When you want to buy or sell your home quickly!

Category Archives: Buyers

Buyer Contingencies in the Oregon Real Estate Contract – PointClickandPack.com

The Oregon Real Estate Sales Contract heavily protects buyers by giving them three standard contingencies, plus an appraisal contingency for financed offers, upon which they can terminate a sale and get a full refund of their earnest money. It’s important to note that once a home is sale pending, the sellers cannot get out of the contract without risking a lawsuit from the buyers for specific performance. Buyers cannot be sued by the seller for specific performance. If a buyer terminates a sale after all of the standard contingencies have been satisfied, then the buyer risks losing his/her earnest money in full as liquidated damages for keeping the seller’s house off the market while waiting for the buyer to perform. Here are the basics of each contingency:

The Seller’s Property Disclosure – 5 Business Days After Receipt of this Document

Prior to listing their home for sale, sellers fill out a five page property disclosure which lists everything they know about their home in check box format. (Ex: Has the roof leaked? Yes or No. If so, has the leak been fixed? Yes or No). Buyers have five business days after receipt of this disclosure to back out of the transaction for any reason (or no reason) whatsoever. This is the buyer’s right of revocation under OR law.  If the seller (typically via the listing agent) does not provide the property disclosure until closing, then the buyers can back out of the purchase, keeping their earnest money, up until closing. Normally though, the disclosure is provided to buyers upon offer acceptance, so this contingency is satisfied within the first five business days of offer acceptance. In my experience, buyers rarely terminate a transaction based on information learned from the property disclosure. If they terminate on disclosure, it’s usually because they have found another home they want to buy instead, or have gotten cold feet about the purchase for some other reason. However, the property disclosure is the first place buyers check when problems arise during the transaction or after closing. And non-disclosure about issues that can be somehow proven that the sellers were aware of but didn’t reveal can lead to lawsuits. For this reason, it is imperative that sellers reveal everything they know about the home, during the time that they’ve lived in the home, on this form.

Home Inspection – 7-10 Business Days After Offer Acceptance

Buyers have the right to have the home inspected unless they specifically waive this right in the contract. The time frame for inspections is most typically 7 or 10 business days after an offer has been accepted. Business days begin the next day. Ex: If an offer is accepted at 8:00 am Monday, the time frame for all contingencies would begin on Tuesday. Additionally, unless stated otherwise, the deadline for all contingencies is 5:00 pm on the final day. Once the buyers have obtained all desired inspections, they have three options: (1) Remove the inspection contingency and proceed to closing without asking the seller for any repairs; (2) Unconditionally disapprove of the inspection and terminate the sale; (3) Write up a repair addendum asking the sellers to make repairs and/or reduce the sales price (or provide a credit towards closing costs) in lieu of repairs. If agreement is not reached on the repair addendum, the buyers have the right to terminate the sale. The sellers do not have the right to terminate. However, they can refuse to do any repairs or provide any closing cost credits or price reductions. They could simply revert back to the original accepted offer and perform accordingly. (Please see my other Blog article about the types of inspections available).

Preliminary Title Report – 5 Business Days for Escrow to Send, and then 5 Business Days for Buyer Review

The preliminary title report (prelim) is generated by the escrow company and is emailed out to all parties in the transaction within five business days of the opening of escrow. This is most typically effectuated within 1-2 business days after offer acceptance and is handled by one or both of the realtors involved in the sale. The prelim shows all of the following information (and more): Liens against the home; Easements affecting the property; Judgments against the buyers and sellers (child support/alimony/court judgments); Taxes due or paid; Codes, Covenants & Restrictions, (CCR’s) and Bylaws for condominium and townhouse complexes; Legal property description; Filed litigation affecting the property, etc. Once the buyers receive the prelim, they have five business days to challenge it. Unlike the property disclosure where the buyer does not need a reason to terminate, if the buyer wants to terminate based on the information learned from the prelim, they must have a reason for doing so and this reason must be one that the seller cannot or will not agree to remedy. For example, if there is a contractor lien on the property and the sellers agree to pay the lien at closing, then this item is considered satisfied and the buyers cannot terminate for this reason. If the sellers do not agree to pay the lien and the buyer does not want to pay it, then the buyers can terminate the sale and get their earnest money back. An example of an issue that the seller would not be able to remedy would be any item featured in the CCR’s for the complex or neighborhood. If the complex does not allow dogs, the seller will not be able to change that issue, so the buyer can choose to terminate at this point if they want to keep their dogs. Utility company or fire hydrant easements are not considered to be valid reasons for termination. Nor would any item that would have been easily recognized or already disclosed prior to offer acceptance (ex: a shared driveway).

Appraisal Contingency

For buyers obtaining a loan to make their purchase, the lender will require a property appraisal. The appraisal is typically the final step in the sales transaction. This report is normally ordered after the inspection contingency has been satisfied. For conventional or FHA loans, it takes approximately 2 1/2 weeks from the date ordered for the appraiser to schedule the appraisal visit, complete the home valuation report and submit it to the lender. VA loans take about 2 weeks longer. If the home appraises at or above the sales price, then the sale moves forward to closing. If the appraisal price comes in below the sales price, then the buyer and seller have the following options; (1) Challenge the appraisal by sending in different comps or disputing information in the original appraisal report in hopes that the appraiser will increase the appraised value to the sales price or higher; (2) The seller can agree to lower the sales price to the appraised value and the sale will continue at the lower price; (3) The buyers can bring in the difference in the appraised value and sales price in addition to their original down payment. For example, if the sales price is $250k but the appraisal comes in at $240k, the buyers can choose to continue with the transaction by bringing in another $10k at closing on top of the down payment needed to fund their loan. If the above options lead to a stalemate by the parties and the appraiser is unwilling or unable to adjust his/her value to meet the original sales price, then the buyers can terminate and get their earnest money refunded.

One final note: Other than the appraisal contingency, the three main contingencies typically run concurrently within 10 business days of offer acceptance. Thus, if buyers want to terminate within the first 10 business days, usually they can get a full refund of their earnest money. However, once all contingencies have been satisfied and the appraisal has come in at or above sales price, then terminating buyers typically forfeit their earnest money to the sellers.

Feel free to contact me with questions about the Sales Contract. You can reach me at Phyllis@PointClickandPack.com or 503-421-2407. I look forward to hearing from you!



Posted in Buyers, General|

PPS School Locations by NeighborhoodHere’s an excellent map of where all 78 schools in the Portland Public School District are located. Kindergarten thru High School are included. PPS offers language immersion programs in grades K-8 in Spanish, Chinese, Vietnamese, Russian & Japanese, as well as focus schools which specialize in areas such as science or the arts. Both of my kids are in the Spanish immersion program and were fluent in Spanish by 2nd grade! Contact me if you’d like more information, 503-421-2407.

Posted in Buyers, General|

How Seller-Paid Closing Costs Are Applied at Closing – Portland’s Fee for Service Real Estate Company, PointClickandPack.com

Seller paid closing costs are basically a paper transaction. There are costs for the buyer for getting a loan. These include origination fees, loan processing fees, escrow fees & recording fees. Your lender can send you a break-down of these costs if you don’t already have a copy. In addition, your loan could include an escrow account to pay your taxes and insurance with your mortgage payment. If you choose to have an escrow account then there are typically 6-12 months worth of padding to set up this account initially and these reserve funds are collected by your escrow officer at closing. Think of your escrow account as simply a bank account for the house. When you sell, you will be refunded any unused portion in the account. But during your ownership, your bank will take care of your property tax payments and home insurance payments each year. (They pad the account at the onset so that they don’t need to ask each buyer for more money when taxes and insurance rates go up each year). These reserve funds to set up your escrow account are called “pre-paids.” In loans where the buyers have a 20% down payment or more, the buyers can choose to pay their own taxes and insurance each year, in which case they would not have pre-paids. When you close, you will need to provide the balance of your down payment (your earnest money deposit goes towards your down payment) plus your closing costs and pre-paids. When the seller agrees to pay a portion of these, (let’s say $5,000 just to have a number), then that simply shows up as a credit on your closing statement. So at closing, you will need to bring $5k LESS to the closing table while the seller nets $5k LESS from his profit. This is why it’s a paper transaction, because neither party actually shows up with this money at closing. Let’s say you want to pay your own taxes and insurance, and therefore you don’t have pre-paids, and your closing costs come to $3k. You would then talk to your lender about buying down your interest rate so that you come up with another $2k in closing costs and thus have a less expensive mortgage payment. Or, you would ask the seller to do $2k worth of repairs prior to closing and then contribute $3k towards your closing costs. Any unused portion of closing costs gets credited back to the seller, so it’s important to know exactly how much your loan needs in costs before negotiating this as part of the transaction. The closing cost contribution has absolutely NOTHING to do with the seller’s costs to close. The seller will have some closing costs related to escrow and recording fees, but they pale in comparison to loan costs and these show up as a debit on the seller’s closing statement meaning that the seller’s profit is reduced by that amount. Please contact me if you want additional information. You can reach me at Phyllis@PointClickandPack.com or 503-421-2407.

Posted in Buyers, Sellers|

Types of Inspections

Finding the perfect house is tough for most buyers. But just getting an accepted offer is only the beginning of the house buying experience. As soon as you’re sale pending, you’ll need to start scheduling your home inspections. I typically recommend that buyers have three inspections: a general home inspection, an oil tank scan, and a sewer scope.

The general home inspector will perform a broad overview of all aspects of the house from the roof to the crawlspace. The inspector’s job is to test out and identify whether the house’s mechanical parts are functioning (i.e., the furnace, electrical outlets, plumbing system, dishwasher, etc) and to point out any structural or hazardous items, such as missing hand-rails at stairwells and inferior support beams. Most inspectors are also good about offering small tidbits of maintenance and repair advice to buyers. Most inspection companies base their pricing on the square footage of the home.

For most houses in the close-in Metro area, an oil tank scan of the property is advisable. Many of the older homes were originally heated with oil heat and although the house you are buying may have a different heat source now, such as gas or electric, there may still be a buried oil tank on the property. If the seller is unaware of a buried oil tank, then the only way to determine if one exists is to hire a tank company to scan the yard around the house. If a tank is found, further testing of the soil will determine if the tank is leaking oil into the ground.

Think of a sewer scope as a colonoscopy of your house. For this inspection, a long wire with a camera at the end is threaded through the sewer line from the sewer clean-out valve (which is typically located in the basement or garage) to where the line connects to the city main line in the street. The scope will reveal any problems with the sewer pipe including holes, tree root intrusion, breaks at connecting joints and improper grading. This inspection normally costs $100.00 and is well worth the money since a clogged sewer line could back-up into the house.

In addition to the above, other inspections may be recommended, such as radon testing or specialists for the roof, furnace, electrical or plumbing systems. It is good for buyers to know as much about the house they are purchasing as possible. Never waive your right to inspect!

Posted in Buyers|

Why Buy New?

By Andrew Hill @ http://newhomes.move.com/

With the shaky economy and the burst of the housing bubble, many homeowners and potential homeowners are looking for ways to save money on their living expenses. But what should you do when you want/need to move, but can’t decide whether to buy new or used? If you have wrestled with factors such as cost, appliances, etc. then please consider the following suggestions when making your new/used decision. Although there isn’t a right or wrong answer to the question, there are better choices for certain people. If the following reasons are important to you, then you should consider buying a new home.

If you’re afraid of a hefty mortgage accompanying a new home, then listen up. Contrary to popular belief, new homes do not have to come with a higher price tag than used homes. Remember the mantra “location, location, location?” Depending on where your property is sitting, you very well could find a new property that meets all of your requirements and costs less than plenty of resales, simply because it’s in a newer neighborhood.

Other economic factors to consider are maintenance and energy efficiency. These hidden costs in resale properties will not have near the same impact when choosing a new home. With a new home you are buying more than a new roof, carpet, and walls. You’re making an investment in the appliances, hardware, and structure of your house. Purchasing new means less home improvement and repairs, which absorb both time and money. Many new appliances and building techniques can also be much more efficient than older forms of energy conservation. By using the proper insulation, HVAC, and building protocol, a new home will be much more efficient at conserving energy than a resale. This efficiency ultimately manifests itself in a reduction of gas, water, and electricity consumption, which means lower monthly utility bills!

Should you decide to buy a new home, there is one area that you must not overlook- and that is the need for a professional inspection. Though your home may be new, there is still the possibility of existing problems that passed the required of building codes, but could have potential consequences for homeowners. A home inspection is important for both new and used homes, so make sure you don’t skip this important step.

Whether you decide to buy new or used, having a Realtor guide you through the process is one of the best ways to make sure that your home purchase goes smoothly. And in case you didn’t know, Realtor’s commissions are paid by the seller/builder. This means that their fantastic services are available to you, the buyer, at no cost! For more information about buying new versus used, or about real estate in general, be sure to contact Phyllis Ghazi, today.

Posted in Buyers|

Expertise from Real Estate Professionals: Far Better Than an Estimate

Real estate websites serve as an important platform to help buyers find their next home, and certainly help sellers expose their listings to those buyers.

But in our view, real estate websites are a starting point, not the ultimate decision engine.

Accurate data and up-to-date listings are very important, but ultimately, we believe the expertise provided by a real estate professional is a far better indicator of true market value than an estimate derived by machine.

That’s why we only display REAL PRICES on homes for sale on REALTOR.com®. Real prices that have been established between a seller and the listing broker, not a mechanized estimate.

Estimates may be OK if they’re used as a reference point to gather general information, but we feel placing mechanized estimates on an active listing that’s been priced by a local professional familiar with the market is misleading.

At best, these estimates are confusing to consumers. At worst, they create the perception of market conditions that don’t accurately reflect reality.

That’s why we don’t do it.

The real estate market is not a “paint-by-numbers” animal. Local market conditions can vary drastically from zip code to zip code, neighborhood to neighborhood, and can change at a moments notice.

Foreclosures and short sales – or the removal of distressed inventory all impact what’s actually happening.

Estimates that are placed on listings that already have an established sale price not only create a recipe for inaccurate information, they also create a strain on real sellers and a strain on the agents who work hard to create CMAs and pricing strategies based on what’s actually happening.

Sellers deserve better than that. Buyers deserve better than that.

Lost in the machinations and histrionics that permeate the discussion about listings and accurate data is the one thing that should be crystal clear:

Real Estate is NOT a game.

It’s a serious business with significant financial and emotional ramifications for the parties involved in every transaction.

And at REALTOR.com®, we have a responsibility to provide accurate information and accurate representations of what’s actually happening in the market – so consumers get the REAL story about what’s happening in their market.

And we do this by displaying real prices from real professionals in every market we serve.

That’s the thing that can really help consumers get a flavor of what’s happening locally, and that’s what we deliver.

Posted in Buyers, General, Sellers|

Square Footage MLS Listing Discrepancies

The determination of whether a particular room or space is “finished” and/or “usable” is sometimes a subjective matter. For example, one person may think a basement is finished because they have area rugs down over the floor and have painted the concrete walls. They may have even furnished the basement as a family room with sofas and a TV. To that person, the basement is finished and usable. To another person, this same basement is unfinished and may not suit their ability to use the space in a similar fashion without adding drywall, installing a drop ceiling to hide the ductwork and adding wall-to-wall carpeting.

Because of this subjectivity, RMLS changed their rules for listing agents a few years ago. Now, when Realtors get a new listing, we are required to input all square footage, finished and unfinished into the MLS. It is up to the buyer to decide if the square footage is usable and how the space can or will be used. The only exception to this rule is attached garages which are not included in square footage calculations.

Without physically touring the property, buyers can do additional research to determine the house’s finished square footage. This information can be found on the MLS listing in two places and is also sometimes written about in the public comments section by the listing agent.

The first place to look is in the basement/foundation (abbreviated Bsmt/Fnd) category under Residence Information. The designations that the listing agent can specify in this section are if the basement is finished, unfinished, full, partial, slab, dirt, crawlspace or no basement. Listing agents can select a maximum of two of the above descriptions for each home. So if the agent has indicated “Finished, Fullbas,” buyers can infer that the full amount of square footage shown in the Lower SQFT section is accurate. (Whether the basement has been finished in a quality, workmanlike manner must be seen firsthand with a property tour). If the agent has indicated “Full, Unfin,” buyers should look only at the square footage shown in the Upper and Main SQFT sections to evaluate how large the house is. The buyers would then need to tour the home to see if that basement could be finished legally as usable space.

The second place buyers can look on the MLS to determine accurate square footage is in the Approximate Room Sizes and Descriptions section. Buyers should note the following abbreviations next to each room; M which stands for main floor, U which stands for upper level, and L for lower level. If buyers see square footage listed in the lower level but there are no rooms with an L designation, it could reasonably be inferred that the basement is not finished. It should be noted that the only room that is required for listing agents to input the M, L or U abbreviation is the master bedroom.

In addition, I think it’s a service to all parties for listing agents to input room sizes and I do this on all of my listings. The MLS does not allow agents to enter inches, so room sizes are rounded up or down to the nearest foot.

Posted in Buyers|

What is a Bumpable Buyer?

A bumpable buyer is the same thing as a contingent sale. It means that the buyer owns a house that they must sell in order that they may use the proceeds of that sale to purchase another property. Because their purchase is contingent upon something that the seller has no control over, (when or if the buyer’s house sells), the seller wants to keep their house on the market by listing it as bumpable in the MLS (as opposed to sale pending).

Can you make an offer on a house that is listed as bumpable in the MLS? Absolutely! However, upon acceptance of your offer, the bumpable buyer is given the first right of refusal. This buyer will have between 24 – 72 hrs (depending upon what time frame was initially agreed upon by all parties when the seller accepted a bumpable sale) to remove their contingency. If this buyer is able to purchase the house without selling theirs, (for example, they acquire a different kind of financing), then the status of the house gets changed from bumpable to sale pending in the MLS and all other offers can only be accepted in back-up position.

If the bumpable buyer is not able to proceed without selling their home, their offer is terminated and the seller can proceed with offers from other buyers. Typically, in the Portland, OR real estate market, we only see sellers accepting bumpable offers on their homes in a buyer’s market. We are currently in a buyer’s market.

If you have additional questions, please feel free to contact me directly at phyllis@pointclickandpack.com.

Posted in Buyers|