Miscellaneous real estate catch up; and it’s all my daughters’ fault.
Posted on November 29, 2007
Filed Under Builders, Buying Real Estate, Marketing, Real Estate, General |
It’s not that it’s been a slow real estate month for news. And it would be nice to blame a lack of posting on the fact that buyers are oozing out of the woodwork, but it’s neither the time of year nor the time of market for that.
So the best I can do is this: I haven’t posted for nearly three weeks because I spent nearly three days with my two favorite people on earth, whom I hadn’t seen in five months. On the left Kelly, who will be an MD and a surgical resident in June, on the right Shannon, who’s a business manager for Microsoft and, besides managing a multi-million dollar budget, gets fabulous prices on software for her father.
LOVE those girls.
But let’s catch up:
1. The city of Portland inserts itself into the residential building and inspection trades. Apparently not content with their Keystone Cops endeavor to rename streets, the city sent Mayor Tom Potter, Commissioner Dan Saltzman and eighteen or so other of its miscellaneous finest to Chicago - for somewhere in excess of $60,000 - for a Green Building trade show, there to announce at an invitation only cocktail party a plan, by 2010, to A) Fine builders who meet the already strict code for energy efficiency; and B) to mandate ‘energy efficiency’ inspections for every home sold in Portland.
In the case of (A), the fine is unspecified but in the hundreds of dollars, passed, of course, to the buyer. If the home exceeds the code by 30% - 30% of what exactly I have no idea - there will be a waiving of the fine, and exceeding by 45% actually gets a rebate. Note it costs an additional 3% to 8% of a home’s cost for, say, a LEED certification, so it’s either a few hundred dollars protection money or an additional $9000 to $24,000 on a $300,000 home. [What to do, what to do…]
In the case of (B), none of the inspectors I use have any idea what an energy efficiency inspection would entail. An outside inspection - EnergyStar, LEED - is anywhere from $500 to $1500, this on top of the standard $350-$500 inspection. And no one quite knows what will be done with the report once generated. It’s intended to motivate people to be aware of energy consumption; there may be some of that, but more likely it will motivate people to buy outside the city limits.
But for the record? The fact that the introduction was in Chicago suggests this was posturing - preening before the similarly evolved- rather than anything substantive. It has almost no chance of becoming law.
2. Speaking of green building, we had an office meeting with Randy Sebastian of Renaissance Homes at their Design Center. Everything they build is Energy Star certified, adding around $20,000 to the cost of a home. Prior to a half hour discussion on what that means, the question was asked: “What are your clients asking about green building?” No one raised a hand. Even in progressive Portland, ‘green’ hasn’t exactly taken hold as a successful marketing tool.
But you know what? Everything Renaissance does to make a home ‘green’ - kiln dried lumber, Rain Screen construction, much more - makes the finished home better. Their product is among the best.
So, Randy, if you’re reading this: Concentrate your marketing on your quality; people are willing to spend an extra $20,000 for that, because it’s worth it.
They’re not willing to spend that much for some fluffy concept of saving the planet.
3. Buena Vista Homes has planned an auction of 248 homes, the perfect way to generate hype, depress prices and con the public all in one delicious marketing ploy.
There’s no begrudging trying to unload excess inventory in overbuilt areas like Happy Valley, but: caveat emptor. Read all the fine print. Note particularly: 1) There is an unpublished reserve price on each property, not the same as the opening bid price; 2) The auctioneer is authorized to bid on behalf of the seller to get the price to the reserve price; 3) There’s a 5% premium to be paid above the bid price to go to the auctioneer. Bid $300,000 and the actual price is $315,000; 4) Earnest money is mandated as 5% of the final selling price; 5) There is no five day right of rescission.
If you do go? Have your agent sign up as an authorized agent. Be represented.
Please.
4. Finally, in the legislating before they think category, we have a new Purchase and Sale Agreement that goes into effect on January 1.
Part of that agreement pertains to a new provision in Oregon law - HB 2592 - that calls attention to the fact that sellers that are out-of-state residents must have withheld from their final settlement a tax “…to be the lesser of (1) Four percent of the consideration of the real property being conveyed; (2) Four percent of the net proceeds resulting from the conveyance; or (3) Ten percent of the gain includable in taxable income.”
The problem is no one knows what that means. Title companies are trying to figure it out - they’re the ones that are mandated to withhold - and someone somewhere is designing an exemption form, as soon as he or she figures out what constitutes an exemption.
In the meantime, I - and I suspect many others - have listings where the sellers have moved out of state, and any of those listings that go under contract after this week will almost surely close after the first of the year. They’re looking at the possibility that their final settlement will be thousands of dollars short of what they thought.
Gotta love it…
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