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Sniffing Out Some of the Best Investment Properties

by Marc Fox

When promising investment properties are well-promoted, you can count on them drawing a crowd. Why wouldn’t they? Investment properties that perform well are like money machines: put in a quarter, get back a quarter and a nickel (and another nickel, and another, and another…). What’s not to like?

But not all investment properties are well-promoted. There can be any number of reasons why, but the bottom line is that some of the best ones are hard to sniff out. In that case, they may take a “Bird Dog” to discover.  

Ask any hunter about the value of a good bird dog, and you’ll get an earful. Those canine sleuths use their highly-evolved senses to locate and retrieve the quarry—even when it is all but invisible to their human companions. Without a good bird dog, hunters would be the ones thrashing through swamp and forest to find supper.

In the world of investment properties, the counterpart is the real estate Bird Dog. Like the hunter, real estate investors highly prize a quality bird dog. They may not bring back a duck or pheasant, but the distressed and undervalued real estate that they locate can be orders of magnitude more lucrative.

If you’re thinking of scouting the promising investment properties, a few things about real estate Bird Dogs…and the “woods” they hunt in…may be of interest:

Investopedia offers the most concise definition. It says that a Bird Dog (also known as a ‘deal scout’), finds distressed property deals for a real estate investor and gets paid a referral fee according to the terms of their agreement.   

-  One of the mistaken assumptions that first time investors frequently make is to believe that simply finding property on the local MLS is all that’s needed. Although that can be the case, since everyone else seeking investment properties also has access to MLS, the most promising listings usually draw a crowd of competitors. You need to be able to find deals that every other buyer isn’t privy to. 

-  Success can depend on understanding the historical criteria that have worked best for investment properties that fall within your budget range. Maybe you should target multi-unit properties, or maybe the most lucrative investment properties will be mid-range residential homes. Some investors should be looking for rundown properties to rehabilitate, whereas others might most usefully be scouting out investment properties that are in better condition but with motivated sellers.

For new investors or those with limited capital, thinking like a real estate Bird Dog will put you ahead in the hunt for the most lucrative investment properties. Even better is working with your own real estate bird dog who can source quality deals—and save you a lot of time!

Many people assume that when the kids leave home, their newly empty nest automatically signals that downsizing into a smaller house or condo is the next step. In truth, for such families, downsizing is a common option—one that could very well be the best choice.  But, as the old Gershwin tune says, “it ain’t necessarily so...”

For many of us, once we establish a firm direction in life, a lot of decisions are more or less made without much hesitation. Career, family, and even community needs head us in certain directions, so a lot of choices are obvious. Every once in a while the paths open up, and it’s time to take a breath, clear the head, and realize that there may be a lot more freedom to change course than we are used to. When the downsizing idea bobs to the surface, it’s likely to signal such a turning point. That’s when it’s your true interests and passions should govern your next step—especially with respect to your residential options, which will shape much of what happens next. If this summer you find yourself musing about downsizing, it might be fun to also consider:

Upsize:  It sounds backwards: moving into a larger home with your smaller family. Yet if you have special interests or hobbies that have always called for a lot of elbow room, this could be the chance to add a workshop, rehearsal space, or studio that you’ve never quite been able to wangle. A larger home can also provide extra space you may need to accommodate the rest of the family when they come for a visit (especially if that family is going to be growing!).

Follow your heart: Have you always wanted to live near water, or wake up to a view that looks like it belongs on a magazine cover? Maybe you’d like to move close to a totally new metro area with museums, shows and restaurants you’ve never been able to explore before. Or perhaps it’s a planned community that suddenly doesn’t look so much like a refuge for ‘old people’ as a place that’s loaded with bustling sporting and cultural activities...or a development built around a golf course…or winter sports complex. Downsizing may be able to deliver on your ideal dream refuge…or maybe it beckons from far away. It might involve downsizing, or upsizing, or same-sizing!

Splurge a little: With the children gone, it may also be time for some guilt-free indulging. A luxury home or condo could include some amenities you’ve always wanted: a swimming pool or home spa—or classic architecture set in a storybook garden. Downsizing by Selling the family home and claiming a smaller but more upscale residence might also be a way you wind up claiming the home of your dreams.

Of course, many considerations will go into choosing your next home. As an experienced real estate professional, I’m here to help guide you through the process of Selling and/or Buying, and depending where your move takes you, I can very likely help with referrals there as well. If and when the pull to downsizing strikes, I’m here to discuss all the many possibilities!

How to Find the Right Realtor

by Marc Fox

When you set about Buying a house, you will have already taken as a given that this will be among the most expensive purchases you will ever make. It’s going to be your house on the line; you’ll want to make sure you have the top resources in your arsenal. Chief among them will be having a Realtor® who understands your goals, respects your bottom line—and who sees the joint goal the way you do: recognizing the right properties when they become available, and helping to remove any and all obstacles to securing it. Just how will you recognize the Realtor® who fits the bill?

Who Do You Know?

The right Realtor knows every leading vendor in the business and can introduce you to as a valued client. Need an inspector, attorney, or maybe a floor guy to price out staining the hardwood? The right Realtor will know the key players at every step, and will be able to get the facts and inside scoop to help you sound out the right decisions. Often you’ll be presented with multiple options for each resource so you’ll be sure you have a vetted group of experts to choose from.

What am I Looking For?

The right Realtor will interview you to pin down as closely as possible which of your goals are must-haves…and which want-to-haves. Before long, your Realtor will understand instinctively what matters to you, how that translates to the current listings; and even how it matches inventory that’s waiting in the wings. If you’re a first-time homebuyer, you’re likely to find that the right Realtor will answer some of your questions even before you know what to ask! 

How Can I Reach You?

If you’ve ever had trouble—real trouble—reaching an agent, you’ll appreciate that a great Realtor has not only excellent communication skills, but back-up systems in place to be quickly available for questions, showings and negotiations. So make sure you ask all Realtor candidates how she or he plans to field last-minute or urgent requests.

The right Realtor will always demonstrate having your best interests at heart—from the first home viewing to the day you close. If you’re interviewing Realtors in the Portland Metro area to help with either Buying or Selling a home, I’d love to show you what my team and I can accomplish for you!

Selling a Home Means Recruiting a Skilled Team

by Marc Fox

Selling your home can be a bit complicated. Although you can make a case for the feasibility of doing the whole thing yourself, there are enough areas of knowledge where experience, expertise, and even licensure are recommended that few would ever try it.

At the end of the day, Selling a home is a true team undertaking. And you’re the one selling a home, so you’re Captain. In addition to interviewing and selecting the real estate agent you will be working with, there are other professionals you should plan to engage as well. Here’s who and why:

The Inspector

It’s quite a good idea to have a professional inspection performed at your property before Selling a home. In addition to any major issues that could affect your smartest listing price, you want to be made aware of any minor issues before buyers come across them. Sometimes small details that are easy to fix can upset timing and even derail a deal entirely.

The Appraiser

As a seller, you shouldn’t try to value your property blindly. To do so runs the risk of over- or undervaluing it—and a smart listing price is a key element in the successful Selling of a home. Your agent will give you key guidance on pricing. However, having a professional appraisal performed in advance can help support your price to potential buyers (especially if you are asking a high number that could be difficult to otherwise support). While the buyer’s bank will require their own appraisal, the money spent here in advance can help speed up the offer and/or negotiations.

Financial Advisor

The most difficult part of Selling a home is finding and attracting a serious buyer. Fortunately, this is a burden your real estate agent will shoulder for you. But before everyone has signed on the dotted line, it’s important to understand what the financial and tax implications will be once you’ve sold. If you have gains, you want to know how much—if any—tax burden it will trigger. If there is a loss, you’ll want to know how to turn that to your advantage. Either way, knowing the tax implications before you list may well affect the price you list at or will accept.

Thinking of Buying or Selling a home in soon? Why not come by or give me a call? I’ll be here at the office, working hard for my clients all summer.

Good News for Some FHA Applicants with Foreclosures

by Marc Fox

There is encouraging news for some prospective homeowners with a foreclosure in their recent past: more common sense seems to have entered the picture.

The financial crisis that began in 2007 caused global disarray: across the U.S. (and the Portland Metro area was no exception), large numbers of responsible homeowners were clobbered by the fallout, often finding their incomes suddenly reduced or even obliterated as business cutbacks and closings reverberated through the economy.

The Portland foreclosure rate jumped as a direct result—and it’s taken quite a while for the effects of that to work through the system. But even after the economy has resumed something like normal activity, more than a few local residents have found themselves having to deal with how a foreclosure on their record dims their home ownership prospects.

Even if the reason for the foreclosure was due to circumstances beyond their control—and even if they had recovered enough to now be able to service a home loan—many found that qualifying for a mortgage with reasonable terms was difficult to impossible. That was bad for everyone, and the effect on the market was such that the Federal Housing Administration decided to address the problem in specific situations. For those who qualify, it can make the availability of a normal home loan newly possible.

 The idea was to enable FHA backing for borrowers who could show that their foreclosure or bankruptcy was caused by external economic factors. With few exceptions, borrowers had not previously been eligible for an FHA loan until two or three years after a foreclosure. Exceptions to that rule were granted only if the death of a spouse or medical emergency had caused the forfeiture: now “loss of income” was added as an extenuating circumstance.

 It means a much swifter rehabilitation. For those who can demonstrate that a job loss, pay cut, or decline in business income caused their foreclosure, the previous years-long waiting period may be waived. There are other details that can affect any individual applicant’s eligibility. The guideline change is temporary, but overall the recognition that the Great Recession was the true cause of many foreclosures does seem to be a fair accommodation.

In the wake of a foreclosure, you’d expect it to take more work to arrange a new home loan, and that’s the case. But the good news is that for those who qualify under the widened eligibility guidelines, they are increasingly likely to be able to obtain a new home loan—even following a recent foreclosure. Whether or not that is your situation, if you’re looking to buy a home this summer, step one is to get pre-qualified. 

Last year comprised a decision point for many a local investor who had been holding back from the real estate market. There’d been a number of good reasons for them to hesitate.

First, there were memories of the pervasive price drops that followed the global financial meltdown. Not exactly what a prudent investor was looking for—even given the real estate’s traditionally invincible long-term record. Then there were fears that the economy’s slow reverse out of the Great Recession (a term that was in itself enough to freeze many a checkbook!) would hamper apartment and single family unit rental increases. A landlord could get squeezed by inflation…if there were any inflation…who could know for sure?

But as 2013 began, some positives that were at last beginning to provide a degree of optimism. Last year’s real estate investment decision was looking a little less risky when the historically low mortgage loan rates were taken into account. They penciled out to what looked like a potentially rosy cash flow outlook. And even the more hesitant investors had been noticing for a while how institutions had been pouring their own cash into residential real estate—you had to wonder why so many of the larger investment concerns suddenly seemed to want to become local landlords…

Now we can look back at 2013 and realize what a fantastic year it was for a real estate investment. First, there was the rise in real estate prices, which was nationwide. According to the S&P Case-Shiller Index, U.S. real estate prices increased 11.3%—the highest rate of increase in many years. By the end of the year, website Zillow was predicting that the rise would continue through 2014 at a steady (and less superheated) rate. That tempering was attributed to the gradual rise in still-low mortgage interest rates—and to the inevitable fact that the most extreme bargain properties had been snapped up.

 The latest news on multi-family dwellings shows that fears of inflation outpacing landlords’ ability to increase rents were exaggerated (to say the least). National research firm Reis has just reported that for the 12-month period ending in June, rents rose 3.4%—the 18th consecutive quarter of rent increases! “You have definitely seen the recovery now spread to all of the major markets around the country,” according to Reis economist Ryan Severino. Single-family home rentals are on the rise also. According to Zillow’s latest Year-over-Year Rent Index, “increase renter demand is driving rental appreciation” even though rent affordability continues to be low in terms of percentage of incomes.

What does this mean for today’s investor deciding whether to enter the real estate market? That’s always a choice individuals make for themselves—although, as a not-entirely neutral observer I tend to side with landlords throughout the ages whose reliable backstop has always been the real estate “they aren’t making any more of.” One thing is for certain: checking out the values to be found in this summer’s real estate offerings is the only sure way to gauge the opportunities that are out there. 

For Sale by Owner: the Top 5 Challenges

by Marc Fox

When you determine to sell your house, one of the first choices that comes up is tactical: do you try to sell it yourself as a “For Sale by Owner” property—or do you enlist a real estate agent? Since your object is to maximize your profit, you might think that most thrift-minded home owners would decide to eliminate the agent’s commission and do the work themselves. But that’s not the case.

The majority of sellers ultimately team up with a real estate agent. Sometimes they go the For Sale by Owner route first, but after testing that method, change courses. The statistics show that the Selling price of Realtor®-assisted home sales is higher (a $40,000 difference, according to the latest study) which certainly would explain part of the reason. But other factors come into play, too:

  1. 1.                        Pricing:   If you aren’t immersed in Portland’s real estate business five to seven days a week, there’s no way you can have the intimate knowledge about the current market that comes with daily work in the field. A real estate agent comes armed with extensive knowledge of the local market and all the changes that have brought it about. It’s extremely important to price your home correctly to sell it on the first go-round. It’s a demonstrated fact that the longer a home sits on the market, the lower its final sale price. 
  2. 2.                        Time and Energy:   A For Sale by Owner sign in the front yard means you are in charge, 24/7! That’s despite any other demands on your time—for example, your job! One of the benefits of using a real estate pro is that Selling your property is our singular focus: our job! It means marketing, networking, working with buyers. Doing whatever it takes to get your house sold is our first priority. Lacking the same kind of time and resources, a For Sale by Owner seller is at a clear disadvantage in the competition to sell houses. It’s a marketplace where one missed buyer can mean the difference between a listing that turns into a sale…and a listing that turns stale.
  3. 3.                        Objectivity:   The house is yours: you designed or decorated it; you’ve fixed and painted and mowed and swept it. If you took your work seriously, you feel at least some pride in how it’s presented. Unfortunately, that’s a problem. Lacking objectivity in the sales milieu can be one of the biggest hindrances to actually Selling your house. It makes it hard for you to negotiate—to see and acknowledge the flaws a buyer sees. And it can make buyers wary of even wanting to negotiate with you in the first place. Either factor can prove costly. Separating owner from sales agent opens communication. It’s a relief for everyone!
  4. 4.                        Paperwork:   This is the most obvious point. If you choose to wade into the paperwork/deadline process yourself, you’d be wise to count on needing a bit of extra attention from a good real estate attorney—if only to avoid potential litigation down the line.
  5. 5.                        Security:   It’s unfortunate, but putting your house up For Sale by Owner in the Portland Metro area (or anywhere) can make you a target. Less-than-honest folks are out there—creeps who may specialize in sellers who might not follow the proper measures for letting people into their homes.

If you are looking into Selling your own home this summer, I’d like to offer you a complimentary property evaluation. Whether or not you decide to go the “For Sale by Owner” route, it’s sure to be well worth discussing what to expect from today’s market!

Home Buyer Strategies When Bidding Wars Break Out

by Marc Fox

Wasn’t it just yesterday that we seemed locked into a classic home buyer’s market in Portland? Bad economy, bad job numbers, tanked real estate values were all we heard about…until it eventually shifted. Over the past two years, it’s become a very different landscape. If you’ve been out looking to become a home buyer, it’s possible that you’ve found yourself putting in offers on multiple houses…and also possibly watching from the sidelines as another buyer walked away with a deal. If this isn’t a true seller’s market, to you the difference may not be apparent.

In any case, when a prospective home buyer finds themselves vying for one of the plum homes that are now appearing in this summer’s listings, there’s no need to passively watch as others get the nod. If you are sure of the value of the property you are going for, there are straightforward tactics for improving your chances of winning the day:

-          Offering at or above list price is the time-tested way to give you the best shot of getting your contract accepted over bidders who offer less than list. Real estate prices are again on the rise, increasing your likelihood of being able to recoup the extra money if you decide to sell several years down the road. Look at the comps with your agent to determine what an aggressive—yet realistic price—will be.

-          Ask your real estate agent what the recommended earnest money amount would be; then double or triple that deposit amount. It’s a sure way to signal that you’re a serious and financially able home buyer. This tactic has the advantage that it doesn’t really cost you anything in the long run, assuming you hold up your end of the contract. It is a way to stand out from other home buyers without actually spending more.

-          In a buyer’s market, it’s almost expected to ask for add-ons like fixing a staircase or leaving the swing set. But in a seller’s market, you can beat the competition by not asking for extras beyond what is offered in the listing. Home sellers may be fully occupied with many outside details (like looking for their own next home!) and often assign high value to an offer that looks uncomplicated.

-          Along the same lines, another way to stand apart from every other home buyer is to offer to give the seller more than the usual time to move out of their house. Many other bidders won’t think of this—but it can make the deal if the sellers are having to cope with difficult deadlines for their own move.

Above all, don’t let yourself get discouraged. The right house is out there, and you will get an offer accepted! Particularly in a seller’s market, any home buyer will be rewarded by just remaining patient and cool-headed. First step if you will be looking to buy this summer: call me today to get started!

Open House: Direct Path to Prospective Buyers

by Marc Fox

Yes—a listing and a well-shot virtual tour are both important tools in this summer’s real estate marketing. But the low pressure, informal walk-through that an open house allows, can be as effective today as it ever was. Your open house has every possibility of becoming your most direct path to engaging the prospect—­the one who ends up being your buyer. Making that happen takes the kind of ‘luck’ that preparation creates.

Of course, the house will be as thoroughly cleaned as possible. You don’t want to do the job of a contractor, but fixing blemished walls via a few small spot-painting fixes can make the difference in producing a house that looks in top shape; ready for a new owner.

You want your open house to be ‘open’ in the fullest sense of the word: open to as wide a group of prospective buyers as possible. Do a walkthrough with the object of removing anything that could present a personal or controversial element­­­—political or religious statements that might turn off potential buyers. Since you want visitors to be able to see your house as the place they want to call home, messages that strike a dissonant note run a high risk of being counter-productive.

Less is more when it comes to a successful open house. You know instinctively to clear away as much clutter as possible, but sometimes it’s worth going the extra mile. Do another walkthrough, and room by room, consider rolling up area rugs (bare floors create the feeling of open space) and removing pieces of furniture where you can. You want the house to feel spacious and airy rather than jam-packed with furnishings. If you come away worried that the furniture is overly dated or otherwise unsuitable for showing, it may be worth considering an investment in staging.

Summer weather makes it a great time to sell a home. A well-publicized open house can be an important Selling element. But it’s only one part of the overall marketing effort I offer clients. Call me today for a top-to-bottom discussion of how we can sell your home for top dollar—and quickly!

Selling a Home: What Makes Your Property Stand Out?

by Marc Fox

This summer, success in Selling a home will depend upon the same factors as always: location; quality; buyer appeal.

A home’s location—short of calling in the house movers—is pretty much what it is. The structural quality of workmanship and the level of maintenance that it’s received though the years can be gussied up where it shows (and should be!), but that, too, is largely a done deal.

Which leaves that other factor in Selling a home—the little things that reach out to appeal to buyers. The difference between receiving a swift offer and not can hinge on what makes your home more desirable than others in its price range.

A good example is with closet space. Any property with a closet organization system will carry great appeal to a large number of prospective buyers. Likewise, advanced technological touches can stick in buyers’ memories at the end of a long day of house tours. They don’t even have to be expensive or whole-house systems: a simple programmable thermostat that can be accessed on a smart phone can be an interesting Selling point that sticks in the memory. It’s the kind of touch that isn’t a great deal of trouble to install—but it can provide the edge that makes selling your home that much easier.

More extensive tech-savvy features, like tricked-out media rooms or home offices wired to the hilt, are also very hot right now (especially for today’s younger homebuyers) and can provide the edge you’re looking for.

If when you are readying your home for showings and open houses, you-

  • prep to emphasize each of these special features (like leaving that system-organized closet door open with the light on);
  • you make sure your agent is in the loop, ready to showcase key elements; and
  • stage to bring out less visible features—whether it’s printing up a list of newly-refurbished utilities or setting out a wine bottle and glasses with a note to “be sure to check out the killer wine cellar downstairs”

It’s also possible that some appealing features are ones that you take for granted; you’ve simply gotten used to them, yet they ought to be emphasized. Often those are details that your agent will be helpful in pointing out. Whatever is unique and desirable will make Selling your home that much easier.

If you will be Selling your home this summer, I hope you will give me a call. There’s never an obligation, but if you wish, we can go over your property to uncover the marketing options that will make it a stand-out: the one with the edge!

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The Marc Fox Group
Keller Williams Realty
17700 SW Upper Boones Ferry Rd Suite 100
Portland OR 97224
Office: (503) 336-7072
Fax: (503) 336-7170