We live in a world where some people will tell you “What you see, is what you get”.

I am sure this is nothing new to you but what you get, is also what you don’t see.

Patti has waited nineteen years for our kitchen to have some improvements.

We hired someone to extend the gas line underneath the house…

You found what? 

A sewer line in the crawl space that needs to be replaced.

Got to do it.

Pull the appliances out and get ready for new floors and countertops…

You found what?

The dishwasher leaked so you have to replace some of the flooring and the dishwasher.

If you bought or sold a house lately, this is probably nothing new to you.

If you are buying, you are probably spending almost every last cent to get that dream home and don’t have money laying around to do any repairs.

If you are selling, no way you want to delay closing to fix something and besides, you lived with the problem right?

The realty is, when buying or selling a house, as in life, things come to light that you didn’t know existed.

What Mold in the attic?

What do you mean the sewer line isn’t hooked up?

The radon levels are how high?

What water is flowing through the crawl space?

What do you do with problems or challenges?

What you don’t do is ignore them.

The small leak that is ignored often becomes the big dry rot and costly structural problem.

Get the information and come up with several possible solutions.

Negotiate it out in a way that all parties agree is fair.

Bad news is always preferred to inaccurate news….What Problem?

Nothing wrong with expecting good news, but always be prepared that there is more than what meets the eye and something, some problem or challenge will be ready to greet you and test your focus, your commitment, and your ability to negotiate.

Embrace the process, work through it, come away with a feeling of satisfaction, or at least appreciation, and not defeat.

Don’t let anything take away the Joy of Life that is yours!

Do You Believe in Zombies?

Am I talking about already dead yet somehow alive corpses you see in the movies?

No, but what I am talking about are what the Federal Reserve calls “firms that are unable to generate enough profits to cover debt-servicing costs and that need to borrow to stay alive.”

According to Lisa Lee at Bloomberg that includes about 600 of the largest traded companies including American Airlines Group Inc and Carnival Corp.

As interest rates increase the cost of borrowing money to stay afloat may ultimately be the death of these corporations.

The next question is what about individuals and families who lose jobs or have hours cut back and are already struggling with student loans, auto loans, and double digit credit card interest rates?

We might call these people with Zombie finances.

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According to Bankrate.com subprime auto loan delinquencies are at their highest rates since 2007.

John G. Merna, Esq at the Merna Law Group shares how a car can be repossessed even if your payment is  just one day past your grace period .

We are talking about people who after the stress of two years of lockdowns are coming up to the surface to gasp some proverbial air, only to be pushed back down by circumstances beyond their control.

It makes sense to talk to a lender whether you are preparing to buy a house in the future or learning how to reduce financial stress amidst hard times today.

Most importantly, we are all at different points in life and what you are experiencing may be far different than what I am experiencing and we all need to be aware of the struggles of those around us.

That is just one  of the many reasons why I love our company, Premiere Property Group, LLC.

We have what is called “The Circle of Giving” where we can give of our time, money, and household items.

It is set up to help those who are facing hard times, whether in our company or by pairing with local non profits, those in the community in which we work.

Lessons from Hawaii

This is not so much about what we learned while we were in Hawaii, but what we learned while our daughter and her husband were in Hawaii.

That means Patti and I watched our grandkids for ten days.

Now to be honest, Patti did most of the watching but I was a willing participant and backup.

I learned rather dramatically that a seventh grader is better at basketball and long range shooting than grandpa. Even on a slightly lowered hoop, elevation and what it takes to dunk a basketball are best done with a younger, more flexible and agile body.

Want to know a stat or what is going on with sports?  No need for google or youtube, just ask your grandson.

When it comes to what grandkids can and can not do, our third grade granddaughter said it best “Mom says we can do this and eat that because grandparents are supposed to spoil their grandkids.”

We thought we were watching two kids and a dog but as it turns out, it was more like three kids.

The family dog is the most loving animal you will ever find and because of that loving nature, wants to be part of all things family, whether setting down to eat or playing games outside.

And of course the dog must go on his walk which the grandkids also enjoy, whether walking or riding their bikes. There are several approved routes and plants, bushes, and trees that must be attended to by a male dog. 

There is one must have on these walks and that is the doggy bag. That means when you come back home you must have everything you left with and leave nothing behind for the neighbors to discover. Now I won’t go into details but it appears those gifts are graded and described prior to removal for the trip back home.

Spending time with our grandkids was a time where we were reinvigorated with the joy of living, laughing, having fun and putting life into perspective.

The best lesson learned from Hawaii is that loving your grandkids and being loved by them while giving their parents a break is an opportunity one should never pass up!

Altos Research gives a detailed Market Action Report with charts and graphs that boils down to how much of a seller’s or buyer’s market we are in. 

For context, as I understand it, 30 and below on the Market Action Index  is a buyer’s market with the lower the number the stronger the buyer’s market.

31 up to 100 are a seller’s market with the higher the number the stronger the seller’s market.

Looking at the Portland metro area on the Oregon side, covering 62 zip codes, the average Market Action Index is 77.8 which is considered a Strong Sellers Market.

Can you guess which area is the strongest seller’s market?

The answer is…Tigard. On May 29th it was at 98, down from 100 the previous month. Remember 100 is as strong a seller’s market as it gets.  Doesn’t get much harder for buyers than it has been in Tigard (which actually includes three zip codes) where the median price is about $750,000.

What area is the most buyer friendly?

It happens to be Portland in the 97201 zip code which has an index of 36 which is called “A Slight Seller’s Advantage”. Median Price is $2,097,500. 97201 is located approximately west of the Willamette River between the Hawthorne and Ross Island bridges.

Two areas both on the west side of the Willamette River.

Totally opposite sides of the Buyer - Seller spectrum yet one metropolitan area.

What side of the spectrum is your neighborhood, city, or zip code on?

The big question we all want to know is “What is happening in the real estate market?”

The answer is “Which ‘what’ are you referring to?”

If you live in the Pacific Northwest and during the winter you bumped into someone from Michigan or New York who said to you “It feels like snow” would you believe them? They have experienced that “feeling of snow coming” many times and have a good sense of what is happening next.

Real Estate Brokers who have been in the business for a while sense the same thing in the form of Open House attendance, showings, number of offers, days on market, and even subtle shifts in motivation or “fear of missing out”.

As you go through Open Houses you may experience a shift in the number of people looking.

What you as a consumer and I as a real estate broker have experienced is anecdotal evidence of what is happening in the market.

Lagging indicators tell us what has already occurred and may confirm our experience or anecdotal evidence.

If I take the Portland Metro area and compare April Closed Sales to the previous month in the $351,000-$400,000 range, sales dropped 27%. 

Contrast that to the $1,501,000 to $2,000,000 range where closed sales increased by 67%.

Those are documented lagging indicators of what has happened.

The average home for our RMLS system in Oregon for April  was $575,800. 

Over an eight week period in 2022 rates rose from 3.76% to 5.11% resulting in an average monthly payment increase of $460.

Continually rising  interest rates is a leading indicator of fewer buyers going to qualify, lower demand, and at least in some price ranges increasing inventory and longer times to sell.

The market we are in is a little like an earthquake where those tectonic plates well below the surface are shifting  and depending where you are located, the intensity you feel may be negligible or catastrophic.

If you are noticing a subtle shift in the market, you are correct.

Questions? Glad to talk with you

Cash offers always get accepted, correct?

Sellers give a discount for cash offers, right?

Is it also true that getting a cash offer is as good as heading to closing and transferring the title?

There are a couple of aspects of paying cash for a home we can agree on:

A cash offer has the potential of closing sooner than an offer with a loan.

A cash offer has the potential of moving forward without needing an appraisal as compared to a loan where there is a risk of a low appraisal and sale-fail.

Employment verification is usually needed for a home loan but not for a cash buyer. 

In fact, if a buyer quits their job prior to funding and recording on their new home, they risk losing their loan when the lender does an employment recheck.

An escrow officer is a neutral third party but is obligated to inform the buyer’s lender they are no longer employed if the buyer casually mentions at closing “glad signing is over because I just quit my job.”

Why does a cash offer just have the “potential” of closing sooner than a financed offer?

If a buyer is approved subject to an appraisal, some lenders could, with a willing appraiser, close in two weeks which is a typical inspection period.

Cash could possibly close in less than a week yet most cash buyers still want a home inspection which would extend the closing date to that of a fast tracked loan.

What about appraisals? 

A home lender could have an appraisal waived or just require an automated appraisal. They could also rush an appraisal.

On the other hand, when a cash offer comes in, some buyers think they have a cash offer but it may be subject to the closing of another home, selling stock, getting funds from a relative who “promised” them money to pay cash, or even being subject to the funds coming from a retirement account only to find out funds aren’t immediately available.

Let’s look at some recent cash offers.

If a seller receives a cash offer $50,000. above asking price and has a second offer with a  loan 50% down but $100,000. above asking price, which would most sellers take?

It comes down to risk versus benefit and a slice of seller preference.

It is always the seller's choice and sometimes a seller will choose a buyer that may not be the highest price, the quickest closing, or all cash. 

The local market determines the value of a cash offer.

The past several years with low interest rates may have been a time of a slight preference for cash offers if all other terms were equal.

However, as interest rates increase, if the pool of qualified buyers starts to shrink, the value of a cash buyer to sellers may increase greatly.

Let’s look at the facts to better understand the value of cash offers so far this year.

Are cash offers reserved for lower or moderately priced homes?

Let’s take Lake Oswego for detached homes from Jan 1 2022 to April 28, 2022 as shown on RMLS for answers to many of the above questions:

Conventional Loans Closed: 92 

Average Cumulative Days on Market: 39

Percentage Sold to Original Asking Price;     104.68

Average Sold Price:           $1,290,027

Cash Offers Closed: 34 

Average Cumulative Days on Market: 27

Percentage Sold to Original Asking Price;             98

Average Sold Price:           $1,715,703

Any observations?

In Lake Oswego the average closed cash offer compared to a conventional offer was priced $425,476. higher, sold 31% faster, and buyers paid on average 6.68% less than their conventional loan counterparts.

Here are the houses sold in Portland for the same period:

Conventional Loans Closed:      1,901

Average Cumulative Days on Market: 24

Percentage Sold to Original Asking Price; 105.06   

Average Sold Price:        $659,573

Cash Offers Closed:           388 

Average Cumulative Days on Market: 28

Percentage Sold to Original Asking Price;   104.74

Average Sold Price:          $820,045

Any observations?

In Portland the average closed cash offer compared to a conventional offer was priced $160,472. higher, sold 16% faster, and buyers paid on average just .32% less than their conventional loan counterparts.when a cash offer comes in, some buyers think they have a cash offer but it may be subject to the closing of another home, selling stock, getting funds from a relative who “promised” them money to pay cash, or even being subject to the funds coming from a retirement account only to find out funds aren’t immediately available.

Here is what happened in Vancouver Washington for the same period:

Conventional Loans Closed:           881

Average Cumulative Days on Market:   5

Percentage Sold to Original Asking Price;     103.83   

Average Sold Price:             $546,367

Cash Offers Closed:           143 

Average Cumulative Days on Market:   5

Percentage Sold to Original Asking Price;     103.95

Average Sold Price:             $568,918

Observations?

In Vancouver Washington,  the average closed cash offer compared to a conventional offer was priced just $22,551. higher ($568,918 vs $546,367), both sold in an average of five days and cash buyers actually paid, on average .12% (12/100ths of a percent) MORE than their conventional loan counterparts (103.95% of asking price for cash vs 103.83%).

Isn’t that interesting that cash buyers typically bought houses in a higher average price range than their conventional loan counterparts and that in one area the impact of paying cash upon sale to asking price was nothing, yet more dramatic in another.

What we don’t know is how many conventional offers were made before an acceptance as compared to cash offers made before acceptance.

So apart from getting an acceptance, it sounds like on average, luxury home sellers may have a smaller buying pool, are less down to the last dollar sensitive, or are just more willing to negotiate price than midrange homes when it comes to price.

Accurate expectations from cash buyers and those needing financing will vary based on location and price point.

As interest rates rise, will lender requirements change, fewer buyers qualify, and therefore the value of a cash buyer, and willingness to negotiate with them, increase?

And, or, will the stock market go down and fewer cash buyers exist?

The power went out and the flashlight batteries are dead.

Get out those candles.

Light amidst darkness.

Over time the candles burn down and then, total darkness.

Extinguished.

You may have heard the story of the two frogs in the farmer’s barn.

They both fell into a bucket full of what looked like milk.

They tried to get out and found it impossible.

They both kept swimming but had two different attitudes toward their outcome.

They were both getting tired but of them decided there was no hope,  

His desire to survive had extinguished.

The other frog was also tired but was not about to give up.

He was determined to keep swimming.

Shortly after he decided he had no hope, one of the frogs drowned.

The other missed his friend but kept kicking and swimming.

Suddenly all of that liquid cream started getting thicker and soon he hopped out of the bucket.

Whether in business or our personal life there are times when we encounter difficulties and our motivation or desire to reach that goal comes down to personal choice.

The price we have to pay may be more than the benefit we will receive.

We all have limits.

As I show homes in this market of increasing prices and interest rates some buyers looking for a home get tired of looking and competing  with multiple offers.  

They get tired of being qualified and losing out to cash offers. They get tired of having to look at a house and make an offer immediately to try and increase their chances of the seller taking their offer.  

It is disheartening to the buyer and agent alike.

The desire to look, to make an offer, and to buy a house can be so difficult that it gets snuffed out, extinguished, and the process is stopped.

I don’t fault those who no longer qualify, nor do I fault those who get tired of the emotional and time drain.

But for the majority who continue to push through the disappointment, who work through the home buying process and get their offer accepted, there is a feeling of victory, of having overcome the obstacles they encountered.

That Accomplishment is a reason for celebration for buyer and agent alike!

The Flame still burns hot, the cream hardens and life begins anew.

That buyer who celebrates should be you!

Patti came home with a bunch of plantable flowers.

There were a variety of sizes and colors.

Some go into pots and others into the ground.

You ever wonder why we do that?

If you are selling your home, it adds color and life and is a twenty four hour welcome committee to all potential buyers.

You may be a local expert who only plants flowers, shrubs, and trees that are native to your specific region.

Some of you are a hoticulturalist or botanist and you know more about each plant you take into your care than most of us know about our immediate family.

Then there are the pragmatists among us. You buy edible plants such as radishes, tomatoes, and carrots along with some spinach or lettuce.

Whatever the reason, even for us amateurs, it is more than the joy of looking at that plant today, it is enjoyment of that plant for a season, a year, or maybe even years to come.

So, what are you planting?

Let’s talk figuratively and practically.

Planting takes effort. Planting can have a monetary cost to it.  Planting involves Planning.

Some plants and trees thrive in one type of climate but may die in another.

Some plants grow better in alkaline soil like cucumbers, onions, lettuce, and kale.

Radishes, sweet potatoes, and peppers prefer acidic soil.

What kind of seeds are you planting in your relationships, whether at home, work, or in social settings? Seeds of trust, encouragement, and teamwork or seeds of selfishness, disruption, and despair?

When people ask me about a career in real estate, I say it is one of the few professions left that gives everyone an opportunity to grow themselves and their business based on what is of interest to them.  If you are social and like to interact with people, real estate could be for you. If you are quiet and more analytical, maybe commercial real estate or investment property is a great fit.

What you will find out in real estate, as in every other type of career, is what you are good at and how to best use your personality and areas of interest to succeed!

Are you planting seeds of stability when times are good so you can weather the storms when times are bad?

If you work hard and learn all you can about what you do, you will often be the last one let go because you have made yourself so valuable to the company you work for. You are cross trained and able to fill in the gaps as needed.

It is too easy in our society to live above your means. According to Lendingtree the average new car payment in 2022 is $644 per month borrowing $39,721. Another article they said that the average credit card debt for Oregon was $5,994 and $6,480. In the State of Washington.

There are some circumstances where job loss, declining health, or other unforeseen circumstances affect us in ways we can not control.

If you haven’t done it lately, consider getting a Free Credit Bureau Credit Report. We checked our credit about a year before buying our home and found there was a negative credit event on it. It was attached to our credit report in error.  Took us nine months to get it removed and that made a big difference when the time came to get a home loan.

It is never too early to talk to a loan officer. Ask me. I am glad to give you a recommendation. 

When is the best time to prepare for a new loan? 

When you don’t have too… That gives you time to prepare and correct.  If all is good from the start, then you are prepared should an opportunity of a lifetime come across your path.

What kind of seeds are you planting?

Are you planting them before it is too late?

If you are in business or marketing you have probably heard of the acronym:  FOMO

It means “Finally One More Opportunity” correct?

For many desert lovers, cake is a wonderful pleasure.

When you see the whole cake, it is easy to wait your turn to enjoy it, one bite at a time.

But when there is only one piece, and several people have yet to get theirs, FOMO often steps in and takes over.

Fear Of Missing Out

Emotions take over and cut circulation to the brain, throwing logic out the window.

I don’t want to miss this opportunity to satisfy that sweet tooth craving within. 

I love cake, I deserve that piece of cake. I can taste that soft sweet bite before it hits my mouth and overwhelms my tastebuds.

I will take that piece of cake before someone else does.

After all, that is why it is there, right?

Take it, Enjoy it. It was offered to you.

If however, someone else took that last piece of cake, you may feel disappointed for a minute but it probably wouldn’t be a life changing event.

Fear of Missing Out also applies to behavior on a much bigger scale.

It could apply to buying a house.

The Fear could be real but it shouldn’t cause you to put yourself at undue risk.

Let’s look at the housing supply over the last couple of years in our RMLS system:

Is there a real fear of missing out based on inventory alone?

This is how much March 2022 inventory is down in Oregon and SW Washington compared to prior years:

March 2022 has 57.17% less inventory than March 2017

March 2022 has 56.79% less inventory than March 2018

March 2022 has 60.90% less inventory than March 2019

March 2022 has 55.22% less inventory than March 2020

March 2022 has 13.67% less inventory than March 2021

Add to that Fannie Mae’s last August 30 year rate of 2.84% compared to yesterday’s average rate of 5.0% 

In case you miss it, that is a 76% increase in interest rates since last August.

Remember, that 5% rate is an average and is credit based. So it could be 5% or even as high as 6% depending on your credit..

The next layer in addition to inventory and interest rates is the obvious increasing home values.

Here is “Percentage change from previous year of single-family housing prices in the different states of the United States as of 4th quarter of 2021” according to Statistica:

Oregon was up 18.05%

Washington was up 20.12%

With inventory down 55.2% from two years ago, interest rates up 76% over the last seven months, and values up by 18%-20% in the last year, there is a reason to have Fear of Missing Out (FOMO).

However, Fear should never be the basis for your or my decision.

What can be done to increase your chances?

Spend less than you make, if at all possible. Work on improving your credit score by first meeting with a loan officer who can guide you through that process. Buy what you can comfortably afford and maybe not what you could qualify for. 

One couple I was working with decided to get a 30 year fixed loan which would have an interest rate adjustment after 10 years. It helped them get a lower rate than a standard 30 year fixed and they had a plan to lessen the impact of an interest rate increase ten years down the road.

Talk to an accountant, but maybe a relative could gift you some money to help you get your first home. Another option would be for them to co-purchase it with you or buy it and let you rent it with a lease option to purchase at a given price and part of each payment going toward your down payment.

Consider the possibility of moving to an area where prices are lower than where you currently live.

Sady, for some, now may not be the time buying a home is possible.

If you know what you want in a home and also have a good understanding of what kind of real estate market it is, then you can move forward with confidence that your decision was a good one and not Fear based.

Who knows, you may even celebrate getting that home with a piece of your favorite cake.

Patti and I went to the grocery store. 

Depending on which we got, carrots and beets were about the same price, $3.49 a bunch.

That was the listed “Price”.

The location I buy those vegetables at affects the price. That price would be different if I drove down from Portland to San Jose in California.  On average about 15% more. Yet traveling to Memphis would save me about 25% on my food bill.

Time can affect pricing. Not local, but the international price of a commodities food basket (FFPI) is up 20.7% for February 22 over February 21.

I’ve been looking at software that helps track time and activity. How much time have I spent doing what? Is what I am doing a good use of my time?

“Time is Money” is a saying we have all probably heard. Whether you attribute it to Benjamin Franklin as some do, or a variation of it from a proverb written in 1572, we need to consider the value of our time. After all, we only have so much of it and it is spent one moment at a time and can not be saved to be used another day.

If you are working long hours, you may buy those vegetables online and the delivery cost could add to the price you are paying.   You might have the time to get them, but you have to ask yourself what is your time worth?

If you were so unfortunate as to have lost your job or have month at the end of your paycheck, you may have to charge those vegetables on your charge card. With credit card interest rates of 14% to almost 25%, those vegetables start to become very costly. According to Fool.com, if you had a $10,000. balance and 18% interest rate, made monthly payments of interest plus 1% of the balance, it would take 28.5 years to pay off your credit card.  Now, that is a budget buster!

What value do those vegetables have?

Beets have been said to lower your blood pressure, lower your blood sugars, contain anti-inflammatories, and help brain function due to the high levels of nitric oxide.

Carrots have great benefits which may include  helping vision, reducing the risk of cancer, and preventing heart attacks and strokes.

The health benefits add a lot to the “value” of beets and carrots,  almost independent of the cost. 

Let’s talk about a little more expensive item such as a house purchase.

How do cost, price, and value relate to purchasing a home?

Initially, the Price is what the seller is asking. It is a starting point. 

What typically happens in response to an asking price, varies from location to location, point in time, and as can be expected, interest rates. These factors are all a part of supply and demand.

According to RMLS, in February 2022 the average price in Lake Oswego was $805,000. 

Do you want to guess what the average was twelve years ago in February 2010, when the subprime mortgage crisis was in full swing? It was $400,000.

Did you get that? The average value in February 2010 was half of what it was this last February of 2022.

In Lake Oswego during the last couple of months there have been houses sold for $235,000. more than the asking price. Yet, surprisingly, there have been homes sold for $250,000. less than the asking price.

During the same sixty day period in 2010,understanding that values were half of what they are now, I found only one home sold for $60,000 more than asking price with the next closest one going for $26,500 more.

Contrast that to two homes that sold for less than asking price. One sold for $424,000 less and another for $329,000. Less. Considering values were about half of what they are today that would be like homes selling for $848,000. and $658,000. LESS THAN ASKING PRICE in light of today's real estate values.

Time has drastically impacted prices in the last twelve years.

Location affects real estate values in many different ways.

Although the average price of homes in Lake Oswego in February 2022 was $805,000., Hillsboro and Forest Grove have an average of $529,600 and Beaverton and Aloha of $526,300. North Washington County and Sauvie Island come in at $657,000.

Anecdotally, back in 2010, if there was a home on a busy street it was very difficult to sell. Why? Because the supply of houses was so great, buyers had all kinds of choices of homes located on quieter low traffic streets.

In today's market, inventory has been so low that even homes on busy streets sell quickly.

There is the seller’s asking price and then the often higher selling price.

What affects the cost to a buyer of the house they buy?

Low inventory, FOMA (fear of missing out), and the emotional frenzy of buyers offering more than what they think a competing buyer will, ultimately cause a buyer to pay more than they otherwise would.

Do interest rates affect the cost to buyers?

If you are a cash buyer, rising interest rates don’t impact you in the same way as a buyer getting a loan. The cost you pay may be more closely aligned with the selling price.

Interest rates are currently based on your credit score. So those with high credit scores get the best rates while those struggling pay the most.

In the 1980’s I remember having friends who were current with their payments  on an interest rate loan of 14% and they wanted to refinance as rates were heading down around 10%. After applying for a loan they were told they did not qualify for their 10% loan. I understand banks have guidelines but it didn’t seem logical that someone could be in good standing at a much higher payment than they could get qualified for.

Kind of like the borrower who has enough money in the bank to pay cash for a house but does not qualify to borrow money and get a loan.

If you are getting a loan, interest rates  dramatically impact what you pay for a loan. According to TheMortgageReports.com mortgage rates peaked in October 1981 at 18.63% and had a low in January 2021 of 2.65%. Let’s do the math. A $500,000 loan at 2.65% would translate to a loan payment (not including taxes and insurance) of $2,014.82.  Now be thankful you don’t have to pay the 18.63% rate which with a $500,000 loan equates to a monthly payment of $7,792.91

The $500,000. 30 year loan at 2.65% will cost you about $725,334.82

What will that 18.63% loan cost you?   $2,805,449.13  Ouch!

According to Freddiemac on December 23, 2021, a little over three months ago, 30 year rates were 3.05% compared to 4.67% on March 31, 2022.  

So due to interest rates increases in the last three months, if you borrowed $500,000,  your monthly loan payment would have increased by $462.65.

Or to look at it another way, that same payment of three months ago which let you borrow $500,000 would now qualify you for  a loan of $410,484.03. 

These last three months of increasing interest rates would have cost you $89,515.97 in buying power!

How does value fit in with the price you pay and what it costs you?

Some people have refinanced, once, twice, even three or four times as rates came down. The focus on monthly payment has saved them considerable money compared to rising interest rates.  However, each of those refinances has cost money and eaten away at their equity.

The value of a lower monthly payment is incredible. The decreasing equity has virtually no effect until it is time to sell.

As a buyer, if I want an upscale neighborhood where everyone has a pool, that pool has value to me. 

If however, I want a house with a pool and it is an average neighborhood where most people do not have a pool, then I may be willing to pay more for that house than another buyer who thinks a pool is nothing but a costly item with maintenance costs and higher insurance rates.

If I am not planning on moving and I want to spend $50,000 to $100,000. on a pool because that is something I value, will I get my money back out?

Let’s say when you sell you only get back 25-50% of what it cost you to put in the pool.  If you have medical problems and swimming alleviates your pain and gives you renewed energy, the value of the pool to you is more than just dollars and cents, it is quality of life. I am not a tax consultant and you would need to confirm with one, but if someone was able to write the cost of their pool off as a medical expense, that could play a large part in both the cost and value of a pool to that person.

The value you give a specific home can change with your circumstances.

 If you think your home is worth $1,000,000 and you find another one you want to buy worth $2,000,000. But that seller is  forced to sell and will take $1,500,000, would you sell the home you are in for $900,000. ?

If two buyers have a bid on the same $700,000 home, which one may see a higher value in terms of what they are willing to pay?..

…buyer one buyer who sold their smaller California home for $1,000,000

…buyer two who is moving from the midwest where they sold their home of similar size and quality  for $500,000.?

Whether buying or selling, you need to understand the difference between price, cost, and value against the backdrop of your circumstances at the time, to make a decision which serves you best.