The Evolving Role of the Real Estate Broker!

The role of the real estate agent in Portland Oregon or anywhere else is constantly evolving.  When I started my real estate career in 1985, we had one computer in our office.  NO ONE in my office had a personal computer.  I knew one Realtor with a cell phone (that was about the size of a State Fair prize-winning zucchini) and it was so expensive the agent was afraid to make calls!  No one had ever “faxed” an offer to someone (much less e-mailed one).  I still remember beating out another offer because I “faxed” an offer to a client in the mid-west for his signature (while the other agent overnight-ed their packet).  I had to work-out on a regular basis because my “Multiple Listing Book” was larger and heavier than a Manhattan phone book (and, that was really the only way to access the listing inventory).  Of course, the book was always two weeks behind the inventory due to publishing and printing constraints.  A secretary “manned” (or, more likely, “womaned”) the front desk and was your lifeline to communication with clients and potential clients, where you maybe checked in twice a day by stopping by or calling from a pay phone while “out in the field”.  Real estate offices did eventually “morph” and provided 2-3 computers in a work room for all the agents in the office to share (I was in an office with 75 agents and 3 computers at one time).  Since in today’s world way over 50% of our business is transacted through working on our web sites, blogging, e-mailing, e-faxing and connecting while in the field from our “Smart Phones”, I don’t know why there weren’t more shootings in real estate offices as agents vied for time on the computers!!! If I hadn’t lived it myself, I would think this was a figment of someone’s imagination….really good “fiction” about the way things were.  And, NO……those were not the “good ‘ol days”……not for me anyway!

Anyway, I digress.  To survive in the real estate business you must constantly reflect your buyer’s and seller’s needs and the requirements of the marketplace in present tense.  Real estate information is no longer proprietary and we are not the “gate-keepers” of listing inventory or property details.  Home buyers and sellers have access to multiple sources of information and with 90% of buyers starting their real estate search on the web and xx% of sellers researching their position online, the public does not need real estate agents as their first point of contact.  There are a myriad of ways to access much of that data.  Our industry must keep re-structuring and re-inventing itself to reflect the times.  We need to “kick it up a notch” and be a partner in an important set of decisions that revolve around a real estate purchase.  We must be a source for other referrals such as mortgage brokers, title and escrow companies and property inspectors.  We must be an educated and experienced resource.  We have to be a strategist, a fellow brain-stormer, an advocate and a sponge (take it all in, wring out what we don’t need).  We have to not chase the immediate sale, but rather embracethe long-term relationship.  We have to negotiate with a win-win attitude while solidly championing our clients’ position.  We absolutely have to maintain a certain level of technical proficiency and constantly be willing to upgrade our technology….it is a “people-first business”, but you must have access to fast information and an even faster response time!  We have to read, take classes, attend seminars/webinars and scour real estate, financial and economic “rags” to keep abreast of the “latest and greatest”.  We have to respect ourselves and our clients by first investing in ourselves, personally and professionally.  You cannot be an advocate if you’re not mentally, physically and spiritually at least trying to be at the “top of your own game”!

The emergence of this new breed of real estate agent will, of course, begin with the on-going edification of existing professionals.  The rest of the evolution of the industry will have to launch with hiring practices.  Instead of pressure on managing Brokers in real estate offices to “fill seats” or simply produce “warm bodies”; instead of a “numbers game” the industry will have to embrace the age-old “quality over quantity” ideology!  The public will have to insist on “full-time” vs “part-time” agents to represent them.  Why does this matter?  It matters because experience matters!  Everyone has to start somewhere, so why not institute “mentoring programs” within real estate offices, where new agents can actually shadow experienced agents and learn the basics.  Instead of fueling a state of paranoia, the agents develop a sense of community and camaraderie.  Of course, a little old fashioned competition mixed in doesn’t hurt, but sharing the wealth of knowledge is essential.  Lack of training is rampant and handing someone an RMLS-web code, a desk and a phone is not enough to secure the success of that agent or the clients they represent!

I am one of the lucky ones.  Not only do I love my job (despite the fact that 2008/2009 tested my stamina), but I started my career in another down market with interest rates at 13% and a stampede of real estate agents had left the business.  There were only 12 agents in my office and we were given individual attention and weekly required classes.  I know that many newer agents have never seen a downturn…till now.  This temporary down market could give managing Brokers the opportunity and time to really participate in their agents’ development.  Instead of setting the bar so low, we can now demand from ourselves our very “highest and best”.  Just some thoughts……………

What’s the Buzz…Tell me what’s a-happening (in Portland Oregon real estate)!!??

“What’s the buzz…tell me what’s-a-happening….what’s the buzz…tell me what’s-a-happening”.  I certainly don’t have a crystal ball, but sure could use one these days!  Perhaps on Craig’s List??? I’m doing a lot of market analyses of Portland properties lately to determine an appropriate possible sales price.  It’s not easy in a market where foreclosures and short sales undercut and undermine the market stats (and expect more of those this year).  It’s often difficult to define that “sweet spot” in the market where you don’t leave money on the table but still entice buyers to offer!  There ARE buyers and there ARE properties selling IF they appear to be a “steal or a deal”.  It is still very much a buyer’s market with the possible exception of well-placed, well-staged and well-priced homes at the first-time buyer price point.  At that entry price point (which is looking oh so much more attractive and accessible than it was a couple of years ago), I have run into some multiple offer situations.  Other higher price points do also move but with much more consideration and due diligence.  The move-up/repeat buyer market moves more slowly and it’s all about price!  The more money at stake, the more enticing the price must be.  With inventory as high as it is, you must consider pricing your home to sell as a competitive sport!  You must out-shine and under-cut the available competition. 

Are the first-time home buyer tax credit and repeat home buyer tax credits helping our real estate marketplace?  I definitely believe that the credits are an incentive.  But, no one should buy a house merely for a tax credit.  However, if a new home was a goal I would most certainly be amenable to “free money” from the government!  I guess if I were thinking I was ready to make a move, I would be hustling to get my house on the market while that stimulus is still available (buyers must be in contract by April 30th and the transaction closed by June 30th).  I do believe that it’s a good time to buy real estate (and put my $$$ where my mouth is by purchasing a duplex this summer).  Interest rates are very low and there is the potential that rates will rise this year.  I’ve also sold one of my real estate investments this year, so “I feel your pain” regarding how much you may have once thought your property was worth  .  Real estate is still a good addition to any well-rounded portfolio and has always stood the test of time (with “time” being the operative word here).  For some stats on how low interest rates affect housing costs, go to http://fabulousportland.com/2009/04/07/to-buy-or-not-to-buy/ and for a great rent-vs-buy calculator, go to http://www.gonorthwestloans.com/mortgageLoanCalc.html .  Investment real estate is a wonderland of positives in my book.  Someone else pays the mortgage, you get multiple write-offs and depreciation on your taxes, you work towards a positive cash-flow with increasing rents over time and you enjoy appreciation of the value of the property (albeit slow in our current environment). 

So, that brings me to appreciation and what can we expect for our recovery?  See paragraph one as I’m definitely in the market for a crystal ball!  I do read a lot about this subject and attend presentations, I’m “in the trenches” everyday and have worked through multiple real estate market conditions since 1985 (remember interest rates at 13%???).  There are ups and there are downs.  Also, remember if you are buying and selling in the same market you are feeling the pain of selling, but enjoying the benefits of buying.  I do see two unknowns in our immediate future:  unemployment and the commercial real estate market and how they will continue to affect our residential supply and demand.  Otherwise, I believe it will be a slow climb.  It could be five years (give or take) before we see a full recovery.  And, what does “full recovery” mean?  I think our minds will be reluctant to embrace another real estate frenzy anytime soon.  So, a slow and steady plod is a more reasonable expectation.  I’m cautiously optimistic about real estate in 2010!  We are likely to see a slight rebound in sales this year as stabilizing home prices and record-high affordability conditions (along with continued low interest rates) draw buyers into the market.  It’s not as sexy or exciting, but I’d always rather be the turtle than the hare anyway.

Goals for 2010! Procrastination is not your Friend!!

Hey! Welcome to a New Year AND a New Decade! It seems to insinuate a lot of pressure to make resolutions and accomplish new things.  If you live anywhere near the “here and now”, every day actually offers the promise of resolutions realized or not.  I’m always pondering my goals, I do write them down and I actually have to be careful how I frame them as I’m so naturally “hard-wired” for goal-setting and so “type-A” about keeping them!  I say this because life is a “flow” and resiliency and flexibility are paramount to success.  However, I digress!  Any time you set a goal, you have to be looking around the corner for “procrastination” to rear its ugly head!  And, I can promise you that “procrastination is not your friend”.  Not ever!  End of story!  If there’s something you want to do, something you want to accomplish………do not give “procrastination” a ride to anywhere. 

If you’re still considering your “New Year/New Decade” resolutions, I would think these are at least categories to include:

• Family.  It all starts with family.
• Health.  Without health, the rest of your list doesn’t matter.
• Friends.  They’re your “family” not by blood.
• Finances.  You may not care about money, but everytime I go to buy groceries, they make me pay with money???
• Personal Development.  This a core element of a fully realized human being, we just have to keep trying.
• Business Plan.  If you’re in business, you need one. If you’re not, you’re dependent on other businesses you frequent having one.
• Philanthropy.  Once you’ve reached the level of providing for yourself and your family, giving back is essential for fulfillment.
• Love.  YES!!!!!!!!!!!!!
• Education.  We just need to keep learning new things.
• Spirituality.  We need to feel like we leave this earth making a difference (size does not matter).
• Exit Plan.  When, where, how and why will we retire?  What is our legacy?

Lots to think about and some time to do it!  Just don’t let “procrastination” keep you from any one of these.  I promise you “that guy” ain’t your friend.  Just do it!  Happy New Year! 

Health, wealth, peace, love, joy…………..jj

More Changes Coming in the Mortgage Industry! An FYI for Portland, OR Buyers & Sellers!

Again, more changes coming in the mortgage industry!  This time it involves “Good Faith Estimates” for potential buyers.  In order to compare “apples to apples” you must compare a combination of elements when interviewing Mortgage Brokers to partner with you on your next real estate transaction.  One of the first is to speak with other friends or trusted advisors (such as your Real Estate Broker) to get the names of mortgage brokers they have found reliable and referred.  The 2nd step has always been to ask for a “Good Faith Estimate” or GFE.  A GFE has always been a list of closing costs to acquire the loan plus the most appropriate interest rate available from the lenders available to that Broker and, finally, the monthly PITI (principal, interest, taxes, insurance).  Beginning January 1st, 2010 we will see some changes in the industry.  Now a GFE will be more akin to a “Truth-in-Lending” document that was formerly provided during the loan process and, again, with the closing papers.  Truth-in-lending gave you the APR or annual percentage rate (the full cost of the loan including closing costs) and the total of your payments over the life of the loan (never a pretty sight).  Now GFEs will look more like truth-in-lending and the other information, such as closing costs and PITI will be in a summary sheet provided by each mortgage brokerage house.  Another big change is the new requirement for getting a GFE from a mortgage broker or lender and that will include pulling a credit report.  Thus, receiving this document will take a bit more time!

Other changes include that the “Owners Title Policy” (usually a seller paid cost) will show up on the buyer’s GFE (and will be very confusing for buyers…just know to subtract that amount, but it must now be disclosed). Also, the escrow officer in charge of preparing the documents for signing and recording must now compare the original GFE to the final HUD closing document to make sure they are in line.

Just know that you will want to compare both the GFE and the summary to get a true picture of which loan would fit your needs.  This is simply another example of the pendulum swinging (and, perhaps, occasionally “over-swinging”) to compensate for the former “loosey-goosey” lending practices that helped propel us into this new era of real estate.  Sighhhhhhhhhhhhhhhhhhhhhhh!  However, the good news is these new regulations will force marginal Mortgage Brokers to stay the course on fees.

Portland Metro Monthly Real Estate Stats…Come and Get ‘Em!

The very best to you and yours this holiday season. I hope you are enjoying the magic that also comes at this time of year. We officially start the beginning of winter next week, but that means the days will start lengthening again. I think the Portland real estate market is also reaching the end of a long dark period, and I look forward to a new and brighter year for 2010. The tax incentive for home buyers has been expanded to include certain current or repeat homeowners, so if I can be of service, please contact me at 503-709-0802 or jj@janeesejackson.com.

FAQ’s on Repeat Tax Credit:  http://bit.ly/RepeatBuyerTaxCredit

FAQ’s on 1st Time Buyer Credit:  http://bit.ly/Original1stTimeBuyerCredit

Sales activity in the Portland area increased in November compared to the same month in 2008.  Closed sales were up an amazing 72.4% and pending sales rose 7%. New listings dropped 7%. Year to date pending sales were up 2.6% although closed sales were behind last year’s total by 4.1% (my guess is the number of short-sales that fail to close). Y-T-D listings decreased 19.9%.

The monthly inventory rose just slightly to 7.1 months from the previous month (which is typical for the holiday season), which means it would take approximately 7.1 months to sell the 12,697 active listings. The average price for is down 12.9% and the median sale price declined 11.1% compared to the previous 12 months in the Portland area Metro market.

 As always, information is very neighborhood specific, so contact me for info about your area!

Track your ‘hood or find your new home or investment on this site by signing up for daily listings!  You are enjoying www.fabulousportland.com

Season’s Greetings!!

Gratitude!

It’s been a tough year and tough years bring out the challenges in dealing with other people (spouses, co-workers, children, family and friends), with out jobs, with our day-to-day routines and with our sense of entitlement!  The ritual of a day of Thanksgiving is just a reminder that however “challenged” we might have been or might still be, by the economy and/or powers-that-be and/or the consequences of our individual choices, we have much for which to be grateful!  Maybe we can commit to health and well-being, lending a hand when we can and not being too hard on ourselves and everyone else!

Freedom to think, to love, to live.  A chance to be alive and live our life to our fullest potential. A chance to find happiness and joy.  Giving thanks that we have an opportunity to control our gratitude and attitude!!!

Have a Happy Thanksgiving!

Are You Sick and Tired of Hearing About the $8000 Tax Credit?

okay, okay, okay….enough already about the $8000 tax credit!!  Portland home owners and home seekers have been barraged with information about the credit.  If you are sick and tired of hearing about the 8 grand in $FREE MONEY$ available as a “credit” not a “deduction” (see explanation below) then turn away from the computer.  Remember:  a first-time buyer under this program is someone who has not owned a home in the last three years….so, this credit could apply to a wider range of people than you may imagine.  Don’t hesitate to remind your friends, your family, your co-workers that the deadline for closing is December 1st, 2009 (which means the transaction must record on November 30th, 2009).  This ALSO MEANS you would need to be in contract (unless it’s a cash offer) by approximately the first of October to the 15th of October to ensure a close date of the end of November….especially if there’s a last minute rush on loans and with all the new appraisal regulations and requirements.  Please pay it forward……..(more FAQs below):

The “FIRST-TIME HOME-BUYER CREDIT”    (AND WHAT IT MEANS TO YOU, A FRIEND OR FAMILY MEMBER)!  

PLEASE pass the information to someone you know who might be in the market for their first home!!!

Q:  How much is the tax credit?

A:  The tax credit would be $8,000 or 10% of the purchase price, whichever is less. 

Q:  Who is eligible?

A:  Similar to the $7,500 tax credit included in the Housing and Economic Recovery Act of 2008, the $8,000tax credit (included in the 2009 Economic Stimulus Plan) is available for the purchase of the primary residence by first-time homebuyers.

Q:  What defines a “first-time home buyer”?

A:  According the IRS, any taxpayer who has not owned a home during the 3 years prior to the date of purchase can qualify for the credit.

Q:  Do I have to repay the $8,000?

A:  No.  Unlike the previous $7,500 tax credit that did have to be repaid (which made it essentially an “interest free loan”), the $8,000 does NOT have to be repaid, UNLESS the home is sold within three years of purchase.  If the home IS sold within that 3 years period the credit is simply reversed.

Q:  What if I have no tax liability?

A:  The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

Q:  Are there any income limitations on the tax credit?

A:  Yes.  The tax credit is strictly for individuals with adjusted gross income (AGI) of under $75,000 or $150,000 for joint filers.  AGI is total income for a year minus certain deductions, but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4.

Q:  If my AGI is a bit more than the designated $75,000 or $150,000 respectively, can I still claim the credit?

A:  It depends on your income. Partial credits of less than $8,000 are available for some taxpayers whose AGI exceeds the phase-out limits. 

Q:  What is the difference between a tax credit and a tax deduction?

A:  A tax credit lowers your tax bill dollar for dollar. A deduction shaves money off your taxable income, so the value depends on your tax bracket. For example, if you’re in the 25% bracket, a $1,000 deduction lowers your tax bill by $250. But a $1,000 credit lowers the bill by the full $1,000, no matter which bracket you might be.

Q:  What type homes qualify for the tax credit?

A:  Included are single-family detached homes, attached homes like townhouses and condominiums, manufactured homes or mobile homes and houseboats (as long as all other criteria are met).

Q:  What is the time frame for completing my purchase to be eligible for the “First-Time Homebuyer” credit?

A:  This tax credit applies to properties purchased on or after January 1^st, 2009 and before December 1^st, 2009 (so there’s still lots of time).  First-time home buyers who purchased a principal residence on or after April 9^th, 2008 and before January 1, 2009 may qualify for the former $7,500 tax credit (which must be repaid, but operates like a zero interest loan).  Purchase date refers to the date you closed escrow on the property.

Q:  What if I am eligible to participate in another state or local first-time homebuyer mortgage program? 

A:  You maynow claim the credit (previously this credit was prohibited if you participated in any other first-time homebuyers initiatives).

Q:  What if the home is a short sale or foreclosure?

A:  The credit does apply.

Q:  What if the home is in disrepair and I’m willing to do the work but worried about getting the home financed?

A:  There are two possibilities for financing:  the FHA 203k loan and a conventional “Purchase & Renovate” loan (call or write for more info on those forms of financing).

A Follow-Up to My Recent Post on Loan Modification Fraud!

As a follow-up to a recent post:  “Loan Modifications:  Be Careful Out There”  ( http://bit.ly/jgeHx ), here is a recent Inman News article ( http://bit.ly/5QRdS ).  The article shares examples of loan mod company deceptions and fraudulent activity in California!  A majority of the time, if there is an opportunity for negotiating a modification of your existing loan, you can deal directly with your lender.

Coupon for Money Off the 2009 Street of Dreams Tour in Portland Oregon

Here is a coupon for $2 of tickets to the Street of Dreams if you would like to visit or share with a friend!

The 2009 NW Natural Street of Dreams “Views of the Pearl” opens August 1 and showcases four of Portland’s premiere condominium home developments, featuring nine incredible penthouses ranging in price from $1 to $2.5 million. With a focus on LEED standard and eco-friendly materials, the dream condos include the latest in home innovations and design, including wrap around balconies and hot tubs with a stunning city view. New to the show is the Pearl Pass, which is not only your ticket to the show, but also a savings card to over 80 Pearl area businesses.  Click on the link below, enter “2off” at check out for $2 savings on your 2009 Pearl Pass.  Enjoy the show.

http://www.streetofdreamspdx.com/info-and-tickets/info-and-tickets.php

What if You Owe More on Your Home than it’s Worth?

Whether you live in Portland Oregon or elsewhere, our present economic situation is presenting more obstacles than only 401Ks or IRAs that’s are not worth what they once might have been!  Homeowners are challenged by the mere fact that they simply owe more on their house than it is currently worth in today’s market.  So, what are the options for that homeowner who must sell due to changes in employment, changes in family dynamics or life situations?  First and foremost, know you are not alone!!  Who saw this coming?  I think during every real estate market frenzy, we know that a correction is imminent.  I’ve seen multiple markets during my 24 years tenure in this Portland real estate market.  The severity of this particular “correction” is what makes it special.  The complexity of economic conditions and contributors to this market environment also make it different!  We can go on and on about exactly what elements of greed deserve the most blame but that won’t help a homeowner presently struggling with the aftermath. 

I’ve had multiple clients attempt loan modifications without any cooperation from their various lenders.  So, where do you go from there?  One possibility is to put the home on the market and attempt to negotiate with the lender or lenders involved to sell short of what is actually owed on the home.  This takes some extra paperwork and extreme patience.  But, this type sale can minimize the damaging impact to your credit and can lessen your financial exposure and liability.  A foreclosure can remain on your credit for up to seven years while a short sale usually gets reported as a “settled debt” and is significantly less damaging.  With a short sale, your FICO score will not be as negatively impacted as it would be with a foreclosure, and you will be able to get into a new home sooner.  As with foreclosure, there are several potential tax and liability considerations when doing a short sale or loan modification, however, they are typically less severe than they would be with a foreclosure.  Seeking qualified advice from your CPA or tax attorney is suggested.

Why would a lender agree to a short sale?  In most distressed mortgage situations, foreclosure is a last resort for all parties involved.  Both the homeowner and the lender usually want to avoid foreclosure at all costs.  That is why lenders have come up with various alternatives to foreclosure.  A short sale gives the lender the ability to cut its losses upfront, thereby avoiding the expense and time of a foreclosure and potentially greater losses.  Lenders want to make loans; they do not want to be in the business of owning and managing real estate.  In may cases, a short sale offers a better return on the lender’s investment than a foreclosure.

As a seller, you must first authorize your Real Estate agent to speak and negotiate on your behalf.  Next, some time should be spent composing a sympathetic “hardship letter” to explain the circumstances that force the sale.  This is your opportunity to appeal to them.  You will possibly be asked to corroborate your hardship with financial statements and other verifications.  Your Realtor should be experienced in the procedures and able to be your guide throughout the process.

Next will be the really hard part; that is divorcing yourself from the transaction and your attachment to the home or the “value” of the home.  This is going to be a sale that “sells short”.  The ultimate price that ”our present real estate market” will accept is not a reflection of the quality of the home or love and attention you once gave your home.  And, it is not a reflection on you, as a person.  You are simply another person who is traversing a new terrain.  One that, very often, was not precipitated by you…rather one that was created by outside circumstances!

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