Making Offers on Bend Oregon Real Estate and Pricing Metrics

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MAKING OFFERS ON BEND OREGON REAL ESTATE AND PRICING METRICS

Hi, Thom Gardner again for the Bend Real Estate Minute at BendHomeBuyersAgency.com which is part of Bend Brokers Realty. So today, I’m going to talk a little bit about making offers on Bend Oregon real estate, and the pricing metrics to make that offer.
Now, we are in the high season, May through October. And because of that, you’re going to see that most houses are selling for at list, close to list, or in some cases, with hot neighborhoods, way over list.
There still are chances for you to get a Bend Oregon home at less than list depending on a few things. And to do so, we use pricing metrics. Those are things such as how many days has that home been on the market.
I’m looking to buy a Bend Oregon home right now myself. I have a couple that I’m looking at that have been on the market an inordinately long time. And because of that, I know I’m going to be able to take them a little bit and rate them over the coals and get the price down. They don’t have a choice at this point because it’s a hot market and they’re not selling.
So, how many days on market has that home been there? That’s the first one to think of when making offers on Bend Oregon real estate.
The second is what neighborhood is it in? Is it a hot neighborhood? Is it a hot home? Are there obvious flaws with the home?
Now, in the case of the Bend Oregon homes I’m talking about for myself, they have obvious flaws. So, the question with those obvious flaws, you have to ask yourself, is “Can I fix these flaws? Or are they structural, fundamental flaws that can never be fixed?” You want to avoid those, of course, because you’re going to have trouble selling that house later yourself.
However, if it’s something you can fix—and the ones I’m looking at can be fixed for a price—you figure out how much under the list price can I come in at so that I can fix those flaws and still get a great deal? So that’s another metric to look at when making offers on Bend Oregon real estate.
Other things I can find out for you from the listing agent. Is there something in this deal for the seller that’s much more important than just the price? That can be something like a seller lease back for a month or two, so that they lease the home from you after you close, and they can move out more easily. Or is there a certain closing date they’re looking for that’s maybe a couple months off in the future? And if you have the flexibility to deal with that, the fact that we’re putting that into an offer may cause them to take a lower price, which works for you.
So, there are several things like that to consider when making offers on Bend Oregon real estate. Other things can be: does it back to a busy road, is it in an area where there’s a mixed look to the neighborhoods—you have some lower cost homes versus higher cost homes—and of course, running a competitive market analysis (which I can, of course, do for you), find out what homes nearby are selling for, how long they’re taking to sell, and how is this home priced versus those homes?
Those are just a few of the pricing metrics to take into consideration when making offers on Bend Oregon real estate. Again, I can help you with that! Thom Gardner with the Bend Real Estate Minute at BendHomeBuyersAgency.com, part of Bend Brokers Realty. Take care!

Alert- Artificial Bend Oregon Home prices

 

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SPRING/ SUMMER 2016 – Artificial Bend Oregon Home Prices Alert

Hello, everybody. Thom Gardner for the Bend Real Estate Minute at BendHomeBuyersAgency.com which is part of Bend Brokers Realty, and I am going to talk to you today about Bend Oregon Home Prices.
So, you may have seen my recent video on multiple offers in Bend Oregon- we’re smack dab now in multiple offer season. There’s something else I want to alert you to that’s going on out there that I’ve seen in previous years, but seems to be becoming more standard for Bend Oregon real estate agents who list homes.
I first started seeing it in 2011 or ’12. And now, in the last two years, it’s become a little bit of an epidemic. And that is Bend Oregon Home prices being set artificially to attract multiple offers.
Some listing agents are underpricing Bend Oregon homes that they know will be hot, so that you think you’re going to be able to get this house for a price within your price range. But what they’re really doing is trolling for multiple offers on the first day.
The multiple offer situation in Bend has gotten stranger this year. It used to be that we would write in a deadline date for them to respond to our offer, and they would do so within that timeframe. Now, because the hot homes are so hot and rising in price so quickly in a market where there’s very little inventory, they’re just holding onto the multiple offers, and they’re saying, “You know what? We’re going to look at all the multiple offers, all together, in a week.” Usually, it’s not even that long. Usually, it’s two or three days.
So, let’s say the house goes up on a Friday. The listing agent, when I call—they won’t call me because they’ve got the hot house, I’ve got to do the work on this thing- I’ll call them and they’ll say, “Look, we’re going to look at all the offers on Monday night, and we’re going to pick the best one.”
So, if you see a Bend home that looks too good to be true in your price range—let’s say you’re in the range of $500,000 Bend Oregon home prices. You think, “Gosh! This house looks like those fantastic $650,000 or $600,000 houses I’ve seen,” and you can’t believe it, It’s in the right neighborhood. It’s got the right look, its craftsman. Everything looks new and beautiful. It looks like it’s got a great flow. Maybe I’ve run and done a video on it. It looks amazing. Well, guess what? Well, there are probably 10 other people beating down that door, making an offer on that home. That house that’s listed at $500,000 might go for $550,000, it might go for $575,000, it might go for $600,000. It sounds ridiculous, but it is happening.
And of course, as usual, I’m going to tell you. Your best defense against this is to call me or another pure buyer’s agent if you can find one. Let us get to work on that property, dig in the dirt, finding out what we can from the listing agent, and save you a bunch of headache.
Let me tell you, it’s very deflating when you go through two or three of those in a row, and you have nothing to show for it. Meanwhile, your emotions have been jerked around. Two or three times, you thought you might have a great house, and you have nothing. It’s pretty discouraging.
Okay, again, Thom Gardner, Bend Oregon real estate agent, Principal Broker, and Pure Buyer’s agent for the Bend Real Estate Minute at BendHomeBuyersAgency.com, part of Bend Brokers Realty, and this has been my rant on artificial Bend Oregon home prices. Thanks again.

Multiple Offers in Bend Oregon Real Estate 2016

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Multiple Offers in Bend Oregon Real Estate 2016

Hey, Thom Gardner, Bend Oregon real estate agent, Principal Broker, and Pure Buyer’s Agent here again for the Bend Oregon Real Estate Minute at BendHomeBuyersAgency.com which is part of Bend Brokers Realty. So, it is May, middle of May. And as has happened the last several years, that means multiple offers in good old Bend Oregon real estate.
I’ve already been involved in one—actually, two. The first one was a little strange in that we got a second chance after we were beaten on our original offer because the original buyer got buyer’s remorse and pulled out within a day or two.
On the second one, we came in at full price on a $600,000 home, and ended up being beaten by a significant margin.
So, here’s what you need to know about multiple offers. First of all, we need to identify if the home you are looking at is going to be in a hot area of Bend Oregon, or a neighborhood or the home itself is such that it’s going to be subject to  multiple offers.
Now, I can tell you whether that is the case. Generally, these are going to be on the west side, generally in specific neighborhoods, and not ugly ducklings because they tend to last awhile. I can help you identify if that’s the case.
Now, if that is the case, we go to part B which is where you need to have a conversation with yourself and ask yourself “how much more than list am I willing to pay for this house in Bend?” You may only get one chance.
In the old days, we would submit an offer in multiple offers situations and they would come back and say, “Okay, we want your highest and best offer.” However, what I’m finding this year and last is that they are just taking the highest offer because, often, they’re so high that it’s a case of a bird in the hand versus two in the bush, and they want that bird now. So, you’re going to need to decide how high you’re willing to go.
And remember, it’s tough for me as your Bend Oregon real estate agent to advise you to go too high above list because often, I find that buyers, within a week or two, if they’re paying let’s say $525,000 for a house that was listed at $500,000, they have buyer’s remorse, and they think, “Gosh! Did somebody play me? Have I been jerked around on this deal? Should I have bid so high? Did I pay too much for this house?”
I hate seeing buyers in that situation. I hate seeing you have to pay more than list. But you know what? In May, June, July or August in Bend, 2016 especially with such low inventory you may have to for the home that you really desire.  So then we make the offer, we hope for the best, and we move on from there.
Now, remember, the key with multiple offers—and this is tough in a moving market like we have in Bend Oregon real estate where it’s moving so quickly in terms of price as we’re up 10% in two months—is that it has to appraise. So if you’re getting a loan, remember, it’s going to have to appraise at the amount that we go above list on. If it doesn’t, we go back and we start over again.
If you’re paying cash, that’s not a problem. You just need to figure out how much cash you’re willing to let loose with.
Okay! Again, Thom Gardner, Bend Oregon real estate agent, Principal Broker, and pure buyer’s agent for BendHomeBuyersAgency.com, again, part of Bend Brokers Realty. This has been the Bend Real Estate Minute. Take care!

Bend Oregon Mortgage Lenders – Local?

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Bend Oregon Mortgage Lenders

Hello everybody and welcome again to the Bend Real Estate Minute. This is Thom Gardner, Principal Broker and Pure Buyer’s Broker at Bend Brokers Realty, which is part of Bend Brokers Realty.
Today, I’m going to talk to you a little bit about Bend Oregon mortgage lenders. Now other than choosing myself, the second most important choice you’re going to make, if you’re getting a loan, is your mortgage lender.
Now, people often ask me, “Should I use somebody in my hometown who I may have used in the past for a purchase as my lender? Or should I look at Bend Oregon mortgage lenders?”
I believe it’s important to use somebody locally because Bend is a very unique market, very unique, especially in terms of seasonality of sales, as our sales go through the roof in spring and summer and die most of the rest of the year. And things like the forest boundary, urban growth boundary, septic tanks, and other area specific things here affect loans, and it’s good to have somebody here who understands that stuff and works with it every day versus somebody maybe online – that’s often the worst choice I’ve found – or someone in your local town who may not be used to some of these issues on a daily basis.
Concerning loans, most deals that fall apart do so right at the very end of the deal. You need a mortgage lender who can move fast. And importantly as well, you need someone who will take your phone call on a weekend or an evening, who will give you their cellphone number. If you use somebody online, that’s not going to happen. If you use a bank, that is not going to happen.
I almost always recommend a mortgage broker over a banker because he or she doesn’t get paid unless you get your loan, unlike a banker who gets paid a salary and he or she’s not going to be so hot on running and chasing down every detail for your loan. It’s going to happen or it doesn’t happen. A mortgage broker needs your sale to go through in order to make money. So I highly recommend you use one instead of a bank.
And if you use a Bend Oregon mortgage lender, which again I highly recommend, and there’s a problem at the very end of your deal, I can get them on the phone, get them running and say, “What is going on here?”, or “We need this fixed immediately”.  Or, conversely, if they have a problem and they need me to chase something down, they can get ahold of me really quickly and say, “Here’s what I need. Do this, do that.”
I’ll give you at least three Bend Oregon mortgage lenders to choose from so that you have a choice in figuring out who works best with you and who will give you the best deal in the end. But again, I highly recommend using somebody locally. When we’ve had deals fall apart due to loans, it’s almost always when someone is using a lender that is not here in town.
Now again, this is Thom Gardner, Principal Broker and Pure Buyer’s Broke, BendHomeBuyersAgency.com part of Bend Brokers Realty.  CONTACT ME if I can be of help!

Free Bend Oregon Real Estate Services


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Free Bend Oregon Real Estate Services for Home Buyers

CONTACT ME HERE if I can be of help!

Hello again everybody, this is Thom Gardner with Bend Brokers Realty at BendHomeBuyersAgency.com. I’m a Principal Broker and Pure Buyer’s Broker.
Today, I’m going to tell you a little bit about a couple of the Bend Oregon real estate services I offer that really help my out of town clients. And again, that is the vast majority of my clients- 80% to 85%.
So the first thing I like to do for folks is set up a Bend Oregon real estate portal on the MLS system because that will give you a real time look at how quickly homes are selling in your price range, what kind of Bend homes you like, and allow you to save ones that you like for possible future looks or to send me on a video run, which I’ll describe next, so that you can see a little bit more into that property.
Now, the nice thing about having an MLS portal versus having a Trulia or Zillow view is that you get real time updates and changes on the pricing, and on the status of the Bend Oregon real estate if it has gone pending- which you don’t get on the consumer sites. I can’t tell you how often a client contacts me and says “I saw this great house on Zillow, can you check it out?”, only to find out it is a goose chase because the house sold months ago and the listing agent left it on the consumer sites so that he or she could get more phone calls! VERY COMMON. So with a Bend real estate portal, you’re able to really make much more informed and quick decisions in a hot market about what you would like to do and what you like to have me do on this end. So I highly recommend that you ask me to set up an MLS portal.
All I need is the criteria, your minimum square footage, your minimum beds and baths, your price range especially and other things you may have like garage size, lot size, age of home, whatever floats your boat. Let me know and I’ll do my best to integrate it into the search so we don’t waste your time, area of town, et cetera, proximity to the river, trails, shopping, whatever you like. So that’s the first thing.
The second of my free Bend Oregon real estate services that folks use to buy from afar after they have a portal is video. When they find a Bend home that really looks good, they want to see what it really looks like, not what it looks like in some fluffy pictures done by a pro and that may have cropped out the ugly thing next door or focused only on the pretty parts of the house. No, they want a real look and so I go and I do a professional video. Obviously, if you are watching this you know I have a professional camera. I also have a steady cam and some pretty good experience in the field.
And so what I do is I go in and I go through the home from front to back, all around the outside and I show you the neighborhood, the homes on either side and across the street, proximity to traffic, noise, et cetera. That way, you get to see what they don’t want you to see in that listing and you are able to make a much more informed decision. I speak throughout, and bring a very critical eye to the Bend real estate properties that I film for clients. I’ve had people buy from overseas just strictly based on those videos, as well as from here in the States. Clients tend to love them, share them with their friends, and I’m told they are very entertaining! Bonus!
But most often, my Bend Oregon real estate clients use them as a reason to fly out or drive here rather than just doing so for something that looks good on the computer when it may be terrible in person. You get to see a real, critically focused video, not the “moving pictures” stuff that they like to show you on the listings. And in that way, you can make an informed decision on whether you want to spend the money and time to come here and look at it yourself.
Okay, there you go, a couple of valuable, but free, Bend Oregon real estate services I offer to buyers from afar. Thom Gardner, Principal Broker and Pure Buyer’s Broker at BendHomeBuyersAgency.com, which is part of Bend Brokers Realty. And again, this has been the Bend Real Estate Minute. Thank you!

Bend Oregon Real Estate Buying Seasons

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Bend Oregon Real Estate Buying Seasons

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Hello again and welcome to the Bend Real Estate Minute! I am Thom Gardner, principal broker at BendHomeBuyersAgency.com which is part of Bend Brokers Realty.

I want to talk to you a little bit today about the Bend Oregon real estate buying seasons. Now, we have several and they’re not always the same every year. It depends on what’s going on in the economy. As you know, we’re a very big vacation home and second-home market. Although these days, we’re a much larger primary real estate market than we used to be when I first started in the business. And that’s because we’re known worldwide.

We’re in various newspapers and magazines all the time now, and that didn’t use to be the case. We used to be a West Coast sort of known quantity.

So, let’s start with January, February, March, the winter season. So, generally, in January, we get a burst of business right after New Year’s. I call them the New Year’s resolution folks. They’ve always wanted to live in Bend. They’ve traveled here and they’re finally like, “This is the year! We’re going to do it! We’re going to call a Bend realtor and buy some Bend real estate!”

So, the first couple weeks in January are often busy and that leads to some closings in February. February, otherwise, is relatively slow. There’s not much on the market that time of year, so it makes it difficult for the Bend Oregon real estate buyer to find what they want.

Now, new Bend Oregon real estate listings start coming on the spring. The past few years, as the economy has been better, March, April and May have been huge. They’ve actually been the biggest months of the year in terms of real estate price increases.

So, you’re going to have static prices in January, February left over from the fall and then they’re going to explode in March, April and May, sometimes five percent a month during that period. We get the vast majority of our real estate price increases during that spring period. And that is also when more Bend homes come to market. So, you have more home inventory, but you are going to pay a higher price to get one.

Now, we get into summer. That’s when the inventory peaks, around June. And up through June, it’s very busy. In July we get what I call the tire kickers. Those are tourists who come to Bend and want to be shown around, but they haven’t really dug into whether they can afford a Bend home. They haven’t checked Bend mortgage lenders. And so, they’re tire kickers. They’re not often as serious as folks in other Bend Oregon real estate seasons.

August tends to start another busy period. August, September, October, that’s what I call the serious season. These are folks, sometimes senior citizens, who have been traveling during the summer and they want to get a Bend home and move here before winter. And those folks I love because they’re decisive. They come to town, they know what they want.

There’s still a lot of good stuff on the market in August and that starts to dwindle after September. You get into October, there’s often less on the market. November and December are the period that’s slowest here. That’s also the period when you can get the best deal.

You’re not going to get a deal on Bend Oregon real estate in spring. You are going to pay almost 100 percent for your home. It’s the same thing in the summer. You get into September, it gets a little bit better. Beginning of October, it gets better still. However, you’re now looking at homes that are left over on the market that nobody wanted, that maybe was priced too high or is an ugly duckling.

You can get a tremendous deal starting in October, November, December, the very best deals we have all year, but you also have slimmer inventory.

So, you have to decide what’s right for you! Am I looking for this specific Bend home and don’t mind paying a higher price for it, or do I just want a deal on something that might appreciate quickly?

If you just want a deal and you can settle for something that may not be exactly perfect, come in November, December and also in January and February. It starts to get a little better towards the tail end of that period. That’s when you’re going to get the best price for a Bend home. The rest of the year, March through September, you’re going to be paying full price for Bend real estate, but you’re going to have the best selection.  You can confirm what I say here on my Bend Oregon Real Estate Statistics page.

So, that’s a little bit of insight into the Bend Oregon real estate buying seasons. Again, I’m Thom Gardner, principal broker and pure buyer’s real estate broker with BendHomeBuyersAgency.com, part of Bend Brokers Realty. Thanks again and take care!

 

Green Remodeling Incentives

Home Energy Audits and the financial incentives available to help pay to retrofit an older home to “Green” status, and a recommendation for my buyers that they consider an energy audit as part of our inspection when purchasing a home in Bend.
I recently became certified as an Earth Advantage Real Estate Broker, which, for those who do not live in the Northwest, is a program similar to but not quite as in depth as Leed certification. Earth Advantage certifies homes with what is called an EPS score, much like the Energy Star scores you see on appliances these days. Now, there are neighborhoods in town where these EPS scores are standard, including of course Northwest Crossing. Newer homes in our area often are “green”, meaning they have a high EPS score due to modern green building techniques.

But, if like me you own an older home, you can still participate in the “green” home boom, by retrofitting your home in various ways to save on energy costs and make your home much more liveable, AND valuable. Studies show that buyers are currently willing to spend 5% more for a green home than for a standard 20th Century style home. In order to better inform my clients, and to determine what I could do and how much it would cost to retrofit my home, I participated in an Energy Audit. The lure of free money in the form of incentives from Clean Energy Works and Energy Trust, which are closely linked, was enough to get me on board. When a Northwesterner pays their utility bills, a portion goes to Energy Trust, which then pays those funds out as incentives to retrofit older homes. Clean Energy Works operates on funds directly from Pacific Power and Cascade Natural Gas, but performs the same function, and the two often work together.

The audit was suggested by Clean Energy Works (I will have links at the bottom for all of my mentions), and performed by Neil Kelly associates, which is a company that started in Portland many years ago, and performs both audits and retrofit energy remodels. They performed a blower door test, in which they add negative pressure to the home to find out where the air leaks are, duct tests, infrared sensor testing to see where cold air is flowing in and heat flowing out, and a host of other tests. The whole thing took about 3 hours.

A few days later I got my report and the recommended remedies, broken down by cost per item. To summarize, the total to retrofit my home, a 1989 built structure, was $17,500. Of that, incentives from Energy Trust, Clean Energy Works, as well as State energy tax credits (Federal energy credits have vaporized, unfortunately) would kick in $4000. Interestingly enough, they offer an option to amortize your cost, and they set it up so that the amount you pay will not be more than the amount you SAVE each month on your energy bill! Quite a nice system. My monthly payment, should I choose to go this route, is $38, the minimum they expect I would save on my monthly bills. It turns out my ducts are quite leaky, with 5 times the loss from furnace to vent as in a green home, most of my windows of course need replacing (about $7500 of the total cost), and in the 1980’s they simply did not seal homes very well. Add to that the fact that there is no insulation under the floorboards but only on the stem walls, and you can see there is a lot to do here!

Now, $13,500 might seem like a lot, but with the value of my home close to $400,000, and the fact that buyers are willing to pay 5% more at the moment for a green certified home, anything under $20,000 should be easily recouped in my case.

Which brings me to my last point, one that I believe will register with my Bend home buyers, especially those in higher price brackets. One of the largest concerns my clients tend to have is in regard to energy efficiency, as we are cold in the winter and warm in the summer here. A few years ago I could order the energy bills for prospective home purchases, but that is no longer the case as they are now considered private. So, for those who are extremely concerned about energy costs and green home living, I will now recommend that they consider having an energy audit performed during our 10 day inspection period. Whereas a standard home inspection costs about $400, an energy audit costs as little as $250, and will either set your mind at ease, or keep you from making a bad investment. Well worth it, in either case, especially for costly homes. Something to consider for the 21st Century.

As promised, here are your links!

http://energytrust.org/residential/

https://www.cleanenergyworksoregon.org/

http://www.earthadvantage.org/residential/

http://www.neilkelly.com/services/energy-efficiency/

http://www.oregon.gov/energy/RESIDENTIAL/pages/residential_energy_tax_credits.aspx

The “Hold Your Nose and Buy” Bend Real Estate Market

Thom describes his analysis of the current and especially difficult market factors that led him to the choice to purchase a less than perfect home, rather than rent, wait, and perhaps end up with no home at all.
Last year I had a divorce that ended up in a demand from my ex wife to sell our Bend home so that she could get her equity into her pocket. I loved that house, and had put a ton of sweat equity into it. I bought it in a fixer condition, and knew that I had made a very large and tidy profit on it. So, after much gnashing of teeth and softly preparing my daughter for the loss, we indeed sold the house. Despite my admonitions to my ex wife that we would get much more money for it this Summer, we sold it in Spring, and it closed sale on April 30th.

Meanwhile, I had been looking. Homes in Bend that were perfect for what is rapidly becoming my new family, homes which I had seen for sale last Fall for $350,000 ish, were now $425,000. I was undaunted, as I was selling a $300,000 home, and my new Love was selling her $220,000 home, so we should be able to afford $425,000, right? Well, not exactly. Banks have actually tightened their lending standards since I bought in January 2011, and though we had a ton of money for a down payment, fluctuating self employment income and my Love’s full time student status brought us down to Earth rapidly- they would only give us enough to buy in the very low $300,000 range.

Now I had been using an MLS portal, the same type I set up for my clients, and I knew that 4 bedroom Bend homes in the $300,000 range with a large lot and a 3 car garage were almost non existent. When they did exist, they were in areas I simply would refuse to live, areas I know well to be problematic from my 23 years in the area. We could get a 3 bedroom, with no office for my business, and a 2 car garage, with no space for the ski boat or other “Bend” type recreational toys, and we could get a smaller lot. Not exactly inspiring stuff! After living for a month in my new Love’s house in a neighborhood where people can hear their neighbors’ conversations in their back yard, I wanted to get back to the sort of home I had sold; one with an idyllic, large back yard and outdoor entertaining space. I grew up in the Southwest, so outside is the way I like to live when at all possible.

After chasing down a few homes which we ended up being too late to nab (Seriously, the $300k range is about the worst in terms of inventory here, being about the mid-line of home purchases in Bend and having the largest demographic of the buying public perusing them), we had a choice to make, a choice I have seen clients wrestle with in recent months as well. Do I hold my nose and buy something less than perfect and try to fix its limitations, or do I rent and wait for several months hoping that inventory improves?

It did not take long to decide. Option 2 is out, and here are the reasons why.

Rising rates. We saw rates spike a quarter point in less than a week, and they don’t look to be stopping. A home we planned to buy at $325k is no longer available to us because of that quarter point jump. It puts us over the magic 45% debt to income ratio that banks use as their dividing line these days (It was 51% when I bought my last house). If we wait until next year, my guess is we are looking at 6% or so. Not a bad rate historically, but one’s buying power is crushed with each tiny tick up in rates.

Rising Prices. Prices rose 20% last year, and they have risen about 10% so far this year in Bend. With the low Bend Home inventory and so many buyers hearing the “ALL CLEAR” bell ring at the same time, they are going to rise more quickly the rest of the Summer and Fall, in my opinion. If we wait we risk BOTH rising rates AND rising prices crushing us to the point where we won’t be able to buy anything, a position I was in back in the 2005 era, where I had given up on buying a decent home here, as the median Bend home price was around $465,000.

Rising rents, fewer homes. Lastly, rents are rising very quickly in Bend as well, which is a historic change. Traditionally, rents here have been low as our economy does not support the kind of jobs that pay high rents. However, with so many people having moved to Bend in the last two years and far fewer of them buying than before, and so many others having lost their homes and no longer able to buy, the renter pool is massive these days, and since almost no new homes were built for four years here, there are fewer homes to go around. So, the same dynamic is occurring in the rental market that we see in the home purchasing market- a large demand and a tiny supply is pushing rents upward. Add to this the fact that we lose major tax benefits (both of us being self employed) by renting, and this is the last nail in the coffin of waiting to buy a home.

And so, friends, I am left with only one decision. HOLD MY NOSE AND BUY SOMETHING! And that is exactly what we are doing. We made an offer on a Bend home that needs some work (it has no furnace, just wall heaters, only 3 bedrooms when we need 4, and is only 1650 square feet, when we need well over 2000) this weekend. It came down to the same thing that ended up deciding my last home purchase- the lot. You can change a home, you cannot change (at least not in terms of size, privacy, location) the lot. This is a gorgeous lot, at the end of a cul de sac, a half acre, very private with lots of potential for gardens, greenhouses, and room for the dogs and the kids. To make it work we will have to spend a bundle to convert the garage to a real master suite, and then build a new garage next to the home. Not to mention putting in one of the new Japanese style Mini-split ductless heat pump systems.

But it does accomplish a few things. It gets me back to the West side of Hwy 97, where traffic is lighter and flows better, trains don’t stop your progress daily, and restaurants, pubs, trails, and the river are all in biking distance. It gets me back into a home like the one I had, which was very private, has gorgeous and idyllic backyard space, and has lots of quiet in the evenings and on weekends. Even better, this one is not on a busy road as was the last. And, by increasing the footage to over 2000, and bringing the 90’s styling inside the home into the 21st Century, we should have a $400,000 home by Fall, albeit with a much smaller mortgage.

So, my message is this. We are indeed in a tough market. If you are the picky type, this is not the Bend real estate market for you, though you would have loved it two years ago when my buyers (including myself) had the run of the place and could buy anything. Now, there is not much out there to buy. And time based financial pressures (rising rates, rising prices, and rising rental prices with limited availability) are all saying that if you don’t buy now, you will either get much less for your money later, or like many in the pre-boom and boom years, may be pushed out altogether. This Bend real estate market takes an open mind, a lack of fear, and a sense of creativity. Cash helps if you have it, and if you are an all cash buyer but find yourself in the same situation I am in where I can’t find what I want at my price, I HIGHLY recommend you consider a small loan at “still ridiculously low” rates, and then do like I am doing, put that cash into MAKING THE HOME YOUR OWN, MAKING IT THE BEND HOME YOU WANTED!

That way, you end up with what you want, you take advantage of low rates while they still exist, you keep the tax benefits of home ownership, and you beat the herds that will no doubt continue to come and drive our prices up for the next several years. I made 50% on my last home purchase by carefully studying the risk/reward ratio of the situation, though many did not agree with me at the time. Once again, the slight risk we are taking offers great reward, and indeed, it is a much, much lower risk than I was taking at the end of 2010. It seems a no brainer to me, and I have tried to counter argue the points above, to no avail. If you can’t either, perhaps you will agree.

Why I don’t recommend Short Sales to my Buyers

Thom explains just why he tells his buyers that short sales are most often very bad deals, if they are even legitimate deals at all!

It seems that three years ago no one had ever even heard of a short sale. Now we just wish we hadn’t EVER heard of them. Short sales are the bane of the home buying market at this moment. Most buyers really don’t understand why they are so bad, so difficult, and in the end, so infuriating. I have been involved in many, from both sides. And while I am whining about them as a buyer’s agent, I can tell you it is actually much worse to be on the listing side, at least for the agent. From the customer’s perspective, it is generally worse on the buyer’s side. This is because if you are the seller, you already know you made a very bad mistake, and you are prepared for lots of unpleasantness in trying to unwind that awful thing.

But if you are the buyer, you ostensibly haven’t screwed up, and are just trying to buy that cute house with the low price. But what you don’t know in these situations will damn near kill you. In the early days, let’s say in late 2007 and early 2008 when shorts were beginning to rise locally (I am told by those in other areas Bend has been in the very forefront of short sales, as we fell so hard, so fast, the Vegas of the NW, so many have learned from our mistakes), we eagerly took our clients to them, as none of us really understood them either. Then came the hair ripping, the screaming, the crying, and the slew of buyers running for the hills, convinced the banks were evil and liars (I am not so sure they got it wrong there), and that the whole deck was stacked against them.

So if you are a home buyer, and you are looking in an area such as Bend, Florida, Vegas, Phoenix, or California’s Inland Empire, where prices are down 50% or worse from their highs, please, for your own sake, listen up.

1) PRICING-
First of all, the price you see on a short sale may or may not be legitimate, in fact, most often it is not. “But it’s on the paper”, you say. Yes, but it means nothing. A short sale is generally begun when a homeowner misses 2 payments. The bank won’t even let a seller consider a short unless they have satisfied that little detail. Then, the Realtor comes in, gets the bank information, and most often begins the short WITHOUT ANY communication from the bank as to how much they want to get out of the property. This is not the Realtor’s fault, because most lenders will not accept any communication from the Realtor UNTIL an offer is made. Therefore, the Realtor has to get an offer before he/she knows how much the house can really sell for. So, in order to show good faith to the bank that we attempted to get their money out of the deal, we generally start them at the break even price, where the bank will get all of their money back. Then, the price is lowered, often by 5%, each week or two, until an offer comes in.

So what generally occurs is that the house sits on the market for months as the price comes down, and that period is longer when there has been a huge drop from the boom prices, simply because the market is 50% or so below that price at the current moment. Finally, the price begins to look attractive to buyers, and an offer comes in. Then the Realtor is often allowed to speak to a negotiator at the bank. This negotiator is for the Seller, as, remember, the bank is not the owner of the home until foreclosure, and the seller still owns the house, so all negotiations on how much they will take to let the seller out of their obligation to pay the money back take place between seller and bank, not the buyer. So, the buyer sits, and sits, and waits for someone to get back to them while the lender’s negotiator negotiates with their board, their sub-lenders who really own the note, and the seller. What sometimes occurs in our market is that the bank finally comes back and says,”we won’t take that much, you have to offer more than the asking price”. So, that’s what I mean by the price often being illegitimate, as it means nothing at all until the bank says it does. And in cases where they are writing down over more than 35%, my experience says they won’t do it, and would rather foreclose. Now, this is where the price DOES get legit, as the Realtor is forced to raise it, and puts it back in the ACTIVE MLS category. These are your best bet if you want to look at shorts. I just closed one, in fact, where the previous deal fell apart, leaving a pre-accepted bank price for us to jump in and take advantage of. These are a needle in a haystack, but your Realtor can help.

2) SELLER CONTRIBUTIONS? Fahgeddaboutit.-
The majority of offers these days include what are known as seller contributions. This simply means the seller is kicking money in towards the buyer’s closing costs or down payment. As houses now require larger downs to buy, it makes sense that the buyer is putting the squeeze on the seller to help the sale come to fruition. But in a short sale, the seller is losing his or her house and accepting the mantle of years of bad credit. To even get a short sale to happen, they have to prove to the bank that they are essentially broke. Do you think they can, or will, kick in cash to help you make a purchase? Would that make any sense at all?

No, of course it wouldn’t. And, as you can’t negotiate with the bank (remember, they only deal with the seller and have no legal basis or right to negotiate with the buyer as they don’t own the house . . . yet), they also won’t help you. So contributions are exceptionally rare with shorts, and if you need one, don’t waste your time looking at them.

3) OFFERS-
So the buyer has made an offer, and is smiling thinking they are going to get this great house cheap. But not so fast. It often takes 1-4 months for the bank to figure out what the heck is going on, and it may take them that long to get back to you. You need to know this going in. Furthermore, there may be other interests involved. These include second mortgages, Home Equity Lines of Credit (HELOCs), and the worst, Private Mortgage Insurance (PMI). Now, your chances of actually getting a short sale with only ONE lender is somewhere around 25% at last check. Those chances drop significantly with each party attached to the debt. The First Mortgage has the power here, as they can legally take the whole offer and leave the sub-creditors with nothing, but of course then they really can’t do it as the sub lenders will foreclose. SO, all lenders and insurers must sign off on the deal, and IF this ever happens it will take a long, long time. There are bureaucracies in each, and therefore the slow wheels in those institutions have to deal with the slow wheels at the others, negotiations go back and forth between loss mitigation departments at each, and it just grinds to a halt. Frankly, these banks believe they have better things to do, and much of the time in these instances would simply rather foreclose than go through the mess of dealing with your offer.

My own advice would be to never get involved with a short sale if it has PMI involved, as there is very little chance it will ever happen. I also counsel against getting involved with short sales that have a second or a HELOC involved, as they also have maybe a ten percent chance of going through. Meanwhile you are wasting your time and missing good Bank Owned REO’s and traditional sales that may actually be purchaseable. Which leaves us with the single lender short sales. These are your best bet. There are certain banks which have a good track record of closing these, and others which are the kiss of death. I am not going to tell you which unless you are my client, due to legal issues, but it you have an honest buyer’s agent who didn’t just fall off the turnip truck, they should be able to as well.

3) IT AIN’T OVER UNTIL THE FAT LENDER SINGS-
But you’ve made an offer, and you are prepared to wait until something happens. Optimistic, are you? Well hold on, Kemosabe, this ride gets rougher. Now, if you make an offer on a traditional sale, or on an REO, once it is looked at by the seller and approved, which should only take a few days at worst, it is marked PENDING in the MLS system, and no one can offer on it again until the offer falls out of contract. But with a short sale, the ground is shaky as Jello, and because there really isn’t a deal until a third party lender signs off, it is marked CONTINGENT, which might just as well say “WE HAVE AN OFFER BUT IT PROBABLY AIN’T GOING TO HAPPEN- GIVE US A BETTER ONE!” Yes, “your” house stays on the market during the month or more of negotiations, and another buyer can come in behind you and get in line with a better offer (generally you are still first to get a shot these days, as banks only want to look at one offer at a time, but you know the listing agent is going to tell them that they have a better one waiting behind you . . .). Which means, you might fall in love with it, as clients of mine have in the past, and over months develop a real love for it, only to lose it at the last minute. Not a recipe for stability, is it?

4) REMEMBER AIG?
Another dynamic in place with short sales is that these lenders are insured against foreclosure risk, but often not against short sale risk. So, if they foreclose, some of that loss is made up by an insurer. If they sell a short, they often have to write it all off. This just makes negotiating the short sale even less attractive to them.

5) THIS IS/WAS SOMEONE’S HOME!
When I take young couples and families through short sales, people get bummed out. When you walk through a short sale, the pictures are still up, the kids’ toys are scattered all around, and the kitchen table has recently been used. And as you inevitably look at these things, you realize these are people just like you, who had dreams of a better life, but theirs were destroyed by the housing crisis. These people are losing their home, a home they probably love. A home they might have hoped to raise their kids in, watch one of them get married in, have family gatherings and holidays in. But now their dreams are dashed, and you really can feel the despair and sadness in these homes. Clients have walked out just crestfallen after looking at a great home, only because it hits home what is REALLY going on here. If you’re an altruistic type, a sweetheart, short sales aren’t for you, either.

6) CONCLUSION:

In my book, there are only certain short sales worth looking at, and they represent maybe 20% of those on the market. Here are your criteria for a Short Sale you may actually be able to buy:

A- Look for a short sale with ONLY ONE LENDER! More than that and your chances drop dramatically.

B- THAT LENDER BETTER BE A GOOD ONE! There are good banks, and bad banks. The worst in terms of getting these closed was once the industry darling. I think you can guess that one. I wouldn’t get involved with them, they supposedly close only single digits percentage-wise. And that monster that swallowed a big NW bank is not much better. You’ll do better with small banks. They need the money. The big guys are too cash rich these days to care. Caveat- Wells Fargo has proven to be very good and conscientious about closing these, one reason I have switched to them for my own banking needs.

C- Better yet, find one that HAS ALREADY HAD A SALE FAIL AFTER MONTHS ON THE MARKET. This one may have the rarest of items- a legitimate price.

D- BE PATIENT! Constantly emailing or calling your Realtor won’t help. All he/she’ll do is call the other Realtor, and get the “I haven’t heard anything and they won’t talk to me” line we always get. If you are getting involved with a short, that’s your choice, and you must be prepared to wait and be ignored.

E- BE REALISTIC! If the price looks too good to be true, it almost always is. And don’t go looking at short sales if you need to close a house in the next two months or so, chances are it won’t happen, and then you will have only yourself to blame, NOT your Realtor (unless that Realtor hasn’t told you all of this, and in that case, you have my permission to yell at them).

F- Looking for the perfect home? Is the most important thing to you getting the right house? THEN DON’T EVEN LOOK AT THEM! Short Sales are for the buyer who wants to get the best price and doesn’t care if it is an ugly process after which they might never even get the house. They are not for people who are at all emotional about their home purchase. These are brutal, ugly, faceless deals, and if you are looking for the perfect place for your family or get emotional about homes, do yourself a favor, look only at REO bank owned homes, and at traditional sales. You will thank yourself, and so will your Realtor!

Free Money For Saving Energy

Thom points out Federal and State tax credits for efficient energy systems and appliances
Well, the very dark cloud of the economic De-Cession we have all lived through for the past three years has a silver lining. Energy prices. When economic activity dies and products being manufactured, shipped, and distributed slow from their frenetic pace of the early 2000’s, energy prices fall, and fall they have. Automobile gas is currently about 60% of what it was at its peak, Natural Gas is about a third of what it ran up to, and crude oil is at approximately half its former cost. What does this have to do with Real Estate, you ask?

When fossil fuel prices drop, a similar phenomenon occurs in the renewable, or green, energy industry. Prices on many renewable energy systems go up when more people are rushing to buy them to stave off the specter of high fuel prices, and they also go down when prices in non-renewable energies fall, and people become complacent about buying what is the easiest to get- fossil fuels. However, as we have seen with the stock market since the March 2009 bottom, the best time to buy is not at the peak, but in the trough of prices.

Furthermore, homeowners who install energy efficient systems in their homes in 2010 can cash in on government programs, put in place when energy was expensive and it seemed the Saudis would own the entire World, and get some real money back on their taxes both this year, and for years to come. Everything from Solar electricity systems, so perfect for our High Desert and loads of year-round sun, to wind systems, also perfect for our climate, to simple energy saving appliances has a financial benefit to install and use in your home.

After all, do you REALLY think that low energy prices are here to stay? T. Boone Pickens, who is an oil and wind energy titan, claims that oil will once again double this year to well over $150 a barrel (that means $4 plus gallons of gas to you and me). Now, he is an OIL man, so we can take that with a grain of salt, however, he made similar predictions in 2004, and he proved correct then. And he is not the only one making such claims, as the economic recovery in China charges ahead, while ours begins to start chugging along here in America. Once we get our economy cranked up and join the current booms in Latin America and Asia, and then Europe follows, we could be looking at another massive problem with energy prices right here at home.

Now, the tax credits. The Federal Government has several tax credits, CREDITS, NOT DEDUCTIONS, for homeowners in place for 2010. Through this year, homeowners who install energy efficient products in their homes can get 30% of the total cost of the products back as a tax credit on this or next years’ taxes, UP TO A MAX OF $1500. The items must be in your principal residence, must have been put in service between January 1 2009 and December 31 2010, and include the following items:

Biomass Stoves, HVAC (heating, ventilation, or air conditioning), Insulation, Roofing, Water heaters, and Windows and Doors.

Folks, this is a no brainer. I know many of you have bought fixer uppers in the past year or two as prices have dipped, and if you need a new roof, new vinyl windows to replace old aluminum ones, or a new furnace, NOW is the time to do it. Free money from the government is not just for Big Banks (though yes, it’s a LOT less!)

AND EVEN BETTER, there are some items which HAVE NO UPPER LIMIT, and not only do they qualify for the 30% credit without a limit, they also run through 2016! These items include:

Geothermal Heat Pumps, Solar Energy Systems, Wind Energy Systems, and the new up and comer, Fuel Cells.

Now that’s a credit! Always wanted a solar electricity system on your home, but balked at the cost? Take advantage of lower prices than you will probably find in a a years’ time at the source, and let the government pay 30% of your costs! It’s a great situation for those that need to do some work, and have the seed money to do it.

And, of course, the State of Oregon has a very messy and extensive list of credits for homeowners who install energy efficient appliances and systems as well. It is too sloppy to summarize here, so I am including this link to a page which summarizes them: http://www.oregon.gov/ENERGY/CONS/RES/RETC.shtml , OR, I have included a great chart on the bottom of my “Tax Information” page, HERE.

Lastly, here is a link to the Federal Governments informational site on their tax credits: http://www.energystar.gov/index.cfm?c=tax_credits.tx_index

Now, go save some money!