Category Archives: Uncategorized

Empty Pocket Syndrome

pocketsHome buyers that are not aware of how much cash they will need to complete their purchase could be exposing themselves to a financial disorder (that I just totally made up) called “Empty Pocket Syndrome”, or EPS. Symptoms of EPS include the cancelling of pizza and beer nights, more frequent attendance at Costco free sample booths and increased lottery ticket purchases!

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But seriously, below are the most likely expenses that buyers should include in their cost analysis BEFORE making an offer on a new home:

  • Loan Down Payment – The percentage of the purchase price that you can afford to pay at closing. Knowing what your other costs are going to be (as below) will help you determine how much down payment you can truly afford. This should be discussed very carefully with your lender and realtor.
  • Earnest Money – When you make an offer on a home you will also be required to deposit earnest money into escrow shortly after your offer is accepted. This money shows the seller that you are serious. The good news is that the earnest money is applied to your down payment at closing.
  • Professional Home Inspection – Home Inspectors charge varying rates. Many set their rates based on the size of the home. The average sized home in Oregon will cost around $400-500.
  • Radon Gas Test– Most real estate professionals now recommend a radon test for every home. The cost in our area is approximately $150 and many home inspectors are qualified to add this test to their inspection.
  • Sewer Line Scope –Sewer line repairs can be very costly and since the sewer line is buried, you need to have it checked. For approximately $125 the contractor will send a camera down the line and provide you with a “Pass” or “Fail” report along with a link to a video of the line. Don’t forget the popcorn when you sit back to watch this video.
  • Appraisal – Recently in Oregon the cost of a home appraisal has increased significantly. Check with your lender on this, but it could be in the range of $1000 or more.
  • Lender & Escrow Closing Costs – These costs can be significant. It’s important for buyers to work with their lender to get an accurate estimate of the lender and escrow closing costs before making an offer. The amount of these closing costs vary depending on the price of the home, the amount of the property taxes, insurance, closing date, etc. Check with your realtor and lender to see if it is possible to wrap some, or all of these costs into your loan.
  • Miscellaneous – This category will help you be prepared for any unforeseen or additional recommended inspection costs. I suggest buyers have a minimum of $500 factored in, just in case.

It’s still a fantastic time to buy, so GO FOR IT. But please avoid Empty Pocket Syndrome by working with your Realtor and lender to calculate how much money you will need…then go get some beer and pizza.  🙂

I’m not a doctor folks, but I can answer your real estate questions at  503-367-4869.

Happy home shopping!

             Kevin      Kevin GormanSells.com

Broker, Certified Residential Specialist –  Summa Pacific Cascade

carry-money-house

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Housing Shortage Fix

PDX Metro Housing Problem? Well, there isn’t a problem if you are living in a home you own and plan to stay in, or if you own rental properties. Both are reaping the benefits of an approximate 11.4% increase in appreciation over the past 12 months. (Check out my  Audio Market Action Report  for these and other market stats)

Portland area landlords are enjoying an annual yearly increase in rental rates of approximately 9%. In the past six months alone, rents have raised 7% which suggest an increase rate of 14% for this year! (Here is a link to a recent Oregonian article regarding these numbers)

Unfortunately, buyers and renters are struggling with the higher costs and lack of choices. That is a problem. Thankfully, loan interest rates still remain low. It is still possible for first-timers to buy. However, sacrifices in location, age or condition may need to be made. Renters should contact a local preferred lender and find out if they can qualify. If they can’t qualify now, ask the lender what steps to take to make it happen in the future.

So what’s the fix? Oregon and Portland metro have been discovered. We are now known to be one of the best places in the world to live. Those of us that live here are fortunate, regardless of whether we rent or own. That said, we need to solve the housing problem. It seems obvious that we need to build a wall and have California, Nevada, Idaho and Washington pay for it!  Just kidding of course… we may need to pay for it ourselves.   🙂   Have a safe & spooky Halloween!

spooky-super-summa-man

 

Kevin G.                                                                                 KevinGormanSells.com

 

 

 

 

 

Questions about the market?  Give me a call  503-367-4869

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Filed under Buying a Home, Investment Properties, Oregon Real Estate, Portland Real Estate, Uncategorized

Battling For Backup

My buyer visited a new listing the very next day after it came on market. The home went pending that same afternoon. Less than one day, and gone! I called the agent to ask if we could present a backup offer (in case the sale with the current buyer fell apart). The agent said yes, but that there were two, possibly three other back up offers that we would be competing with. Oh brother…competing for backup position?

Tapper

 

So, there I was, writing a backup offer above list price and with several other bells and whistles that we hoped would make our offer the best of them all.

 

It was interesting how good it felt when the seller selected our offer over the others. HOORAY, we had won! I felt great… for about two or three seconds. Then I remembered that we didn’t actually get the house yet. We still had to wait and pray that the first position buyers changed their minds, chickened out, lost their financing, got arrested and sent to jail (etc., etc.).  Of course, we’re not wishing for harm to come to those buyers, but we are definitely hoping SOMETHING happens that will move us into first position. Sigh…I also can’t help but wonder if our backup offer is actually even better than their offer. 

For sellers, a signed and accepted backup offer is a powerful tool to have in place. It offers peace of mind knowing they will not have to go back on market should the first buyer bail out. It can also add leverage during negotiation of repairs with the first buyer. Sellers don’t feel as much pressure to agree to expensive repairs requested by the buyer. They just need to have their agent inform them that they have secured a contract with a strong backup buyer who would LOVE to take their place.

Supply and demand folks….supply and demand………

Cheers!

      Kevin G.                  Kevin@KevinGormanSells.com

carry-money-house

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