Get Real Estate Blog: Salem Oregon Home Trends and Relocation Information

Really, this isn’t unexpected, is it?

The real estate hangover

You go to a party, drink way too much, and end up regretting it the next day.  Many college students go through this unfortunate experience and it is how we learn our limits and how to make better choices for our bodies.  The tax credit intervention was kind of the same way…we knew the hangover would come to the real estate market.  So what does a real estate hangover look like in Salem Oregon?

The blue outline is what home sales have looked like so far this year. The red is the year 2003.  I just wanted you to see what a more normal real estate cycle looks like for the Salem Oregon real estate market, specifically.

Typically as the year goes on we ramp up our sales, then slow down for the rainy season.  I get that…who wants to move in the rain in Oregon?  You don’t have to be a data geek to see the huge early boom we had.  Our market was premature due to the tax credit.  Sellers are stressed who expected this summer to be “prime real estate season” to be dealing with a lack of showings, but we all new things were happening too early.

For every action there is an equal and opposite reaction.

Well our real estate market didn’t realize that we weren’t dealing with physics here, but Sir Issac Newton’s laws of motion certainly apply to our market.   Home sales plunged 47% from last year’s July.   I told you that we would see a drop in sales a couple of months ago, but it did drop more than I expected.   I could feel the slowness of the market, which continues to be slow right now. August’s numbers won’t be stellar, I can tell you that already.

July’s average home price was down 7% from last year’s $204,727 to $190,222.  The median shifted downward a mere 2.5% to $183, 750.  The biggest concern I see right now in the housing market is that inventory in Salem Oregon proper  surged to 18.9 months.  This is NOT a good thing.   Our distressed property sector is holding fairly steady at 12.3% of the market.  This will climb a bit over the next year, I think, but it won’t ever be like the really hard hit areas of the country.

• So, the distressed property sector is remaining fairly steady.
• Real estate sales are down.
• Home prices are down.
• Inventory is seriously up.

So, what do I think?  I’ll get back to you after October.  Fall is typically a good real estate season in our city.  If things don’t perk up in the market for fall, as is typical, then the massive inventory that we have on the market right now will have no choice but to pummel real estate prices.

One of the most common frustrations I hear from Salem Oregon home buyers is that they are using GIFT funds for their down payment and they don’t understand why we have to pick apart the documentation…or even document it at all. This seems like a great place to shed some light on the whole gift issue, so here goes:

When Mom, Dad, Uncle Jim, or Aunt Sue agree to give you $5000 to buy a new home, it seems like they should be able to give you the money and everyone’s happy. Unfortunately, lending guidelines require a little more than that. The issue is that they *could* be giving you a gift, but they *could* be expecting you to repay them as well. Family members aren’t afraid to tell a little white lie for one another… So…what if you are to repay the “gift”? Is there a monthly payment? Can you actually qualify WITH the payment to your relative? There really is a reason for all the nit-picking, I promise!

Once we get past the gift letter and accept the fact that we need to document the gift funds, the next big issue comes up: “WHY do you need to prove that the gift DONOR had the money to give?!?” Well, we have to look at lending guidelines again and see the common sense answer. A family member is likely to GIVE money to help another family member out. There is a select group of relationships that are allowed to give a gift. Your next door neighbor may have the money, but if you convince him to give it to you, he’s most likely going to want it back, right? So…since your neighbor has the money, and Aunt Sue is an acceptable gift donor, wouldn’t it be simple for the neighbor to give Aunt Sue the money to give you? Then there would be a new debt to the neighbor… So, the solution is to make sure Aunt Sue actually had the money to give in the first place. It’s frustrating, but it’s the only way to avoid loan fraud and putting people in homes they can’t actually afford.

So, if you’re thinking of buying a home, and you plan on using a gift, take note of the items you’ll need to provide as documentation:

- Gift letter (provided by your lender)
- Copy of the gift check to you from the donor (Personal checks are best)
- Copy of the CANCELED check from the donor’s account (OR – if not a personal check – most recent bank statement from donor showing available funds, no unusual deposits, and the withdrawal of the gift)
- YOUR most recent bank statement, or transaction history signed by a teller, showing your balance after the gift was deposited.

If you gather this documentation carefully the first time around, the frustration level will drop considerably and the paperwork will cruise through underwriting.

One last tip: If you KNOW you’re going to be getting a gift, and you KNOW how much it will be…..deposit it in your bank account BEFORE you apply for your home loan, then you’ll ONLY need to provide a gift letter! It’s a little known secret that spares many a home buyer a ton of frustration and paperwork!

Please remember one last thing: in the world of home loans, the name of the game is DOCUMENTATION. It may seem excessive these days, but compared to the days of no documentation that got us in trouble, this is a good thing.

Carmen Babb is a Mortgage Consultant with Wells Fargo Home Loans here in Salem Oregon

Phone: 503-551-9690

MAC  P6202-024

Paul Slaybaugh, who is a really good Scottsdale Arizona real estate agent by the way, wrote an interesting blog post about buyer agent bonuses.  He syndicated it to the real estate network ActiveRain and a brouhaha ensued.    I think as a consumer you should take the time to read some of the comments and what some real estate agents across the country think about you knowing what they get paid.

Here’s the truth…well according to me anyway…

Home buyer bonus paid to Salem Oregon real estate agents?

If a real estate agent has agreed to act as a buyer agent for a client, then that client has a right to know how their agent is going to get paid, how much, and for what services. Now real estate agents scream about raising the bar of the quality of real estate agents, but frankly I think some agents need to be hit over the head with the bar because they just don’t get it.

Now before you think there is some massively huge conspiracy going on in real estate, I pulled the WVMLS properties that are offering a buyer agent bonus: 123 of them out of 5, 492.  That’s 2.2% here folks.  It is not a common practice in our area to offer buyer agent bonuses, and I can tell you without running those numbers that a good chunk of those are bank owned properties.   So why should you care?

Well because you are spending a boatload and a half of your money to purchase a property.  The real estate machine will tell buyers that representation is free, but really it is amortized over 30 years and figured into the price of a home. For most people that pick a good buyer agent, it is worth the additional cost.    You know I have a great company attorney who bills me and writes next to it what he did for me.  My doctor bills me along with the services.  I know that consumers get that real estate agents don’t work for free.   I know you are all intelligent people and don’t need to be schmoozed with soundbites.  So what I don’t get is why agents feel compelled to not share how they get paid or what they get paid to provide services to someone that they agreed to represent.

The example I shared in a comment stream

Let’s say an agent is offering a $2,000 bonus +3% on a $200,000 home purchase.  So the buyer agent will make $8,000.  The seller runs their NET sheet and says “I want to net this amount.”  The seller negotiates from a position of net, unless they have a doofus agent who doesn’t know what a net sheet is.  The seller should only care about their bottom line.

So the seller doesn’t really care where that $2,000 goes, as long as it gets the property sold.  On that I totally agree with you…bonus, commission, closing costs…whatever…to the seller it is a tool.

Now, enter the buyer.  The seller won’t budge off their $200k price because they want to net a certain amount and the buyer loves the house so they agree.  NOW, if there was no bonus involved, the seller would have come down to $198,000 or given the buyer $2k in closing costs because it worked with their net numbers.

In this scenario the buyer loses $2,000 and the agent gains, but is that okay if the buyer isn’t aware of it?  I think the only way for a buyer agent to act as a true fiduciary to their client is to disclose any incentives.  I think a buyer has the right to know if their agent, potentially, has a conflict of interest.  If you are buying a house and hire an agent to be your representation, do you think the agent representing you has an ethical obligation to tell you of any financial incentives that they will receive as a result of bringing in a buyer to that property?

Okay guys…you all have to put up with a little bit of real estate advertising every so often so this is fair warning! I organized an open house tour of some south Salem acreage properties. You can see what is on the tour on the google map. I have this seriously cool old home, that was the original Halls Ferry School, that is for sale. It is one of those places that you really have to go into to experience because pictures don’t do it justice.

So, this Sunday, I will be hanging out there from 1-4 showing people this cool place. I expect you all to come and visit me there. Hint, hint…okay hit you over the head with a hammer… I know that some of the people reading this blog aren’t looking to buy, BUT if you know anyone that likes old homes, PLEASE tell them to stop by and see this one. In fact, if you come into the open house and tell me that you read about the open house on my blog, I will give you a $10 gift certificate to French Press. That’s how awesome I am.

Oh, and if you want to meet John Kirk, who will at some point get his hiney in gear and be writing more posts here, he’ll be on the tour at 6685 Trillium. I really think Capital Taps and John need to meet since John is a brewer…this is your chance!

5032 Halls Ferry Rd, listed by Melina Tomson with Tomson Burnham, llc

$289,000 3 bed/1.5 bath, 2188 sq feet, 1.27 acres

View South Salem Small Acreage Tour of Homes in a larger map

So do you really want to know how they do it?

You know…build a house in a week.

You’ve all watched the show…some of you may have cried…some of you may have gagged at the sappiness.  Either way, Extreme Makeover is hitting Salem Oregon.

If you are interested in volunteering or donating you can head over to the website for more information. They are, of course, looking for skilled trades people to help out as much as possible.  I know someone that participated in one up in the Seattle area and they said it was nuts.  Nuts meaning crazy busy.  So, if you are up for a nutty, crazy busy adventure…this is for you.

Stayton Real Estate Prices

I wrote six months ago that I fully expected Stayton real estate home prices to continue to drop.  That didn’t happen this quarter, but quite frankly I don’t see how prices can’t go down.  Back in January, Stayton had 36 months of inventory.  Right now, it has 33.  Pretty much none of the excess inventory was eaten up by the tax credit home buyers out here.   Despite the fact that it looks like things are working themselves out in terms of home prices, I just can’t see that continuing.

Stayton Home Sales

You know as I was looking at this graph, I couldn’t help but notice the nice wave action going on…kind of looks like an ocean wave.  Stayton, like all the other metro area cities sucked less than 2009.  I think that will be my new motto “2010:  The year that sucked less than 2009.”

So, the average and median home prices were up.  Home sales are up.  What is wrong with me that I think this is a problem?  It’s that 33 month inventory number, and this…

those dang foreclosure notices.  2Q 2010 was twice as much as 2Q 2008.    Foreclosure notices aren’t going down in Stayton.  That coupled with the high inventory really means price corrections are headed this town’s way.

If you are thinking of moving to Stayton, here is what is available for sale there.   Contact me for a showing or sign up to get new homes sent to you as they hit the market.

Home sale and home price data was crunched from the WVMLS.  Foreclosure information was obtained from Fidelity National Title Co.

I’ve been busy working and playing at North Fork Park rather than doing my quarterly real estate market reports, so I’m a bit behind…So for those of you waiting for these, my apologies…now onward!

Silverton Oregon home sales

Finally seeing home sales rise in Silverton.  Like the other Salem metro cities, sales stunk in 2009.    Home sales volume in the second quarter was where it was back in the early part of the decade.

Silverton Oregon Average Home Prices

The steep drop in home prices in Silverton has slowed.  This is not unexpected.  Silverton is a nice place to live and as prices come more in-line with consumer expectations prices will stop dropping.  That time isn’t yet though.

Silverton Oregon Foreclosures

Unlike Salem where the notice of defaults are dropping nicely, Silverton foreclosure notices are holding steady.  Not a good thing for the  health of the Silverton real estate market.

My opinion

I think Silverton is in for a bit more pain.  Foreclosures haven’t decreased there which is keeping the distressed property funnel full.  The fact is that distressed properties pull home prices down, so I would fully expect to see ongoing home price declines in Silverton for a while.   I don’t think prices will plunge 20% mind you, but I do think with the large inventory of homes, 12.5 months as of today,  on the market and ongoing foreclosure woes, Silverton has a ways to go before they are done correcting.

If you are wondering what kinds of properties are in foreclosure in Silverton, here they are in the slide show. Check it out and then see what other homes are for sale in Silverton.

P.S.  All home sales and home price data was crunched from the WVMLS and all foreclosure data was crunched from information received from Fidelity National Title Co.

Are you one of those?

You know, those people who want to live off-grid, have a cob house here in Salem Oregon, or build your own strawbale instead.  If those words are green music to your ears, I just stumbled on this cool map.

If you want to see who is doing what in serious green living across the US or here in Salem Oregon, check out this little map.  You can add your own house on here and talk about it briefly.  I’m thinking this would be great for those of you interested in this type of home.  Building codes vary and so being able to talk with a local who is doing what you want…that can be seriously valuable.  So…check out natural homes.

Like many Salem Oregon real estate agents, my transactions all seem to be from hell.  Not because I don’t have amazing clients; not because I don’t have a great loan officer involved ; and not because I don’t have a great escrow officer around me.   It is hard to find a post that says anything positive about banks, loan officers, appraisers, lenders…well let’s just throw real estate agents into that mix as well.  Rant this…rant that.  Everyone sucks, except of course the person writing the rant.    If my child told me today that he wanted to be an underwriter when he grew up, I’d be thinking I need to start those electric shock treatments NOW because clearly he isn’t right in his head.   I have spent many a sleepless night wondering what incredible minuscule detail the underwriter will use to derail my clients that are attorneys, journalists, doctors, teachers…you know, the people we generally consider stable home buyers, from getting a loan.  I’ve never seen such scrutiny to the point of ridiculousness.  I’d laugh if my clients weren’t so stressed out.

A couple of months ago, I had a client in distress.  The good news…I got them an offer AND we could clear title.  This situation seemed an anomaly to the bank who requested my short sale packet.

“This is NOT a short sale…we can clear title,”  I said.

“Huh?” was the reply. Clearly the concept of being able to clear title was something they hadn’t heard in a while.

“I just need to verify that you got my authorization form to talk to you?”

“No, you’re not in the system.”

“I’ve faxed it over three times now. I NEED to talk to someone, right now.”

“Can’t do it without the authorization form.”

“I understand that. Can I have a supervisor?”

My problem?

House under contract.  Inspections done.  Appraisal done.  Title report done.  DOCS at escrow. Buyer has signed.  What’s the problem?  The bank wouldn’t give the escrow company a payoff balance.  I’ve never heard of a bank not wanting to get their money back, but okay…there is a first for everything.  As I worked my way up the supervisor chain, I found a supervisor to just listen to me. The conversation pretty much went this way…

“Hey, legally you can’t talk to me without the authorization form that your company can’t seem to input into the system, so I’ll talk and you listen.  Here is what I need you to do…”

After saying what I needed to say, I hung up and Ted, the supervisor from the bank who just listened, took care of things.  The transaction closed 48 hours later.  I called Ted back and left a message saying thank you for not talking to me and just listening.   I called the buyer agent and gave her a big thank you for keeping her client in the real estate transaction as we worked through the mess.  I called the escrow offer and said thank you for hustling once we got what we needed.  I called and said thank you because they aren’t all the enemy…well maybe with the exception of underwriters.  They are still on my crap list.

A couple of days ago charges were announced related to real estate fraud.  According to the press release by the FBI in Oregon,

Among the 39 defendants named today are two real estate agents, 11 mortgage brokers, one bank loan officer, and one certified public accountant (CPA).

There are some ongoing investigations and they are expecting more charges to occur.

I don’t know why, but I feel compelled to comment on this.  I was having a hilarious and off tangent facebook conversation with some other real estate agents from across the country focused on the term “raising the bar.”  It’s the current term agents cry out to express the need for greater standards in our industry.  That battlecry has been going on for my entire career as a real estate agent here in Salem  and honestly, the bar hasn’t been raised a whole lot here in Oregon.  I mean Oregon just put into law that a real estate agent has to have a high school diploma or GED.  That wasn’t in the books before.  That’s like raising the bar a millimeter.  Not sure that is what the battlecry is about.

Personally I,  like these other fellow agents, am tired of the battlecry.  See here’s the deal.  The government can’t regulate behavior: they can only regulate systems.  It is up to each of us that makes up the system to regulate our behavior. If we want to talk about real estate fraud then brokerage owners need to look at how they fail to train their agents.    If we want to talk about improving the world of real estate it is up to the business owners, whether your own a brokerage or a mortgage business to have their own standards.  Government has never been about raising the bar; it has always been about the lowest notch on the bar. It is the responsibility of the business owners to ensure that we are well above that lowest notch.

I am not the biggest brokerage in town.  I don’t have “bragging rights” that I have 100 agents working at my firm.  I also don’t have to worry about real estate fraud.  I don’t have to worry that I have a mediocre agent in my midst.  My agents have direct access to a real estate attorney for any help they need.  Part of preventing fraud is making sure your agents can be successful so that they aren’t in a position of having to compromise their ethics.  I’d rather be the smallest game in town, with the best agents, even if there are only a few of us.

Me…I’m not aiming for the lowest notch.   Forget about raising the bar for the industry.  Raise the bar for yourself or your brokerage.  Consumers know the difference.