Q: I am interested in buying a short sale, but wonder if there are any unusual or unexpected costs associated with such a sale, compared to buying a regular house.

-Denver

A: It’s possible to get a great deal on a short sale-where a home sells for less than is owed on the mortgage-but whenever a seller is in a financial bind, you should be prepared to pay extra costs.

Expect to pay for many of the expenses that a seller would normally pay in the transaction-because the lender, who is taking a loss, may refuse to approve the deal if you don’t.

Just what those costs will be varies. For instance, some lenders will agree to assist with a buyer’s closing costs; others won’t. Some will pay broker’s fees-others won’t. (If you agree to pay your buyer broker a certain fee for finding the house and handling the deal, and the lender doesn’t pay it, it will come out of your pocket.)

Among the other expenses you may have to shoulder: unpaid homeowners association dues, appraisals, inspections, mechanics and other liens, a second deed of trust, transfer and other fees and even the seller’s back taxes.

If the price you and the seller agree to is lower than what the bank will accept, you will be asked to make up the difference-though it’s worth trying to negotiate this point.

On top of that, if there are any repairs to be made-and since sellers under financial stress often let maintenance slide-you will have to make them. Short-sale homes are almost always sold “as is,” although some lenders will agree to pay for termite damage, or to correct safety or building code violations.

Portland’s Clean Energy Works recently received federal funding for it’s Pilot program that helps homeowners make energy efficient upgrades with low cost, long term financing through utility bills.  While the primary focus is to help homeowners weatherize their homes through insulation, air/duct sealing, and heating options, you may also be eligible for window upgrades, solar panels and more.

Eligible participants will meet with a Building Contractor and Energy Advocate from the Energy Trust of Oregon to determine what upgrades are available and best suited for the home.  Based on their assessment, the homeowner determines which upgrades they’d like to make.  There are no upfront costs, and rates are minimal, at 5.99% or 3.99% for income-qualified participants, over a 20 year term.  It really doesn’t get much cheaper than that!  Payments are made directly through your utility bill via NW Natural, General Electric, or Pacific Power.

It can be a daunting task to find a qualified, trustworthy contractor to perform any type of work to your home, let alone for work that requires a specific money-saving, environmental impact reducing outcome. This program really walks you through the process with true experts and at a minimal cost.  Get in on it!

Find out more or apply online at:  Clean Energy Works of Portland

If record-low interest rates and an abundant supply of houses on the Portland market weren’t enough to make you eager to start looking for a new home, the Senate yesterday passed a proposed economic stimulus package that includes $15,000 for home buyers purchasing within the year.

The plan would give a tax credit of $15,000 (or 10% of the home’s purchase price, whichever is lower) and applies to all buyers – not just those purchasing their first homes. The Senate plan has no income limits and, unlike the tax credit passed last summer as part of the Housing Recovery Act, does not have to be repaid.

At the same time, mortgage interest rates are expected by many to fall to 4.5% in the coming months.

Is a sizable tax credit combined with a rock-bottom interest rates and unprecedented selection enough spark stagnant sales? Or are potential buyers going to continue to wait, believing that our market has not yet hit bottom?

Current home prices in Portland metro area are down 17% from their peak. Houses in the local market usually sell quickly when priced at 80% of their peak price.

Home buyers waiting for the real estate market to hit bottom will inevitably be caught making their purchase as house prices are on the rise. There may never be a better time to find the home of your dreams….

Even though home buyers are all looking for something different, the majority will turn around and walk back out your door if they notice one or more of these problems:

1. Odors
If you smoke indoors or have pets your house might smell bad, even if you don’t notice it. Ask a friend or neighbor who doesn’t live there to take a whiff… and don’t get angry when they tell you the truth.

2. Dirty Bathrooms
Scrub them, paint them, buy a new shower curtain, rugs and towels–do what it takes to make them shine!

3. Dimly Lit Rooms
Replace dim light fixtures, remove heavy drapes, repaint some rooms with light colors and clean your windows inside and out to bring in more light.

4. A House Full of Busy Wallpaper
Don’t paint over it, because it will be obvious that you did… and ultimately make removal even more difficult.

5. Damp Basements
Most are not due to faulty foundations but occur when rainwater is not diverted away from the house. Prevention can be surprisingly inexpensive.

6. Dogs that Meet You at the Door
Dogs frighten some people and irritate others. Remove pets during showings if possible.

7. Bugs
There are many natural products that can help safely and effectively get rid of insects.

8. Gutters with Plants Growing in Them
Make buyers wonder what else hasn’t been maintained and can contribute to a leaky basement.

9. Sellers Who Hang Around for Showings
Home buyers feel awkward about opening closet doors and lingering for a really good look at the house if the seller is home. Give them their space!

10. Poor Curb Appeal
See above…

1) Determine a location and strategy
Define the area you want to invest in based on economic fundamental research; this includes breaking down your criteria to find the best neighborhood to suit your investment style. Next, you’ll want to determine your strategy. Are you specializing in long term holds (and if so, how long will you hold)? Short term flips? Renovation deals? Foreclosures? Tip: Review your financial plan and personal goals for the next 15, 10, five and three years. This will help you decide which strategy to use when looking for your property. Start from the end goal and work backwards.

2) Get pre-approved
Do you have your financing in place? Get pre-approved. You may not always know where your financing is coming from, but it is less stressful to have a few options lined up, and doing so makes you look like the professional you are. Be certain to have a back-up plan, or Plan B, to close your deal if things don’t go as expected at the bank or lender. Tip: Before you go to the bank, prepare a detailed financial binder. Include your employment history, tax statements, asset and liability sheet as well as current financial statement.

The current real estate market is definitely a buyer’s market. With the high availability of homes on the market and interest rates at historical lows, this is an opportune time for buyers to purchase the home of their dreams at an affordable monthly payment.

If you have been saving to purchase a first home and have a good credit score and reasonable debt-to-income ratio then this is a great time for you to buy a home. Not only will you have a variety of homes to choose from, some that may not have been affordable if the market had been different, but you will also be able to obtain an affordable loan payment at a low fixed interest rate.

Be cautious, however, not to buy beyond your means. Consider all the costs of home ownership, such as upkeep, taxes and insurance, before you buy!

This is also a great time for renters with a stable income to consider purchasing a home. With so many homes on the market, many due to foreclosures, you may be able to find an affordable home that requires very little down. You could even look into purchasing a small home, holding it until the market turns upward, then sell and move into a larger home.

Newly retired couples, who have their home paid for and good retirement, may find this is a good time to purchase a vacation home.  With the good interest rates and the lower home prices, they may find a good deal that they otherwise may not have been able to afford.

For those who have money to tie up, this is a great time to purchase a home as an investment or rental. As a precaution, it is important that you can afford to hold onto the property for awhile. Use your purchase as a rental property for  a few years. When you’re ready to sell it, you’ll find you’ve made a good investment.