It is weird, isn’t it. Today, buyers and sellers of property are scratching their heads, “The house up the street had multiple offers while the house down the street seems to just sit there” In a recent meeting at Windermere’s Lloyd Tower Office, about 55 brokers gathered and noted that 9 of them were now or recently in a multiple offer situation with clients. How can this be happening in this economy?
Within a few blocks of each other and in the same neighborhood, two homes sold at wildly different prices. One was a custom built home while another was an all too common bank owned “tract” home. What is encouraging is the fact that such a scenario perfectly illustrates that all homes are not equal and prices are not a generic number. Fair enough?
Unlike areas such as NE Portland where streets may contain very different homes of different sizes and quite different remodels and rehabilitations, the “burbs” typically have far less differences even if different builders. It is true that one neighborhood may have both custom and “tract” homes, but prices typically do not vary wildly. This neighborhood has both custom and “tract” homes that vary in quality but originally varied only somewhat in price for comparable size.
So, to see two homes close within 3 days of one another and be $258,000 apart in price, was shocking. Good news, but still shocking. The square footage difference was only 462 square feet – so I’m quite sure that the quality difference was not really worth $558.00 per square foot. Was it?
Well, maybe I’m not so sure. A buyer and an appraiser, and I’ll bet also a review-appraiser, saw all the comparable sales and still felt the value was there at $625,000. So, then the less expensive home around the corner was worth only $367,000? Well, yes, because that is all the one buyer would pay.
Happy Valley(http://www.ci.happy-valley.or.us/) , Oregon is known as “death valley” in slang because it was over-built and also suffered from certain floorplans and many lot placements that were, shall we say, less than optimum. But with some homes being sold at $112 psf, and even as low as $99 psf, happy new owners are coming in. The North Clackamas School District ( http://www.nclack.k12.or.us/northclack/site/default.asp) is very highly rated.
Well then, I think it is fair enough. And, if people will still pay top dollar for at least some custom homes while others pay low prices for distressed property, I think that a certain balance may exist. If this trend would dare continue, and the sea of “for sale” signs fade away, then “death valley” will be a closed chapter of Happy Valley. Of course this will ultimately happen over some period of time. With these two recent sales I see at least a hope of both distressed and non-distressed homes finding their new owners. And if both types of homes sell, then the sidewalks and parks will sooner be crowded with the many residents who will be newly happy in Happy Valley.
So tomorrow, when I pass by the vacant lots and empty homes I will just smile and enjoy the quiet calm while I can. There are new residents on their way and I’ll soon be meeting them around the valley.
An amazing thing is happening in real estate that is a bit different than I have ever experienced in my years as a Realtor and working with Realtors since 1985. Consumers, friends, family and clients alike are doing three things:
- People are incredibly receptive to hearing from us, more so than typical.
- People are seemingly ALL interested in hearing what is happening in real estate from our perspectives, and especially what we see in their neighborhood.
- People are sincerely concerned about Realtors in these times and are asking how we are doing.
Yeah, Ok I know, many of us have good relationships and at first pass this is not so different. Yet, upon listening to dozens of Realtors of all experience levels report the same feedback, this is something more powerful than usual.
As the famous Maya Angelou says, (http://thinkexist.com/quotes/maya_angelou/)
“I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
It is very touching that we are calling our clients, friends, family and others to check on them only to have them express their interest in our well being in these interesting real estate times. When we reassure them, and tell them about the daily activity, and our listings, and the houses we previewed, they are genuinely excited and pleased to hear that we are, in fact, doing well.
Some Realtors are doing better than others. Yes, this is true. It is also true that people are moving and people are, in fact, buying homes. What is especially positive is the fact that the relationships between Realtors and Clients has never been better. So quite interestingly, many Realtors are enjoying well-deserved success directly attributed to this current level of healthy client relationship. Why is this happening?
I believe many reasons exist, but I have found these three to be my take on this current trend:
First and foremost – The best realtors are inherently service oriented and quite active in community. Therefore, these realtors tend to have many relationships and are well respected beyond the real estate transactions they facilitate.
Secondly – The market is requiring actual real estate skills when it comes to pricing homes, negotiating complex short-sales and aligning lenders, ESCROW, Title, Inspectors, and all parties to a successful positive result. It is worthwhile time consuming work and people are appreciating Realtors more than ever.
Lastly – The Realtors who jumped into the business in the hot markets of 2003 – 2005, and who did not have a strong service commitment, are not the ones out working now. New Realtors and Experienced Realtors who are working now, and who are busy, are generally the ones who are career-minded and truly the dedicated professionals.
So, these three factors above being true, it is maybe not so surprising that Realtors are experiencing strong mutually supportive relationships. But this current powerful trend is certainly not lost on Realtors. I can confirm that the words of Maya Angelou are ringing true. We Realtors will never forget how nice it feels to have so many people sincerely caring about our well being.
We are touched.
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PROS of Lease Options:
· BUYER can control a house and stabilize their living situation in a property they like, and MAY buy.
· SELLER can receive lease payments and have some or all of their entire loan payments paid. The home might otherwise sit vacant.
· And, maybe, the buyers will exercise the option – no hassle.
CONS of Lease Options:
· Seller gives up control – why not just lease the home and then sell on open market later? Then, tenant can compete with all of market.
· An OPTION has value and must be paid for. So Buyers put money at risk “Buying” the Option and that amount is often not sufficient to make a seller happy if the buyer does not exercise the option to buy. Seller may be back at square #1. Depending upon market conditions, that can be a good thing, or a negative thing.
· The Price paid for an OPTION is generally NON-REFUNDABLE and is paid up front.
· DUE ON SALE/Lease/Option clauses – Did you know that a lease-Option can trigger an “ALL DUE IMMEDIATELY” clause from the holder of a first position loan?
· TITLE INSURANCE ON AN OPTION? – A seller can encumber property because they still own it, so a good contract will call for title insurance on the property specific to the option or other legal instruments?.
· Landlord-Tennant act Applies in Oregon so Seller must comply with all laws.
NOTES on Practice:
- USE OREF FORM 085
- RECRORD OPTION
- When do you Give Seller Disclosure? Suggest prior to occupancy so tenant-caused issues not a disclosure issue for seller later?
- Always secure additional Legal advice?
So this is just the surface of several issues that a sold experienced real estate Broker will prompt when facilitating a lease with option. What else should Brokers understand in lease-option work?
Posted February 9, 2009on:
Portland Oregon is all abuzz with real estate activity despite very real economic events across all industries. And, I’d love to hear a consumer’s take on this as well as brokers’; Should people move forward and offer to buy a home when they need to sell the one they live in currently – first?
The cat chases its tail. “I need to sell my house first but I don’t want to sell until I have another house to buy!“ Yes, that’s the never beginning and never ending loop in spin cycle. Our clients need our help finding the “START” button so they can escape the dilemma.
Sell First, Then Buy: OK good job. In this track, clients have their exact amount of sale proceeds in the bank and theycan buy non-contingent. Where do they live now? In this track, they are most likely living in a temporary rental or have made other arrangements. In some cases they have rented-back the home they SOLD. As a Real Estate Broker – you have a clean transaction selling the home and a clean transaction as their buyer broker. Clean, meaning non-contingent.
CONTINGENT – BuyFirst, Then Sell: OK, is this “The Blues” for a client and Broker alike, or is this approach a “celebration” of rescue from the “I need to sell my house first but I don’t want to sell until I have another house to buy!” – never ending loop spin cycle. Or, is this simply just the start of a different loop and spin cycle?
1.) Client may select a home, get offer accepted contingent, and the be “bumped”. In this case, the client is now offering to sell a home but without another selected to buy.
2.) Client may select a home, get their offer accepted contingent, and the have their buyer unable to complete the transaction so the client can’t then proceed with their purchase. In this case, the client is back to having their house listed and a home selected to buy, but still contingent.
These two scenarios are why some clients and some Brokers prefer to seperate the two transactions and plan, from the start, to sell one home first and THEN buy the other next. And yes, the client accepts that an interim living arrangement is inconvenient but the lessor of evils.
While two seperate transactions, and interim living arrangements MAY be ultimately required, proceeding “CONTINGENT” at least gives the client a chance to make one move and avoid temporary living arrangements.
What do you think?
Seems like I ask 10 people and I get 10 unique responses.