Land Surveys and Real Estate

Surveying is a dry topic at best, at least to most of us.  Oregon Field Guide rebroadcast last week a fascinating segment on surveying, though, telling how every square mile of Oregon was surveyed back in the 1800’s, and how the practice continues to this day.  Surveying in the United States dates back to Thomas Jefferson and the Revolutionary War, but most of the original surveying in Oregon didn’t start until the 1850’s due to the Donation Land Claim Act, which encouraged even more Pioneers to come west along the Oregon Trail.  The early settlers got 160 acres for free if they improved the land and stayed for 5 years.  Interestingly, homesteading continued through the 1970s in the lower 48 States and through the 1980s in Alaska.

Unless you’re a surveyor, logger, or involved in a property-line dispute, you probably don’t care too much about surveys.  However, surveys form the basis for legal descriptions on deeds, which are, of course, critical in real estate transactions.  When you sell a property the land is conveyed by signing the deed which is then recorded at the county.  Interestingly, when you sell or convey property, the legal description only describes the land, not the improvements.  According to the Field Guide segment, a couple of deaths a year in the U.S. result from property line disputes.  Yikes.  Loggers care about property lines because they don’t want to harvest someone else’s trees, a problem known as timber trespass, which can lead to treble damages.

All surveys in Oregon, one way or another, reference the Willamette Stone, located in west Portland, and first sited in 1851.  The stone usually draws a yawn even from the most devoted real estate nerds, even if they’ve made special trips to see it.  The Willamette Stone is the intersection of the Principal Willamette Meridian and the Baseline; so it’s the zero or reference point.  The Baseline corresponds to about Stark Street in Portland, and the Willamette Meridian crosses through Walterville in Lane County.

Driving through Oregon’s splendid back-roads is a great way to spend an afternoon.  If you do find yourself driving around on BLM roads, you’ll see their baffling road signs, which consist of a series of numbers and dashes.  If you have cell service, your smart phone’s GPS can tell you exactly where you’re at, but cell service can be spotty in the country.  To use a real-life example, if you saw you were on BLM Road 19-6-16 you could get a rough idea of where you were from the sign.  (BLM road nomenclature is from the start of the road, so unless you happen to be at the start, positioning is only rough).  BLM roads are named by Township, Range, & Section.  Townships and ranges are 6 miles across, so, the example is 19 townships south of Portland, or 114 miles, and 6 ranges away from Walterville, in this case West, or 36 miles.  Remembering to draw your sections, starting with “1” in the upper right corner locates you to the nearest square mile, or in the upper northwest corner of the grid.  Where is this place?  Roughly Alma Oregon, a largely abandoned logging town, 22 miles west southwest of Eugene.

Even if you don’t drive around on logging roads, you’ll see the same type of numbering system on your Lane County property tax bill.  For instance, this is how the County shows Bell’s office on River Road:  17-04-24-34-04200.  Translating this get us 17 townships south of Portland (or 102 miles), 4 sections west of Walterville (24 miles), 24 is the section number, and 34 is the location in section 24.  34 indicates the parcel is in 3rd quarter section (bottom left) and 4th quarter of the 3rd quarter section (bottom right of the bottom left).  A section is 640 square acres, a quarter section is 160 acres, and a quarter-quarter is 40 square acres.  So, the 34 locates the parcel to within 40 acres on the globe.  This 40 square acres corresponds to an area of 1,320 feet x 1,320 feet.  04200 is the tax lot number, which doesn’t indicate position on a map.  Hideously boring?  Probably to most.

Residential property sales in subdivisions are usually described by lot and blocks, such as:  Lot 8, Block 2, Your Subdivision, as platted and recorded in Book 34, Page 22, Lane County Records.  This is clean, simple, description works because Lane County has the survey information recorded, and it can be viewed by anyone.  That survey information may involve a metes and bounds description, which isn’t something most people have ever even seen, let alone read.  Units of measurement can be esoteric at best:  links, chains, rods, furlongs, etc.  Real estate attorneys, title officers and surveyors are about the only people that can actually understand a metes and bounds description.

In the millions of dollars worth of real estate transactions I’ve done, I rarely see anyone get a survey.  It doesn’t mean it’s not a good idea, it just rarely comes up.  Even on country property, where boundaries are less clear than in subdivisions, they’re not often ordered.  Sometimes, for commercial transactions they’ll be ordered to make sure buildings aren’t improperly sited.  Frequently, though, they may incorporated as part of an extended ALTA title policy, so as to have the added benefit of title insurance.  If property lines are in doubt it’s best to call a good surveyor out.

Land surveys precisely describe your real estate.

Land surveys precisely describe your real estate.

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Low Interest Rates: Good Time to Buy

Mortgage interest rates are very low these days, usually in the 3% to 4% range, which makes for affordable house payments.  Rates are said to be at 40 year lows, and combined with low, but increasing, house prices in Eugene Springfield Oregon, makes it a good time to buy.

The latest data from the Federal Reserve Board shows a national average for fixed conventional home mortgages to be 3.35%, which is very low.  How long will it stay that way?  No one really knows, but analysts are saying rates will stay low until unemployment drops below 6.5% which they’re not expecting in 2013.  Last quarter’s GDP actually was in negative territory, attributed to a decrease in defense spending.  Get  2 of those in a row and you have a recession, by definition; analysts are not expecting that, though.  New home building is expected to contribute significantly to the economy in 2013.

If you are thinking about buying a house in Lane County, please contact me.

Monthly Mortgage Interest Rates through December 2012

Monthly Mortgage Interest Rates through December 2012

2013 Eugene Springfield Real Estate Market: Predicted Up

Eugene Springfield is predicted to be one of the strongest real estate markets in the country

Springfield Oregon skyline from the north.  Bear Mt. is the tallest peak.  Mt. Pisgah is in the foreground to the right.

Springfield Oregon skyline from the north. Bear Mt. is the tallest peak. Mt. Pisgah is in the foreground to the right.

over the next 5 years, with estimated annualized price appreciation of over 7%.  My own crystal ball isn’t quite that clear, but I hope it is so. Real estate values have been increasing in Eugene Springfield, Oregon over the last few months, however, and hopefully the trend will continue.

Loans on Lots

In today’s conservative lending environment, it can be very difficult to obtain loans in Lane County on raw land, or even on bare lots in a subdivision.  Raw land is often in its natural state and probably doesn’t have utilities or other infrastructure in place, whereas subdivision lots are often ready to build on.

So what do you do if you find that perfect parcel of land, but don’t have all the cash to buy it?  In some cases, seller’s will agree to a land sales contract, in which they essentially finance the purchase.  Sellers retain title to the property until you perform under terms of the contract.  Sellers I know usually want the cash, if possible, and aren’t thrilled with the risk of holding title to a property not controlled by them; they may need to take it back, or there could be a problem brought about by the new buyer, like dumping of something nasty on the property.

Most banks don’t want to loan on raw land because the loans are difficult or impossible to sell on the secondary market.  (Most banks don’t own your loan, merely the servicing rights; the underlying loans typically get sold off on the secondary market.)  Land is also perceived as risky, because if they need to repossess it, there is no quick source of rental income, and development costs can be largely a mystery.

There are a select few lenders in Eugene Springfield that will loan on bare land.  There are the so-called hard money lenders, but they tend to be expensive, and LTV ratios are low.  However, for certain situations, they may make sense.  There are a few portfolio lenders in town, who can and will loan on raw land, or just about anything that makes financial sense to them.  Down payments may be as low as 30%, which is great for land.  If I were wanting to purchase land in Lane County, I think a portfolio lender would be my first stop so I could find out about the financing available.  My second stop would be to call a good honest realtor, especially because it’s free as a buyer.

Below is a picture of a lot I have listed, and on which I lowered the price.  It’s a good example of property for which a portfolio lender makes a lot of sense.

92166 Lot for sale in Marcola Oregon

92166 Lot for sale in Marcola Oregon

Low Crime in Eugene Springfield

Is crime out of control?  Not in Oregon, at least according to just released 2011 FBI statistics.  Depending on which measurement is looked at Oregon’s cities are some of the safest in the country, which is, of course, a good thing.  Low crime makes a location desirable, and desirability (demand) props up real estate prices.

So, what are the numbers for Eugene Springfield?  Violent crimes and murders in particular are very low. Cities which are typically thought of as higher crime, like Detroit, MI, have murder rates over 40 times that of Eugene Springfield.  Non violent crimes are higher in Eugene Springfield, but still less than average compared to the rest of the nation.  Apparently bike theft is pretty bad because we’re such a target-rich environment.  So, Eugene Springfield is very safe if you’re a person, and not so much if you’re a bike.

The FBI statistics cover Metropolitan Statistical Areas, which are generally over 50,000 people, and don’t look at smaller towns per se.  So, they’re not the whole picture but I think a good overview of crime rates.  Our rankings compared to about 370 other MSA’s are below.

Crime Rates for Eugene Springfield

Crime Rates for Eugene Springfield

First Time Home Buying in Eugene Springfield Oregon

Most people want to own their own home–it’s part of the American Dream.  There are a variety of programs, grants, and loans that help first time home buyers get into a house, sometimes with little or no money down.  Home prices have started back up, so many folks are choosing not to wait any longer to buy.  I work with first time home buyers, and often it’s cheaper to buy than to rent.  Record low interest rates, decreased house prices, and first time buyer’s programs make home buying now especially appealing.

So, how do you go about buying a house?  Many will look on the internet to get a feel for what’s out there, guess what they think they can afford, and there’s nothing wrong with that.  And, there’s always driving around and picking up fliers.  If you’re just starting out mortgage calculators can give you an idea of what monthly payments on a loan will be.  If you need a quick back-of-the-envelope type estimate, figure that a home mortgage costs about $5/1,000, meaning you’ll pay around $500 a month for a $100,000 loan.

A better way to go about the process, once your plan gets a little momentum, is to talk to a lender, who will be able to tell you exactly what you can afford, and once you get that number, your home search will be much easier.  Finding a good Realtor will also help you.  It doesn’t cost anything  as a buyer to work with a Realtor, and they’ll be able to guide you through the home buying process, which is often emotional and complex.

There are a number of programs exclusively for the first time home buyer, and there are other available programs for all buyers, that often help first timers, which in summary are:

  • Oregon State Bond Program:  Up to 3% for buyer’s closing costs or lower interest rate on the mortgage.  Within Oregon.
  • HAP:  Up to 10K as a zero interest silent second.  Within Eugene city limits.
  • SHOP:  Up to 7K as a zero interest silent second.  Within Springfield city limits.
  • USDA:  100% financing (zero down payment).  In Lane County, eligible properties are outside Eugene and Springfield city limits.
  • VA:  100% financing (zero down payment)  For veterans only.
  • FHA:  3.5% minimum down payment.

Some of the programs and are income based.  Some are area specific.  And, all of them have their own unique set of requirements.  A good lender will be familiar with the programs and a good realtor will know what types of houses qualify for which program.  Also, some programs are sometimes out of funds, and therefore temporarily unavailable–again, this is something your lender should know.  Below each of the programs is described in more detail.

Oregon State Bond Program:

  • For first time home buyers, meaning buyer hasn’t owned a home in the last 3 years.
  • Can be combined with 15 to 30 year FHA or USDA loans.
  • Program provides up to 3% for buyer’s closing costs, or lower interest rate on the loan.
  • House must be in Oregon.  Can be used or newly constructed site-built, however the underlying loan may have its own requirements, such as no used mobile homes for USDA; each loan program has its own requirements, though.
  • No bankruptcy in last 2 years or foreclosure in 5 years.  The underlying loan will have its own timing requirements if you’ve had a short sale, foreclosure or bankruptcy.
  • If the house is sold within 9 years of purchase and your income limit exceeds certain set limits for the year you sell, you will be required to pay back some of the money, although this doesn’t often happen.  Your lender will review it and explain it to you.
  • There are income limits by county and number of people in the household.  A budgetary estimate of income limits in Lane County is 70K to 80K, or 115% of the median income that year.
  • There are property value limits.  A budgetary estimate for Lane County is 313K to 383K, depending on location.

HAP

  • No funds are available before July 2013.
  • For first time home buyers, meaning buyer hasn’t owned a home in the last 3 years.
  • Maximum income requirements based on family size.  In 2012, this ranged from 33K to 55K.
  • House must be within Eugene city limits.
  • Must be your primary dwelling, single family (can’t use as a rental or be a duplex).
  • Up to 10K in funds for down payment or closing costs, in the form of zero interest, silent second mortgage which doesn’t need to be repaid until you sell or refinance.
  • House must meet HUD requirements.  The condition of the paint is very important.
  • Maximum house price is about 260K.
  • Used in conjunction with another loan program, for example FHA, for which you must qualify.

 

SHOP

  • For first time home buyers.  Buyer or their spouse can’t have owned a home in last 3 years.
  • Up to 7K in funds for down payment or closing costs, in the form of zero interest, silent second mortgage which doesn’t need to be repaid until you sell or refinance.
  • House must be located in Springfield city limits.
  • Maximum income based depending on family size.  Income maximums between 31K and 59K in 2012.
  • Must be primary residence.
  • House must meet HUD standards.
  • Maximum house value is 185K.
  • Buyer must contribute $1,500. of their own money.
  • Used in conjunction with another loan program, for example FHA, for which you must qualify.

USDA guaranteed loan

  • Not exclusively for first time home buyers.
  • Minimum down payment:  0.
  • Maximum income requirements based on area and number of people in household.  In Lane county, with 3 people in the household, the maximum income is approximately:  74K.
  • The house must be in the USDA definition of a rural area.  In Lane County this excludes properties in Eugene and Springfield city limits.
  • Maximum purchase price is $417,000.
  • Property types:  Generally existing or newly site-built.  In certain instances modular or manufactured homes may be allowable, but check with your lender for the latest on that.
  • Farms are, surprisingly, not acceptable.
  • There are specific time requirements for bankruptcy, short sale or foreclosure.  Almost all loan programs need at least 2 years and sometimes the minimums are more.
  • All household income is counted towards the income maximums even if person is not on loan.

 

VA Loans

  • For Veterans
  • Zero down payment up to a home price of 417K.
  • No location requirement for the house.
  • There are specific time requirements for bankruptcy, short sale or foreclosure.

FHA Loans

  • 3.5% minimum down payment.
  • House must meet HUD standards.
  • Loan maximum by county.  In Lane County, it’s currently $417,000.
  • There are specific time requirements for bankruptcy, short sale or foreclosure.

Generally, for all of the loans and programs you’ll need to meet minimum credit standards and have verifiable income.  Your loan officer will know the most about the requirements of different loans and programs.

Most home purchases with mortgage loans have closing costs.  Closing costs may include:  prepaid home insurance, prepaid taxes, loan fees, and a surprisingly large number of other expenses.  Each deal and each loan will vary in the amount of closing costs, but a back-of-the envelope estimate is 3% of the sales price.  As a realtor, I usually try to get the seller to contribute as much as possible to closing costs so my buyers have to come up with as little out of pocket costs as possible.  Typically, when you’re buying a home, you don’t have an abundance of excess cash laying about.

I helped the buyer of this home; she was a first time buyer and had to come up with very little cash out of pocket and utilized some of these programs.  It was cheaper than renting for her, and the purchase price was 100K.  What a deal!  If you’re interested in buying a house in Eugene Springfield or anywhere in Lane County, Please contact me.

Good buys still exist in Eugene Springfield Oregon for the first time home buyer.

Good buys still exist in Eugene Springfield Oregon for the first time home buyer.

Real Estate Shadow Inventory Fears Ease

Time Magazine reported today that the shadow inventory of homes, nationwide, appears to be shrinking.  In 2012, estimates of the shadow inventory were as high as 10 million homes.  One reason they cite is investors snapping up distressed properties.  In Lane County that’s certainly the case and I see a lot of activity in that segment.  Well priced homes are often gone within 1 week of listing.  We do appear to have a significant shadow inventory in Lane County, but the properties seem to come on line slowly.

I thought it interesting that Time’s author said:  “All this goes to show that predicting the movement of large, complex markets like housing can be difficult even for experts who make a living doing just that.

Shadow inventory fears appear to be cooling off

Shadow inventory fears appear to be cooling off