Between 2011 and 2012, the NW Portland area (roughly west of NW Skyline and between HWY 26 an HWY 30), was the only area reporting a median price increase.

The article also has a video of how Habitat for Humanity in Florida is turning foreclosures into opportunities for their clients as part of the national Neighborhood Stabilization Program.  It’s a departure from their typical model of building new construction homes.

I took this picture a couple of weeks ago while stuck in traffic.  I cropped the “For Sale” sign out from the right hand side.  The photograph will self select a large portion of the potential buyer pool out.  No need to visit if you’re looking for a move-in ready home.  But it is “pending” in RMLS now so there is a buyer for every property (at the right price).

Another component to the number of showings relates to the notice needed to view it.  Sometimes the answer to, “why isn’t my home getting shown?” is, “Because buyers can’t get into to see it.”  The less restrictive the showing instructions the more likely the property will be shown.

• “Vacant- RMLS lockbox“  No need to call unless I’m is looking for more detailed information.  We won’t discuss how a house that is colder inside than it is outside shows poorly here.
• “Call first” “Hi, this is Charles Turner with Atlantic and Pacific Real Estate.”  I’d like to show your home between noon and 1PM.  If that’s going to be a problem please call me…”  This is the best scenario for an agent when setting up appointments for occupied homes.
• “Appointment Required” Actual contact needs to be made to show.  If you’re not good at returning calls this is a terrible option to get your home sold.  I’ve left messages and gotten calls back days after our showing request.
• “Agent Accompany” I need to coordinate with the listing agent to show your home because they need to be there.  Scheduling conflicts may eliminate the showing.  Agent accompany showings requires all four parties to the transaction coordinate.
• “Tenant Occupied” Some sellers and their tenants come to some sort of an agreement where “call first” is sufficient notice but this is the exception, not the rule.  Most require 24 hours notice.  This eliminates potential showings when a pre-planning is not an option.

There are some situations that can’t be avoided.  A day sleeper has to sleep when the majority of us are working.  We try to respect kid’s nap times.  Pets and security systems can also make showings difficult.  Our advice is to make the showing instructions as simple as possible while covering the needs.  Adding restrictions because it is inconvenient will reduce showings.  Selling a home is inconvenient but remaining on the market is even worse.  We use “Call listing agent” as necessary.  It works well when English isn’t the seller’s native language but is more often than not totally useless with a vacant home just so the agent can “monitor showings.”  That’s what the electronic RMLS lockbox is for.  It notifies the agent when the box is opened and if the agent is using a home feedback system the seller is also notified.   To reiterate, most of these situations can be worked out and the house will get shown but in some instances showings don’t happen to qualified buyers because of them.

Average sales price is $249,100 which is about the same as it was this time last year and at the beginning of 2005.  The question for 2012 is whether prices will follow the same trend as 2011 where there were gains in the first part of the year lost in the second half or do something completely different?  Lower prices and the lowest interest rates in years have pushed Portland’s Affordability Index to the highest level since reporting began in September 2003.

Here are links to all of January’s Market Action Reports.

All Areas (68 pages)- Baker County- Columbia Basin- Coos County- Curry County- Douglas County- Grant County- Lane County – Mid-Columbia – North Coastal Counties- Polk & Marion Counties – Portland Metro- SW Washington- Union County- Wallowa County

Graphs from RMLS.

Useful links include:

• Oregon Department of Education Report Cards
• Clackamas County School Locator (includes Lake Oswego)
• Portland Public Schools Locator
• Beaverton School District attendance information
• Tigard-Tualatin School Infomation
• Hillsboro School Information

Additionally, Portland Monthly publishes their Best Schools report annually.  From their homepage you’ll find the link under the real estate heading.

Six continual months of (minimal) Portland real estate price appreciation has slipped away in the last two month.  The Case Shiller Index, released this morning shows Portland lost 2.18 points to end November at 133.26, essentially the same level as February of last year.

The Case Shiller Index reports “Portland Metro” as the seven county MSA and lags sixty days.  RMLS reports a five county “Portland Metro” and the mid-month report features the previous month.  In January 2000 the Index was reset to 100.  Portland peaked at 186.51 in August 2007.  In contrast, the Composite 20 Index peaked at 206.52 in July 2006.  Both indices were almost identical in July 2010 at 148 and now the Composite 20 is five points ahead of Portland.

Portland was “late to the party” during much of the run-up and the beginning of the decline but appears to have fallen into the same groove as the national indices.

Is the Housing Market Coming Back?

Is the Portland housing market beginning to turn around?

Analysts are taking up that question with the release of a new report from the Regional Multiple Listing Service. The bad news is that the organization’s data show the median house price in the Portland metro area fell another 7.9 percent to $221,000. Home sales totaled $5.2 billion in 2011 — an 11-year-low.

Home sales end 2011 mixed

Year-end sales figures paint a mixed portrait of Portland’s residential real estate market for 2011. Overall sales rose compared to the prior year but other metrics, including price, fell.

Bartiromo: JPMorgan’s Jamie Dimon sees housing at bottom

Scroll down to question on U.S. housing Market:

We have seen the worst. We are at the bottom. We may hug along the bottom for a while, but we are at the bottom. People think housing is terrible, but the early indicators tell you a lot about where it will be in 18 months or so. Supply and demand are rapidly coming in balance. Renting is now more expensive than buying in half of America. We’re adding 3 million Americans a year. In the next 10 years, we have 30 million more Americans. Those 30 million Americans are going to need 15 million homes, or something like that. Household formation has gone so low. You had kids move back home — and, yes, by the way, it doesn’t work for them, either.

Oregon unemployment 8.9%

Portland Business Journal

Oregon’s unemployment rate has dropped to its lowest level in three years.

It’s not a real estate article but jobs are a key factor in the housing market.
I’m not loving the orange background on the quotes, will work on getting that toned down!

• - All Areas (68 pages)
• - Baker County
• - Columbia Basin
• - Coos County
• - Curry County
• - Douglas County
• - Grant County
• - Lane County
• - Mid-Columbia
• - North Coastal Counties
• - Polk & Marion Counties
• - Portland Metro
• - SW Washington
• - Union County
• - Wallowa County

This Willamette Valley Multiple Listing Service’s year end report.

Here’s the link to my comparison of the average sales price of the local Portland areas for 2010 and 2011.

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Will the seller make repairs?
Most foreclosures are sold “AS IS, NO DISCLOSURES.” This means the property is offered “as is,” without repairs or upgrades. The seller has already reduced the price of the property for any damages or needed repairs, which are reflected in the listing price. As for “No Disclosures,” the seller cannot provide disclosures because typically the seller has not personally seen the home to have knowledge of its condition. Foreclosure sellers generally rely on what the listing agent and appraiser have seen.

Going in, you should expect “as-is.” That being said we have seen instances where banks have made repairs that were not considered in the original pricing as they were unknown prior to thorough inspections.  One bank paid for the decommissioning of two underground tanks on the property found during the inspection period- one oil and one fuel.  Another did sewer repairs.  

Will the seller allow for an inspection period?
Typically, yes. This inspection period is normally 10 days long. It is designed so that the buyer can have a home inspection, termite inspection, septic inspection, survey (if desired) and appraisal completed. An appraisal is part of the inspection period.

The inspection is not designed to allow the contract to be re-negotiated. Generally this will kill the transaction if the buyer attempts this. The seller will not activate utilities if the condition of the property is deemed unsafe. Ask the listing agent for more information.

See my previous comment.  This underscores that the inspection period is not a negotiation period.  It may be necessary to have the home de-winterized to conduct inspections.

Does the seller have any special forms?
Most sellers do have what they call “special addendums.” These forms vary from lender to lender. The addendums supersede the original purchase and sale agreement and become part of the purchase and sale agreement. Most of these forms have a few items that the buyer must pay close attention to, such as per diem charges, inspection periods, closing costs, and earnest money requirements.

If the bank provides additional addendum with their acceptance it is imperative to return them promptly as their acceptance may be contingent on their return to have a binding contract.

When will the seller respond to my offer?
Response times on an offer can vary from just a few days, to much longer.

You may feel like you are playing a game of “hurry up and wait.”  Always try to get any requested material or response back as soon as possible but realize that a reply may be slower than desired. 

Should I get a home inspection?
Yes. A thorough home inspector can provide the buyer with valuable information.

Yes, yes, yes.  In Oregon, read the Oregon Property Buyer Advisory.  Remember, banks are exempt from disclosures so it is your responsibility to discover any property defects through your own due diligence.

Can my agent provide me a home inspection?
No. A home inspection can only be performed by someone associated with ASHI (American Society of Home Inspectors) or NACHI (National Association of Certified Home Inspectors).

Will the seller pay my loan closing costs?
Closing costs, along with other aspects of the transaction, are subject to negotiation.

When a seller pays any or all of the buyer’s closing cost it lowers the seller’s net proceeds.  Full price offer A with no seller paid closing costs nets the seller $3000 more than full price offer B with $3000 seller paid closing costs.  Those are just two components of an offer so it is not impossible that offer B could be considered the better offer when the whole package is presented.  As mentioned yesterday, there may be incentives to use the in-house lender. 

Does the seller accept FHA?
This depends on the seller and the condition of the property.

Will the seller finance the property?
This depends on the lender. If they do, it will be advertised as such.

Will the seller accept contingencies or a Lease/Purchase?
No. Contingency and lease/purchase offers are generally not accepted on foreclosed properties.

The previous three statements are are pretty black and white so there isn’t anything I can add!

The ultimate goal of any property purchase is minimizing risk.  The road to getting there requires due diligence regardless of who the seller is.

During a traditional sale and short sale the seller is the homeowner. In a traditional sale, the buyer and seller negotiate the terms (through their Realtors). In a short sale, the seller typically rubber stamps the buyer’s offer so it can be given to the bank for third-party approval. The bank will counter with their terms for and both the buyer and seller have the option as to whether they accept them. The majority of the negotiation is between the listing agent and the bank’s representative.

When a bank owned property is listed for sale the institution is the owner of record and there is no third party to the sale.  There are many ways in which the intitution becomes the owner (foreclosure, deed in lieu of foreclosure or by purchasing a portfolio from another institution, etc) .  The Asset Manager makes all decisions as the seller. They use Broker Price Opinions (BPOs), which are mini-appraisals (not dissimilar to a CMA), pictures, bids and other information to make their decisions. It is very unlikely that they have physically seen the home.

This is the first part of Atlantic & Pacific Real Estate’s FAQ about buying bank owned property.  Keep in mind that every situation cannot be covered here.  I’ve added some comments (my opinions) from experience in italics. 

What price does the bank (seller) want for the property?
The same as if a private seller was listing their home. They want the listing price or better.

How did the seller come up with their listing price?
The sellers typically try to determine fair market value through a combination of Broker Price Opinions and appraisals on the property. The condition of the property was also taken into consideration.

How do I place an offer for the property?
All offers must have either a pre-qualification letter or proof of funds attached to them. A pre-qualification letter can be obtained by going to a direct lender. Proof of funds can be a bank statement showing the balance in the account exceeds the offer amount or a statement from a securities company. A prequalification letter must be current and contain the following information:

* Borrower’s name * Borrower’s lending limit * Lender’s name * Lender’s address
* Loan Officer’s name * Loan officer’s direct phone and fax numbers.

Once you have obtained proof of funds or a pre-qualification letter, then you should begin looking at houses.

You should always get pre-approved early on in the home search process and you are typically able to choose what lender you use to complete the purchase.  Most bank owned properties will also require a pre-approval from their selected bank (a pre-approval from Wells Fargo Mortgage for a Wells Fargo owned home).  Your Realtor will have those instructions in the listing.  There may be incentives offered by the seller to use their bank.  It’s an extra step to get pre-approved for a second time but it also provides a second opinion which can never hurt.  You might have to go through the hoop-jump numerous times if you are making offers on property owned by different banks. If you are providing a bank statement as proof of funds black out your account numbers before giving it to anyone, including your Realtor.

What should I offer for the property?
You should make an offer that feels comfortable to you. However, if you are going to submit an offer substantially below the list price, be prepared that you may: (1) be outbid by other prospective buyers (2) need to wait an extended amount of time for a seller’s answer; or (3) be forced to look for a different property if your offer is not accepted.

We always want our buyers to be comfortable with what they are offering on a property.  In the case of multiple offer situations we ask the question, ” if you know you want the property and the other party gets it for $x more than your offer will you be upset?”  Just because someone else is willing to pay more doesn’t mean you should be.  Multiple offer situations are returning to our market in both traditional and bank owned properties.  An accurately priced home will sell in any market and just because it is bank owned doesn’t mean it is underpriced, accurately priced or overpriced. 

Will the seller look at more than one offer?
YES. And the seller will not consider a property under contract until the seller has signed all contract forms and addendums. (They will not do this until the buyer has signed all of these forms first). Therefore, if you make an offer on a property and receive seller addendums back, you need to review and (if you agree to the terms) sign them immediately and return them. (Never cross out or make changes on the seller addendums unless you are willing to have the seller treat such changes as a counter offer that can result in your offer subsequently being rejected by the seller)

The Asset Manager may reject, accept  or counter an offer; just like a traditional seller.  In the case of multiple offers they may come back to all interested parties with “make your highest and best offer.”  At that point the buyers can choose to revise their offer or stand pat.  Potential buyers are not going to know what others have offered.  Banks will often have their own paperwork and addendums.  Most banks use some sort of electronic property and offer submission system and Realtors may never have the opportunity to talk directly with the asset manager so complete paperwork is imperative and filling it out in a timely manner is equally important.  Electronic signatures such as those through DocuSign may or may not be permitted.     

Let’s end there for today.  I’ll link all future related posts to each other.

Overall, the Portland Metro market average sales price slid 6.2% from the previous year.  The local market areas are interesting because in 2010 the close in markets fared better than the suburbs.  That wasn’t universally true in 2011 (compare West Linn/Lake Oswego to SE Portland):