FEBRUARY PORTLAND METRO REAL ESTATE UPDATE!!!!

With the holidays, Valentine’s Day (not to mention my birthday) behind us, we can look forward to the 2012 Real Estate Season!!!  2011 ended on a positive note and this year has definitely started off on another positive note.  Closed sales experienced an 18.3% increase if you compare this January to the same month a year ago.  These are the highest numbers for January since 2007 (remember, if you believe the statistics, March 2007 was the height of the market).  The average time on the market has also improved, decreasing from 160 to 136 days.  December 2011 saw 5.3 months of inventory (down from 11.3 months in January 2011 and 12.6 in 2010).  January 2012 came in at 7 months of inventory, but that’s a fairly typical trend that January will be one of the highest (and usually THE HIGHEST) month of the year in housing inventory.  I have been in a multiple offer situation 3 times in the last 6 weeks!  So, well-priced, good condition properties are moving!!!  That speaks volumes to me!

SELLERS:  What does this mean for sellers?  It means if you haven’t already absorbed the market data, get someone you trust to give it to you!  Some properties are harder than others to price correctly; such as those with ethereal value (views, waterfront, etc) or challenged properties (fixers, un-staged, over-stuffed).  None-the-less, you must react quickly to the marketplace.  If you get a “lot” of activity and no offers, it probably sounded good but still has issues (remember price overrides all objections).  I’m telling you that well-placed, well-marketed properties will go fairly quickly.  If your home is not selling, re-visit price, condition, location.  There are no magic potions!

BUYERS:  What does this mean for buyers?  The Fed has claimed they will keep interest rates down until 2014.  If that doesn’t change, then mortgage rates (which still fluctuate daily) should stay very low giving buyers some time to position themselves for the best buy.  However, that being said, like I mentioned in my beginning paragraph the inventory is beginning to be absorbed.  Since pricing is always about “supply and demand”, I have to question that the pricing continuum will continue to go down!

INVESTORS:  What does this mean for investors?  The rental market is very good in the Portland area, generally with vacancy rates less than 4%. You use your down-payment + other people’s money (a Mortgage) to purchase a property. Your tenants pay that mortgage (PITI=principal, interest, taxes, insurance), you realize whatever cash-flow (rents minus PITI & maintenance=cash-flow). So, whether the real estate market appreciates or not, you accrue equity due to the tenants paying down the mortgage on a monthly basis.  It can be a challenge to lay the foundation to be an investor, but “NO PAIN, NO GAIN”!!  Read my recent post on “Preparing to Be a Real Estate Investor”!

Selling anything in this economy takes a strategy that makes whatever you’re selling stand out!  What are the “do’s” and “don’ts”?

• don’t “start high”
• don’ try to sell something that is dirty or needs repair
• don’t expect to “sell quickly”, a little patience is a virtue
• don’t take offense when the buyers “low ball” or ask for a discount
• don’t cling to the idea that the price 6 months ago has anything to do with the price today
• do understand that if you hold on for too long to get the “better price”, you might shoot yourself in the foot
• do get professional help for marketing, positioning, pricing and selling
• do get over your emotional attachment to the thing you want to sell
• do make it easy for the buyer to buy
• do show compassion

It’s tough out there but properties are selling if they are priced competitively, staged to show off their best qualities and accessible!  Maybe it’s just time to move on…..

“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!!!

This is a rendition of an article that I wrote for April 2009 and it’s nothing if not even MORE true today!!!  You remember the age-old real estate adage: “location, location, location”?  Well, it’s been trumped by PRICE!  There are buyers out there but they are looking for a “steal or a deal” in order to entice them into the marketplace. 

Location will always be an important component of real estate value, however, pricing has usurped its position as a stronger element for a successful sale.  It’s all about price now! So, overpricing your home in this market is the “kiss of death” (and it doesn’t have to be much overpriced to accomplish this).  It is very difficult to determine pricing (and, no one wants to leave money on the table), but you almost have to run the comparable data and ignore it!  You absolutely have to price below the competition and price to lure the reluctant buyer to the table.  The foreclosures and short sales are compromising the sale prices of homes in many areas and to be competitive the other sellers must respond.  Properties with the possibility of selling short of what is actually owed on the property are often utilizing formulas for price reductions.  The listing agent will consistently and incrementally drop prices until that property’s price hits that “sweet spot” in the market pricing continuum.  You know you’ve reach the sweet spot when the activity and interest suddenly increases and there are often even multiple offers.  This can also happen in a non-short sale or foreclosure situation (I was just involved in such a situation when trying to purchase an investment property…overpriced and no offers…I come in low…seller is out of town…while I wait they lower the price…and, suddenly there are three offers…I have to up my offer).  This is a tough market, maybe tougher than most realize.  It’s a competition for a smaller pool of buyers.  You have to be competitive to even be in the game, you have to undercut the competition to win.

It’s important to think like your potential buyer. What will they be looking for in your area and in your price range? Is your home “conforming” for that average buyer? Is your home “the best it can be” (considering your financial situation)? Is your house priced to compete and compare? How many other homes are available to that buyer? Are you accessible to that buyer (is it easy to show your home)?  Remember:  “Pricing, pricing, pricing is the new location, location, location”

Your best effort is your first effort (remember when your mom said “first impressions count”?). So, don’t think “I have time to market” or “I don’t have to sell”. If you’re “on the market” you must want to make a change (or you just really like cleaning your house or picking up your underwear). So, make it count! Today’s market demands a competitive attitude.  Undercut the competition, run faster, jump higher, just do it (thanks NIKE).

“PRICING, PRICING, PRICING” IS THE NEW “LOCATION, LOCATION, LOCATION”!!

It’s true!  Though, location will always be an important component of real estate value, pricing has usurped its position as a stronger element for a successful sale.  It’s all about price!!  So, overpricing your home in this market is the “kiss of death”.  It is very difficult to determine pricing (and, no one wants to leave money on the table), but you almost have to run the comparable data and ignore it!  You should price below the competition and price to lure the reluctant buyer to the table.  The foreclosures and short sales are compromising the sale prices of homes in many areas and to be competitive the other sellers must respond.  Properties with the possibility of selling short of what is actually owed on the property are often utilizing formulas for price reductions.  The listing agent will consistently and incrementally drop prices until that property’s price hits that “sweet spot” in the market pricing continuum.  You know you’ve reached the sweet spot when the activity and interest suddenly increases and there are often even multiple offers.  Once a home has endured the actual foreclosure procedure, the banks are anxious to get them “off the books” and will try to price for a quick sale.  These factors, obviously, affects the pricing on homes that are not facing a short sale or foreclosure and must be considered in the market analysis. 

Pricing properties for market is always challenging.  There are so many components to determining at what price point a house may sell.  The usual elements such as size, age and neighborhood are definitely a consideration, alongside the more ethereal factors such as view, style and cosmetics.  Realtors utilize the RMLS web site (Realtor’s Multiple Listing Service) to view, compile and compare data on presently active listings, pending sales and recent sold properties. At present it is very difficult to compare due to one particularly overlooked element of full disclosure in our results and that is “seller paid concessions”!  These allowances can be in the form of loan points purchased by the seller to lower the buyer’s loan interest rate, a buyer’s closing costs paid by the seller, etc.  In a marketplace where pricing is already made more difficult due to a lower number of usable comparable “solds”, there should be more transparency in the amount of financing concessions.  Our local RMLS should consider a category for seller paid monies.  This would benefit sellers, buyers, appraisers AND Realtors!

Ok, this local Portland, Oregon arctic storm weather has not helped an already challenged real estate market.  For buyers low, low, low interest rates hit simultaneously with a chunk o’ ice, snow and cold temps.  Thus, in the last two weeks I’ve had to cancel multiple showings to interested buyers.  A great time to buy, no doubt!!  We have the lowest interest rates in years coupled with some of the lowest housing prices.  So, there’s an easy remedy there.  I’ll reschedule after the holidays with interested buyers. 

What to do if you’re a seller is truly the question of the New Year!!  If you are buying and selling in the same market, sellers and buyers need a “Come to Jesus” moment where we truly evaluate what your perceived losses might really be?  It’s true, if you sold your home a year ago or even 6 months ago, the end result would’ve been different.  But, so will it be different for you as a buyer!!  If you’re moving out of state, your attitude is, of course, completely contingent upon where you are moving (but, isn’t it always???).  If you are selling due to the unfortunate loss of a job or some other life-defining circumstances, you have to evaluate reducing your pain.  Are you lucky enough to have equity to absorb the current and temporary “paper” loss of equity?  If so, I would simply move forward with your life plan.  If you were counting on “x” amount of accrued equity to move forward, you might reassess and find that moving forward is not as expensive as you once thought.  If you are forced to sell and find that you have do not yet have enough equity or have lost ground, then you have to consider the best options to lessen the impact on your life.  First you should research all options your present lender might offer.  A short sale will many times be preferable to a foreclosure. 

We’ve all lost $$$, for the moment, on all our real estate investments as well as our retirement portfolios.  These cycles are just that:  “cycles”.  And, timing is everything