When you purchase a home, you need to know exactly what you’re buying. Imagine how frustrated you’d be to find out that the hot water heater wasn’t working mid-shower! This is why you should have a home inspection before you buy your home. In Oregon, the inspection period is 10 business days after the sales agreement is signed. This time gives you, the buyer, a chance to have professionals take a look at the home and advise any repairs that it may need. Most commonly, there is a home inspection (a top-to-bottom inspection of the home), sewer scope (a camera is sent through the main sewer line to inspect it for obstructions or degradation), and a radon test (the Pacific NW and Portland have higher than average radon levels, so it may not be necessary in your area). However, not all inspectors are created equally. Just as in every profession, you’ll find good and bad inspectors. Usually your Realtor will have inspectors that they have worked with that they can recommend to you, but you should still do your homework. Before you hire a home inspector, here are a few questions to ask to make sure you’ve got someone that you will be happy with.
- What does your inspection cover? Not all inspections are the same. Different inspectors have different areas that they focus on, and a range of services. More often, now, we are seeing inspectors that act as a “one stop shop” for home, sewer, and radon. This is nice because you can set one appointment to get all your inspections done in a timely manner, especially if the home you’re buying is not vacant. Many inspectors also offer levels of inspections. A basic package is usually cost-effective and covers the State minimum requirements, and with increasing costs, you can add more detailed inspection. Also, be sure to ask if the inspection covers the garage. Many times if it a detached structure, the garage will cost extra. If you are concerned about something specific, like a leaky faucet in the bathroom, mention that to the inspector so they can check it out.
- Are you licensed or certified? If you live in a state that licenses home inspectors, ask to see their license. In Oregon, you’ll want someone who is licensed with the Construction Contract Board (CCB) and an Oregon Certified Home Inspector (OCHI). At the very least, choose a home inspector who belongs to American Society of Home Inspectors (ASHI). This shows a level of professionalism and education that you can trust.
- What kind of report will you give me? You should expect a written report detailing what the inspector found. Most inspectors will give you a typed report within a week of the inspection. Great inspectors will give you your report at the site and go over it with you in person, which is why it’s important to be at your home inspection. The report should contain plenty of pictures and a good amount of detail as to what the areas of concern are. This will not only paint a picture of the overall condition of the home, but can help you and your Realtor decide which, if any, repairs you are going to ask for in the repair addendum.
- Do you offer re-inspections? In situations where you’ve requested major repairs, it’s a good idea to have the inspector come back out to reinspect the areas of concern. Many home inspection companies provide a re-inspection at a discounted cost to just look at the repairs that have been made to see if they were properly completed.
At the end of the day, the home inspection is a tool for the buyer to ensure that the home they are purchasing isn’t hiding unsafe and costly conditions. In competitive markets like Portland, people will sometimes waive the inspection period to make their offer stronger, but I think that’s like buying a car without a test drive. Taking the time and spending a little bit upfront can not only save you money later, but it can keep you from making a bad investment.
If you’re looking for a home inspector in the Portland Metro area, contact me and I can refer you to a few excellent local inspectors!
Ah, the Comp. It’s a word you’ll hear over and over again in real estate. Comp is short for comparable property, and it is how a real estate agent will arrive at a market value for your home. If you are the seller, your agent will use comps to arrive at a recommended list price. If you’re the buyer, your agent will use comps to help suggest a fair purchase price. You may think that sale price is the only factor when you’re looking at comps and trying to set a price for your listing. But it’s actually a bit more complicated. Here are five things that affect comps that you might not be aware of:
- New construction nearby: Because of low prices for lots and varying prices in home building materials, new homes can actually be cheaper and cost less per square foot than existing homes. If there’s a lot of new construction nearby, that can affect the price for your own listing. A seasoned agent can account for this by using comps that are closer in age to your property, and assessing the quality of the finishes in a new construction compared to the subject property.
- Renovations: Recently renovated homes typically sell for more than homes that haven’t been updated in a while. If you’ve recently upgraded your home–especially sought-after upgrades like the kitchen or master bath, your home should be priced appropriately.
- Developable lots: Not all lots are created equal. Even if the square acreage is the same, a lot that’s easily developable will get a better price than a hilly or rocky lot that needs a lot of preparation. In this same vein is the zoning of the property. If your lot is zoned for multiple dwellings, it can fetch a higher price than a single family dwelling.
- Listing price vs. sale price: Whether sellers actually get their asking price depends greatly on the market. When you’re pricing your home, it’s important to look at sales prices, not just listing prices. The listing price doesn’t always accurately reflect what a home will sell for. Be sure to take note of average list price vs sold price as well. If homes are consistently selling for over or under listing price, it can give you a good idea of what a fair market value would be.
- Location: Nearby amenities, safety, schools, and noise levels can vary greatly within a neighborhood. Homes in more desirable parts of the neighborhood will sell for a higher price, all else being equal. Walkability is usually a very desirable trait, and so proximity to amenities can be a boost your home’s value. Similarly, being on too-busy of a street can lower your home’s value compared to other homes.
At the end of the day, fair market value is the price a buyer is willing to pay and a seller is willing to accept for a property. The best way to get your home in front of the most qualified and serious buyers is to have a competitively and accurately priced home, something a seasoned real estate broker can help you with!
I took a fantastic class this morning dealing with a new law that was recently passed: starting January 1, 2018, anyone wishing to sell their home within Portland city limits (with or without an agent) must get a home energy audit prior to listing, and must provide the report with the home energy score (HES) to any prospective buyers. The HES is on a scale from 1-10, with 1 being least efficient and 10 being most efficient. Scores are based on BTUs used, and the majority of your score comes from heating, water heating, and cooling.
There is a lot of talk about the impact that these scores are going to have on the real estate market, and a lot of confusion as to what this is going to mean for sellers. I’ve taken some of the more important information that I learned and put it into an infographic for easy reading and sharing:
It’s important to realize that the requirement to sell only applies to the City of Portland (so if you’re in the Metro area, but not Portland proper you don’t have to have one). You’ll also want to note that you don’t need to make any upgrades or repairs based on the report. All you have to do is get it done and provide copies.
This city ordinance is still in early stages: they haven’t yet worked out everything, and will have a rule-making session in July to nail down some of the finer details. For instance, we don’t yet know how long an energy audit will be valid (but my guess is probably a year). Also condos are an area of concern because there are too many variables when you have units on all sides. Chances are that condos will be an exemption, but we won’t find out until July.
Even if you’re not thinking of selling next year, knowing your HES has great benefits. For starters, you’ll get a really clear picture of the energy efficiency of your home. The last page of the report shows upgrades that would increase the efficiency. It is broken down into 2 categories: update now, and update later. Alongside these repairs, your report will give you the estimated annual savings by making the change.
I’ll update once we know more about this new ordinance, but as always, feel free to reach out with any questions you have!
When you’ve just purchased a new home, there’s a ton on your mind. There’s moving, decorating, getting to know your new neighborhood, and more. It is an exciting, if a little overwhelming time. In the rush to get settled, though, there are some important money-saving areas that tend to get overlooked. Here are a few things that should be at the top of your to-do list; they don’t take long, and can save you a ton of money in the long run:
Check on your water heater
Set your water heater for 120 degrees Fahrenheit. This is plenty hot enough for bathing, washing dishes, and any other household use of hot water, so heating water above 120 degrees is a waste of energy and money. And if your water heater is an older model, it’s worthwhile to invest in a water heater blanket to keep it insulated.
Replace air filters
Sellers often put in a lot of cosmetic work to get the home move-in ready, but they often skip or forget about air filters in the HVAC system. Filters can be found at your local hardware store (just make sure to get the right size) and are easy to replace. Doing so will improve air flow and quality, and save on energy costs. Air filters need to be changed periodically (depending on the type of filter and frequency of use, anywhere from every 1-6 months), and this will get you in the habit right away.
Get a smart thermostat
Seriously, a smart thermostat, is an incredible investment in your home. I know I’ve mentioned them before because I can’t get over how cool they are! The thermostats themselves are a little expensive, but you’ll make that money back in energy savings. Plus, in Portland, as well as many other cities, you can send in a mail-in rebate to your power company for switching over. It’s programmable so that your AC and furnace run at lower levels when you’re not home, so you’re not wasting money to cool or heat an empty house.
Set up a space to air-dry clothes
Whether it’s a rack in your laundry room or a clothesline in the back yard, air-drying clothes is a big money saver over even the most energy-efficient dryers. Even just getting a clothes drying rack to set up in one room when you need it is helpful. Air-drying your garments will also help them last much longer. If you’re lucky enough to have space in your yard for a clothesline, nothing beats the fresh scent of clothes dried by Mother Nature!
Check for leaks and running toilets
A leaky faucet or a constantly-running toilet will use up water unnecessarily, and that’ll show up on your utility bill. And in the worst case, they’ll cause expensive water damage and mold. Leaky faucets are usually an easy, inexpensive fix that you can do yourself. A lot of times, it’s as simple as replacing a cartridge. Of course, if you’re unsure of your plumbing skills, it’s always best to call a professional.
Do you have any go-to money savers that you implement in your home? Tell us about them in the comments?
Here’s one that I know my friends in the mortgage industry can get behind. There’s no more important time to work on your credit score than when you’re about to apply for a mortgage. There was once a time when if you could fog a mirror, you could get a loan (hello 2006!) but those days are long behind us. Now if you want to apply for a home loan, there are lots of qualifications. Having good credit is right at the top of that list. The higher your credit score, the lower the down payment you need to qualify, and likely the lower your interest rate. Improving your credit can save you a ton of money—we’re talking about thousands of dollars over the life of the loan. Here are the actions you can take that will have a notable impact on your score:
Pay down your credit card balances
Credit utilization is one of the biggest factors in determining your credit score. Your credit utilization should at least be less than 30 percent of your limit, and it’s even better if you can get it below 15 percent. This rule applies to both individual cards and your overall credit limit.
It may even be worthwhile to use some of the cash funds you were planning to use for a down payment to pay off credit card balances. Speak to your mortgage lender about the best avenues to take to ensure you’re getting the best loan possible!
Do no harm
Possibly the most important item on this list! While you certainly want to improve your score if possible, at the very least you’ll want to keep it steady. Avoid opening new lines of credit if you’re applying for a mortgage in the very near future. This will cause a hard inquiry to show up on your credit report. Whatever you do, don’t go car shopping or start furnishing your new home before the closing date! Otherwise your lender and Realtor® will be none too happy with you!
Take care of negative items
It’s good practice to check your credit report for negative items a few times a year—you can get one free report from each of the three major bureaus (Experian, Equifax, and TransUnion) per year. Sites like Creditkarma.com are great for keeping track of your credit scores for free as well.
If you find any negative items (collections, late payments, etc.), write a letter to the original creditor. Explain the circumstances that led to the negative item, and request that it be removed from your report. It can be surprisingly effective, and removing a negative item will improve your credit score in a hurry. You can find some good templates for a request letter online.
Once your credit is in order, your lender will be able to get you pre-approved for a loan amount. Make sure you get pre-approved before you start house hunting, or else you might fall in love with a home outside your budget!
Got any other credit tips? Leave them in the comments!
Unless you’ve been living off the grid for a while, you’ve probably heard about this great influx of people moving to Oregon–Portland specifically. For those of us that live here, it’s definitely been an adjustment to the increases in traffic, general cost of living, and the changes in housing availability and affordability. And of course there’s the great debate that comes with these changes: whether Portland was better off before all these newcomers, or if the influx has forced improvements that make the city better. Walk 5 feet down any street and you’ll hear 10 different opinions. This migration has got me thinking about something a little different, though: how people decide to move to a new city in the first place.
Moving to a new city can be a fun, but scary experience. I’ve done it a couple times now, and each time I feel the same way: excited but nervous, hopeful but hesitant, adventurous but like an outsider. It’s a mixture of good and bad feelings that forces me to take a good look at the move I’m about to make and ensure I have made a good decision. Now, I do have to say that there’s always unknowns, and no matter how much research you do, there are some things you can’t learn about a place until you move there. You can minimize the uncertainty, however. Answer these questions to figure out if this move is the right one for you.
1. Can I afford to move?
This is the biggest question you need to ask, so might as well get it out of the way first! Moving is expensive. If you’re just moving a town or two over, it’s less so, but there are still a lot of costs to consider. Are you driving to the new city? How much will gas cost along the way? Do you need a moving van? Movers? Boxes and packing materials all cost money, too. If you’re using a U-Haul or Penske truck, do you need a car carrier? When you get there, are you moving straight into your new place? Or are you doing your house hunting when you get there? You’ll have to budget for hotels or rentals while you’re looking at homes if it’s the latter.
You’ll also need to find out what the costs are for transferring utilities and updating your information at the DMV (if you’re moving out of state, find out how long you have to get this done! In Oregon, it’s 30 days after you’ve moved).
So, now that you’ve deducted the costs of the move itself, ask yourself:
2. Can I afford to move there?
3. Do I know anyone in the area?
Picking up and moving away from it all sounds great in theory, but the first few months after you’re in a new place can be very lonely. You can absolutely make it out on your own in a new place and thrive; many people do it every day. I will say, however, that having a point of contact somewhere in the vicinity is such a comforting feeling, even if you’re moving with another person. I live 1000 miles away from my parents, but I’m only 50 miles away from my stepdad’s family. I don’t see them all that often, but when I make it down to visit, I feel welcomed, eat more food than I ever should (plus leftovers!), and get to have that sense of family that I don’t get every day. It also eases my mind that if there is an emergency for whatever reason, family can get to me fairly easily.
Chances are, you know SOMEONE that lives near where you’re going. Between high school and college, I think I have acquaintances in most major cities across the US. Reach out to them before making your move, and you can at the very least pick their brain about the city. If you’re comfortable, try to plan a meet up when you get to town. It will help you feel like you’re not so alone.
4. What is the Cultural Climate?
Most people have a sense of this before they move, but it’s important to think about nonetheless. Different regions have wildly different attitudes, and you don’t want to end up somewhere where your ideals and beliefs make you an outsider before you even get there. Attitudes can change vastly in small areas as well; for instance, Portland is thought of as a very liberal city, but go just a few miles out of town and you’ll find rural, more conservative folk dominate the area. You can even find big differences just within one city. Now, I’ll be the first to say that political attitudes are not the end-all, be-all on what an area is like, but it is important to be aware of how people in general react, as you will be able to make an informed decision.
5. What will I do when I get there?
Obviously, if you’re working, you’ll need to find a job. But it’s just as important to figure out what recreational activities your new home has to offer. Many people move to Portland for the easy access to nature, but that’s far from all the city has to offer. Again, Google will be your friend here, as you can search for any interests you have to find events and communities in the city. If you’ve never heard of Meetup.com, it can be a life-saver for newbies in town to find new people and experiences. There are so many groups to join, and most cities have at least one “New to ____” group specifically for people who have recently moved to the area. I’ve met great people and tried all sorts of things I never thought I would through this website. The human connection can’t be overstated, either.
I hope this has been helpful to you as you think of making your move to a new place. And when you’re ready to buy a home in your new city, be sure to reach out to me!
Lovely 2 bed/2 bath home in North Portland’s Portsmouth neighborhood.
With low inventory in many markets throughout the country, many homeowners are afraid to sell their homes because they’re concerned that they may not be able to find a new one. I’ve seen this happen all over Portland. Inventory is so low that it’s scaring people on both sides of a transaction. This can be a real problem, but if you are seeking to sell—whether to upgrade or find a new neighborhood—there are a few ways to combat the low inventory.
1. Look to buy first
In most markets, it is a real mistake to put your home up for sale before you start looking for your new property. Identify the geographic area where you are interested in buying. Even if you don’t see anything on Zillow, it doesn’t mean you can’t or won’t find the right home. If you’re in a place where inventory is really low, you’ll have to act quickly if you find anything you love. As long as the home you’re selling is in good condition, it’ll probably sell quickly and you’ll be able to close on the new home contingent on your old home’s closing. It pays to be on the hunt before you’re on the market so you can keep track of market trends and have a good working knowledge of the inventory of that area. A great tool for this is Neighborhood News, which you can sign up for on my website. Just follow that link!
2. Think outside the box
Be proactive! Keep in mind that there are probably many people like you who want to make a move but are afraid as well. Have your real estate agent send a letter to the neighborhoods in the geographic areas where you want to live. The letter should be heartfelt and personal while announcing that you are ready to buy a home in that neighborhood. You could find a home to buy that may not even be currently listed or for sale. Imagine if you got a similar letter. Wouldn’t it put you at ease to know there’s someone out there looking for a home like yours? This would also give you a leg up on everyone else furiously refreshing Zillow and Realtor.com for the newest listings.
3. Protect yourself legally
Each state varies in how the purchase process is conducted. Talk to your real estate professional about adding a clause in the purchase contract for the home you are selling that will enable you to not sell the home if you cannot find a suitable home to buy. Real estate contracts afford buyers and sellers both opportunities to make sure the transaction is going to suit their needs. Just like you can make the purchase of a new home contingent on the sale of the old one, in most states, you can make the sale of your old home contingent on an accepted offer for a new one. This is where the value of a REALTOR® really comes into play. At Windermere, we have a whole class to take just on writing good contingencies!
If you or anyone you know is on the fence about selling, contact me! I’ll help you figure out if now is the right time for you and your family. We sure could use the inventory in the market!
The title of this post is a question that if I had a dollar for every time someone asked me, I could probably already be retired. Unfortunately, there’s no easy answer that applies to everyone. One of the biggest determiners is location. For instance, here in Portland, the rental market has gotten so out of control in the past few years, that rent increases are exceeding housing price increases. Couple that with the fact that mortgage rates are still so low, that more and more renters are looking at home ownership as they find that monthly mortgage payments are actually more affordable than their current rent. Now, this isn’t the case everywhere, but it is happening all over the US. This article from Bloomberg shows the strain that high rents are causing people all over the country.
Many real estate sites will tell you that you should never, ever rent and that you need to buy now. There’s a reason so many people decide to rent, though. Renting isn’t always a bad idea. If you’re the type of person that never likes to stay in the same place for too long, then it probably doesn’t make a whole lot of sense to buy a house. Zillow’s Breakeven Horizon estimates the number of years you would have to live in a home before buying it would become more financially advantageous than renting it. At the end of 2015, the national breakeven average was 1.9 years. So if you’re not planning on staying somewhere for more than 2 years, it definitely behooves you to rent. If you’re lucky enough to be somewhere that’s rent-controlled, and you’re happy with your amenities, why would you walk away from that? Having a landlord means that you aren’t the one that’s ultimately responsible for the home, which can be a big allure to some people. For anyone that falls into these categories, by all means, keep renting!
Many of us, however, dislike the idea of paying down someone else’s mortgage, but aren’t sure if buying is right, either. While there are pros and cons to both buying and renting, here are some pros to being a home owner:
- Buying is cheaper than renting. According to a study done by Trulia in May 2015, nationally, buying is 35% cheaper than renting due to low mortgage rates and home price increases and rent increases being on par with each other.
- Freedom! Want to paint the kitchen a different color, or add carpeting to the bedrooms? When you own, those decisions are up to you and you alone (well, maybe your budget, too). Unless you have an HOA, you are free to make changes as you wish, and really create a space that is all you.
- Wealth Building. Real estate is usually someone’s biggest financial investment. Home prices tend to appreciate as time goes on, so you’re building wealth just by being in your home. Also, the more you pay down your mortgage, the more equity you have in your home. So the longer you stay, the more wealth you’re building!
- Homeowners get more tax breaks. You may be able to deduct your mortgage interest payments every year, as well as any deductions for any energy efficient improvements that you make to your home. Contact a tax professional to find out all the ways home owners can get tax breaks.
- Fixed rate mortgages don’t increase, rents do. Unless you’re somewhere that’s rent controlled, your rent will go up. It is just a part of the rental market. If you choose a fixed rate mortgage, your monthly payment won’t increase for the life of the loan. There’s definitely a peace of mind in knowing that you’ll always be paying the same amount every month.
Ultimately, it’s going to be up to you whether renting or buying better suits your lifestyle. If you’ve been on the fence for a while now, however, this is a good jumping off point to help make your decision.