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.

It’s a buyer’s market here in Portland Oregon and everyone knows it.  Prices have changed dramatically over the last year or so, home buyers can reap big benefits.  While exactly where the market will land is unknown one thing is certain when looking at history; It’s a better time to buy now than within the last three years!

Here are a couple of buyer tips:

1. Look at the comparable recent sales and make an offer lower than perceived market value.  Notice that I didn’t say lowball the heck out of 20 houses.  This approach is a giant waste of everyone’s time for the most pat.  Comparing current sales data is required, regardless of market conditions and most everyone does it.

Let’s say for example that you’re looking to buy a house in Beaverton Oregon.  Comps on the house of choice point to market value being $300k.  Given current real estate conditions a realistic offer may be $280k.  Most sellers will probably counter at a higher price.  Stick to your guns and counter back with original offer price.  Leave the ball in the seller’s court.

2. Don’t get emotionally attached to the outcome.  This tactic will suit you well in the long run.  People tend to pay more once they’ve mentally moved into a house and started arranging furniture.  Look at home buying from two standpoints.  It’s a place to call home and an investment.  Money is made on the purchase not the sale.  Disengaging from the outcome of your offer keeps the decision more business like.  So a seller doesn’t accpet your offer.  Big deal.  Plenty more to choose from!

3. Knock the price down after inspection.  Some buyers want to play hardball and really push for a lower purchase price.  Others would prefer a softball approach.  It’s up to you and your Realtor can address either avenue.

Once home sellers come to an agreement arrangements for their move become more solidified.  Much of this goes back to emotions.  Mentally, they’ve sold the house and are moving on.  Buyers control transactions for the first few weeks and it’s up to them to continue or potentially walk away after inspection.  Seller options are limited.  Typical inspection periods run 10 business days here in the Portland Metro area.  Pushing inspection negotiations towards the 2 week deadline gives sellers more time to move foreward with their plans.  Remember, they’re selling because they want something…

Get that professional home inspection.  Minor or major, suggested repairs show up 99% of the time during these closer looks.  One of the most common approaches is to get contractor bids for such repair points and go back to sellers asking for a price reduction (compensating for repairs costs).  Who says it has to be a dollar for dollar reduction?

Buyers willing to play hardball can come back with a take-it-or-leave-it approach.  Asking for additional money to compensate for (insert additional excuses here) house/market shortcomings is an aggressive approach.  Sellers will be ticked but they’re faced with a choice.  Move on with bird in hand or risk putting their home back on the market only to weather additional market downturn or potential repeat of a similar offer.  Tough one…

For the most part experience says that the majority of home buyers take a balanced approach and ask only what is perceived as a reasonable repair cost.  Price still goes down in the end and buyers can address non-critical repairs at their leisure.

Additional Portland Metro area home buying tips are available at www.MaxwellSinclair.com