Why For Sale By Owner Is Not A Good Idea

Smooth ‘Sale-ing’ with Sean

Selling your home yourself might be tempting. Sure, low commission fees and no formal process of purchase might sound like an easy process. But what is the truth about selling your home yourself? Here are reasons why working with a realtor is better than going alone:

Experience

With over 15 years of real estate experience, I have seen a lot—including some surprises with the purchase of my own home. Wouldn’t it be better to hire someone who can anticipate and mitigate bumps in the road? I am trained and experienced in guiding you through the transaction process.

Real Estate Contract Expertise

Your broker is or should be keeping up on the state laws that govern real estate transactions. For example, are you familiar with FIRPTA? Some of the details of the real estate purchase contract are seemingly obscure, but part of the legal process of a sale. How do these rules and regulations impact your investment? Are you a landlord selling your rental property?

All of the legal documents are at your broker’s fingertips. We pay to have access to and use the required standard legal forms. Though tedious and voluminous, the paperwork is in place to protect you, your investment, and your payout. I ensure all the proper disclosure forms are in place so you don’t risk losing your earnest money should a buyer decide to back out. Or worse, a failed sale altogether.

Title Company

Are you equipped to navigate working with a title company? My brokerage and I have established relationships with title companies. The behind-the-scenes preparation influences how smoothly the closing process will go. They ensure all the boxes are checked so your home sale is recorded properly. This attention to detail mitigates errors that if not attended to, may come back to haunt you in the future.

Pricing

FSBOs accounted for 8% of home sales in 2018. The typical FSBO home sold for $217,900 compared to $295,000 for agent-assisted home sales. Source: 2020 National Association of REALTORS® Profile of Home Buyers and Sellers(link is external)

I also provide:

The multi-page, detailed property entry in the Multiple Listing Service (MLS) system. FSBO charges around $400 for this service.
Professional property photography and staging company recommendations so your listing makes that good first impression that is so critical in a competitive market.
Coordination of showings with buyers’ agents.
Installation of a lockbox.
Production and installation of property signage and flyers.
Marketing your property and buying ads and mailers to promote them.
Docusign account, ensuring quick turn-around times on electronic signatures and document delivery.
Access to other resources not readily available to the public.

Why spend time managing these details when you could have an expert handle them for you? While the allure of saving 1 or 2% in commission fees may tempt you, prepare yourself to make the sale of your home a full-time job. As they say, you get what you pay for! Anyone who has cut their own hair knows this to be true–and that some things are better left to the professionals. Contact me to discuss how I can help you with the smooth sale of your home!

Originally published December 16, 2020

Eight Things To Do Before Buying A Home

Are you ready to buy a house or condo?

Following are eight steps to prepare for this life change in order of priority. Being prepared paves the way to a seamless transaction.

Home Buyer Preparedness Checklist

1. Do Not Make Any Major Financial Changes

When you are getting ready to buy a home, and especially when you are under contract to buy a home, do not make any major changes in your life that affect your financial standing. Don’t switch jobs or do things that could adversely affect your finances, like opening new credit cards. Especially when in the transaction, do not buy a new car, new appliances, or furniture. Wait until after the transaction has closed before making any major purchases or life changes. A credit check alone can affect your credit score and may cause you to lose a home, even days before closing.

2. Get Pre-Approved

Getting pre-approved from a mortgage broker enables you to determine what your price range is, while taking into account what down payment you can afford. While pre-qualification is a good idea, having pre-approval is a better indication of your intent to buy. Realtors love working with pre-approved individuals because it shows you are more serious about buying. If you need a mortgage broker, contact me for referrals.

Many home buyers will look to the financial institution that they bank with as the first option when looking for a home loan. It is not the only option, and sometimes may not be the best solution. Mortgage brokers often have many more (hundreds) of options for finding loan solutions that can fit your needs and save you money. I recommend my buyers not only talk to their bank, but also to a mortgage broker and credit unions. Make sure that at least one is a local lender, as they can also know about special state and local lending programs that national lenders may not be aware of.

3. Make a “Dream List”

Compose a list of your requirements for the place you want to buy. Divide the list into things that are deal breakers and factors that are more flexible:

Is the school district a priority over your commute (if you have one)?
What about walkability score and access to services?
Or are you looking for a property that is more remote, because you want the acreage?

Having a defined list of “wants” will provide a clear vision of the property you seek and help your broker in searching out the best options for you. Work with your realtor on this list, and understand that often this list will evolve over the time of your search based on market inventory, price of the house, and other market factors. Browsing listings online can also help. Stop by open houses and drive to locations that you see in your online previews to start narrowing down those search parameters. Check out the property during the day and at nighttime, too.

4. Get A Referral And Start Discussions With A Buyer’s Broker

A buyer’s broker will provide you single agency representation. Oregon does allow for “dual agency”, where a seller’s listing broker can write an offer on their seller’s property for you. Remember though, that the listing broker has a contract with that seller and has a fiduciary responsibility to the seller. Working with a buyer’s broker offers you a real estate professional who has your best interests in mind in the transaction, guiding you through negotiations, inspections, and the entire home buying process. A broker can also help you research market conditions so you can understand the cost of homes in the vicinity of where you’d like to buy. Having comparable sales information helps determine how much to offer on a home.

5. Making An Offer

Once you’ve found a house you like, you’ll work with your broker to make an appropriate offer. Familiarize yourself with the process so you know what to expect. A good buyer’s broker can offer you referrals for home inspectors, contractors, or other professional services. Collect three referrals for each service. Home inspectors help identify any underlying issues your home may have, such as problems with the the roof, plumbing, or electrical system. There is an “Inspection Contingency Period” in Oregon real estate transactions. This is usually a period of ten business days to allow for a whole home inspection. The inspection report helps determine if it’s the right home for you and whether you want to negotiate needed repairs and/or a better price.

6. Home Insurance

Homeowner’s insurance is required when you purchase a home. Shop around to find the best rates. Bundling your home, auto, and other insurance can also be a way to save money.

7. Managing A Contingency Purchase

A contingency purchase is when you want to buy, but your purchase is contingent upon the sale of your home. In the low-inventory market we are experiencing in the Portland Metro area, many people who are looking to sell and then buy again are finding it challenging. Offers where there is a contingency of the sale of a home are at a disadvantage when up against offers that don’t have a home to sell. When the client feels comfortable releasing their contingency, and if selling first, then renting until finding a new home is also an option.

8. Organize Your Household Contents

Start sorting your personal effects now. You have more stuff than you realize, guaranteed. Getting started on purging before packing will enable an efficient and less stressful move.

If you’re also selling, check out my Sellers Checklist. Contact me today to get the conversation going!

Published October 13, 2020

Home Seller Preparedness

Selling a home involves many moving parts, so it’s best to be proactive. Start planning upwards of 6 months ahead to avoid rushing at the last minute to complete deferred maintenance repairs, consider your next living arrangement, and be able to time the marketing strategically to local market conditions. Deferred maintenance can affect not only the value of what your home can sell for, it can also affect your time on the market. If you plan on selling without taking care of maintenance that you have not done on the home, then be prepared to price your home accordingly. Getting these critical components in place prior to listing could enhance the value of your home, ensure a smoother listing experience, and mitigate buyer negotiation leverage once you accept that offer.

Create a punch list of repairs.

Using an Excel spreadsheet, a pad of paper, or your smartphone or tablet, go room by room identifying what repairs are needed.

1. Windows open and close easily.
2. Install GFCI certified outlets.
3. Doors close and doorknobs turn easily.
4. Chipped or nicked trim?
5. What else?

Perform a deep clean

Closets, oven, range, refrigerator (pull it away from the wall to vacuum the coils), carpets/hardwoods, windowsills, chandeliers/fixtures all need attention.

Hire a professional painter

Liven up the walls and doors inside and outside with fresh paint. When you’ve lived in a place for a while, your mind begins to ignore little inconsistencies. A new visitor to your home will notice these details, so keep in mind they contribute to the overall first impression. A professional painter can help repair cracks in ceilings and walls as well.

When getting your interior or exterior ready to be painted, think base colors like creams and whites for your paint colors at time of sale. You may love that purple colored room for your own use, but these more extreme colors can influence a buyer’s interest in your home. Provide the new buyer with a fresh palette to introduce their own color scheme to their new home. This one preparation can save you on market time, putting more money in your pocket at closing.

Install new smoke and carbon monoxide detectors

Oregon law requires new detectors to be installed. There are some affordable smoke and carbon monoxide detectors available at your local hardware store.

Landscaping

It’s all about curb appeal! The first impression is usually the last.

Prune, weed, clear brush, mow, lay down fresh bark mulch.
Hire an arborist to shape existing trees (never refer to it as “thinning” a tree). In fact, this should be done even if you’re not selling!
Having a tidy home on the outside bodes well for the inside.

Assess the roof

One of the most overlooked components of selling a home is the roof condition. Inspectors will assess the condition of the roof after you receive an offer, so if repairs or even replacement are necessary, it will mitigate the need for negotiation on the price of your home while saving time on repairs already completed.

Organize Documents

Have your paperwork and invoices available for work you’ve had done on your home. If you had work completed by a contractor that required a permit, verify all permits were finalized with your local bureau of planning and permitting. You don’t want to get into a transaction on your home and have an open or voided permit come into question. If a final inspection was not completed, you may have to open walls, cut into sheet rock, or pull up flooring so as to prove to a city inspector that work was done to code. Avoid a potential nightmare in the middle of a real estate transaction.

If selling a condo, line up all your HOA governing documents and proof of insurance. Your management company may have a login to access documents electronically. Request access for your yourself and your agent, so a tedious yet critical detail is taken care of in advance.

Appliance Check

Ensure all appliances are in clean and working order. If there are any dings to the enamel, thermometer adjustments needed in the oven, thaw a freezer, replace the dryer lint filter, or anything else you find, these will be good to have taken care of before people start viewing your home.

Staging

Consider coordinating a staging company with your broker as the final step in preparing to sell. Staging will showcase your home to people who may not have an imagination or need a physical visual in order to imagine themselves having the lifestyle you’re selling. Part of staging involves decluttering and depersonalization. You want the new buyer to imagine themselves in your home, not what it was like for you to live there. Another side benefit? Packing up personal items saves you time for when the real move happens.

Photography

Use a professional real estate photographer. They have the digital technology to deal with minor touch-ups, enhance lighting, and streamline your photos for use in virtual tours and/ or 3D tours.

Pricing your home

Your broker should provide this “apples to apples” home sales comparison of properties within a mile or less and over the last 3-6 months. This information helps determine the best listing price. Keep in mind the market determines the actual sales value of your home.

Strategy

Pricing your home too high can cause the home to stagnate on market and necessitate a price reduction. Don’t wait too long to consider a price reduction if showing activity is not producing an offer. If you have been seeing double-digit numbers in showings without an offer, then a price reduction should happen within a few weeks. Perception is reality. If buyers see a home on market for more than a few weeks, their perception can be that there is something wrong with the home.

Portland is also known as a “polite market” where buyers will usually not make offers on homes they think are overpriced, so as to not upset the seller with a lower offer. Buyers in the Portland Metro area will often wait for the seller to make a price reduction before submitting an offer. Real estate values can be unpredictable, so keep an eye on factors like the state and national economy, unemployment rate, interest rates, and other factors.

Showings

Be ready to accept raw feedback about your home. You have memories and emotions attached to your property, so it’s best to remember to try to not take constructive criticism personally.

Create a showing schedule with your real estate broker that works both for you. Maximize the availability of the home to buyers to see your home, such as evenings, after work, and weekends.

I’d love to learn more about what your greatest challenges have been when selling your home. Did I miss anything on this list? I look forward to hearing from you.

Published September 10, 2020

Advantages to Buying a Home in Oregon During Winter

There is a misperception that because Oregon is rainy in the winter, house hunting should happen between March and August. Sure, most new homes come onto the market then, but it is also the most competitive time to buy. You can often expect bids over asking price with multiple-offer situations, depending on the home’s price, condition, and location. Contrary to popular belief, for those who have not lived in Oregon, everything is dry in the summer. So if you’re looking in the fall/winter, you’ll be able to detect:

If the roof leaks
How well gutters drain
Standing water issues
If the basement leaks

These issues could indicate a bigger problem such as mold, which could require expensive remediation. They may also contribute to reducing the purchase price and/or ensuring repairs are completed prior to closing.

More advantages to a home search in the winter, aside from walking in the rain:

Sellers in winter months may have a home that was either overpriced, had condition issues, or is in not as a desirable location. These factors can cause their home to sit on the market.
There could be personal reasons driving the desire to sell in off-season, such as a job change.
Sellers are more motivated on price and repairs.
Motivation to sell before the holidays could be about getting the family settled quickly into a new home and having a budget to buy family presents.
Perhaps there’s a tax reason for trying to sell before the close of the year.

If you are hesitant to start your home search now, I hope this information helps with a different perspective on timing your search. I’d be happy to show you around Portland. Just drop me a line.

5 Oregon Real Estate Contract Changes You Need to Know Now

One of the many things I respect about Oregon Realty Company, our brokerage, is that management makes every effort to protect our clients. One of the ways they do this is by conducting an annual forms review training session with our brokers. Laws and regulations, like in any industry, are always subject to change. As concerns arise, the regulations evolve. This year’s Annual Forms Review was presented by Richard Mario of Buckley Law P.C. Mr. Mario has been with Buckley Law since 1989. Admitted to both state of Arizona and Oregon State Bars, he practices from his Lake Oswego office. If anyone knows real estate disputes, it’s Richard Mario.

If you’ve ever purchased a home, you know there is an extensive, detailed, 11-page sales contract. With my track record of almost 15 years of real estate experience, I have helped clients navigate the wordy waters of contracts. Most recently, I had a situation where a buyer made an offer, then withdrew it, and because the buying party’s broker (not affiliated with my company) was not up to speed on latest contract laws, the buyers lost their earnest money when a deadline was not met. I encouraged the other agent to provide a timely response, but I discovered the agent was not aware of the new law. We all want sales and purchases to happen seamlessly, so it is in everyone’s interests to work cooperatively.

1. OREF 093 FIRPTA

One example of a recent law change pertains to FIRPTA. The Foreign Investment in Real Property Tax Act of 1980 is a tax law that imposes a 10-15% gross sales tax on foreign persons disposing of US real property interests. For instance, if you’re my client, and regardless of whether you are an American citizen or not, and you are selling the property you own, you would need to fill out the form and submit it to a title company. The law states I can only provide you with the form, but not help fill it out. My next step is to confirm the form has been submitted to the title company, so that the buyer may proceed with writing an offer. Two additional documents are required for submittal to be compliant with federal law.

2. OREF 011 Condo Sale Agreement

There is now a hard date for the delivery and review period for buyers and sellers. Previously, there was a flexible deadline. Extensions to the review period must be written and agreed to. Condo documents should be gathered by the seller prior to the agreement to maximize the time for review. If the buyer does not have ample time to review documents, the sale could be postponed and then the process would need to start all over again. It is recommended to state which documents were provided and that no other documents are available. When a hard deadline is set and the deadline is missed, your broker will need to submit a new offer. This is reflected due to a change in 2018 with regards to the offer deadlines as stated in OREF 001 Residential Sale Agreement.

3. OREF 083 Contingent Right to Purchase

“…buyer may not accept an offer contingent on the sale of the Offeror’s property without written permission of the Seller”
This wording in the agreement prevents contingency chains of sale. Previously, for example, Bob could sell his home to Sally, as long as Sally could sell her home to Joe, as long as Joe could sell his home to Alicia, and so on. The new language prevents this situation from happening.

4. OREF 070 Investment Property Addendum

A few lines were reformatted for readability and ease of understanding. Three sections were removed and combined in the Document Review period (note the hard date where a written extension is required).

5. OREF 007 Commercial Sales Agreement

There are numerous nuanced changes in this section, but perhaps most notable is the section where personal property transfers require the use of a Bill of Sale. There are tax implications. For example, if you were to buy a fully-stocked grocery store, you would need a Bill of Sale to transfer the contents of the store to your ownership. Otherwise, you only own the building.

These changes are five of over 25 sections we learned about. I am not a real estate attorney, so I cannot provide legal advice. However, I have the resources to call upon the experts whenever a situation may be in question. I advocate for you, so you may focus on enjoying your new home and prosper.

Photo: JESHOOTS.COM