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A slew of big real estate companies might soon be fighting to buy your house

AP Photo/Marcio Jose Sanchez, File

In this March 6, 2018, photo a sign advertises the pending sale of a home in San Jose, Calif.

You can order dinner to your front door or summon a ride to the airport without so much as a phone call.

Why shouldn’t you sell your house with so little fuss?

That’s the pitch from a new crop of real estate companies vying for a share of the so-called “instant buyer” market. They allow a homeowner to enter their address on a website and, if their home checks certain boxes, get a cash offer on the spot.

If the homeowner accepts — and pays a percentage of the price as a fee — the deal can close within a couple of weeks. The company will turn around and sell the house itself.

House flipping has been around for decades. But this new model has its roots in the same big data and machine learning that’s allowed homeowners to get estimates of their homes’ value online (and snoop on that of their neighbors).

The business is getting crowded quickly. The players include purpose-built startups like Opendoor, which launched in Portland this year, as well as tech-focused real estate firms like Zillow, which will launch its Zillow Offers business in Portland this year, and Redfin, which is also eyeing the Portland metro.

Even the 36-year-old real estate megafranchise Keller Williams Realty has announced plans to jump on the instant buyer bandwagon with its Keller Offers program.

It remains to be seen how many homeowners will risk leaving money on the table for the sake of convenience.

Three months ago, Jennifer Howard got an offer for a job in Coos Bay, and a clock started ticking. She had a month and a half to sell her house in Aloha. That’s when she remembered hearing a radio ad for Opendoor.

Howard was skeptical.

“You can’t just sell your house to a company and not have to go through a Realtor and not have people traipsing through your house,” she recalled thinking. “No way.”

But she went to the company’s website and requested an offer. She had one finalized by the end of the following week: $324,700, minus a 5.5% fee — about $18,000 — to Opendoor.

"I kept expecting something to go wrong,” she said, “but it never did.”

Less than a month later, Opendoor put the house back on the market for $338,000 — about $13,000 more than it had paid her.

That doesn’t bother Howard.

“It would’ve taken me longer,” she said, adding that she might have had to make repairs, paint and keep the house tidy while it was on the market. “To me, it was worth it. We were surprised they didn’t do more before they turned it around.”

Joe Denother, the general manager for Opendoor in Portland, says Howard is pretty typical for the company’s clients, many of whom are looking for a quick close or dreading the tours and open houses of a more traditional sale.

“For most folks, their home is their biggest asset, but it’s a very illiquid asset,” he said. “We’re trying to reinvent the real estate process and remove a lot of the hassles.”

Denother says it offers a fair market price and doesn’t significantly mark it up when the home goes back on the market.

Zillow and Redfin, both companies built around showing an estimate of what a given home is worth, say their offers are usually pretty close to what they’ve said on their website, but they acknowledge in-person inspections can change things.

“We normally bracket that number with some percentage points in either direction,” said Jason Aleem, who leads the Redfin Now instant buyer business. “We try to stay true to that.”

Because the business is built on making money on a fee rather than resale, the companies say the model isn’t dependent on a market where houses are selling fast and prices are rising.

“In a hot market when homes are selling, we’re offering certainty and risk avoidance,” said Jeremy Wacksman, the Zillow executive who runs Zillow Offers. “In a market that’s more balanced, or even cooler, home sellers want that certainty even more than they want it today.”

In Portland, at least, instant buyers were responsible for only a few dozen transactions over the last few months, compared with thousands of sales brokered by traditional real estate agents.

The companies say that number will grow significantly in the coming years — and in fact, they’re depending on it. None of the players have reported profitability as they battle to expand and claim market share.

“Today we’re in growth mode, and we’re investing in that growth,” Wacksman said. “We’re targeting more break-even profitability on each house while we build up the teams and operations and get efficiencies of scale that will come.”

That could leave traditional brokers nervous about the looming battle over market share in a business that, when it turns down, turns down hard.

And homeowners should be wary too, said Nick Krautter, the owner of brokerage SellPDX. Direct buyers, he said, have every incentive to work against a seller’s best interests.

“I know there will be plenty of people who do it because they believe they’re getting the best dollar price value they can get, or they’re so focused on the convenience factor that they’re willing to take a haircut” on the sale price, Krautter said. “I just really struggle to believe that when it’s your biggest asset and 10s or 100s of thousands of dollars on the line, that people are going to be willing to do that.”

— Elliot Njus

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‘Impossible Burger’ not always possible in Portland

PORTLAND, Ore. (KOIN) — The Impossible Burger is becoming tougher to find at independent restaurants across Portland.

At least two Portland restaurants confirmed with KOIN 6 News this week that they’re researching alternatives to due to supply issues with the plant-based meatless burger.

Impossible Foods said the company has experienced 50 percent revenue growth since the launch of the Impossible Burger 2.0 in January. The product is now in large restaurant chains like Red Robin and Qdoba, as well as stadiums and college campuses nationwide, the company said. They’re also seeing high sales volume in Asia.

That means some small restaurants here in Portland are left to look elsewhere. The company told KOIN 6 News in a statement:

We recognize the inconvenience that scarcity causes and sincerely apologizes to all customers, particularly those who have come to depend on the additional foot traffic and revenue that the Impossible Burger has generated. In addition, we’ve apologized to consumers who can’t get as many Impossible Burgers as often as they’d like over the next couple weeks. We understand that the Impossible Burger is a unique product that’s impossible to replace. That’s why we’re working literally 24-7 to get stocks of Impossible Burgers to all customers as soon as possible — and we produced an all-time record amount of product in May 2019.

On its website, the company still has listed some of the Portland restaurants that are currently seeking alternatives to the popular burger.

"We are urging consumers to call restaurants in advance to ensure that they still have Impossible Burger in stock, and to inquire when new shipments are expected to arrive," the company said.

The company noted that they’re increasing manufacturing, adding staff, and getting increased funding.

"The company faces no insurmountable supply-chain constraints or fundamental bottlenecks; like other successful startups, we are facing short-term ramp-up challenges resulting from demand greatly outstripping supply."

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Former Oregon Duck football star Keanon Lowe hailed as hero on Twitter after tackling gunman at Portland high school

Twitter reacted Friday to the news that the staff member who wrestled a gunman to the ground at Parkrose High School was former University of Oregon football player Keanon Lowe.

Police said a Parkrose High School staffer wrestled a suspected gunman to the ground Friday at the school. They said students are safe and that the suspect has been taken into custody.

Keanon Lowe, former Oregon Ducks star, wrestles suspect to ground amid report of armed gunman near Parkrose HS

Parents and students reported Coach Keanon Lowe, one of Oregon’s most prominent high school and college football players of the past decade, tackled the armed male suspect, who has since been taken into custody.

They could not confirm the identity of the staff member, but parents and students told The Oregonian/OregonLive that the staff member who diffused the situation was Lowe.

Lowe, a stand-out football player at Jesuit High School in Portland and then at University of Oregon in Eugene, is a football and track coach at Parkrose High School.

Lowe was named Defensive Player of the Year in Oregon as a high school student and went on to play four years as a wide receiver for the Oregon Ducks.

Lowe could not immediately be reached for comment Friday.

Twitter exploded with the news that the man who tackled the gunman was the well-known football star. Accolades came from students, as well as the general public, a former teammate and a Portland comedian.

“From sports hero to actual real life hero,” wrote comedian Ian Karmel. “Beers (protein shakes?) on me!”

“You’re a hero and it’s an honor to call you my friend,” said former teammate and current member of the Detroit Lions, Tyrell Crosby.

Scroll down to read more tweets about Lowe.

Still my favorite @KeanonLowe highlight at Oregon. Celebrating his teammate’s success. Great work today, sir. pic.twitter.com/La5mBrbke4

— Baby-Haver Mike Lee (R) 🍆 (@DerekBortles) May 17, 2019

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How Best To Invest In Real Estate In The Northwest

The Northwest is one of the fastest-growing parts of the country, with home prices soaring as the supply of housing hasn’t kept up with demand.

Investing in such a rapidly changing environment is a challenge because we know from experience that such surges in growth never last. At some point demand will ebb, supply will increase, and prices (and rents) will level off—or even fall.

The area around Seattle has seen the most spectacular growth because of the expansion of the information technology sector—Amazon, Microsoft and many others. This sector now provides 6% of all local jobs, grew 7% in the past year, and provides 23% of local wages because of the high average annual pay, over $250,000.

Oregon and Idaho have had growth on a scale that’s only smaller in comparison, but that leads to similar problems for investors.

The best way to assess these markets is to first see where they are in the price cycle—that is, are they already over-priced? Is there a greater risk that prices will at some point actually come down? If so, your investment will need to be defensive as much as an opportunity for good returns. The table shows that in Seattle, Salem, Bend and Boise, prices are already more than 25% higher than the ‘income’ price. This means they’re over-priced. Another half dozen markets are in the 15% to 25% range, and at the rate prices increased in the past year they’ll soon be there as well.

Local Market Monitor, Inc. Local Market Monitor Inc.
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Over-Priced Markets

If you plan to buy and hold a rental property for the next 10 or 20 years, you don’t care too much what will happen with home prices in the next five years—even if they do go down. Eventually they recover, though the recession showed that it can take a long time. Your greater concern is to have renters in your property if the local economy does go downhill. This means you need to invest in a price range where there are lots of renters right now, what we can call the "sweet spot." This varies from market to market and from zip code to zip code, so you must do some homework with Census data.

You want to avoid high-end rentals in over-priced markets, because they’re most vulnerable in a down economy; don’t just buy a single-family home and rent it out at a high rate unless you also plan to flip it in the next few years. Instead, split a single-family into several rental units, which will take time and money but will give you better returns in the long run; or you can invest in apartments.

The table shows that the job situation in Seattle is very strong—jobs up 3.5% in the past year—so if you invest now it’s probably not yet the peak of the market. In Boise, on the other hand, job growth is now slower than six months ago and the very sharp increase in prices points toward a riskier situation.

Moderate Markets

Portland is a former high-growth market that may come to a soft landing. Three years ago home prices were rising 12% a year, last year just 5%. With jobs still increasing over 2% a year, which means demand continues to grow, it’s most likely that prices will stabilize but will not fall. In these conditions, investors must be very careful about the price they’re willing to pay for a property and shouldn’t count on appreciation to add to their return. Rents, on the other hand, can be expected to rise slowly, along with income.

Kennewick is a good bet for investors, even though it’s a smaller market and therefore more volatile. Job growth has been good, home prices are close to the "income" price, demand is strong, and home prices are low enough compared to rents that single-family homes can be rented out directly.

Low-Growth Markets

Spokane, Idaho Falls, Billings, Cheyenne—despite the occasional surge in home prices, demand in these markets is driven by job growth, which has been low. This means that the location of your rental property is even more important than usual. You’ll want to be near medical centers, colleges, government offices, revived downtown areas. And because there probably hasn’t been much recent construction of attractive properties, it makes sense to buy inexpensive homes to upgrade into a higher rental/sales bracket.

Wrap-Up

You can successfully invest in any market, but your strategy may be different in each one. The Northwest has a lot of markets that are tricky right now because of a surge in prices; that just means you need to prepare more for the downside. Dynamic markets are a challenge, but that’s often where the best opportunities can be found.

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2 men use skimmer to steal from Portland ATMs

These 2 men were caught on camera using an ATM skimmer to withdraw money from customer accounts in Portland, PPB said, March 29, 2019. (Portland Police Bureau)

PORTLAND, Ore. (KOIN) — Two men were caught on camera stealing money from ATMs using skimmer devices in Portland, police said.

The Portland Police Bureau said Friday afternoon that the men inserted a skimmer device into at least 2 ATMs in the city and withdrew money from multiple customer accounts.

Officials didn’t say which ATM locations were targeted.

If you’ve seen either of the suspects, contact the police.

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