FinancePortland June 1, 2016

What Buyers Can Do to Get Ahead in a Seller’s Market

contractYou've no doubt heard that it's a hot real estate market here in Portland right now. Last week I wrote about how quickly everything is selling in Portland. When we talk about a hot market, though, we mean it's a hot time to sell. For buyers, though, it means more competition and, often, more difficulty. 

A lot of buyers are just not prepared for the challenges they'll face when they make their first offer in a market like this. They expect to be able to come in with a low-ball offer and take negotiations from there when the seller counters. But that's just not wise in a market where nearly every seller is seeing multiple offers for their property, often as soon as it hits the market. When they have lots of offers to choose from — I've seen properties get more than 15 offers several times in the last year — sellers are not going to bother negotiating with everyone. They're going to pick the offer they like best, maybe keep one or two as backups, and reject the others. 

It's important for you as a buyer to understand these conditions, so that when you are ready to write an offer, you have your best shot at getting it accepted. So what do you need?

  • PROOF OF FUNDS — Aboslutely the most important thing going into an offer is to have your finances figured out in advance. If you're paying cash, you'll need to prove you have the cash. If you're using a loan, you'll need a pre-approval letter. Have your lender provide you with pre-approval letters at several different price points, so that when you find what you want, you've got the pre-approval to submit with your offer immediately, and you don't have to rush to get something in writing from your lender before a tight deadline.
  • BE READY TO ACT — Houses are selling faster than ever right now. That means that you just don't have time to look at it on the internet, set an appointment to view it in two weeks when you're free, and then think about it for a couple more weeks. It will more than likely be long off the market by then. Know what you want, where you're willing to compromise, and if a listing comes up that interests you, check it out immediately. When you find something that fits your criteria, be ready to write your offer that day. You will have chances to back out if you get cold feet later, but you'll have a hard time getting a contract if you can't move quickly.
  • HIGHEST & BEST — Most sellers right now are not just considering the first offer they get. They'll set a window of time for potential buyers to see the house and submit offers, and they'll review them once they have several to choose from — they almost always do. If you really want to get the contract, you have to bring your very best offer immediately. Think of it this way: if you offer $450,000 for a house, but the winning bid is $460,000, are you going to wish you'd offered more? Then you should offer at least $460,000. If the winning bid is $465,000, now are you upset you didn't offer higher, or just sad that it ended up being out of your range? Find the top of what you'd be willing to pay, and write that into your offer. Remember that there are opportunities to negotiate further on price if something comes up during your inspection. 
  • LIMIT CONTINGENCIES — The fewer hurdles the seller has to clear to close the deal, the better. Is your offer contingent on selling another property first? Don't expect to beat an offer that can close immediately. Are you asking for the seller to cover closing costs? They're going to see how that affects the bottom line, and your purchase price offer has to be high enough to beat out a buyer who offers less but covers their own closing costs. I will never recommend to a client that they waive the inspection. Sellers are thrilled if you're willing to do that, but it's just too risky. If the seller needs you to waive the inspection in order to make the deal happen, I advise you to move on. This is not a place for compromise.


It's so easy to see what you think is the perfect house, and before you sign your offer, you're already envisioning your life there. Try not to get too attached. It's heartbreaking to miss out on a house you love, but in this market, buyers rarely win their first offer. Just remember that new houses are coming on the market every day, and as long as you follow the above guidelines, you will get something great. When you work with me, I'll guide you through the process, and I won't let you settle for something you don't love just because you're getting market fatigue. This is your home we're talking about! Hang in there, and it will be worth it when you sign those closing documents.

FinancePortland May 24, 2016

Portland Real Estate: Why It’s Not A Bubble

KGW recently reported that Portland has the fastest-rising home prices in the United States. Check out this graph representing Multnomah County. The line at the top is the average sold-price-to-asking-price percentage, and the bars represent days on the market. 


It's incredible! Days on the market — from listing to closing! — is averaging less than a month. And the average sale price — AVERAGE — is above the asking price. Houses in Portland are selling immediately, and they're selling above list price in nearly every case. It's hard not to wonder when this bubble will burst and the market will crash again. This momentum can't last forever, can it?

Well, the pace of growth probably will slow down eventually, but I'm confident this is NOT a bubble, and we're not headed for a crash anytime soon. Here's why:

  • Buyers are paying cash. Approximately one-quarter of all Portland home sales in 2015 were all-cash offers. When a buyer pays cash, there's no mortgage on which they risk defaulting. The house is paid for and the money is accounted for.
  • Mortgages are stronger and more secure than they were before the last crash. The last crash in the late 2000's was largely due to irresponsible lending and borrowing. Whether the banks paid fairly for their part in the crisis is up for debate, but they absolutely learned a lesson about making flimsy loans. And just in case they didn't, the government put new restrictions in place to ensure that future mortgages meet higher standards. The result is that it is more difficult to get a mortgage, but those who do qualify are sound borrowers — much less likely to default. 
  • Portland is the greatest city in the world, so of course it's growing. Okay, this last point is just my opinion rather than a strict fact, but it is an opinion shared by many! This is a great city, and even though prices are rising fast, the cost of living remains much lower than in many other big cities. 

As prices continue to rise, the growth momentum will probably slow somewhat, but this is not a market that's headed for a nosedive. We can expect it to level off at some point — no one can predict when, but based on current trends, that still seems a long time from now. But unlike the wild real estate market of 2005, 2006, the money is there to back up the purchases this time around. We're not going to see a big wave of foreclosures and short sales. At worst, there may be a plateau coming, where prices don't rise and the homes for sale stay on the market a little longer. 

If you're waiting to buy because you're expecting prices to drop, you'll likely be waiting a long time. This is no bubble.


Uncategorized October 20, 2014

The Importance of Pre-Approval

I would love to take you shopping for your next home — I can't wait, in fact, and I bet you're excited, too. But before you even start browsing the listings, you need to get pre-approved for your home loan. You've probably heard this from a thousand different sources, and it may seem like I'm beating a dead horse, but I cannot stress this enough — shopping for a home before you get your mortgage approved is a fast path to heartbreak. I know from experience. 

When I was shopping for my home two years ago, before I was a Realtor, I heard the same advice: GET PRE-APPROVED! But I ignored it like a chump, because I'd already bought homes before. My credit was established and I knew what I could afford. Can we just look at houses, please? Turns out, the market is a lot different than it was the last time I got a mortgage. I thought I was any bank's dream borrower — the banks thought otherwise. In fact, they wouldn't even consider me. Since the financial crisis, the banks have adopted some very tight requirements for loans — and I didn't meet them. I learned this only after I'd made an offer on a home to which I'd become quite attached. The seller had other offers and wasn't interested in waiting for me to come up with the money some other way. I didn't get the house. This is a truly heartbreaking experience, and I want to protect my clients from it. 

Even if you think you know what you can afford, verify it with your lending institution. The rules have probably changed since the last time you did this. The market is competitive right now. If you are going up against other buyers, you need to prove to the seller that you are able to close the deal. 

Call or email me if you have questions about getting pre-approved. I can refer you to a mortgage broker who will help you get all your ducks in a row before you start shopping. Then when you find the home you want, we can write an offer and move forward swiftly.