Pocket Listings

Pocket Listings

A pocket listing is where a seller signs a listing agreement with a broker but they don’t want the house marketed on the Multiple Listing Service (MLS). Due to the current housing market, this practice is becoming less common.

What’s the benefits and drawbacks of pocket listings?

The main benefit is convenience. Many property owners want to sell their house but do not want the aggravation associated with showing the property.

However, if you aren’t marketing your home on the MLS, you’re not exposing the house in the entire market so it’s harder to determine market value.

For example, if I’m going to sell candy and I’m going to sell it to one person, it’s worth $1. However, if 30 buyers want the same candy, it increases the value of the candy to perhaps $15.

What’s your experience with pocket listings?

As a general rule, we don’t encourage our sellers to keep their property as a pocket listing because it doesn’t fully represent the seller. We’ve had occasions where sellers signs the listing agreement but they aren’t ready to have the house exposed to the market. In the meanwhile, if someone wants to buy the house, they want to sell.

Recently, one of our buyers heard about a house for sale directly through the seller and we submitted what we felt was a fair market value offer based upon the comps. The seller decided at the last moment to expose the property to the entire market and they ended up getting $15,000 or $20,000 more than what we had offered.

Tune in to KXL’s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to real estate advice from Portland’s Real Estate Advisor, Rick Sadle.

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What does it say if my home doesn’t sell quickly?

Selling A Home

What does it say if my home doesn’t sell quickly?

One out of every seven homes in the Portland area is selling in less than three days. What does it say if your home doesn’t sell in less than three days?

It says you listed with the wrong Realtor.  Not every home can sell that fast, but if your house isn’t selling in the first couple of weeks, it’s probably one of three things; you got the wrong price, the wrong condition or the wrong marketing.

Is it good for my house to sell quickly?

It depends. If your home sold in three days above asking price, you would say yes. There is a lack of inventory right now. There is a high demand and a lack of supply.  It’s simple economics.

How does a lack of inventory affect the sale of my home?

In a market with this much demand, it’s not a bad idea to price your house just a little below current market value. You’ll get buyers emotionally involved and excited about the house which hopefully results in multiple offers.

Why would sellers price their home below market value? Shouldn’t sellers price their home above market value?

No. When we advertise an overpriced home, buyers know that it’s overpriced because it will sit on the market. If the house was priced properly, it would have sold.

Tune in to KXL‘s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to real estate advice from Portland’s Real Estate Advisor, Rick Sadle.

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New Limits on FHA Loans

We are just a couple weeks away from new limits on FHA loans.

FHA is decreasing their loan insurance limits on January 1st, 2014 from $417,000 to a little over $362,000. That’s nearly a $55,000 dollar difference.

This change will greatly decrease the overall purchasing power of buyers who only qualify for FHA financing. FHA has less stringent credit requirements than many other loan programs. Also, FHA allows individuals who have claimed bankruptcy to qualify for home loan after two or three years. Conventional loan programs may require anywhere from four to seven years for the individual to qualify for a home loan.

Why is the FHA lowering the loan limits? As the housing market continues to recover, they are attempting to reduce their role as private capital is returning to the market. Also, since September, FHA needs to draw 1.7B dollars to cover their losses on bad loans.

Tune in to KXL‘s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to real estate advice from Portland’s Real Estate Advisor, Rick Sadle.

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Are We Headed For Another Housing Bubble?

Housing Bubble

Real estate prices are rising, but are they going up too fast? Are we headed for another housing bubble?

This is unlikely. The low supply of houses for sale is one reason that has been driving the recent upsurge in prices. We’re seeing a lot of people who are able to sell or who are finding it more attractive to sell. We should see inventory levels used up a bit.

One strong factor that we’re not heading for another housing bubble is the mortgage rates. Economists believe that they are going to continue to go up, slowly but surely. Along with this is the fact we’ve seen very little foreclosure activity of late. With some of the recent changes on how foreclosures are processed, we’re going to start to see more foreclosures and that’s going to add to our inventory help.

I just read a report from CoreLogic, one of the biggest real estate data firms, and they also admit that housing bubbles are usually spotted in hindsight. But to reach affordability levels that we saw back in our bubble here, prices would have to go up by as much as 47% or interest rates would have to rise to 6.75%.

Tune in to KXL‘s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to real estate advice from Portland’s Real Estate Advisor, Rick Sadle.

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Why You Should Buy A Home Now

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Anyone who’s been thinking of buying a home may want to hurry up and follow through. But what’s the rush?

It’s all about appreciation. We’re hearing predictions that prices might still go up by as much as 12% in the next 12 months. Based on this percentage, if you wait for a month, you’ll be paying $3,000 more; if you wait for 3  more months, you might be paying an additional $9,000, and in 6 months, it could be $18-20,000 more for an  average-priced home.

Mortgage rates have been rising in the last few months, and it is expected to continue that way. This adds to the price of a house too. The Mortgage Bankers Association predicts that they’ll go up by as much as a full point this year.

If you’ve been thinking of selling your home, you should act soon as well, for the same reason. The price appreciation is based around the lack of supply while there’s a huge demand. A good percentage of our sellers who would be selling right now are those who bought in 2005-2007. They’re locked out of the market due to a lack of equity. But as prices go up, more of these people will be able to sell, so supplies will be enough for a short time. This, combined with the interest rates going up, could cool the market.

Tune in to KXL‘s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to real estate advice from Portland’s Real Estate Advisor, Rick Sadle.

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What is a Pocket Listing?

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When we take a listing, we are required to put it in the multiple listing service. A pocket listing is one that’s taken held by the agent but not advertised through the multiple listing service and taken straight to the seller’s direction. It’s mostly advertised through word-of-mouth between brokers. They usually have been most prevalent in the luxury and commercial real estate sectors, but now, with the limited number of homes for sale, they’re becoming more commonplace. This keeps a more private way of selling between brokers. They keep the listing in their “pocket” and then talk to other people who might be interested in buying the house.

Are there any gains from it? For buyers, in today’s competitive market, they might be able to buy a house without  getting into a bidding war. On the other hand, sellers can sell their house without tons of people traipsing through.  Some people prefer to keep things simple and confidential.

There are risks, too. The best way to get the highest dollar possible for the sellers is to expose their property to the highest number of people. Without this exposure, the biggest risk involved is under-pricing the property. For the buyer,  the biggest risk is to pay too much because the number that the seller came up with may be completely arbitrary.

Tune in to KXL‘s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to Real Estate advice from Portland’s Real Estate Advisor, Rick Sadle.

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Home Buyers: Beware of Solicitations

The rise in home sales has a downside. There are companies that appear to be affiliated with the government that send solicitations to homeowners that require payment.

A client received a mailing that appeared to be a bill from a local government office.  The “bill” stated they were required to pay $87 to get a copy of the deed on a home they had recently purchased.

Home buyers are given everything they need to prove completion of the sale upon closing. Also, the county will mail a certified copy of the deed to the purchaser after closing without an additional cost. If a homeowner needs a copy of the deed,  they can go to the county office and purchase one for under $10.

Whenever someone buys or refinances a home, they may receive a flood of solicitations.  Home purchases and refinances are recorded at the county and become public information. Unfortunately, there are companies which take advantage of this information and start mass mailing homeowners.

These mailings must have disclaimers on them because companies are not allowed to claim they are affiliated with the government. Homeowners should read these letters carefully and check with their attorney or real estate agent to confirm the mailings are legitimate before sending payment.

Tune in to KXL‘s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to Real Estate advice from Portland’s Real Estate Advisor, Rick Sadle.

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The Housing Market’s Great News

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Foreclosures were down in April as the housing market is getting hotter. Also, reports show that the numbers are way down from the prior month and even from the previous year.

Realtytrac says that foreclosures are down by 20% from April and 32% from 2012; these percentages are from the actual repossession of the house. The other good news is that foreclosure starts (the initial step in the foreclosure process) are down 28% from last year. It’s a great sign of job growth and the rising home prices are making it more likely for people to sell or refinance if they become unable to make some payments.

The percentage of people who are behind on their payments fell by 21% in the first quarter of this year versus the first quarter of last year. This can serve as a good indicator that the economy and the housing market are continuously improving.

The State of Oregon is re-launching a program called Mortgage Assistance Payment Program which can help homeowners to stay current on their mortgage payments. This plan is devised for people who are current but are in danger of falling behind.

The market is so hot right now that The Oregonian reports some real estate agents are calling people to ask if they want to sell their house. The interesting part is that most people who receive these calls or letters respond positively to the offer, meaning they are willing to sell their house as long the “money” is good enough! The market is so tight that there’s just no inventory, so some real estate agents are doing all that they can to meet the demands.
Tune in to KXL‘s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to Real Estate advice from Portland’s Real Estate Advisor, Rick Sadle.

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Renovate or Buy

To Buy or To Renovate

Portland’s housing market is heating up and sellers are curious if it makes more sense to renovate their current home or sell and buy a new home.

Before you make any decisions, please consider the following questions: Are you going to be living in the home long-term? If yes, then it does make sense to renovate the house. If it’s just a short-term fix, then it’s probably not a good idea.

Is your house already the best home in the neighborhood? If it is, the ability to recoup your investment is limited by the house values in the area. As a rule of thumb, expect to recoup 50-85%, depending on the project that you do.  As long as you’re willing to accept somebody else’s design, it may be better to buy a house with the remodel already completed.

On the surface, it can sound a little confusing but it actually comes out to a case-by-case scenario. Have an expert sit down with you before the decision to renovate and let them do a market analysis (duration of stay etc.). Another market analysis should be done regarding the value after the house renovation has been completed. From there, you can make a final decision if it makes sense to renovate.

Top 10 Midrange Projects
1. Entry Door Replacement (steel)
Job Cost: $1,137
Resale Value: $974
Cost Recouped: 85.6 percent

2. Deck Addition (wood)
Job Cost: $9,327
Resale Value: $7,213
Cost Recouped: 77.3 percent

3. Garage Door Replacement
Job Cost: $1,496
Resale Value: $1,132
Cost Recouped: 75.7 percent

4. Minor Kitchen Remodel
Job Cost: $18,527
Resale Value: $13,977
Cost Recouped: 75.4 percent

5. Window Replacement (wood)
Job Cost: $10,708
Resale Value: $7,852
Cost Recouped: 73.3 percent

6. Attic Bedroom Addition
Job Cost: $47,919
Resale Value: $34,916
Cost Recouped: 72.9 percent

7. Window Replacement (vinyl)
Job Cost: $9,770
Resale Value: $6,961
Cost Recouped: 71.2 percent

8. Basement Remodel
Job Cost: $61,303
Resale Value: $43,095
Cost Recouped: 70.3 percent

9. Major Kitchen Remodel
Job Cost: $53,931
Resale Value: $37,139
Cost Recouped: 68.9 percent

10. Deck Addition (composite)
Job Cost: $15,084
Resale Value: $10,184
Cost Recouped: 67.5 percent

http://realtormag.realtor.org/home-and-design/cost-vs-value/article/2013/01/2012-13-cost-vs-value-make-first-impression-count

Tune in to KXL‘s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to Real Estate advice from Portland’s Real Estate Advisor, Rick Sadle.

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All About Reverse Mortgages

The Truth About Home Selling Rates

You may have heard a thing or two lately about reverse mortgages, but are they still a good idea? Were they ever a good idea?Reverse mortgages are quite challenging to classify as good or bad. It’s a tool for people over the age of 62 to get the equity of their house without having to make monthly mortgage payments. For most people, it can rather be complicated and confusing, maybe expensive.

Why is the federal government putting restrictions on this type of mortgage? FHA did a study as they’re mostly the ones doing insurance on these loans. They found out that almost 10% of a specific type of reverse mortgage was in default. Even though those who have reverse mortgages don’t have to make monthly mortgage payments, they do have to continue making tax and insurance payments. The study shows that the type of product which allows the most money upfront (a lump sum payment) led to a 10% or $2.8 billion of the FHA insurance fund in default. They eliminated that product and kept some of the mortgage products that allow a smaller amount upfront plus monthly payments.

So what’s the best advice about reverse mortgages? Get MORE advice. Talk to a financial planner or a trusted mortgage broker to make sure that it sets your needs.

Tune in to KXL‘s “Experts on the 19′s” every Monday morning at 6:49AM and 8:49AM and listen to Real Estate advice from Portland’s Real Estate Advisor, Rick Sadle.

 

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