http://www.orenconeighbors.comA blog by Bill Metzkeren-ushttp://www.orenconeighbors.com/ask_bill.php?id=101Two different buyers have asked me over the past few weeks about earnest money--the why and the how much. The main purpose of it is for the buyer to show he or she cares a lot about buying the house--he or she is is "earnest" enough about the offer to put some skin in the game. It is not, by the way, the central theme of an Oscar Wilde play nor the title of Hemingway's autobiography. The Real estate sales agreements have more to do with the earnest money than about the actual sale of the home. I'll get flack on this from other agents and maybe even a lawyer or two, but it's true. In California, these agreements are far more often referred to in the legal and business communities as "deposit receipts" (for earnest money)than as sales agreements. Don't believe me? Try suing for specific performance on one of these agreements. Short of that, ask a lawyer what your chances of success might be in this kind of lawsuit. Which gets us to the purpose of it: It fixes a damages amount for the parties to the contract should someone not perform as agreed. This includes the real estate agent, by the way. Once the agreement is signed by both parties, the earnest money is placed in a trust account and becomes the property of both buyer and seller. How much? One to two percent of the offering price. If I represent the seller, I push for the higher amount. For buyers, I try to keep it as low as possible. Sun June 29, 2008, 10:21 amhttp://www.orenconeighbors.com/ask_bill.php?id=100Plans for rebuilding the Washington County fairgrounds into an events center are underway (cut and paste into your browser http://tinyuri.com/4sbeyq to learn more of the details). But there's a naming contest underway. The rules: --Up to five words in length --Should not include the words "fair" or fairgrounds, since the revitalization is multi-purpose in scope --Should have countywide appeal --Should reflect a year round facility attracting a wide range of events and trade shows --Should address the long-term vitality and future use of the property. For more in formation on the naming contest, go to http://www.tinyuri.com/6b2sqb. My choices: 1. Catch a Fat Pig Plaza 2. World Shade Center 3. Washington County Trade and Spade 4. Thin Towers Sat June 14, 2008, 10:33 pmhttp://www.orenconeighbors.com/ask_bill.php?id=99Since most of my professional life has been in real estate investing and developing, I understand the public's antipathy towards paying a six percent commission. Lately--as I have often have over the years--I've been trying to reconcile the real estate agent's and the property owner's owner's viewpoint. From the owner's point of view (and mine for 35 years), it's paying an agent $18,000 to sell a $300,000 house just to stick out a sign and put it in multiple listing. From the agent's point of view, it's not that at all. Of the gross amount, she or he will pay around half to the agent who brings the buyer. Ok, that's still $9k. But of that amount, a percentage between ten and forty percent goes to the brokerage house for desk fees. Call it $6,000 for the sake of argument. Take out the listing costs and a pro-rata amount of annual personal marketing, and the agent is down to--what? Three or four thousand, maybe? That sign in the ground and MLS entry cost her or him $14,000 or so. Agents spend thousands and thousands of dollars in personal marketing. Their logo is their picture on a business card, sign or website. As Procter and Gamble spends millions to convince you how great Tide detergent is, agents spend thousands to convince you that they are the one for you. This isn't to justify the business plan as it now exists, by the way. I'm showing the agent side of things. More to follow on this. I'd love to hear your response. Tue June 3, 2008, 5:19 pmhttp://www.orenconeighbors.com/ask_bill.php?id=98Here's a typical instance of how her Turkish MIL annoys my daughter. Yesterday (Saturday), she called Sarah up and told her to bring the baby over that afternoon. Sirin (the MIL) had invited a number of friends ands relatives to come and see Sarah's baby. Unfortunately, Sirin had neglected to tell Sarah or Engin (Sarah's husband)any of this, and they already had other plans for the day. Forward planning, while not a concept in Turkish business or politics, doesn't seem to be present anywhere else. But nevermind. The MIL calls and the younger ones have no right to declne the invitation, or even be annoyed. A similar instance happened a couple of weeks ago. Sarah and Engin dropped their plans and made the 1 1/2 hour trip to the In-laws' flat, who weren't home and kept them waiting for three hours. No apology, no acknowledgment.Sun June 1, 2008, 2:55 pmhttp://www.orenconeighbors.com/ask_bill.php?id=97The latest data from RMLS has been posted under Data and Trends. Market activity remains slow over all. Worse, we see the first deline in average sales price since August 2002. Honestly, some geographical areas are just horrid. Hillsboro/Forest grove isn't one of them, though. I think anyone in the business will say this is almost a neighborhood-by-neighborhood, block-by-block market. Financing remains an issue, especially for condominiums, but that problem MAY be loosening in a while. Watch this space for updates. Want to know what your house is worth? E-mail me (just like Housevalues.com), and I'll send back a pricing report.Sun May 18, 2008, 4:25 pmhttp://www.orenconeighbors.com/ask_bill.php?id=96I updated a price evaluation for a customer who owns a condominium in the Pearl District. The initial report was almost six months old and I wanted to see what was happening. The pricing level was pretty close to unchanged. No real surprise, there. The sales activity was the same. That was kind of a surprise, but no biggie. But the available inventory shot up. I don't know if it's because of new constructio coming on line, more people putting their condos up for sale, or what. A similar thing is happening with a listing in Gresham. Prices over there have come down and will drop a little more. But I updated the information and found that there was a 10-plus month supply of houses. Hard to say where this is all going.Tue May 13, 2008, 3:00 pmhttp://www.orenconeighbors.com/ask_bill.php?id=95If you're a seller, the numbers stink. But they don't if you're a buyer. Time on market is up. The numbers say 98 days for Hillsboro, but that's the average. Prices appear to have maintained a bit of appreciation, but just barely. Statistically it's zero, and I don't know of a listing that hasn't dropped the price. YTD, listings are up, pending sales are down more than 36% and closed sales dropped more than 32%. The tradeoff: Nearly everyone who sells a home buys another one, even in another locale. Sellers who take it on the chin a little will probably make it up when they become buyers for the new home.Mon April 21, 2008, 3:24 pmhttp://www.orenconeighbors.com/ask_bill.php?id=94People trying to sell their homes right now must feel cursed. It's taking longer. Prices get cut. No one even comes to look at the property. Construction defects. I have a listing that's just over a month old that's priced right and is in a favorable location--good school district, close to transportation, close to everything. Hasn't even had a call. Here's the tradeoff, for what it's worth: People selling their homes are usually buying one someplace else, even in another city. The same price cut that makes you wince as a seller gives you a smug grin when you buy. Also, if you're selling, don't be too quick to cut the price. To often, that's the default solution for some agents and their clients. But the reason isn't always the price. If your house is competitively priced and you know it, but it still isn't selling, you might just have to be patient. You wouldn't want to lop $10k off the price and still sit there. How do you know if the price is right? Have your agent, if you're using one, check pending sales, not just closed ones. At least you can learn what asking price is attractive enough to get an offer. You might also try such websites as Trulia.com or Zillow.com for sold information.Thu April 17, 2008, 5:46 pmhttp://www.orenconeighbors.com/ask_bill.php?id=93While I'm not adept or educated enough to fully explain the mortgage and credit crisis, I'm offering a bit of a primer. This thing is a very big deal and will dtermine the housing market for years to come. Anyway: Ten people buy houses for $120,000 apiece. Each buyer puts down 20%, or $20,000, and takes out a mortgage from different banks for $100,000 at 6% interest. The bank takes the loan and sells it to Fannie Mae or Freddie Mac, quasi-government agencies, who now has a new packet of loans for $1 million (ten bank loans times $100k each). Fannie or Freddie turn around and sell the loan packet to investor groups, most recently large hedge funds. Now, a couple of why's: Why Fannie Mae or Freddie Mac buy loans from the banks, and why do the hedge funds buy the loans from Fannie or Freddie? Fannie and Freddie do it so the banks whom they bought the loans from can turn around and make a bunch of new loans with the new money. Hedge funds buy the loan packets because of the interest rate return. The 6% rate will, in fact, be higher because the funds bought the loans for a discount, so the actual rate of return is higher. So, what happens when the ten people who bought the houses quit paying the loans? The hedge fund stockholders get hosed because the income stream stops, the hedge funds refuse to buy any more loan packets from Fannie and Freddie, Fannie and Freddie don't have money to buy loan packets from banks and suddenly, the banks don't have any more money to loan to new borrowers. New borrowers can't buy, and the market drops because of the law of supply and demand. That, in essence, is what's happening now. To make things worse, the houses that were bought for $120,000? They're now worth $100,000. If a couple of them go into foreclosure and get sold at fire sale prices, the appraised value of the others drop accordingly. There's more, but I hope this helps.Thu March 13, 2008, 12:04 pmhttp://www.orenconeighbors.com/ask_bill.php?id=92The current RMLS data has been posted. Portland Metro is trending towards longer market times and price stabilization. Some areas are seeing dips, but it seems mostly because of very localized conditions. Another agent remarked that Orenco Station homes may be settling into 2005 prices. However, we both concur that construction defects remediation have not affected marketability. I think it's a long-term benefit. Why? Because defects are popping up all over in new construction. The typical response is for homeowners to file legal actions and, if lucky, win some kind of settlement. That's where the "fun" begins, because lay people usually don't know enough about building to understand how much is costs and if the contractor doing the work is doing it right. At Orenco, Pac Trust IS doing it right. It's the opinion of many that construction defects are far more widespread than anyone realizes and that many just haven't been discovered. We'll see.Fri February 22, 2008, 9:44 am