Did you know that 1 of every 3 home buyers nationwide purchase their properties sight unseen?

I have to admit that this was a surprise to me. It goes without saying that these  buyers are doing their research online and depending on photos and information that is readily available for anyone to see.

For those who are purchasing for investment or flippers who are ready and eager to find properties in specific neighborhoods with the cash and skills to rehab homes, this could be a great way to go.

But for people looking to buy a home to live in, it’s not a way to buy that I would recommend at all. Here’s why:

  1. Photos can lie
  2. Unfortunately sellers and their realtors are not always telling you the whole story about any given house. The truth is that neither the seller nor the Realtor may know the whole truth when the house is listed. But sellers may also deliberately try to hide flaws that they are aware of. For example, how easy is it to paint over a wall covered in mold to disguise the problem? How easy is it to disguise a wall way out of plumb with a refrigerator in that corner?
  3. Not all remodels are done up to the same standards. A home may photograph beautifully, but has it really been finished beautifully? Do the doors all close? Do drawers all open?

In my very humble, or not so humble opinion, there is no substitute for actually seeing a house and getting a real feel for how the house flows, and more importantly how a house feels to you. Sure a home inspection is supposed to disclose what the seller may or may not have known in terms of flaws; but remember that a home inspector is a person too and can make mistakes, or might not call out something that just might drive you crazy when you actually live in the house.

The home inspector is not there to advise you about a neighborhood or your potential new neighbors. He/she might find the foundation appears sound, which doesn’t mean that it hasn’t settled. Those walls that aren’t plumb can be a real inconvenience when you go to place furniture, or even just hang wall decor.

That being said, my best advice to almost all home buyers is if you’re not able to go see a house yourself prior to purchase, at least have someone you trust go see it for you. Please don’t base your decision on photos, videos and the description. What feels like “move in ready” to one person may not feel like move in ready to you.

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How to win the battle of bugs and weeds around your home and garden with all natural products

It’s the battle of people versus the bugs and weeds as both try to take over our homes and gardens. Take heart, for the most part we can co-exist with most bugs without damaging the environment or killing off the good bugs. Personally I have no love for the weeds, so weeds be gone is my motto as long as I can do it without chemicals and too much work on hot summer days. 

Bugs
Did you know that most bugs have a sense of smell and there are some common household items that bugs do not like the smell of?
1. Vinegar – very few bugs will tolerate and spend time around an area sprayed with vinegar, so feel free to use it liberally to deter pests. This is especially helpful to drive ants out of your house. Personally I wipe down kitchen counters almost daily with vinegar. It works.
2. Essential oils such as peppermint, lavender, tea tree, citrus or neem oils have spiders literally taking their spider webwebs elsewhere. They smell through their feet, so you don’t have to actually spray the spiders, just their webs, and they won’t even walk on them. You can make up a spray bottle with any of a combination of several of these oils, add a few drop of dish detergent, find your target and spray. Keep this on hand because the effects are not forever, so you will have to repeat as needed to keep walkways etc free of spider webs. This works equally well indoors and outside too. By the way, to keep spiders outside, trim plants about a foot away from your foundation.


3. Coffee grounds are great to keep slugs out of your garden beds. If you’re a coffee drinker you probably have plenty around to surround your veggies or favorite young plants with the used coffee grounds. Slugs don’t like that coffee grounds stick to their bellies so they move on. If you don’t drink coffee, try going to the nearest Starbucks or other cafes. They are usually thrilled to have you take coffee grounds away for them, and the plus is that coffee grounds actually nourish the soil. This is so much better than dumping slimy trays of dead slugs that have gone after your good beer in a bowl. Yes slugs love beer, but it’s a nasty mess to clean up.

Weeds
weeds

Is this how big weeds look in your garden?

Weeds are a never ending battle but one that is easily won if you keep on top of it. While some people swear by Round up,  it’s highly toxic and pollutes the ground, gets into ground water, and really does not kill weeds any better than a simple mix of:
1 gallon regular 5% household vinegar
1 cup table salt
1 teaspoon dish detergent
Mix the above in a sprayer and wait for a sunny day to tackle the weeds. It’s best if you can catch the weeds before they flower and set seeds, but if not, just go at it, and repeat as necessary. You should see most weeds die off within hours and certainly within a few days. 
IMPORTANT note here though is that this mix is so effective that you need to be careful to not spray on any plants you care about directly. It will kill your plants as quickly as the weeds you were after. 
If you have weeds growing around the roots of favorite plants, sorry but your best best is to just dig them up.

If weeds have already set seed they’re ready to sprout up somewhere else, so keep vigilant and keep your garden not only looking better but healthier too. Remember those weeds compete with your plants for nutrients in the soil. 

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Average Portland home prices soar to $423,700 while mortgage rates dip slightly

houses make you moneyNationwide, housing inventories have reached crisis proportions. There is a severe lack of available homes for sale everywhere. Home values are increasing an average of 5+% throughout the country. But here in the Pacific NW, home prices are surging faster than anywhere else in the country. Average prices in Seattle are up about 12% per year, while Portland in the #2 position is seeing average value increases of 10.7%.

Remember, these are average price and value increases. There are some neighborhoods with lower inflation rates, but there are also many with much higher rates. Currently zip code 97233 (Centennial, Rockwood and Mill Park) is leading the metro area seeing prices and values up 19.7% for 2016 and early 2017! This means that if you are currently a home owner in 97233, you’ve watched your home value increase about $2500 – $5000 every month for the last year and a half – depending on size and condition of your home and immediate neighborhood. Still closer in areas such as Tualatin, Tigard, West Hills, Hawthorne, Rose City, Alberta and more are also seeing inflation between 10-15% annually so you’re not being left behind. 

Spring and early summer months are the busiest months of the year for home purchases. 

Buyers are out in droves, so homes are selling as quickly as they hit the market; often with multiple offers and often selling for considerably more than list price.

According to RMLS, new listings for May hit their highest level in May 2017 since May 2008 but demand was so strong that inventory levels actually dropped .2 months (down from 1.7 months to 1.5 months once again.)

What does this mean for buyers?

If you are a prospective home buyer, once you make up your mind that you’re ready to get out and start looking at homes, there are a few things that you should get in order before you proceed. First and foremost, whether you’re paying cash or financing the purchase, get your finances in order.

  1. If you are going to be financing the purchase, get your pre-approval. This means you will need to get your paperwork together for that lender. 
  2. If you’re a cash buyer, be sure your funds are free to use (if you need to sell stocks or move funds from a retirement account, that shouldn’t be left until the last minute.
  3. If you need to sell a home, get it on the market. I know this could put you in a difficult position of needing to move in with friends or stay in a hotel if your house sells too quickly, but sellers need to know that you’re serious and you will need to present proof of your ability to go through with the purchase if your offer is accepted.

Many sellers won’t even allow you to view a home or consider an offer from you without the above business details being in order.

This doesn’t mean that you shouldn’t go out and take a look at a few homes just to see what’s available in your price range. But, it really doesn’t make a lot of sense to just go out looking at lots of homes until you’re a serious buyer because prices and values are moving so quickly. The home you’re viewing today at $300,000 will cost and be worth considerably more in 6 months. Still some looking around in advance will help you understand better what your dollars will buy in different neighborhoods, and that’s a good thing to know as you begin this process. 

Strike while the iron’s hot

Boom markets never last forever. The markets ebb and wane all the time. But the old adage to “strike while the iron’s hot” has never made more sense.

strike while the iron's hotMost buyers are not looking for their forever house. They just want a home of their own and the stability of knowing that their monthly payments are locked in (other than tax and insurance increases). Of course obvious. Your purchase starts making you money in the form of equity often before the transaction even closes, and of course the tax advantages can’t be overlooked either. Mortgage interest, property taxes and even mortgage insurance are all tax deductible, so your monthly income rises once you become a property owner.  

 

You might like to read 15 fastest selling neighborhoods in Portland as of June 13, 2017

 

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Seattle – Portland fastest rising home prices nationwide

sold - sale pending signsAccording to the S&P CoreLogic Case-Schiller home price index, Seattle and Portland are leading the country with the fastest rising home prices in the twenty major metropolitan areas they follow. Seattle has had year over year price increases of 11% annually through September 2016, while Portland follows right on Seattle’s heels at 10.9%. Remember, these are average prices and some neighborhoods within these metro areas have seen prices rise much more dramatically year over year. 

According to Professor Gerard Mildner at Portland State University’s Center for Real Estate, the issue is that developers are just not building enough housing to meet the demand. He added that here in the Portland metro area, “We’re building about 20 percent fewer housing units in the last three years as compared to the years between 1990 to 2007.” At the same time, our rate of growth as been explosive with as many as 150 new residents moving into Portland every single day! That number varies from report to report, but numbers I’ve seen range from as low as 112 daily to as high as 165 people migrating into Portland daily. 

Housing inventory has sat at or below 2 months (the time it would take to sell all listed homes based on current demand if there were no new listings) for the last few years, and demand is on the rise with recent rate increases. 

How much has demand risen?

Lockbox activity 12-4-2016

Just to give you some perspective on demand, check out the chart issued by RMLS that shows the amazing increase in number of home viewings the week ending December 4, 2016!

Since the election, rates have been rising at the fastest pace we’ve seen in years, so buyers are jumping off the fence and getting to work finding that new house. On average rates are up at least 1/2% in the couple weeks! 

 

 

 

Is Portland experiencing a housing bubble?

The general consensus is NO. 

First of all, the population and business influx that we are seeing in this decade did not exist prior to the housing collapse on 2007-2008. Sure we saw people moving to Portland from all over the country, but the jobs increases due to the movement of big industry creating satellite offices here is a relatively new phenomenon. 

We have not seen the wage increases that would support price increases continuing at the rate we’ve seen over the last 3-5 years (up 32.5% in the last 5 years), but the lending guidelines (assuming that they are not over-turned with the new administration) are so much more stringent that current home owners and buyers are not nearly as likely to default as they were during the recession. High risk banking and lending practices and loan products have all but disappeared. 

Home ownership remains an American dream

Most  people interviewed want to be home owners. There is stability in knowing what your housing payment will be from year to year (versus rapidly rising rents); and where else can you see as great a return on your investment as current home owners are seeing?

As mentioned above, until supply catches up to demand, housing prices in Portland will continue to rise. At least that is the forecast until at least 2020. To be sure, the rate of inflation in housing values will slow as supply catches up to demand. There could even be a 10% price reduction in the next 10 years, but if your home value has increased by 30% and more, that’s not devastating, especially if you know your housing payment will not increase. 

Please read more in the article published by Ettro Capital in November 2016.

 

 

 

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Fall and early winter are best seasons for both home buyers and sellers

Fall colors

Fall colorsLate October through the end of December  are always the best months for home buyers and sellers to either get their properties listed or hit the streets in search of the perfect house. This may sound counter-intuitive, but the reason is low inventory and serious buyers.

Relatively speaking few people list their homes during the latter part of the year, especially as we move closer to the holidays. Home owners get involved in home decorating, holiday shopping and of course, all those special holiday activities. They’re busy and don’t want to be bothered with keeping their homes as clean and orderly as possible for potential buyers.

Buyers also get busy, but serious buyers are looking to take advantage of less competition, hoping to avoid bidding wars and perhaps more negotiating power with sellers. Besides, even if they cant close a sale prior to year end, moving into a new home is a great way to start a new year. 

Feds meet again in December

The Feds are scheduled to meet again in December. The elections will finally be behind us, but there has been a lot of talk about raising interest rates one last time this year. Wall Street has seen corporations reporting strong earnings for the 3rd quarter of this year which makes it even more likely that the dreaded rate hikes could be upon us sooner rather than later. 

There are even rumors that the Feds will back off on their massive purchases of mortgage bonds low which have been keeping mortgage rates so low since the recovery began in 2012. Remember, even a small increase in mortgage rates will affect your buying power.

So, whether looking to buy or sell, don’t write off the later months in the year. 

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Portland home values soar 17% in last year ~ average home prices hit $385,000!

sold - sale pending signs

sold pendingAs of the end of the first quarter of 2016, houses within the Portland city limits have soared an almost astonishing 17% over the last year (according to Zillow). Throughout the rest of the metro area home values are up approximately 13% – not quite 17%, but still a very good return on any investment these days. In many areas of Portland, housing values have hit record new highs, and just keep rising.

To make matters even worse, inventory dropped again to almost new record lows of only1.3 months (the time it takes to sell all the houses currently listed if there are no new listings). Many buyers I work with say that trying to buy a house is almost like having a second job. It is not for the faint of heart or those who are easily discouraged. Buyers need to be ready to get out and look at new listings the day it goes active because any house could be sold in just one day, often with multiple offers. And buyers need to be ready for “rejection.” It’s not unusual for buyers to make offers on many houses before they get one accepted. This is not personal folks. Money talks.

Buyers – don’t even think about a low ball offer; not in this market (unless the house has been listed longer than a week or two.)  Sellers know this is their market and most are prepared to wait for the right offer to come along. 

Average home values in Portland metro area hit $385,000

It’s true that the averages include the prices of homes in the highest priced areas of Portland;  but this is the highest average price we have ever seen, and it’s just going higher. With big industries moving into Portland and employment on the rise, there are more buyers out there with bigger budgets helping to push prices up. 

Home buyers with lower budgets should consider the suburbs

The typical Portland suburb does NOT look like this. This is a photo of a suburb in Las Vegas.

The typical Portland suburb does NOT look like this. This is a photo of a suburb in Las Vegas.

The “dreaded suburbs” has many would be buyers thinking gloom and doom. Millennials and those with larger budgets have their eyes on being close in to down town Portland and are willing and able to pay the higher prices. Just last week in the very popular Hawthorne/Belmont district there were only 3 listings.

But the suburbs aren’t the end of the world. There are some really beautiful neighborhoods outside of the I-5 corridor. With home values up at least 13% over the last year those who move to the suburbs are still making a very respectable return on their investments! Of course, it’s always possible that many of these suburban neighborhoods will sprout little boutique shopping areas too, and in time, you might find that you actually like where you were able to buy at a lower price. You get a lot more house for the money in the suburbs. Remember that the Division shopping area didn’t appear until PokPok restaurant opened and that was only 10 years ago.

Businesses are also moving to the suburbs

It’s not new that businesses are moving out from downtown Portland. Property costs are  lower in the suburbs, so many big companies choose to build their campuses further out. Look at Intel, Nike, Columbia Sportswear, and all the high tech companies out in Beaverton and Hillsboro; or Xerox, Sysco Food Systems, Mentor Graphics and Flir Systems down in Wilsonville and you’ll find those suburbs are where the employees are moving to be closer to their jobs; and their housing markets are thriving too. As a lot of start ups are moving into Portland, we’re finding that many of them are also locating out in the suburbs. 

At some point, housing inventory will catch up to demand, and the market will slow. That 13% return on your investment will definitely help you purchase another house, perhaps in a more desirable location if you choose to. You’re certainly not going to see that kind of return paying rent (which is also increasing at unprecedented rates of 14% per year). Buyers need to remember that a house is more than just a place to live; it’s also an investment for the future. It’s not even unforeseeable that housing prices could dip again one day. It has happened many times historically, so it could happen again.

When will the housing market craziness end? Is this just another housing bubble?

We’re hearing “bubble” everywhere, but few analysts or economists think this is a bubble. Portland property values have been lagging behind all the major metro areas on the west coast forever. It is in part why 500 people are moving to Portland every week. And of course, that high rate of migration into Portland is fueling our high demand and low housing inventory. Plus approximately 25% of all home sales are cash buyers! With all these factors in place, this housing boom was predicted. Even Forbes magazine named Portland one of the housing markets most likely to outperform this year. That prediction is certainly coming true now. 

However, virtually everyone believes that the market will cool, but very likely not before 2018. It will take that long for inventory to catch up to demand. Note, that cool is the word here, not bubble bursting. Eventually the housing market will stabilize and we will retreat to more normal 3% annual home value increases. But inventory has to rise to more like 3-6 months before that will happen. For better or worse, this is our housing market now, and anyone who wants to buy a house has to play in this market. It’s quite an experience. 

What about buyers with budgets of less than $300,000?

Buyers with budgets of less than $300,000 absolutely should be looking outside the inner corridor to find a home, especially if they need a house with 3 bedrooms and 2 baths. Inside the inner corridor, few homes are priced below $300,000 and most are major fixers or tear downs and often require cash buyers. But even close in to I-205, home prices are rising almost as quickly as just across the interstate. Neighborhoods like Park Rose, Maywood and Mill Park took off last year. Others further out such as Milwaukie, Gladstone and even Gresham were among the hottest selling neighborhoods in the metro area. And on the west side, Beaverton and Hillsboro are definitely hot too. 

You may even find that you like living in the suburbs where there is less traffic and your money allowed you to buy a larger home than would have been possible closer in. And with the exception of the new housing developments, most Portland suburbs do not feature “every house looks the same” type of atmosphere. Most of our suburbs are a great mix of older homes, lots of mid-century style homes (which, by the way are definitely coming back into vogue), as well as newer infill homes. There are lots of quaint tree lined streets and evidence of pride of ownership further out. Stranger things have happened, and it could happen to you.

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Portland home prices hit new median highs as of end of 2015

It’s official. Throughout the Portland-Vancouver metro area, home prices have hit new median highs as of the end of 2015. All four counties have surpassed the values and prices last seen prior to the housing crash of 2007.

What’s driving all this growth? I’ll recap some of the reasons covered in the past, and add a couple new reasons that aren’t as common knowledge.

  1. Approximately five hundred new people are taking up residence in this area every week and they need a place to live.
  2. More high paying jobs are being created as technology businesses create outposts and new offices in the Portland area.
  3. The extreme volatility in the stock market has many investors re-thinking the wisdom of investing on Wall Street. Institutional investors are buying up the Portland housing market and are aggressively competing with all cash offers often at premium prices as they consider our market a better investment than Wall Street. Portland is currently the 2nd most desirable area for institutional investors in the country.
  4. Mortgage rates remain low for those still financing their purchases.
  5. Millennials have entered the housing market.
  6. Record low housing inventory has buyers driving up prices with bidding wars as new buyers try to get into the housing market. This is especially true for houses priced at or below $400,000.
  7. Builders have been very much behind the eight ball in catching up to housing demand; though big developers such as DR Horton and Lennar Homes just completed purchases of huge tracts of land. Still it will be a couple years before they are able to sell houses on those parcels because plans must be submitted to cities for approval of developments and of course the infrastructure has to be completed before they can even start building houses.

It seems that every day new articles cross my desk talking about just how hot the market is in Portland, but the prognosis for how long this housing boom will last continues to be extended. Last year the “experts” were saying that we would see a robust market at least through 2016, but now some experts say that with the unprecedented job growth, low housing inventory, and rate of migration to this area, our housing market may very well not slow down until sometime in 2018! 

 

 

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16 signs your home is seriously dated

maintained bodyHomes are a little like people. They require continual maintenance and updating to maintain their integrity, appearance, and safety. Potential buyers to your house will watch for any features that spell money to them after the purchase closes. But beyond that, failure to invest in proper maintenance and updating WILL cost sellers money, and can be dangerous to current residents.

Obvious signs that a home has not been well maintained or upgraded in a long time:

  1. Fuse boxes – especially a fuse box with only four fuses! Fuse boxes haven’t been installed in new construction in decades with good reason. They simply don’t have the safety features that new circuit breaker electrical panels have. Yes, fuses trip or burn out if over loaded, but it was too easy to bypass those safety features and create a fire hazard in doing so. In addition, there are no fuse boxes out there with enough capacity to handle new appliances, big flat screen TVs and sound systems, computers, and all the new gadgets that are being manufactured every day to safeguard your home.
  1. Old electrical panels – especially where additional panels have been wired into the original panel, or where there are signs of cobwebs, frayed wires, etc. inside. Electrical panels need to be replaced to accommodate new technology, or can also be a fire waiting to happen.
  2. No GFCI outlets – especially in any room with water access such as bathrooms and kitchens. Again, these are dangerous and should be upgraded. Electrical shock and potential electrocution are the obvious readily apparent dangers here.
  3. Aluminum wiring According to the Consumer Product Safety Commission, homes wired with old technology aluminum wire “are 55 times more likely to have one or more connections reach Fire Hazard Conditions than is a home wired with copper.” Enough said.
  4. Old furnaces that obviously have not been serviced regularly (if there are dust mites inside, this furnace needs at the very least, a good cleaning and inspection). But buyers are also looking for energy efficiency, and old furnaces were not built nearly as energy efficient as newer models. If you have an old furnace in your home, make sure it is cleaned and serviced prior to listing, and if possible get your servicer to write up a letter stating that the furnace is in good working condition.
  1. moss covered roofMoss covered roofs – If your roof is so covered in moss that you can barely see the roof, most buyers will assume this roof needs replacing. At the very least, have that roof professionally cleaned and inspected.
  2. Carpet in the bathroom – This is a definite replace it now situation. It is not only unsanitary, but mold can be hiding in and under the fibers of the carpet.

 

 

More flags that will cost home sellers in their ultimate sales price

  1. Wall to wall shag carpeting is definitely out, and if stained or has well-worn or bare patches, dollar signs are going off in your buyers’ heads.
  2. White appliances – especially if they are old. White appliances have been out of favor for a decade or more, and especially those older electric stoves with coils rather than flat surface tops. Even worse are appliances in colors such as sage green, gold or beige.
  3. Busy dated wallpaper and bold colored paint. Remove both and go neutral with your color scheme.
  4. Brass fixtures (lighting, drawer pulls and door knobs) really date your home.
  5. Linoleum
  6. Tiled counter-tops – OK – you love that electric blue tile, but it will be the very rare buyer who loves it as much as you do. And the grouting is very hard to keep clean and sanitary.
  7. Formica counter-tops – enough said.
  8. Popcorn ceilings – These are not only dated, but in a huge percentage of homes built prior to 1978 or so, contain asbestos. Popcorn ceilings definitely have to go. But be careful about doing it yourself before you have it tested for asbestos.
  9. Wood paneling – We’re not talking log cabins here or beautiful wood details such as wainscoating. We’re talking about the inexpensive wood paneling that was so in vogue half a century ago. If you can’t afford to tear those out and sheetrock the walls, at least paint them a neutral color.

Remember that home buyers have their eyes on their wallets

If there is anything in your house that seriously needs updating, sellers should always consider making those upgrades before listing. Buyers almost always over-estimate the cost and time to do those upgrades themselves and will low ball sellers to the extreme IF they make offers at all. All too often buyers won’t even want to go see a house with photos showing white appliances, popcorn ceilings, wood paneling and gold fixtures. 90% of buyers out there are looking for move in ready.

If you Mr./Ms. Seller are looking for top dollar for your house, talk to your realtor® about what not upgrading your house could cost you in real dollars and cents. Remember the more potential buyers you can attract, the more money you will make on your sale.

 

 

 

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Portland tops the list of fastest rising home prices in US for last 3 months

home price appreciation 2015 in USAccording to a recent article in the Oregonian, Portland continues to lead the nation with the fastest rising home prices in the U.S. with prices rising more than 10% in 2015 (followed by San Francisco and Denver. Seattle and Dallas were the next runners-up with price increases above 9%). For the last couple months of 2015, and now two months into 2016, the market is screaming hot and home prices just keep rising.

For those considering buying a house, you should know that prices for starter homes are closing in on $300,000 in most of the Portland metro real estate market. To be sure, there are homes still priced in the low to mid $200,000 – $250,000 range, but with more buyers than available properties, bidding wars are the name of the game. Within hours of being listed, sellers will receive often multiple offers, resulting in a sale price 20-30% higher than list price.

I’ve heard it many times, “I’ll just wait for the market to cool off.” But the forecast is that the demand is so high most economists forecast that this condition is likely to persist well into 2018 (when it is anticipated that new construction should catch up to demand.)

Where are houses priced under $250,000 in Portland?

If your budget and pre-approval is for less than $250,000, you should be looking in SE Portland. I know, everyone wants to live as close in to downtown as possible. The “hottest” neighborhoods are moving east too. It used to be that everyone wanted to buy west of 82nd Street. Last year that barrier moved to I-205, and this year we are looking at almost anywhere between I-205 and 130th as hot neighborhoods. But there are pockets east of 130th that are getting to be equally as hot.

Currently prior overlooked neighborhoods such as Maywood, Park Rose, or Mill Park are becoming the Montevillas and Cully neighborhoods of last year.

How to spot neighborhoods on the rise

Forecasting where the new boutique areas will pop up is tough, but here are some signs to watch for:

  1. Restaurants opening to anchor a shopping area – remember that Division street started with the opening of Pok Pok and just expanded from there to be one of the hottest little neighborhoods in town.
  2. A great little café offering freshly baked pastries and more atmosphere than a Starbucks.
  3. Nearby strip malls that can easily become little boutique malls.
  4. Small boutique type shops squeezing into more commercial strip malls.

You will know the neighborhood is “on the map” if a Trader Joes or New Seasons market opens nearby. But by then, it’s already too late to get in on what has already become a trendy neighborhood.

 

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Banana peels, coffee grounds and egg shells are gardeners’ best friends

Bananas egg shells and coffee grounds

Tips to organically nourish your soil for spring and summer planting

Bananas egg shells and coffee groundsIt’s never too early to start preparing your soil for spring planting. When the rain gives way to those intermittent sunny days, many of us start just can’t wait to get our veggies into the ground, or plant flats of color to chase away the gloom. February is still a little early for most of the planting we’ll get to when the weather really warms. Here are a few tips to get a jump start on feeding your soil organically with banana peels, coffee grounds and egg shells.

To compost or not?

If you’re an avid gardener or just ready to tackle your first garden, you’ve certainly heard a lot about composting all your kitchen scraps; from fruit and vegetables to egg shells and coffee grounds, composting is a great way to enrich your soil. But composting, even if you’re using a composting bin, attracts bugs, and who wants all those bugs and bug larvae around? There is an easier way to use some of that waste.

Banana peels can be cut into smaller pieces and placed into the ground around the base of your plants, just an inch or so below the surface is all that is necessary but deeper is better. They are full of all kinds of great nutrients like potassium, phosphorus, and calcium, and other minerals your plants need. OR, if preparing soil for your veggie garden, get those banana peels into the ground now so they can break down before you’re ready to plant. There are many other ways you can use banana peels – such as drying and grinding them up, but this is by far the easiest. (Don’t leave the peels on the surface of your beds unless you want to attract bugs and squirrels.)

Coffee Grounds are rich in nitrogen a nutrient that all plants need to flourish. Contrary to popular belief, the grounds are not acidic but are pretty much PH neutral, so can be added around any type of plants. Be sure to start slowly with coffee grounds though, just adding a tablespoon or so a week, and stop using if you see existing plants start to react badly to them.

Egg shells add calcium to soil and have the added benefit of deterring slugs. Crush eggshells – just put in bag and crush with your foot or hand, and scatter around the base of plants, especially those that slugs like to eat. The sharp edges keep slugs away, but soften and break down quickly, so you need to put fresh shells out every week or so for best results.  

Vinegar is NOT for mulch but is an organic weed killer. It will kill plants as well, so use carefully. If you’ve looked out in your garden or lawn recently, you have probably noticed that dandelions and crab grass are already growing. 5% vinegar (which is what you buy at the store) will fry those tender young dandelions and crab grass shoots, and will kill them to their deep roots. Yes, you might see brown spots in your lawn, but it’s better than hundreds of dandelions appearing and taking over your lawn later in the year. Unlike chemical weed killers, vinegar won’t harm the soil for the grass that will soon take over that brown spot. Vinegar is best sprayed to make sure you get the whole plant. If going after well- established dandelions, you might need to spray them a couple times to kill them off, but they shouldn’t be producing offspring once well sprayed the first time.

 

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How do lenders determine your mortgage rate?

Libor Index graphicMortgage rates are tied to a variety of indexes such as the mortgage bond index, the LIBOR index, etc. These indexes change continually which is why mortgage rates are an ever moving target, though usually stay within a relatively small range on a daily basis.

Banks will add their profit margin to the index rate to determine their “best rates” at any given time. “Best rate” is the key here though. Depending on the type of mortgage you are applying for, your lender may make adjustments to that “best rate” based primarily on your credit score and amount of down payment.

Conventional financing (Fannie Mae loans)

Mortgage rates chart Oct 15 through December 10, 2015

                               As you can see from the above chart, mortgage rates change frequently

After the recent housing crash when so many home owners who had adjustable rate mortgages lost their homes, most buyers who qualify are opting for 30 year fixed rate mortgages.

IF your credit score is at least 720 AND you have a 20% down payment, AND there are no recent prior derogatory credit issues (such as short sale, foreclosure, bankruptcy), AND you don’t need a co-signer, you should qualify for the best conventional rate you see quoted all over the Internet. But remember that those posted rates may be quoted just once a day, while rates can move up and down, even during the course of a single day.

Important note: Rates quoted on the Internet are often for adjustable rate loans or include a buy down cost.

The reality is that mortgage rates are all about risk. Currently mortgage rates are very low compared to historical averages. This is risky to lenders because you are locking in your rate for 30 years. Banks are all too aware that means that if you keep your house and take the full 30 years to pay it off, they will likely experience an interest rate loss on you at some point during that 30 years as mortgage rates rise. That’s why they build in a substantial profit margin over the rates they are paying to borrow money to lend to you.

If your credit score is below 720, or if you have less than 20% down payment, or if you can’t qualify based on just your own income; you are considered a higher risk, so you will be charged a higher rate to minimize that risk to the lender. We refer to this as “risk based adjustments”. Also, the type of property you are purchasing can trigger risk based adjustments. For example, you will pay a higher rate if purchasing an attached condo. You very likely will not be able to purchase a manufactured home even if you own the land under it, nor a floating home, even if you are also buying the slip, with conventional financing.

ARM (Adjustable rate mortgages)

Adjustable rate mortgages are still available. You’ll hear them referred to as 5/1 ARM, 10/1 ARM, etc. These loans have a locked in fixed rate for 5 or 10 years, or whatever type of ARM you have, but then the rate can (and usually does) begin to rise, as often as twice a year, and up to 2% at a time. For the lender, this means you are assuming some of the interest rate risk so ARMs are generally offered at lower initial rates than 30 year fixed rate loans. It is highly advised that unless you are absolutely sure that you will sell your home prior to the end of the locked in rate period, because the rates increases can be quite a shock to most home owners when they kick in, you should choose the 30 year fixed rate loan if you can afford to do so. (Your mortgage rate can go from 3.5% to 5.5% over night!)

Conventional ARMs are also subject to risk based pricing adjustments. So, all of the above mentioned variables can apply to these loans as well as 30 year fixed. 

Conventional financing can end up being very costly for those who do not qualify for the best rates, because when it comes to risk the banks always win. Buyers always pay for higher risk.

Other loan options

There are several other types of mortgage financing available. FHA, VA, USDA, private lenders, hard money, etc. Each type of financing comes with its own good, bad and ugly features, so each type of financing should be looked at and carefully considered when you are shopping for home financing.

FHA financing

FHA has historically been the option for those who are credit challenged. But, increasingly, those with lesser down payments are opting for FHA financing because the minimum down payment is only 3.5% of the purchase price, and, the fact that you have only 3.5% to put down does not affect your rate. BUT, FHA covers their risk by charging you both an upfront fee for the loan, plus monthly mortgage insurance to cover their risk for the life of the loan. Rather than the rate, the amount of the monthly mortgage insurance will be affected by how much risk you are to the lender. For example, if your credit score is lower (as low as 620), or if you have prior derogatory credit issues, you will be charged a higher monthly mortgage insurance premium. Some lenders do offer FHA financing to borrowers with credit scores lower than 620, but then rate as well as mortgage insurance will be higher. 

FHA rehab loans are a great option for those who want or need to purchase a lower priced home that requires renovations in order to make it safe and habitable. Make sure, if you are looking at fixers, that your lender is aware of this in advance, because there are defined steps you must take in order to close your purchase. Otherwise, FHA is very picky about the properties they finance and have very strict standards about the condition of the property if you are not getting a rehab loan.

Another downside to FHA financing is that the maximum purchase price is lower than the maximum price for conventional financing.

FHA does lend on manufactured homes, but does require a minimum 20% down payment, and these homes must be in excellent condition and must have been built after 1978. 

USDA loans

USDA loans cover up to 100% financing! But there are restrictions.

They are offered only in “rural” areas (as determined by population as of the last census.) In the Portland metro area, USDA loans are pretty hard to get, because only neighborhoods that are way out from downtown Portland still qualify. Additionally, there are income limits for home buyers, maximums on purchase price, and minimum credit scores are higher than for FHA financing.

But, if you are looking in a USDA eligible neighborhood, be sure to talk to your lender about whether or not this option will work for you. Anyone who qualifies gets the best conventional 30 year fixed rates with zero down payment and minimal mortgage insurance premiums.

VA loans

VA loans have been around forever, and what a great program they are for veterans. In most cases, there is zero down payment required, and vets will get the best rates with lower credit scores as well. They do have to pay mortgage insurance, but it is minimal as compared to the MI charged on FHA or conventional loans.

Thank you veterans for your service! You definitely deserve the best mortgages possible for the sacrifices you have made for the rest of us.

Hard money and private lender financing

As a general rule, only those who cannot qualify for any of the above types of financing will turn to hard money or private financing. The exception is when you want to purchase a property that does not qualify for any of the more well known forms of financing. If you seriously want to purchase a home and cannot get a loan, be prepared to pay much higher rates and more points for your loan. These private lenders know you have no other options, and are in a position to take advantage of that fact. Also, these lenders almost never lend without your having considerable “skin in the game” in order to protect their investments in you.

It’s important to talk openly with your realtor and lender when buying a home

Because a mortgage is the biggest debt most people will ever take on, and buying a home is the biggest and one of the most eventful purchases of your lifetime, home buyers need to talk openly with both realtors and lenders to help us guide you to the best purchase and financing for your unique circumstances.

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The number 1 misconception about home financing

Typical down payments for home buyers 2015During and after the great housing crash of 2007-2008, home financing became almost impossible. Even the most qualified buyers had a  hard time getting a mortgage. At that point, in order to purchase a house, most buyers needed at least 20% down to qualify.

Unfortunately, the idea that 20% down payment is still required to purchase a house has persisted and is keeping many who would like to purchase a home on the sidelines scrambling to save that cash.

As you can see from the graphic, very few buyers actually put 20% down in 2015.  In fact, the average down payment for first time home buyer was only 4%, and even repeat buyers put down only 13%. Most buyers, even those with cash, opted to use that money to pay off debt and establish a rainy day fund.

It’s true that lending regulations remain much tougher than prior to the crash. A good credit history is still important, and with the exception of veterans and rural property buyers, 100% financing is just about impossible to find. However, financing is available with credit scores as low as 620, and as little as 3.5% down for just about anyone. Self employed buyers can sometimes even obtain a mortgage with only one year of tax returns.

Banks are flush with cash these days, and one of their favorite investments is housing. With money readily available for qualified buyers, you might check with your favorite lender, or call me for a referral to discuss the assorted lending options that are available to you.

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The wealth gap widens between home owners and renters

Increasing gap in wealth renters vs home ownersAs you can see from the graphic prepared by the NAR (National Association of Realtors), based on a survey completed by the Federal Reserve, home owners have always had a significantly higher net worth (between 31% – 46% ) than renters. This gap has been widening since the start of the economic recovery in 2010, while renters have actually seen their net worth decrease.

Of course, most of this is due to the equity that has been accumulating in their homes. This spread is forecast to continue to widen over the next few years as rents continue to rise, while home owner payments remain relatively stable. The forecast for 2016 is that home prices and values will continue to rise which will add more to home owners’ net worth and wealth.

At the same time, increasing rents will eat away more and more at individual’s wealth.

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Number of distressed properties in Portland dropping in 2015

distressed properties in Portland metro area

 

The number of distressed properties continues to drop, especially short sales.

According to RMLS Portland metro when comparing percentage share of the market, third quarter to second quarter 2015:
• When comparing third quarter to second quarter 2015, distressed sales as a percentage of new listings decreased by 0.3% (5.4 v. 5.7%).
• In a comparison of third quarter to second quarter 2015, distressed sales as a percentage of closed sales decreased by 0.3% (6.4 v. 6.7%).
• Short sales comprised 1.4% of new listings and 1.7% of sales in the third quarter, down 0.2% and 0.5% from the second quarter of 2015, respectively.
• Bank owned/REO properties comprised 4.0% of new listings and 4.7% of sales in the third quarter, down 0.1% and up 0.2% from the second quarter of 2015, respectively.

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Housing forecast for winter 2015 through 2016 in Portland metro area

real estate sold sign for newsletter2015 has seen just about the hottest housing market in Portland’s history. Sales were up about 25% over 2014, and it seems there is no shortage of buyers in sight as we wind out the year. We did see a bit of a slowdown in September, but this is typical as families get into back to school mode. Year-to-date, we have seen metro wide price increases of almost 10% for 2015 (higher in some areas).

October housing activity has picked back up again and this trend is expected to continue throughout the winter months and into 2016. Inventory has been at 1.9 months for a few months now, and isn’t budging as buyer demand is still outpacing the number of new listings hitting the market. According to Zillow, “The median value in the region is $295,600, and the median sale price is north of $300,000.” Many buyers have already been priced out of the market, and for those waiting for prices to drop, don’t hold your breaths. That scenario is not forecast for the upcoming year at all.

In fact, most economist believe that while price appreciation should slow when inventory finally catches up to demand, we are unlikely to see any “housing crash” any time in the near future. Due to much more stringent lending standards, forecasts are for a stable housing market at least through 2022!

duplex - Portland ORInvestment property prices rising as much as single family housing

We are seeing the same pricing increases in multi-family properties as we are seeing in single family homes. In fact, there are some statistics that point to even greater increases in multi-family pricing because of the recent huge increases in rents here in the Portland metro area. Multiple offers are common as competition heats up to grab a share of the rising rental income.

For buyers of multi-unit properties, location is every bit as important as for home buyers. Buyers should be watching for properties in areas with easy access to mass transit, though should expect to pay a premium for properties in the best locations. Renters always expect to pay higher rent in good areas than in marginal areas, so you will recoup your investment even when you pay more for the property.

It’s important for investors to be realistic about prices for multi-unit properties. If the average house price is $300,000 for a given area, you shouldn’t expect to purchase a duplex (basically 2 houses) for at or close to the same price. In fact some investors are rehabbing multi-unit properties and selling each unit individually for great profits.

 

 

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Tips to save money on home renovations for property flippers

Thinking about getting into property flipping? Have you received an invitation to a free seminar about flipping? or have you watched any of the long list of TV shows on flipping? They all make it seem so easy and profitable.

fixer homeWho can resist the temptation to try to “Flip properties without using a cent of your own money?” The truth is that there are private money “lenders” willing to put up the money for you. These lenders are better known in the trade as “hard money,” and there’s a reason for that. They are expensive. With most of these lenders, before you ever see a dime of profit, you will generally have to pay 3-6 points (3%-6% of the amount you borrow) PLUS ½ the profits.

In most of the country distressed properties typically sell for as little as 50% below actual value. But in the Pacific Northwest, distressed properties are usually priced at only 8%-10% below actual value, unless they are major fixers. This makes just finding a suitable flip very difficult. Bank owned properties are often considered the best prospects because they are lower priced; but banks are notoriously hard to deal with and don’t budge much on their prices.

Your best option for actually making a profit on your flip is to find a house that looks terrible. The price will be low relative to the neighborhood values and the profits can be huge because the majority of home buyers prefer “move in ready” homes and are willing to pay for that convenience.

How to increase profits on flipping homes

  1. If you can pay cash or finance the house yourself, even at investor rates, you are way ahead of the game. You’ll save on closing costs and keep all the profit.
  2. If you have any cash to put into the purchase or renovations, this is money you won’t have to split with a lender when you sell. Even if it’s just $10,000, that’s $5,000 in savings to you.
  3. Demolition – can you do some of this yourself? Why pay contractor’s hourly cost for demo you can do yourself or have done by a handyman who is less expensive than a contractor?
  4. SHOP SHOP SHOP -Go ahead and get a bid for all the work from a contractor. Then see how much you can save if you take on some of the work yourself. Remember that your contractor will charge his/her hourly rate for ALL the work completed, even if he subbed out the job for half his rate.

    1. Sub out some of the work yourself. Roofers for example are all over the board in their estimates, so get a few bids on your own.
    2. Put in pre-engineered hardwood floors rather than more expensive hardwoods at about half the cost and have Lumber Liquidators install the floor (again at a lower cost than your contractor). You’ll find pre-engineered hardwoods in many new homes, and they are beautiful and durable too.
    3. Shop specials at big box stores. They are running sales all the time on just about everything from flooring to appliances so be sure to watch for these sales and save money on your rehab project.
    4. Buy “assemble yourself cabinets” (Cabinets to Go is a great vendor with really beautiful cabinetry.)
    5. Granite counter tops? Shop around to see if any vendors have “end pieces” left over from another job. These are often sold at very reduced prices. The trend lately is for mix and match counter tops and cabinets anyway these days.
    6. Can you re-use some of the materials already in the house? For example, damaged granite in the kitchen might have enough salvageable to use in the bathroom.
    7. Install energy saving features (such as tankless hot water). Buyers are becoming accustomed to paying extra for eco-friendly homes and it is a great selling feature.)
    8. Don’t spend a lot of money on plumbing or lighting fixtures or any item that is inexpensive to replace and is subject to personal taste. Buyers won’t walk away from a house because they don’t like the faucets you choose.
    9. Can you do some of the finish work? Such as painting ?
    10. Ask your realtor what features are most popular with buyers and what extras you might be contemplating that will result in very low return to you.

It’s important to note that some projects require building permits and licensed professionals to perform the work. Hire a professional to do electrical or plumbing work or other work that requires a permit and final inspection.

If you can afford to purchase in a very popular neighborhood where home prices are much higher than the cost of the house you’re looking at, you can expect to reap more profit than in less trendy areas. Always think worst house on the block for the highest profit.

In the Portland metro area, the biggest profits are often on old craftsman or Victorian houses. Buyers love these homes, but will rarely take on a renovation project themselves. Be careful here though. Look for homes with period features and stay true to the period when renovating. In fact, many old home flippers will keep the original kitchen cabinets and fir flooring and just refinish them.

Always keep your eye on the prevailing price range for the area. Remember, you are buying this property to re-sell as quickly as possible. You don’t have to put in every feature that you would want in your own house. But make sure whatever you do makes the house attractive to buyers.

Flippers, unlike banks, must disclose whatever they uncover during the renovation. While this can be a scary thought, you might also think of it as your best protection from a future lawsuit especially if you take care of the issue professionally and correctly.

And finally – don’t expect huge profits on your first flip. Any cash you make is cash you didn’t have before you started your project. And remember, we are still enjoying a very hot housing market. If you’re going to get into the game, do it while the market is hot. You just might see more profit than you expected.

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Pre-approvals for mortgages – What you need to know

In a busy housing market, most people know that before you even go out to look at houses, you need to get a written pre-approval for financing. While you may have checked your credit scores recently, your scores don’t tell the whole story about your credit history. The truth is that since the recent recession and the consequent tightening of lending standards, there are many people out there with credit scores between 650-750 who do not qualify for a home loan. A prior bankruptcy, foreclosure or short sale could have your dream of home ownership on hold until the mandated waiting period. And those with old collections and even old judgments will have to pay those old debts prior to obtaining a pre-approval too.

In a sellers’ market, it is not uncommon for sellers to receive multiple offers on their homes. When this happens, sellers may opt to basically ignore offers that are not accompanied by a pre-approval (or proof of funds for cash buyers).Of course sellers are looking for the most money they can make on their homes, but their decisions are also based on the likelihood that an offer will actually close. For sellers, nothing says serious buyer more clearly than a signed pre-approval from a lender (on lender letterhead).

Your pre-approval process is usually fairly easy and with most lenders pretty fast too. You will need to provide (at a minimum) the following information to your lender:

  •  2 months most recent pay stubs
  •  2 months bank statements – all pages included (If pulled online, statement must show your name on the on the paperwork.)
  •  last 2 years tax returns – all pages and all schedules
  • most recent 2 years W2s or 1099s if self employed

Your lender will pull a tri-merge credit report (all 3 credit bureaus) to determine the amount and type(s) of financing that are available to you. Most lenders will use the mid-score from the 3 bureaus.

Not only do sellers require pre-approvals; your realtor needs this information as well.

  • We want to show you properties that you are qualified to purchase.
  • We need to know if, for example you are looking for FHA financing, that the property is FHA approved (many condos are not FHA approved, so why look at them?)
  • Once you find a house you want, we need to be able to present as strong an offer as possible.
  • We frequently communicate with your lender, usually even prior to finding you a home, so we need that contact information as soon as possible.

Your pre-approval is usually good for 90-120 days. Once you have an accepted offer your lender will require all  new updated documentation, AND your credit will be re-pulled at that time too so please read on.

Managing your credit after you receive a pre-approval

Once you have your pre-approval from a lender, it is important that you manage your use of credit wisely. Most lenders should tell you:

  • DO NOT apply for any additional credit cards after your pre-approval is issued.
  • DO NOT make any large purchases ($100 or more) on existing credit cards.
  • DO NOT change jobs or give notice to your current employer. In fact, don’t use online services to search for a new job. Lenders are wise to all the online services, and often check social media sites to see what you’re up to that the loan application does not cover, and they do this just before the loan is scheduled to close.
  • Make sure that you pay all creditors on time.
  • Don’t file for a divorce or formal separation prior to closing a loan. Even if your spouse or partner will not appear on your application or loan, the legal ramifications of a divorce will affect your ability to finance a purchase.

Applying for new credit, large purchases on existing cards, and missed payments to creditors WILL lower your credit scores and will reduce the mortgage amount you qualify for.

You really should be using the time prior to home shopping to do any mortgage shopping before getting a pre-approval. Once you have an accepted offer with a seller, the Oregon contract does clearly spell out that you must notify the seller if you’ve changed lenders after mutual acceptance of your offer.

The credit bureaus allow up to 3 mortgage inquiries within a 90 day period without a 6 point drop in your scores for each inquiry. New sources of credit will lower your scores considerably more than 6 points.

If you know that you will need a new refrigerator for you new home, you have to put these purchases on hold until after your loan closes. You really can manage 1 or 2 days without a new refrigerator or washer/dryer or that big flat screen TV you now have the perfect wall for.

Virtually all lenders will pull a credit update and will verify your employment just before your loan is scheduled to close. Any negative changes to your credit scores, increases in your credit balances, or iffy news about your employment can kill your loan at the last minute.

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Factors that can increase the value of your home

street trees in a neighborhood

street trees in a neighborhoodReal estate agents know that valuing a home isn’t rocket science, but determining value is not nearly as cut and dried as the algorithms used by well-known property search sites in their estimated values.

According to House Logic, there are many factors that can influence the price buyers will be willing to pay for your home.

**Millenials cite “walkability” as the number 1 factor that influences their decision about location. In Portland, we are seeing more and more neighborhoods creating small shopping districts that home owners can walk to for groceries, coffee shops, fine dining, and boutique and retail shopping. Homes in walkable areas will see value increases of $4,000 – $34,000, depending on the type of shops and restaurants nearby. Clearly little boutique shops and dining are favored, and result in the higher valuations of neighborhoods. But just being able to walk to a local park is important too.

**Highly rated schools

**County or state parks or golf courses nearby can increase the value of a home more than you might imagine.

  • A public park within walking distance can increase the value 8-20%
  • A natural area can increase the value on average about $10,000
  • A nearby golf course can raise the value approximately $8,000.

**Here’s a surprise – House Logic says a nearby Walmart that stays open 24/7 could increase your home’s value 1-2% and if very nearby another 1%. In Portland, Walmart stores are not all that popular but are gaining traction. But watch for areas where a New Seasons or Trader Joe’s market is either proposed or ready to open. Those are sure signs that the neighborhood is either prospering or is definitely on the rise in desirability and values.

**Additional dwelling spaces (whether a separate building or a basement with a separate entrance) can increase your home’s value 24-34%. These separate units are in high demand but are relatively rare in the Portland metro area.

**Trees are a valuable asset – and trees in your own yard, or better yet, street trees throughout a neighborhood make the whole neighborhood appear lush and inviting and raise the values for all home owners in your neighborhood. According to a University of Washington research survey:

    • Mature trees in a yard add 2%
    • Mature trees on the street add at least 3% for all home owners on the street
    • Trees in the front yard add 3-5%
    • Mature trees in high-income neighborhoods add 10-15%

While all the above factors can influence the value of your home, you can’t move your home to a better location to attract buyers. Still, if you want to add value, something as relatively easy and inexpensive as planting a tree or two in your mowing strip can definitely enhance not only your house, but the looks of your entire neighborhood too. Imagine if everyone on your street planted just one tree today how much more inviting your street would look in just 5 years.

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Have you checked your credit recently?

Credit reportI’m sure it’s not a surprise to anyone that ID theft is alive and thriving these days.Did you know that approximately 1 of every 4 people in the U.S. has at least one error or derogatory item on their credit reports? And yet, with all the threats out there, most people are pretty lax about keeping tabs on their credit information. Just last week I personally received an updated report and found, much to my surprise, that someone else is using my social security number!

  1. Do you know if there is information on your credit report that is not yours? Or that was reported in error?
  2. Do you have a relative with a similar name? Or is someone else also using your social security number and causing information to reported on your report that isn’t yours?
  3. Do you have an old collection that was filed against you that you never cleared or that you thought you had cleared but was never reported as paid?

Everyone should monitor their credit on a continual basis. There are several credit monitoring services that you can purchase for as little as $10 a month, AND there are multiple free sources for obtaining your credit information as well. All three credit bureaus offer you one free report annually, and several businesses allow you to pull your credit at least several times a year at no charge.

As surprising as this may sound to many of you, the first time that many people learn there are errors on their credit reports is when they apply for a mortgage. Oops! Here you are, all all ready to go out house hunting and find a $5.00 collection on your report. No big deal, or so you think, but that $5.00 collection for cable TV service you were sure you had canceled on a prior move, can cost you a 100 points or more on your credit score. and can cost you thousands of dollars on your mortgage because of the higher rate you will have to pay, if in fact you qualify.

Fixing errors isn’t hopeless, but it takes time and could be more work than you might think. And if the $5.00 collection was a valid charge, paying it will help your score, but not nearly as much or as quickly as your score dropped due to the non-payment of a legitimate bill.

Be sure to check all credit that is being reported to make sure that it is yours. Look for names that your credit report shows using your social security number. Check to make sure the credit bureaus are showing your current address.

How to fix errors on your credit report – This article will outline the fastest, easiest way to fix errors on your credit report yourself, but be warned, it can still take 30 days or more to have errors removed. The reward is an immediate increase in your credit score, and a clean credit report. Errors that have been disputed and removed can never appear on your reports again. 

In March this year, “Eric T. Schneiderman, the New York State attorney general, announced that his office had reached a sweeping settlement with the agencies, affecting consumers nationwide, which was prompted by an investigation that began in 2012.” This is a huge victory for consumers because it will not only make correcting errors on your report easier to fix, but it will change how some information is weighted in computing your scores. The credit reporting agencies have announced that the changes will be implemented over the next 3 years, so don’t expect over night progress. But rather than outsourcing all disputes to employees overseas, the agencies have agreed to hire specially trained personnel to handle all disputes to make sure that they are handled correctly and promptly. AND best of all, information from collectors will no longer be given more weight than documentation from consumers.

While we’re waiting for these sweeping changes to take effect, please, if you haven’t done so recently – Check your credit report today. Don’t wait until you need credit to find out there are errors that can be fixed. The more frequently you monitor your report, the faster you will discover errors, and the easier those errors are to fix.

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Alert: Hackers target home buyers

Hacker at work - https://de.wikipedia.org/wiki/HackerAs if buying a property weren’t stressful enough, the NAR (National Association of Realtors) has just advised us that Internet hackers are now targeting home buyers. It was only a matter of time before hackers went after the vast sums of money involved in purchasing a home, but this time the route to the hacking is a bit different than in most cyber crime-schemes.

Apparently hackers are now targeting realtors’ email accounts and silently watching those emails for information that will allow them to re-route buyers closing funds to their own bank accounts. As closing approaches, escrow officers send buyers instructions, including what to bring to closing, amount of funds required, and where and how to wire funds to close the transaction. The hacker will also send the buyer what appears to be an official looking email from the “title company” with “updated instructions” on where to wire funds. (Remember that your agent and escrow officer have been communicating frequently during your purchase, so hackers have the official signatures each has been using, and these are easy enough to copy to make your email with updated escrow instructions look legit.) Some hackers may even include other information about your transaction to make the email look even more like it has come from a trusted source.

Generally speaking, this will not impact the majority of buyers who hand carry a cashiers’ check to the title company at closing. But, for out of state buyers and cash buyers, it is not uncommon for funds required for settlement to be wired to the title company. By watching emails exchanged between buyers and their agents, hackers gain information about how the purchase will be financed as well as the scheduled closing date.

How can you protect yourself from hackers?

  1. Make sure that your realtor is taking every step possible to keep hackers out of their email. Personally I change my password frequently which makes watching my email much more difficult for hackers, and I use strong passwords that hackers would be unlikely to guess.
  2. It is very uncommon for a real estate agent to request sensitive information from buyers, especially via email. We don’t need your bank statements (unless you are a cash buyer) or any information with your social security number. That type of information should always be handled by your lender. When we do require proof of funds for a cash transaction, buyers should always redact most of your account number (leaving only the last 4 digits), and should send proof of only enough funds required to settle the purchase. If you are able to encrypt the email, that would be even better.
  3. Before wiring funds, always double check with your escrow officer to make sure that you have the correct wiring information for your bank. Be sure to keep and check old emails you have received from the title company to make sure you are calling or emailing the correct person, because hacker contact information is almost always included in the scam emails you receive.
  4. Don’t click on any links in the email, giving the hacker access to your email (if they don’t already have it).

It’s an Internet world out there, but there are always steps you can and should take to protect yourself, and that I take to protect you if you are my client. Unfortunately, once the funds are wired, even to an incorrect account, the money is gone.

The good news is that banks, title companies and realtors are all being notified of this new threat and are all taking whatever steps we can take to tighten security on your behalf. But at the end of the day, responsibility for issuing correct wiring instructions is still yours. So, be careful out there. Check and double check your information before you pass on wiring instructions to your bank, and you should be fine.

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How to fix errors on your credit report

Did you know that 1 in every 4 credit reports contains errors and surprises? ID theft may be responsible, but more often what shows up on your report might just be an error that can be fairly easily corrected.

Some of the most common errors found are:

  1. A parent or child’s mortgage or other credit obligation is reported on your report as yours (even if your names are not exactly the same).
  2. A paid off debt is reported as still owing.
  3. A collection has been filed against you for a debt that was never yours.
    1. One of the most common forms of ID theft is using a fake ID to get cell phone service.
    2. If you have a fairly common name, someone else’s debt can be reported against you.
  4. TV cable or satellite service is often left on after someone moves out of a house or apartment. Until the service is actually shut off, the service provider will report the delinquency under the most current resident’s name.
  5. Blatant ID theft with multiple creditors is actually easier to solve, but if the amounts are small, you may not know about them until your credit is pulled.
  6. A debt discharged through a bankruptcy could still show as unpaid.
  7. Collection agencies are often irresponsible about reporting paid collections, and court systems are equally negligent about reporting paid in full judgments.

All too often errors will sit on your credit report for years without your knowledge. You can still get most credit with an error on your report, but when you apply for a home loan, these little dings on your report and score will raise their ugly heads in a huge way.

Did you know that most collections are auto-filed by creditors and can be for less than a dollar? Many people would think “who cares?” But that little collection can cost you up to 100 points or more on your credit score. That can make a huge difference in the home loan you qualify for and the rate you will pay, if in fact you qualify for a mortgage at all!

How to fight errors on your credit report

1. Contact the creditor

This sounds like it shouldn’t be too difficult, but in fact, most creditors, like cell phone providers or cable companies are pretty non-responsive to your efforts. Be sure to try to contact the creditor in writing so you have proof of your effort.

2. If you receive no response from direct efforts, file a dispute with one or more credit bureaus directly:

Experian,

Transunion,

Equifax

This is important because not all three bureaus will have identical information. They do share, but aside from mortgage lenders, most creditors report to just one of the three bureaus. The easiest way to file the dispute is online. You can even upload copies of your proof of error and/or attempts to resolve the error.

The credit bureaus will contact the creditor on your behalf. The creditors then have very limited to respond to the inquiry or within 30 days the disputed item will be removed from your report.

Usually you will receive a response within days of submitting a dispute acknowledging that your case is being investigated. If you do not hear from the credit bureau within 30 days, follow up. After your report has been corrected, you should receive, along with a letter from the credit bureau, an updated copy of your corrected credit report with your new score within 30 days of the date you file your dispute.

 

 

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Are “fixer” homes overpriced in Portland Oregon?

Fixer statsLooking for a “fixer” home so you can take advantage of low prices and create your dream home for less than a comparably priced home in your preferred area? If you watch many of the housing shows on TV, you see this happen all the time.

According to a recent study by Realtor.com, there is a huge disparity between the possible discounts available to home buyers looking to purchase “fixers” versus move in ready homes throughout the U.S.

For example, in Clarksville, Tennessee a typical fixer can be purchased  for about a 70% discount. Likewise most cities around the country offer some great deals. But those of us who reside in the Portland metro area are seeing only about a 6% discount on fixer properties. That’s hardly enough financial break to afford the necessary repairs and still come out even close to even on comparably priced homes in the area. According to Realtor.com, the median price of a fixer home in Portland is currently 354,928, just 6% lower than the $379,000 median price of homes in good condition.

What’s going on in Portland? It’s really a matter of supply and demand. There is very little supply of “fixer” homes in Portland right now, so the laws of supply and demand rule. It doesn’t help that there is also an ample supply of cash buyers competing with the everyday buyer either.  These developers usually have “fixer teams” make short work of the needed renovations, which of course, they also do at a discount to what you and I would pay for the same work.

Portland isn’t the only city running out of fixers. As-is homes are becoming increasingly harder to find throughout the country. Check out the chart above to see many metro areas and what investors are paying for these fixers these days. Thank goodness we don’t live in Prescott, Arizona!

Beware Portland buyers – there are few “fixers” out there that are really a good deal right now, unless the repairs required are strictly cosmetic and can be done over time. The homes marketed as “fixers” that sound like a great value need a whole lot of fixin’ and will either require a cash purchase or a rehab loan.

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No more bidding wars in the Portland housing market

Bidding wars! Those words strike terror into the hearts of many would be home buyers during a very active sellers’ market. Believe it or not, sellers don’t like bidding wars much more than buyers do.

With Portland currently experiencing a full on sellers’ market, one would think bidding wars would be rampant, but that isn’t the case this year. 

Currently, when a listing goes live on MLS, the listing agent clearly indicates when offers must be in and when they will be presented to sellers. It is not unusual to see new property listings go live on Thursday, an open house on Saturday or Sunday, and offers due by noon and presented to sellers at 3pm Monday afternoon. 

In this format, it is imperative that buyers make their first offer their “highest and best, because there is no haggling or negotiating at this point, and there is no second chance.

The sellers are able to review all  offers in one sitting and select the winning bid which is almost always the highest price. Occasionally other factors can come into play,  such as closing date, pre-approvals, buyers’ willingness to allow a rent-back period, waiver of inspections, etc.

When the winning offer is selected and mutually accepted by sellers and buyers, the house goes pending (off the market).

Most sellers are seeing all the advantages of the bidding wars days in terms of higher prices without all the drawbacks inherent in a bidding war scenario.

In many areas throughout Portland, homes are selling at premiums of 10% and more above listing price. If you are home shopping your realtor should be familiar with your area and the premiums most buyers are willing to pay so you can write up your best offer when you find your dream home.

Of course, if a house does not sell within the specified offer period,  the house remains on the market where buyers reap the rewards, with more negotiating power.

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2015 federal and state tax breaks for Oregon home purchasers

Uncle SamIf you’ve missed the home buying frenzy the last few years, it’s not too late to cash in on some great tax breaks if you purchase a home this year in Oregon. IN fact, many of the tax breaks apply to both federal and state income tax returns, at least this year.

  1. Points – mortgage rates remain low – in some cases still under 4% for a home purchase. If you’re buying a home now and want even lower rates, you can buy your rate down and the “points” paid for that buy-down become tax deductible. However, be sure that you understand the cost of the buy-down, and the amount of time it will take to recoup your cost.
  2. Federal energy tax credits – You can still deduct 30% of the cost of installing alternative energy sources for your home, such as wind turbines, geo-thermal energy, solar energy panels, etc. So, for example, if the cost of the solar panels is $10,000, you get a $3000 tax credit PLUS the cost of energy savings in your home for years to come. This tax credit is scheduled to expire in 2016, so if you’re thinking alternative energy, be sure to get in on this savings before the end of next year.
  3. Oregon energy tax credits – there are a long list of energy saving devices that you can install in your home this year to qualify for savings on your Oregon state tax bill. These include not only the items listed in #2 above, but also items such as tankless gas hot water heater, a direct vent gas fireplace, duct sealing, solar hot water system, and much more. Click here to see the entire list of tax deductible items from the Oregon Department of Energy.

House are more than your home, they are also investments tax wise. While both state and federal legislatures continually bring up the topic of eliminating tax credits for home owners, the home builders, real estate and mortgage lobbyists are active working on your behalf to keep interest, property tax and mortgage deductions alive and well.

 

 

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100% First time home buyer program~no mortgage insurance

If you are a low income home buyer in Oregon, 100% financing is available, and could be the ticket to buying your first home.

What is a Key Community Mortgage?

  • 100% Financing Allowed
  • No Mortgage Insurance
  • 30 Year Fixed, no prepayment penalties

What Does It take to Qualify?

  • Property located in Low or Moderate Census tract OR
  • Borrower’s Household Income below County limit (example: $55,000 – $58,000 – depending on county)
  • 42% Maximum Debt to Income Ratio
  • Must be able to document a satisfactory 12 month rental history
  • Cannot own another home at time of closing
  • 620 Minimum credit score
  • No outstanding medical collections over $1000
  • No outstanding consumer collections over $250
  • Bankruptcies must be discharged for 48 months with reestablished credit
  • $500 Minimum investment from Buyer(principal, interest, taxes and insurance) payment is in savings at time of closing
  • Gift funds ARE allowable
  • Borrower must complete Home buyer Counseling Prior to Closing
  • Borrower’s with student loans in deferral and no payment listed on credit report will have an assumed monthly payment of 3% of the total balance
  • Rehab component is available up to a maximum of $50,000 and cannot exceed 150% of the appraised value of the property.

If buyers annual income is at median county income or less, buyer can purchase a home in any location. If income is higher than median county income, the property must be in a low census tract area.

To determine census tract for property, go to http://www.ffiec.gov/Geocode.

  • Type in property address
  • Click search
  • Click Get Census Demographic on the next page
  • Look at the box that says Tract Income level

Call or email me for more information. Your income and location of property are critical to determine if you AND the property qualify for this type of financing.

Do you qualify? Is now the time to buy your first home?

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How to write a winning offer in a Sellers’ market

In case you haven't noticed, 2015 has ushered in a full blown sellers’ market in Portland
  1. House hunters are out in huge numbers.
  2. Mortgage rates are hovering around the 4% range for best qualified buyers.
  3. Housing inventory is at an 8 year low.
  4. Employment is up.
  5. Lenders are accepting lower down payments.

In a sellers’ market when there isn’t enough inventory to meet the buyer demand, bidding wars for homes become the norm. Bidding wars often strike fear into the hearts and minds of buyers, but we do have tools to help you win a bidding war, if you are willing and able to compete.

Tactics for winning a bidding war in a seller’s market:

  1. bidding wars over homesBuyers need to accept that the list price on most homes is just the starting point for offers. Most homes are selling for considerably higher prices, sometimes even tens of thousands of dollars more than the list price.
  2. Buyers should work with their own agent. Your agent should be keeping an eye on the market for you and keeping you apprised of new listings and price reductions as they come up.
  3. Look at new listings as soon as possible. Homes often sell in just a few days.
  4. Your first offer should be at least asking price. With multiple offers, you may not even receive a counter if your offer is too low.
  5. Write a personal letter to the sellers telling them why you want this house. Be creative and personal.
  6. Make sure your pre-approval is recent (less than 60 days old). Offers submitted without up to date pre-approvals are often ignored.
  7. Offer a big earnest money deposit as a show of good faith and high interest.
  8. Keep your offer clean – NO contingencies except those that are already included in a standard contract.

The escalation clause

In a sellers’ market I suggest using an escalation clause to protect you in cases of multiple offer scenarios. An escalation clause is written into the contract to keep your offer competitive by automatically raising your offer to whatever your maximum price is

On a property with a list price of $300,000, for example, where there are competing offers, you need to assume that at least some of those offers are for more than $300,000. When writing up your offer, you should consider if you are willing and able to pay more, and if so, how much more.

Here’s how I write an escalation clause:

  1. If there is a bona fide competing offer, Buyer will purchase the property for $1,000 more than the NET purchase price of the competing offer, up to a maximum purchase price of $315,000.
  2. Seller is to prepare a counter offer to this real estate agreement with new purchase price based on the proposal outlined above in #1. 
  3. Seller must attach copy of the competing offer with counter offer to buyer. (personal information about competing buyer may be redacted but all terms of contract to be included in copy).

In this example, you are protected from paying more than $315,000, and you could potentially win the bidding war at a lower price. Of course, if there are other offers for more than $315,000, you are now very likely out of the game on this property.
 

Why use an escalation clause rather than wait for a counter offer?

  1. A counter offer might not be offered if there are other offers higher than yours?
  2. Time to go back and forth on counter offers can work against you because until you have a mutually signed and accepted offer, another buyer can slip in with an offer higher than your counter offer and “steal” this house out from under you. You are never locked in as the buyer until both buyer and seller have signed all paperwork at mutually agreed upon terms.

 

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