Question: We don’t know much about real estate, where do we start?

Answer:

Buyers: Start by talking with a loan broker and getting pre-approved. A good loan broker will give you a realistic price range to work within, and will identify any problematic issues in your financing, and how to best remedy those issues.  I encourage you to speak with more than one broker, and find someone that understands your needs.
Sellers: “Failing to plan is planning to fail”; Start early by seeking out a knowledgeable real estate broker and obtaining a comparative market analysis (CMA). A good broker will be happy to get involved early to help you strategize and maximize your home’s potential. A well planned home sale transaction leads to optimum profits with the least amount of stress. Again, interview more than one so that you are working with someone you can trust that understands your objectives. 

Question: What does it cost me to work with a real estate broker?

Answer:

Buyer: In the state of Oregon, it does not cost the buyer any additional out-of-pocket expense to work with a real estate agent. The seller pays the listing agent, who then splits the fee with the buyer’s agent. Occasionally, if your agent approaches a for sale by owner (FSBO) on your behalf, the seller may ask that you adjust your offer price to reflect the agent’s fee.
Seller: Real estate brokers charge a percent based fee for their services. For example, a broker in the Portland area may charge anywhere from 1-7% of the sales price. As more and more buyers are asking for closing costs into their offer, stipulate to your listing agent that no commissions will be paid on seller’s concessions. This means that if a buyer asks for $7000 towards closing costs, you don’t have to pay commission on that $7000. Occasionally, for an unusual transaction, a broker may ask only a flat fee. Brokers typically can only be so negotiable on their fee, as most brokerage firms stipulate that a fee below a certain percent requires authorization by the firm. It should also be noted that real estate brokers do not earn a salary, and are only paid when a transaction closes.

Question: Why should I work with a real estate broker?

Answer:

Buyer: Real estate agents do more than show homes to you. A good broker will get to know your specific requirements, will work closely with your loan broker, will negotiate on your behalf for the best price, and will ensure that your interests are protected at all times. The top brokers coordinate your transaction to minimize stress, meet your time requirements, and meet deadlines specified by the sales contract.
Sellers: It is well worth the fee to work with a knowledgeable agent to sell your home. A good broker will have a tried and true marketing strategy that is customizable to your lifestyle and home, will negotiate the best price on your behalf, will protect your interests at all times, and coordinate the timing or your transaction(s) to meet all deadlines in the contract.

Question: What qualifies a person to be a real estate broker?

Answer:

In the state of Oregon, brokers must complete a 150-hour course of study, obtain a certificate from a state approved real estate school, and complete a 200-question test given by the Oregon Real Estate Agency. Once licensed, brokers must complete an additional 30 hours of education before their first license renewal, and every renewal there after. Brokers must also attend a variety of classes to maintain their membership in various organizations, like the National Association of Realtors (NAR). Oregon is one of the few states that has such high requirements of their brokers. We have seen a “division of labor” in recent years, as the state has encouraged the implementation of “Buyer’s Agents” through the introduction of a variety of changes to legislation and policy. Many offices are following suit and encouraging some agents to become buyers agents, that specialize in working with only buyers. This is a prudent industry change, as the buyer can now be assured that their agent is truly working on their behalf.

Question: How should repairs be handled?

Answer:

I get this question from buyers and sellers often….

Buyers: It is well worth the money spent to have a home inspection done on any home you are considering buying. It should be expected that there will be issues that need varying degrees of attention. Every situation is different, but after consulting contractors and obtaining estimates, I typically recommend that the buyer ask for a price reduction or credit to cover the cost of repairs. Only in rare circumstances do I recommend that we ask for the seller to hire a contractor to perform repairs. The reason for this is that it is in the buyer’s best interest to obtain the credit and allow them to hire their own contractor and have the work done to their satisfaction. Often, if repairs are done while escrow is still open, it will extend the closing date and incur additional out-of-pocket “re-inspect” fees for the buyer.  There are occasions where a repair can appear to be minor, but may become quite extensive after work is started (i.e. - oil tank decommissioning).  In this instance I would recommend that the seller hire a licensed, bonded, contractor that specializes in the work needed.
Sellers: I recommend that sellers take a proactive approach to selling their home and have a professional home inspection conducted before marketing their property. After the inspection, I recommend that a licensed contractor do reasonable repairs, and larger repairs be accommodated for in the pricing of the home. If the seller is in extenuating circumstances, or the home is in an advanced state of disrepair, I recommend that the home be priced “As-is”, and that contingency be cited in all marketing.

Question: What is escrow?

Answer:

 Escrow is a neutral third party to the transaction. An escrow officer is usually chosen by the seller, but can sometimes be a point of negotiation if a buyer has an established relationship with a certain escrow officer (as is often the case with investors). Escrow officers must remain neutral and ensure that all parties perform their obligations as specified in the sales contract. The escrow officer will also obtain, verify and notarize as needed signatures on the “closing documents”, like the financing paperwork, the note, and the trust deed. Escrow services in the state of Oregon or part of title companies. Title companies verify that the title is as it should be, is able to be sold, and will insure the title for both the buyer and the seller.

Question: Can I make a fortune on foreclosures?

Answer:

 I typically advise clients to steer clear of foreclosure properties. The transactions are long, can be difficult to negotiate, and the homes are often left in a very deliberate state of disrepair as disgruntled and displaced owners will vandalize upon leaving. Not to say that the bargains aren’t out there, but they are far and few between, and if someone is looking to “flip” the property within a short period of time, there usually isn’t enough of a profit margin. Foreclosure purchases typically take a great deal of patience, due diligence, and capital investment. A better strategy is to find homes that have been owned by the same person for decades, fairly well maintained, and just in need of updating.

Question: How much remodeling should we do to sell a home?

Answer:

To a certain degree, it depends on different factors. If you are strictly investing, you want to find homes that need only cosmetic work and minimal repairs to the major systems of a home. If you are living in your home, and thinking of maybe selling sometime in the future, remodel to your comfort and specific needs as you will have time to “appreciate” in value. If you are living in your home and want to maximize your profits from a sale in the near future, do necessary updating to the major systems (like replacing old lead pipes with copper in an older home), then study current design and color trends in model homes and popular magazines. Work with a contractor, and be willing to do some of the grunt work yourself. A prospective buyer will want to see permits, warranties, and invoices if the work appears to be recent.  Whatever your situation, consult a trusted real estate broker for advice on the value of your project before and after you do the work .

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