Thursday, May 21, 2015

Five Sellers?!

I'm selling a house to a buyer client; seemingly a normal house in a normal, bedroom community type neighborhood.  It should be a fairly simple transaction. seems to be some sort of estate, and has five sellers, with varying percentage interests. 

This means five folks to reach agreement on every step of the sale, five folks to sign every piece of paper involved with the sale, and five people for the title company to research in order to insure title.

Wow. I don't know the story of how this came about, but wonder if it isn't a result of poor, or no estate planning. 

To his credit, agent representing the sellers is doing a great job of wrangling the sellers for signatures, and was sure to have the title company do advanced title work to be sure clear title could be provided.  For this, I am thankful.

Over time, we run into a variety of scenarios where getting the proper people signing the listing and sale paperwork can be a challenge.  Aging parents, properties held in trust and dissolving marriages are a few of the forces that can make selling a property hard.  Powers of attorney don't always pass the muster of a title officer, divorce decrees usually have to be signed and filed by a judge, and aging parents may be deemed not of sound enough mind to sign selling papers.

Its best to engage in a bit of pre-sale planning before setting off to sell a property.  Look into who holds title and what might need to occur, well in advance of actually trying to sell the property.  Guardians can be appointed, affidavits signed, powers of attorney clarified and so on.  But really best to do this in advance.

Its a shame to see buyers spend hard earned money on inspections and appraisals, not to mention the emotional investment, only to find the seller can't actually sell the house. 

If you think you might have such a scenario on your hands, give me a call, text or email, and I'll refer you to a local real estate attorney to assess the situation.  Occasionally a title officer can even help.  503-312-8038

Friday, May 15, 2015

Pricing in this crazy market

I'm hearing from some buyers the thought that real estate agents are under pricing properties in an effort to create bidding wars.  I'm not so sure.  Most of us are pricing properties as we always have; by looking at the recent closed sales of properties similar to the subject property in size, location and amenities.  We might bump the listing price of a property up or down depending on how it compares to the similar properties.  But, in general, we look to recent sales for pricing.

Indeed, as a listing agent, it is my job to get the best price and terms for my seller client.  So indeed, I do try to market the property to maximize the sellers proceeds.  This means counseling the seller to properly prepare the property for sale.  Many sellers spend weeks, if not months on a lengthy to do list which includes minor projects, painting, de-cluttering, oil tank decommission and so on.  We're sure not to market the property until professional photos have been taken, the sign is installed, and the sellers are ready for showings to begin.  Often, I'll suggest sellers take a weekend away when their home first hits the market, so the property can be easily shown.  And, we want to expose it to the market for a few solid days before looking at offers.

I work carefully with a seller client to help them understand why waiting too long for offers can be counter-productive and alienate good buyers.

So the property hits the market well priced (supportable by comps), looking good, and readily available to be seen.  I don't think we've manipulated the market, we're just doing a good job. 

The scarcity of listings, combined with a desperation on the part of buyers, has panicked buyers offering well over the list price.  Yes, it can be nice to have a few good  offers from which to chose. Different sellers have varying priorities, from price to close date, terms or possession date.  A few good offers increases the seller's chance to getting what they want.  We evaluate offers based on these varying factors, usually accepting one offer and perhaps putting another offer in aback up position should the first sale fall through. A side note, with buyers jumping to make high offers, we are seeing an unusually high number of failed sales as remorseful buyers back out.

Above that, as a listing agent, I see very little benefit to a large number of offers.  Oregon statutes require every written offer to be presented to the seller, and I believe every buyer who has written an offer deserves to have their offer considered.  I use a spread sheet to organize multiple offers to help my seller client keep track and focus on the components of the offers.  The seller only has one house to sell, so aside from the insurance of a back up offer, the difference between 5 and 20 offers is rarely a benefit to the seller.

Should I be pricing the house higher then the market data suggests?  That feels reckless, and a bit unethical to me.  And I do know, I could price the property too high, attracting no offers; a real disservice to the seller.  I'd prefer to price a property where I know the comps support the price, and see if the market chooses to take the price higher.  By "the market" I mean see if buyers choose to offer more.

And, unless the offers are cash, in the back of my mind, I'm considering if the appraiser will be able to support the high price when establishing value for a bank loan.   In this market appraisers are allowed to trend prices up a bit if the available comparable properties closed several months ago and thus don't reflect this recent run up.  But, while appraisers may do this, they aren't required to do so.

A low appraisal requires further negotiation between buyer and  seller with the possible solutions being the seller coming down in price, the buyer bringing in more cash, or a combination of the two.

We real estate agents are taking a lot of heat for driving prices up, pricing the working poor out of Portland's neighborhoods, playing pricing games to drive prices up and so on.  Mostly, we're trying to do our jobs by doing right by the seller.  In my most recent multiple offer scenario, I realized, it is the buyers who are driving those prices up, not the supposedly greedy sellers.

If you have questions about this crazy market, from the buying or selling side, I'd be glad to talk with you.  503-312-8038