Friday, July 25, 2014

Latest Market Trends

Data from RMLS
The real estate market continues to pluck along at a nice healthy pace. Although prices are not rising nearly as fast this year as they did last year conditions remain healthy. Part of the reason resale homes are seeing a big of a flat spot in the otherwise upward curve, is the influx of new home construction. Prices seem to be leveling off but slightly rising and that bodes well for the long term prognosis.

The chart at right shows the median and average sales price in the greater Portland-Vancouver metro area since 2012. the first half of 2013 saw a spike in pricing and then a flat spot and we seem to be nudging back on the upswing again. Pricing will be limited in its ability to surge based on a variety of other economic factors. Most notably is the fact that the economy in general is not exactly booming.

Data from RMLS
The chart to the left shows the year over year change in median price. This is a direct comparison to pricing exactly one year earlier. Overall the future looks promising for real estate values in general. Interest rates remain favorable and as the broad economic conditions improve the housing market will be able to open up a little more. This will be especially welcome in the mid to high end price ranges that are still just a little flat. Buyers looking to get into the entry level may find a highly competitive marketplace with multiple offers and above asking prices.

It is a very good time to be buying or selling real estate.

Friday, July 18, 2014

Understanding Contract Terms is Essential to a Smooth Transaction

It is imperative that both parties to any contract understand the terms and requirements to close. Most problems that arise in real estate transactions are misunderstandings between the parties. One person thought the seller would move out on this date or that time but the seller thought they had till such time, and so on.

Real estate agents are not attorneys! We fill in the blanks on standardized forms prepared by attorneys and approved by the state of Washington. This is designed to alleviate many problems that can happen during a real estate transaction. It is critical that all parties understand timing, dates and expectations. Many people make assumptions about how things are supposed to go. There are many standard timing issues that act as a default. For example, in Washington State, a buyer has the right of occupancy at 9pm on the day the county records the transaction. Unless specifically agreed in writing this is a contractual requirement. Many buyers think they can move in right after they sign documents or when the bank funds the loan. This can cause problems.

The moral of this tale is that both buyers and sellers need to be certain they understand the terms and conditions to the purchases and sale agreement. They should never feel afraid to ask their real estate agent questions about the details and procedures that are mandated and/or customary practices when closing a real estate transaction. Real estate agents should always be clear and concise about these terms and conditions and be certain that their client understands them. If language is a barrier then that agent needs to work harder to ensure that the clients understand.

When all parties understand the details and procedures to close, the transaction will go smoothly and everybody wins.

Friday, July 11, 2014

Cash Offers

There have been quite a few all cash transactions this year. It seems that many people are liquidating other assets and using the cash to buy real estate. This shows that there is a strong trust in the stability of the market. It bodes well for the confidence suggested in the strength of our local real estate market.

Cash is convenient in a real estate transaction because the buyer is not waiting on any bank approval, credit check, etc. Once the seller is ready to close the buyer simply signs documents and wires money to title. I love those. Sellers love them too because they tend to be stronger offers. Sometimes a seller will take a lower offer because it is a cash offer and they choose a fast and convenient lower price over a more cumbersome, slower path with a higher price. This can lead to problems if the buyer isn't careful about understanding what cash is.

Sometimes however people just do not understand what cash is. According to Black's Law Dictionary Cash is defined legally as follows :

"Ready money; whatever can be used as money without being converted into another form; that which circulates as money, including bank-bills. Hooper v. Flood, 54 Cal. 221; Dazet v. Landry, 21 Nev. 291, 30 Pac. 1004; Blair v. Wilson, 28 Grat. (Va.) 105; Haviland v. Chace, 39 Barb. (N. Y.) 284.
Law Dictionary: What is CASH? definition of CASH (Black's Law Dictionary)"

Sometimes offers are made on property as cash offers and in reality the cash is not truly liquid. Any buyer making an all cash offer needs to be aware that the funds must be in liquid cash. I have taken many offers with the proof of funds being in an investment account. Technically those funds are not truly liquid. Buyers need to be certain they have their money in liquid cash form, i.e. cash in the bank, well in advance of the closing date. As a listing agent I have learned a lesson that asking the buyer to prove the funds are liquid at least by the end of the inspection period, is a good idea.

I wrote this today because sometimes real estate deals far apart. There are a variety of reasons for this but when they do people can be a little upset. If a buyer presents a cash offer and then can't close because he can't "get" his cash, that buyer is in a tough spot and will very likely lose his earnest money deposit. If the buyer knowingly made a cash offer without having the cash on hand, that could be viewed under the law as fraud. Fraud is very bad.

The lesson here is that cash offers need to be backed up by real cash and real cash in a contract is cash as defined by the law. Black's Legal Dictionary shows that above. Of course as always my standard legal advice is to get legal advice from an attorney. Any legal questions should always be presented to a qualified attorney and decisions about these things should not be made unless one is well advised by proper legal counsel.

Friday, July 4, 2014

Happy Independence Day!

It's hot dogs and apple pie... ah the heck with it it's a thick juicy steak on the grill and fireworks booming across the sky. Enjoy the day off, I am ;)