I’ve put my career as an agent on pause for the moment while I pursue the development of B2B website solutions.
Buying a Portland Home in 2018
As we prepare for the busy 2018 real estate season, I recall a very specific file that typifies our current market conditions. I found myself standing in the living room of a recently vacant home in an up-and-coming area. My client (a buyer, in this case) was overpaying for rent and desperate to get a place to call home. With homes appearing as active only to disappear as pending a few days later; even lackluster listings seemed like fragrant flowers swarmed by happy honeybees seeking the sweet nectar that is life in Portland, Oregon. In a market where bidding wars running thousands over list price had become the norm, the topic of discussion was how to make my client’s offer more relevant. Despite a promising career in a fascinating field, my client’s funds weren’t unlimited; we had to get creative.
I mentioned to my client that while the purchase price was important, there were other ways to add value. In this case, the seemingly insignificant cues surrounding the property made my Realtor-Senses tingle and I was able to infer a number of salient details about the person selling the home. They were likely retired and although they had already moved, there was still furniture and personal property left behind still. The notable lack of a mortgage pointed toward someone who was frugal and valued a minimalist life. RMLS sales and tax records indicated that the person had lived there a long time. With these and many other clues, it was concluded that the seller was elderly and had likely either moved in with a relative or to a retirement community.
Drawing from past experience with sellers in similar scenarios, we were able to tailor the offer to better anticipate the needs they may be experiencing. By not asking for closing costs, we appealed to the seller’s more conservative values and also showed that we weren’t reaching beyond our means. After all, the person who stayed in their “starter house” until it was paid off would probably respect a “No-BS” offer that didn’t ask for closing cost credits and included a healthy down payment. Furthermore, by allowing the seller to leave unwanted furniture behind and structuring the repairs to not place an additional burden on the seller, we showed an understanding of the seller’s logistics and needs beyond their net proceeds. We also wrote a personal letter to the seller showing appreciation for the mature fruit trees and peaceful landscape. After all, there’s a good chance that either the seller or a loved-one had planted those trees many years before.
With our offer standing out from the crowd, we were able to truly connect with the seller’s needs and create a deal that worked for everyone. In this transaction, we succeeded because we showed respect for the seller while offering complete solution that fit with their needs. As my client and I were shaking hands and the buyer got the keys to their very first home; I felt a sense of gratitude about being a small part of Portland’s evolving housing market. As we look forward into summer of 2018, I’m thankful for the many ways in which the Portland real estate market of yesterday and today has taught me and given me the internal resources to be prepared for the future.
How The Great Recession Shaped My Real Estate Career
That first spring of 2009 most agents in my city were still under the old model. The pre-crash real estate model relied on establishment and opulence. The top agents of the day portrayed an imposing massif of success and amassed impressive client-lists. Basically, I was a small fish in what seemed like a big pond. The sales-pitch-de-jour often centered on portraying success by living a big lifestyle; with the meta-communication being that an expensive lifestyle indicated competence in the field. As a neophyte agent being thrown into the height of that decadence, the quality of an agents’ service seemed to become synonymous with the opulence of their surroundings. By extension, agents were also measured against how large their clients could live. Portland was a year or two behind the rest of the country in succumbing to the Great Recession and most of the established area agents felt that our city was different and that the financial woes of the nation and world simply couldn’t touch us. In the years that followed, my mind was fascinated by “the data” of the recession while my heart was moved by the human side of those tough times.
The summer of 2009 was the real estate summer that never truly happened for Portland. 2009’s sellers were often seeking to keep climbing the property ladder. The wisdom of the time was to either refinance or sell one’s current home and use the appreciation to bail out car loans, credit cards and student debt and then use the freed-up credit to purchase an even larger home in a more desirable area. But, as summer waxed hotter and open-houses beckoned, nobody showed up to buy. The buyers who were in the market often had threadbare financing and couldn’t truly afford to buy. One of my early experiences showing houses in 2009 was the heartbreak of finding out that the clients that I had spent hours touring homes with had just been laid off. Despite these setbacks, I did manage to make some sales and pick up some listings here and there.
As summer waned and autumn gave way to winter, the weight of the recession began to take hold in Portland, Oregon. For sale signs became ubiquitous and even the best custom photographs or open-house table spread couldn’t change buyers’ economic reality: nobody could afford to buy. Once confident agents were now whispering about foreclosure and quietly trying to downsize. In that new world of privation we all shared concerns over our own bottom lines as well as concerns for our clients. As agents, newly minted or with established careers, we all became equal in a way. The old way of selling homes no longer worked so we all had to figure things out. It was then that I started to hear about short sales.
The talk around the watercooler was that short sales were a byzantine world of impossible odds, frustrating banks and changing guidelines. To help ease the process, agents in the office had successfully closed a few of them using outside negotiation services that received a cut of the sales commission. After trying a few negotiating services I soon realized that if I wanted the job done right, I had to do it myself. My technical background gave me a unique perspective on the process and in time I found that I had closed short sales that many had deemed impossible. My business partner at the time took on the role of prospecting new clients and I negotiated multimillion dollar debt settlements while also handling client and agent relationships.
The Human Cost of The Great Recession:
The downturn was a very tough time for many people including thousands of families and baby-boomers looking toward retirement, for many across America, the downturn was defined by gutted retirement accounts and families left unemployed, unable to sell. However, the recession also spelled the end of a destructive housing bubble where young individuals and families were disenfranchised and economically left behind because they were not ready to purchase a decade earlier. At the height of the housing bubble, nobody could afford to own a home. In the lead-up to the recession, I regularly met hardworking young people with good jobs who would never be able to reasonably catch up with the quickly rising cost of housing. As such, in 2008-2009 you either already owned a house or it appeared like you never would.
For myself, I felt compassion and empathy for those on both sides. The Housing Bubble boosted the net-worth of those who already owned homes into the stratosphere but in the process made it almost impossible for many young people and families to ever own a home. I would also meet young people here and there who had made big sacrifices to squeeze into a home during the boom years, only to now have the rug pulled out from under their feet during the crash. As a short sale specialist, I brought together the needs of overextended home owners and buyers who previously would have never been able purchase. Banks were squeezing home owners to recoup losses in the billions of dollars; and as their Realtor I was all that stood between sellers and the ruin of foreclosure. As a negotiator it was my job to convince the bank to accept much less while forgiving the remaining balance.
The Short Sale With Five Liens:
One time in the early days, I was up against a collections attorney and the IRS, who were two of the five lien holders on the property. That short sale had seemed impossible but I just kept doing whatever I could think of each day to move the file forward in one way or another. Calling one department of a bank and reaching a dead end and then picking up the phone and calling another department looking for any inconsistencies in the statements made by various asset managers. Little by little, the banks and IRS all agreed to the deal until all that remained was the collections attorney. The lawyer was adamant that they wanted a full payoff and they were ready to see the entire deal crash and get nothing rather than accept a reduced settlement. After many months of negotiating it looked like I was doomed to fail but I realized that the attorney’s collection was affiliated with the same parent bank as the first mortgage. Then, when the first mortgage called me to ask when they would get paid, I simply informed them that they wouldn’t get paid at all because a different department in the same bank was demanding unreasonable terms. At that point, the bank’s own confusing system of conflicting messages was turned in on itself and the manager of the first mortgage was able to pull strings internally to get the collections attorney to cooperate with us.
Sitting across the table from my clients going over their five approval letters had a surreal, almost spiritual sensation; as if years of financial sins had been absolved while I had pushed myself beyond what anyone thought was possible. For my clients’ part, they had spent years in dread of financial ruin, with one late payment and defaulted credit card stacking on another and tax debt coming home to roost on top of all that. And then as if by magic, with that final stroke of a pen, my clients were completely free and I had a much-needed paycheck.
After successfully negotiating the short sale with five lien holders I felt like I had done the impossible. I used the momentum of that victory to push myself forward and have since become a specialist in short sale transactions. In the market today, short sales are no longer front page news. But, what those transactions taught me about the real estate business and how to negotiate on behalf of my clients are lessons that I’ll carry with me forever.
My Story as a Realtor: