Buyers Archives - Investors Trust Realty FL

Buyer’s Representation – 2024

April 12, 2024 by bzawaski

Having settled, subject to final court approval on or around July 1, 2024, Burnett vs. NAR (National Association of Realtors) the proposed changes, as outlined on pages 95-98, will undoubtedly hurt buyers who can’t pay for representation that has always been, in most cases, paid by the seller. I say in most cases because it’s never been mandatory that a seller pay a cooperative commission to a buyer’s agent for bringing a ready, willing & able buyer. Somehow the Plaintiff’s allegation that a “conspiracy to inflate or stabilize broker commissions by NAR’s mandatory offer of compensation rule” has taken a cooperative commission offer to a whole new level, suggesting that commission rates have been fixed. Commission rates have always been negotiable and anyone who interviewed multiple brokers to list their home for sale knows that only too well.

With that said, there’s a certain amount of irony in the fact that the Plaintiffs’ Motion for Attorneys’ Fees is almost as long as the settlement itself and comprised of fixed rate calculations utilizing the Lodestar Method. The case law that brought about the change to how attorneys calculate fees is predicated on a $14,000,000 fee attached to a $37,000,000 judgment. I think most would agree that 37.8% is a bit excessive but what about 33-36%, that’s where they’re at. In addition to several structured hourly rate graphs and charts included in their Motion for fees, the Plaintiff’s attorneys have drafted page after page highlighting the skill of their adversaries, the time away from their lucrative practices and god forbid, the possibility they should not prevail and not make any money.

The latter sounds like something every buyer’s agent knows only too well, losing a buyer to another agent or the buyer not qualifying and not being paid. We’ll certainly see many more buyers unable to achieve the dream of home ownership and in some instances, be forced to work directly with the Listing Broker. Although perfectly legal to do so in many States, this scenario is ripe for allegations of conflict of interest but, I’m sure our attorney friends, at somewhere between 33-36% of any settlement, will be glad to step in and make things right.

Buyers who require sellers’ assistance with allowable closing costs, basically anyone with less than 20% down or certainly FHA or VA purchasers will be faced with a mandatory buyer representation agreement that, in most cases, obligates them to agree to pay the buyer’s agent’s fee. Needless to say, a USDA or VA buyer who is utilizing a no-downpayment loan program is doing so out of necessity and therefore cannot agree to pay a buyer’s agent. Adding this cost to the sales price and taking it out of the seller’s proceeds has potential shortcomings concerning the home appraising at its newly inflated price.

In this high-interest environment, buyers may need all the allowable closing costs they can get, not only to get to a reasonable cash-to-close figure but, to buy-down interest rates as well. Building in a buyer agent commission limits the assistance a buyer in need can seek, in many cases 6% of the sales price. Of course, even if agreeable, building in a commission of any amount and adding it to the borrower’s loan will stay with them at current interest rates for as long as they have that loan.

Sellers have always been able to recognize the value of as many buyers as possible viewing & potentially making an offer on their home. With a much smaller buyer pool sellers will have no choice but to negotiate commissions, not just with their listing Broker but with a buyer’s Broker as well. At Investors Trust Realty we’ll be gearing our buyer’s representation agreement to the benefit of our buyers thus seeking commissions directly from the seller first. Regarding listings, we’ll continue the practice of representing only the seller thus avoiding any conflict amongst our valued clients.

Bob Zawaski, G.R.I.

Principal Broker

Investors Trust Realty

Water, Water Everywhere

December 12, 2022 by bzawaski

“Water, Water Everywhere, and all the boards did shrink. Water, Water, everywhere, nor any drop to drink” from ‘The Rime of the Ancient Mariner’ by 18th Century Poet Samual Taylor Coleridge. Although the Ancient Mariners of the 18th Century clearly understood that much of the earth’s surface was covered by water they quickly learned that a supply of life-sustaining freshwater was a scarce commodity. 70% of the earth’s surface is covered by water but, a mere 2.5% is freshwater with less than 1% easily accessible. The World’s population currently uses 30% of the available freshwater supply and according to the United Nations, water usage could run as high as 70% by 2050. It’s further said that by 2025, 1.8 billion people worldwide will live in areas plagued by water scarcity.

When demand for Real Estate exceeds available inventory it can be managed by building new homes. When demand for freshwater exceeds its capacity the solutions may not be as simple or cost-effective. If pressed to make a life-or-death decision, many would be quick to prioritize the need for life-sustaining water over the shelter of a home. What Real Estate & water flowing through it share in common is both are considered ‘Real Property. Often times the ‘Rights’ that go with a parcel of land, or property that includes a home, are taken for granted and the potential value remains just that, potential.

Water Rights that can provide fresh Springwater for consumption, as well as the ability to irrigate crops, can rival or exceed the value of the adjoining land in many cases. In Oregon, a water Right is authorized by the State Water Resources Department (OWRD). Requirements for issuance of a ‘Water Right’ before using surface water have been in place since 1909 and groundwater permits were first issued in 1955. The doctrine of “Prior Appropriation” is a system wherein it’s basically one of first come, first served. In times of shortage, the “Senior” water right holder is entitled to take all the water needed before the next “Junior” water right holder is served. With only a few exceptions, Oregon law provides that all water is publicly owned. Water Rights with a “Priority Date” that predates any “Junior” water rights holders can add additional value under our “Prior Appropriation” doctrine.

Real Estate has remained an excellent long-term investment, however, it’s not immune to cyclical changes in the market. Hedging one’s investment by utilizing valuable resources such as water can be just the right solution. Water and its importance to our survival have been referred to as a ‘Human Right’ thus, it will always be in demand. If you’ve wondered what one of the few prognosticators who saw the housing collapse of 2008 coming is doing today, after making $2,690,000,000 for his clients by ‘shorting’ the housing market, Dr. Michael Burry is focusing all of his tradings on one commodity: Water.

Bob Zawaski G.R.I.

Oregon Licensed Principal Broker

Investors Trust Realty

When Your Buying & Selling As-Is

December 23, 2019 by bzawaski

When you Buying or Selling a home the term ‘as-is’ will probably come up. What exactly it means will depend on who is making that interpretation and how that benefits them. Sellers who are steadfast about not doing repairs or multiple offer situations can be determining factors. In either case, it’s important that neither party feels compelled by those factors to do what they ordinarily wouldn’t.

Sellers may want to make it clear in writing that they won’t be participating in making repairs or providing credit allowances. Most sales agreements include as-is provisions & inspection clauses that may already be pre-printed. It’s important to carefully address your desire to sell as-is without eliminating the buyer’s rights to any written representations. State-required Property Disclosures or Federally mandated lead disclosures, in the case of pre-1978 homes, are required. Whether or not a Buyer fully inspects the property or waives that right is something both parties should cautiously approach. It would serve the Sellers’ best interests to allow any potential Buyer the opportunity to fully inspect their property.

In the event, a Buyer chooses to waive that right it should be in writing. Waivers should be based upon the buyer knowingly and voluntarily electing to waive that right. Private parties should seek legal counsel when preparing a sales agreement. Licensed Brokers should avoid altering any pre-printed language to suit Sellers’ wishes to drive home a point without first consulting legal counsel. It’s easier to simply stay within your lane and not make changes to legal terminology already in place.

It’s not always a clear path despite one party or another laying the ground rules. As-is means different things to different people. It’s not uncommon for a Buyer who discovers a “big-ticket item” to take pause. Sewer lines & underground fuel tanks are often met with “I didn’t mean to include that in my as-is offer”. Of course, the Seller is not obligated to change the terms & conditions as originally agreed to. On the other hand, not coming to an agreement may mean the sale won’t close. Sellers should consider their potential liability for dealing with certain issues, despite any previous no repairs stance.

In the case of an abandoned underground fuel tank, there is no statute of limitations. I’ve had this conversation with many Buyers & Sellers over the years and there is plenty of potential liability to go around for passing along this issue. In Oregon, a DEQ (Department of Environmental Quality) Certified contractor is required to report leakage within 48 hours. Sellers must take responsibility but, what about a situation where both parties agree to sell without further testing? The Seller may feel it’s the Buyer’s responsibility going forward. What if the Buyer were to lose the house to foreclosure and disappear? With no statute of limitations, the Government can bypass owners to the next in line, the Seller. The Government will pull out all the stops to locate past owners. Banks who foreclosure are exempt & can sell without the tank being decommissioned thus, truly as-is.

There are lesser issues dollar-wise that a Seller should also consider despite any previous ‘no repair’ stances. Where CO & Smoke alarms are required saying I won’t do it or simply handing them over and saying “You do it” is short-sighted. If that potential buyer simply didn’t get around to installing them and is injured or perishes in a fire there is something to be said for that Sellers’s liability. Even a somewhat minor issue could have negative ramifications down the road thus, counsel from your Broker should always be sought before simply saying no.

In a recent condo sale, we were advised that a dryer duct had dislodged from the roof vent. It may have subsequently contributed to the fungi growth on the sheathing. Ducting from the interior space had been accidentally cut, which too may have been a contributing factor. Might the Association consider the latter as a contributing factor to their fungi issue? Despite the duct being within the Association’s domain consideration was given to simply replacing the entire duct.

In a hot market, Buyers will oftentimes want their offer to stand out. In order to stand out, some will opt to waive their inspection rights. It’s important they’re not given the impression or feel compelled to do so by the Seller or their Broker. As the cost of repairs & maintenance takes its toll Buyers may second guess waiving an inspection. In a Real Estate transaction, all things must be in writing but, they’re only as good as the parties involved. Good verbal communication along with the appropriate written language will protect both parties interests.

Bob Zawaski G.R.I.

Oregon Licensed Principal Broker

Investors Trust Realty

Transitioning Between Houses

November 7, 2019 by bzawaski

Transitioning Between Houses

You’ve decided it’s time to buy a new home however, you have a home you need to sell in order to do that, or at the very least want to minimize the carrying costs & uncertainty about locating your next home in the interim…how do you manage transitioning between houses ?

Do you sell your house first, then hopefully find the next one or do you find your next home & hope you can sell your current home quick enough to close simultaneously on your next one ? We’ll discuss everything in between, including the current Portland metro area market & what factors you should consider along the way so, let’s begin…

One of the most important things to understand is that in most cases your probably moving to improve your quality of live to some degree and have envisioned what life will be like in your next home. With that picture in mind, there is no need to distort that vision by creating undue stress thus, remember why your doing it and that it’s a choice & most likely not a necessity. Of course, there are situations that life can dictate to us such as failing health, employment changes or a need to create a multi-generational household but, despite the importance of the need to do so, all the information contained herein is equally applicable to your situation.

Once you’ve decided your going to make the move & have weighed the pro’s & con’s, including how it might effect your situation if you didn’t make the move, your next to step should be to develop a level of comfort as to what’s reasonable to expect as far as making your next purchase. In our current market there is just a mere 1.9 months of inventory available as of September 2015’s Market Action published by RMLS. That may bode well for Seller’s however, it creates challenges for buyer’s thus it’s important to start thinking about things as a buyer does. In many areas in and around the Portland metro we are seeing rapid appreciation & multiple offers however, that is slowing just a bit as winter approaches and where you may be looking may paint an entirely different picture. In addition to preparing your finances for that next move via providing your lender with updated information, it’s important to note that even though you may have purchased just a few short years ago that the landscape is ever changing thus you can never start that process too soon. The most pressing concern buyer’s have is ‘what will my new payment look like’ however, that may not even be a consideration if there is nothing to buy. The comfort level an individual requires varies on many fronts, with no two people being exactly alike. Typically, I would suggest that as part of this process of ‘easing’ into this next phase of life scenario that we spend ample time looking at not only new listings (if they are available) but, sale fails & recently sold properties as well. With so little to choose from it’s crucial that you have a realistic view of the overall market, including what & why certain houses sell, as well as for how much. What we don’t want to do is give away everything that you may have just made on the sale of your house (or will potentially make) by proceeding on emotion rather then with as much knowledge of how the market’s been behaving. We want to have a thorough understanding of the market before entering into it, as hesitation based on a lack of preparedness or spending too much based on pure emotion will produce poor results. How long does this process take ? It obviously depends upon the individual but, when taking into consideration the preparation of a home to sell I’m typically seeing clients starting the conversation anywhere from a month to 6 or more months out. It’s never too soon to start your on line search to help develop that comfort level & no better place to start then here.

Once you’ve determined how much your new mortgage payment will be & whether or not what you hope to find does exist, even if only for sporadic periods, then your most likely looking for anyway possible to avoid having dual mortgages in place, assuming you would qualify to do so. Since you are now wearing two hats, one as a Seller & the other as a buyer, you should be able to better understand where a buyer who is purchasing your house or Seller you are purchasing from are coming from. Again, with just 1.9 months of inventory we are in a Seller’s market, assuming the property is priced correctly and has been prepared for market so as to appeal to buyer’s. The likelihood that you would consider an offer on the sale of your house that is contingent upon a buyer’s home selling i.e., a Contingency Offer, is pretty slim, unless of course you had no other offers but, that would also mean you have an issue that has made your property something other than what could be defined as being a “Seller’s Market Property”. If, as a future buyer, your first choice is to make offers contingent upon the sale of your property you should consider that first, it’s highly likely to not get accepted if the house has any sort of activity on it. Second, most Seller’s, or at least their Broker’s if they are providing good counsel to their Seller’s, would expect a Contingency offer buyer to pay a price premium for coming off the market for the uncertainty of a transaction that may never close. After all, Contingencies are things which may or may not happen, just like in everyday life. Again, as mentioned previously the goal should be to not give away what you may make via the sale of your house. Last, although not always the case you should consider that in a market where most homes are selling fairly rapidly that if a Seller is willing to entertain a Contingency offer you should be diligent in your efforts to understand why and that’s where your Broker can be most helpful in possibly attaining information you might otherwise not be able to gather on your own. There are obviously unlimited terms & conditions that could be added to any offer that could ‘sweeten’ the pot, including those made in concert with a Contingency offer however, that too is most likely subject to your Buyer’s Broker uncovering some pertinent fact and/or being able to articulate a certain need that a Seller appears to have based upon communications with a listing Broker. It’s not a given that a Contingency offer can ever be entirely ruled out as it depends on the individual circumstances surrounding each & every transaction & there are no two that are exactly the same.

The likelihood of a Seller accepting your Contingency offer is fairly slim so, how about negotiating a lease back on your current house while you search or wait for the 2nd house to close ? Just as was the case with individual circumstances surrounding each & every transaction not being exactly the same, as mentioned in regards to Contingency’s, it all depends on being able to understand your current situation well enough so as to not give anything away for the convenience of being able to stay over. Depending upon the amount of activity you may have on the sale of your current home your Broker (and ideally it’s the same Broker who will represent you in the purchase of your next property) may be able to gauge just how far you can push potential buyers in a multiple offer scenario so as to suggest that in addition to price, their getting accepted may hinge upon a limited lease back of the property to the Seller. Unless that buyer is paying cash (actually about 35% of sales are currently all cash) or via a non-owner occupied investors loan that buyer may be limited to do such a rent back for no more than 30 days based upon conditions of their loan. In addition to the aforementioned limitations, specifically those of buyer’s with owner occupied financing (the majority), a Buyer’s Broker who is providing thorough counsel to their buyer clients may convey that a Seller stay over has some potential liability that the buyer should consider thus, it may eliminate some or all of those potential buyers. The current Oregon Sales agreement (O.R.E.F. 054) does address in much greater detail then we would venture into here the terms & conditions under which each party is responsible for certain acts & costs etc., however, despite it’s best intentions over (4) pages there will always remain issues that will require additional deliberation, either by a Court or perhaps an insurance carrier. Point being, any attempt to stay over as a seller in order to easily transition into a purchased property may eliminate potential buyer’s who might bring the best offers thus, another scenario wherein your Broker can advise you.

What about those who would gladly carry (2) mortgages for a brief time but, aren’t able to qualify to do so ? Bridge loans have existed for a long time however, even in the boom market in the late 90’s and into the early 2000’s it was no secret that the costs were prohibitively expensive. With rates in general being lower then in the past the Bridge loan looks less attractive by today’s standards.

Although not practical for everybody hoping to transition from being a seller to a buyer, having a stopping point in between i.e., a rental property, allows for optimal strength on both sides of buying & selling. As a seller you have the flexibility in moving quickly from your property which some times can be looked upon favorably by a buyer who may pay a premium in price for the convenience. In addition, it allows you as a Seller the opportunity to slowly & methodically remove personal possessions from your home to better stage it for sale. From the buyer’s side of the equation you have the flexibility a seller might be looking for when deciding which offer to accept, moving quickly on a vacant house or perhaps a longer escrow where needed. Having your offer accepted is not entirely about price and having some flexibility and a verified down payment waiting makes your offer more attractive to a seller.

With home ownership being at historically low levels it’s created a very competitive rental market thus, it’s not just homes for sale that are in short supply. The vacancy rate in the Portland, OR metro area is 2.5% at this time thus, you might disregard much of what I mentioned in the last paragraph about the possibility of renting in between. Typically, the initial response from clients might be one of dismay at the idea as they see the same difficulties in finding a short term rental as they do in finding their next house. In most cases this because they are looking at traditional rentals wherein the landlords are looking for long term tenants with terms & deposits etc. that are not geared towards shorter stays. With all the rentals that should be available due to record low home ownership why would vacancy rates be as low as they are ? In many cases those investors have ventured into shorter term rentals where regulations allow and have been able to get premium returns as a result. Programs such as VRBO, AirBnB & FlipKey have opened up short term housing in local areas throughout the Nation & Worldwide. There are numerous spin off websites in our area with similar rental opportunities that are priced competitively with local long term rentals, yet without the large deposits & other conditions we would hope to avoid that are common to traditional long term rentals. I sold several properties this year alone that will be used for short term rentals.

As is the case with every Real Estate transaction being different in their own way, the answers to your particular needs & requirements may require a combination of some or all of the ideas put forth in this blog.

Best Regards,

Bob Zawaski G.R.I., e-Pro

Oregon Licensed Principal Broker / Owner

Investors Trust Realty

[email protected]

www.iTrustRealty.com

Social Media

July 31, 2018 by bzawaski

The internet is the starting point for over 90% of today’s buyers thus, it’s never been more important to be on the cutting edge of technology. At Investors Trust Realty we’ve built a foundation that provides Sellers with top placement & exposure for their homes. We’ve done this by employing old-fashioned hard work and providing content that keeps us high in search rankings. In addition, we strategically purchase ads that place your Home ahead of thousands of others on sites such as Zillow, Realtor.com & RMLS, to name a few. A typical listing will derive multiple times the viewings of most other listed properties which in turn results in either multiple offer scenarios or a strong accepted offer coming early on. Below are some of the Social Media sites we utilize to provide our Sellers with top placement.

Zillow and recently acquired Trulia are ranked # 1 & # 2 respectively among Real Estate sites buyers visit. Our Zillow Profile includes detailed information regarding hundreds of past sales throughout the greater Portland metro area, as well as a number of Certifications obtained to better serve our clients over the past 24 years.

Google sites remain the top multi-platform property with over 240 million unique visitors across desktop & mobile. As a foundation to all other forms of Social Media, Investors Trust Realty Google + and Bob Zawaski Google + add daily content, including sharing our Seller’s listings from our WordPress site. In addition, we utilize Google Ad Words in order to provide your Home with maximum exposure and priority placement over thousands of other Homes on the market. By providing Sellers listings, as well as helpful resource content on a daily basis from both our Investors Trust Realty Google + and Bob Zawaski Google + sites we’ve effectively doubled our presence on the largest multi-platform property.

Coupled with our ‘doubling down on Google + we’ve effectively employed the same strategy with our Investors Trust Realty Youtube Channel and Bob Zawaski P.C. Youtube Channel thus providing an ever-increasing presence in the world of video. Providing consistent content of the highest quality in the fastest-growing segment is critical to gaining the maximum exposure for your Home. Buyers are 60% more likely to view and subsequently look at Homes with Professional still and video photography.

Our website at itrustrealty.com is part of the Word Press platform, 28th Nationally, and 3 places ahead of the Zillow Group at # 31. From our site, we’re able to share content regarding your Home with the widest audience in the shortest period of time. With our ability to reach paid sites, as well as gain a following from organic sources, we’ve been able to amass viewings exceeding 1,000 on a daily basis just on our site alone. Views from other sources such as Google, YouTube, & RMLS.com regularly take our listed properties well in excess of 100,000 overall views.

Bob Zawaski G.R.I.

Principal Broker / Owner

Investors Trust Realty

Days on Market: Why it Matters

July 30, 2018 by bzawaski

Once the market analysis is completed, the listing signed & post sign is set in the ground the real work begins. Putting the market plan into action is now a priority. Discussing how to react when things don’t go as planned is equally important as the initial plans themselves. Sellers may not be receptive to talk of any upfront failure and Brokers will be treading lightly as well. It’s important that an honest dialogue take place upfront in order to keep things in proper perspective.

There are a variety of reasons why a Seller may elect to dismiss the importance of staying on the market for too long. In some cases, it’s overconfidence that they’ll sell quickly. Certainly, Brokers’ enthusiasm can be contagious and can add to unbridled confidence. In some instances, a Seller may feel he/she can wait for their price and is seemingly in no hurry. Again, a Broker who would knowingly list a property at a price higher than the market indicates could be complicit by “buying a listing”.

Whatever the reason may be, the end result is most likely a lower net price to the Seller. Whether a Seller is overly confident or seemingly in no hurry to sell, it’s a Brokers’ job to present the facts. Without ready-made days on the market to sell versus the list price indicator we did our own analysis and here are the results.

We took closed sales of detached single-family homes Northwest of Sunset Highway (area 149 & zip code 97229) over the last two months, June & July of 2018, in the $600,000 – $700,000 range. Here’s the breakdown:

DOM # Sold Units Listing Volume Sold Volume %SP/LP

0-10 17 $ 10,183,272 $ 10,226,250 100.42%

10-30 7 $ 4,697,800 $ 4,682,425 99.60%

30-60 7 $ 4,722,933 $ 4,618,928 97.70%

60-90 3 $ 1,944,800 $ 1,919,990 98.70%

90 – + 2 $ 1,354,995 $ 1,313,595 96.90%

There was a time when Brokers ‘freshened up’ listings by entering them as new. In virtually all cases & all places, cumulative days on market (CDOM) follows the listing, making that strategy useless. Sellers who might be relying on their own good fortune as opposed to hard facts might question the marketing efforts. A review of the Broker’s Social Media plan and implementation is always advisable. Buyers have become far more sophisticated in their use & understanding of history & time on the market. Sending the same message repeatedly eventually has the opposite effect on those it’s supposed to reach thus, the simplest solution is often times the most logical i.e., price reduction.

No two listing scenarios are the same thus, there are a variety of market indicators your Broker can provide. First & foremost of course is actual showings and a gauge by which to compare with other homes that have sold. The $600,000 – $700,000 homes referred to above may not require the same number of showings that a home priced at $350,000 will in order to get maximum results. Second, our local RMLS monitors daily view counts which an experienced Broker can use for illustrative purposes. Third, monitoring view counts from public websites, as well as Broker managed social media can also be useful. Deciding when it’s appropriate to make a change or stay the course is crucial to avoiding unnecessary days on market.

When Marketing Your Home it’s important to review essentials such as Maximizing Multiple Listings all the way thru to Negotiating Offers. It’s equally important to discuss the potential pitfalls that may come your way so they can be dealt with.

Selling Your Home and Buying Another

November 10, 2017 by bzawaski

Selling your Home and buying another can be a challenge, especially in a market with an inventory of just 2.3 months (the amount of time it would take to deplete all listings if no new listings were added) as is the case here in the Portland, OR metro area. Inventory below 6 months is indicative of an appreciating market thus, 2.3 would suggest it’s a Seller’s market. Despite very little change in inventory from the last time I blogged on this issue (September of 2015 when it was 1.9 months) in Transitioning Between Houses we’ve come a long way in bringing back the simultaneous closing of one house to another that was commonplace a decade ago.

Transitioning Between Houses

As is the case with the Stock market where sentiment towards the events of the day shapes its ups & downs, Real Estate is not solely reliant upon Buyers & sellers simply taking statistical market data at face value. The slight gain in inventory we’ve seen in September of 2017 versus that of 2015 would suggest we should be going at roughly the same level of appreciation yet, we’re clearly not. The typical slowing down of the market that we see mid-summer seemingly came as no secret to buyers this past year thus, their sentiment was heard loud & clear. Price reductions, discounts, and repair negotiations became more commonplace than in the last two years. That’s not to say that we’re headed in a rapid decline but, perhaps a correction of sorts after a couple of years that saw Portland as one of the leading major metropolitan areas in appreciation. Does this mean the Seller will be more receptive to Contingent offers? Perhaps in some cases, they will but, there have been some changes on the lending side of the equation that may give hope to those who have little or no reservations about selling their home but, wonder if they can find a replacement home when they become buyers themselves.

The stumbling blocks to bridging the gap have typically included expensive Bridge loans or a refinance with all the costs & fees in order to rid the borrower of the ‘temporary’ financing utilized in order to circumvent buying in a Seller’s market. Whether we are still in a Seller’s market or witnessing a correction remains to be seen but, certain lenders have created products in response to the needs of today’s borrowers. According to the National Association of REALTORS, 68% of buyers are buying a home at least for the second time thus, one would assume many of them have a home to sell. Although much more than a stop-gap measure, Guild Mortgage lender John Bruce has successfully linked several of my clients with the Guild 1% Down program as an alternative to those who might be cash-strapped yet, want to purchase their next home in advance of selling their own. With market rates and competitive Mortgage Insurance the borrower truly has an option that includes keeping this loan in place as opposed to viewing it as an expensive temporary measure such as a bridge loan or traditional refinance. In addition, a recast or virtually cost-free version of a traditional refinance after purchase allows those whose qualifying numbers might be too tight, and/or whose cash for a down payment is problematic, without selling first. Of course, flexibility in underwriting has also created opportunities for borrowers where none may have existed just a couple of years prior.

Having the resources available from the lending side, as well as a thumb on the pulse of the market from the Broker’s side are what we bring to our clients at Investors Trust Realty.

When is Cash no longer King ?

February 8, 2017 by bzawaski

When is cash no longer King for Oregon home buyers & sellers? It’s not likely sellers will ever lose an affinity for accepting an all-cash offer on their property. It’s equally true that buyer’s with the financial resources to make an all-cash offer will continue to do so with the knowledge that their offers will be accepted more readily. That eagerness by a seller to accept cash in lieu of a financed offer is due in part to the elimination of concerns over the buyer’s qualifications becoming an issue as underwriting examines their file in greater depth. In addition, an appraisal value shortfall can result in going back on the market with all the most interested buyers long since gone.

Potentially compounding an appraisal issue based on value and/or conditions is the wait…Oregon is ranked 50th in regard to appraisal turn time. In a market with as little inventory as we currently have, waiting 30 + days for an appraisal turn can make a once highly sought-after listing old news. There certainly are enough considerations from the buyer’s qualifications coming into question during a transaction to issues related to appraisals that would make any rational seller seek out the easiest path to the closing table. What about those sellers who don’t necessarily consider being separated from those issues to be ‘priceless’? Would sellers entertain the possibility of accepting a financed offer over cash, if the price were right? It all depends on a seller’s comfort level with their knowledge of how financed offers work. In most cases that knowledge is going to come in a crash course from their Broker as it may be the first transaction the seller has dealt with recently, or ever. Most likely, the difference between cash & financed offers isn’t something a seller will have considered until the very moment it’s presented to them.

What due diligence should a listing Broker employ when analyzing a buyer’s offer with a seller? Regardless of whether it’s to make a determination about weighing the merits of financed versus cash, it should be standard practice to contact the lender directly to get as much insight about the buyer & lender as both. Unfortunately, the percentage of listing Brokers who contacts the buyer’s lender directly in order to verify information already stated on a Pre-approval letter, or gather additional insight about the buyer, is a mere fraction of what it should be. I would venture to say that when I’m representing a buyer whose offer is being seriously considered that our lender is contacted by the listing Broker less than 10% of the time. That may in part be due to my making a good case for my buyer clients & the listing Broker feeling all the issues have been satisfactorily addressed but, there are always pieces to the puzzle that can only be solved with the lender’s input.

Having a pre-approval in hand gives us a head start in dissecting the appraisal process and possibly putting to rest some of the concerns that might cause a seller to dismiss a financed offer in lieu of cash. Knowing the difference between Mortgage Brokers, Mortgage Bankers & Commercial lenders will be the very first consideration for the seller to take into account when presented with a financed offer. This not only gives the listing Broker the opportunity to educate the seller on differences that can truly separate one from the other but, it also should be the first subject to the table with the lender. Commercial lenders, or the big Banks that You and I may have our checking and savings accounts with, are required to use an appraiser from the Statewide pool on a first come first serve basis. In Oregon, we’re just shy of 1,500 appraisers Statewide thus, the first challenge is hopefully getting someone who is somewhat familiar with the neighborhood in which they are being asked to make a value judgment. Secondarily, the sheer volume of appraisals being ordered by large commercial banks creates a backlog that is compounded by an antiquated compensation system that many times hinders the capabilities of those appraisers in making adjustments when the value has come into question. Appraisers are exceedingly well-educated in their field thus, the vast majority of challenges they face are due to regulatory & industry demands that simply haven’t kept pace with the times. On the flip side of the coin are Mortgage brokers & bankers who may work under local Company names you’re familiar with, some being rooted here in Oregon while others have a National presence. This would be the opportunity for a listing Broker to inquire as to the working relationship the lender has with its much smaller pool of appraisers. Better yet, would be to leave open the opportunity for that lender to boast about the excellent relationship they have with their appraisers and the quick turns they are accustomed to. Obviously, the lender feeling a sense of pride in their working relationship with their appraisal pool and offering evidence of results without being prompted to do so may go a long way toward a more favorable view of a financed offer. Of course, this requires the listing Broker to exercise due diligence on behalf of their seller clients above & beyond the listing and marketing of their property that resulted in a multiple offer scenario. Utilizing Social Media to gain optimal exposure, as well as marketing to cooperating Brokers via Maximizing Multiple Listings are critical components to getting a seller to a position where multiple offers are a factor. The value derived from those first two steps is unfortunately the final ‘resting place’ for some listing Brokers who may feel their duties to the seller have been satisfied by having multiple offers on the table. It’s at this point that a Broker truly can determine his or her own value to the seller by providing Negotiation insights that outline options and considerations far above & beyond simply being presented with an offer(s) and directed to the location on the first page that states the offered sales price.

In order to provide a seller with as much pertinent information to make an informed decision, be it which offer to accept or whether a financed offer should be given more weight in comparison to cash, it’s important to know something about the makeup of that particular buyer. In addition, creating a scenario of some common traits that cash buyers sometimes exhibit can be helpful to a seller. As was mentioned earlier, buyers with cash resources do have certain expectations that go along with their offers. In addition to the knowledge that their offer has a greater likelihood of being accepted there is also a realization that their capability to close sooner & avoid financing issues is looked upon favorably by most sellers. Each & every cash buyer places a different value on his/her ability to put to rest some of the seller’s concerns. Exercising due diligence above & beyond simply reviewing the buyer’s proof of funds statement can be a crucial part of the decision as to whether or not cash is truly king in all cases. On numerous occasions, I’ve had Buyer’s Broker’s casually stated that their cash buyers had just terminated a transaction prior to this one and it was ‘easy to do because it was cash’. In reality, it really isn’t any easier to do but, that mindset is the key component here for the seller to consider, once it’s conveyed by the listing Broker. Of course, all this wouldn’t take place if it were simply left to telling all the buyer’s Brokers to bring their ‘Highest & Best Offers’ and have no conversations above & beyond that. Unfortunately, that is all too often what takes place.

Having an understanding of how an appraiser views a home & subsequently makes a value determination is vitally important information to convey to a seller. Deciding between taking the seemingly easier road with cash versus a financed offer that may ‘net’ tens of thousands more to a seller requires serious discussion based upon revisiting comparable sales. In addition to the due diligence required to make this call, it may also bring into question the listing Broker’s original comparable sales. Unfortunately, as is all too often the practice of some Brokers to ‘shut it down once offers have been received, there may also be a reluctance to revisit comparable sales for a variety of reasons, none of which benefits the seller.

Cash certainly has its advantages however, its uses are determined by the holder of those funds, Determining what other motivations they may have for purchasing this property, whether have they purchased others with cash, whether have they been successful, etc. Creating a profile of a cash buyer can be vitally important information in helping the seller predict how they might act in a transaction.

Ultimately the choice as to whether a seller should accept a financed offer when a cash offer is also on the table has much more to do with merely a difference in price. An understanding of the market, appraisal of common practices, and an ability to ask questions to gain helpful insight about parties to the transaction are vitally important factors. With over two decades in the industry, I pride myself on having developed a knowledge base of issues and an ability to act in a beneficial way on behalf of my clients. If your looking for superior representation in your next purchase or sale I would be glad to meet with you to see how we might work together.

Bob Zawaski G.R.I.

Oregon Licensed Principal Broker

Investors Trust Realty

Repair it all Home Inspections

January 23, 2017 by bzawaski

Repair it all Home Inspections are typically the product of a buyer seeking to get a fresh start in life in their new home. In some instances, that long wish list of repairs may be a part of a strategy employed by a buyer in order to regain some of what they may feel they lost when their offer was accepted. Whatever that reason may be, it’s crucial in negotiating repairs that any emotions a Seller may have as a result of being presented with an endless laundry list of repairs be dealt with tactfully.

Unfortunately, communicating in person isn’t always an option in this age of technology thus, we’ll employ a real life example via email. Effectively conveying that you’ve heard what the buyer has said and demonstrating it by responding in a thorough & thoughtful manner is critical to keeping everyone’s hopes alive when it seems your miles apart.

In many instances a Listing Broker representing a Seller will send back a reply reminding the Buyer and their Broker that this is not a new house but, one of a certain age with all the issues that go along with it. Of course, this may well be correct but, the effort a Listing Broker makes to first address the buyer’s efforts and appreciation for making their offer can go a long way towards allowing them to understand how things are viewed from the Seller’s perspective. The following narrative is from an email response I recently made in regards to a buyer’s repair request. That request included virtually every item noted by the Home Inspector, be it those requiring immediate attention to points for future reference and everything in between, here’s that reply:

“Sorry for the delay in getting back to you. Both the Seller’s and I appreciate the effort & due diligence put forth by the buyer in highlighting his concerns thus, wanted to spend as much time as necessary to provide a response commensurate with that effort.

Please note that although I’m just going to address a few of those issues herein that each & everyone has been considered. Before I address a sampling of those issues I wanted to say that we felt the Home Inspector did a good job of pointing out areas of concerns, as well as typical home owner deferred maintenance issues, all while doing so in a professional & non-alarmist manner. In addition, we certainly appreciate his identifying the frozen water supply line issue before it thawed. I’ll be meeting a plumber tomorrow to have that replaced and have him check for any additional leaks as well.

What we did in our evaluation of the buyers concerns was prioritize what was noted into repairs needing immediate attention, items that could be categorized as deferred maintenance or as we noted in several cases, just those requiring further explanation. Examples of some, but not all, of the noted issues that require further explanation are: Water heater over flow pan does in fact have a drain tube that runs from it out thru the garage. The furnace was recently serviced just a few months ago (no sticker left on it which leaves the inspector no choice but to suggest that) & a circuit board was replaced a few years back. All the parts for the T.V. cabinet are there but, need to be adjusted…the old parts are the ones laying in the back of the cabinet. Secondarily, there are a number of issues that any buyer would be well advised to take care of once inside their new home such as vegetation, moss growth, caulking & sealing etc. In regards to a tree mentioned, if it’s the one the Seller is thinking of, it may border in part onto another property thus, that might fall into question but, can very likely be dealt with.

None the less, we took it to mean that by spending the amount of time he did in compiling this list these items held some importance to the buyer thus we wanted to afford him the opportunity to continue to prioritize just how important each one was. After much reflection the Seller’s have agreed they would credit the buyer up to $3,000 to use as he see’s fit for the essential repairs or, would be O.K. with increasing the sales price as much as an additional $5,000 to $422,000 with an $8,000 credit.

Just as I’m sure all concerned are well aware this is a 16 year old house and no longer brand new as it was when the Seller purchased it, we are also sensitive to the fact that the buyer would like every opportunity to remedy any & everything possible in order to get a ‘fresh’ start. We feel we’ve adequately covered essential issues while giving the buyer the option to take on as much or little of the typical home owner issues your likely to encounter with any 16 year old Home.

Thank You again for your thoughtful insights and we look forward to your addendum.”

I typically try to put myself in the shoes of both the Buyer and Broker when responding thus, words mean things whether your on the Buyer or Seller side of the equation. Here’s a breakdown of my email response and what wording was employed in the context of a Real Estate transaction to convey a clear & concise response. First, I would note that the response was only a few hours after it was promised however, starting off by suggesting that any delay in getting back to them shows that their requests are ever-present in our minds thus, they should expect a thoughtful response as they continue reading. Secondarily, I wanted to convey that any perceived delay was due only to our wanting to dignify their efforts on an equal footing.

In the second paragraph I’m touching on two primary points, one being that a later attempt to categorize and condense a list of 20 something items into 3 categories is being done with everything taken into consideration and not a skimming exercise & second paying respect to their Home Inspector. All too often Broker’s use the opportunity to dismantle an inspection addendum by laying blame on an over zealous Home Inspector. It’s important, as long as the Listing Broker truly feels it to be the case, that how you viewed their inspection report was also considered, assuming of course you’ve been provided with one. Note that just as I was laying a foundation for condensing their list of issues into smaller groupings, I’ve also taken the opportunity to highlight that the Inspector not only did a good job of pointing out areas of concern but, also noted in a subtle way that we recognize there was a place for items that might be considered home owner deferred issues. Ideally I want to convey here and elsewhere that their own Inspectors report has a varying degree of comments & notations…sounds much better than actually pointing out that something like suggested might have a different meaning then recommended. It’s sounds like a very minor difference but, it’s important that we first agree that the Inspector they choose did a good job and second, we noted his varying degree of comments & notations without any cloud over us from having just implied the Inspector was over zealous in preparing the inspection report. In this particular case, I also took the opportunity to once again thank them for the thoroughness of the inspector in catching a potentially damaging issue and hopefully drove that home by letting them know a professional would be not only repairing that issue but, would look for other issues as well.

The third paragraph recognizes the effort put forth by the Buyer in compiling his issues and related ancillary information. We also ‘suggest’ that we are in essence affording the buyer additional time to continue to prioritize those issues. After all, we initially got a list of 20 plus issues with no degree of separation as to their importance. We’ve already implied that there is in fact a difference in how things should be viewed and that all started with their Inspector, someone we already agreed upon as being competent & reasonable. The second part of that paragraph is where we finally condense the subject matter so as to avoid discussion of 20 something different issues thus, we’ve suggested a credit that covers essential repairs. In addition, and again treating all the buyers concerns as important, we’ve extended an opportunity for the buyer to potentially do all those items with a majority of the overall credit being offset by a price increase. Many times we’ll find the buyer no longer see’s these items as necessary if they are being asked to contribute. Of course, offering an increase in sales price is subject the ability of the property to appraise…something we were comfortable with in this case.

Last paragraph states the obvious in regards to the homes age but, includes the Seller and I in that statement as well. This is a much better time to state what is often bluntly stated in one simple sentence during such negotiations, it’s creating a foundation for what we hope to convey. We further address the fact that the buyer’s request is really only what virtually everyone else wants in their purchase, a fresh start in a Home that is ‘new’ to them. By that statement we are again giving just due to the importance of what the buyer is requesting. We finish off by revisiting the idea that there are different types of issues with varying degrees of importance and place our Home on equal footing with other Homes of its age, no better & no worse. Finally, we commend their thoughtful insights and move to our intended goal of getting the buyer’s Broker to put there list to writing.

Will the efforts put forth have a ‘net’ positive effect for the Seller ? Stay tuned to my Blog to see how this works out.

Bob Zawaski P.C.

Oregon Licensed Principal Broker

Investors Trust Realty

itrustrealty.com/blog

What Buyer’s should know about Broker referrals

December 29, 2016 by bzawaski

What buyers should know about Broker referrals…

Ask any Broker about referring Lenders, Home Inspectors, or Contractors to their buyer clients and you’ll get a wide range of answers from referring several for each trade, referring just their most trusted individual to not referring anyone at all. The one common thread among those three points of view is the Broker’s concern for his/her liability. Of course, the buyer simply wants to hire someone with expertise to help them obtain a loan, inspect a house or make repairs so, should the Broker’s issues with liability be a concern for the buyer? Unfortunately, the answer is yes but, how your Broker deals with walking the fine line between being a resource for all your needs and protecting his/her liability will determine whether you’ll have a good working relationship and be able to accomplish your goals. This is certainly a question you can pose to any Broker you may be considering to work as your Buyer’s Agent before hiring them.

Why should a Buyer be concerned with the Broker’s potential liability…the short answer is that in an Agency relationship your Broker’s liability could become your liability. You’ve hired someone to represent you thus, what they say and do in that capacity may have unintended consequences for you. Regardless of which point of view a Broker takes in regards to providing referrals or not, if they’ve made that decision with the intent to protect all involved from the harm of potential liability then they have served their clients well. Of course, there still is that fine line between potential liability and providing a buyer with high-quality service.

In 20 + years I’ve observed Broker not only practice one of the three above-referenced points of view in regards to referrals but, some pretty unique defenses of those positions as well. It’s commonplace to hear Brokers say they always refer to “3” of every trade but, all too often it’s followed with some sort of disclaimer that they’ve now cleansed themselves of any liability by doing so. There is also a saying that goes “your only as good as the last name on that list” thus, the client still got the names from the Broker so, if one goes bad then who is to blame, the buyer for making a bad selection or the Broker for providing the names? In many cases the buyers are glad to have three names from which to choose and things go just fine, however, there are the buyers who require more pinpoint direction and that means being guided to the sole individual expert who’ll solve their issue. To this type of buyer, 3 names may be looked upon like handing them the yellow pages and wishing them good luck & which leads us to a Broker who proudly states their “no referrals” policy. I try to put myself in my client’s shoes whenever possible and I can’t imagine how stressful it would be to be left on your own to trust a total stranger to take you thru a crucial point in a transaction. Needless to say, I’m not in the camp with either of those Brokers who would provide multiple names or leave you on your own. I just closed a transaction wherein my buyers & I encountered a seller who had just gone thru a sale fail that included making repairs to his roof which were improperly done…it factored in that deal terminating, as well as being an issue when our inspector called out the improper repairs a second time. This was a situation wherein the seller simply searched on his own to locate a roofer & unfortunately, it didn’t fare well. Having had the rare opportunity to meet the seller in person, I was taken aback by his obvious embarrassment for what had happened previously. It’s a situation such as this that confirms my belief that I will continue to provide only the most trusted individual lenders, inspectors & contractors to my clients. Brokers are only permitted to share referral fees with other Brokers, not lenders, Home inspectors, or contractors thus there are no financial incentives, other than providing a valuable resource to the client. I constantly review records & information on all trade referrals to ensure that anyone I refer to a client would be the same individual I would trust in my own home.

Although most Real Estate brokers are not experts on home inspections or construction we do have an obligation to our clients to have sufficient knowledge to address issues related to buying & selling property, including providing information that may require more advanced expertise from Attorneys, CPAs Contractors, etc. It would be very difficult, if not impossible, to understand when those ‘next steps are required if a Broker essentially removes him/herself from a transaction by not taking part in all the issues that affect a client, such as when & who to hire in addition to the Broker

Bob Zawaski G.R.I.

Oregon Licensed Principal Broker

Investors Trust Realty

Buyer’s Representation – 2024

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When Your Buying & Selling As-Is

Transitioning Between Houses

Days on Market: Why it Matters

Selling Your Home and Buying Another

When is Cash no longer King ?

Repair it all Home Inspections

What Buyer’s should know about Broker referrals

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