Remodeling tests the strength of your resolve.  I feel like it’s very much a step-by-step process combining a flexible plan, lot of resiliency and a bit of faith in your vision.  You are watching the rose unfold, the painting evolve, the present unwrap…okay, I’m a little melodramatic sometimes.  But, it is my “baby” and I really, really care about the progress.  Again, I have a philosophy that if you love your property, your tenants will care more about it!  I’m enchanted by this North Mississippi neighborhood and I appreciate the vintage and “feel” of this piece of real estate.  I’ve already had multiple calls wanting more information about renting simply from people “cruising the ‘hood”.  The refinished hardwoods look great, authentic and aged, but really good.  Thanks to “All About Wood Floors”/503-309-4036 (they finished the floors on the Vancouver duplex last summer also). 

subtle, updated colors replace former "hot pink" paint

just in case you forgot the former awful bright pink

black & white "art deco" look in the kitchen w/soft yellow walls

new tub surround, we were able to save the window

New insulation, bathtub refinishing and kitchen next week.  Stay tuned….

JULY 2010 PORTLAND METRO REAL ESTATE UPDATE

In the residential market of the greater Portland Metro area, we saw inventory stay relatively low month-to-month from May to June of 2010.  We hit a year-to-date low of 7 months of inventory in May 2010 and jumped just slightly to 7.3 months in June!  When comparing June 09 to June 2010, closed sales increased 13.3%.  However, comparing June with the preceding month, closed sales dropped 1.9% and but pending sales grew 8.4%.  The average total market time is now 121 days for June and year-to-date it is 132 days on market (DOM) to sell (compared to 147 DOM in 2009).  We definitely saw sales stagnate with the end of the tax credits.

We are getting very mixed messages from the marketplace.  Overall, the stats are stronger for 2010 as compared to 2009.  However, the average sales price for June 2010 still declined 3.3% compared to June 2009 and the median sales price also fell 4%.  Comparing the 2^nd quarter of 2010 (April-June) with that of 2009, there are gains across the board.  Closed sales rose 34% and pending sales and new listings also saw increases of 1%.  So, there is more activity but not a repair in pricing.  I believe that there could be more activity because our decline has slowed and people feel more confident to move forward with their real estate plans.  But, the market is still very sluggish and competitive pricing is still “King” and “Queen”.  There seems to be very little emotion attached to the purchase.  IF it’s not perceived as a deal (i.e:  priced correctly for location and condition) it will be ignored both by the Realtors and the buying public.  The showing activity is already smaller due to a limited pool of available and qualified buyers, so being competitive is paramount to success!!  And, remember that the old adage is still true:  you have the most “power” when you are new and fresh on the market.  The longer you sit as over-priced “non-competitor”, the more stale and stagnant you become.  Of course, our sense of timing has been skewed by the former frenzied marketplace of 2005-2007 and we need to readjust our expectations to fit our “new normal”, which means more time on the market even priced correctly, but you will know you’re priced at least close to market by the activity you receive.  We still have the ramifications of the short-sale and foreclosure market and that will affect our pricing continuum for quite some time (or until that inventory is absorbed). 

Despite the fact that legislation has been introduced to supposedly make the loan modification process easier for the consumer, that has not been the experience of anyone I know.  And, there are lots of scams to avoid.  Thus, there will be more short-sales and foreclosures that continue to enter the marketplace.  There are reasons to attempt a short-sale rather than foreclosure or a strategic default and it’s good to know your options, if that situation should arise.

Buyers:  way to pick a great time to buy!  If you have nothing to sell, you would be hard-pressed to find better mortgage rates, lots of choices and adjusted prices.  You just have to get your “ducks in a row”.  The hardest things about too much choice is not getting overwhelmed and having a little faith.  Also, try not to over-analyze (often easier said than done).  If you have something to sell, you must get realistic and make sure the numbers work for you to make the next real estate move.  Brainstorming with trusted professionals can be invaluable!

Sellers:  The one piece of good news of which I can remind you is that if you are selling and buying in the same market place, you will not get as much for your home as might have at one time but you will also buy for much less than you would have at one time.  Again, there are no secrets to marketing and selling your home.  There is definitely no magic to overcome being overpriced.  The preparation is the same in this market as any other market (only even more important due to the competitive nature of the marketplace):  Pricing, Condition/Staging, Location.  Once you are ready for market and priced competitively, your Real Estate Broker has to make sure you are prominently displayed on the web.  Every agent has their favorite web sites and your input into the marketing is invaluable!  Remember, this is a partnership and nothing can be accomplished if you don’t trust your Realtor.  My ultimate goal:  you are happy…not just done…with the transaction!!

Tips to Insure A Good Move

For many families, moving can be a very stressful event. Besides coming to terms with your new life in a new home, you and your family will also need to think about moving day. Too often, families get caught up in various activities before moving day and fail to make the proper preparations. If you and your family are preparing to move, try to stay calm and organized throughout the process. Here’s a few pointers you might use:

Make a detailed checklist

It can be difficult to keep track of all the tasks associated with moving. Hence, you should try to organize your days leading up to and beyond moving day. If you have a reminder of what needs to be done and where you need to be, you are more likely to have a smooth moving day. 

Prepare for day 1

Prior to packing all of your boxes, you may want to assemble one box of necessities for the whole family. As most families finish unpacking their trucks late in the evening, there is often little desire to open several boxes to find pillows and toothbrushes. To prevent a stressful first night in your new home, try to place anything your family might need in the first 24 hours in a separate box, mark it clearly and keep it accessible during moving. Also, if you have any valuable or irreplaceable items – such as jewelry and personal keepsakes – you should try to wrap the items well and keep them with you while moving.

 To help with your checklist, you should try to include all of the following items in your “Day 1 Box”:

• Personal toiletries
• Soap
• Toilet paper
• Snacks and drinks
• Flashlight
• Screwdriver
• Pliers
• Set of plastic plates and cutlery
• Paper towels or tissue

Pack manageable boxes

Unless you have lots of large, lightweight items – such as down comforters and blankets – you shouldn’t need too many oversized boxes. Oversized moving materials often force homeowners into packing boxes that are too heavy and unmanageable. Instead, try to find plenty of midsized boxes and distribute weight evenly. Furthermore, if you are moving yourself, make sure you have all the necessary materials on hand before packing, including bubble wrap or packing peanuts for fragile items.

Label every box 

When packing your boxes, try not to place items for different rooms in the same box. After sealing up each box, simply mark which room the items belong in. When you arrive at your new home, you will be able to take each box to its rightful place and each family member can spend time organizing their own space.  

De-clutter as you go 

As you prepare to move out of your home, try to organize your belongings and set aside unwanted items. After unpacking in your new home, you will be happy having more space and fewer items to arrange. Before moving out, you can hold a yard sale or make a charitable donation to get rid of your unwanted belongings.  

Get the family involved 

If you have children, help them get excited about moving. With something to look forward to – like the chance to decorate a new bedroom – children often get more involved in the moving process. Also, you may want to ask your friends and family for help on moving day. Even if no one is able to move furniture with you, a family member could watch your pet for the day or take care of errands.

Though moving day can be a very overwhelming time for families, proper organization can make help turn that stress into excitement. If you follow your timeline leading up to moving day, you and your family will have no problem approaching the big move with confidence.

Think!  And, enjoy your new home!

“We’re All in This Together” by Ben Lee

You want to make a change or you have to make a change and you are considering selling your current home or investment property.  You decide to enlist the help of a Real Estate Broker.  At this moment, you are forming an alliance, you are developing a partnership and you are including professional guidance.  My advice is to definitely choose someone you trust, not to necessarily just agree with you, but to direct you and advocate for you.  Then you must open your mind to the facts.  It is often so difficult to “hear the truth”.  But, taking recommendations for staging (preparing your home for market), repairs (overcoming objections) and pricing (being competitive in a challenging market) are paramount to success in the Portland Oregon real estate market today.  Then you have to exhibit a lot of patience.  This, of course, goes back to “trust”. 

There are no “secret weapons” in selling a home today (other than avoiding common mistakes).  With the advent of incredible amounts of information available on the web, if your agent is performing due diligence in the marketing department (great photos, video, enticing commentary), immediately responding to inquiries, refreshing web sites, following your agreed upon marketing plan and you are getting no showings, you absolutely have to visit price again.  “Waiting” for the right person to come along and “make that offer” is hurting your chances of maximizing your eventual sales price.  If you continue to get showings but no offers, you absolutely have to visit price again.  Waiting for a buyer who will just “make me an offer” is difficult if the wrong buyers are seeing your home.  If you’ve staged to the best of your ability and responded to all “showing” feedback  and you ARE getting showings and no offers, you absolutely have to visit price again!!  At the risk of sounding repetitive, it all comes down to location, condition and PRICE.  These are tried and true axioms of real estate success and they’ve never been more true than right now!  And, it doesn’t take much to be overpriced in the current market climate. There is more inventory, a smaller pool of buyers, more mortgage restrictions, tighter appraisal standards and it’s a competition to catch the attention of that perfect buyer.  You can’t do anything about the location, you just have to live with no “footprint” during the marketing process and you absolutely have to be priced at or below the competition.  Like my Dad used to say, no one said life was going to be fair!!!

So, what if you simply owe more than your home is worth?  What if, due to the changing market conditions or changes in your personal situation you are forced to make a decision to opt for attempting to negotiate a “short-sale” (sell for less than is owed on the property) or a “foreclosure” (the lender steps in to repossess your property) or a “strategic default” (a homeowner can afford to make payments, but opts to stop because the loan amount is more than the value of the property)?  Here’s the beef on how these decisions affect your credit standing and ability to borrow again on a home.  (Remember to check with you accountant, CPA and/or attorney prior to making any decisions that might affect your long-term financial standing).

Generally speaking, a foreclosure will have a more dramatic negative impact on your credit score than a short sale. Foreclosure will lower your score anywhere from 250 to over 300 points and affect your score for over 3 years. Only late payments on a mortgage will show up on your credit score, a successful short sale will be reported as “paid as agreed”, “paid as negotiated” or “settled”.  Of course, the “catch” here is that you must be late on your payments for most banks to even discuss a short sale.  This will lower the score as little as 50 points if all other payments are being made. A short sale’s effect can be as short as 12 to 18 months. Foreclosure will remain as a public record on a person’s credit history for 10 years or more.  A short sale is not reported on a credit history. Foreclosure can have a challenging affect on your security clearance.  If someone has a foreclosure and is a police officer, in the military CIA or other position that requires a security clearance, that clearance could be revoked and the position terminated!  On its own, a short  sale does not challenge most security clearances.

Employers do have the right to check the credit regularly of all employees who are in sensitive positions.  A short sale is not reported on a credit report and is therefore not a challenge to employment.  Many employers are now requiring credit checks on all job applicants.  A foreclosure could challenge employment.

In 100% of foreclosures (except in states where there is no deficiency judgement) the bank has the right to pursue a deficiency judgment.  In some short sales it is possible to convince the lender to give up the right to pursuit a deficiency judgment against the homeowner.  My understanding is that the state of Oregon only allows “Deficiency Judgments” on only 2nd mortgages or lines of credit (again I would check with an attorney).  However, Fannie Mae stated that they will pursue deficiency judgement in states that allow this by law.

A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage, FHA, VA or Conventional mortgage for a period of 5 years.  With a short sale, it could be as little as only 2 years for Fannie Mae, 3 years for FHA or VA and 2 years for conventional financing.  An investor will find that they can get another Fannie Mae or conventional loan for 7 years, whereas you can get a Fannie Mae backed investor loan again after a short sale in only 2 years.  Fannie Mae recently announced that they will make people who can make their payments and who choose to do a strategic default wait 7 years before they are eligible for a Fannie Mae loan.  Furthermore, Fannie Mae stated that they will pursue deficiency judgments in states that allow this by law. 

Anyway, hopefully it never comes to that for any of us.  But, a little knowledge can help in the decision as to how to proceed.

"OOPS" Paint Gets Removed at the duplex renovation!

 And, so the work begins on the new duplex/investment property near the North Mississippi neighborhood in Portland Oregon.  It’s a great 1926 vintage side-by-side duplex and it needs some cosmetic updating!!  The new neighborhood is well-established (with one family owning 4 homes on the block) and that neighbor knows all the stories of the ‘hood (as she grew up on the block).  She calls the atrocious “mauve” paint job, which adorned the otherwise beautiful, original built-ins: “oops paint”.  This “oops paint” is what you get when there’s a particularly good deal on someone else’s paint and find out why it was considered a mistake! 

The same solution, Klean-Strip, was applied to remove the paint as was used on the duplex remodel at the North Williams Corridor last year to remove the awful adhesive that held the vinyl tiles and it appears to be working!!

There have been bids, bids, bids and decisions, decisions, decisions!  So far, there have been bids for insulation (as the house has very little), a plumbing company bid for separate water meters, a flooring company bid to refinish the hardwood floors.  I’ve spent two days at Habitat for Humanity, Lowe’s and IKEA choosing kitchen cabinets and flooring plus paint.  But, I’m starting to get a vision of “all that it can be”.

Tearing up the damaged vinyl flooring

The vinyl flooring was a mess and already peeling, so it was fairly easy to remove.  I’m envisioning a “black and white” kitchen that will be simple with clean lines and not fight with the “vintage”.  IKEA has a great deal on kitchen cabinets and new appliances (that were priced close to the “used” prices I paid on the North Williams corridor duplex appliances!!).  And, you can design your own rooms online!

The new fence construction will begin tomorrow and Pedro Naranjo will again perform the honors.  If you need a good handyman or help with small construction, cleaning or landscape projects, give Pedro a call at 503-443-8232 (although, he’ll be busy for about a week)  . Happy 4rth of July!!!

It’s been a wild ride!  If you’ve just tuned in, I’ve been trying to buy a new investment property/duplex in the continually developing N Mississippi neighborhood of NoPo (North Portland).  I signed the paperwork Monday, after various obstacles, my new deal closed and recorded yesterday (I still have a cramp in my hand from the signing).  I’m simply “living on faith”.  I have faith that the real estate market will repair and eventually turn-around (although, I don’t believe it will happen quickly).  I have faith in the power of a low interest rate  (I got 5.135% on an investment property and owner-occupied have been hovering around and UNDER 4.5%!!!).  I have faith in my “real estate sense”.  And, I have faith in buying low and making the numbers work!  And, let me tell you….even for me, a lot of it is and always will be “faith”.  Two great quotes that come to mind:  “Too many of us are not living our dreams because we are living our fears” (author unknown) and “Courage is resistance to fear and/or mastery of fear, not absence of fear”  (Mark Twain).

Buying real estate can be a little bit stressful at times, whether its in Portland Oregon or Kalamazoo.  After all, you are not buying socks at Bi-Mart (by the way) and for most of us it will be the largest financial transaction we make (as most of us are not Donald Trump)!  So, how can I be a better conduit for the process.  How can I be more than a “Broker”.  Webster defines “Broker” as “a person hired as an agent for negotiating contracts”.  Buying real estate is SO much more than negotiating a contract!!

There are so many moments in a real estate transaction that give you pause.  There’s digging through all your financials to get approved for the mortgage, there’s choosing the style of real estate, the location and the amenities.  Then, there’s all the choices of available homes for sale (and, today’s buyers do have choice), the decisions, the offer and, ultimately, the process of escrow.  There’s the waking up the middle of the night screaming “what have I done?”.  Okay, maybe that’s just me. 

Once you find the house and successfully negotiate your offer, you are in “escrow”.  There are several components to the experience.  There’s your continued negotiations (inspection negotiations, changes in possession because loans papers are late, etc) through your real estate broker, there’s your continued (often seemingly endless) requirements from your mortgage broker and there’s your interaction with your escrow officer.  There will occasionally be incompetence, arrogance and sometimes just honest mistakes.  Stress can make all of these experiences amplified.

It appears that every aspect of the process has gotten more complex.  Updated regulations to avoid any semblance of fraudulent behavior has complicated the methodology.  And, once again, the actions of a few are visited upon all of us.  But, an important component for all service providers in the real estate buying and selling process is patience and empathy.  The rest of the world is not involved in real estate transactions every day of their lives.  We have to perform our jobs like we trying to make people happy, not just getting them through the transaction.

So, you may remember that I have been trying to get a loan for another investment property in Portland Oregon in this new tightened credit market.  I have met my fair share of obstacles.  After a “what-seemed-endless” slew of last minute requests for minutia, that absorbed almost 4 hours of my day on last Thursday and some time again on Friday morning, then having to wait a weekend plus intermittent requests for verifications and clarifications this week for the underwriters (who had already said “loan approved with the following conditions”) to review, I get word today that my loan is actually REALLY approved.  What a relief!  But, I don’t actually know if I’m relieved I got the loan or just relieved to be able to quit digging through every piece of paperwork ever produced about or for me???  Just for giggles, some of the last minute “documentation” was a letter (from me) explaining why my income changes from year-to-year?  #1: My job and my income is dependent on the successful sale of someones property and/or finding someone that new and special home or investment property.  #2: This is a question from a lending institution? Are they not aware that the real estate market has been just a wee bit challenged?  Just sayin…
Anyway, I’m so happy. Portland was recently listed by trulia.com as one of the top 10 places to buy rental properties.  Now, the work begins.  The property is located in a wonderful, burgeoning area called the  N Mississippi neighborhood and is also at the east end of the Alberta Arts District but needs some cosmetic updating to “be all that it can be”.  Stay tuned for updates on the renovations!

My New Duplex/Investment Property in the N Mississippi Neighborhood

JUNE 2010 PORTLAND REAL ESTATE UPDATE!

Once again, when comparing sales activity in the Portland metro area in May 2010 compared to the same time last year (May 2009) closed sales increased 43.7%.  Pending sales and new listings both decreased by 24.1% and 10.2% respectively.  HOWEVER (and it’s a big “however”) a lot of that is still the residue sales from the “First-Time Buyer Tax Credit” and a little from the “Repeat-Buyer Tax Credit”.  Those deals had to be accepted by April 30^th, 2010 and were supposed to be closed by June 30^th, 2010 (however, the Senate just voted to extend the required close date to September 30^th, 2010).  Altos Research (which updates weekly) shows that inventory and days-on-market are climbing, while the Market Action Index has been flat recently.  This trend points to a weakening market.  It is still a buyer’s market, yet we’ve seen some areas with pricing moving higher, but because of high inventory levels our price conditions are still very fragile and if the market cools off further that price trend is likely to reverse.  When comparing May 2010 to the month prior, the average sale price fell 2.3% ($275,500 v. $282,100) and the median sale price decreased slightly by 0.4%.  Total market time has decreased from this time last year from an average total market time of 147 in May 2009 to an average total market time of 123 days on market in May 2010!  We are down to 7 months of inventory.  Our inventory in months is calculated by dividing the Active Listings at the end of the month in question by the number of closed sales for that month.  It would take 7 months to absorb the current inventory if sales continued at the same pace.  All the research continues to indicate that we are in recovery (although, I’m not really “feeling the love”) but that it will be a slow process that could take 3-5 years.

My experience in the everyday Portland real estate market is that buyers are still looking for a “steal or a deal” and sellers are still not fully comprehending the competitive nature of the marketplace.  Buyers are reluctant to “step up to the bat” unless they feel the property is priced at or even slightly below what the current market dictates.  There is still increased inventory and a smaller pool of buyers.  Once a property gets correctly priced, I often see or hear of multiple offer situations (and experienced it myself recently), so there ARE buyers out there.  The credit markets are still very tight and appraisal standards are amplified.  I’ve experienced multiple problems with appraisals as the pendulum swings back from the era of “drive-by” appraisals to the reactionary “over-kill” now present in the lending environment.

Sellers, let’s pretend that someone drops in from outer space and does not know what has happened to our local, national….NO, world real estate market and they agree to pay full price on your property (even though it’s priced over recent “solds” in the area).  They don’t go see and compare other similar homes (because they’re from outer space).  Unless they just won the lottery or have a considerable cushion of cash (and are willing to use it all to buy this home), they must get a mortgage.  If they are one of the prudent ones with good credit, a saved downpayment and can overcome the new strenuous mortgage requirements, the house must still appraise.  The average buyer will balk at purchasing for more than the appraised value.  I paid over appraised value last year on an investment property, but you have to be pretty confident that you are making a good investment.  Generally, the only buyers willing to do so are investors (either the numbers work for a rental property or a 1031 exchange protects profits from the sale of another investment, etc).  You can consider the current active listings but just so you’ll know your competition.  The only properties that an appraiser will consider are recent, comparable “solds” (they prefer to only go back 3 months).  I recently completed an article on “Why Homes Don’t Sell”.  Remember:  it doesn’t matter what you paid for the home, how much you’ve spent on the home or how much you need out of the home, the only factor that determines what a home will sell for is how much an agreeable and able buyer is willing to pay (but, see “must appraise” above)!!

Buyers, let’s pretend you are waiting for the “bottom of the market”.  Some areas and neighborhoods appear to be already there and repairing, others could still be challenged due to “shadow inventory” of foreclosures and short sales.  Do keep in mind, that interest rates will trump price over the life of the loan.  Rates are holding between 4.5% and 5%.  But, as the economy improves, interest rates will most likely go up.  Most of the time, you will find ample inventory and have plenty of time to consider your decision.  However, occasionally when a property is priced right, savvy buyers will immediately jump on a “good buy”.  That could force a multiple-offer situation.  So, being prepared (which includes watching and comparing inventory, getting your mortgage pre-approval, as well as mental readiness) to make a decision could be paramount to success.  What is a good deal in real estate?  When you get what you want!