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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

Do you know how many qualified buyers are out there at any given time in the Portland area?  A ton.  And most are not taking advantage of our current market situation.  Here are several reasons that now IS a good time to buy Portland Houses:

• House Prices around Portland

Compare today’s prices to the last couple of years.  Portland home appreciation rates of 5% are historical averages but declining values are very rare trends.  Projections for our economy continue to be centered around mid 2009 for a turn around.  The local housing market will definitely pick up as soon as people’s perception changes.  After all, perception is reality.

• Renting vs. Buying

Just the law of supply and demand.  Areas like Hillsboro, Beaverton and NW Portland will continue sustained population growth as large companies move in high-tech locations on the west side.  These eventually fuel the need for housing.  If people aren’t buying, they’re renting.  Rental supply shrinks and price goes up.  Real estate buyers are fewer and prices of homes for sale in Portland go down (like we’re seeing now).

• Huge selection of houses

Right now we’re facing an 11 month supply of homes.  That means if no additional homes listed in MLS then the current rate of sales would take 11 months to deplete our inventory.  This is higher than in recent history giving buyers a huge advantage.  Sellers are happy to get an offer!

• Homes are a forced savings plan

Tying yourself to a mortgage is a form of disciplined investing.  Everyone has to live somewhere.  Choosing to own a home can really pay off in the long run.  Generally speaking rents and real estate prices go up.  Your mortgage payment stays the same.  The earlier you start the better off you’ll be due to equity build up.  My first house payment 12 years ago was $531/mo.  Rent for that same house now would be at least $1000.

• A Look Back at House Values

Who hasn’t talked with a parent or grandparent and heard about the good ol’ days of house prices and payments?  Timing a home purchase is optimal but it’s not likely that you’ll be successful.  Average appreciation for homes in Beaverton, Hillsboro, Tigard and Portland are similar are better than average US numbers.  Our current housing market situation is temporary.

• Investor cash flow

It’s not hard to find an investment home in Portland’s metro area.  Cash flow is looking better than it has in years.  Several homes in decent Beaverton and Hillsboro neighborhoods in particular offer great investing opportunities.  Highly likely that properties can cash flow with 20% down.  Real estate foreclosures are running high and, if you can tolerate the wait, short-sale situations offer fantastic value!

Talk with me today about buying or investing in Portland Oregon real estate.   Visit www.MaxwellSinclair.com for information and search Porland MLS listings.

Looking to score on awesome foreclosures or short sales in Portland Oregon?  Watch out for that middle-man fee!

Recently I had the pleasure of dealing with an interesting situation.  This involved a pre-foreclosure property for sale in Beaverton.  Although it was listed in the RMLS there were additional buyer “fees” involved I found out about after talking with the listing agent.  Although additional “negotiation service fees”, or whatever you want to call them, are not too uncommon these days it is something to watch for and I’d be interested in hearing other’s opinions regarding ethics of such.

My example came when a buyer was searching houses for sale in Portland Oregon.  He came across what looked to be a fantastic deal but was disclosed as a short sale (bank would have to approve sale price and deal with a lack of loan payoff).  I found out from the listing agent that there was middle party involved with the seller who, apparently, had a contract for purchase (option to buy at a undisclosed price).  This middle party wanted $15k to buy out the option and had no intention of actually acquiring the house.  Purchase by my buyer could not move forward without getting this party out of the picture.

Justification for paying the $15k was “negotiation work done with the bank.”  There was work done with the bank, yes, and they had come to an agreement with lien holders.  OK, great.  Was it $15k worth of work or just someone trying to make a quick buck off of a real estate transaction?  Remember, this middle party had no intention of actually aquiring the property.

Here’s a rundown; Buyer writes the offer, seller approves, middle party approves, then it goes to the bank.  Bank asks for a HUD 1 sheet (balance sheet more or less).  Bank now sees that $15k of the purchase price is going to a middle party and essentially not only are they dealing with selling short of what’s owed on the loan but an additional $15k shortage.  The bank has to potentially choose between selling short, foreclosure, counter offering, or relisting the property hoping for a better offer.  What’s the most cost effective route?

Tough spot for the bank.  They’re up against this situation more often than the general public realizes.  Ethics conversations between people in our real estate industry are strong in regards to involvement of middle parties.  Ulimately, as long as the buyer gets a good price for the house he shouldn’t care.  It’s the seller/bank side that has to deal with distribution of sale proceeds.  Many feel that it’s part of the listing Realtor’s job to deal directly and negotiate with banks, no middle party involvement.  Points are made that middle parties are taking advantage of an already bad situation involving home sellers near foreclosure.

What do you think?

For tips on dealing with Portland foreclosures and Portland short sales visit our site at www.maxwellsinclair.com.

Many properties in the marketplace today fall within one of three categories peaking interest of investors/rehabbers.  Foreclosures, short sales and listings labeled as fixers.  So, which one will provide the greatest potential as far as return?  Property analysis is same regardless of the selling situation.

Here’s a fairly typical case study

Yesterday I went out with clients looking at an entry level project house for sale.  It came on the market that day and was listed at $169k.  Wow!  Houses in Beaverton listed for that price draw attention.  Very few properties for sale even come up under $200k (detached homes).

Looked like a decent deal at first glance.  Hey, you can practically break even on payments with 20% down using it as an income property.  Pretty interesting, on paper…  We arrived at the home and it did match the pictures a little too well.  Blue roof of several layers, single pane windows, cheapest sheet siding known to man, and best of all… trashed.  Rather bummed on this find.

After quick review of the surrounding homes and overall condition of the neighborhood it was estimated that resale in average to decent condition would fetch around $190k.  A rough guestimate of rehab costs was an easy $20k as long as sweat equity was involved and not 100% contractor labor. Question then is; At a list price of $169k is the home worth purchasing strickly for potential gain?  In my opinion there are more lucrative forms of real estate investment out there.

Taking a look at overall investment costs, just rough numbers:

Loan and closing fees: $6000

Carrying cost during rehab: $2000 (figure two months)

Material and labor costs: $20,000

Total investment: $28,000

From $169k add this $28k and we have a product that most likely isn’t going to sell for the money spent.  If a buyer is looking at keeping as a long term rental or primary residence it’s not too bad.  For $197k you’ve pretty much got a new house but for immediate resale… dream on, there’s no money in such.

My guess is that this particular piece of Portland Oregon real estate is not going to sell in it’s current condition for much over $160k and it’ll take a couple of low-ball offers to convince the seller of such.  Still, if you’re searching for fixer type houses for sale in Beaverton, Hillsboro, or any other Portland metro area you can do better.  Look for key words like “fixer”, “short sale”, and “foreclosure.” Check out the website and search all RMLS listings for free at www.maxwellsinclair.com.  Great investment opportunities are available with a little searching!