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Flipping Over Portland Real Estate

Determining whether you need a building permit and/or a contractor’s license to buy and resell a property is a topic that isn’t entirely clear cut but very important to both the buyer and seller through both the purchase of the target property, the remodel and the resale to the new owner. IF YOU AREN’T SURE, CONTACT THE AGENCIES.

Building permits are city specific (PortlandOnline.com for Portland). Contractor’s licensing is overseen by the state (the Contractor’s Construction Board or CCB). This post will just focus on the CCB portion.

Straight off the CCB website:

Who Needs To Be Licensed

Oregon law requires anyone who works for compensation in any construction activity involving improvements to real property to be licensed with the Oregon Construction Contractors Board (CCB). This includes roofing, siding, painting, carpentry, concrete, on-site appliance repair, heating and air conditioning, home inspections, tree service, plumbing, electrical, floor covering, manufactured dwelling installations, land development and most other construction and repair services.

A CCB license is also required for:

those who purchase homes with the intent to fix them up and resell them, even if they do not perform the work themselves.

material suppliers that receive compensation for installing or arranging the installation of the materials.

Current law is pretty clear. Oregon House Bill will change that but you’ll have to wait (from OARO):

HB 2498B, introduced at the request of the Oregon Association of REALTORS®, has passed both the House of Representatives and Senate and now moves to the Governor for his signature. HB 2498B would amend the construction contractor licensing laws to allow property owners to hire licensed contractors to work on up to three existing homes, and then put those homes back on the market for sale. Current law requires owners who arrange for remodeling work to have their own contractor’s license unless they are living in the house. HB 2498B passed the House unanimously (47 – 0) in May, passed the Senate unanimously (29 – 0) on June 6 and re-passed the House (52 – 1) earlier today. The one Representative who voted “no” told the Association’s lobbyists that he had made a mistake and would seek permission to change his vote to “yes,” giving HB 2498B unanimous approval throughout the process.

This will exempt the guy with the deep pockets from needing a license but those planning on using sweat equity and getting hands on will still need to have a contractor’s license.

8 Comments on “Flipping Over Portland Real Estate

  1. Most of the people who use “sweat equity” live in the homes. If not, then with a small adjustment in lifestyle, there really isn’t a problem. How many days do you need to stay in a place to establish it as a personal residence?

    One more comment: I never ask governement agencies for legal help. I hire a professional who is paid to represent my interest, not the interests of some political system. After too many times of getting poor advice from those who do not share or promote my interest, I have learned to get good legal assistance. For example, where would OJ be without his legal “Dream Team?”

  2. A good real estate agent will also advise any prospective buyers that renovation work can potentially increase property taxes. Completing a basement, taking an old property and giving it extensive renovation, or putting on a new room are all potential events to add value under Oregon Measure 50.

  3. “A good real estate agent will also advise any prospective buyers that renovation work can potentially increase property taxes.”

    I disagree. As a seller I expect my paid professional agent to represent my interests and do the best with what’s here today, not degrade the value of the property with speculative tax increases in the future. Of course I would never ask an agent to misrepresent anything, and if the buyer specifially asked about potential tax increases from renovations, then the agent may be able to put a positive spin on things, such as the potential personal enjoyment, or discuss any recent tax decreases. But if the buyer does not ask, I would not be happy if my agent looked for and presented potential road blocks to the sale.

  4. I tried to post this comment yesterday with no luck.

    JP, you could be possibly be in trouble legally without the disclosure. See the Oregon Property Tax laws. When the county says that the taxes will increase more than the 3%, you know whose number will be called – stat.

    And I was referring to both a buyer’s agent as well as a seller’s agent. Out of state buyers have no idea about Oregon property tax law. Not being told that a flipped property might have property tax issues could cost a buyer’s agent that next referral.

  5. Here you have the crux of the problem with dual agency (one agent in the middle). What puts a negative “spin” on the property for the seller is important information for the buyer- but we are digressing.

    Tip, wouldn’t we expect inventory to go up at the peak of selling season in a normal market? You’ve got to have inventory to sell and the sale lags behind the listing (by 53 days according to RMLS). Inventory month-by-month Jan-May 6.2, 5.2, 3.8, 4.4, 4.5 months.

    IRS considers a primary residence if you have lived in it two of the last five years but you can only take that exemption once every two years. You can’t live in house A for years 1&2, house B 3&4 and claim both as primaries when sold in year 5. Confirm with your accountant.

  6. I have to agree with Charles here, but only to a point. It’ll depend on what the inventory numbers are in mid-August, and what went off the market because it failed to sell and what actually sold. Many properties that didn’t sell by November last year stayed off the market until March/April. Some sold, some still have not!

  7. So really a more accurate inventory number needs to take into account the average days on market, listed not sold property (withdrawn, relisted or canceled), some sort of list v. sale price and whether the Farmer’s Almanac predicts more or fewer days of rain than average for the following month 🙂

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