Friday, June 26, 2015

Seller's: Water the Lawn!

Here in Southwest Washington we have had one of the best Junes ever as far as weather goes. Nothing but big blue skies and sunshine. Certainly not the norm for June. So, we have an early summer and that means we have to actually water our lawns. In a typical year we can usually go 9-1/2 months without worrying about the lawn. In the summer however that grass with brown out faster than Usain Bolt runs the 100 meters.

Curb appeal adds value to a home. This is not a novel idea. Yes the water company charges in body appendages in the summer, but keeping that yard nice and lush could be the difference between nabbing that over full price offer.

Many sellers are caught up in the notion that this market is so good it doesn't matter. Lies, filthy rotten lies. This market is awesome IF you have a well priced, cherry house. Buyers are not just buying any train wreck at any price. In fact, buyers are particular. When someone has a clean, move in ready property priced right, the buyers come out of the proverbial woodwork with big juicy offers. Ugly, poor condition homes with clutter and mess will linger in the marketplace unless they are priced like it's 2013.

Now there are exceptions, of course. There are a handful of neighborhoods that are so overwhelmingly desirable that the buyers are chomping at the bit for an opportunity to buy. These neighborhoods are few and far between. A few in Fisher's Landing, a few more in Salmon Creek, Prune Hill in Camas, Steamboat Landing, etc.

A healthy real estate market like we have right now, requires sellers to follow the time tested truths of curb appeal and the minimalist approach inside. Even if the property is located in one of the "HOT" neighborhoods, following these classic preparation techniques will still yield extra dollars on the offer(s).

Come on, just water the lawn already!

Friday, June 19, 2015

Understanding Contract Terms is Essential to a Smooth Transaction

This was posted last summer here on the blog...

It is imperative that both parties to any contract understand the terms and requirements to close. Most problems that arise in real estate transactions are misunderstandings between the parties. One person thought the seller would move out on this date or that time but the seller thought they had till such time, and so on.

Real estate agents are not attorneys! We fill in the blanks on standardized forms prepared by attorneys and approved by the state of Washington. This is designed to alleviate many problems that can happen during a real estate transaction. It is critical that all parties understand timing, dates and expectations. Many people make assumptions about how things are supposed to go. There are many standard timing issues that act as a default. For example, in Washington State, a buyer has the right of occupancy at 9pm on the day the county records the transaction. Unless specifically agreed in writing this is a contractual requirement. Many buyers think they can move in right after they sign documents or when the bank funds the loan. This can cause problems.

The moral of this tale is that both buyers and sellers need to be certain they understand the terms and conditions to the purchases and sale agreement. They should never feel afraid to ask their real estate agent questions about the details and procedures that are mandated and/or customary practices when closing a real estate transaction. Real estate agents should always be clear and concise about these terms and conditions and be certain that their client understands them. If language is a barrier then that agent needs to work harder to ensure that the clients understand.

When all parties understand the details and procedures to close, the transaction will go smoothly and everybody wins.

Buyers Need to Tailor Their Offers

Sometimes buyers find themselves in a position of offering on a house that looks real sharp in the marketplace. You know the listing. That solid three-two in the cute neighborhood with good schools blah, blah, blah and only $199k.

Although most people think the price is the end all be all, and money is a strong motivator, but the best offer is not always the highest. Their are many factors to consider. The price and ultimately the net proceeds to the seller will always carry a lot of weight with the seller. Obviously when it comes to cash, the more the merrier. The listing agent may have a different angle. Listing brokers here in Washington state, have a statutory obligation to keep the best interests of the seller. Sometimes a clean offer for $201k with a large earnest money deposit and 20% down is a better deal than the border line 3.5% down offer with $500 in earnest money no pre-qualification letter and so on at $203k.

Buyers should consider all the variables that might effect a seller's decision to choose. Putting up 1-2% in earnest money shows the seller that the buyer is serious about the house. Earnest money is more or less a deposit on the house. That money is in jeopardy if the buyer decides for no good reason to back out of the deal. Buyers are protected against certain events beyond their control and have contingencies for financing and inspection. But in the end putting up more earnest money always looks stronger than an equal offer with less. Of note: veterans using a VA loan should be an exception to this.

Writing offers with excessive addenda can be a mistake that even some seasoned agents make. Addenda should be used for contingencies such as financing and inspection. There are quite a few addendum forms that are available to suit a wide variety of possible scenarios. I have seen agents submit offers however with addenda attached that had no relevance to the subject property. A clean offer is a simple, straight forward offer, and its strength should not be underestimated. That said, the appropriate addenda for relevant aspects of the deal should always be used!

Buyers should always have their financing pre-approved when submitting offers. Many buyers run around looking at house before meeting with a mortgage professional. Most sellers and their brokers want to see at least, a pre-qualification letter before considering an offer. A pre-approval letter is even better. (pre-approval means the lender has acquired some documentation and run the client through the automated underwriting system) I think it is safe to say that 70% of real estate transactions that fail, do so because the financing failed. This is why the pre-qual or pre-approval letter is important.

Buyers agents should talk to the seller's agent prior to writing the offer. Try to find out what makes that seller excited. Usually sellers are motivated by the almighty dollar; sometimes seller's have another motivating factor. This knowledge can help the buyer's agent tailor the offer to appease the desires of the seller and make their offer stand out against others even if it is not the highest price.

It should be noted that all of this commentary only goes so far. A clean offer for $200,000 is not likely to beat out a sloppy looking offer at $220,000. But most multiple offer scenarios bring a handful of offers within a couple of thousand dollars of each other. It is here that the well crafted offer can win the day.

Happy house hunting and keep it clean and simple, whenever possible.

Friday, June 12, 2015

Metro Area Market Trends

I pulled some data from the National Association of Realtors® for the Portland-Vancouver Metro Area and the results are interesting but not surprising.

Many agents and media outlets have suggested the market is a raging bull and although in context it may be true. But the perception has been that it is a seller's market in the vein of 2005-2006 and that is simply not the case. Back before the crash in 2008-2009 it was a ridiculous seller's market. Homes were fetching whatever the seller wanted and condition was almost a moot point. Double digit appreciation was practically expected rather than being a gross anomaly like it really should be.

This current market is much different and frankly much healthier. yes we are in a seller's market. But sellers still have to present a quality product at a fair price. Over priced listings are NOT selling and that is a very definitive difference between 2005 and 2015.

Buyers are also showing reservations about homes that are in questionable neighborhoods or that need TLC as they say. The market is raging but only if you have a solid move in ready house in a conforming neighborhood. Other homes are are taking longer to sell. 

The media can sometimes make a mountain out of the proverbial mole hill and sometimes they underestimate things. It seems the story is not always what it seems.

We are in a healthy real estate market here in the Portland-Vancouver market. Values are rising in the 3-5% annual range and that is just dandy. If sellers want to have a vigorous multi-offer situation they need to be in a solid hot neighborhood AND they need to have that house looking real sharp. Sellers that are unwilling to comply with the conditions presented by the cold-hearted market will only find disappointment.

Buyers on the other hand, need to realize that the house they want, the clean and sharp beauty in the perfect neighborhood will not be on the market long. It will also sell for more than the asking price. Buyers making low offers on hot houses will also be met with frustration. 

The National Association of Realtors® has some projections for pricing over the next twelve months and the outlook is HEALTHY.