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November Mailbag 

Answering your real estate questions

Q: I have heard conflicting things about buyer "love letters" being legal. What gives?

A: Great question, this one has gone back and forth a few times. To catch everyone up, in 2021 House Bill 2250 became law, which essentially made seller's agents reject any documents (letters/photos), not directly related to the real estate transaction. The reason for this was to protect sellers and their agent from breaking the Fair Housing Act.

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However, in March of this year the U.S. District Court of Oregon put an injunction on the enforcement of this law—so to answer your question, yes, right now, they are legal. Now, from a listing agent's perspective there is quite a bit of risk in accepting "love letter"-type documents. I advise my clients to not accept them, and to allow me to publish that information on the listing in the MLS so buyers know that they will not be accepted. Most letters that are received from buyers include information that could lead to fair housing issues; for example, the terms, husband, wife, family, children, locally born or Oregon native all have the potential to create these issues. So, my position as an agent is to not accept them, but to answer your question, right now, they are legal.

Q: Am I being crazy for considering an adjustable-rate mortgage versus a fixed rate mortgage?

A: Crazy? Probably not. With the increases we have seen related to mortgages, we are now starting to see more lenders talk about Adjustable Rate Mortgages (ARMs). For readers who don't know, fixed-rate mortgages have a "fixed" rate that does not change, so your monthly principal and interest payment does not change; however, your taxes and insurance can "change" your payment slightly. Now, ARMs are loans with an interest rate that adjusts to market conditions. It's most common for ARMs to start with a lower rate versus a fixed rate, but after the initial period (five years, seven years, 10 years are common terms) the rates adjust upward, which can make them more expensive. When it comes to mortgages or really any financial advice, there is no "one size fits all" advice, as there are a ton of variables to consider, and everyone's circumstances can be different. There is inherent risk with an ARM, however if you have a plan, and are OK with accepting "some" risk, they can be a great product. However, for most people the best option is going to be a fixed-rate mortgage to eliminate the risk of a payment increase in the future.

Q: How do agents work through repair addendums? I ask because during my last sale a few years ago, I had some difficulties in working through the repair addendum with my agent, and the seller and their agent.

A: Like most of my answers, it depends. Assuming this was a standard residential transaction, the inspection period and the negotiating of repairs/credits can be a stressful part of the transaction for both the buyer and seller. To answer your question though, it's common for the buyer and seller to have some level of difficulty when negotiating the final pieces of the deal. The reason: Sellers feel they are being "nickel and dimed" and buyers are often intimidated by the contents of their home inspection report. Buyers should focus on the big-ticket items, like foundation, roof, major systems and appliances. On the sellers' side, I usually have a pre-inspection done on the home prior to listing to ease some of the stress on the seller, knowing that at least there are no major issues existing and any repairs or credits requested should be minimal. Most of the time repair requests can be negotiated and the buyers will get some of the items fixed or perhaps receive credit at closing.

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