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.

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.