Portland Real Estate Blog

House is listed for X. What should I offer? Continuing the train of thought from some of the comments on another post, let’s talk more about pricing. I’d maintain that listing price has very little if anything to do with market price. As I said before, we suggested a listing price of $675,000 for a house that was then listed for $775,000 with another agent (about a 13% difference). Back in “the day” (2005), pricing was almost as easy as looking at the comparable properties and adding a little. Odds are there was a buyer. Now were spending much more time looking at and visiting comparable properties. Pricing is more important than ever.

Certain things remain true in any market:
1) An accurately priced house for the given market will sell.
2) An over priced house when listed will sell for less than it would have had it been appropriately priced on day one.
3) The first offer is often the best. This isn’t always the case but negotiating the first offer may be smart. Tends to matter more the closer you are to the listing date. A few months ago, we wrote an offer that was rejected by virtue of no response. It was too low for the seller to reject on paper. I talked to the agent and said, “I’m shocked that they won’t even counter.” He was surprised at my position. A couple of months went by and all of a sudden the house is on the market for $100 more than our original not-worth-responding-to offer. The closing price was less than my buyer would have paid on day one and the seller held a vacant house for two extra months.
4) The listing price sets the seller’s expectations. A seller that receives a “market price offer” on an overpriced listing is likely to think it is too low.
5) The listing price might come down without actually coming down. Say what? If the seller pays for work on the property the listing price is less likely to come down but the market value should have increased, closing the gap between the two.

When it comes to writing an offer, you have to consider all of the above and look at what the market is today. In order to have a discussion like this, I think we have to assume the buyer is ready, willing and able to enter the market today and remove the “market may drop, stay flat or increase conversation.” Everybody wants to buy low and sell high but markets don’t stop.

The comparative market analysis works just for the buyer just as it does the seller. Look at the comparable properties; sold and active. Does your offer make sense based on everything you can identify about the property and the seller? I know I place less value to listing history/sales of the subject property than others as I consider today’s market value to be more important. The balance is to get your lowest offer accepted without prompting a counter from the seller as in most cases, going back and forth with counters will raise the accepted price (we have recently had buyer’s counter a seller’s counter back to the starting price and get it accepted. Part of your agent’s job is to provide support as to why the offer is good as it is written (or why it is bad if it is and representing the seller). Sure, every once in a while a blind squirrel finds a nut. A rationally unreasonable (thought that was softer than lowball) offer may stick. No one ever said that emotion (or desperation) doesn’t play a role in real estate.

This is getting a little long so let the comments begin.

From one extreme to the other: snow in Portland and 90 degrees plus down here in Ixtapa where we’ll be for a few more days. There is a large partial construction site right across from us. What I hear, from those that know, is that Mexico is full of partial construction projects. They open with great fanfare, take deposits and when the money runs out, so does the work. Then they have been known to reopen as new project and resume building with a different set of investors. As Mexico has become an easy-to-reach destination from so much of the US, you have to assume that some Americans must have lost their deposits though this method of fund, build, fund, repeat. One would also expect as equity positions decline in US markets, the vacation home in Mexico will become less attractive and possible for many that were looking south to thaw out.

Looks like a good thread going on the previous “Buy Here Now” post. Thanks for the participation. Sorry we’re going to miss the blogger get together tonight.

The Standard & Poor’s Case –Shiller report is pretty much what we expected having recently looked at declining prices over the last few months in a previous post. The weight of the recent months has finally brought Portland year over year prices down -.5%. That’s compared to the 20-City Composite Index which dropped 11%. Once again, Charlotte and Seattle join Portland as the top three in the index.

The Oregonian reports that Portland was buoyed by Californian’s moving to the area but, “that’s over now.” Maybe I missed the news of the CA/OR border patrol sending Californians south at the border. My clients yesterday must have slipped through. Their plan is to be here in August in time to put their kids into school. I must have dreamt about coffee with a San Francisco family and the subsequent emails last week. Maybe I have the only two Californians moving here but broad media strokes imply that part of the market is dead are wrong. What we don’t see much of now is the California investor who is selling one property there to buy two or more here anymore though. A good portion of our clients now are moving from out-of-state to Portland. We just had dinner with friends that moved here who felt priced out of the Vancouver, BC market.

It does seem like we are seeing more media balance. Portland Monthly’s “Buy Here Now” edition is on newsstands and unless I heard wrong, I thought KGW’s business piece last night was brighter than they had been reporting in recent months. I think it underscores that there is little agreement and no defined outcome and that “Portland Home Values Take First Dip” might be a little late to the party as a front page headline caption. Most of the real estate blogs have been acknowledging that declines in the most recent data would weigh numbers downwards and that it was a matter of time. As I underscored to both of my recent California clients, you have to look at the whole picture to make your decision. Many think that there is a 20% plus correction coming (the Oregonian posits 15%). I don’t see it being that drastic but in poker parlance, we’re pretty close to being all in.

The Oregonian story ends, “There is an unsustainable army [of contractors, bankers and brokers who depend on housing for a paycheck].” True, very true. Regular readers know that I take a pretty Darwinian stance to the real estate industry: many will leave the business and the strong will survive. In a tougher market, quality and diligence will make a difference for all three industries quoted above.

As I alluded to earlier, we’re on vacation now (this will post from LAX when we land). Our business and clients are well covered while we are gone and we’ll be in contact. I do hope to write a post about Mexican real estate and what it means as an American looking at that market (not that we’re buying). I attended a “seminar” at the Mac Club a few months back that was touted as, “buying and owning land in Mexico” but it was really, “Buy in our resort in Mexico and if you have any questions, contact an attorney or banker.”

The Standard & Poor’s Case –Shiller report is pretty much what we expected having recently looked at declining prices over the last few months in a previous post. The weight of the recent months has finally brought Portland year over year prices down -.5%. That’s compared to the 20-City Composite Index which dropped 11%. Once again, Charlotte and Seattle join Portland as the top three in the index.

The Oregonian reports that Portland was buoyed by Californian’s moving to the area but, “that’s over now.” Maybe I missed the news of the CA/OR border patrol sending Californians south at the border. My clients yesterday must have slipped through. Their plan is to be here in August in time to put their kids into school. I must have dreamt about coffee with a San Francisco family and the subsequent emails last week. Maybe I have the only two Californians moving here but broad media strokes imply that part of the market is dead are wrong. What we don’t see much of now is the California investor who is selling one property there to buy two or more here anymore though. A good portion of our clients now are moving from out-of-state to Portland. We just had dinner with friends that moved here who felt priced out of the Vancouver, BC market.

It does seem like we are seeing more media balance. Portland Monthly’s “Buy Here Now” edition is on newsstands and unless I heard wrong, I thought KGW’s business piece last night was brighter than they had been reporting in recent months. I think it underscores that there is little agreement and no defined outcome and that “Portland Home Values Take First Dip” might be a little late to the party as a front page headline caption. Most of the real estate blogs have been acknowledging that declines in the most recent data would weigh numbers downwards and that it was a matter of time. As I underscored to both of my recent California clients, you have to look at the whole picture to make your decision. Many think that there is a 20% plus correction coming (the Oregonian posits 15%). I don’t see it being that drastic but in poker parlance, we’re pretty close to being all in.

The Oregonian story ends, “There is an unsustainable army [of contractors, bankers and brokers who depend on housing for a paycheck].” True, very true. Regular readers know that I take a pretty Darwinian stance to the real estate industry: many will leave the business and the strong will survive. In a tougher market, quality and diligence will make a difference for all three industries quoted above.

As I alluded to earlier, we’re on vacation now (this will post from LAX when we land). Our business and clients are well covered while we are gone and we’ll be in contact. I do hope to write a post about Mexican real estate and what it means as an American looking at that market (not that we’re buying). I attended a “seminar” at the Mac Club a few months back that was touted as, “buying and owning land in Mexico” but it was really, “Buy in our resort in Mexico and if you have any questions, contact an attorney or banker.”

April’s Portland Monthly just hit the news stands and mailboxes. Portland Monthly has a history of collecting some of the best data regarding Portland; other annual issues include, schools, doctors, attorneys and this month, real estate. Typically the rankings are available online but the stories aren’t. The website hasn’t been updated yet from the 2007 list or the March issue “on sale now” home page so you’ll have to hit the streets to buy your own copy.

Their top five ‘hoods:
1) Sylvan Highlands- Biggest one year growth
2) Northwest District- Most homes for sale over $500,000
3) Sauvie Island- Best five-year price growth
4) Powellhurst-Gilbert- Most homes for sale under $300,000
6) (tie) Hollywood/Healy Heights- Fewest days on market

The cover caption, “Buy Here Now” is a clear item of contention in the blogsphere and without the articles readily available online it’s going to be hard to discuss or present. If people have copies and want to discuss something out of the magazine, this would be a good place to do it.

I got a call on Wednesday from a Willamette Week reporter who is/was writing a piece on Portland housing affordability and what it would look like in ten years. After about 20 minutes of conversation as we were winding down he threw in that the piece would only be about 100 words. We emailed back and forth on Wednesday and my last message has gone 41 hours without a reply. Normally I wouldn’t scoop a news story but the topic and subsequent lack of reply changes that. On Wednesday night I wrote to the reporter:

What you said towards the end of our conversation set off alarms in my head: words to the effect of, “I’m writing a 100 word piece on Portland affordability.”  You can’t ask the question of what someone they think affordability will be like in 10 years and do the topic justification in 100 words.  I am afraid that any quote you use from our conversation could easily be taken out of context.  I based our conversation on the fact that you were working on more than sidebar piece.  I urge you to urge you editors that this is not a topic to be entered into lightly.

The preceding paragraph is 106 words.

I have no idea what or if they plan to write in Wednesday’s edition regarding the topic but here is today’s challenge: write a balanced essay on what you think Portland’s current and future affordability in 100 words or less. My attempt:

Charles Turner, Prudential Northwest Properties’ Realtor and www.PortlandRealEstateBlog.com author doesn’t preach buy or sell now but to base your decision on your individual situation acknowledging that many believe the Portland housing market may drop 20 plus percent within the next couple of years. Turner does not agree with the assessment of a market freefall but the possibility is there and should not be ignored. “Affordability” is individual unless looking at the strict mathematical definition. The crystal ball question to future affordability cannot be answered because real estate is an emotional as well as an analytical process subject to unquantifiable factors. [Exactly 100 words. Try it. It isn't easy.]

The City of Portland’s Auditors Office ran a survey. The 2007 results are all online and the site works really well.

The home page is here.

I think one of the most interesting questions is how residents of a neighborhood view livability in Portland as a whole. Irvington residents have the best view of Portland as a whole.

Play with the site. It is interesting what we think about ourselves.

This is posted on RMLSWEB, the agent side of RMLS.com. I know an agent that was holding an open house as people came by to check out the “rental.”

It has come to our attention that some homes that are posted for sale on Craigslist are being fraudulently re-posted as low-rate rental listings on Craigslist. The photos, address and other details were all included in the scam rental post with an e-mail address directing people to what appears be an out-of-country party. The scam may be aimed at getting prospective renters to wire or send first and last months rent. In the case reported, an agent conducting an open house was unexpectedly inundated with people who wanted to rent a two-bedroom house in Irvington for $600/month.

It might but this reports my CNBC’s contributing editor Barry Habib says differently: Fed Rate Cuts Do Not Equal Lower
Mortgage Rates.

Stocks and bonds compete for money and when stocks like Fed rate drops money goes into the market like it did yesterday. Therefore bonds don’t do as well and mortgage rates don’t drop.

Yesterday, commenter Squeezed supplied us with a link to this chart on housingwatch:

It shows a median price drop from $369,000 to $332,900 or a 10% drop this year. Heading out to the homepage of the site, I found the following disclaimer/methodology:

These are asking prices and not final sale prices of homes in various cities and their surrounding regions. Final sales prices can be higher or lower than asking prices depending on factors such as market conditions, or the needs of the buyers and sellers involved in the real estate transaction. Data is taken from MLS data sources. We are not responsible for any errors and/or erroneous data.

They are looking at listing prices, not sales prices. RMLS looks at sold prices. Two sources of “prices” with different results. RMLS data reports:

Average Sales Price for February, 2007 – $326,700
Average Sales Price for February, 2008 – $342,600
Median Sales Price for February, 2007 – $279,000
Median Sales Price for February, 2008 – $280,000
Average Sales Price Year to date for 2007 – $323,800
Average Sales Price Year to date for 2008 – $342,800

Adding another data source for the same market:Case Shiller index data for Portland (current reporting period is only through December):

March 2007 181.72
April 2007 183.55
May 2007 185.21
June 2007 185.76
July 2007 186.51
August 2007 186.00
September 2007 185.67
October 2007 185.10
November 2007 183.65
December 2007 182.47

How do we put it all together? It doesnt all make sense. Housingwatches’ median listing price was below RMLS’s median sales price in Feb 2007??? A year later the median listing price dropped 10% and there was a slight increase in median sales price? Any thoughts?