Tag Archives: buyer representation

FHA Mortgage Insurance Premium Reduction Suspended

The federal government had decided early this year to help lower income home buyers afford to get in the market by reducing their PMI (Private Mortgage Insurance) on FHA (Federal Housing Administration) loans. This is a type of insurance that is currently required for borrowers who have less than 20% equity in their homes. This mortgage insurance wasn’t necessarily required prior to the recession, and Realtors applauded the effort to reduce the cost burden to (usually) first-time home-buyers since the real estate market is in vastly better shape than it was prior to the downturn.

However, effective January 20th, 2017, the US Department of Housing and Urban Development suspended the program. We’re hoping it will be picked up as a priority again soon!

Accuracy of Zillow Zestimates: a review of recent data.

Ever wondered how truly accurate those Zillow estimates are in showing what your home will sell for? Wonder no more! I’ve been telling clients since Zillow’s inception that their values are usually way off, but here is some raw data so that you can see it for yourself.

For my data, I selected all homes that sold and closed within the last week in Oregon City and show you prices that these homes sold for versus Zillow’s Zestimate. Here are the cliff notes:

There were twenty homes that closed within the last 7 days.

Of those twenty homes, Zillow’s Zestimate was within $5,000 of the actual sales price on four of the properties.

Six were within $5,000-$15,000 of the actual sales price.

Two were within $15,000-$25,000.

Two were within $25,000-$35,000.

One was within $35,000-$45,000.

Lastly, four homes out of the twenty that sold were at least $45,000 off from the actual sales price of the home. 

The take away message from this? Zillow’s Zestimates are probably accurate within $50,000 of what a home will actually sell for. Maybe half of the time the website will be within $15k of the sales price. However, many of these will sell for vastly more than what Zillow’s estimate shows, some will sell significantly under, and a handful will sell right around the estimate.

Address Sold price “zestimate” Home sold for ___ % above/below zillow’s zestimate:
511 1ST ST $158,000 $188,879 84.00%
18817 ROUNDTREE DR $240,000 $242,657 99.00%
19201 MILES ST $250,000 $242,263 103.00%
522 JACKSON ST $253,000 $204,306 124.00%
18777 BLUE RIDGE DR $265,000 $270,781 98.00%
19132 BEDFORD DR $270,000 $261,822 103.00%
13183 WASSAIL LN $280,000 $233,219 120.00%
19316 TOWERCREST DR $280,000 $257,416 109.00%
14388 TALAWA DR $289,000 $257,416 112.00%
23529 S TRILLIUM HOLLOW RD $290,000 $243,878 119.00%
18701 LASSEN CT $296,500 $292,576 101.00%
17445 WAKE ROBIN CIR $305,000 $317,272 96.00%
20005 MOSSY MEADOWS $329,900 $323,158 102.00%
13633 BARCLAY HILLS DR $330,000 $335,177 98.00%
146 PARK DR $350,000 $350,954 100.00%
18927 Wynton DR $351,450 No zest. listed
16265 BARLOW DR $381,500 $388,101 98.00%
16300 S HENRICI RD $407,000 $368,020 111.00%
1307 15TH ST $425,000 $404,270 105.00%
18598 ALADDIN WAY $540,000 $487,452 111.00%

There is no substitute for a human to help guide you through pricing your home. Having about 25% of the properties off by $50,000 is way too big a financial risk to take. And, in the past, I’ve seen sold price/zestimates that were even larger discrepancies than $50k.

Should you price your home for sale low high or low? Let’s look at the raw data.

When my seller-clients call me to start the process of getting their home on the market, one of my first tasks is to do a CMA (Comparative Market Analysis) on the property. This thorough report will show us a range in prices in which the home is likely to sell. My seller-clients often ask me what price they should start out at. They frequently tell me that they feel they should start higher than what they think it will actually close for, because buyers are almost always going to come in with a low price. I tell them this isn’t necessarily true, that in *this market* homes that are priced well tend to sell full or above full price, but homes that are priced too high tend to sit on the market awhile, often selling for less. This post shows data to back up that advice.

The following is a list of ALL homes that have sold in Oregon City in the last thirty days. This is just a “snapshot” of one local Portland metro suburban market.

The left column, “Days on Market” shows how many days the home was on the market prior to going pending. The next column is the ML#, identifying which property was on the market. After that is what price the seller had started out at, and after that is the price the home sold. The column on the right shows the ratio of list to sell price.

Here’s a synopsis of the data: 
-The homes are organized by how long they stayed on the market prior to getting a pending sale.
-There were 87 homes that closed in the Oregon City area in the last thirty days.
-The vast majority of these homes sold very quickly.
-I see trends in list/sell price ratios in homes that sold within ten days, ten to thirty days, thirty to 90 days, and homes above the 90 day mark:

Homes that sold within ten days: 
-About half of the homes that closed in the last thirty days sold within ten days of hitting the market!
-Of the homes that sold within ten days, about half sold full-price, half sold more than full price, and only couple sold under full price. 

Homes that sold within ten to thirty days: 
-About 1/4 of the homes that closed within the last thirty days sold within 10-30 days of hitting the market.
-List/sale price ratios are about equally divided between homes that sold above, at, or below the asking price.

Homes that took 30-90 days to sell: 
-About a dozen homes that closed within the last thirty days took 30-90 days to get an offer.
-These homes typically sold around 95% of the asking price.

Homes that took more than 90 days to sell: 
-There were about 10 homes that needed 90 days or more to go pending.
-These homes tended to sell for about 90% of the sales price, unless they were new construction or a short sale, which take more time to get offers.

The take away message from all of this data: 
This data clearly displays that buyers offers do not “always” come in below the asking price. In fact, many times they come in higher if the home has not been on the market long. And buyers DO pay attention to how long the home has been on the market, and will adjust their offering price accordingly. See tip #2 on this advice column on Trulia for more on why buyers adjust their prices this way. 

Here is the raw data for you to review:

Days on Market ML # List price Sales Price Ratio note
0 15379912 349,900.00 349,900.00 100.00%
0 15322645 265,000.00 270,000.00 102.00%
1 15581730 299,900.00 296,500.00 99.00%
1 15607584 350,000.00 360,000.00 103.00%
1 15296533 179,000.00 277,000.00 154.00%
1 15581731 299,900.00 296,500.00 99.00%
1 15476059 299,990.00 316,100.00 105.00%
2 15450131 349,900.00 357,000.00 102.00%
2 15494859 389,999.00 392,999.00 100.00%
2 15655278 249,950.00 250,000.00 100.00%
2 15601606 280,000.00 285,000.00 102.00%
2 15649940 307,500.00 307,500.00 100.00%
2 15456426 289,000.00 313,000.00 108.00%
2 15034410 324,900.00 324,900.00 100.00%
2 15047178 324,900.00 331,000.00 102.00%
3 15239577 329,900.00 341,000.00 103.00%
3 15615840 539,000.00 540,000.00 100.00%
3 15544653 245,000.00 244,035.00 100.00%
3 15029746 285,000.00 290,000.00 101.00%
4 15244462 360,000.00 360,000.00 100.00%
4 15691953 499,900.00 499,900.00 100.00%
4 15175870 239,900.00 239,900.00 100.00%
4 15529200 269,900.00 275,000.00 102.00%
4 15391532 269,900.00 280,000.00 104.00%
4 15632787 268,500.00 280,000.00 104.00%
4 15012109 289,900.00 $290,000 100.00%
4 15559876 279,900.00 290,000.00 104.00%
4 15272464 319,000.00 325,500.00 102.00%
5 15466370 325,000.00 340,000.00 105.00%
5 15107424 329,000.00 332,500.00 101.00%
5 15466370 325,000.00 340,000.00 105.00%
6 15035049 339,900.00 339,900.00 100.00%
6 15530536 344,900.00 350,000.00 101.00%
6 15570596 359,000.00 359,000.00 100.00%
6 15473045 170,000.00 180,000.00 106.00%
6 15202381 200,000.00 200,000.00 100.00%
6 15435611 199,500.00 240,000.00 120.00%
6 15050036 259,900.00 270,000.00 104.00%
6 15585965 289,000.00 289,000.00 100.00%
6 15035049 339,000.00 339,000.00 100.00%
7 15647733 374,900.00 374,900.00 100.00%
7 15563531 425,000.00 407,000.00 96.00%
7 15096104 319,900.00 318,700.00 100.00%
8 15074987 240,000.00 245,000.00 102.00%
9 15667826 399,900.00 400,000.00 100.00%
11 15293497 349,900.00 350,000.00 100.00%
12 15396773 259,900.00 253,000.00 97.00%
12 15665087 300,000.00 290,000.00 97.00%
12 15589357 329,500.00 330,000.00 100.00%
13 15233888 300,000.00 292,500.00 97.00%
13 15250604 358,999.00 381,500.00 105.00%
13 15311351 568,000.00 543,611.00 96.00%
13 15233888 300,000.00 292,500.00 96.00%
14 15294110 358,900.00 358,900.00 100.00%
14 15095749 594,700.00 594,700.00 100.00%
14 15261625 269,900.00 265,000.00 98.00%
15 15139198 220,000.00 226,500.00 103.00%
16 15232008 349,900.00 335,000.00 96.00%
16 15508023 339,000.00 336,000.00 99.00%
20 15461779 374,900.00 374,900.00 100.00%
21 15578366 235,000.00 235,000.00 100.00%
21 15022494 299,000.00 $289,000 96.00%
31 15142657 425,000.00 425,000.00 100.00%
34 15221005 294,900.00 286,000.00 97.00%
34 15330552 339,000.00 325,000.00 95.00%
52 14038853 429,900.00 450,000.00 105.00% new construction
53 14660142 449,900.00 447,500.00 99.00%
58 15306094 356,900.00 349,900.00 98.00%
60 15627885 325,000.00 $305,000 94.00%
63 15426426 319,900.00 311,400.00 97.00%
68 15442766 325,000.00 299,000.00 92.00%
68 15201503 324,500.00 318,000.00 98.00%
79 15655651 354,900.00 356,900.00 100.00% new construction
79 14081155 389,900.00 389,900.00 100.00% new construction
79 14176899 169,900.00 158,000.00 93.00%
82 15607375 255,000.00 229,700.00 90.00%
91 15648604 285,000.00 278,000.00 97.00%
112 14654121 425,000.00 370,000.00 87.00%
135 14070284 598,900.00 590,000.00 98.00%
138 14282473 695,000.00 670,000.00 96.00%
141 14671525 265,000.00 270,000.00 101.00% short sale
182 14297397 229,900.00 217,000.00 94
198 14373063 265,000.00 231,500.00 87.00%
229 14360151 384,900.00 376,950.00 98.00%
270 14607200 559,900.00 559,900.00 100.00% short sale
446 13104108 329,950.00 351,450.00 106.00% new construction

Please call or email me with any questions. I look forward to helping you!

Local tax assessors are using aggressive methods to find ways to increase property taxes

Tax assessors have been using the RMLS (Realtors Multiple Listing Service) database to search for properties that have been remodeled or updated in order to raise the assessed value and tax more money on real property.In Portland, there are several reports of assessors stopping by homes that have recently closed and leaving notes saying that they want to see the house to see the home for valuation purposes. The upgrades that they are looking at are not things that would typically require permits from the city or county (cosmetic updates).

Please note that if there is updating done on your home, the assessed value can change, regardless if the assessor actually sees the changes in person (the assessor can use the RMLS photos to see the condition at the time the home was listed). If you find than an assessor is attempting to re-evaluate the value on your home, you may find this write up by PMAR (Portland Metropolitan Association of Realtors) helpful: https://pmar.org/wp-content/uploads/5.20-Property-Tax-Update.pdf

 

Buyers: How to Compete in Multiple Offer Situations

Do you fear looking for a home that you are going to get into a  bidding war? If so, this post may help you conquer that fear of competing with other buyers when you find the right home. Here are some tips to make your offer stand out from the rest:

Be the first one to get in the door. The buyers that wait to write an offer don’t look motivated.

The single biggest factor in determining who wins the property is who offers the highest price. If you work with me, we will discuss your feelings and motivation for buying the home, which can help guide you through how much you should offer. If you feel that this is the best home you’ve ever seen in your life, and you would be devastated that an offer came in higher than yours, you might want to consider offering as much as you feel is reasonable, even possibly going over the asking price.

If, however, you like it but you would not feel all that much is lost if the seller went with another offer, you might consider a lower offer.

Another big factor in multiple offer situations is having a good pre-approval letter to provide to the listing agent and seller. Note that there is a difference in pre-approval versus pre-qualification. In addition, the best offers come from buyers that are pre-approved with a mortgage broker versus a bank.

The seller will want to see a decent amount of earnest money offered. In our market, the typical amount of earnest money is 1% of the sales price rounded off to the nearest $500. If you are competing, you may consider offering more than this.

Find out what the seller is planning on doing when the home sells. Are they hoping to find another home? Are they moving into a home they already have picked out? Often, sellers will want to negotiate a period where they can stay in the home for a short while after the sale closes, so that they can find another home and have time to move into it. Having the sellers situation factored into your offer will help you substantially.

Some buyers like to add a personal note with their offers. This can be very helpful, because when sellers get offers from buyers they are very impersonal.  Introducing yourself can help sway the offer your way. When people introduce themselves, they might: tell the seller what they do for a living, talk about their family, say what they like about the home, etc. Sometimes they even attach a picture of the family. However, there can be drawbacks to these letters. If there is something that comes up on the inspection report that needs to be negotiated, the seller may remember the buyer raving about the property on their letter, and sometimes they won’t do any repairs or make any credits. It can occasionally weaken a buyer’s bargaining position. Your best bet is to keep your letter more neutral, unless you really are in love with the place and will accept problems as-is.

I have other tricks up my sleeve, and if you work with me I am happy to help guide you through the process!

 

Why working with a mortgage broker is different than going to your bank or credit union

When I first start working with my buyer clients, they often tell me that they are considering getting their loan through their bank or credit union. Most often, I will need to coach them into understanding the difference between the services offered by a mortgage broker and a bank.

First of all, a bank and/or credit union usually only has access to their funds, unlike a mortgage broker, who shops around to all private and public sources of loans, and generally offers you the best rate that they can find. Their fees for closing a loan (“closing costs”) tend to be significantly higher than mortgage brokers as well.

The other big difference in the two is that mortgage brokers typically have much better customer service. The few times that I have had clients use a bank over a mortgage broker, many problems come up. Appraisals don’t get ordered on time, the estimates that my clients received weren’t accurate, the loan officer pulled up too many credit reports (lowering my clients credit rating), and most often, the loan doesn’t close on time.

If you end up in a multiple offer situation and you have a pre-approval letter from your bank versus a mortgage broker, the listing agent is likely to make a note of this and it will be one of the considering factors when looking at all the offers.

When you shop around for different loans, ask for a Good Faith Estimate, and compare them side by side. You will want to make sure that everyone has a ball park amount of things like taxes and hazard insurance included, which will affect the amount of the monthly payment.

If you need a referral for an excellent loan officer, please check out my referrals page.

The Difference Between Pre-approved and Pre-qualified

In one of my posts I had discussed the importance of getting pre-approved for a home loan ASAP if you are considering purchasing a home. Now I want to explain the difference between the terms “pre-approved” versus “pre-qualified.” The difference in terms is meaningful to both buyers and those wishing to sell their home.

A “pre-qualification” simply means that the buyer has had a verbal discussion with a loan officer regarding how much money you make. “Pre-approved” means that the loan officer has actually received supporting documentation regarding your assets, and has taken loan application on the buyer’s behalf, pulled a credit report, etc., and is approved for a loan based on these factors.

When you are looking to purchase real estate, a buyer’s agent is going to be hesitant about representing you if you have not gotten fully pre-approved.

When you do find the right home to buy and want to write an offer on it, the Realtor representing the seller (Listing Agent) may advise the seller to not accept your offer until you’ve gotten fully pre-approved. A seller will not want to take their home off the market, only to have it go back on the market a week later for a buyer that does not qualify. This damages the seller, because many people assume that something went wrong with a home inspection. This means that another buyer can come along and buy the house before you’ve gotten fully approved for your home loan.

The distinction is particularly important in multiple offer situations. Even if you write an offer on a home that is well above another offer, the fact that the buyer is not fully pre-approved discredits the entire offer.

For recommendations of mortgage brokers that past clients have had good experiences with, check my resources page.

How to Search for a Home to Buy

Home searches are now exclusively done through the internet. Many agents out there have paid to have a page set up in their website so that the buyer can search for real estate themselves. However, I have not paid and implemented a search page into this website. Besides the expense, there are a multitude of reasons for this, of which I will go over below.

My preference in working with buyers is that we meet when beginning your search, and I set up a professional search through the RMLS system *for* you. 

The websites that have search engines built into them have paid for an IDX feed. When I looked into it, I found that this feed is set up to download once per day, at the end of the day. I believe this once per day update is a disadvantage to those who are seriously looking for a piece of real estate to buy. In this hot market, properties can get offers and sell on that first day. You want to be notified of homes for sale as soon as possible after they go on the market.

The other major reason is that I like to set up a home search within the RMLS database for my buyer-clients myself. The RMLS database (Realtors Multiple Listing Service) is where all listings in this geographic area are placed. The reason that I like to do this for you is that I understand the intricacies of this system, as I have extensive experience and training in using it. For example, if you are wanting to search specific neighborhoods, this can be rather tricky. Many times the Realtor who lists the home does not input a neighborhood on the listing, gets the neighborhood incorrect, or spells it incorrectly. There are other ways that I can pinpoint the area that you are looking for, but they are only available to me.

I can set up the RMLS database to automatically send you new listings based on your particular criteria. These are set to be sent out every two hours, every day of the week, so that you are fully up-to-date on all listings that come on the market as quickly as possible

If you want to buy a home and want to discuss setting up a search for you, please email or phone me. You can also check out my page for buyers for more information about working with me as a buyer-client or check the tags on articles in this website about buyer representation.

However, if you aren’t quite ready to buy, and just want to see what is available out there, the are a couple of websites I can recommend. RMLS has a public version of their website. Oregon Realty has a more user friendly website that pulls in the RMLS data. Also, the National Association of Realtors has a website which pulls in all databases in the country. I would recommend avoiding zillow, as of lately I have seen serious errors in the way the listings are displayed (including errors in my own listings).

As always, I look forward to working with you!

Why I Recommend a Search for an Abandoned Underground Oil Tank

When you buy a home from me, we will discuss searching for an abandoned underground oil tank as part of your inspection process (in addition to a general home inspection, radon test, sewer scope, and other inspections that are available to you).

So what exactly is an abandoned oil tank? During the middle part of last century, a common type of fuel that was used in furnaces was oil. In order to have oil heat, you needed to have a way to contain the oil tank, which is what a tank was used for. Most commonly, these tanks were buried in the yard, but sometimes they were installed above ground, typically in the basement or side yard of the home.

When the homeowners decided no longer to use oil to heat their home (say, if they wanted to convert to gas) these tanks were simply abandoned in the yard. The oil was never pumped out of them. The typical life of these oil tanks was around 30 years before it would crack and start leaking into the ground, potentially damaging the groundwater and possibly leaking carcinogenic gas into the house itself.

Back in the late 90’s, searching for abandoned oil tank started to become an industry standard for inspections when buyers purchased a home. It is VERY common to find an abandoned oil tank, particularly with older homes.

When you are looking at a piece real estate, it is possible to see evidence of an abandoned oil tank on the property. Sometimes you will see a “fill pipe” or a “vent pipe” on the outside of the property, or about a four inch scar along the basement floor where oil lines ran to an old furnace. However, sometimes no evidence exists. You can do some homework searching the DEQ’s UST (Underground Storage Tank) database to see if any work has previously been done, or if your property is located in the City of Portland, you can search your property records at the city’s website Portland Maps (check the historic permits tab). However, often permits were not obtained and no records exist at all.

I had a property listed last year where we found no evidence of an oil tank upon visual inspection, but when the buyer did their professional inspections, an abandoned tank was indeed found. This abandoned tank contained several hundred gallons of oil at one time, and had been leaking for decades. It was a bad spill, and the cost to clean it up ran around $6,000, and my clients eventually decided to not sell the home and move into their dream home, partly because the repairs cost too much money, the oil tank being the biggest bill on the repair list.

Oil tank spills do not always cost that much (commonly in the $2,500 range). Rarely, they can cost considerably more if they’ve been leaking for even longer. There are times that the contaminated soil around the tank does not have to be physically removed, if the oil tank contractor can prove to the DEQ that the contamination does not threaten the groundwater and there aren’t carcinogens threatening the health of the occupants, among other criteria.

Occasionally you will find a home that still uses oil heat. The same concerns apply to working underground oil tanks as the ones that have been abandoned.

Searching for an abandoned oil tank costs in the vicinity of $75. Taking soil samples to find out if the tank has leaked is going to cost you around $200. These fees, while costly, could save you thousands of dollars in the future than if you had bought the house unknowingly with an abandoned tank.