Buyers on the Hook for Thousands

Have you ever heard of FIRPTA?  Probably not.  If you're buying or selling a home in the US, you need to be at least slightly aware of it.  FIRPTA stands for Foreign Investment in Real Property Tax Act.  Have you fallen asleep yet?  This is a topic that I could bore you to tears with and make you want to never read this blog again!  Obviously I have no intention of doing that.  But I want to at least let you know the basics so you don't get taken for a ride.

When someone is a foreign investor (the short answer meaning that they aren't a US citizen) and they are selling property in the USA, they may be subject to FIRPTA.  The bottom line is the federal government wants to make sure that they can still get taxes from that seller, which is next to impossible if they don't live in the US.  This means that escrow may withhold up to 15% of the sales price of the home from the seller for FIRPTA.  Not 15% of the seller's profits, but up to 15% of the sales price.  Wait! Don't lose interest yet, hang on one second.  This means that Ms. Seller, if you are making a $30,000 profit on that home and the government's percentage is $50,000, then to close that transaction, you're going to need to come up with an extra $20,000 to set aside with escrow.  Wowza, now tell me that's going to be no big deal.  

I can see you starting to get blurry eyed and not caring about this already, but wait!  The responsibility of FIRPTA lies with the buyer.  As a buyer, you want to know if the seller falls under FIRPTA so that escrow, the sellers agent and your agent can all do their jobs and make sure that you aren't on the hook for thousands with the federal government.  If you're a buyer, YOU could be responsible for those taxes if the seller doesn't pay the feds!

What do you need to do?  As a buyers or a seller, talk to your agent about FIRPTA at the beginning of a real estate transaction.  This can all be a non-issue as long as the communication happens from the get go.

What Do You Want?

One of the interesting things about real estate is the emotions that can come into play.  One might think that it's a business transaction and it's all about the numbers, but the reality is that emotions often override our intentions to focus on the deal. 

Sometimes both buyers and sellers will lose sight of what the goal is and get distracted by the emotions of it.  It's normal to focus on how we feel, what's making us frustrated or angry, instead of focusing on what it is going to take to solve that item.  It's also common to surround yourself with how you're feeling and not take a moment to consider how the other side is feeling.  It can be helpful in real estate to think about what you want, and then to also think about how that will come across to the other side. 

Every transaction will have emotional ups and downs.  Every transaction will have problems of varying degrees, some big, some small.  The thing to remember is not to sweat the small stuff and to focus on what your actual goal is.   Remember that.  What is your goal?  What do you actually want?   

Don't let emotions sway you away from your goal.  Sometimes we can be our own worse enemies.  We get so focused on the fact that we think someone is being unfair and nit-picking an item, that we lose sight of the details, how much that item is actually going to cost and is the cost worth it.  It doesn't do anyone any good to argue over a small item when that small item could actually prevent the buyer from getting the house they want and the seller from selling their house that they need to sell.

Have you ever heard an adult cry "that's not fair!"  I tend to find that interesting because by adulthood, we should all know that life isn't fair.  With any item, no matter what it is, don't focus on the fairness of it; instead remember "What's my goal and what can I do to achieve that goal?"  If you stick with a goal oriented focus, then any problem can be figured out. 

Portland's Growing in 2017

Everywhere that you turn in real estate news right now, people are talking about their forecasts for 2017.  When you're looking at real estate, you really want to focus on your area specifically, because Portland, Oregon is much different from Port Allen, Louisiana.

Here are some of the basics that we are expecting to see in 2017.  Interest rates are expected to rise.  Some are saying that a 30 fixed will rise to 4.75%.  Nothing crazy, still in the historically low range, but rise non the less.  This may cause some buyers to back out of the game.

Millennials are expected to be a big category of home buyers in 2017.  We have seen a lot more multi-generational home buyers with families looking to buy a home for two or more generations of the family to live in.  Even though this is still a strong trend, Millennials are likely to strike out on their own, especially towards more urban living like Portland.

Tiny homes are becoming more popular.  With shows like "Tiny House, Big Living" and "Tiny House Nation", more people are becoming aware of the benefits of living small.  This is a trend that I expect to continue in 2017 and grow in popularity in Portland.

Inventory for the past few years has been at amazing lows.  Basically anything under $350,000 in the Portland Metro area is still flying off the shelves.  New construction is picking up, which will help with the inventory, but I expect the Portland area to still have a shortage of inventory for a while.  As long as inventory is low and demand is high, home prices have no where to go but up.  When buyers are forced to get into bidding wars and you've got 5 offers in on the same house, people will go much over list price to get the home they want. 

What will 2017 hold?  Only time will tell.... but for now, it's certainly the time to sell!