The ‘Art of War’ for Homesellers

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‘Peace through Strength’ Can Apply to Real Estate Transactions, Too

“The supreme art of war is to subdue the enemy without fighting.”
Sun Tzu, The Art of War

Click here or on the ‘play’ button below to hear the audio podcast of this presentation.

The ‘Home Front’
Without being overly dramatic, it’s helpful to realize that as a homeseller, you are in a ‘war’ of sorts. Outright battle? Definitely not. And for anyone selling a home, it clearly helps to maintain a sense of politeness and grace when dealing with potential homebuyers. But we’re about to look at the process of homeselling using the metaphor of homeselling as ‘war.’

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Why would the concept of ‘war’ be appropriate for homeselling? To start, homesellers and homebuyers do not have identical goals. In fact, similar to armed conflict, they frequently have goals at direct odds with one another. You can call such business interaction ‘give and take,’ or ‘financial combat,’ or real estate ‘tug-o-war.’ Rather than use swords or heavy artillery, the tools used can be more subtle. Here, metaphorical weapons might include home inspectors, attorneys and a ‘take no prisoners’ attitude. The point is that there is sometimes conflict in a home sale. But as with any good book or movie, sometimes it’s conflict that keeps things interesting and moves the plot forward, while underscoring the value of what is being contested.

So on many levels, the process of homeselling includes engagement with buyers who are naturally at odds with some of your desires as a homeseller. Acknowledging this fact will help you to maintain reasonable expectations throughout the transaction. If that becomes difficult, then simply remember that you were once a homebuyer, too.

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Agility, Leverage and Balance Matter

A Martial Arts Comparison
One such metaphoric view of homeselling is akin to defensive forms of Judo, a time-tested martial art where an opponent’s weight can be used to advantage. A comparison of Judo with homeselling suggests deftness on the part of a homeseller doesn’t have to mean abrasive confrontation, or offensive aggressiveness. Instead, it’s primarily defensive. So we’re therefore talking agility, leverage and balance in order to yield a winning result. Namely, if not to vanquish an attacker, then to simply remain financially safe. 

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Research, Like the Tedious Work of Minesweeping, is Worthwhile

“When you surround an army, leave an outlet free. Do not press a desperate foe too hard.”
Sun Tzu, The Art of War

Make War No More
In the ‘heat of battle,’ there are some practical real estate applications for homesellers to ‘sue for peace,’ de-escalate tensions and maximize results of ‘peace talks.’ Let’s look at a specific real estate situation. For example, in the heat of an ‘offer-counteroffer’ scenario where a buyer and/or seller becomes testy or emotional over a key issue, a constructive approach might involve tactics of (1). taking a ‘time-out’ of sorts by mutually agreeing to longer response timeframes for time-sensitive documents, (2). deflecting an argumentative conversation to other, more fruitful forms, (3). working on other more readily resolvable issues first, and/or (4). ultimately and simply agreeing to disagree.

Willamette Valley Homes, Willamette Valley Properties Spy vs. Spy
The metaphor of ‘armed conflict’ in the real estate environment is also relevant in a ‘Cold War’ sense, where parties warily share information as necessary, especially when it suits their own best interests. This might be illustrated as ‘spy’ tactics between two less-than-trusting powers, similar to ‘Cold War’ political terms of entente’ (a French term meaning a diplomatic “understanding”)  or detente’ (“the easing of hostility or strained relations”).

For example, homesellers may not enjoy completing a multi-page property disclosure statement to highlight their home’s flaws, yet they realize the significant downsides if they don’t accurately complete the document, so they comply. Such less-than-enthusiastic engagements definitely don’t resemble a ‘hot’ or ‘shooting war’ which could otherwise usher in the military acronym of MAD (mutual assured destruction), where ‘the plug is pulled’ on a home transaction and ostensibly everyone loses. “Scorched earth” is rarely good policy.  Such alternative approaches incorporate thoughtful caution imbued with hope, which seems to describe most real estate transactions.

“The greatest victory is that which requires no battle.”
― Sun Tzu, The Art of War

Trust, but Verify
What the term ‘trust, but verify’ can mean is that given often high financial stakes, buyers and sellers are sometimes wary as they ‘size each other up.’ From there, it’s largely up to each party involved to determine whether they attempt to maneuver and take tactical advantage, or ‘play nice’ and get along well throughout a home sale. Practical application of this in a real estate context may include finding common ground wherever possible, but for example, hiring your own home inspector or licensed contractor if a buyer’s inspector seems ‘heavy handed.’

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Land Battles of Different Sorts Can Cause the ‘Fog of War’

The ‘Fog of War’

“In the midst of chaos, there is also opportunity”
― Sun Tzu

Military veterans have long talked about the ‘fog of war,’ which is defined as  the uncertainty in ‘situational awareness’ (what is going on around you) experienced by soldiers in the heat of battle. The word “fog” in reference to uncertainty in war was introduced by the Prussian military analyst Carl von Clausewitz (1780-1831).  If the ‘fog’ of war is defined as uncertainty in what’s going on around you, this certainly applies to real estate transactions. For example, people you don’t know are walking through your home, viewing your possessions, all the while assessing an opinion of value. 

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Don’t Let This Happen to Your Next Real Estate Transaction

‘Fog’ is an apt description of some home selling process, which can be both confusing and uncertain. Think about it. Interest rates fluctuate. Loan underwriters, home inspectors and appraisers all need to come together in agreement that the buyer and property both ‘pass muster.’ Unless and until they do, uncertainty. Some home sales fail because the buyer made a major purchase before the home sale closes. Or their credit score dropped.  Or the appraisal came in low. You get the idea. In the end, more than a few home sales are just one ‘thumbs down’ from someone in the property transaction ‘chain’ blowing it sky high.

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Opposing  Civil War Generals, U.S. Grant & Robert E. Lee

Wars of the Roses
Interestingly, the historic ‘War of Roses’ was a different kind of ‘real estate battle’ between two royal ‘houses,’ the White Rose of York and the Red Rose of Lancaster. But thankfully as a homeseller, you aren’t marshaling troops to wound and destroy. Instead, we’re talking in essence about a ‘civil’ war between parties who can do business. As a homeseller, your ‘battle’ includes navigating a minefield of easily avoided homeselling missteps, while engaging  homebuyers who might be alternatively friendly, hostile or ‘hard-to-read,’ yet always potentially adversarial.

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An Impossible Mission?
A major goal of homebuyers may at first seem like “Mission Impossible.” Namely, getting you, the homeseller, to accept the lowest possible price for a prized possession, your home. This doesn’t mean you have to be fearful, intimidated or worried. With an experienced Realtor at your side, you’re a ‘well-armed’ team ready to ‘do battle.’ It also helps to know that the more buyers want your house, often the nicer they will be.

War Games
Given these dynamics and with tongue planted firmly in cheek, it makes sense to modify a few homeselling cues from successful battle strategists. You might consider this approach as a ‘tip sheet’ to lay your ‘battle plan’ for what lies ahead.

  1. Declare War. Franklin Delano Roosevelt
  2. Never Surrender. Winston Churchill
  3. Declare Victory. Harry S. Truman
  4. Win the Peace. George C. Marshall
  5. Go home. To your new home, that is

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1. Declare War
This step mainly involves understanding that buyers generally have opposing interests than sellers, but you can usually do business with most of them. Such realistic expectations will help you to understand, for example, why it’s usually a good idea to let your Realtor do much of the talking and not share many specifics about your motivations for selling. Otherwise, opportunistic buyers may sense desperation and take advantage by offering you significantly less than your asking price.

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2. Never Surrender
When the going gets tough, stick with your plan. This includes following through on your thoughtful, well-defined strategies. ‘Keep your powder dry’ by not obsessing over factors you can’t change and ‘choose your shots wisely’ by considering those factors you can change. Conserving firepower is fundamental to strategic homeselling.

For example, adjustments in the home-selling process are sometimes necessary. It’s entirely possible that if your home hasn’t sold for some time, a case can be made for a price adjustment. That’s not a defeat, unless you stop moving thoughtfully forward. But before making substantial ‘course corrections,’ first make sure to review the situation and your options.

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3. Declare Victory
Realize when you’ve won. This doesn’t mean chest beating. Just make sure to remind yourself of your goals once you’ve reached them. For example, your home selling goals may have included receiving a timely offer at full selling price and/or retaining a few extra days of delayed possession after the closing date to more comfortably move out along with other factors important to you. Cherish the win.

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4. Win the Peace
Remain as gracious as possible throughout the transaction. Be charitable to your buyers. For example, this could include your being flexible if they ask about allowing contractors to visit your home before closing in order to provide bids for later remodeling. Leaving a vase of flowers in the house with a note for when the buyers move in is a nice touch, too.

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5. Go Home: To Your New Home, That Is
Mission Accomplished!

Oregon Real Estate Podcast

Thinking about selling your Oregon home? Contact the experts at Certified Realty using the convenient form below for a free consultation. And please thank a veteran today for their service.

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What’s An Oregon Acre Worth?

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One frequent Oregon real estate question that both buyers and sellers ask is ‘What’s an acre worth?’ When you think about it, this question is not so different than ‘What’s a car worth?’ That’s because each situation has significant variables.

Click here or the ‘play’ button below for the audio podcast presentation of this article.

With a car, the mileage and condition are both very important to arrive at an accurate value. Land, too has unique variables. What are these variables that affect the value of an acre and as an Oregon property buyer or seller, what is it that you may need to know?
What follows in not an exhaustive study of determining the value of an acre, but a summary of 6 key factors that affect the market value of Oregon acreage property. Spoiler alert: The actual answer to the value of an Oregon acre is ‘it depends.’

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Research is Fundamental
There are plenty of places to find estimates on land values, including for Oregon acreages. But unless some specific and fundamental research is performed, such estimates can be meaningless, beyond providing a broad yardstick for comparison between states. Yet, even that can be a misleading endeavor.

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California Dreaming
For example, many think California land is more expensive than Oregon land. Yet an acre of land in Oregon could be worth considerably more than a California acre. How? Select one acre in Canby, Oregon (with a current population of more than 16,000) and the other acre in tiny Canby, California, (with a current population of less than 500). The simple laws of supply and demand apply, even across state lines. So to begin, demand is a function of value. The larger a population surrounding a given acre, usually the greater the demand and hence the higher the price per acre.

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How Big Is An Acre?
Sources suggest an acre was first defined back in the Middle Ages as the amount of land that could be ploughed in one day with a yoke of oxen. An acre can now be specifically defined as an area comprising 43,560 square feet. For example, this would equal a parcel of 66 feet (1 chain, also known as 22 yards) by 660 feet (1 furlong, also known as 1/8 mile, or 220 yards).

6 Factors of Separation
The following six factors provide insights into some key components that help determine the value of an Oregon acre of land.

Real-Estate-OregonFactor 1: Location, Location, Location
To help determine the value of an Oregon acre, chief among the variables is the immutable characteristic of location. Why? For example, prime farmland located in distant locales can be worth less than somewhat lower grade farmland if the distant location requires significant fuel and related expense in order to transport crops to market. Location explains why waterfront property usually sells for more than property located some distance from a river or lake. Location also explains why view properties can command a premium.

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Factor 2: Zoning & Allowed Uses
In Oregon, also top among the factors that impact the value per acre is zoning. Zoning can be influenced by federal, state, county, regional (like Oregon’s Metro government) and city regulations. For example, don’t expect to generate much income from a parcel of land designated as a wetland. There are fewer activities that can be performed on such a property and as a result, fewer buyers and therefore lower demand. This typically means a lower market value. Generally speaking, in many parts of Oregon, property zoned to allow residential, commercial or industrial use frequently commands a higher price than agricultural land.

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Factor 3: Volume Discount
With some limitations, the larger the parcel, generally speaking the lower the market value per acre. This is true for several reasons. As a property’s price gets up into the higher ranges, particularly if we’re talking multiples of a region’s average selling price, there are simply fewer qualified buyers. As an example, consider how many buyers in a given area who may be able to afford a $100,000 property. This is a sizable percentage of the ‘buyer pool.’ Now consider how many buyers who may be able to afford a 3 or 4 million dollar property. Far fewer as the price increases. So while there are buyers for each price category, the price per acre is typically reduced with the increase in land size and purchase price.
Oregon-HomesFactor 4: Soil Types
There is a plethora of soil types, with various metrics to determine their characteristics and use. According to Oregon State University, we have nearly 1,000 different soils in Oregon. One broad method of grouping and evaluating soil types is known as the ‘class system.’ Broad groups of soils can therefore be denoted as Class I, Class II, Class III, and the like. As you might expect, Class I soils are considered the best and typically have very good fertility, superior drainage and are typically located in mostly level areas, often with slopes of no more than 3%. Examples of Oregon Class I and Class II soil types are Willamette Silt Loam and Woodburn Silt Loam.

Also as you might expect, Oregon’s Class VI and Class VII soils are considered less useful for agricultural purposes. One example of these is called Whetstone soil. While having low fertility, Whetstone is suited to to growing timber, but not cultivated crops. Erosion of poorer soils can also be severe. One of Oregon’s least productive soils is not even technically considered soil. Called Terrace Escarpments, this alluvium is typically located in steep areas which makes cultivating it so difficult.

Some crops grow significantly better with certain soils. Other crops, such as grapes, can be more forgiving and can actually thrive under a diversity of soil types, even if they ‘struggle,’ which is said to provide certain favorable wine characteristics.

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Examples of Different Soil Surveys Published for Each Oregon County

While soils information on a given property can now be located online for a specific property according to each Oregon county, for many years the primary method of researching soil types was to either speak with an extension agent or view the ‘soil survey’ book issued for each Oregon county. These books were published by the US Department of Agriculture. As a result, they became the ‘bible’ for determining soil type and related information.

Oregon-WaterFactor 5: Water Rights
In addition to the above factors, access and legal ability to use water is a very significant element in determining the value of an Oregon acre. The Oregon Water Resources Department has a regional watermaster system, where each watermaster has a range of state-mandated duties. As a general rule, land with water rights is worth significantly more than ‘dry land.’ One reason is because irrigable land allows for more-and potentially more profitable-crops.

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Factor 6: Improvements
Another important factor in determining the value of an acre are improvements. Key among these can be a home. However, even if a home is not present but a well and/or septic system is, and the property is zoned to allow a home, this can be the ‘dream scenario’ that some buyers who wish to have a new home built actually want. That’s because the zoning is already in place, as are some of the most expensive utilities like water and septic. As a result, the presence of absence of improvements is another element in helping to determine the value of an acre.

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In Summary
There are many components to evaluating the worth of an acre in addition to those touched on here. For example, certified organic land can command a premium. The bottom line is that in order to most accurately determine the value of your property, it’s important that a review of comparable properties be performed in your area. This means utilizing information among truly similar properties sharing related characteristics, especially those which may have recently sold. An experienced Oregon acreage real estate specialist is conversant with the multiple factors necessary to most accurately gather, analyse and interpret such data.

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Questions? Call a Professional!
Do you have questions about buying or selling Oregon property? Contact veteran Oregon Realtor Roy Widing for a free consultation using the convenient form below.

Posted in Acreage, Acreage Valuation, Oregon Acreage, Willamette Valley, Willamette Valley Homes | Tagged , , , , , , , , , | Leave a comment

3 Questions Your Oregon Realtor Can’t Answer

Click here or on the ‘play’ button above for the audio podcast version of this article.

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When making the biggest financial decision of their lives, many homebuyers and homesellers understandably ask their Realtor to provide a professional opinion on a range of topics. Some common questions include if adding a bathroom will boost resale value, should wallpaper be removed, if re-painting will help, how long a home has been for sale, if sellers should leave when their home is being shown, or if a home shows better when ‘staged.’ These and many other questions are typically addressed with aplomb by an experienced Realtor.

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However, with other, less benign questions, agents are trained not only to be cautious, but simply refuse to answer them. Is it because the Realtor doesn’t have an opinion? Maybe, but maybe not. Often the reason is because rules don’t allow it.

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Federal, State & Ethics…Oh My!
What are these rules that might cause an otherwise conversational, if not super-chatty (or at least engaging) real estate agent to go mum? They include federal laws, state regulations and the Realtor Code of Ethics.  And while there are more than three topics agents are trained to be wary of, here we’ll address three examples of areas Realtors are supposed to be particularly cautious about. It helps to first understand that some of the following essentially forbidden conversations most often occur between a Realtor and clients. However, the specific topic of Question #3 below can also be especially problematic if discussed between Realtors.

Question #1 That Your Oregon Realtor Can’t Answer: “Do Many Minorities (or Other Protected Classes) Live Here?”
If there is even a hint of a question having a racial, religious, or other prohibited basis, law-abiding Oregon Realtors will not go there.

Federal Law Prohibits Real Estate Discrimination
Chief among the federal laws that limit a Realtor’s behavior in these areas is the Civil Rights Act of 1968. It prohibits:

  • A refusal to sell or rent a dwelling to any person because of race, color, religion, sex, or national origin.
  • Discrimination based on race, color, religion or national origin in the terms, conditions or privilege of the sale or rental of a dwelling.
  • Advertising the sale or rental of a dwelling indicating preference of discrimination based on race, color, religion or national origin.
  • Coercing, threatening, intimidating, or interfering with a person’s enjoyment or exercise of housing rights based on discriminatory reasons or retaliating against a person or organization that aids or encourages the exercise or enjoyment of fair housing rights.

Oregon Law Prohibits Real Estate Discrimination
Discrimination in Real Property Transactions-State discrimination law also prohibits a person from refusing to sell, lease, or rent any real property because of an individual´s race, color, sex (including pregnancy), sexual orientation, national origin, religion, marital status, familial status, physical or mental disability, or source of income.

The Realtor Code of Ethics Prohibits Real Estate Discrimination
Additional guidelines to assist Realtors in following laws against discrimination are incorporated in the Realtor Code of Ethics, which you can read in its entirety here. For the purposes of this discussion, here is a pertinent portion:

Article 10
REALTORS® shall not deny equal professional services to any person for reasons of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. REALTORS® shall not be parties to any plan or agreement to discriminate against a person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. (Amended 1/14)

REALTORS®, in their real estate employment practices, shall not discriminate against any person or persons on the basis of race, color, religion, sex, handicap, familial status, national origin, sexual orientation, or gender identity. (Amended 1/14) [listen]

  • Standard of Practice 10-1

When involved in the sale or lease of a residence, REALTORS® shall not volunteer information regarding the racial, religious or ethnic composition of any neighborhood nor shall they engage in any activity which may result in panic selling, however, REALTORS® may provide other demographic information.

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Steering
Related to this phenomena is the concept of ‘steering,’ where a real estate agent might guide prospective homebuyers toward or away from certain homes or neighborhoods based upon forbidden criteria. This article provides six ways a Realtor can help to avoid ‘steering.‘ Just one example of a forbidden topic might be: ‘Can you find me a Catholic neighborhood? (or Jewish, or Mormon, or Hispanic, or Lebanese…)’ As seen in the above example, just as religion and race are protected classes, so are nationalities.

So What’s a Buyer to Do?
If there are particular places where you want to reside, like specific neighborhoods where your friends currently live, or an area where your church is located, then an agent can show you homes in areas you request.  Real trouble comes when asking a Realtor to specify neighborhoods for you that involve protected classes. So questions about the racial, religious, or nationality composition of a neighborhood are not something to bring up with a real estate agent.

It really helps to leave protected classes out the discussion. Instead, after doing your own research of factors that are most important to you (which may include crime as we’ll address below, or proximity to good restaurants, or parks, or a reasonable commute to work), then provide your agent with boundaries of areas where you want to focus your homesearch. There are several other terms used to define related discriminatory illegal real estate activity.

Blockbusting
The practice of persuading owners to sell property cheaply because of the fear of people of another race or class moving into the neighborhood, and thus profiting by reselling at a higher price.

Redlining
Refusing a loan or insurance to someone because they live in an area deemed to be a poor financial risk.

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Question #2 That Your Oregon Realtor Can’t Answer: “Is This a Safe Neighborhood?” Real estate agents are instructed not to disclose information regarding crime and the safety of a neighborhood in part due to concerns of violating the Fair Housing Act. The following paragraph is from a Realtor article about how agents are advised to advise homebuyers on crime figures, along with a host of other topics:

‘Direct them to the police. If buyers want to get a picture of the area’s crime rate, direct them to the police department or other sources of information. Don’t disclose crime statistics or say a neighborhood is a safe place to live even if you believe it to be true.’

Why Crime Statistics Can Be Difficult to Get-Part A
There’s another reason why getting reliable crime information, at least from a Realtor, is not preferred. That’s because in Portland, for example, Oregon Revised Statute 696.880 states that an Oregon real estate agent is not required to disclose the proximity of a sex offender. For some, this may be difficult to believe. As a result, it’s helpful to take the attitude of ‘buyer beware’ if you have small children, or simply want to avoid living near a convicted sexual predator.

Why Crime Statistics Can Be Difficult to Get-Part B
There is currently a strange situation being experienced in parts of Oregon, because while FBI crime statistics have long been seen as a helpful source of public safety information, for Portland and 40 surrounding communities, these important recent figures will not be available.

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Are Sex Offenders Living in the Neighborhood?
Megan’s Law requires convicted sex offenders to register their address with local officials. This information is available to the public. You may check the public records, or get information from local police near where you’re considering a move. But it’s important to know that online information is hardly foolproof. Here’s why, as stated in the Oregon Sex Offender website which reads in part, with my highlights:

This website only lists sex offenders designated: a Level 3 offender under ORS 181.800; a predatory sex offender under ORS 181.585; or a sexually violent dangerous offender under ORS 144.635.  Not all sex offenders are listed on the website. In addition, the information on this website refers only to sex offenses defined under ORS 181.805(5) and does not reflect the entire criminal history of a particular individual.

Since all information is subject to change (and not everyone registers how they’re supposed to), if accurately determining if a sex offender might live in your next neighborhood is important, make sure you’re comfortable with the information you gather. Here’s a link to the State of Oregon’s sex offender website.

There are good reasons to avoid living near a convicted sex offender. In addition to the reasonable desire for safety, it’s proven that homebuyers can take a financial ‘hit’ after purchasing in unsafe neighborhoods. For example, one study showed that a home’s value declines by 4% on average if it’s located within one-tenth of a mile of a sex offender’s residence, according to the National Bureau of Economic Research.

What’s A Buyer to Do?
Many homebuyers would like to see local crime statistics before buying a home. However, getting reliable information isn’t always as simple as asking a real estate agent. Why? First, realize that Realtors are not police and therefore typically not always well-versed on crime statistics. To get those, it really does make sense for buyers to contact local law enforcement, or research online themselves, using a variety of available resources.

Also understand that if you’re concerned about a factor like crime, certain kinds of research will best come from someone other than your agent. This may not seem fair, but in Oregon, an agent is not required to provide such information. The good news is that there are established sources of information for homebuyers interested in a safer neighborhood. Yet you may have to dig.

Some Helpful Oregon Homebuyer Websites
CrimeReports.com
FamilyWatchdog.us
FBI Crime Report
MyLocalCrime.com
Oregon Drug Lab Properties Website

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Question #3 That Your Oregon Realtor Can’t Answer: “What’s the Standard Real Estate Commission?”
The reality? There is no ‘standard’ real estate commission. A Realtor can tell you what they charge, but commissions are negotiable and one real estate agent can’t speak to what another company or agent charges. There is also good reason why a real estate agent would not want to discuss real estate commissions with other agents.

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Some Questions Get Realtors Running!

A Different Kind of ‘Running Suit’
A major antitrust lawsuit that has reverberations to this very day involved real estate brokers who attempted to ‘coordinate’ an increase in their commissions. Federal investigators were not amused. As a result, now Realtors are advised very early in their training to avoid discussion of commissions with other real estate brokers, lest they be accused of ‘price fixing.’  Real estate agents are commonly instructed to simply leave a room if someone attempts to discuss such illegal tactics. Some have observed agents scrambling out of a meeting to avoid talking about commission collusion, or price fixing.Oregon Real Estate PodcastDo you have questions or are you considering the sale of your Oregon property? Contact veteran Oregon Realtor Roy Widing using the convenient form below for a free consultation.

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The Power of Oregon Seller Financing

While most Oregon homebuyers use traditional loan sources like banks, mortgage brokers or credit unions, there are solid reasons (and a very helpful alternative) for purchasing a home without them. Buyers avoid traditional lenders for a variety of factors and when they do, one mechanism they frequently turn to is known in our area as seller financing.

Click here or on the above ‘play button’ to hear the audio presentation of this article, The Power of Oregon Seller Financing.

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What Is Seller Financing?
Also called owner financing, seller terms, owner carry, seller carryback, or seller carry, seller financing allows a homebuyer to purchase a property by making an initial down payment, then making direct payments to the seller. While Oregon law has rules in place especially to regulate large-scale property sellers who might handle a significant amount of seller-financed transactions (notably commercial firms, such as private finance companies), the process still remains relatively simple for typical Oregon home buyers and sellers who enter into a home sale without using a traditional lender.

Fundamentals  
A key factor that helps to make seller financing an option is if a homeseller has either no loan, or a very small loan remaining on the property to be sold. Having little or no loan on the home being sold means more of the buyer’s down payment will go to the seller, and not diverted to the lender of a seller’s existing home loan. Most home loans now have what’s called a ‘due on sale’ clause, which means a seller’s existing home loan must be paid off upon the sale of a property. The single factor of having no or little loan balance on a property is often the single most limiting condition in determining if seller financing is an option. If the property has either no loan, or only a small loan remaining, this can really open the door to seller financing. 

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Playing the Bank
One other factor for prospective sellers to consider when thinking about seller financing is if they’re okay with ‘taking payments’ instead of receiving a ‘lump sum.’ By ‘playing the bank,’ sellers receive payments from the buyer as they are made over time, not all at once. Some sellers greatly prefer the regular income of proceeds from their home sale over time. That said, unless the payments are made according to a ‘straight line’ amortization, there usually will be a lump sum paid to the seller at the end of the agreed upon term, often after several years, or much longer.

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Seller Financing is the ‘Swiss Army Knife’ of Loan Options

Basic Tools
Several tools can be used to establish seller financing. In Oregon, these include either a trust deed and note, or a land sales contract. Here is a recent legal article outlining some differences between these two instruments for Oregon seller financing. Most common is the trust deed and note, which can be prepared by Oregon title companies and escrow firms.

Less common in Oregon but also suitable is the land sales contract, which is frequently more expensive, since Oregon land sales contracts can only be drawn up by an attorney. Another difference is how a buyer takes title. ‘Equitable title’ is an ownership interest that describes a land sales contract and ‘legal title’ describes interest via a trust deed and note. 

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What Makes Seller Financing so Powerful
Seller financing may sound ‘blah’ to some, but it can be very powerful. How else to describe a something that can:

  1. Make an otherwise ‘unsellable’ property sellable, and/or
  2. Render an otherwise ‘unqualified’ buyer qualified, whilst escaping considerable loan fees, underwriting and requirements, like an appraisal, and/or
  3. Provide income to a home seller, with interest, all secured with the protection of a legal instrument in case of default, and/or
  4. Allow a homebuyer the ability to purchase a home while selling a less liquid (hard to sell) asset, or re-building credit, and/or
  5. Give both buyer and seller the flexibility to negotiate what works for them, rather than a bank’s pre-determined, ‘cookie-cutter’ loan term, interest rate, or myriad other conditions.

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Here are a few scenarios illustrating some of ‘real life’ advantages of seller financing.

Scenario #1 involves a house located in a large Oregon city with no foundation and a faulty roof.
This property is otherwise attractive, yet routine lender guidelines require a foundation for residential properties. The seller begins to think his house is a ‘lemon.’ That is, until he learns that since he owns the property ‘free and clear’ with no loan, that he can sell the property directly to a buyer. A buyer who happens to be a contractor discovers the house and realizes he can put a roof on the house for the cost of materials, then hire foundation work far more cheaply than someone unlike him who is not in the building trades. An agreement is made and the transaction closes. Buyer and seller see the transaction as a ‘win-win.’ 

Scenario #2 involves a nice home located in a tiny Oregon town between the Willamette Valley and Oregon Coast.
Given the somewhat remote location, there isn’t a lot of demand for the property in Scenario #2. In an effort to ‘open up the buyer pool’ and ‘jumpstart’ buyer activity, the seller’s Realtor advises his seller client to consider seller financing.

The seller agrees and before long, a California buyer who just retired discovers the property, located near the buyer’s elderly relative. The buyer wants to first sell his large ranch in California, but because he will be listing his out-of-state property for 4 million dollars, the buyer knows it may take more than a few months to sell it. The California seller doesn’t want to sell his out-of-state property at a discount and wants to purchase a home meanwhile near his relative.  

So the Californian strikes a deal with the tiny Oregon town homeseller. Because the seller is open to seller financing and therefore providing the buyer with a helpful benefit, including no need for a lender required appraisal or loan fees, the buyer agrees to pay full price for the seller’s property and places $75,000, or 25% down of the $300,000 purchase price using seller financing. Confident his California property will sell within 3 years, buyer and seller agree to mutually agreeable monthly payments, with a balloon payment of the remaining loan balance within 36 months.

The buyer gets full price, a quicker home sale, loan interest (on top of his full selling price) and the security of a legal instrument as protection in the unlikely event of buyer default. The buyer has sufficient time to sell his out-of-state asset, plus can move quickly to live near his Oregon relative. Buyer and seller see the transaction as a ‘win-win.’

Scenario #3 involves a homebuyer who recently experienced a ‘short sale’ on an investment rental he owned.
Because traditional lenders are unlikely to loan to borrowers with a recent ‘short sale,’ this homebuyer can either wait possibly years until lenders are satisfied that this experience is well behind him, or look at other options.  Knowing his buyer’s situation, the Realtor for this ‘short sale’ purchaser searches specifically for, then locates a property suitable for his buyer client which is being offered with seller financing. The buyer’s Realtor writes up a clean, solid offer with 20% down at a competitive interest rate and 5 year balloon payment. The seller accepts the ‘short sale’ buyer’s offer. There is a successful closing of the transaction, long before a traditional lender would have said ‘yes’ to providing the ‘short sale’ buyer with a home loan. Buyer and seller see the transaction as a ‘win-win.’

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Covering the Bases
As with any business agreement, business agreements can and sometimes do go wrong. One important factor for sellers to consider prior to entering into any seller financing agreement is the possible default by a buyer, who may not continue making payments as agreed. In this case, placing the situation before an Oregon real estate attorney is frequently a good move. If the buyer is dealing in good faith, sometimes a temporary restructuring of payments can be agreed upon, or mutually agreeable exit strategy to provide the buyer a pathway to meet the agreement, or sell the property. If the buyer becomes difficult, an attorney’s letter can be persuasive. 

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Happy Bankers
Studies show that traditional lenders start relaxing requirements when a buyer can make a 20% downpayment, known as 80% ‘loan to value.’ This is a good general rule for seller financing, too. A minimum 20% downpayment typically means a buyer will be a better risk. The graph below shows how such an 80% ‘loan to value’ situation has historically reduced the delinquency rate for loan transactions.

Foreclosure

The larger the down, the fewer the frowns

Insurance
One other condition for sellers to be aware of relates to insurance. This can include fire and liability insurance. Especially helpful is if the seller is named as a ‘loss payee.’ This means that if there is a loss, such as a fire, the seller has a priority to insurance compensation.

Guidelines and regulations stamps

New Rules
Federal and state mortgage laws often change and this is certainly true of Oregon seller financing. The good news is that for many routine transactions, Oregon homebuyers and homesellers can participate in the benefits of seller financing.

The latest batch of regulations are largely designed to hold commercial lenders more accountable. If a home seller is not a major creditor or commercial lender, the process of buying and selling with seller financing in Oregon can still be relatively simple. The latest rules create a situation where it’s best to be clear if you’ll be dealing with a ‘vanilla’ type ‘mom and pop’ seller financing transaction, or a more complicated ‘corporate’ one that requires additional time, money and outside assistance.

The following information is not legal advice, but a ‘thumbnail’ overview of two simpler scenarios for Oregon seller financing. For real estate advice, consult a Realtor. For legal advice, consult an attorney.

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The ‘Vanilla’ Scenario
Let’s have dessert first. One of the easier scenarios for seller financing is if you’re buying a home from a seller who has lived in the house as a primary residence. This simple factor is a decent sized ‘green light’ and avoids much additional paperwork, like the need to hire a mortgage loan originator, or MLO, to handle the seller financed transaction. Under the new rules, another ‘vanilla’ scenario that simplifies the process are transactions between family members.

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The ‘Small Potatoes’ Scenario
Even if the seller has never lived in the home you’re buying, if the seller is deemed ‘small potatoes’ and not a major creditor or commercial lender, the seller can still provide seller financing. In this case, a ‘green light’ to simplicity is found among sellers who have provided seller financing in a home sale for three or fewer transactions within a 1 year period.  This exemption is helpful, since few residential homeowners sell even one home each year.

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The Meat of the Matter
Regardless of the kind of seller financing you consider, consider working with a professional experienced in this unique area of real estate practice. Seller financing offers many potential advantages, but it’s important to understand the process and your limitations.

Collection-Escrow

Collection escrow accounts keep order in seller financed real estate transactions

Collection Escrow Account
One very convenient service often used by buyers and sellers who use seller financing is called a collection escrow account. Collection escrow accounts are usually set up during the escrow process, once an offer has been accepted. In our region, collection escrow companies receive payments from the buyer on behalf of the seller, handle accounting procedures, then forward payments to the seller, often by direct deposit or via a mailed check. Why is this convenient? Because both parties then have a state-licensed firm keeping track of payments.  This also makes it easier around tax time for buyer and seller, as they can receive a printout of payments made or received for accounting purposes. Sellers can more easily show income and buyers can better account for their mortgage interest deduction. 

Oregon Real Estate, Oregon, Oregon Housing, Oregon Homes, Oregon Properties, Portland Real Estate, Salem Real Estate, Willamette Valley, Willamette Valley Real Estate, Willamette Valley Homes, Willamette Valley Properties, Willamette Valley PropertyThinking about using seller financing? Contact Certified Realty for more information about this frequently helpful real estate tool using the convenient form below.

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3 Steps To An Oregon Home Sale



Hear the audio podcast presentation of this article by clicking here or on the ‘play’ button below.

Selling an Oregon home can sometimes seem overwhelming and complicated. Yet there is a logical framework to the entire process. Once grasped, this knowledge makes the task less daunting. 

Easy As ‘1-2-3’
The linear progression to selling an Oregon home can make it as easy as ‘1-2-3.’ So since the process between buyers and sellers is routinely described as a kind of ‘dance,’ let the music begin.

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Fundamentals
To be fair, there are plenty of tasks associated with any real estate transaction, yet the key process that gets homesellers a workable offer can be simplified to three primary steps. Then, once a mutually accepted offer is in hand, the final march to closing the sale begins.

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The fundamentally crucial elements start very early. Curious? Away we go:

Oregon Real Estate

1. Online Activity-More than 90% of homebuyers first look online before they even call a Realtor. Just as important, once buyers select an agent, they will continue to view properties online as they ‘winnow the field’ and decide with their agent which kind of homes to tour. Then, the power of the local multiple listing system provides a good selection of properties and enhanced information.

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2. Showing Activity-By the time buyers take their first home tour, they’re often pre-qualified.  Few homebuyers make an offer without this crucial step. If they do, it’s not unusual for sellers to request they get pre-qualified before their offer is considered.

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3. Offer Activity-
This is the final step in the 3 phase path to an offer. Once homesellers make it to this point, their property has likely been priced close to the actual market value. The 3-step process looks simple and in a way, it is. What follows are some extra helpful considerations.

Oregon Home-Selling by the Numbers
First, it’s helpful to realize that buyers generally behave in somewhat predictable phases. 
This means they routinely go to Step 1 first, before Step 2, or Step 3. There is very little skipping around. For example, it’s uncommon for a buyer to start at Step 2, or leave out any steps. 

Another important element to consider is when a homeseller’s efforts ‘stall’ at a certain step. Depending on a variety of factors, there is usually a good reason, which can be diagnosed by a Realtor experienced with intrinsic behaviors of buyer activity. 

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Even Batman Doesn’t Have This In His Utility Belt
Homesellers can have a very useful tool in their utility belt, since online buyer activity can be monitored to evaluate buyer response, or lack of it. That valuable tool is a report on buyer activity for your specific property. Some of these reports are released weekly (Realtor.com) and others (like regional multiple listing services) are compiled daily. Realtors who invest wisely in their business frequently subscribe to these proprietary services

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Realtor chart showing decreased buyer activity over time.

Step 1. Online Activity
Online reports are very valuable in analyzing market reaction to a seller’s property. And realize what market reaction is: The collective response of buyers in an area, or ‘market.’ As a result, your Realtor can provide you with regular updates with online buyer and Realtor activity for your home and from a variety of sources. Some of these key sources will provide hyper-local data very specific to your area. 

Online property activity data can help gauge if your property’s popularity is really ramping up, falling fast, or simply ‘so-so.’ Now let’s take a further look into these helpful tools.

A Medical Analogy
As with reading blood tests or an electrocardiogram (EKG), it’s especially helpful if the professional reading them has familiarity with interpreting specific signs under a variety of situations. Some ‘bumps’ can mean much, others little.

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      EKG reading. Notice that it somewhat resembles the multiple listing report image below.

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A multiple listing property chart with buyer views, Realtor views & email frequency to Realtor buyer clients

Since you wouldn’t expect a brain surgeon to be a heart expert, agents who only work with city properties may not analyze market reaction to a rural property quite the same way and vice-versa. It’s important that market responses for a seller’s property be analyzed by taking both the property type and location into account. As a result, it may not be realistic to expect identical market readings for a palatial suburban Portland, Oregon home when compared to a ‘fixer’ property in tiny Paisley, Oregon. Tracking your home’s online popularity can determine not only buyer response, but provide key insights. For example such buyer activity information can help sellers make adjustments before activity gets lackluster and a property becomes ‘shopworn.’  

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Step 2. Showing Activity
The ‘jump’ from online home searching to touring inside homes is a significant one. Since agents commit considerable time and effort and are usually paid only after a buyer purchases a home, this typically means real estate agents are selective with those they spend time with, so touring buyers are usually pre-qualified by a lender. In other words, we’re now working within the realm of a qualified home purchaser, who is ready, willing and able to buy. Studies show that the typical home buyer searches for 10 weeks and views 10 homes.

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Step 3. Offer Activity
A final leg in this three step journey is when an offer is written and submitted for the seller’s consideration. By writing an offer, this step also helps to confirm that the property is likely priced within a reasonably market-friendly range. There is still plenty to do after Step 3, but an acceptable offer places the process into the remaining phases of a real estate transaction. This can include elements like escrow, home inspections, preliminary title report, appraisal, loan documents and closing.

Oregon Real Estate

Think of home prices like fishing at the right level. Homes priced where ‘the action is’ get more bites.

A Real Estate/Fishing Analogy
For example, wildly over-priced homes don’t usually get much more than ‘low-ball’ offers, if any. Think of the actual top market value of any property as a ‘waterline.’ Fish usually don’t jump in the boat, so if a home seller’s property is priced significantly above that level, expect little, if any action. As the ‘bait’ or price is lowered to the waterline, expect ‘nibbles.’ If no serious offers arrive within a reasonable amount of time, further lowering the price will typically provoke a ‘feeding frenzy,’ also known as a ‘bidding war’ for the property. 

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The End of the Beginning
An accepted offer is not the final step of the home selling process. But with an accepted offer in hand, home sellers and their Realtor can focus attention on remaining stages. 

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Thinking about Selling?
Call (503) 682-1083, or contact veteran Oregon Realtor Roy Widing with Certified Realty using the form below. Bring Roy your questions, or request a free consultation on what your property could sell for in today’s market.

Posted in Housing Oregon, Oregon Homebuyer, Oregon Homes, Oregon Homeseller, Oregon Homeselling, Oregon Homeselllers, Oregon News, Oregon Real Estate News, Oregon Real Estate Podcast, Oregon Realty, Portland Homeseller, Portland HomeSelling, Portland Real Estate, Sell My Oregon Farm, Sell Oregon Home, Willamete Valley Properties, Willamette Valley, Willamette Valley Economy, Willamette Valley Homes, Willamette Valley Housing, Willamette Valley Oregon, WIllamette Valley Podcast, Willamette Valley Properties, Willamette Valley Property, Willamette Valley Real Estate | Tagged , , , , , , , , , , , , , , , , , , , | Leave a comment

Knockin’ on Heaven’s Door: Stigmatized Properties

‘…that long black cloud is comin’ down,
I feel like I’m knockin’ on heaven’s door…’  Bob Dylan

Listen to the podcast version of this article by clicking here or on the ‘play’ button below.

Every experienced Realtor has them: Stories rarely shared with clients that involve particularly unnerving moments in an agent’s real estate career.  And, for purposes of this article, we aren’t talking about simple cases of a flea-infested house, or one with no water or electricity. The topic? Stigmatized properties. Homes where people may have died, where crimes reportedly occurred, or where ghosts are said to roam.

Not all stigmatized properties are obvious, especially at first

Not all stigmatized properties are obvious from the outside

Dealing with stigmatized property can be unforgettable for real estate agents and their clients. Also known as ‘tainted’ real estate and many other monikers, before we dive in, let’s get a quick grasp of what a stigmatized property is.

Definition 
‘Here’s a dictionary definition of the word stigmatize: 

Stigmatize verb
1. to set some mark of disgrace or infamy upon

While this definition may be readily grasped, state laws vary significantly in how they address stigmatized property. This is not a legal analysis, but in Oregon under the broadest sense of the term, it’s commonly understood that a stigmatized property can range from one where there are problems, like mold, to being a place where undesirable things have occurred, such as a crime. So it’s important to realize that there are degrees of stigma. And what may bother one person may not seem so bad to another.

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Meth houses are one category of stigmatized property

One of the classic examples of stigmatized property is a home where tragedy or other undesirable activity has occurred, such as if someone dies inside a house. Another example is a home where drugs like methamphetamine have been manufactured. Yet other example, though generally considered less worrisome to many buyers, is a foreclosed home where a former owner loses the property due to job loss.

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This Happened to Me: A Case Study
Here’s a true story that helps to illustrate the impact of stigmatized property. While at work one day, I received a phone call and quickly recognized the caller as a client I assisted with a home purchase months earlier. Listening further, I detected serious concern in his voice as I’d never observed from him before.

As the client talked, I listened while running through a brief mental checklist of his closed transaction:

‘Paperwork completed correctly?’  Check.
‘Home inspection performed?’ Check
‘All inspection issues addressed or negotiated?’  Check.
‘Building permits researched?’ Check

‘Insurance, title report, loan and closing documents taken care of?’  Check.

I ran through a few more items in my mind, then heard him say the word ‘Ghost.’ 

Oregon Stigmatized Home

In the film ‘A Christmas Carol,’ miserly Scrooge is visited by the ghost of Jacob Marley

In the Beginning
After looking at many homes, this buyer and his wife ended up making an offer that had some ‘back and forth’ on the price, but it was ultimately accepted. Looking back at the transaction, there was never any indication to suggest this would be anything but a ‘normal’ home purchase. And everything was normal. Until after the transaction closed. Which is when things took a decidedly different turn.

Not very long after this buyer and his wife moved into their recently purchased home, they began to hear strange noises, usually in the middle of the night, like around 2 or 3 AM. But then things got much stranger.

The sounds they heard appeared to emanate from inside the house for no readily explainable reason. Sounds like dropped tableware, moving furniture, bells ringing. You get the idea. There was no reason for them to expect these sounds, yet they were apparently coming from inside the house and at odd hours.

After a while of having their sleep disturbed, the homebuyers grew concerned and began to ask around the neighborhood. “Do you hear strange sounds at night like we do?” After being told “No” by at least one neighbor, one neighbor asked if the homebuyers knew about the event that had occurred inside their home. The new owner said ‘No.’

Story specifics vary, but the neighbor apparently explained that a child had died inside the house and was then laid to rest on the property. Understandably, this distressed the home buyers, who thought they should have been told before buying the home.

After speaking with the home buyers, I next called the seller’s real estate agent for the transaction and simply asked: “Did you know that the property had a history of a death in the house? “Yes,” he quickly answered, then followed up with what I knew aligned with what Oregon real estate agents are instructed regarding state real estate law. “But my principal broker told me we didn’t have to disclose it.” And he was correct.

I also understood that particular Realtor’s fiduciary responsibility to his seller client; Because if the seller’s agent had openly revealed the situation while marketing it, there was a good chance the property would have sold for considerably less. Usually, the rule is ‘disclose, even if an item seems trivial.’ Yet in this instance, there was no state law requiring such disclosure and the seller had a vested interest in not bringing the issue up.

The Rest of the Story
As a result of the impact from their home purchase of the stigmatized home, the homebuyers moved and ultimately rented out the property. Witnessing this unpleasant situation had me researching to better determine what might have been done differently. At the time, there were no online resources solely dedicated to determining if a house is stigmatized. On top of that, repeated online searches eventually turned up one news story relating to the property. However, that was accomplished by a search using the specific house address and buried in a list of much other website information. It was virtually a ‘needle in a haystack.’

Oregon Real Estate-Stigmatized Property

Rules of Disclosure
Realtors are compelled to abide by real estate law. So what exactly is required by an Oregon real estate agent regarding stigmatized, or other ‘tainted’ property?  Oregon law states in Oregon Revised Statutes 93.275 the following excerpted incidents as among those considered not material to a real property transaction:

(a) The fact or suspicion that the real property or a neighboring property was the site of a death by violent crime, by suicide or by any other manner;

(b) The fact or suspicion that the real property or a neighboring property was the site of a crime, political activity, religious activity or any other act or occurrence that does not adversely affect the physical condition of or title to real property;

What’s Legal Vs. What’s Right
Was not disclosing such history the right thing to do, though? You be the judge. That’s where there is a divergence of opinion and it’s not always because someone is buying or selling a property. To some buyers, what has happened in the past within the four walls of a house, especially a death, matters. Other buyers may have a more practical perspective and and appear to be less bothered by property history.  Here is information on a court case where a buyer sued a homeseller who did not disclose stigmatizing details. As you will read there, there are two sides to the story of stigmatized properties.

Oregon Real Estate Podcast

And in an odd twist, some reports suggest properties located near a cemetery actually sell for considerably more money. As a result, there are diverse opinions on certain kinds of stigma. Take for example houses considered ‘haunted.’ A Realtor survey found that most people are open to purchasing a haunted house.

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Why Stigmatized Properties Are Different
One reason stigmatized properties are different is because they don’t affect everyone the same way. Another reason is because factors that stigmatize a property vary. Some are undeniably gruesome, like violent death, while other, more common stigmatizing factors have limited psychological affect, like bank foreclosure. Yet other stigmas, such as a former meth lab, are doubly troublesome, since they carry both a market stigma plus can render a property unfinanceable.

Another reason why stigmatized properties are uniquely different than usual issues, like say dry rot or a leaky roof, is that they frequently involve very human emotions. And when we consider what makes a home, where children are raised, birthdays and anniversaries are celebrated and many cherished memories are created, common sense dictates that a house should comport with the real estate concept of ‘quiet enjoyment,’ least of all being awakened at 3 AM to later be surprised with what has occurred in your own home.

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There’s a Website for That

So important is the issue of certain real estate stigmas that there are even websites for consumers to research for them. For example, homebuyers concerned about a possible death in a particular home can now search at websites like DiedInHouse.com in an effort to determine such information. However, be aware that this kind of online search may provide an incomplete portrayal of what you’re seeking.There are certain reliable websites, depending on what you’re seeking. For example, here is a link to the Drug Enforcement Administration’s meth lab registry.

Buyer Beware
Websites that purport to provide a report on stigmatized real estate typically charge a fee and they are certainly not foolproof. In fact, a recent test search of several confirmed ‘death houses’ in Oregon found no record in such a website dedicated to providing this kind of information. What these websites sometimes say in their results is that they ‘do not have any records’ of specific activity. Given my anecdotal ‘test searches’ of known locations where death, violent and otherwise did occur, yet where no records were located, appears to suggest such databases may be small, rarely updated, or otherwise inadequate.

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‘Buyer beware’

What’s A Buyer to Do?
First, understand limitations of Oregon real estate law. Certain real estate factors simply do not need to be disclosed.

Second, realize that websites claiming to provide information on stigmatized properties can be severely lacking. So if more fully determining a property’s stigmatization status is important to you, you may need to address this on your own in a variety of ways explained below.

Third, if you have a Realtor, family member or friend that is more ‘computer savvy’ than you are, have them perform some research for you. Regardless, some homebuyers may wish to work on this themselves.

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Researching a Stigmatized Property
It’s important to realize that a great deal of data may not be on the Internet, or easily found there. Yet that’s generally a fast way to get started. So if you have concern about possibly purchasing a property and want to see if there is information to be found, here’s one possible research approach:

Perform Internet searches using different search engines (Google, Bing, among others). Each time you search, type in the property address several different ways. For example, if there are many different pages that turn up for a specific address, try enclosing the search address using closed quotes.

One example might look like this: “123 E. Main Street, Portland, OR” and also “123 East Main Street, Portland, OR” along with several other methods, including spelling out the state and possibly leaving the word ‘street’ out altogether. Try also typing in a possibly related word in your search, like “123 E. Main Street, Portland OR” followed by the word “police” or “arrest” or “murder” or “crime” or “death.” Also realize that in certain counties and towns, the street direction is used AFTER the street name. So in Salem, the address might be “123 Main Street East, Salem, OR” along with other variations.

You get the idea. What you’re trying to do is determine any especially untoward activity associated with that specific house you may purchase. Other potentially effective ways to help determine more about a specific property regarding possible stigmatization is to ask the neighbors, or your local police department. 

What’s A Seller to Do?
Usually the best advice for homesellers is to ‘Disclose, disclose, disclose.’ Yet there are exceptions. For example, in Oregon it is illegal to disclose certain facts about a property.

Under Oregon law, neither the seller nor their agent is allowed to disclose that an owner or occupant of the real property has or had human immunodeficiency virus or acquired immune deficiency syndrome.

If you’re unsure about how disclosure requirements apply to your situation, it’s generally a good idea to consult your Realtor for more information and/or an attorney specializing in real estate law.

Do you have a real estate question? Contact Oregon Realtor Roy Widing using the convenient form below.

Posted in Meth House, Psychologically Tainted Home, Psychologically Tainted Real Estate, Stigmatized Properties, Stigmatized Property, Tainted House, Tainted Housing, Tainted Properties, Tainted Real Estate | Tagged , , , , , , , , , , | Leave a comment

5 Little-Known Oregon Real Estate ‘Insider’ Tips

Willamette Oregon Valley Real Estate Homes

Listen to this podcast episode by clicking the ‘play’ button below

Real Estate Confidential
As with any occupation, there are ‘insider tips’ in real estate. Exactly what are these little-discussed pointers and how can they benefit non-Realtors?
Ask a dozen real estate agents and you’re likely to get a dozen different answers. Yet the following perspective can provide insight into what are often little-known facets of residential real estate, whether you’re buying or selling. We’ll first briefly note why this little-known information can be important, then we’ll get to these 5 little known ‘insider tips.’ And since most real estate agents are Realtors, both terms will be used interchangeably here. 

Willamette Valley Oregon

Keep Your Quiver Well-Armed
Knowledge is power and in the hands of a trusted real estate professional, such power can be tremendously beneficial. For example, it’s helpful whether you need correct information to price your property right, or entrust transaction details to an agent while away when your home is for sale, or get solid recommendations for a truly good inspection, repair or mortgage firm. The ability to reliably depend upon a trusted Realtor to look out for your best interests regarding one of your most valued investments is a very good ‘arrow’ indeed to have in your ‘quiver.’ Having navigated ample real estate terrain, accomplished real estate agents are understandably ‘go to’ sources for good reason.

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On The Move
It’s difficult to be an expert on everything. As a result, consumers can feel vulnerable or even taken advantage of, given the sheer volume of knowledge needed to buy or sell real estate. Since Americans move on average about every half dozen years, it’s easy to get ‘rusty’ and not know what to be aware of when buying or selling a home. With that in mind, here are 5 ‘insider’ Realtor tips you may not have considered. 

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Double Agents Have Lots of Important Information

1. Having A ‘Double Agent’ Can Be A Good Thing
Few buyers and sellers think much about what is sometimes called ‘dual agency.’ This is when the listing (seller’s) Realtor also represents the buyer. There are possible pitfalls, but also significant advantages to dual agency. But let us first be clear: Any potential benefits of dual agency go out the window if an agent is either dishonest, or doesn’t work within ethical boundaries.

Why would buyers want to work with a dual agent? First, no agent is likely to know a property better than the listing agent, (the seller’s Realtor). Second, the listing agent is also likely to have a relationship, or at least some rapport with the seller. While this isn’t typically enough to get a poor offer accepted, having an agent who knows the seller could help a buyer ‘put their best foot forward’ in a competitive offer situation. Third, because offers are routed specifically through the listing (seller’s) Realtor, no offers usually come in that the seller’s agent is unaware of. For buyers, having a ‘heads up’ of other offer activity can also be useful.

Sellers can also benefit from dual agency by having their agent represent property details directly to the buyer with one less person in the communication loop, while also possibly having a clear understanding with the Realtor of what is expected in a transaction. Because the listing (seller’s) agent understands the seller’s needs, those needs may sometimes be better communicated to buyers represented by the same agent. So while there are possible downsides to dual agency, there can also be real advantages.

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2. Realtors Can Calculate Their Paycheck by Viewing a Property Listing Sheet
That’s right, virtually every property listed by a real estate agent in our region shows exactly what will be paid to the Realtor (and their real estate firm) whose buyer purchases it. So before an agent even shows a home, he or she can determine what they’ll be paid for selling it.

Commissions are typically ‘split’ between Realtors and their offices, so a buyer’s agent will usually get a portion of the commission shown in the multiple listing system. That figure is sometimes called the ‘buyer’s agent commission’ or BAC and can have dramatic implications.

That’s because real estate agents are salespeople and if they do not deem the promised commission as competitive, sellers may not see the same level of enthusiasm or showing response to their property. The point of a multiple listing system is to promote homes to buyers and their Realtors. Offering what’s considered a sub-standard commission to the buyer’s agent can tend to subvert the whole concept of attracting interest to sell it.

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Some Realtors ‘Jump Ship’ in Different Markets

3. Inventory-Induced ‘Ship Jumping’ 
Just as Realtors will help clients gain perspective by encouraging sellers to ‘put on their buyer’s hat’ and ask buyers to ‘put on their seller’s hat,’ now let’s ‘put on our Realtor’s hat.’

Assume there are few buyers and lots and lots of homes for sale, so buyers are in demand. What do some savvy real estate agents do? If it is a ‘buyer’s market,’ they work with buyers, the ones having considerable power in the situation. If there are few homes for sale, this means ‘listings are hot’ and controlling more property inventory by having more listed homes may provide Realtors a better income. As a result, some focused Realtors ‘jump ship,’ from working with buyers to sellers, or vice-versa, depending on the market.

Given such changing market dynamics, expert agents also routinely educate their clients on what to expect, depending on the kind of market they’re in. For example, being a seller in buyer’s market, or a buyer in a seller’s market requires more patience than when you have the advantage of having the market ‘on your side.’ Here’s a helpful article and podcast on buyer’s and seller’s markets.

Willamette Valley, Oregon Homes, Oregon Real Estate

4. Research is Key & Sites Like Zillow Can Be Wildly Inaccurate
A recent news article illustrates just how inaccurate online home estimate websites can be. The head of Zillow recently sold his home for approximately 40% less than the Zillow estimate, or Zestimate. This is one reason why some real estate agents roll their eyes when online home value estimates are mentioned. In accurately setting a selling price, it’s important to let your Realtor research truly comparable properties. Would you really expect similarly accurate results from a doctor who physically examines you, compared to a computer-generated exam?

For sellers, this frequently means closely examining key differences between your property, competing homes for sale and those that have actually sold. Location matters, living space matters and so does condition. And especially if your home is a best suited to a more experienced ‘second’ or ‘third time buyer,’ expect they’ll do their research and haven’t just fallen off a turnip truck. If possible, drive by properties deemed truly comparable and ask your Realtor questions if you don’t understand why your home is valued differently than you expect.  

It’s normal for sellers to believe that their property is ‘the best,’ or worth the most in the area. Yet one problem is not only convincing buyers, but if a bank is involved, convincing the lender-required appraiser, too. As part of that, it’s especially helpful to compare key specifics on home sales that are recent, local and truly comparable. Then if there are any significant differences between your home and sold comparable properties, they can at least be be more accurately adjusted for.

Otherwise, if your property has not sold by the time you exceed the average market time for your area and home type, buyers may begin to wonder ‘What’s wrong with it?’ and ‘Why hasn’t it sold?’ For example, buyers may even wonder if there is a crime problem, when maybe your neighborhood is the safest one around. There’s one other reason to consider pricing correctly using truly comparable properties, as we next examine the concept of ‘property history.’

Willamette Valley, Oregon Homes, Oregon Real Estate

5. Every Property Has a History
Believe it or not, there is a viewable history for any property entered into local Realtor multiple listing systems. With the touch of a button, a Realtor can know how long the property has been on the market, if it has expired from the market unsold (suggesting it was overpriced), if there have been price adjustments and if listing data has been changed. 

Even among properties that have not been sold for some time, a resourceful agent can use tax records and other data to determine what was paid for the home, among other information. This too can raise questions. Was the shop built with permits? Is the current use compliant with zoning regulations? You get the idea.

So if your property has been on the market significantly longer than other similar homes that have sold, expect buyer reluctance. It’s difficult to fool an agent who does their research and expert Realtors commonly provide buyers with a property’s history even before touring it. What this underscores is that it’s usually best to price where buyers will buy and where appraisers can appraise. Otherwise, expect few offers or the dreaded ‘sale-fail.’  

Thinking about selling your Oregon property? Contact expert Realtor Roy Widing using the convenient contact form below, or call him at 800-637-1950.

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