guidelines. Many are willing to waive a purchaser’s debt rations if net assets are considerable. Home equity loans are a popular market for these lenders. Interest rates tend to be higher than conventional loans, plus various up-front fees and points are often required.
PRIVATE INVESTORS assist in financing real estate transactions to receive greater returns on their investment. For instance, most lenders will not loan on homes lacking a foundation. Private investors are often eager to fill this gap and loan the money to the purchaser, thereby “cashing out” the seller. Payments from the purchaser are then made to the investor. To ensure an attractive return, significant penalties for prepayment are common.
GOVERNMENT INSURED LOANS (FHA/VA) are government-backed loans requiring additional paperwork and documentation. These programs frequently offer significantly lower loan limits, longer processing times and more stringent home condition requirements than conventional loans but by agreeing to sell your home under these conditions can be helpful in enlarging your pool of potential buyers.
ASSUMPTIONS involve a buyer taking over the seller’s prior obligation by making a payment or securing financing for the difference between the selling price and the assumed amount. “Qualified” assumptions typically require that a buyer who assumes an existing loan first be qualified by the existing lender. “Blind” assumptions require few qualifications, sometimes necessitating only that the purchaser pay a set fee.
You’ve Heard the First Five Strategies. For the entire power packed list, just complete the convenient form below to receive the full report, “7 Strategies to Sell Your House Sooner!”
The ‘Home Front’ Without being overly dramatic, it’s helpful to realize that as a homeseller, you are in a ‘war’ of sorts. Outright battle? Definitely not. And for anyone selling a home, it clearly helps to maintain a sense of politeness and grace when dealing with potential homebuyers. But we’re about to look at the process of homeselling using the metaphor of homeselling as ‘war.’
Why would the concept of ‘war’ be appropriate for homeselling? To start, homesellers and homebuyers do not have identical goals. In fact, similar to armed conflict, they frequently have goals at direct odds with one another. You can call such business interaction ‘give and take,’ or ‘financial combat,’ or real estate ‘tug-o-war.’ Rather than use swords or heavy artillery, the tools used can be more subtle. Here, metaphorical weapons might include home inspectors, attorneys and a ‘take no prisoners’ attitude. The point is that there is sometimes conflict in a home sale. But as with any good book or movie, sometimes it’s conflict that keeps things interesting and moves the plot forward, while underscoring the value of what is being contested.
So on many levels, the process of homeselling includes engagement with buyers who are naturally at odds with some of your desires as a homeseller. Acknowledging this fact will help you to maintain reasonable expectations throughout the transaction. If that becomes difficult, then simply remember that you were once a homebuyer, too.
Agility, Leverage and Balance Matter
A Martial Arts Comparison
One such metaphoric view of homeselling is akin to defensive forms of Judo, a time-tested martial art where an opponent’s weight can be used to advantage. A comparison of Judo with homeselling suggests deftness on the part of a homeseller doesn’t have to mean abrasive confrontation, or offensive aggressiveness. Instead, it’s primarily defensive. So we’re therefore talking agility, leverage and balance in order to yield a winning result. Namely, if not to vanquish an attacker, then to simply remain financially safe.
The Tedious Work of Minesweeping is Worthwhile
“When you surround an army, leave an outlet free. Do not press a desperate foe too hard.” ― Sun Tzu, The Art of War
Make War No More
In the ‘heat of battle,’ there are some practical real estate applications for homesellers to ‘sue for peace,’ de-escalate tensions and maximize results of ‘peace talks.’ Let’s look at a specific real estate situation. For example, in the heat of an ‘offer-counteroffer’ scenario where a buyer and/or seller becomes testy or emotional over a key issue, a constructive approach might involve tactics of (1). taking a ‘time-out’ of sorts by mutually agreeing to longer response timeframes for time-sensitive documents, (2). deflecting an argumentative conversation to other, more fruitful forms, (3). working on other more readily resolvable issues first, and/or (4). ultimately and simply agreeing to disagree.
Secret Agents Specialize in Spy Tactics
Spy vs. Spy The metaphor of ‘armed conflict’ in the real estate environment is also relevant in a ‘Cold War’ sense, where parties warily share information as necessary, especially when it suits their own best interests. This might be illustrated as ‘spy’ tactics between two less-than-trusting powers, similar to ‘Cold War’ political terms of entente’ (a French term meaning a diplomatic “understanding”) or detente’ (“the easing of hostility or strained relations”). For example, homesellers may not enjoy completing a multi-page property disclosure statement to highlight their home’s flaws, yet they realize the significant downsides if they don’t accurately complete the document, so they comply. Such less-than-enthusiastic engagements definitely don’t resemble a ‘hot’ or ‘shooting war’ which could otherwise usher in the military acronym of MAD (mutual assured destruction), where ‘the plug is pulled’ on a home transaction and ostensibly everyone loses. “Scorched earth” is rarely good policy. Such alternative approaches incorporate thoughtful caution imbued with hope, which seems to describe most real estate transactions.
“The greatest victory is that which requires no battle.” ― Sun Tzu, The Art of War
Trust, but Verify
What the term ‘trust, but verify’ can mean is that given often high financial stakes, buyers and sellers are sometimes wary as they ‘size each other up.’ From there, it’s largely up to each party involved to determine whether they attempt to maneuver and take tactical advantage, or ‘play nice’ and get along well throughout a home sale. Practical application of this in a real estate context may include finding common ground wherever possible, but for example, hiring your own home inspector or licensed contractor if a buyer’s inspector seems ‘heavy handed.’
‘Land Battles’ Can Cause the ‘Fog of War’
The Fog of War
“In the midst of chaos, there is also opportunity” ― Sun Tzu
Military veterans have long talked about the ‘fog of war,’ which is defined as the uncertainty in ‘situational awareness’ (what is going on around you) experienced by soldiers in the heat of battle. The word “fog” in reference to uncertainty in war was introduced by the Prussian military analyst Carl von Clausewitz (1780-1831).If the ‘fog’ of war is defined as uncertainty in what’s going on around you, this certainly applies to real estate transactions. For example, people you don’t know are walking through your home, viewing your possessions, all the while assessing an opinion of value.
Don’t Let This Happen to Your Next Real Estate Transaction
‘Fog’ is an apt description of some home selling processes, which can be both confusing and uncertain. Think about it. Interest rates fluctuate. Loan underwriters, home inspectors and appraisers all need to come together in agreement that the buyer and property both ‘pass muster.’ Unless and until they do, uncertainty. Some home sales fail because the buyer made a major purchase before the home sale closes. Or their credit score dropped. Or the appraisal came in low. You get the idea. In the end, more than a few home sales are just one ‘thumbs down’ from someone in the property transaction ‘chain’ blowing it sky high.
Opposing Civil War Generals, U.S. Grant & Robert E. Lee
Wars of the Roses
Interestingly, the historic ‘War of Roses’ was a different kind of ‘real estate battle’ between two royal ‘houses,’ the White Rose of York and the Red Rose of Lancaster. But thankfully as a homeseller, you aren’t marshaling troops to wound and destroy. Instead, we’re talking in essence about a ‘civil’ war between parties who can do business. As a homeseller, your ‘battle’ includes navigating a minefield of easily avoided homeselling missteps, while engaging homebuyers who might be alternatively friendly, hostile or ‘hard-to-read,’ yet always potentially adversarial.
An Impossible Mission?
A major goal of homebuyers may at first seem like “Mission Impossible.” Namely, getting you, the homeseller, to accept the lowest possible price for a prized possession, your home. This doesn’t mean you have to be fearful, intimidated or worried. With an experienced Realtor at your side, you’re a ‘well-armed’ team ready to ‘do battle.’ It also helps to know that the more buyers want your house, often the nicer they will be.
Given these dynamics and with tongue planted firmly in cheek, it makes sense to modify a few homeselling cues from successful battle strategists. You might consider this approach as a ‘tip sheet’ to lay your ‘battle plan’ for what lies ahead.
1. Declare War This step mainly involves understanding that buyers generally have opposing interests than sellers, but you can usually do business with most of them. Such realistic expectations will help you to understand, for example, why it’s usually a good idea to let your Realtor do much of the talking and not share many specifics about your motivations for selling. Otherwise, opportunistic buyers may sense desperation and take advantage by offering you significantly less than your asking price.
2. Never Surrender When the going gets tough, stick with your plan. This includes following through on your thoughtful, well-defined strategies. ‘Keep your powder dry’ by not obsessing over factors you can’t change and ‘choose your shots wisely’ by considering those factors you can change. Conserving firepower is fundamental to strategic homeselling.
For example, adjustments in the home-selling process are sometimes necessary. It’s entirely possible that if your home hasn’t sold for some time, a case can be made for a price adjustment. That’s not a defeat, unless you stop moving thoughtfully forward. But before making substantial ‘course corrections,’ first make sure to review the situation and your options.
3. Declare Victory Realize when you’ve won. This doesn’t mean chest beating. Just make sure to remind yourself of your goals once you’ve reached them. For example, your home selling goals may have included receiving a timely offer at full selling price and/or retaining a few extra days of delayed possession after the closing date to more comfortably move out along with other factors important to you. Cherish the win.
4. Win the Peace Remain as gracious as possible throughout the transaction. Be charitable to your buyers. For example, this could include your being flexible if they ask about allowing contractors to visit your home before closing in order to provide bids for later remodeling. Leaving a vase of flowers in the house with a note for when the buyers move in is a nice touch, too.
5. Go Home: To Your New Home, That Is Mission Accomplished!
One frequent Oregon real estate question buyers and sellers ask is ‘What’s an acre worth?’ When you think about it, this question is not so different than ‘What’s a car worth?’ That’s because each situation has significant variables.
With a car, the mileage and condition are both very important to arrive at an accurate value. Land, too has unique variables. What are these variables that affect the value of an acre and as an Oregon property buyer or seller, what is it that you may need to know?
What follows in not an exhaustive study of determining the value of an acre, but a summary of 6 key factors that affect the market value of Oregon acreage property. Spoiler alert: The actual answer to the value of an Oregon acre is ‘it depends.’
For example, many think California land is more expensive than Oregon land. Yet an acre of land in Oregon could be worth considerably more than a California acre. How? Select one acre in Canby, Oregon (with a current population of more than 16,000) and the other acre in tiny Canby, California, (with a current population of less than 500). The simple laws of supply and demand apply, even across state lines. So to begin, demand is a function of value. The larger a population surrounding a given acre, usually the greater the demand and hence the higher the price per acre.
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How Big Is An Acre?
Sources suggest an acre was first defined back in the Middle Ages as the amount of land that could be ploughed in one day with a yoke of oxen. An acre can now be specifically defined as an area comprising 43,560 square feet. For example, this would equal a parcel of 66 feet (1 chain, also known as 22 yards) by 660 feet (1 furlong, also known as 1/8 mile, or 220 yards).
6 Factors of Separation The following six factors provide insights into some key components that help determine the value of an Oregon acre of land.
Factor 1: Location, Location, Location
To help determine the value of an Oregon acre, chief among the variables is the immutable characteristic of location. Why? For example, prime farmland located in distant locales can be worth less than somewhat lower grade farmland if the distant location requires significant fuel and related expense in order to transport crops to market. Location explains why waterfront property usually sells for more than property located some distance from a river or lake. Location also explains why view properties can command a premium.
Factor 2: Zoning & Allowed Uses In Oregon, also high among the factors that impact the value per acre is zoning. Zoning can be influenced by federal, state, county, regional (like Oregon’s Metro government) and city regulations. For example, don’t expect to generate much income from a parcel of land designated as a wetland. There are fewer activities that can be performed on such a property and as a result, fewer buyers and therefore lower demand. This typically means a lower market value. Generally speaking, in many parts of Oregon, property zoned to allow residential, commercial or industrial use frequently commands a higher price than agricultural land.
Factor 3: Volume Discount
With some limitations, the larger the parcel, generally speaking the lower the market value per acre. This is true for several reasons. As a property’s price gets up into the higher ranges, particularly if we’re talking multiples of a region’s average selling price, there are simply fewer qualified buyers. As an example, consider how many buyers in a given area who may be able to afford a $100,000 property. This is a sizable percentage of the ‘buyer pool.’ Now consider how many buyers who may be able to afford a 3 or 4 million dollar property. Far fewer as the price increases. So while there are buyers for each price category, the price per acre is typically reduced with the increase in land size and purchase price.
Factor 4: Soil Types There is a plethora of soil types, with various metrics to determine their characteristics and use. According to Oregon State University, we have nearly 1,000 different soils in Oregon. One broad method of grouping and evaluating soil types is known as the ‘class system.’ Broad groups of soils can therefore be denoted as Class I, Class II, Class III, and the like. As you might expect, Class I soils are considered the best and typically have very good fertility, superior drainage and are typically located in mostly level areas, often with slopes of no more than 3%. Examples of Oregon Class I and Class II soil types are Willamette Silt Loam and Woodburn Silt Loam.
Also as you might expect, Oregon’s Class VI and Class VII soils are considered less useful for agricultural purposes. One example of these is called Whetstone soil. While having low fertility, Whetstone is suited to to growing timber, but not cultivated crops. Erosion of poorer soils can also be severe. One of Oregon’s least productive soils is not even technically considered soil. Called Terrace Escarpments, this alluvium is typically located in steep areas which makes cultivating it so difficult.
Factor 5: Water Rights In addition to the above factors, access and legal ability to use water is a very significant element in determining the value of an Oregon acre. The Oregon Water Resources Department has a regional watermaster system, where each watermaster has a range of state-mandated duties. As a general rule, land with water rights is worth significantly more than ‘dry land.’ One reason is because irrigable land allows for more-and potentially more profitable-crops.
Factor 6: Improvements Another important factor in determining the value of an acre are improvements. Key among these can be a home. However, even if a home is not present but a well and/or septic system is, and the property is zoned to allow a home, this can be the ‘dream scenario’ that some buyers who wish to have a new home built actually want. That’s because the zoning is already in place, as are some of the most expensive utilities like water and septic. As a result, the presence of absence of improvements is another element in helping to determine the value of an acre.
In Summary There are many components to evaluating the worth of an acre. To most accurately do this, it’s important that your Realtor review comparable properties in your area. This means utilizing information among truly similar properties sharing related characteristics, especially those which may have recently sold. An experienced Oregon acreage real estate specialist is conversant with the multiple factors necessary to most accurately gather, analyse and interpret such data.
Questions? Call a Professional! Do you have questions about buying or selling Oregon property? Contact veteran Oregon Realtor Roy Widing for a free consultation using the convenient form below.
When making the biggest financial decision of their lives, many homebuyers and homesellers understandably ask their Realtor to provide a professional opinion on a range of topics. Some common questions include if adding a bathroom will boost resale value, should wallpaper be removed, if re-painting will help, how long a home has been for sale, if sellers should leave when their home is being shown, or if a home shows better when ‘staged.’ These and many other questions are typically addressed with aplomb by an experienced Realtor.
However, with other, less benign questions, agents are trained not only to be cautious, but simply refuse to answer them. Is it because the Realtor doesn’t have an opinion? Maybe, but maybe not. Often the reason is because rules don’t allow it.
Federal, State & Ethics…Oh My!
What are these rules that might cause an otherwise conversational, if not super-chatty (or at least engaging) real estate agent to go mum? They include federal laws, state regulations and the Realtor Code of Ethics. And while there are more than three topics agents are trained to be wary of, here we’ll address three examples of areas Realtors are supposed to be particularly cautious about. It helps to first understand that some of the following essentially forbidden conversations most often occur between a Realtor and clients. However, the specific topic of Question #3 below can also be especially problematic if discussed between Realtors.
Question #1 That Your Oregon Realtor Can’t Answer: “Do Many Minorities (or Other Protected Classes) Live Here?” If there is even a hint of a question having a racial, religious, or other prohibited basis, law-abiding Oregon Realtors will not go there.
Federal Law Prohibits Real Estate Discrimination Chief among the federal laws that limit a Realtor’s behavior in these areas is the Civil Rights Act of 1968. It prohibits:
A refusal to sell or rent a dwelling to any person because of race, color, religion, sex, or national origin.
Discrimination based on race, color, religion or national origin in the terms, conditions or privilege of the sale or rental of a dwelling.
Advertising the sale or rental of a dwelling indicating preference of discrimination based on race, color, religion or national origin.
Coercing, threatening, intimidating, or interfering with a person’s enjoyment or exercise of housing rights based on discriminatory reasons or retaliating against a person or organization that aids or encourages the exercise or enjoyment of fair housing rights.
Oregon Law Prohibits Real Estate Discrimination Discrimination in Real Property Transactions-State discrimination law also prohibits a person from refusing to sell, lease, or rent any real property because of an individual´s race, color, sex (including pregnancy), sexual orientation, national origin, religion, marital status, familial status, physical or mental disability, or source of income.
Article 10 REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. REALTORS® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. (Amended 1/14)
REALTORS®, in their real estate employment practices, shall not discriminate against any person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. (Amended 1/14) [listen]
Standard of Practice 10-1
When involved in the sale or lease of a residence, REALTORS® shall not volunteer information regarding the racial, religious or ethnic composition of any neighborhood nor shall they engage in any activity which may result in panic selling, however, REALTORS® may provide other demographic information.
Related to this phenomena is the concept of ‘steering,’ where a real estate agent might guide prospective homebuyers toward or away from certain homes or neighborhoods based upon forbidden criteria. This article provides six ways a Realtor can help to avoid ‘steering.‘ Just one example of a forbidden topic might be: ‘Can you find me a Catholic neighborhood? (or Jewish, or Mormon, or Hispanic, or Lebanese…)’ As seen in the above example, just as religion and race are protected classes, so are nationalities.
So what’s a buyer to do? If there are particular places where you want to reside, like specific neighborhoods where your friends currently live, or an area where your church is located, then an agent can show you homes in areas you request. Real trouble comes when asking a Realtor to specify neighborhoods for you that involve protected classes. So questions about the racial, religious, or nationality composition of a neighborhood are not something to bring up with a real estate agent.
It really helps to leave protected classes out the discussion. Instead, after doing your own research of factors that are most important to you (which may include crime as we’ll address below, or proximity to good restaurants, or parks, or a reasonable commute to work), then provide your agent with boundaries of areas where you want to focus your homesearch. There are several other terms used to define related discriminatory illegal real estate activity.
Blockbusting The practice of persuading owners to sell property cheaply because of the fear of people of another race or class moving into the neighborhood, and thus profiting by reselling at a higher price. Redlining Refusing a loan or insurance to someone because they live in an area deemed to be a poor financial risk.
‘Direct them to the police. If buyers want to get a picture of the area’s crime rate, direct them to the police department or other sources of information. Don’t disclose crime statistics or say a neighborhood is a safe place to live even if you believe it to be true.’
Why Crime Statistics Can Be Difficult to Get-Part A
There’s another reason why getting reliable crime information, at least from a Realtor, is not preferred. That’s because in Portland, for example, Oregon Revised Statute 696.880 states that an Oregon real estate agent is not required to disclose the proximity of a sex offender. For some, this may be difficult to believe. As a result, it’s helpful to take the attitude of ‘buyer beware’ if you have small children, or simply want to avoid living near a convicted sexual predator.
Why Crime Statistics Can Be Difficult to Get-Part B There is currently a strange situation being experienced in parts of Oregon, because while FBI crime statistics have long been seen as a helpful source of public safety information, for Portland and 40 surrounding communities, these important recent figures will not be available.
Are Sex Offenders Living in the Neighborhood? Megan’s Law requires convicted sex offenders to register their address with local officials. This information is available to the public. You may check the public records, or get information from local police near where you’re considering a move. But it’s important to know that online information is hardly foolproof. Here’s why, as stated in the Oregon Sex Offender website which reads in part, with my highlights:
This website only lists sex offenders designated: a Level 3 offender under ORS 181.800; a predatory sex offender under ORS 181.585; or a sexually violent dangerous offender under ORS 144.635. Not all sex offenders are listed on the website. In addition, the information on this website refers only to sex offenses defined under ORS 181.805(5) and does not reflect the entire criminal history of a particular individual.
Since all information is subject to change (and not everyone registers how they’re supposed to), if accurately determining if a sex offender might live in your next neighborhood is important, make sure you’re comfortable with the information you gather.Here’s a link to the State of Oregon’s sex offender website.
There are good reasons to avoid living near a convicted sex offender. In addition to the reasonable desire for safety, it’s proven that homebuyers can take a financial ‘hit’ after purchasing in unsafe neighborhoods. For example, one study showed that a home’s value declines by 4% on average if it’s located within one-tenth of a mile of a sex offender’s residence, according to the National Bureau of Economic Research.
What’s A Buyer to Do? Many homebuyers would like to see local crime statistics before buying a home. However, getting reliable information isn’t always as simple as asking a real estate agent. Why? First, realize that Realtors are not police and therefore typically not always well-versed on crime statistics. To get those, it really does make sense for buyers to contact local law enforcement, or research online themselves, using a variety of available resources.
Also understand that if you’re concerned about a factor like crime, certain kinds of research will best come from someone other than your agent. This may not seem fair, but in Oregon, an agent is not required to provide such information. The good news is that there are established sources of information for homebuyers interested in a safer neighborhood. Yet you may have to dig.
Question #3 That Your Oregon Realtor Can’t Answer: “What’s the Standard Real Estate Commission?”
The reality? There is no ‘standard’ real estate commission. A Realtor can tell you what they charge, but commissions are negotiable and one real estate agent can’t speak to what another company or agent charges. There is also good reason why a real estate agent would not want to discuss real estate commissions with other agents.
Some Questions Will Get Realtors Running!
A Different Kind of ‘Running Suit’ A major antitrust lawsuit that has reverberations to this day involved real estate brokers who attempted to ‘coordinate’ an increase in their commissions. Federal investigators were not amused. As a result, now Realtors are advised very early in their training to avoid discussion of commissions with other real estate brokers, lest they be accused of ‘price fixing.’ Some real estate agents are instructed to simply leave a room if someone attempts to discuss such illegal tactics. For example, Realtors have been observed scrambling out of such a meeting to avoid talking about commission collusion, or ‘price fixing.’Do you have questions or are you considering the sale of your Oregon property? Contact veteran Oregon Realtor Roy Widing using the convenient form below for a free consultation.
While most Oregon homebuyers use traditional loan providers like banks, mortgage brokers or credit unions, there are solid reasons (and a very helpful alternative) for purchasing a home without them. Buyers avoid traditional lenders for a variety of factors and when they do, one mechanism they frequently turn to is known in our area as seller financing.
What Is Seller Financing? Also called owner financing, seller terms, owner carry, seller carryback, or seller carry, seller financing allows a homebuyer to purchase a property by making an initial down payment, then making direct payments to the seller. While Oregon law has rules in place especially to regulate large-scale property sellers who handle a significant amount of seller-financed transactions (notably commercial firms, such as finance companies), the process still remains relatively simple for Oregon home buyers and sellers who enter into a home sale without using a traditional lender.
Fundamentals A key factor that helps to make seller financing an option is if a homeseller has either no loan, or a very small loan remaining on the property to be sold. Having little or no loan on the home being sold means that more of the buyer’s down payment will go to the seller, and not diverted to the lender of a seller’s existing home loan. Most home loans now have what’s called a ‘due on sale’ clause, which means a seller’s home loan must first be paid off upon the sale of a property. The single factor of having no or little loan balance on a property is often the single most limiting condition in determining if seller financing is an option. If the property has either no loan, or only a small loan remaining, this can really open the door to seller financing.
Playing the Bank Another factor for prospective sellers to consider when thinking about seller financing is if they’re okay with ‘taking payments’ instead of receiving a ‘lump sum.’ By ‘playing the bank,’ sellers receive payments from the buyer as they are made, not all at once. Some sellers greatly prefer the income of proceeds from their home sale over time. That said, unless the payments are made according to a ‘straight line’ amortization, there usually will be a lump sum paid to the seller at the end of the agreed upon term, often several years or much longer.
Seller Financing is the ‘Swiss Army Knife’ of Loan Options
Basic Tools Several tools can be used to establish seller financing. In Oregon, these include either a trust deed and note, or a land sales contract. Here is a recent legal article outlining some differences between these two instruments for Oregon seller financing . Most common is the trust deed and note, which can be prepared by Oregon title companies/escrow firms. Less common is the land sales contract, which can usually be considerably more labor intensive and expensive, since in Oregon land sales contracts can only be drawn up by an attorney. Another difference: ‘Equitable title’ is how buyers take ownership using a land sales contract and ‘legal title’ is how buyers take ownership using a trust deed and note.
What Makes Seller Financing so Powerful Seller financing can be very powerful. How else to describe a form of financing that can:
Make an otherwise ‘unsellable’ property sellable, and/or
Render an otherwise ‘unqualified’ buyer qualified, whilst escaping considerable loan fees, underwriting and requirements, like an appraisal, and/or
Provide income to a home seller, with interest, all secured with the protection of a legal instrument in case of default, and/or
Allow a homebuyer the ability to purchase a home while selling a less liquid (hard to sell) asset, or re-building credit, and/or
Give both buyer and seller the flexibility to negotiate what works for them, rather than a bank’s pre-determined, ‘cookie-cutter’ loan term, interest rate, or myriad other conditions.
Seller Financing Can Be ‘Win-Win’ for Buyer & Seller
Here are a few ‘win-win’ scenarios illustrating some of real life advantages of seller financing.
Scenario #1involves a house located in a large Oregon town with no foundation and a faulty roof. The property is otherwise attractive, yet routine lender guidelines require a foundation for residential properties. The seller begins to think his house is a ‘lemon.’ That is, until he learns that since he owns the property ‘free and clear’ with no loan, that he can sell the property directly to a buyer. A buyer who happens to be a contractor discovers the house and realizes he can put a roof on the house for the cost of materials, then hire foundation work far more cheaply than someone unlike him who is not in the building trades. An agreement is made. As a result, buyer and seller see the transaction as a ‘win-win.’
Scenario #2involves a nice home located in a tiny Oregon town between the Willamette Valley and Oregon Coast.
Given the somewhat remote location, there isn’t a lot of demand for the property in Scenario #2. In an effort to ‘open up the buyer pool’ and ‘jumpstart’ buyer activity, the seller’s Realtor advises his seller client to consider seller financing.
The seller agrees and before long, an out of state buyer who just retired discovers the property, located near an elderly relative. The buyer wants to first sell his large ranch in California, but because he will be listing his out-of-state property for 4 million dollars, it may take more than a few months to sell it. The California seller doesn’t want to sell his out-of-state property at a discount and wants to purchase a home meanwhile near his relative.
So the Californian strikes a deal with the tiny Oregon town homeseller. Because the seller is open to seller financing and therefore providing the buyer with a helpful benefit, the buyer agrees to pay full price for the seller’s property and places $75,000, or 25% down of the $300,000 purchase price using seller financing. Confident his California property will sell within 3 years, buyer and seller agree to mutually agreeable monthly payments, with a balloon payment of the remaining loan balance within 36 months.
The buyer gets full price, a quicker home sale, interest (on top of his full selling price) and the security of a legal instrument as protection in the unlikely event of buyer default. The buyer is provided sufficient time to sell his out-of-state asset, plus can move quickly to live near his Oregon relative. As a result, buyer and seller see the transaction as a ‘win-win.’
Scenario #3 involves a homebuyer who recently experienced a ‘short sale’ on an investment rental he owned. Because traditional lenders are unlikely to loan to borrowers with a recent ‘short sale,’ this homebuyer can either wait possibly years until lenders are satisfied that this experience is well behind him, or look at other options. Knowing his buyer’s situation, the Realtor for this ‘short sale’ purchaser searches specifically for, then locates a property suitable for his buyer which is being offered with seller financing. The buyer’s Realtor writes up a clean, solid offer with 20% down at a competitive interest rate and 5 year balloon. The seller accepts the ‘short sale’ buyer’s offer. There is a successful closing of the transaction, perhaps years before a traditional lender would have said ‘yes’ to providing the ‘short sale’ buyer with a home loan. As a result, buyer and seller see the transaction as a ‘win-win.’
Covering the Bases As with any business agreement, things can and sometimes do go wrong. One of the more important factors for sellers to consider prior to entering into any seller financing agreement is a possible default by a buyer who cannot continue making payments as agreed. In this case, placing the situation before an Oregon real estate attorney is frequently a good move. If the buyer is dealing in good faith, sometimes a temporary restructuring of payments can be agreed upon, or mutually agreeable ‘exit strategy’ to provide the buyer a pathway to meet the agreement, or sell the property. If the situation becomes difficult, an attorney’s guidance can be helpful.
Happy Bankers Studies show that traditional lenders start relaxing requirements when a buyer can make a 20% downpayment, known as 80% ‘loan to value.’ This is a good general rule for seller financing, too. A minimum 20% downpayment typically means a buyer will be a better risk. The graph below shows how such an 80% ‘loan to value’ situation has historically reduced the delinquency rate for loan transactions.
Insurance One other condition for sellers to be aware of relates to insurance. This can include fire and liability insurance. Especially helpful is if the seller is named as a ‘loss payee.’ This means that if there is a loss, such as a fire, the seller has a priority to insurance compensation.
The latest batch of regulations are largely designed to hold commercial lenders more accountable. If a homeseller is not a major creditor or commercial lender, in Oregon the process of a typical seller using seller financing remains relatively simple. The latest rules create a situation where it’s best to be clear if you’ll be dealing with a ‘vanilla’ type ‘mom and pop’ seller financing transaction, or a more complicated ‘corporate’ one that requires additional time, money and outside assistance.
The following information is not legal advice, but a ‘thumbnail’ overview of two simpler scenarios for Oregon seller financing. For real estate advice, consult a Realtor. For legal advice, consult an attorney.
The ‘Vanilla’ Scenario Let’s have dessert first. One of the easier scenarios for seller financing is if you’re buying a home from a seller who has lived in the house as a primary residence. This simple factor is a decent sized ‘green light’ and avoids much additional paperwork, like the need to hire a mortgage loan originator, or MLO, to handle the seller financed transaction. Under the new rules, another ‘vanilla’ scenario that simplifies the process are transactions between family members.
The ‘Small Potatoes’ Scenario Even if the seller has never lived in the home you’re buying, if the seller is deemed ‘small potatoes’ and not a major creditor or commercial lender, the seller can still provide seller financing. In this case, a ‘green light’ to simplicity is found among sellers who have provided seller financing in a home sale for three or fewer transactions within a 1 year period. This exemption is helpful, since few residential homeowners sell even one home each year.
The Meat of the Matter Regardless of the kind of seller financing you consider, consider working with a professional experienced in this unique area of real estate practice. Seller financing offers many potential advantages, but it’s important to understand the process and your limitations.
Collection escrow companies maintain order for seller financed transactions
Collection Escrow Account One very convenient service often used by buyers and sellers who use seller financing is called a collection escrow account. Collection escrow accounts are usually set up during the escrow process, once an offer has been accepted. In our region, collection escrow companies receive payments from the buyer on behalf of the seller, handle processing and accounting, then forward the payment to the seller, often by direct deposit or via a mailed check. Why is this convenient? Because both parties then have a state-licensed firm keeping track of payments. This also makes it easier around tax time for buyer and seller. Sellers can more easily show income and buyers can better account for their mortgage interest deduction.
Thinking about using seller financing? Contact Realtor Roy Widing with Certified Realty for more information about this frequently helpful real estate tool using the convenient form below.
Selling an Oregon home can sometimes seem overwhelming and complicated. Yet there is a logical framework to the entire process. Once grasped, this knowledge makes the task less daunting.
Easy As 1-2-3
There is a usually a linear progression to selling an Oregon home, making it as easy as ‘1-2-3.’ And since the process between buyers and sellers is routinely described as a kind of ‘dance,’ let the music begin.
Fundamentals To be fair, there are plenty of tasks associated with any real estate transaction, yet the key process that gets homesellers a workable offer can be simplified to three primary steps. Then, once a mutually accepted offer is in hand, the final march to closing the sale begins.
The fundamentally crucial elements start very early. Curious? Away we go:
1. Online Activity-More than 90% of homebuyers first look online before they even call a Realtor. Just as important, once buyers select an agent, they will continue to view properties online as they ‘winnow the field’ and decide with their agent which kind of homes to tour. Then, the power of the local multiple listing system provides a good selection of properties and enhanced information.
2. Showing Activity-By the time buyers take their first home tour, they’re often pre-qualified. Few homebuyers make an offer without this crucial step. If they do, it’s not unusual for sellers to request they get pre-qualified before their offer is considered.
3. Offer Activity-This is the final step in the 3 phase path to an offer. Once homesellers make it to this point, their property has likely been priced close to the actual market value. The 3-step process looks simple and in a way, it is. What follows are some extra helpful considerations.
Oregon Home-Selling by the Numbers First, it’s helpful to realize that buyers generally behave in somewhat predictable phases. This means they routinely go to Step 1 first, before Step 2, or Step 3. There is very little skipping around. For example, it’s uncommon for a buyer to start at Step 2, or leave out any steps.
Another important element to consider is when a homeseller’s efforts ‘stall’ at a certain step. Depending on a variety of factors, there is usually a good reason, which can be diagnosed by a Realtor experienced with intrinsic behaviors of buyer activity.
Even Batman Doesn’t Have This In His Utility Belt Homesellers can have a very useful tool in their utility belt, since online buyer activity can be monitored to evaluate buyer response, or lack of it. That valuable tool is a report on buyer activity for your specific property. Some of these reports are released weekly (Realtor.com) and others (like regional multiple listing services) are compiled daily. Realtors who invest wisely in their business frequently subscribe to these proprietary services
Realtor chart showing decreased buyer activity over time.
Step 1. Online Activity Online reports are very valuable in analyzing market reaction to a seller’s property. And realize what market reaction is: The collective response of buyers in an area, or ‘market.’ As a result, your Realtor can provide you with regular updates with online buyer and Realtor activity for your home and from a variety of sources. Some of these key sources will provide hyper-local data very specific to your area.
Online property activity data can help gauge if your property’s popularity is really ramping up, falling fast, or simply ‘so-so.’ Now let’s take a further look into these helpful tools.
A Medical Analogy As with reading blood tests or an electrocardiogram (EKG), it’s especially helpful if the professional reading them has familiarity with interpreting specific signs under a variety of situations. Some ‘bumps’ can mean much, others little.
EKG reading. Notice that it somewhat resembles the multiple listing report image below.
A multiple listing property chart with buyer views, Realtor views & email frequency to Realtor buyer clients
Since you wouldn’t expect a brain surgeon to be a heart expert, agents who only work with city properties may not analyze market reaction to a rural property quite the same way and vice-versa. It’s important that market responses for a seller’s property be analyzed by taking both the property type and location into account. As a result, it may not be realistic to expect identical market readings for a palatial suburban Portland, Oregon home when compared to a ‘fixer’ property in tiny Paisley, Oregon. Tracking your home’s online popularity can determine not only buyer response, but provide key insights. For example such buyer activity information can help sellers make adjustments before activity gets lackluster and a property becomes ‘shopworn.’
Step 2. Showing Activity The ‘jump’ from online home searching to touring inside homes is a significant one. Since agents commit considerable time and effort and are usually paid only after a buyer purchases a home, this typically means real estate agents are selective with those they spend time with, so touring buyers are usually pre-qualified by a lender. In other words, we’re now working within the realm of a qualified home purchaser, who is ready, willing and able to buy. Studies show that the typical home buyer searches for 10 weeks and views 10 homes.
Step 3. Offer Activity A final leg in this three step journey is when an offer is written and submitted for the seller’s consideration. By writing an offer, this step also helps to confirm that the property is likely priced within a reasonably market-friendly range. There is still plenty to do after Step 3, but an acceptable offer places the process into the remaining phases of a real estate transaction. This can include elements like escrow, home inspections, preliminary title report, appraisal, loan documents and closing.
Think of home prices like fishing at the right level. Homes priced where ‘the action is’ get more bites.
A Real Estate/Fishing Analogy
For example, wildly over-priced homes don’t usually get much more than ‘low-ball’ offers, if any. Think of the actual top market value of any property as a ‘waterline.’ Fish usually don’t jump in the boat, so if a home seller’s property is priced significantly above that level, expect little, if any action. As the ‘bait’ or price is lowered to the waterline, expect ‘nibbles.’ If no serious offers arrive within a reasonable amount of time, further lowering the price will typically provoke a ‘feeding frenzy,’ also known as a ‘bidding war’ for the property.
The End of the Beginning An accepted offer is not the final step of the home selling process. But with an accepted offer in hand, home sellers and their Realtor can focus attention on remaining stages.
Thinking about Selling? Call (503) 682-1083, or contact veteran Oregon Realtor Roy Widing with Certified Realty using the form below. Bring Roy your questions, or request a free consultation on what your property could sell for in today’s market.
‘…that long black cloud is comin’ down, I feel like I’m knockin’ on heaven’s door…’ Bob Dylan
Listen to the podcast version of this article by clicking on the ‘play’ button below.
Every experienced Realtor has them: Stories rarely shared with clients that involve particularly unnerving moments in an agent’s real estate career. And, for purposes of this article, we aren’t talking about simple cases of a flea-infested house, or one with no water or electricity. The topic? Stigmatized properties.
Not all stigmatized properties are obvious from the outside
Stories of stigmatized properties are often unforgettable to the real estate agent and their clients who experienced them. Also known as ‘tainted’ real estate and many other monikers, before we dive in, let’s get a quick grasp of what a stigmatized property is.
Definition of Stigmatize ‘Here’s a dictionary definition of the word stigmatize:
While this definition may be readily grasped, state laws vary significantly in how they address stigmatized property. This is not a legal analysis, but in Oregon under the broadest sense of the term, it’s commonly understood that a stigmatized property can range from one where there are problems, like mold, to being a place where undesirable things have occurred, such as a crime. So it’s important to realize that there are degrees of stigma. And what may bother one person may not seem so bad to another.
Meth houses are one category of stigmatized property
It’s important to understand that one of the classic examples of stigmatized property is a home where tragedy or other undesirable activity has occurred, such as if someone dies inside a house. Another example is a home where drugs like methamphetamine have been manufactured. Yet other example, though generally considered less worrisome to many buyers, is a foreclosed home where a former owner loses the property due to job loss.
This Happened to Me: A Case Study
Here’s a true story that helps to illustrate the impact of stigmatized property. While at work one day, I received a phone call and quickly recognized the caller as a client I assisted with a home purchase months earlier. Listening further, I detected serious concern in his voice as I’d never observed from him before.
As the client talked, I listened while automatically running through a brief mental checklist of his closed transaction:
‘Paperwork completed correctly?’ Check. ‘Home inspection performed?’ Check. ‘All inspection issues addressed or negotiated?’ Check.
‘Building permits researched?’ Check. ‘Insurance, title report, loan and closing documents taken care of?’ Check.
I run through a few more items in my mind, then hear him say the word ‘Ghost.’
In ‘A Christmas Carol,’ Scrooge is visited by the ghost of his business partner, Jacob Marley
In the Beginning
After looking at many homes, this buyer and his wife ended up making an offer that had some ‘back and forth’ on the price, but it was ultimately accepted. Looking back at the transaction, there was never any indication to suggest this would be anything but a ‘normal’ home purchase. And everything was normal. Until after the transaction closed. Which is when things took a decidedly different turn.
Not very long after this buyer and his wife moved into their recently purchased home, they began to hear strange noises, usually in the middle of the night, like around 2 or 3 AM. But then things got much stranger.
The sounds they heard appeared to emanate from inside the house for no readily explainable reason. Sounds like dropped tableware, moving furniture, bells ringing. You get the idea. There was no reason for them to expect these sounds, yet they were apparently coming from inside the house and at odd hours.
After a while of having their sleep disturbed, the homebuyers grew concerned and began to ask around the neighborhood. “Do you hear strange sounds at night like we do?” After being told “No” by at least one neighbor, one neighbor asked if the homebuyers knew about the event that had occurred inside their home. The new owner said ‘No.’
Story specifics vary, but the neighbor apparently explained that a child had died inside the house and was then laid to rest on the property. Understandably, this distressed the home buyers, who thought they should have been told before buying the home.
After speaking with the home buyers, I next called the seller’s real estate agent for the transaction and simply asked: “Did you know that the property had a history of a death in the house? “Yes,” he quickly answered, then followed up with what I knew aligned with what Oregon real estate agents are instructed regarding state real estate law. “But my principal broker told me we didn’t have to disclose it.” And he was correct.
I also understood that particular Realtor’s fiduciary responsibility to his seller client; Because if the seller’s agent had openly revealed the situation while marketing it, there was a good chance the property would have sold for considerably less. Usually, the rule is ‘disclose, even if an item seems trivial.’ Yet in this instance, there was no state law requiring such disclosure and the seller had a vested interest in not bringing the issue up.
The Rest of the Story
As a result of the impact from their home purchase of the stigmatized home, the homebuyers moved and ultimately rented out the property. Witnessing this unpleasant situation had me researching to better determine what might have been done differently. At the time, there were no online resources solely dedicated to determining if a house is stigmatized. On top of that, repeated online searches eventually turned up one news story relating to the property. However, that was accomplished by a search using the specific house address and buried in a list of much other website information. It was virtually a ‘needle in a haystack.’
Rules of Disclosure Realtors are compelled to abide by real estate law. So what exactly is required by an Oregon real estate agent regarding stigmatized, or other ‘tainted’ property? Oregon law states in Oregon Revised Statutes 93.275 the following excerpted incidents as among those considered not material to a real property transaction:
(a) The fact or suspicion that the real property or a neighboring property was the site of a death by violent crime, by suicide or by any other manner;
(b) The fact or suspicion that the real property or a neighboring property was the site of a crime, political activity, religious activity or any other act or occurrence that does not adversely affect the physical condition of or title to real property;
What’s Legal Vs. What’s Right
Was not disclosing such history the right thing to do, though? You be the judge. That’s where there is a divergence of opinion and it’s not always because someone is buying or selling a property. To some buyers, what has happened in the past within the four walls of a house, especially a death, matters. Other buyers may have a more practical perspective and and appear to be less bothered by property history. Here is information on a court case where a buyer sued a homeseller who did not disclose stigmatizing details. As you will read there, there are two sides to the story of stigmatized properties.
Why Stigmatized Properties Are Different
One reason stigmatized properties are different is because they don’t affect everyone the same way. Another reason is because factors that stigmatize a property vary. Some are undeniably gruesome, like violent death, while other, more common stigmatizing factors have limited psychological affect, like bank foreclosure. Yet other stigmas, such as a former meth lab, are doubly troublesome, since they carry both a market stigma plus can render a property unfinanceable.
Another reason why stigmatized properties are uniquely different than usual issues, like say dry rot or a leaky roof, is that they frequently involve very human emotions. And when we consider what makes a home, where children are raised, birthdays and anniversaries are celebrated and many cherished memories are created, common sense dictates that a house should comport with the real estate concept of ‘quiet enjoyment,’ least of all being awakened at 3 AM to later be surprised with what has occurred in your own home.
There’s a Website for That
So important is the issue of certain real estate stigmas that there are even websites for consumers to research for them. For example, homebuyers concerned about a possible death in a particular home can now search at websites like DiedInHouse.com in an effort to determine such information. However, be aware that this kind of online search may provide an incomplete portrayal of what you’re seeking.
Latin for ‘let the buyer beware.’
Buyer Beware Websites that purport to provide a report on stigmatized real estate typically charge a fee and they are certainly not foolproof. In fact, a recent test search of several confirmed ‘death houses’ in Oregon found no record in such a website dedicated to providing this kind of information. What these websites sometimes say in their results is that they ‘do not have any records’ of specific activity. Given my anecdotal ‘test searches’ of known locations where death, violent and otherwise did occur, yet where no records were located, appears to suggest such databases may be small, rarely updated, or otherwise inadequate.
What’s A Buyer to Do? First, understand limitations of Oregon real estate law. Certain real estate factors simply do not need to be disclosed.
Second, realize that websites claiming to provide information on stigmatized properties can be severely lacking. So if more fully determining a property’s stigmatization status is important to you, you may need to address this on your own in a variety of ways explained below. There are certain reliable websites, depending on what you’re seeking. For example here is a link to the Drug Enforcement Administration’s meth lab registry.
Third, if your Realtor, family member or friend is more ‘computer savvy’ than your are, have them perform some research. Regardless, some homebuyers may wish to work on this themselves.
Researching a Stigmatized Property
It’s important to realize that a great deal of data may not be on the Internet, or easily found there. Yet that’s generally a fast way to get started. So if you have concern about possibly purchasing a property and want to see if there is information to be found, here’s one possible research approach:
Perform Internet searches using different search engines (Google, Bing, among others). Each time you search, type in the property address several different ways. For example, if there are many different pages that turn up for a specific address, try enclosing the search address using closed quotes.
One example might look like this: “123 E. Main Street, Portland, OR” and also “123 East Main Street, Portland, OR” along with several other methods, including spelling out the state and possibly leaving the word ‘street’ out altogether. Try also typing in a possibly related word in your search, like “123 E. Main Street, Portland OR” followed by the word “police” or “arrest” or “murder” or “crime” or “death.” Also realize that in certain counties and towns, the street direction is used AFTER the street name. So in Salem, the address might be “123 Main Street East, Salem, OR” along with other variations.
You get the idea. What you’re trying to do is determine any especially untoward activity associated with that specific house you may purchase. Other potentially effective ways to help determine more about a specific property regarding possible stigmatization is to ask the neighbors, or your local police department.
What’s A Seller to Do? Usually the best advice for homesellers is to ‘Disclose, disclose, disclose.’ Yet there are exceptions. For example, in Oregon it is illegal to disclose certain facts about a property.
Under Oregon law, neither the seller nor their agent is allowed to disclose that an owner or occupant of the real property has or had human immunodeficiency virus or acquired immune deficiency syndrome.
If you’re unsure about how disclosure requirements apply to your situation, it’s generally a good idea to consult your Realtor for more information and/or an attorney specializing in real estate law.
Do you have a real estate question? Contact Oregon Realtor Roy Widing using the convenient form below.
There are ‘insider tips’ in Oregon real estate, just like many professions. Exactly what are these little-discussed pointers and how can they benefit non-Realtors? Find out in this information-packed podcast from veteran Oregon Realtor Roy Widing.
Real Estate Confidential
As with any occupation, there are ‘insider tips’ in real estate. Exactly what are these little-discussed pointers and how can they benefit non-Realtors? Ask a dozen real estate agents and you’re likely to get a dozen different answers. Yet the following perspective can provide insight into what are often little-known facets of residential real estate, whether you’re buying or selling. We’ll first briefly note why this little-known information can be important, then we’ll get to these 5 little known ‘insider tips.’ And since most real estate agents are Realtors, both terms will be used interchangeably here.
Keep Your Quiver Well-Armed
Knowledge is power and in the hands of a trusted real estate professional, such power can be tremendously beneficial. For example, it’s helpful whether you need correct information to price your property right, or entrust transaction details to an agent while away when your home is for sale, or get solid recommendations for a truly good inspection, repair or mortgage firm. The ability to reliably depend upon a trusted Realtor to look out for your best interests regarding one of your most valued investments is a very good ‘arrow’ indeed to have in your ‘quiver.’ Having navigated ample real estate terrain, accomplished real estate agents are understandably ‘go to’ sources for good reason.
On The Move
It’s difficult to be an expert on everything. As a result, consumers can feel vulnerable or even taken advantage of, given the sheer volume of knowledge needed to buy or sell real estate. Since Americans move on average about every half dozen years, it’s easy to get ‘rusty’ and not know what to be aware of when buying or selling a home. With that in mind, here are 5 ‘insider’ Realtor tips you may not have considered.
‘Double Agents’ Have Lots of Important Information
Oregon Real Estate Insider Tip #1.
Having A ‘Double Agent’ Can Be A Good Thing Few buyers and sellers think much about what is sometimes called ‘dual agency.’ This is when the listing (seller’s) Realtor also represents the buyer. There are possible pitfalls, but also significant advantages to dual agency. But let us first be clear: Any potential benefits of dual agency go out the window if an agent is either dishonest, or doesn’t work within ethical boundaries.
Why would buyers want to work with a dual, or ‘double’ agent? First, no agent is likely to know a property better than the listing agent, (the seller’s Realtor). Second, the listing agent is also likely to have a relationship, or at least some rapport with the seller. While this isn’t typically enough to get a poor offer accepted, having an agent who knows the seller could help a buyer ‘put their best foot forward’ in a competitive offer situation. Third, because offers are routed specifically through the listing (seller’s) Realtor, no offers usually come in that the seller’s agent is unaware of. For buyers, having a ‘heads up’ of other offer activity can also be useful.
Sellers can also benefit from dual agency by having their agent represent property details directly to the buyer with one less person in the communication loop, while also possibly having a clear understanding with the Realtor of what is expected in a transaction. Because the listing (seller’s) agent understands the seller’s needs, those needs may sometimes be better communicated to buyers represented by the same agent. So while there are possible downsides to dual agency, there can also be real advantages.
Oregon Real Estate Insider Tip #2.
Realtors Can Calculate Their Paycheck by Viewing a Property Listing Sheet That’s right, virtually every property listed by a real estate agent in our region shows exactly what will be paid to the Realtor (and their real estate firm) whose buyer purchases it. So before an agent even shows a home, he or she can determine what they’ll be paid for selling it.
Commissions are typically ‘split’ between Realtors and their offices, so a buyer’s agent will usually get a portion of the commission shown in the multiple listing system. That figure is sometimes called the ‘buyer’s agent commission’ or BAC and can have dramatic implications.
That’s because real estate agents are salespeople and if they do not deem the promised commission as competitive, sellers may not see the same level of enthusiasm or showing response to their property. The point of a multiple listing system is to promote homes to buyers and their Realtors. Offering what’s considered a sub-standard commission to the buyer’s agent can tend to subvert the whole concept of attracting interest to sell it.
Some Realtors ‘Jump Ship’ in Different Markets
Oregon Real Estate Insider Tip #3.
Be Aware of Inventory-Induced ‘Ship Jumping’ Just as Realtors will help clients gain perspective by encouraging sellers to ‘put on their buyer’s hat’ and ask buyers to ‘put on their seller’s hat,’ now let’s ‘put on our Realtor’s hat.’
Assume there are few buyers and lots and lots of homes for sale, so buyers are in demand. What do some savvy real estate agents do? If it is a ‘buyer’s market,’ they work with buyers, the ones having considerable power in the situation. If there are few homes for sale, this means ‘listings are hot’ and controlling more property inventory by having more listed homes may provide Realtors a better income. As a result, some focused Realtors ‘jump ship,’ from working with buyers to sellers, or vice-versa, depending on the market.
Given such changing market dynamics, expert agents also routinely educate their clients on what to expect, depending on the kind of market they’re in. For example, being a seller in buyer’s market, or a buyer in a seller’s market requires more patience than when you have the advantage of having the market ‘on your side.’ Here’s a helpful article and podcast on buyer’s and seller’s markets.
Oregon Real Estate Insider Tip #4.
Research is Key & Sites Like Zillow Can Be Wildly Inaccurate A recent news article illustrates just how inaccurate online home estimate websites can be. The head of Zillow recently sold his home for approximately 40% less than the Zillow estimate, or Zestimate. This is one reason why some real estate agents roll their eyes when online home value estimates are mentioned. In accurately setting a selling price, it’s important to let your Realtor research truly comparable properties. Would you really expect similarly accurate results from a doctor who physically examines you, compared to a computer-generated exam?
For sellers, this frequently means closely examining key differences between your property, competing homes for sale and those that have actually sold. Location matters, living space matters and so does condition. And especially if your home is a best suited to a more experienced ‘second’ or ‘third time buyer,’ expect they’ll do their research and haven’t just fallen off a turnip truck. If possible, drive by properties deemed truly comparable and ask your Realtor questions if you don’t understand why your home is valued differently than you expect.
It’s normal for sellers to believe that their property is ‘the best,’ or worth the most in the area. Yet one problem is not only convincing buyers, but if a bank is involved, convincing the lender-required appraiser, too. As part of that, it’s especially helpful to compare key specifics on home sales that are recent, local and truly comparable. Then if there are any significant differences between your home and sold comparable properties, they can at least be be more accurately adjusted for.
Otherwise, if your property has not sold by the time you exceed the average market time for your area and home type, buyers may begin to wonder ‘What’s wrong with it?’ and ‘Why hasn’t it sold?’ For example, buyers may even wonder if there is a crime problem, when maybe your neighborhood is the safest one around. There’s one other reason to consider pricing correctly using truly comparable properties, as we next examine the concept of ‘property history.’
Oregon Real Estate Insider Tip #5.
Every Property Has a History Believe it or not, there is a viewable history for any property entered into local Realtor multiple listing systems. With the touch of a button, a Realtor can know how long the property has been on the market, if it has expired from the market unsold (suggesting it was overpriced), if there have been price adjustments and if listing data has been changed.
Even among properties that have not been sold for some time, a resourceful agent can use tax records and other data to determine what was paid for the home, among other information. This too can raise questions. Was the shop built with permits? Is the current use compliant with zoning regulations? You get the idea.
So if your property has been on the market significantly longer than other similar homes that have sold, expect buyer reluctance. It’s difficult to fool an agent who does their research and expert Realtors commonly provide buyers with a property’s history even before touring it. What this underscores is that it’s usually best to price where buyers will buy and where appraisers can appraise. Otherwise, expect few offers or the dreaded ‘sale-fail.’
If you have questions, need real estate information on your Oregon town or neighborhood, or would like to know what your property could sell for in today’s market, contact veteran Realtor Roy Widing using the convenient form below.
Two common real estate terms are ‘seller’s market’ and ‘buyer’s market.’ What exactly do these terms mean and how do they apply to Oregon’s current real estate climate?
Click on the above audio player to hear this insightful podcast on Oregon real estate.
First, let’s define a ‘normal’ real estate market. Terms like equilibrium and stasis describe real estate climates favoring neither buyers or sellers.
For example, let’s imagine a tug o’ war game. If the rope is not being pulled in any clear direction over a sustained period of time, there is balance between the two opposing teams.
Portland Area Home Price Chart
In real estate, ways to gauge whether one side (buyers, for example) are more powerful than the other side (sellers, for example) is not watching direction of a rope, but instead things like the supply of homes (also called inventory), how long properties are on the market (market time) and where prices are headed (market direction). These factors reveal ‘demand’ to help determine whether there are more buyers or sellers.
In much of the Willamette Valley, a typical ‘rule of thumb’ figure to determine housing supply in a balanced market is between 3 and 6 months of home inventory. If there is less than this, like the current 1.4 month home supply around greater Portland, then there is a strong seller’s market.
Portland Home Inventory in Months
Markets vary within a state, or even between relatively close communities. For example, the greater Salem metro right now has a significantly higher inventory of homes for sale. As a result, there is more balance between buyers and sellers. Consequently, prices are more stable, or growing less drastically than greater Portland.
Even with a 2.6 month home supply, Salem area home prices are climbing significantly
Under this 3 to 6 month guideline describing a ‘normal’ market, even Salem’s current 2.6 months of home inventory, nearly double that of Portland, is still indicative of a moderate seller’s market. This is because with fewer than usual available homes for sale, buyers compete and therefore bid up the price.
Oregon Coast in Months of Inventory
Moving on over to the Oregon Coast presents a completely different market dynamic. Jobs drive income and with the spread out nature of coastal communities, plus limited employment hubs with lower populations and therefore less real estate demand, we could expect the scales to tip more in favor of buyers and currently, that is indeed the case.
Oregon Coast Home Price Chart
As a result of this higher housing inventory, we witness in the above coastal home price chart essentially flat home price growth.
Oregon Realtor Roy Widing
Thinking about selling your Oregon property? It’s tough to beat selling in a seller’s market. Our current real estate climate in much of Oregon is a seller’s dream. For expert assistance and a free consultation, contact Realtor Roy Widing with Certified Realty using the convenient form below.