Real Estate Talk Blog for the Willamette Valley

Regardless of the transaction, whether working with a buyer or a seller...the conversation always comes around to NEGOTIATION!

Buyers want to figure out how low they can go and not alienate the seller...

Sellers want to get the best price they can, but not lose a solid buyer (who may have thrown a low-ball offer)

Everyone wants to negotiate!  And $300,000 real estate deals have fallen apart over less than 1% of the purchase price! 

Here are 2 quick tips for developing your successful negotiating strategy:

(1) Keep it in perspective as a BUSINESS decision...and don't let emotion rule the day. 
     * As a seller you should never be so "offended" by a low-ball offer that you shut the door completely (that doesn't mean you shouldn't sometimes say "no thanks" but don't do it because of the EMOTIONAL component).  If the bottom line allows you to do whatever it is you want to do next (move, buy your dream home...) don't get hung up because it "isn't as much as you wanted." 
    * As a buyer, don't "fall so in love" with a house so that you'll do whatever it takes not to lose it.  Focus on the realistic budget that you set up with your lender at the outset...and if you pay more than you budgeted, do it because it was the RATIONAL thing to do.

(2) Look for Win-Win (or Win-win) vice Win-Lose.  There are often compromises on elements of the contract (OTHER THAN PRICE) that have just as big an impact on getting to an agreement.  Contingencies, closing dates, Home Warranty, included personal property....These items could off set a low offer, or justify a higher one. 

What are YOUR thoughts?  I'd love to hear your comments on this.

This market update is an excerpt from "Real Estate Talk with Dave Pautsch" which airs every Saturday morning from 10-11 am on KGAL 1580.  It is the mid-Willamette Valley's ONLY live, local, real estate resource on the radio.  Wherever YOU are in the real estate lifecycle, buyer, seller, or home owner, listen to Real Estate Talk.

Market Update for 31 March 2007

The big picture for the mid-Valley:
511 current active residential listings.
The total value of the active inventory is just under 145 MILLION dollars, with an average price of $283,000.

• By area:
  Corvallis
• 110 active listings - average price of $366,600
• 68 homes are priced at or above $275,000
• 40 homes between $175 and 275,000
• 2 homes priced less than $175,000.
• Since 1 January 2007 95 residential sales have closed - average price of $298,000
• Average dollar per square foot $160
• Average pace -109 days.
• Current Months of Inventory: 3.02 months of inventory, suggesting a fairly strong seller’s market is still in running.

Albany

• 290 active listings - average price of $267,000
• 98 homes at or above $275,000
• 144 homes between $175 and 275,000
• 48 homes priced below $175,000
• Since January 1 2007 179 residential sales have closed - average sales price of 205,300 dollars
• Average dollar per square foot $127
• Average pace - 137 days.
• Current Months of Inventory: 6.4 months of inventory, right at the tipping point of a buyer’s market.

Lebanon

• 110 active listings - average price is $236,500.
• 29 homes greater than $275,000
• 40 homes between $175 and 275,000
• 41 homes less than $175,000
• Since January 1, 2007 - 57 closed sales and an average sale price of almost $152,000
• Average $116 per square foot.
• Average pace - 101 days.
• Current Months of Inventory - 3.3 months of inventory, suggesting a strong seller’s market

.

Dave Pautsch, REALTOR®, MBA, CSP
Conser Realty & Associates
1010 Airport Rd SE Albany, OR
Office: (541) 791-9310
Cell: (541) 990-9368
dave@conserrealty.com
www.DavePautschRealEstate.com

Ok, I saw the talking heads on FoxNews this morning going on about "What will the value of your home be 1 year from now?"

It was interesting that these folks couldn't come to any real agreement around the table.  It occured to me that some perspective was in order.

1. Biggest impact of a general tightening of sub-prime loans...fewer people will qualify for loans...less buyers.  How many fewer?  Hard to say!

2. Less first time home buyers...the impact is seen in 2 areas; (a) harder for move up buyers to sell their homes in order to 'move up.' (b) impact on demand for rental units...hey they have to live somewhere, right?  Overall, the market could slow, especially when you consider a likely increase in "contingency" sales.

3. If the local economy is growing and new jobs are being created (like here in the Willamette Valley)...relocation brings in buyers that keep the market moving on pace (at least at the price point at which the bulk of them are entering the market).

4. The past 5 to 6 years of boom in the housing market have created large amounts of equity for those who bought some time ago.  Average 10% appreciation per year in each of the past 5 years is NOT wiped away by one (or even two) years of average 3% losses.  Home owners still have equity and they won't LOSE money on real estate; they just won't make AS MUCH...its like stocks, you don't lose money until you cash out at a price below what you bought it...and that ain't gonna happen here in the near future!

5. Some of those smart home owners in #4 above are going to see this as a BUYING OPPORTUNITY and use the equity in their homes to buy smaller rental units (see #2 above).  When the market recovers, could it be that they are going to make money twice as fast!

Summary.  I don't have a crystal ball.  There are too many factors to consider at this point (like what is going to happen with interest rates?...is the economy going to continue on the same trajectory?)...but the point is that KNOWLEDGE IS POWER!  If you have a plan, and maintain your ties to the information you stand a good chance of being successful in the housing market.  You have to make smart decisions based on solid information, don't gamble! 

Best advice on this subject comes from David Crook (WSJ Complete Real Estate Investing Guidebook)...get professionals on your team!

Have a great day!

We've been on the air for a little over 3 months...every Saturday morning talking REAL ESTATE on the radio (NewsTalk 1580 KGAL).  I have had fellow REALTORS® on the show, Escrow Officers, Lenders...as well as Interior Designers and a Landscape Architect.

The show is designed to provide an educational resource to the mid-Willamette Valley on the topic of Real Estate and you know what, even I learn something new each week. 

Today, I had Marcy Taisey from Fidelity National Title Company on talking about escrow, title, and closing from the Seller point of view.  I was pretty familiar with the topic (obviously)...and we were having a great give and take discussion when she tossed out this fact:

If you have a seller that cannot be present for the signing you have a couple of options (and some require advance planning)

1. Arrange for a Specific Power of Attorney for the sale of that property
2. Make arrangements for a "Courtesy Signing" where they are (could cost you $150 or so...)...so much for coutesy, eh?
3. Have the Escrow office arrange for a certified / bonded notary service to take the papers to THEM (cost - around $100)
4. *With a little research I found yet another option.  You may be able to have the papers sent to a local BANK and have them notarize it for you.

 Plan ahead...but it CAN be done!

Have a great day.

Dave

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Let me begin this blog with apologies to the authors of "The Secret" as I admit that I haven't read it, nor seen the video.

My wife (the beautiful blonde who must be obeyed!) has saved on our DVR the Oprah show about "The Secret" and has told me that I must watch it...(My secret...Happy wife = Happy life!) so I have promised that I will do just that.  But I asked her to tell me about it and she did.

Not wishing to question her overview, it seemed to me like this was a new and updated version of "The Power of Positive Thinking" (Norman Vincent Peale), and I have to say that I embrace this 100%.  But it occured to me that it wasn't much of a secret.  I'd like to think that I have lived most of my life this way.

I spent 23 years on active duty in the Navy.  I served on 5 ships and, as I look back at them it has always struck me that I enjoyed each tour.  I learned something while there, I met some amazing people...but I know people who, on the same ship at the same time, thought it the worst one in the Navy!  What was the difference?  I'd like to think it was in our perspective and our outlook...embracing where we were (or not).  So much of our reality is what we choose to make it.

Ok, what does all this have to do with real estate you ask?

From my perspective, the Secret (and again, I have not read the book) lies in believing that you are going to be successful by doing your best to HELP other people achieve their goals.  And, with a tip of the hat to Suze Orman, I try to stay focused on the PEOPLE first, Money second, and things last of all.

If you are in the process of hiring a real estate agent to help you, whether buying, or selling a home...you should be certain that they are professionally competent (of course), but you should also make sure that you are working with someone you LIKE and TRUST!  You should find someone who is trying to help you achieve YOUR goals. 

Have a great day!

What in the world was I thinking?  After 23 years in the Navy I decided to become a REALTOR®.  Could there BE two different professions?  More importantly, how do I take the years of driving ships and shooting 5" guns and find the right skills to be in SALES????

That was a year and a half ago.  I took my license exam, paid for my MLS membership, my NAR, OAR, and WAOR memberships (That is the National, Oregon, and Willamette Valley Association(s) of REALTORS®.) 

The next three months were almost like the great paradox of job hunting when I graduated from college many moons ago...People want to hire an experienced agent; how do I become an experienced agent if no one will hire me?

That was when I figured it out.  The 3 things that led to my pretty successful 1st year in this profession.

1. A successful career in real estate is NOT a career in SALES!  It is a career in customer service and problem solving.
2. People FIRST!  If you do that, the money will come, but if you put MONEY first, they will never come back.
3. There is LIFE AFTER Real Estate (I heard this over and over again from one of the great agents in my office.  It means you have to have balance and that living your life is more important and fulfilling if it isn't all about real estate 24/7)

I spent the majority of this year learning what it takes to get a real estate transaction CLOSED.  There are plenty of professionals in this industry (and all those that touch us; home inspectors, escrow officers, lenders, etc...) but there are also some folks who are still (or who have STOPPED) learning.  You have to ask a lot of questions, follow up, keep pressing people for information...and tell the good ones how much you appreciate their hard work.

Being a real estate professional is one of the most rewarding challenges I have ever taken on.  The positive feeling of helping someone buy their first home...or get their home sold so they can move...nothing beats it!

If you are thinking of getting into this crazy profession (and we are adding another 20 REALTOR® this month, so lots of you must be...I wish you good luck.  Find a good mentor, a positive environment to work in, and invest yourself in becoming a professional.  Keep it in perspective though, because if you aren't having fun, you are in the wrong line of work!

We did a 5 part series on the radio show recently, focusing on First Time Home Buyers.  I wanted to just capture three things to pass on to each of you.

3 Things buyers should never do.

(1) Never knock on the door of a home with a Real Estate Agent's FOR SALE sign in the yard.  You should call YOUR agent to have them set up a showing.  If you aren't working with an agent already, you can call the agent on the sign (but remember, they do work for the SELLER)...but you should not disturb the home owner.  They listed with a REALTOR for a reason.

(2) Never give away your negotiating position.  Buyers do this in a number of ways, mostly innocently enough.  If you do have the occasion to be talking to the seller, or the seller's agent, don't volunteer information like "your need to find a home right away" or "we're qualified to $300,000, but we only want to spend $250,000."  This is one of the best reasons to let your Agent do the talking for you. It's my job as a REALTOR to help you negotiate, and to keep your confidences. 

(3) Never give up the right to a home inspection.  I recommend to my clients that they ALWAYS have the home inspected by a qualified (and recommended) inspector.  Even in new construction there could be problems that you want identified before you sign on the dotted line.  Consider the cost of an inspection an investment; $400 could save you $20,000 in repairs and headaches!

Listen to Real Estate Talk every Saturday from 10-11 AM on NewsTalk 1580 KGAL (Albany, Lebanon, Corvallis).

Here is some information from my good friend Scott Foss at Pinnacle Mortgage.  It should serve as a warning to all of us...I'm calling the Opt Out number tomorrow myself!

Here's a reality check. You sit down with your Trusted Mortgage Lender on Monday morning. Your lender pulls your credit report and you sign your loan application, confident in the knowledge that your lender has your best interests at heart. By the next morning the three national Credit Reporting Agencies have compiled a list of the previous days credit inquiries specific to mortgages.

That list is called a "Mortgage Trigger List," and is sold to lead generation companies before the end of the day. Consumers may then get a flurry of calls from other lenders trying to steal the loan. The lender you sat down with the day before did not sell your information, but it is now out there for unscrupulous lenders to use. This process is called "Prescreening," and is unfortunately not illegal.

There is a way to opt out. Consumers can opt out of being included in target trigger lists for 5 years or permanently by calling 1-800-5-OPTOUT (1-888-567-8688) or by visiting www.optoutprescreen.com. Credit Reporting Agencies have 5 days to process a consumers request to opt out, so your trusted lender may advise that it is prudent to wait 5 days to pull your credit report and help protect your privacy. This may also help reduce unwanted junk mail that is also triggered by these lists.

In any set of market conditions, getting the price right is the NUMBER 1 component of getting your home sold.  My thoughts on pricing a home relies on (1) Good research, (2) Good analysis, and (3) Good strategy. 

When I help a client choose the right price for their home I bring all the data I can find. 

• I look at SOLD comparables to provide us with the rational view of where the market HAS BEEN. 
• I also point out that the SOLD comparables are the ones that the appraisers are going to be using, so they help to ground us in reality. 
• I use the CURRENT ACTIVE listings to show what the market is doing.  Especially if you have a property that is a little unique, and there aren't many direct comparables, you have to include the active market to get a view of likely appreciation in the short term.  I also look at ACTIVE's in terms of the competition, but that discussion comes later on.
• Lastly, I bring in the EXPIRED listings to show them what happens to overpriced homes. 

The analysis of these numbers gives my client a range in which I think their house could sell.  We then have a discussion on what their strategy is (or needs to be).  If there is a sense of urgency then we might price slightly below the most comparable ACTIVE listings.  If they have the luxury of time (I have one client who is having a house built and doesn't need to get it sold for a few months) we  might look at the upper end of the range, and let the market catch us.

The final component in pricing is the mechanical and emotional thresholds of the "most likely pool of buyers."  What I mean by this is, once we have identified who the most likely buyers are (is this a home for older couples, young families with kids, investors/flippers...) this gives us insights into income levels, media mix for marketing, and lots more...It also gives us an idea of the mechanical stops on search engines like Realtor.com (from the pull-down menus - where they are likely to be searching) as well as the emotional stops (the difference between $230,000 and $229,900).

Any pricing strategy has to look at the broad scope of data, thoroughly analyzed, and put into the perspective that helps the seller best accomplish their goals.  My job in all this is to conduct the research, handle the analysis, and educate and coach my client to make a good decision.

Thanks.

Dave

As a professional, it is important to me that I respect the relationships of the others in my field. 

But I believe that many consumers don't really understand this, and inadvertently put us in uncomfortable, and sometimes contentious situations.

When I am working at an Open House in our builder's neighborhood there are numerous walk-ins who want to see the models.  Always happy to show off our excellent homes, I also do my best to create a rapport and determine if I an help these people.  One of the first questions I always ask is "Are you working with a REALTOR?"  If the answer is "Yes" then I will continue to provide all the information they need, but will recommend that they contact their agent.  In many cases, I'll even call their agent to let them know they've been looking without them.  *One note here, there is nothing more frustrating than an agent who "sends" their clients to see Open Houses and doesn't come along!  That is just plain lazy (IMHO)!

My friends, you won't believe the number of times that I've been told "No, we aren't working with anyone," only to see these folks (that I may have spent an hour or more with) a few days later with an agent...coming BACK to look at the homes.

One agent in our office had a young couple call the office and ask about a home that was for sale (NOT one of our listings, but a re-sale in one of our neighborhoods).  She made an appointment to show them the home, and when they arrived, they came with their agents!  You can't imagine the disappointment, and the level of discomfort for everyone involved.

What can you as a consumer do to avoid this very uncomfortable situation? 

 If you have been looking at homes with an agent, regardless of whether or not you have signed a "Buyer's Agency Agreement" you should really be loyal to that person.  They have spent time and effort on your behalf, in good faith, and won't get reimbursed for it unless they successfully help you find a home. More importantly, they are often quite hurt by what they consider a betrayal...many of us focus on relationships first in this crazy business.

At this point, please don't call other agents off their "For Sale" signs.  If you find a home that you'd like to see...call your agent and they can arrange a showing. 

Sometimes you might feel like you've gotten "tangled up" with an agent who you really don't want to work with, but who keeps in contact and continues to provide information...trust me, they THINK they are working with you!  In this very competitive field we are all actively working to get and keep new clients.  As hard as it might be, you need to let them know you don't want them to be your representative.  It's the ony fair thing to do.

The bottom line is that you, as the consumer should find an agent that you LIKE, that you TRUST, and that will work hard for you.  Once you do, please give them your loyalty.

As long as I have been in this business, I continue to learn new things every day.  As I come across something in my day to day life, I'll take the time to try and pass it on to you here.

For example, I was working with some first time home buyers recently.  We found the home they wanted and they were ready to make an offer.  They had talked to 2 or 3 different lenders and decided on one particular one based mostly on the rate.

When it came to closing they realized that there had been a misunderstanding about IMPOUND accounts and that their loan was being set up without including any reserves for taxes and insurance.  They were going to have to set money aside each month...they hadn't planned on that and asked the lender to fix it...CAN YOU BELIEVE IT...he said, 'no.'  They called me and I was able to convince the lender that it was something that he really needed to do!  Docs were redrawn and overnighted and we closed on time...luckily and thanks to this guy's assistant (not him).

Lesson learned...Just because you've told someone what you want you can't ASSUME they followed through.  Check the paperwork, ask lots of questions, and make sure that you are getting what you THINK you are getting. 

Second lesson learned.  I know a couple of mortgage professionals whom I have worked with and who I know that I can count on.  They put their customers first...next time, maybe I'll be a little more persuasive in urging my clients to look at the whole picture...not just the rate...when choosing a lender.  Rates can almost ALWAYS be matched, but customer service can't.

Have a great day.

Each week I put together a market update for my radio show - Real Estate Talk - on 1580 KGAL.  I thought I would start my blog by providing the information to everyone...not just those of you fortunate enough to hear the BEST real estate focused radio show in the mid valley...OK...its the ONLY one but hey.

Statistics for February 2007

Lebanon

23 SOLD
   15 < $175,000
    7 - 175 and 275,000
    1 > $275,000
6 Pending or Contingent
Average sale price $174,900
Average Days on the Market 110
25 new ACTIVE listings (141 total active listings) - average list price of $189,000.

Corvallis

33 SOLD
   2 < $175,000
  10 - $175 – 275,000
  21 > $275,000
11 Pending or Contingent
Average sale price $330,700
Average days on the Market – 121
30 new ACTIVE listings (121 total active listings) – average list price of 308,000

Albany

48 SOLD
   20 < $175,000
   22 - $175 – 275,000
    6 > $275,000
24 Pending or Contingent
Average sale price $197,000
Average days on the market – 150
86 new ACTIVE listings (296 total active listings) – average price $235,000