Numerous buyers for properties that are a bargain

It’s interesting.  Listen to the local and national news coverage and you’d swear that the sky has fallen in the Portland real estate market.  Just this week I ran into 3 examples of properties where home my buyers saw value.  Two listed homes were short sales and already had offers on them within days of input into RMLS.  The third went into a sale pending status before they could even look at the house but RMLS had not yet been updated.  My clients were bummed.

This situation is not uncommon in today’s market.  Countless buyers are sitting on the fence waiting for that great bargain to come along.  Once it does, several of them jump on the opportunity and force a multiple offer situation.  Is our market really that bad?

Portland’s housing market is experiencing a significant adjustment

Home prices have slid in all areas.  Higher end locations like Lake Oswego, West Linn and Forest Heights are seeing adjustments back towards pricing seen in 2005.  Many of the homes in these areas are listed in the $600k price range.  A quick look at tax records will show assessor’s values over $750k.  Not that too buyers should be concerned with what the county thinks but rather note that home prices are adjusting from market peaks.  Looking at tax statements is one key way of evaluating home prices.

Prices have decreased 10% this year alone.  Recently I evaluated a Lake Oswego home for sale.  Sellers purchase the home in 2001 and were looking to relocate.  Taking a broader look at appreciation rates showed a tradational 6% overall increase (comparison of purchase price in 2001 to today’s potential sale price).  Buying in Lake Oswego proved to be a decent investment overall.

Unrealistic sellers need to lower price in order to compete

A huge factor in what’s driving down Portland real estate prices is the shear amount of short sale and foreclosed upon properties.  Banks actually taking homes back through foreclosure are very few, relatively speaking.  Owners who have the fore site to see their financial position may find it beneficial to do what’s known as Deed in Lieu of Foreclosure (give their house directly back to the bank).  This allows banks to unload homes quickly through the Portland MLS.

Whatever method is used to obtain the property doesn’t really matter.  Point is that bank owned real estate will be marketed at an aggressive price.  Benefit is to the buyer.  Buyers purchase properties at very attractive prices and are able to close within a standard 30 day period.  Short sale properties very often take 3 months to actually close, if they ever do.  Bank owned (foreclosures) and short sales are competing against the average seller, driving down their market value.  Sellers have to step up to the plate and lower their price to stay competitive!

Search all Portland Real Estate for sale at www.MaxwellSinclair.com

What’s a good real estate investment?  Depends upon who’s doing the talking.  It never ceases to amaze me how many Realtors comment on what great cash flow their particular listing is producing.  I’m convinced many are not investors.

Here are 3 factors to consider when evaluating overall return on investment:

1. Look at the surrounding area. Portland Oregon has many neighborhoods and surrounding cities like Beaverton, Tigard, Hillsboro, and Lake Oswego.  Within each city are well-regarded and not so well-regarded locations.  This can be seen by driving a couple city blocks in one direction.  How does the subject area compare?

Real estate investing should be viewed as a long term event, more than 3 years.  Google.maps.com has an awesome tool for helping evaluate neighborhood condition from your desktop.  Use the “street view” button to pan up and down the street taking not of vehicle and yard conditions as well as house curb appeal.  Look at aerial views to get an idea too.  More trashed and dead looking vehicles may mean that community involvement is seriously lacking.  A sign of real estate future values.

2. Look for upside potential through remodeling. Buy the worst house in the nicest neighborhood.  We’ve heard that one before.  Beaverton and Hillsboro offer some of the most cost effective real estate investment for single family homes.  When looking for future returns think about what can be done through simple upgrade.

Take a 1970′s original house in Beaverton.  With current Portland real estate prices it’s ease to pick up a great deal around the $200k price point.  This will be a three bedroom 2 bath ranch style house on a 7000′ lot.  Very easy to update and with a little sweat equity can be done well for $10k.  Upside potential for rent is now there as well as resale.  A wise use of $10k.

3. Evaluate cash flow. Much of newer construction and higher density housing is subject to HOA fees.  Property management, repairs, maintainence, vacancy are key factors to consider.  In the above example we refer to Portland investment property, specifically Beaverton.  There’s a good balance of cash flow here, possibly more so in Hillsboro.  House prices are becoming more attractive all the time in many neighborhoods.

Single family nvestment homes provide a minimum amount of expense after remodel.  There’s not much to break, also one of the benefits of purchasing newer homes.  Tenants pay for all utilities.  I also mention in my website additional tips on having tenants take care of small repair, this minimizes cash loss.  If possible, manage property yourself.  Management fees will run 7% every month.

There are a ton of good informational tips on my site www.MaxwellSinclair.com.  Please feel free to call and discuss investment ideas and tips of your own.  David Somerville 503 789-7633

Most home buyers have the same goal; Get a great price on a good property!  So one of the popular ideas is that you’ve got to get your hands on a foreclosure list.  Buy it from direct from the bank and save tons of money over retail.  Sounds like a super plan but are you willing to do the work?

Searching the MLS

Truth is that searching homes for sale in Portland, Beaverton, Lake Oswego or other areas is done pretty much one way, online.  Portland’s MLS system (RMLS, regional multiple listing service) is the source for 99.9% of properties advertised for sale.  Whether it’s John L Scott, Prudential, RE/Max or whoever all listings are input into RMLS.  From there the information is just redistributed to everyone’s website.  Foreclosures (bank owned properties) are typically no different.

Banks work with local Realtors to get their properties sold at fair market value as soon as possible.  Dumping them to a handful of cash buyers on courthouse step doesn’t do much for the sale price.  List them in a MLS and these properties will get a million times more exposure, bumping up the sale price.  If you’re searching online properties for sale you’re already getting the vast majority of foreclosure listings.  This may not be overly apparent because buyer’s generally don’t know who the seller is.

Portland foreclosure lists

Yep, they’re all trying to sell you something of public record.  Foreclosures are out there but today more than ever and a few of such are purchased by full-time investors for cash on the courthouse steps.  You’ve got to be there with certified funds (10% minimum in cashier’s checks) to even participate.  Seller’s (banks) won’t wait for the lucky bidder to secure conventional financing and close weeks later.  Good luck easily finding a published list outside of what’s already in the MLS.

Notice of Default lists

NOD (notice of default) lists are the only thing I know of distributed for free.  These are public notices of people who are at least 3 months behind on mortgage payments.  Lists are distributed by the title company and are the first step to potential foreclosure.  Cash buyers, Realtors, and property solutions people promoting “win-win” garbage all prey on these homeowners.  It’s a full time job for people choosing this route (trying to capture a potential easy buck) and what they’re promoting is to “save the homeowner from foreclosure.”  Some chasers are legitimate (Realtors for the most part), others not.  I’ll argue in depth about the scammers out there if you want to listen…

Short-Sale Listings

In reality these days the majority of properties go through short-sale negotiations (bank agrees to work with a seller and take a loss rather than go through the more expensive foreclosure process, losing even more $$).  Properties are listed in the MLS and you’re already seeing them within the set search parameters if they exist.  Bank representatives generally don’t give the properties away as urban myth would have you believe.  By far the majority of foreclosure and short-sales sell through Realtors on RMLS.

Summary

Late night TV is great for promoting a bunch of trash.  But if you’re willing to make it a full-time job… you may get lucky eventually.  There are easier ways of accomplishing the same goal and getting a good deal.  Contact a good Realtor in Portland!  Keep in mind too that foreclosures generally come with cosmetic or bigger issues, especially in our target price range.

I’m wrapping up my 6^th yr in real estate and figured out long ago that this avenue was a giant headache… and I love doing rehab!  Out of the thousands of people I’ve talked with about real estate I’ve met 2 folks who’ve actually purchased foreclosures on the courthouse steps and know that the one guy was barely breaking even after all was said and done.

Investigate Beaverton, Hillsboro, Tigard, Lake Oswego and Portland neighborhood information at www.MaxwellSinclair.com , we’re happy to help!

Portland home prices have slid a bit and are mirroring the rest of the U.S. housing market.  Albeit not to the same extend but we were bound to feel the push towards price reductions and sluggish home sales eventually.  As of this moment RMLS numbers are showing a decrease of 4% over this time last year.

New construction sales fall in sync with resale and builders are having to come up with creative incentives to move product.  Most are no longer pouring foundations without a sale agreement in place.  Buyers can typically not make new builder’s sale agreements contingent upon sale of an existing home.  Time for construction to be completed is roughly six months here.  At the point where final occupancy permit is available buyers are required to have financing in place and close the deal.

The light turns on for some buyers after waiting six months for their new home and watching prices slide.

“Why should we pay the price agreed upon 6 months ago when the builder is now offering more incentives for the same house!?”  Good question.  What has to be weighed is what the loss or gain will effectively be.  Most likely buyers of new construction have released earnest money to the builder for upgrades, etc.  It’s not refundable.

Choice is to go forward with the existing sale contract, attempt to negotiate a new price, or walk away from the purchase and any funds already paid.  Tough one.  Going forward as planned means a buyer is potentially paying a premium compared with today’s pricing.  No one wants to do that but an agreement is an agreement.  Keep in mind that a builder takes the same risk in seller’s market.

Purchasing pre-sale homes in phase one of a development can potentially be very profitable in an up market.  Locking in a price early on and watching phase two prices climb in a quickly appreciating market is fun.  Buyer’s love it.  Flip side is the case now and buyer’s hate it.  Builders want to maintain good report in any community and may have suggestions.  Probably the best advice is to evaluate options with your real estate broker.

Check out www.maxwellsinclair.com for awesome tips on negotiating real estate purchases or possibly re-negotiating with builders!  Search Houses For Sale in Portland that have come onto the market recently and compare resale with new construction.