With the prevalence of short sales and bank owned properties in the Portland real estate market these days, it behooves buyers to become a little more savvy about how to work within the system to close a deal faster and with fewer hassles for these types of sales. Following are some tips to get your bank owned or short sale deal closed faster. Short sales are admittedly harder, but if you follow these pieces of advice, you’re likely to fare better than if you don’t.

1. Make an all cash offer

This is hard for most people to do, because we’ve become accustomed to going into debt for everything. Nevertheless, average people with average incomes are increasingly paying off their mortgages in full through financial discipline and hard work. You don’t have to be wealthy to aspire to and actually become debt free in a short amount of time and pay cash for a house.

2. Sell your current home before making an offer on another one

This can be an inconvenient experience, because you’ll have to live with relatives or rent a home during the interim, but it is extremely helpful for a number of reasons. First, if you have enough equity, it may enable you to make an all cash offer. Second, you won’t have any contingencies to tie up the new deal. It just makes for a clean offer, so if you can pull it off, do it.

3. Get preapproved with a mortgage broker, not just prequalified

Many buyers don’t know the difference between getting pre-approved and pre-qualified for a home loan. All too happy to have a warm body to show a house to, many agents don’t care enough to advise their clients on this.

Being prequalified for a home loan is sort of like getting those mass mailed postcards telling you you’re “prequalified” for a credit card. It simply means that, on the surface, you’re credit history and unverified income appear to qualify you for the loan, but the bank hasn’t necessarily seen all of your backup docs, tax returns, etc. Pre-approval means the bank has all the documentation and is ready to actually give you the loan. They just need an acceptable property for collateral.

4. If possible, get your loan from the bank that is selling the property

This is not always possible if you’re going to get pre-qualified before you even start looking for a home. But if you know you want to make an offer on a particular property, especially if it’s a short sale, anecdotal evidence suggest that you may have better luck getting the bank who has to sign off on the sale to say “yes” if you are taking out your loan with them. They may be writing down a bad loan the first time around, but if they get the deal with your loan, they are more likely to agree to the deal.

5. Tighten inspection timelines to 3 business days instead of the standard 10

This is an easy place to cut an entire week out of the closing process. Most inspectors have no problem getting their visit scheduled within 24 hours, and they often print their inspection report on the premises.

6. Have mortgage broker order appraisal 2 business days after offer acceptance

Ordering an appraisal can take time, and many mortgage brokers don’t want to do it until the end of the process so they have less money at risk if the deal falls apart. It’s not hard to find a mortgage broker who is willing and able to speed things up for motivated (and qualified) buyers. If you demonstrate your seriousness to close the deal, they will reciprocate and order that appraisal quickly.

7. Have certified funds to escrow prior to signing closing documents

This is something that should happen for all escrows. There is no good reason a loan officer can’t get certified funds into the escrow account before the signing. Waiting to the last minute is just asking for delays.

8. Don’t make any last minute credit purchases

Don’t even think of making any major credit purchase, especially by opening new lines of credit, once you’ve been preapproved. That will just raise questions and potentially impact your loan approval, causing serious delays. If your approval is already tight on the debt to income ratio, it could completely derail your loan.

The bottom line is that fast closings can and do happen, but you have to plan for it. Knowing a few tricks of the trade to can help your Portland real estate deal be one of the fast ones.

So the idea of finding Beaverton houses for sale and flipping it for profit intrigues you enough to at least read this sentence?  Well you’re not alone.  The prospect of easy money never goes out of style, not that house flipping is necessarily easy.  Beaverton real estate has gone through its swing in pricing just like the rest of Portland and is still sliding south.  So is it possible to flip today and be successful?  You bet. 

Math is a bit more important now than in 2005 when a buyer could be a complete flunky with a paint brush and resell for 20% more than the purchase price.  However, I’d venture a guess that a lot of these self proclaimed real estate investors actually didn’t do as well as they say they did.  Fuzzy math seems more common sometimes than regular.  Selective understanding of overall costs in the flip process elude more investors than you’d think.  Purchase, holding, and sale costs being the biggest factor left out of their version of how awesome a flip turned out to be.  Makes for a better sounding story when embellished a bit.  It’s not free to buy, hold or sell real estate.  Hmmm

 Let’s take a look a client’s latest Beaverton house purchase:

• Advertised in RMLS at $125k for a 1290 sq ft. 3 bedroom, 2 bath, vaulted living areas, light and bright, deck, fenced yard, 1992 built home on a .17 acre corner lot in a decent area.  Short sale. 

 Well, sounded real interesting up until the short sale part anyway.  9 out of 10 offers I write are pulled by buyers prior to getting seller’s bank acceptance.  Told my buyer that he’d get impatient like everyone else and pull his proposal in order to close on some other closable property, even bet him lunch on it.  But what the heck, we threw out an offer.  Did that and came to find that several other buyers had done likewise.  

 About 30 days go by and the listing agent makes contact with me saying we’re in first position and a short sale negotiator has been assigned on the seller’s side.  Woo hoo!  That means a little bit more than nothing.  Then the funny thing was that this short sale negotiator says “Hey, if you guys don’t close in 10 days we’re going to foreclose.”  Holy cow.  That’s not much time to get funds together.  We went back with a counter addendum stating that closing in 10 days was going to net them $10k less than our original offer.  They accepted $115k!  Wow.  That IS exciting!

 Buyer ended up with a bargain compared to other homes in the same neighborhood.  Our subject house needed paint, flooring, landscape maintenance plus a few odds and ends, the sum total being under $7,000.  Quick resale on this Beaverton house will be around $170k.  Recall those little-remembered costs of buying, holding and selling?  Even with these factored into the equation flipping will add up to a decent profit.  Unfortunately though I owe my buyer lunch…

 Watch Beaverton houses for sale, Portland houses for sale, or whatever area you’re after.  Short sale and foreclosure profits are possible, even in a down market.  Do your homework and factor all costs with a cushion.  Evaluate realistic resale price and make the offer accordingly.   Write up a handful of short sale offers and see what sticks.  Potential reward is out there!

In the market for high end foreclosures?  Portland Oregon is offering some amazing deals with Street of Dreams quality construction by builders who cater to the upper end buyer.  Several recent showcase-of-homes tours featured locations on the outskirts of Portland’s metro area, mainly Oregon City.  With a drive that’s under 25 minutes to downtown Portland there are 3 locations that offer huge bang for the buck right now.

Because of changes to our market place there is incredible opportunity.  Take a quick trip back to early 2005.  Remember the Portland real estate market?  It was going gangbusters and builders were scarcely able to build fast enough to keep up iwht public demand.  One obstacle was availability of land to put these new construction projects on the table.  The urban growth boundary keeps tight reign on development so luxury home builders had to move further out in order to capture estate sized lots.

In comes Oregon City and it’s ability to cater to high end clientele.  Luxury home development was much more in demand during fast paced days of 15 – 20% appreciation of homes.  Large lots are incredibly hard to find in prime upscale areas such as Stafford, West Linn and Lake Oswego.  Much better availability in Oregon City.

With estate sizes ranging from about 2.5 acres to over 5, luxury home builders found pricing much easier to work with.  Finishes are immaculate.  Landscaping individually designed into every nook of the lot to the tune of $250,000 or more.  Ornate architecture on every wall.  Mature trees positioned in just the right location to compliment grand homes and sculpted landscape.  Almost every home is entitled to show off some form of water feature.  Many have several coi ponds and cascading waterfalls.

At the time, several investors in these estates were reaping advantages of our economy and loose credit terms, income was abundant.  That was three years ago.  Now it’s a bit different.  While short sales and foreclosures run amuk on entry level pricing there are also several on the luxury home end.  Most of this Portland luxury real estate is selling for less than half the construction costs.  Often even one third.

Looking for a deal?  Check out Hidden lake homes for sale.  There is a foreclosed property which will be offered shortly close to $1.1m, a guesstimate.  Construction cost is somewhere around $2.8m.  It is a foreclosed property and may need a slight amount of attention, around $50k worth.  Investment in a few kitchen appliances will mean big returns down the road when real estate heads in it’s historical upward direction.

There are essentially 3 main estate subdivisions catering to Street of Dreams buyers in the SE area of Portland’s Oregon City.  All are gated communities; Grasle Road, Hidden Lake and Beaver Lake.  Guess which two offer their own small bodies of water?  Pretty tough to compete with over the top finishes and settings of all these locations.  Several homes are offered as short sales and even a few have been foreclosures over the past 6 months.  Opportunity is here!

For more information on these and other Luxury Homes in Portland check out the property search or give a call.  We’re happy to help point home buyers in the right direction.   www.maxwellsinclair.com

Changes to Portland’s real estate market bring out some interesting ideas for those who are looking to take advantage of the foreclosure situation. Sellers are often tempted by alternative avenues proposed by parties operating just under the radar of Oregon’s Real Estate Agency.  Funny how these folks won’t get licensed.

Let’s look at a recent example of a Tigard real estate listing in southwest Portland, a desirable area with convenience to everything.  Searching for hot deals in RMLS brought up this jewel:

Pre-approved Short Sale, can Close in Days!  3500 sq ft on 2 levels, 4 bedroom 2 bath, new windows, wheelchair accessible, etc, etc, etc…Sold AS-IS  $325,000.

Pictures didn’t look too bad.  Sure, it wasn’t pristine and may need a bit of sweat equity but the price was fantastic based upon description and comparable sales in the area.  Location was great, close to everything.  All factors point in the right direction.

So we arrive at the house and it looks a titch worse than in the pictures.  Beautiful kitchen shots had been taken before the owner decided to remove appliances and rip out the cabinets.  Blackberries had actually engulfed one entire side of the house as well as several trees on the property.  Garage doors were falling off and pretty much toast, but that was no biggie compared to all the soffit and window sill dry rot issues.  Oh well, still a good deal, she’s a fixer.  We’ll also have to overlook listing comments about being wheelchair accessible since there were about 4′ elevation differences all over the place and no ramps.  In the sales industry these little details are called “puffing.”  Works for the some people I guess…

People Promoting Win-Win Situations Are Often the Winners

A quick phone call to the listing agent reveals not only is this property a short sale but there’s another party involved who expects to be paid for her amazing negotiating skills.  Essentially what happened is that the seller was contacted by this win-win negotiator just prior to going into foreclosure.  Negotiator paid some of the overdue payments and/or fended off foreclosure proceedings temporarily while property was advertised for sale.  Through her incredible abilities she also convinced the seller to give her an assignable contract for sale of the house.  That contract needed to be bought out in order for any other buyer to proceed.  Cost to buyer was $15,000 (she would then assign her interest to the new buyer).  This buy-out money would not have gone towards the seller’s overdue payments/loan balance and would have essentially cost the buyer $15k more in purchase price.

What a great win-win situation!  Wait… I only count one winner, where’s the second?  Nothing like having a third party negotiator step in and take advantage of an already bad situation.  There are several of these “professional negotiators” out there now.  In fact, many are weaseled into RMLS listings.  The buyer is expected to pay for professional negotiation services of which they are not even receiving representation.

Another Avenue for Sellers in Trouble

One of the best solutions for sellers is to contact a reputable real estate broker well before foreclosure.  It’s their job to negotiate with banks, advertise, secure the best price and generally represent the client’s best interest.  No special win-win third party negotiators need to be paid!!!  Note that not all brokers deal with short sales and some that do have a special team (complete with weasel fees).  Hiring the right real estate broker will benefit sellers, banks and property buyers in the long run.

If you’re looking to buy Portland real estate, you can’t do better than to do it through us here at www.maxwellsinclair.com.

Short sales listings will inevitably be part of almost every Portland real estate search result.  In fact, Portland’s RMLS (Regional Multiple Listing Service) has actually added ”bank owned” and “auction” fields for agents to use during listing input.  While getting a great deal on the purchase is in front of most people’s minds, actually closing one of these dynamite short sale houses becomes a little testing on the nerves.

Banks seem to throw logic out the window on occasion… of course these are also the organizations who loaned money to anyone that could fog a mirror a few years back.  Did you know mortgage brokers actually referred to some loan programs as “the liars loan?”  Ya, that didn’t have disaster written all over it.  Good news for buyers though due to all this foreclosure/short-sale turmoil.  Portland prices have dropped significantly, back to early 2005 or even 2004 in many cases!

Foreclosure and short sale prices lead the market with aggressive pricing.  It’s very difficult for average resale sellers to compete with someone who’s dumping a house next door due to financial difficulties.  Your neighbor owes more against the house than what current market will bear and is losing his shorts.  Hence, the term “short sale.”  Actually a better definition might be; A mortgage in excess of what’ll be netted out from the house sale, banks have to agree to take this loss.

A common selling situation:

Market analysis is done.  Looks like the property should sell for $500k based upon recent sales within the last 6 months.  Property is listed but no offers come in after 1 month so price drops $20k.  Still no offers, another month passes.  Price drops again, now list is $460k.  This pattern continues for several months until we get to the point at which the $500k property is now $380k.  Wow, what a deal!  Unfortunately, it’s now considered a short sale because seller still owes $450k against the property and doesn’t have any money to pay the shortage.  Multiple offers come in.  Best offer is $385k.

Listing agent goes back to the bank and asks for the rep’s blessing, approving such a sale.  Rep orders the BPO (broker price opinion)/Appraisal.  Appraiser looks at comps and the offer, comes up with a value of $425k.  Bank says NO SALE at $380k.  So, how do we get the place sold?

Ammunition to use against (il)logical banks

Here’s the compelling argument that can be used to leverage a lower sale price:  Show the bank RMLS history.  Your buyer’s agent can produce such.  Fact is that the property was listed for a higher price and didn’t sell.  Market value is determined by buyers, not appraisers, not sellers or real estate brokers.  Although a market analysis was done showing what theoretically a home is worth the bottom line is that buyers are not willing to pay such.  Real value is at $380k in the buyer’s eyes.

Bank representative must make a choice.  Go with the bird in hand, request a higher amount (forcing more market time/counter offer), or foreclose.  In a declining market which avenue is most cost effective for the bank?  You’d be amazed how many banks will accept this logic, some won’t.  But hey, “He who has the gold…”

Visit the site for information on Portland Real Estate and advice on investing in real estate.  Search Portland Oregon homes for sale at www.maxwellsinclair.com