Best move for buyers? Buy for two!

I've heard talk that folks in America want to make the day after Superbowl Sunday a National holiday..... and would have to admit that, on this particular Monday, I would be a HUGE supporter of any efforts to make this a reality!  I hope all of you out there enjoyed the big game as much as I did!

Before I get into any "meat", I'd like to apologize for my complete lack of posts in the second half of 2011.  I promise to make much stronger efforts to continue writing through 2012!!  Hope you all come back to read!

My thoughts today are aligned with the many homebuyers out there who are looking to take advantage of the current market conditions and get into property for a STEAL..... often less than the home cost to build!  My advice for you is this:

Betting on appreciation by "buying low" is, in the end, still betting.  Nobody can guess where real estate prices are heading or we would all be millionaires.   Yes, prices are incredibly low relative to historical statistics and it seems like a very good time to buy.  Yes, interest rates are low and it's a fantastic time to borrow.  However, history has taught us to expect the unexpected.  Things can go from bad to worse and, yes, it's foreseeable that real estate prices could go down even further than we've already experienced.  Foreseeable, not likely (in my opinion).

That being said, I would still encourage my own family and friends to buy NOW.  In order to hedge some of the risk, I think the best move for current homebuyers is to purchase a well-maintained, newer duplex.  I understand that duplexes have their downsides; you share a wall with your neighbor and you inherit the role of landlord by being an owner/tenant, to name just a couple.  However, you have a tenant paying a large portion of your mortgage payment, all the while holding onto a valuable asset that has potential to experience appreciation.  In this market, you can likely find a short sale duplex that you can buy for less than it would cost to replace..... this basically eliminates the chance for any significant depreciation in value.  The great part about appreciation in a multi-family property is that, as owner, you experience the rewards immediately through increased rents!  No need to refinance or sell the property to capture some equity!  As rents increase, so does the value of the property....  This is inherent in "Cap Rate" calculations that investors use in valuing income property.

This is also a smart move for current renters.  Why give away your money to a landlord when you can become your own (and somebody else's), for close to or even less than you're currently paying in rent?  Further, you get to experience the tax advantages of home ownership!  However, it's important for anybody making the move from tenant to landlord to fully understand the hidden costs of home ownership and make sure they have the financial resources available in order to do so comfortably.

If you are looking to buy a personal residence, and your financial situation allows, don't let the American "dream" of big yards, big cars, privacy, and all the other "benefits" of single family ownership deter you from a fantastic investment opportunity in multifamily living!  You and your family can sacrifice a little bit of privacy & comfort now, for the benefits of financial freedom down the road.  In the words of Dave Ramsey, “If you will live like no one else now, later you can live like no one else.”

Thinking about a Short Sale? Don’t think too long!!

I fall into a large group of homeowners who have been “on the fence” about short-selling their homes during this economic downturn.  The short sale & foreclosure process is a very complicated one, and each transaction has its own set of unique circumstances that sets it apart from the rest.  The decision to short sell a home is anything but an easy one.

I’m writing today to inform the reader of a VERY important change in the law that is taking place at the end of 2012, which should make it easier on homeowners to make up their minds.  On December 31st, 2012 the Mortgage Debt Relief Act of 2007 is set to expire.  For those who haven’t completed their short sale or foreclosure transaction prior to this date, there will be a significant financial impact!

The Mortgage Debt Relief Act of 2007 allows taxpayers to exclude income from the discharge of debt on their principal residence.  Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.  In layman’s terms; if you have a $350,000 mortgage on your primary residence and the lender agrees to let you sell the home for $200,000 without recourse, the $150,000 “forgiveness of debt” does NOT have to be claimed as income!  In any other loan scenario, it is almost always the case that an individual would have to claim this money as income on their tax return!  Well, that’s exactly what is going to happen when this act expires; individuals who sell their homes for less than they owe will have to claim the difference as income on their tax returns!!  These amounts are often VERY significant, and can result in tens of thousands of dollars due to the government in income tax.

The short sale process is a long & complicated one.  If you are thinking about going down that route with your own home, I would highly recommend beginning the process as soon as possible.  There are qualified third-party specialists that can assist you during the process and negotiating on your behalf, often at no cost to you.  If you have any questions in regards to the short sale process, or the expiration of this Act, please feel free to reply to this post or call Matt at 541.389.7910…. I’d be more than happy to help.

Thanks for reading!

Micro-Housing: A Paradigm Shift of the American Dream

A couple weeks back, I wrote an article called “It’s Not the Size that Counts”; a short piece about buying homes based on factors beyond size & $/square foot.  However, I’m beginning to think that the article should have been entitled “Size Matters”.  Let me explain.

Most of you may not know that I am a LEED Accredited Professional.  This is a designation by the US Green Building Council for someone who has taken the steps and demonstrated the abilities to qualify as a “Green” professional in the building industry.  I have a passion for sustainability, and very much agree with efforts to protect our natural resources by using them wisely & efficiently.

My passion for sustainability, and my continued interest in following the latest trends, has brought to light a recent “boom” in the real estate industry.  The trend is commonly being referred to as “micro-housing” or “pocket-neighborhoods” and is a realignment of the traditional mindset, “bigger is better”.  These micro-homes are designed to maximize efficiency & minimize impact.  They commonly range anywhere from 400-1000 square feet, and the small acreage communities that these homes are found in usually include a significant common area with green space and some sort of community garden, clubhouse, and/or storage facility.  The benefits of these home designs include lower utility costs, smaller building footprint allowing for maximized green space, lowered construction costs, and an overall simplifying of the hectic, over-consuming American lifestyle.  It also embraces the idea of community, which is an American tradition that seems to have died in recent decades.

 

An interesting fact I learned in researching micro-housing is that 60% of home buyers today are 1-2 person parties.  Why then, are we looking for these huge homes that have formal dining rooms which are rarely used, more bedrooms than we know what to do with, and yards that simply consume our time & money to maintain?  I think this trend is encompassing an important paradigm shift, which many American’s are embracing after the recent crash.  Perhaps the rebirth of America’s housing industry will begin with a newer, healthier approach to the way we live and the homes we choose to live in.  Here are some related sites if you are interested in further information on the micro-housing trend:

http://www.cottagecompany.com/default.aspx (My Personal Favorite)

http://pocket-neighborhoods.net/

http://rosschapin.com/Projects/PocketNeighborhoods/PocketNeighborhoodsOpener.html

Thanks for reading! Please comment with your thoughts!.

Best,

Matt

R-E-S-P-E-C-T

I’ll start by admitting bias on the subject of this article.  I am, after all, a real estate broker.  However, I can also claim to have spent many years on the other side of the table; selling everything from bare land to industrial buildings and having to pay commissions on every single successful transaction.  In no way is this article meant to be a sales gimmick or to promote my business in any way; it is simply an expression of my honest belief based on my experience in the matter.

Hire a Realtor, but probably not this guy!

My origin for this topic came about one week ago, when my wife received a call from her father telling her that his neighbor was interested in selling her home and that we should come over to pay her a visit.  Having met and dined with the homeowner before, I was comfortable knocking on her door and letting her know that I would appreciate the opportunity to list the home for her, or at least help her in any way I could through the selling process.

I had no expectations, and discussed the issue with her in a very casual & non-threatening manner….. so her response surprised me.  “Why would I pay somebody for something I can do myself?!” she said, followed by “my son is very good at selling things, and is going to put it on Craigslist.”

Now, I have to admit that I have also questioned real estate commissions before, and whether or not a certain realtor has actually earned the monies collected at the close of a transaction.  I’m sure there are instances in which this argument is valid. 

I continued the conversation with little questioning and no confrontation.  However, as I politely said my “thank you’s” and “goodnights”, the only thing I could think of was that this woman was making a HUGE mistake.  Not by simply not hiring me, but with her stubborn mentality that she could take this on by herself.

It is a Realtor’s full-time job to connect buyers and sellers.  If you do your research, you should be able to find a good Realtor who has superior knowledge of local real estate values, laws, and other related topics.  They pay the dues, attend the meetings, and network within a community that allow them do their job efficiently.  They have access to information that will give you a strong advantage in buying or selling your home.  They will help you get your home in selling condition, suggest improvements, hold open houses, post signs, put out flyers, attend MLS meetings, research comparables, etc. 

If a Realtor’s commission is a great concern to you, I suggest you simply factor it into the purchase price or listing price of your home.  I can guarantee that you will not regret spending the money for the professional services and peace-of-mind that they will bring to assisting you in what has become a very complicated transaction process.  Who knows, you may just get lucky by putting up a FSBO sign on your property & posting a local Craigslist ad, but at some point along the way, you will regret not having a professional by your side to help answer the difficult questions that will inevitably arise in your real estate transaction. 

I’m not asking that you give your business to a Realtor (although I obviously recommend that you do), but I am asking that you give your respect to their profession and expertise.  It should also be noted that, more often than not, the commissions they collect are very much earned & deserved.  This is especially the case in the current market, which is flooded with short-sales and foreclosures that require lots of work and produce very little profit.  If your planning on buying or selling any kind of property, do yourself a favor; hire a Realtor!

Love Thy Neighbor... BEFORE Buying

You know, it often happens that in our search for the perfect home, we can so easily get caught up in focusing all of our attention on the home itself.  I’m sure there are hundreds of thousands of horror stories from buyer’s who have purchased a property only to later find out that there are “issues” in the surrounding environment.  Planes flying low overhead, coyotes in neighboring fields that howl through the night, barking dogs at the neighbor’s house or even, the neighbors themselves.

You just never know what you’re going to run into when moving into a new neighborhood and, thus, acquiring new neighbors.  Maybe the Dad next door plays blaring electric guitar in his garage every evening, or the kids new drum set is in his room right next to your master.  Perhaps the 5-bedroom home next to you has turned into a rental for local college kids who like to party late into the night.  Maybe there’s just something “off” with the family across the street.

There are going to be situations like this that are just unavoidable.  Life has a way of throwing things at us that are unexpected.  However, we can all save ourselves potential headaches and hedge our risk of “neighborly” disturbances by simply taking an evening to walk the block, introduce yourself and talk with the neighbors BEFORE you purchase a home.  Ask questions like “Are there any issues with the neighbors?”, “Do you do things together as a neighborhood?”, “What do you like best/least about this neighborhood”, etc.  It’s a quick and simple way to bring some peace of mind to what could be the biggest purchase of your life!  Have fun with it; grab your spouse or a friend, make a cocktail or pour a glass of wine for “the road” and head on out….  You never know what you’re going to find!

Scrapbooking: it's not just for Grandma!

I’m going to keep this post short… just a little thought from my personal experience. 

We all want to live the “American Dream”, but the truth is we all have different visions of what that dream looks like.  About three years ago, I began compiling a notebook of photos & ideas for my absolute dream home.  The notebook is separated by tabs labeled “Exterior”, “Kitchen”, “Master Bath”, “Hardware”, etc. and in each category I’ve cut out magazine articles, clippings, and pictures of home ideas that I really really like and would someday like to incorporate if I’m fortunate enough to build a custom home.

Now, it’s up to you how far you wish to take this little “scrapbook” idea, but I would strongly recommend that you start building one of your own.  Even if you never desire to build a custom home, the book will be very beneficial when you wish to rent or buy.  It’s always a bit of a challenge to understand a buyer’s vision, and sharing this scrapbook with your agent will give them a very detailed and specific understanding of what you are looking for in a home.

Just a small idea that takes very little time but could have big rewards in the end.

Comment if you have similar ideas that will help buyers and/or sellers of real estate!

Hope everyone’s enjoying their Spring Break!

They Just Don't Make 'em Like They Used To

Vintage is always in style.  In fashion, design, architecture and society, it seems the ol’ phrase “history repeats itself” holds true.

Lately, I have been spending some time in the areas of midtown and downtown Bend, really soaking in the historic charm that this town hides behind its more modern appeal.  Bend is filled with a rich history as a mill town, a ski town, and a town that sat for years and years just waiting to be discovered for all its natural resources and inherent beauty.  This history is shared in the walls of many homes scattered throughout the town, and it’s a shame that the character of these homes is often not appreciated to the level that it should be.

I’ve recently acquired a listing on a great mid-century home on 9^th Street in midtown Bend.  For those familiar with the city, the home is a block North of Hwy 20 at the base of Pilot Butte.  In walking through and taking pictures of the home, it struck me that the character of this home simply cannot be copied.  There was a different mindset in those days, of which the current perspective would restrict any designer/remodeler/architect/etc from replicating.  The kitchen boasts ORIGINAL Thermador appliances, with a matching stainless steel counter-top.  Offsetting these steel components is a blue-ish linoleum counter and wallpapered walls with drawings of soldiers & horses.  There is a unique trim design throughout the home, and the doorknob on the entry is located in the center of the door!  Everything works together and it looks AWESOME!!  But seriously, these designs just couldn’t be found in the inventory of today’s retailers.

It’s my opinion that there exists fantastic opportunity in revitalizing the character of these homes by embracing their original finishes.  I’m not talking remodel here, as that would go completely against what I’m trying to say.  If you find the right property, it should only require minor repairs, and maybe a few, appropriate updates.  I’ve been told that the original materials for many of these homes were stored in their crawl spaces; so if wallpaper is peeling or there’s a section of carpet that needs replacing, it might be the case that you can simply install the extra material and maintain the integrity of the home’s era-specific character.

My 9^th street listing is just an example of some incredible opportunities out there right now in this niche market!  These homes have incredible “bones”, meaning they are built VERY well, but are often not appreciated when looked at with a “modern” perspective.  This means that they are commonly undervalued.  Find your inner-hippie, get in touch with your beatnik side, and have some fun finding embracing the “vintage” of mid-century properties!  Like they say, “they just don’t make ‘em like they used to”!

As an fyi, the 9^th Street home is listed at $149,900 (price recently reduced!).  It’s 1,596 sq.ft., has 3 bedrooms and 1 bath.  It is a short-sale, and a fantastic opportunity in a great location.  If you’re interested, or know somebody who would be, feel free to give me a call at (541) 389-7910 or email me at mrobinson@hunterproperties.info

Thanks to all who've been reading!

Best,

Matt