One of the smartest people I know often notes that people make purchases emotionally and justify logically. And, I am realizing that this applies to screwdrivers as much as it applies to real estate.
We buy what we want or need. But HOW we buy it says a lot about us. For instance, say you need a screwdriver. Do you just go to the store and buy the one that will work and get on with your day or do you compare prices at 5 different stores before making the right decision?
This is not a matter of frugality, as even frugality is a choice. I am a very frugal person, even when I don't need to be, because it gives me deep satisfaction that I am not getting ripped off. Another frugal guy I know feels like he is using a trick to get one over on the man when he uses coupons (And, he doesn't really need to use coupons). But, us frugal people justify our purchases as smart money-saving moves.
On the flip side, others might buy whatever they want without giving a second thought to price. They justify it by saying they are buying the top quality or living in the moment.
And, when it comes to real estate, it isn't much different. We tell ourselves and others that we want a solid house in a certain price range that will increase in value. We make it sound like we are making a very rational decision after days and weeks of deliberation.
But, when it comes right down to it, most people buy the house that they respond to emotionally. I often hear from buyers, "This one just feels like home," and not "Well, this house meets 93% of our criteria, so let's make an offer."
What prompted this blog entry is an article at SmartMoney.com making the rounds this week about the psychology of real estate purchases, which I found very fascinating. It is not something people talk about very much.
For instance, buyers often respond negatively at some level to homes that are marketed as having a lot of new features (new flooring, new roof, etc) as it leads them to worry about why the house needed new things and what else might be wrong. I also think that people want to put their own imprint on their new home and might feel guilty about getting rid of new stuff to replace it with their own.
On the flip side, houses that required simple affordable upgrades (like new paint) often turned off buyers, making them think that the house was too much work.
These two facts are somewhat contradictory, but there they are in this academic study. Which reminded me all the more that people buy emotionally and justify logically. Even when they are buying something that costs hundreds of thousands of dollars.
I highly recommend the article, which you can read by clicking RIGHT HERE.
What do you think? How much does psychology and emotion play into your big purchases?
Showing posts with label real estate. Show all posts
Showing posts with label real estate. Show all posts
Friday, July 30, 2010
Monday, July 12, 2010
My New House Needs a Title? But, I'm Not an Author!
The question running through many first time homebuyers minds when they get to escrow and title is, "I can't just own my home? I have to tell them HOW I will own it? What does that even mean?!?"
Time for a crash course in methods of holding title. When you own a house, there are many ways to own it, or, in other words, many ways to have the title in your name. If only it was as simple as owning an iPad or a puppy.
It is important to declare how title is held because a lot is at stake. One thing a title declaration does is make a pathway for what happens to ownership if something like a death or divorce happens. Holding title is a very complicated issue, so remember that this is a just a brief overview.
If a single person owns a home all alone, it is simple. Sort of. That is known as Tenancy in the Severalty. It is odd to think that one person leads to "severalty," which sounds like several, but legally severalty means separate and distinct. And, of course you are an owner and not a tenant, but Tenancy in the Severalty is the legal term what we use.
A married couple usually owns their home as a Tenancy in the Entirety. OK, again they aren't tenants, but lets move on the next big word. Entirety here means unity and totality. This requires both spouses to agree to a sale, so that one cannot sell their half without the other. It also provides some protections from creditors. When it comes to survivorship, the home will automatically become the sole property of the surviving spouse, aka Tenancy in the Severalty. If each spouse wants to leave their interest in the home to someone else, they should consider holding title as Tenancy in Common.
So, what is a Tenancy in Common, then? Again, not tenants the way we normally think of tenants. When a property is held as a Tenancy in Common, there can be multiple owners with different interests. For instance, four people could own a property, with one person owning 40% and the other three owning 20% each. Each person can sell or will their own interest as they please. TICs are tough to market and sell, so you don't see them to often.
Do you also want to know about Joint Tenancy? Forget about it! Joint Tenancy is not a legal manner to hold title in Oregon at this time.
This is a very complicated topic, and I often refer people to their own lawyer or at least the title company for guidance in choosing the right form of title. Choosing title is just one of the many many big decisions a homebuyer has to make on the road to getting those keys in hamd. If you have questions about holding title, please let me know. I am always happy to help.
Time for a crash course in methods of holding title. When you own a house, there are many ways to own it, or, in other words, many ways to have the title in your name. If only it was as simple as owning an iPad or a puppy.
It is important to declare how title is held because a lot is at stake. One thing a title declaration does is make a pathway for what happens to ownership if something like a death or divorce happens. Holding title is a very complicated issue, so remember that this is a just a brief overview.
If a single person owns a home all alone, it is simple. Sort of. That is known as Tenancy in the Severalty. It is odd to think that one person leads to "severalty," which sounds like several, but legally severalty means separate and distinct. And, of course you are an owner and not a tenant, but Tenancy in the Severalty is the legal term what we use.
A married couple usually owns their home as a Tenancy in the Entirety. OK, again they aren't tenants, but lets move on the next big word. Entirety here means unity and totality. This requires both spouses to agree to a sale, so that one cannot sell their half without the other. It also provides some protections from creditors. When it comes to survivorship, the home will automatically become the sole property of the surviving spouse, aka Tenancy in the Severalty. If each spouse wants to leave their interest in the home to someone else, they should consider holding title as Tenancy in Common.
So, what is a Tenancy in Common, then? Again, not tenants the way we normally think of tenants. When a property is held as a Tenancy in Common, there can be multiple owners with different interests. For instance, four people could own a property, with one person owning 40% and the other three owning 20% each. Each person can sell or will their own interest as they please. TICs are tough to market and sell, so you don't see them to often.
Do you also want to know about Joint Tenancy? Forget about it! Joint Tenancy is not a legal manner to hold title in Oregon at this time.
This is a very complicated topic, and I often refer people to their own lawyer or at least the title company for guidance in choosing the right form of title. Choosing title is just one of the many many big decisions a homebuyer has to make on the road to getting those keys in hamd. If you have questions about holding title, please let me know. I am always happy to help.
Thursday, July 8, 2010
The $8,000 Tax Credit is Gone. Now What?
April 30, 2010 was probably the busiest day of real estate negotiations in many many months. The $8,000 federal tax credit expired that day. Homebuyers had to have an accepted offer and officially be "in contract" on that date to get the tax credit.
Due to the increased buyers activity, sales prices swelled a bit and it became somewhat of a seller's market. There were competitive multiple offers on some houses. And, sellers knew they had buyers desperate for that tax credit in a weak negotiating spot.
Now that the tax credit is gone, you might be wondering what is going on. Well, sales dipped some, but the gans in March and April were unnaturally high due to that tax credit.
And, even better, prices have dropped. In fact, I see that many homes are probably priced at least $8,000 less than they would have been before April 30th. So, would you rather have a price reduction in buyers market or a tax credit in a seller's market?
I must admit....I have a hidden agenda here. The real point of my posting today is to point out that there are so many great resources for first time homebuyers in Portland that you probably won't even miss the tax credit.
Probably the best starting point for first time homebuyers in the Portland metro area is the Portland Housing Center. PHC is a non-profit housing center that provides resources to first time homebuyers, providing information, counseling, and guidance on nearly every step that comes up during the homebuying process--from getting your finances together to getting the keys in your hand.
Some of my favorite programs at the Portland Housing Center include:
-competitive fixed-rate loans from a non-profit source
-downpayment savings match--save $2000 and get $6000 in matching funds!
-mortgage assistance program to avoid mortgage insurance
-classes on getting your finances in order
-direction to additional city and county resources you may qualify for
There is a lot to offer at Portland Housing Center. I am confident that if you combine the current buyer's market with some of their programs, you are going to save far more than $8,000 when buying a house.
Due to the increased buyers activity, sales prices swelled a bit and it became somewhat of a seller's market. There were competitive multiple offers on some houses. And, sellers knew they had buyers desperate for that tax credit in a weak negotiating spot.
Now that the tax credit is gone, you might be wondering what is going on. Well, sales dipped some, but the gans in March and April were unnaturally high due to that tax credit.
And, even better, prices have dropped. In fact, I see that many homes are probably priced at least $8,000 less than they would have been before April 30th. So, would you rather have a price reduction in buyers market or a tax credit in a seller's market?
I must admit....I have a hidden agenda here. The real point of my posting today is to point out that there are so many great resources for first time homebuyers in Portland that you probably won't even miss the tax credit.
Probably the best starting point for first time homebuyers in the Portland metro area is the Portland Housing Center. PHC is a non-profit housing center that provides resources to first time homebuyers, providing information, counseling, and guidance on nearly every step that comes up during the homebuying process--from getting your finances together to getting the keys in your hand.
Some of my favorite programs at the Portland Housing Center include:
-competitive fixed-rate loans from a non-profit source
-downpayment savings match--save $2000 and get $6000 in matching funds!
-mortgage assistance program to avoid mortgage insurance
-classes on getting your finances in order
-direction to additional city and county resources you may qualify for
There is a lot to offer at Portland Housing Center. I am confident that if you combine the current buyer's market with some of their programs, you are going to save far more than $8,000 when buying a house.
Wednesday, July 7, 2010
Why You Shouldn't Buy a House
I am going to say something not a lot of Realtors will say. Wait for it. Hang on. almost there. Are you ready?
Not everyone should buy a house.
I know, I know. You are thinking this particular Realtor must be crazy. Or that he has some bait-and-switch trick up his sleeve. But no. I will even say it again. Not everyone should buy a house.
Obviously, one of the main reasons not to buy a house is if you can't afford it. Even if interest rates are historically low, like they are now, you should not buy a house if you don't have the small amount money necessary for a down payment on an FHA loan or the income for the monthly payments on principal and interest (much of which is tax-deductible).
Another reason is that in some regions of the country it is actually cheaper to rent than to buy a home. Even considering the tax advantages of home ownership and equity building that can happen when buying a home in a low market such as this one. Also, it might be easier to rent to have access to great schools.
Sometimes the timing isn't right. On this topic, I will get personal. We are renting for a year until we decide what the right Portland neighborhood is for us to buy in. Even though we have spent a great deal of time here over the last ten years, we need to spend some more time living here to know exactly where we want to be.
The point I'm trying to make is that there are many many different reasons for buying a home--or not buying a home. And it is important to know what your needs are before making one of the biggest purchases of your life. Most people are buying a home and not a financial investment. Even though it is a buyer's market with a great supply of homes for sale, some of the lowest interest rates anyone has ever seen, and solid reliable loan programs, now may not be the right time for you to buy a home.
If you would like to discuss your housing needs to see if you are ready to consider buying a home this year or next year, let me know. I'm always happy to help.
Not everyone should buy a house.
I know, I know. You are thinking this particular Realtor must be crazy. Or that he has some bait-and-switch trick up his sleeve. But no. I will even say it again. Not everyone should buy a house.
Obviously, one of the main reasons not to buy a house is if you can't afford it. Even if interest rates are historically low, like they are now, you should not buy a house if you don't have the small amount money necessary for a down payment on an FHA loan or the income for the monthly payments on principal and interest (much of which is tax-deductible).
Another reason is that in some regions of the country it is actually cheaper to rent than to buy a home. Even considering the tax advantages of home ownership and equity building that can happen when buying a home in a low market such as this one. Also, it might be easier to rent to have access to great schools.
Sometimes the timing isn't right. On this topic, I will get personal. We are renting for a year until we decide what the right Portland neighborhood is for us to buy in. Even though we have spent a great deal of time here over the last ten years, we need to spend some more time living here to know exactly where we want to be.
The point I'm trying to make is that there are many many different reasons for buying a home--or not buying a home. And it is important to know what your needs are before making one of the biggest purchases of your life. Most people are buying a home and not a financial investment. Even though it is a buyer's market with a great supply of homes for sale, some of the lowest interest rates anyone has ever seen, and solid reliable loan programs, now may not be the right time for you to buy a home.
If you would like to discuss your housing needs to see if you are ready to consider buying a home this year or next year, let me know. I'm always happy to help.
Friday, July 2, 2010
Neighborhood Focus--Sullivan's Gulch
For my first Neighborhood Focus, I will start with my own--Sullivan's Gulch.
One of the things I like most about Sullivan's Gulch is the look on people's faces when I tell them I live in Sullivan's Gulch. The look says that they have no idea what I am talking about. I could say that I live between Irvington and Hollywood, but it is more fun to say I live in Sullivan's Gulch. Makes it sound like I live in the Wild West.
In fact, Sullivan's Gulch was a part of Portland's Wild West in a way. It is named for Timothy Sullivan, one of the founders of Portland. He staked his claim in the 1850's right about where Highway 84 crosses NE 28th Avenue. Little did Timothy know that his camp would one day be home to a big Fred Meyer!
But Sullivan's Gulch has much more than a Fred Meyer store, of course. The main corridor is Broadway and that little stretch is home to many great little places, like Pets on Broadway, the Manhattan Cafe, Thatch Tiki Bar, and even a new store for jugglers! Another plus about the neighborhood is its close proximity to both the Hollywood and Lloyd Center MAX stations--so getting downtown is free, fast and easy.
The homes around Sullivan's Gulch are gorgeous. There is a wide variety of arts and crafts bungalows, most of them surrounded by great landscaping and gardens. It is a nice mix of smaller affordable starter homes and grander estates.
Even if I didn't live there, Sullivan's Gulch would definitely be one of my favorite walking neighborhoods. Come check it out.
One of the things I like most about Sullivan's Gulch is the look on people's faces when I tell them I live in Sullivan's Gulch. The look says that they have no idea what I am talking about. I could say that I live between Irvington and Hollywood, but it is more fun to say I live in Sullivan's Gulch. Makes it sound like I live in the Wild West.
In fact, Sullivan's Gulch was a part of Portland's Wild West in a way. It is named for Timothy Sullivan, one of the founders of Portland. He staked his claim in the 1850's right about where Highway 84 crosses NE 28th Avenue. Little did Timothy know that his camp would one day be home to a big Fred Meyer!
But Sullivan's Gulch has much more than a Fred Meyer store, of course. The main corridor is Broadway and that little stretch is home to many great little places, like Pets on Broadway, the Manhattan Cafe, Thatch Tiki Bar, and even a new store for jugglers! Another plus about the neighborhood is its close proximity to both the Hollywood and Lloyd Center MAX stations--so getting downtown is free, fast and easy.
The homes around Sullivan's Gulch are gorgeous. There is a wide variety of arts and crafts bungalows, most of them surrounded by great landscaping and gardens. It is a nice mix of smaller affordable starter homes and grander estates.
Even if I didn't live there, Sullivan's Gulch would definitely be one of my favorite walking neighborhoods. Come check it out.
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