More COVID-19 influenced thoughts

I last wrote about loan forbearance and kittens.

Since then quite a few folks have talked with their lenders, and gotten forbearance agreements for their mortgage payments.  But...many of the forbearance agreements, in the fine print, require re-payment of the full deferred amount at the end of the forbearance period.  This means, if you defer payments for three months, you'd have to pay those three months' payments after three months.  So unless you'll somehow come by that due balance all at once, I'd think twice before signing such an agreement.  It may still be worth contacting your lender to ask, but do read the fine print.

Currently, real estate activity is still permitted in both Oregon and Washington.  Open houses and brokers open houses are pretty taboo, and our multiple listing service has removed that data field, making it challenging to promote open houses.  This is as it should be.  Most offices have recommended  protocols in place for property showings including cleaning, booties, hand washing and social distancing.  Title companies are continuing to close transactions, and county recording offices are handling electronic recordings.

The City of Portland permit office is closed, so building permits, including those for sewer repair/replacement and radon mitigation systems are not available.  Multnomah County's in-person recording window is closed.  It's a challenge to get repairs completed prior to closing, and moving  companies either aren't working, or are very booked.

It sounds as though some loan programs geared toward first time and low income buyers, may be tightening their lending requirements.  Programs like FHA have traditionally allowed a buyer to have a lower down payment, lower credit score and higher debt level than conventional loans.  While these programs will remain more approachable than conventional loans, they will be requiring buyers to have an amount of financial strength.

A few blogs ago, I talked about ibuyers; Zillow, OpenDoor and others.  These companies can offer an easy button to sell your house quickly when timing or other circumstances make selling via traditional means untenable.  Now seems like a great time to use this service, if, for instance you need to sell for a job relocation, to lessen expenses during the pandemic etc.  Oh, but Zillow isn't buying right now, and I'm not sure about OpenDoor.

Who is working now, (carefully) are Realtors; licensed and doing business here in Portland.  We're taking plenty of precautions, with cleaning and distancing protocols in place.

And kittens!  What about kittens?!  Actually, today I'm thinking about puppies!

The folks at One Tail at a Time will soon have puppies available for adoption.  If a puppy seems like too much work (they are very busy creatures) One Tail at a Time has more mature dogs too.  You just might need a buddy...

What's the deal with Opendoor and Zillow Offers?

These companies are referred to in the industry as ibuyers; instant buyer, internet buyer or investor buyer.   They will make a cash offer on a house, site unseen.  Usually, a homeowner or their agent will request an offer through a website or app.  The offer is then sent to the buyer within 24-48 hours.

While their advertising touts no real estate commissions, Opendoor’s average service fee, in the Portland market has been 7.1%.  Realtor’s aren’t allowed to discuss specific commission rates per the FTC, but trust me, many folks charge fees less than this.  Zillow Offer’s fee is also around 7%.  Once an offer is accepted, the ibuyer will have an inspection done by an employee, not a licensed, third party inspector.  Similar to a “regular” transaction, repairs may be asked for and negotiated.  Close dates are usually set by the seller and can be as soon as 10 days, or up to 60 days.

These quick to close, cash offers can certainly have a place in our market.  While the seller may not get top dollar for their property, they can get certainty, convenience and control.  You’ll know the amount of your proceeds pretty quickly, can control the close date to your needs, and don’t have to be inconvenienced by multiple showings and open houses.  Have a busy family where keeping the house show ready and accommodating showings is hard?  This type of transaction might work for you.  Similarly, if you need to sell your home to buy your next home, working with an ibuyer can make that process easier and less stressful.   Or maybe you’re relocating out of the area on short notice; an ibuyer make things quicker and easier.  

If the idea of possibly leaving money on the table will drive you crazy, an ibuyer may not be for you. 

A few things to know.  Currently, in the Portland market, Opendoor is buying in the area from Forest Grove to Sandy, and the Columbia River to Newberg (they are not yet in Washington).  They’ll only buy homes that were built in 1960 or later, priced from $150,000 - $550,000.  They won’t buy anything behind a locked, shared entry; think condominium or gated community, and they won’t buy anything with a pool.

Once a sale closes, the house will be re-listed for sale through their proprietary systems.  You might see Opendoor’s signs of the 24/7 open house.  Buyer’s can access the house themselves, without an agent, using their app.  Some have security concerns about the public going in houses unaccompanied, and worry about squatters are assault crimes . As far as I know, we haven’t had any of those issues here, but in the Phoenix market (where Opendoor has been for several years), there have been such issues.   

Also to know, when Opendoor buys a property, while they do their own inspection, they usually do not test for radon, do sewer scopes nor oil tank searches.  Buyers should be sure to have these inspections done as part of their purchase.  

In general, the ibuyer model is meant to make money on the transaction fees (that 7% noted on the Portland market).  They are not considered flipper.  That is, the business model isn’t necessarily about buying low and selling high; though I’m sure they endeavor NOT to lose money on the buy/sell. Ibuyers are seen as technology companies, not real estate companies, and have LOTS of financial backing. 

Lastly, in selling to Opendoor, unless you have pre-arranged to engage and pay a Realtor, you will not have your own representation.  Opendoor will, understandably, be acting in their own interests.  Similarly, if you choose to buy an Opendoor property directly from them, you will not have your own representation and counsel through the offer, inspection and closing process.  Buyers can choose to be represented by their own agent.  

Most of this piece focuses on Opendoor as Zillow Offers is quite new to our market and less information is available.  Offer Pad and Redfin Now are active ibuyers in other markets, but  have yet to come to the Portland area. 

If you have more questions on ibuyers, I’d be glad to chat. 503-312-8038. leslievjones@gmail.com