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Tracey Henkels  00:00

One thing that I always ask, and I recommend that people think of this house as no less than seven years. Honestly, people say five to seven, but I say seven, and the seven to 10 year range, and if longer, that's great, but at least seven to 10 years. So that's something if people thought about what they need 10 years out, that's a very smart thing to think about. It's not always possible for first time home buyers, most of the time permanent buyers it is, because you can take your equity and you have more purchasing power. But I think that is a really good thing, is to think longer term than when most people are actually thinking, especially these days, it's hard to think more than a year or two out.

Natalie Slagle  00:49

Welcome to Money Dates, the podcast that makes money conversations with your partner feel a little less taboo. I'm Natalie Sligal, a certified financial planner, and I'm joined by my husband and business partner Dan Slagle, also a certified financial planner. Say hi, Dan.

Dan Slagle  01:05

Hello.

Natalie Slagle  01:05

In each episode, we'll share honest stories and practical tips to help you and your partner feel more connected and confident on your financial journey. So, grab your drink, get comfortable, and join us for our money days. Today's guest is Tracy Henkels, a longtime Oregon real estate professional with more than two decades of experience helping people navigate life's biggest moves, with a background in architecture and a degree from Iowa State University. Tracy brings a unique perspective to the world of homes and design. After purchasing her first home in Portland, she experienced the profound sense of grounding, possibility, and belonging that home ownership can create. That experience inspired her to leave architecture and dedicate her career to helping others find their place in the world. Today, Tracy leads Rooted Realty Group, alongside her business partner, Kelsey Burkett, at Living Room Realty, where they help clients buy and sell homes with a thoughtful relationship-centered approach. We're excited to have her with us today. Welcome, Tracy. Tracy, thank you so much for being here. We're really excited to have this conversation all about a transition, maybe into a different home, upsizing, and hearing all your thoughts about

Tracey Henkels  02:22

it, I'm happy to be here.

Natalie Slagle  02:24

Great, great. So let's take a step back. When we think about people who want to upsize, typically it's not going to be a first time home buyer, maybe it is, they're upsizing from their rental, but like Tracy, with your experience, when people have come to you and they kind of talk about like elevating their livelihood in the form of a home purchase, like what reasons have come up on why they're looking to upsize.

Tracey Henkels  02:51

Yeah, there are a couple different that I have over and over again. A lot of times it's when someone has their second child, or it can be their first child, but usually they bought a house fairly young, if that's the case, and they bought something small because they were on a budget, and then they're moving up and having a kiddo, and they're like, "There's no way we can live in a two-bedroom, one-bath, like we're in the neighborhood we want, but like this wasn't part of the plan when we bought the house, or someone that has one child and they're a second child, oftentimes is triggers like a little bit of pondering about, like, how are we going to do this, and many times people consider adding on and putting on a dormer, and they major renovations, and a lot of times it just is so expensive that people opt to just sell and find the house that has already been done, unless they're an architect, or, like, you know, someone has a lot of skill sets. It's just very expensive right now to do that big remodeling work. So those are the two biggest things. They really are kid kid related a lot of times, and school related, but also I do have - I had somebody upsize to a parent who unfortunately the husband had passed away, and the mom was moving to Portland, and they were going to live together, and that was really fun to work with, kind of like multi-generational. And then I had a friend who had a baby, and instead of what happens sometimes is I get the call of, like, we've lived in Portland, we've had a kid, and we're now going to move back to the Midwest, or we're going to move back to where our parents are. But sometimes it happens the other way, where the parent will move here to retire, and I had a really cool fun transaction with somebody that the mom wasn't going to live with them and help give child care to them and live in the home, and so we kind of had to have a little, you know, separation, privacy, so those are the big ones

Dan Slagle  04:55

that felt so pointed at us, like it's like, you know. We're going through, I'm just curious, like, how through your experience, how to have that conversation to convince a parent to move, because, like, so often we do see it the other way around, as, as you're saying, like, moving maybe back home to be closer, closer to family, but, like, in our ideal situation, it would be like, Natalie, get your mom out here, I should get my dad out here, you know, so it's very interesting. I would imagine maybe that's shifted with like the new demographic in like coming into buying homes.

Tracey Henkels  05:28

I don't think it's as common that the parents move here, but I think a lot of people are retiring earlier. Some people are retiring earlier, they're younger, and they love the idea of living in Portland. They may not be here forever, but they come and they, you know, make an investment for 10 years. And in your world, it is actually, if you own a house for 10 years, you're going to make money on it, unless something really weird happens. It's pretty predictable. You'll make a chunk of money if you have a house for 10 years, and so people that are kind of savvy with their money will have an early retirement, kind of have a fun Portland stint, and then they may move to Florida when they get older, or they may move somewhere that you know is kind of more traditional, warmer, maybe an organized community where there's a lot of people in those. I don't know if you guys have seen the boroughs, but I started watching it and miss about a retirement community, it's hilarious, but like, how much fun people have, and those retirement communities, and how they get a little, they're active.

Natalie Slagle  06:29

Yeah, I, I tell Dan all the time, like, hey, just, just so you know, when we're in our 50s, 60s, like, we are moving into one of these communities, because it looks so fun. I want to play pickleball every day, and go to my whole

Dan Slagle  06:41

YouTube special on the villages in Florida, and just like how that's grown to become what it is, because I feel like we haven't seen the boroughs yet. I think that's the name of the show that you said, but I would imagine it's somewhat based on like what we have seen in the villages, like with the growth of the villages, like people finding community and all the extracurricular type activities that take place in those type of communities.

Tracey Henkels  07:06

Yeah, this one has a supernatural kind of fantastical element to it, so it's like not really up my alley. I'm not a sci-fi person, but it is pretty funny, and it's like kind of spattered in there. And yeah, anyway, I think I move up too. Sometimes people are moving up a little later than like your age to host grandkids. They'll actually, you'd think people would be buying a house that is downsizing, but they actually will upsize from what they had because grandkids are coming and they're visiting, and or I've been kind of surprised a couple times. I meet with people in their 50s or 60s, and they're buying quite large houses, so family comes to visit a lot, and they, you know, obviously are based in Portland, and their kids are in other areas. So that's interesting. You'd be surprised, like there are some people later in life that are upsizing, that are active and healthy, and don't have, you know a lot of issues with mobility in Portland, not as much, but that is another upsize a little bit later in life.

Natalie Slagle  08:09

Yeah, one of the other things that you touched on that I know you've mentioned to us that you have some personal experience on as well is renovations, and how there can just be that, you know, because some people are they're locked into that 2.75% interest rate. They don't want to get rid of it ever, and so then their brain goes to, okay, well, I should renovate, but when I think about, especially in the Portland market, and I know there's various markets that will have this, they have the 1910s 1920 craftsmen, it's these beautiful homes, but they're old and it's expensive, and you start to tear down walls, and you find something that is a $10,000 fix, and then some. So, I think that's a really tough decision for people, on you know, do I renovate or do I upsize and just get what I want now, and not have to live through the renovation. I'm sure you've had clients on both spectrums, Tracy. So, could you speak to that a little bit, and that decision making?

Tracey Henkels  09:11

Yeah, I have seen some spectacular remodels on homes, where, when it does work really well, is is when you have some flexibility, kitchens are the worst, because typically people don't have two kitchens, but bathrooms, and it just really can, if people have enough money, where it's not a stressor, and they have some either equity, they can get a HELOC, or they have cash to pay for it, then it's a not a bad idea if people aren't too stressed. Where it really is, it can.. I've seen, I actually have had a couple clients that it triggered a divorce because they did a major remodel and they had no idea what they were getting into, and it's just.. it's really tough, even if your relationship is good, if you're, you know.. What I mean, like, it just brings up stuff, because you don't - it doesn't feel like home. There's.. it always almost always costs more. I mean, people used to say this all the time, but recently I really have experienced this. It always is costing quite a bit more than what they're anticipating, and they're always surprises, especially in older homes. So, I think if you don't have a lot of wiggle room, it's not a great idea, and a lot of people, they don't have any skill sets around managing contractors, which is a whole skill set in and of itself. I even have a hard time with it, and my backgrounds in architecture, and I've done it for over 20 years, I still get frustrated managing contractors and having them show up and do good work, and they charge a lot of money. It's, it's just, it's not a fun project to take on to manage contractors, and I'm really, I contractors have very hard jobs, but they just, there's a culture, I think, in construction, because of just the, there's so many variables that they, a lot of times, don't think it's a big deal when they don't show up, or they're like three hours late, and I just keep having to explain to people, and so when I refer people, I pretty much tell everyone, please let me know if they're not respecting your time, because I don't want to refer anybody that will be giving people a lot of stress, and unfortunately that's really hard to find contractors who are have that type of integrity and beyond, will be on time, or at least we'll call and say, hey, things didn't work out on this last project, I'm not gonna be able to start tomorrow, but I many, many times they won't even call, and then they, they're curious why people are set, and I'm like, this is not cool. So that is the whole thing with remodeling. I've done it myself, and I've been surprised how challenging it is, and how triggered I get, and I have a lot of experience with it. So it's from personal experience, but also seeing a lot of people go through it and be like, we would not have done that if we would have known what we're getting into.

Natalie Slagle  12:08

Yeah, I know you've, you've kind of helped educate us when we think about buying our own home. It's like Dan and I aren't, we're finance people, we're not the handiest of people, and although we're good at taking on projects together, and but it's like we have enough things that we run together, our kid, our business, it's you like really helped us put in perspective, like nope, don't buy the cheap home and take on a project, like that's you were like I know you two and I appreciated that perspective, because I don't think that would be good for for our relationship and I don't think we'd want to take that on, and it's, it's crazy how it does kind of come down to like, what do you want your day to day to look like? How do you want your communication to be? I imagine that people who are going through renovation, stuff, that's all they talk about, because they're literally living in it all the time, and obviously this isn't an episode to sway people away from renovations, but it is an episode talking about upsizing, and one of the options you can do instead of upsizing is simply renovate, and it can be a really solid option, but I think we've got the HGTV, which I just had on yesterday, you know, it like it just like paints this beautiful picture that it's gonna go smoothly and everyone's gonna get along, and it's only going to cost this much money, and the reality is it can look a lot different than that.

Tracey Henkels  13:26

Yeah, the reality is it's not reality.

Natalie Slagle  13:29

Yeah, yeah, exactly.

Tracey Henkels  13:30

Really, there are some things that are really straightforward, and there could be multiple things, but, like, you kind of, you know, what they're going to cost, and there's not a lot of variables, that kind of stuff, all day long. People, that's a very good thing to do to improve value, but not the big projects where you probably have already done that stuff. If you're thinking about upsizing and you need a bigger house, then you're talking about big remodels, which is why I brought up that whole category, not like zijing or even like opening up a wall from a kitchen, if there's nothing there. I mean, there's some things that are pretty straightforward, and there's just some things that they're all these variables and what ifs and risks you're taking by starting a project, and you do not know when you start it how much it's going to cost. You have a very broad idea.

Natalie Slagle  14:20

Absolutely,

Dan Slagle  14:21

I want to go back to the discussion on upsizing, because a lot of our listeners and client base are kind of going through the examples that you provided, whether it's, you know, having their first kid, second kid, whether it's remote work or aging parents are involved, and so we've talked about some of the, I guess, the triggers that go into why someone would upsize, I'm curious, based on like the current market that we're in today, like what your take is on buyers potentially moving up in in market with with home price.

Tracey Henkels  14:54

Yeah, so I think there's a couple things to consider when you're selling and buying I. Always feel like it's kind of a wash, so like if you're, you feel like somebody a long, long time ago, somebody, a realtor said, you know, if you, if you take a haircut on your, when you're selling your house, you're, you're also going to get the deal on the buy, right, and vice versa, like if you get top dollar for your property, because it's a seller's market, but you're going to pay more as the buyer, so it's kind of a wash, whereas if you're doing one or the other, you can kind of more be on the downside or upside of that, right? And so when you're obviously selling and buying in the same market, that's also key, because you could be selling in LA and then move to the Midwest, and that's just not - you're obviously going to have an advantage to that, going that direction, but say you're in the same market, like Portland, and you're selling and buying, basically interest rate is one thing that has held people back, as we all know, that's just that seems that makes so much sense, but there comes a point when it's painful enough where people are like, yeah, we got to move on, our kids are, you know, gonna work. They're a year away from going to the next level of school, and we are not going to that school, right? And there are a lot of people that go to private schools, but there are some good public schools, and you can get into those school districts, and it's a lot less than I don't have children, but it's a lot less than private schools, and so a lot of people are opting for their kids to get the best education in Portland public schools, which is improving, and I think the more that we talk about it, and kind of a more of a fair shake for everybody to get their kids into a decent school or a good school, like we're not actually even supposed to say good school anymore, because it's like a little bit taboo now to say that, but everybody knows that if you have a better school, usually the houses are more expensive, and I mean it's like almost always, but yeah, so interest rates can have people feel stuck, but I just actually, I'm listing a house this fall. I've been talking to this couple with three children for about eight years, and they finally have gotten to the point where they have to move, and they're going to give up their 2.75% interest rate, but they've had time, and they've kind of processed a little bit, so sometimes it takes time for people to accept what their new payments going to be, but they get to a point where it's, it's painful enough, and the motivation is high enough that they're like, we have to do this, for we just have to. So that's just the truth of the matter. With the interest rates changing quite a bit in the last recent years, it seems like they've been high for a long time. I would have thought they would have gone down by now, but I think this is just the new normal. And I just checked, interest rates are hovering around six and a half percent right now, the last few weeks, and plus or minus. So it's just a new reality that people, I think, just have to adjust to, and it is tougher when you own a home already, and you have that interest rate, versus, like, you guys, the first, like, being a buyer with not a property that you have a mortgage on, and it's really low, it's just as easier to get there mentally.

Natalie Slagle  18:14

Absolutely, it's like we exist in the current reality, whereas if you're, if you've been able to hold on to that lower interest rate, it. I would imagine it's hard to let that go, but I like what you're, what you're bringing up. Like, at what point are we making decisions that are best for our family, best for our life, just best for our overall happiness, and how we want our day to day to look like? Our home, where we call home, is so important, and there are ways, like, you know, we model it all the time with our clients. You can afford to have the six and a half percent interest rate. I know it's, it's higher, but this could be the new norm, and so many people are making it work as the new norm. And so, at what point is the financial trade off really worth, you know, the day to day feeling content, feeling happy, feeling you know the pleasure of your home life, like at what point does one kind of outweigh the other? And I think there's a valuation that needs to be taken into account, the financial evaluation, the financial analysis to really make couples feel confident in that big switch.

Tracey Henkels  19:21

Yeah, I do talk to clients too sometimes when they get heavily into comparison, whether they're at any point in real estate selling, buying, well, last time this to happen this way, or comparison just on a basic level, when we compare ourselves to other people in particular, and other situations that are not happening right now, it just causes suffering. It's just, it causes suffering. It's, it's a very simple, basic concept, but a lot of times we are not aware that we're caught in this loop of suffering, because we're heavily comparing, or caught in comparison, and I think a lot of things. It in life come down to your framing and your attitude about something, and you know you can get, you can gather all the information, and that's really important. But if you're in your head and just stay in your head, and you don't drop into your heart and have those kind of work simultaneously, you're going to like people that just rush to buy something because it feels good, because they open the door and they put the house is falling down, versus being just in your head and not being able to make a decision because you're over analyzing. If you are in both of those, like, stay in one or the other. Where the magic really happens is when you can marry your head and your heart and make a good decision for your family and not get stuck in either indecision or moving too fast and not like taking the time to consider everything, and so there's a happy, I feel like with everything in life there's a happy medium and kind of being in the middle, which you know when I first started considering this whole topic of like staying balanced and in the middle, the first word I thought of was like, oh, this is like mediocre, like you're like in the middle, it's like average, but then I was like, no, this is actually where the magic is at, where you're balanced with a lot of things, like polarities, and so this is like a kind of bigger topic, but I sometimes do coach people when they kind of get stuck, either in their head or they're making decisions on things that they, it's just like their heart and they're rushing into it. It's good to kind of put both together.

Natalie Slagle  21:36

I mean, this is exactly why we wanted you on this podcast, because you do such a good job of that, like, it, I mean, yes, we're like, there's so many numbers that go into buying a home, and there's, there's money, and all, but it can't just be about that, that is so unsatisfying, and so you, you just do such a good job of getting to know someone and figuring out, like, how do we get to that perfect balance, because both things are important, but you really need to find that middle ground. So, I appreciate that context. And, speaking of which, like, of having this kind of these conversations, these important conversations with folks, what we were curious about, considering, you know, most, most of our clients and listeners, they're in some sort of partnership, like when people want to upsize, and they come to you, and they're like, "Hey, we're in our three bedroom, one bath home, and we think now we need to do the three, two, or four bedroom, two bath. What have you seen that maybe your clients haven't really talked about, or maybe one you see like they're they're disagreeing on, maybe it's square footage, or is it the bathrooms? Like, what do you think when someone wants to upsize? How would you coach a couple as far as the things they should really think about when creating their own priority lists?

Tracey Henkels  22:54

We do have a questionnaire that we ask couples in particular when we meet with them, we first meet with them and get to know them, and we want to build like kind of trust, and we start talking about what they're looking for, so if they, if it's pretty clear to us that they're on different pages, we try to help kind of mitigate, is maybe not the right word, but kind of help them see where their differences are, so we have a questionnaire that they fill out, and usually this has been my experience. It's not across the board, but like I would say 90% of the time there's one person that's very specific about what they want and the other person is not nearly as specific, and they're together because their life works in that specificity is kind of managed by more by one person, but the other person does all this, they contribute in a different way. But when it comes to house hunting, it's very specific, right? And so the person, there's usually one person that kind of leads in the transaction as well, like one person that communicates more detail, and we tell people, like, we can always have calls with both people, but usually what they say is, "Tell me the information and I'll talk to my partner about it, because the other person, too, sometimes doesn't want all the detail. It's overwhelming, and it's much better kind of given to them from somebody that knows them really well, so I would say I don't feel like there's a ton of conflict with what people are looking for in new homes. I mean, obviously there's little things that they can be worked out fairly easily, and a lot of times that happens as we're looking at homes, these things kind of come up, and so people don't even think about, like, the questionnaire. They don't even think of some of these things, but when you're physically in a home and you like think something happens to a person, especially if you're like, I think some people are just also more affected, or more, their environment around them is very important, and some. People that's not as big of a deal, and so people that are like that, and they go into a home, and they feel something when they go in a house, then all of this other information is very present for them, that when they're filling out a questionnaire, it doesn't really trigger that imagination, and so, yeah, I mean, I've had, I just had the coolest stories of people telling me about, like, their childhood homes, and, like, people get really excited about, like, laundry shoots, like, like, just like the cutest things that people remember about, like, their childhood, and trees, like, certain types of trees, people just reminds them of their home, or even like the feel of the neighborhood, and home is like incredibly important to me. I think that's why I jumped ship from architecture and went into real estate, is because it was very mechanical. Obviously, architecture is very detail-oriented, but I have this part of my personality where my environment is really important to me, in like human relationships and connection with other humans, and I was like behind a computer all day and figuring out stuff, which I'm good at, and solving problems, but like very little people interaction, so that's why I love real estate, and it homes are really important to people, and to be a part of that and help people make all these big moves is stressful sometimes and a little complicated, but it's very satisfying. So the thing with homes, there's just like there's nothing else like it, and

Natalie Slagle  26:34

it's so emotional.

Tracey Henkels  26:36

Yeah, it is emotional. It makes it tough sometimes, but it's also really rewarding because we typically can help people get to their goal if they want to make a move, they want to buy a house for the first time. We help a lot of people move out of their final home, that is incredibly emotional for the entire family sometimes. So, and then there's always like divorce situations. I've had a couple clients that their partners have passed away, you know. It's just, we see everything in real estate, it's like you, you see humanity.

Natalie Slagle  27:10

Yeah, I had the a great experience. I was able to volunteer with the Irvington Home Tour this year, and as a volunteer, you, you go to the tennis club, and you, you get trained, and there was this man who's been volunteering for years, I think decades, like 20 plus years, and he, he was talking about just the emotional connection people have to these houses, and there'll be people who go, and they'll see that their house, their house that they lived in 20 years ago is on the house tour, and there he was just reminding, like, we're, we call it, we own these homes, and you get all caught up in the mortgage and everything, but he's like, this home is was around before you, and it's going to be around after you, and it's just, you're creating the new story for that home in this time frame, and he, it, he just said it so much more beautifully than I am, but, like, it was so true. I was like, wow, we're just like a family, we're a part of the story of this house, instead of it being like, this is my house. It's like, no, I'm.. I get the pleasure of like being a part of this home story, and there were families before us, and there's going to be families after us, and it was.. it was like, oh, this is this is neat, you know, us, like, we love a good old charming home, so it was.. it felt really that hit home for for me, for sure. Yeah,

Dan Slagle  28:30

Tracy, when working with like specifically the couples that you help out, like what are some of the conversations that you would recommend they have in advance of like even reaching out to someone like you,

Tracey Henkels  28:44

so one thing that I always ask, and I recommend that people think of this house as no less than seven years, honestly people say five to seven, but I say seven, and the seven to 10 year range, and if longer, that's great, but at least seven to 10 years, so that's something. If people thought about what they need 10 years out, that's a very smart thing to think about. It's not always possible for first-time homebuyers, most of the time for move-up buyers it is, because you can take your equity and you have more purchasing power, but I think that is a really good thing, is to think longer term than when most people are actually thinking, especially these days. It's hard to think more than a year or two out, so that's important. We right now, we are seeing people that bought during the pandemic, especially in like 2021 2022 that are selling houses for less than what they bought them for, or about the same amount, because the market really bounced up very high, and it's kind of, kind of come down a little bit. I'm not talking extreme. Portland, other places in the United States, the prices are going down, you're. Holding firm right now, and so Portland is a pretty has traditionally been not as impacted by inflation. Interest rates, of course, were impacted, but it's not as severe as other places. So that's that's great, because that's tough conversation, or a tough thing to like lose money on real estate, I always, one of the things that I really want is someone to be happy in their home, and I want them to make a good investment. I want to have both of those things, and some people are, they're like, "I don't care about the investment, I just want the home, and I was kind of like that when I bought my house, honestly, my, that my realtor was talking to me about the investment side of things, and it was very personal for me, but now I really have a more balanced approach, and that was before, just before I realized I was pretty young when I bought my house, so yeah, both of those things are are really important, and then I'm trying to think if there's anything else, I mean, obviously just basic things like walkability, usually they're on the same page about sometimes garages are not big garages, you know, sometimes are hard in Portland, especially with the older homes, and that's given that's good to know whether we have to have that or not. And one thing that people a lot of times want are fireplaces, and they're like I have to have a fireplace, and I really encourage people to consider giving that up, because it just limits the house so much, and you might miss out on a really great house, is but I was that person too, and I did get a fireplace, but just making sure when people have their list that if there's something that's kind of going to really limit them, I typically want to have a conversation with them and just make sure and explore that it's a non-negotiable, because a lot of times it's, it's actually not, it's just kind of more of a want, but if they could have everything else, they would give up a, like, big two car garage, for instance, two car garage is really, really limits your search, and another thing that I've realized, because I do work with people that are kind of retiring or getting older, the single family are hard to come by in Portland, just in general, that are decent size, it's just not a, not a lot of houses were built in our neighborhoods, but even a little further out, it just really limits your choices. So, most houses are not no stairs or very few stairs in them, so you just have to ask a lot of questions, and it's not going to happen in one questionnaire, it's not going to happen by them talking. It is really a process, and a lot of times you do find out a lot when you start actually physically getting inside the home.

Natalie Slagle  32:50

Right? I think it's funny you bring up the fireplace, because I feel like I, I would have really wanted a fireplace, and we grew up having fires all the time, but we grew up in Minnesota, so like, it actually, my dad was kind of a nut about like saving on energy bills, and so we literally had the fireplace, not for the coziness, but for the heat, and I'm like, oh, that's what I want from my family, but it's actually kind of a pain in the butt to have a fire all the time, every day, and like it's not that cold here, so yes, Natalie, I hear you, but that, like, that's why having a realtor like you is so important to be like, what is realistic here, and do you want to give up your walkability because there's maybe some good fireplaces over here, but now you, you know, it's just like having that conversation of priorities and what what is realistic is is a really important piece of all of this, so you don't end up in a home that you don't love. Yeah, a question that has come up that maybe is a little bit more granular than we've been talking so far is a client just recently asked us, and they're planning on buying a home in Minnesota, so they're so.. I know this, that's Minnesota world, but I want to focus on PDX World, but they were like, closing costs, like what should I expect, and like who's paying, what is the seller paying, some fees, am I paying, and so I think I'd like kind of your update on what you've been seeing when it comes to an offer. Who's paying for what? Who's paying realtor fees? Who's paying closing costs? Like, what have you been seeing as far as the offer, and what clients? What does an up-to-date offer look like, and who should expect to pay what in that?

Tracey Henkels  34:22

Yeah, so most of the clients we work with, not all, but a lot of the majority of our clients kind of are in closer in neighborhoods, which are more competitive when you're offering. So I'm going to say that that caveat and base my answer on that. Essentially, the seller we have not asked the seller to pay for closing costs in an offer out of the gate for a very long time. Where you can do that is if it's a house that's sitting on the market and it's kind of in the first time home buyer kind of market and the buyer couldn't really. Probably come up with enough cash with their down payment and their closing cost to get it closed, and so the seller will will consider it if they don't have any other people offering, but if it's a kind of a more normal sale, even now it's still competitive on good homes that are priced really well, like priced right, you're not going to be able to ask the seller to counter closing costs, although it is always an option, it's not a common practice, and it has not been for quite a long time now. If the market's turned into a buyer's market, you would see that all over the place, that would be quite common, right? Or if you have one buyer and that's the only buyer you have, and they're like, we need this to work, right? Sometimes that will happen in a competitive situation, I have done this, but it doesn't really - it's not very attractive to a seller, but you can increase the price to cover the closing costs, like if you want to have a competitive bid on the house, you could increase the price and then cover the closing costs, and then it would net the same to the seller, but that then the property has to appraise for that much more, and you just don't see that very often. Okay, so down payment, a lot of people I have realized this meeting with first-time homebuyers, but even people that have bought before, you do not have to have 20% down. I mean, you often can have like three, three and a half, 5% down, so a lot of people don't don't realize that, but closing costs do add a chunk where we see sellers saying yes, I'll pay some closing costs, is typically when you're negotiating something that needs to be repaired, but they don't want to do it before closing, so they'll say, okay, we'll give you a credit for that in lieu of doing the repair before closing, so it's not when you're writing an offer, it's usually in the negotiation during the inspection period that you see seller credit, so when you hear that term seller credit floating around, it's usually negotiating a repair, which is a little confusing, because you think it might be out of the gate, but that's that is not, that's not typical, and then you go across, have you have the cost of home inspections, which for a typical house, is, you know, about $1,000 plus or minus for testing, unless you get in some alternative testing, which is not super common. Realtor fees are kind of been a topic that a lot of people have been talking about in the last few years. I'm going to try to keep this short and sweet. I think most people kind of know about it, but just in case, and this is my summary, my version of it, just that I kind of tell people, because it, it kind of makes it easy to understand. Otherwise, you can get in the weeds really fast, with, you know, like there was a lawsuit, and blah blah. But basically, there were some people in the United States, I think it was in Georgia, down south somewhere, they thought it was very unfair that sellers were forced to pay buyer's agent fees as well as their own agents fee, and so they sued the National Specialty of Realtors, and there are a lot of opinions about this. I mean, there's been the New York Times, there's been people that have done pieces on this that I very much make me cringe, and I feel like devalue what realtors bring to the table, but everybody's allowed to their opinion, right?

Tracey Henkels  38:03

And I, I have to say a lot of the things that the accusations that were flying around didn't really get proven, and they did a lot of research. They researched different, my understanding is they researched different markets to see why in this market the average, the kind of the going rate for buyers agents commission that used to be offered was 2% and then in this other market it was 3% And why, why did it seem like there was the majority of people always paying about the same amount? And what they realized, it's because people advertise, realtors would advertise and decide in advance what the seller is going to offer as a buyer's agent commission. So, when I would sit down and sign a contract for a listing, I would say, this is my commission, and then this is what we have to decide what we want to buy, offer to the buyer's agent. Now, you're not allowed to do that, we say this is my commission. We agree to that with our client, the seller, and the buyer decides if they want to ask for the buyer's agents to be commissioned to be paid by the seller, or they're going to cover it, and it actually, honestly, could be a combination of them paying little and the seller paying a little, but in Portland, and I can only speak to this market, because it's the only market that I know, but I think this is pretty.. I think it's happening most places. It is very little has changed, because most buyers need to have the seller pick up that portion, because they have their down payment and the closing costs, and also they're moving into a new house, there have moving expenses like all the things, and that is traditionally why it was done like that, and I do understand the sentiment, and I think that the lawsuit brought up some things that we kind of needed to tighten up and not assume that, and you know the way that I think. Realtors kind of addressed it when they went to a listing appointment, was like, you have to offer, I mean, we wouldn't really give them an option, almost, right, that was just like it was like standard, so it felt like it was being forced on people, when in reality they never had to pay a buyer's agent commission, but because it was part of the listing contract, it was just kind of assumed, and I think it made it so we kind of have to articulate our value more, and people will see that most buyers are going to need that to be covered for them, and it's continuing to happen, and I don't know if in 10 years it might will change, but right now, and it's, I think it's been, has it been two or three years in August? I think it's been three years this August. Don't quote me on that. It's either two or three years that that ruling came through that sellers are no longer publishing a buyer's agent commission, but it is still sellers are usually paying it and buyers are asking for it as part of in their offer.

Natalie Slagle  41:04

Interesting,

Tracey Henkels  41:06

yeah, we did that when you guys wrote. I know, I remember your podcast, you kind of told on your podcast about deciding not to buy, you had said that you wrote a couple offers, we always wrote in there that the like we have a contract, you have a contract with you guys, had a contract with me that my agent, my fee was 2.5% and that's what we put in the offer. If the seller said no, I'm not going to pay that, then we would either say okay, we're not going to buy this house, or you'd be like, okay, we'll pay it ourselves, or whatever, they say, oh, we'll only pay 1.5% and then you would be responsible for the other one foot percent, so the other thing that changed is buyers have to have a contract with their agent, and that did not usually happen. There were a lot of most buyers did not have a formal agreement, like a listing contract with the seller, and so that's another thing they made the National Association of Realtors, and all realtors, it's Oregon law and federal law that you have to have a buyer's agreement with your buyers before you even show them a home. In fact, it's supposed to be on first contact, so that's the big change, is that we no longer publish buyer's agent commission, and you have to have an agreement in advance with your buyer and buyer's agent and agree on what their commission

Natalie Slagle  42:22

is, I can see why it was brought up, and it seems like there has been some good out of it, but it's interesting because these things come up, and then the market decides what's valid, what's not, and the market has decided we still like it's still beneficial to have buyers not pay for this, because of all the reasons you talked about, like there's just a lot of fees on the buyer's side, so it's interesting how we still kind of, it, you know, so much more about this than I do, but it feels like we landed kind of in the same place, maybe there's just a few more disclosures, or there's a little bit more people are more in the know, or there's some negotiation, this this line that used to not really be a topic of negotiation, now it can be, but we kind of landed in the same spot. Is that fair to say?

Tracey Henkels  43:08

I think that's very fair to say, and I think that buyers have, have said, yeah, like we, we don't, for most people it's not really doable to come up with five to 20% down closing costs, and pay their agent, and by the way, all of the pricing, and even now, because so many transactions include the seller paying the buyer agent commission, still they are priced with both commissions in there, and so if the seller wasn't paying the commission, they really should be marketing the house for the, you know, the comparable would you should be taken to consideration what they're paying and deduct that as far as an appraisal goes, or just looking at the value of the home, and sellers are like, oh no, I think a lot of sellers would be like, oh no, like that's just that's no, we still want the money, we don't want to pay, you know, like it just can't have both. It's like it reminds me of, I think it was East Moreland, they were fighting against the historical designation, right? You can't have it both ways, you can't retain value, you can't have, like, I think sometimes human nature, we want everything, but like, that's not how it really works most of the time, and so the buyer's agent commission and seller's feeling of your houses are still worth the same amount of money is kind of comical to me, because it's not how it works

Natalie Slagle  44:34

exactly, like the market is the market's efficient, right, and so if the seller is getting, is not having to fork over as much. Well, then the price maybe shouldn't reflect it, like the price needs to change based on the terms of the contract as well. That, that seems very valid.

Tracey Henkels  44:50

Yeah, the thing with real estate is there's not a set, there's, as you guys know, going through the process, it's like there's a range, but it's not an exact amount, so then the. Kind of like you don't know well if a buyer's agent commission is, say, $15,000 like a house can vary in value easily, like in a $25,000 range. So it's not an exact science pricing, it's really what a buyer and seller agree to, and the demand, and you saw that in at least one situation, I think both of them that you offered on were multiple offers, and it was like some people don't care if they're overpaying. Every once in a while, people will overpay, and you're like, 'fine, overpay, we'll go find a different house. But, and sometimes you may find yourself in your life when you are older, and you're like, 'we want this house, I don't care if we're paying $20,000 more than what the stats are saying, it doesn't matter to us that we want this past, and some people just are at that place in their life, and they, they want what they want, and they have the money to do it. So,

Natalie Slagle  45:51

absolutely,

Dan Slagle  45:52

as you're talking, Tracy, I don't even think we said at the beginning of the episode that you and Kelsey were our realtors, as we were going through our home search, what, not too long ago, like six months ago, maybe, when we, when we really picked that up, and I'm just recalling some of the homes that we visited and put offers on, and, and some of the things that you're just alluding to, like there was one offer where there was a lot more earnest money that was put down than normal, if I recall, and then I think they also maybe waived in the inspection. I don't know if we told you this, but we were actually walking by that house a few weeks after, and they were having someone - someone was doing some work on the home and provided like an estimate cost, and we just happened to be walking by. It's not like we were like we were kind of snooping, but like just hearing things. And

Natalie Slagle  46:39

well, we walked by because my mom was in town and I was like, Mom, oh, she wanted to see

Dan Slagle  46:43

the house.

Natalie Slagle  46:43

I was like, let's show you the home we put an offer on, like, this could have been our home. And so we were, we were just walking by, and then there was a conversation happening as we were walking by.

Dan Slagle  46:52

Yeah, and we overheard the person who was providing a quote said, like, I know you've spent a lot more money in the past week than you've wanted to. It's an expensive process, and then, like, right after we passed the homer, like, gave each other fist bumps, and we felt good about that.

Natalie Slagle  47:07

Yeah, the home buying process is, it is an ordeal, but it is worth it when you find the right one. And I know Tracy is going to be there for us when we're ready to pull the trigger again. But Tracy, what are their thoughts or comments on maybe like the Portland market, and when you're thinking about getting into that next home, like any other thoughts or comments that you haven't shared so far. When a couple is thinking about, okay, I need to find a realtor to get me that home, like how did they, what things should they be thinking about when hiring someone like you? Like, what makes a good realtor, like, how? How can you help someone who's thinking about that next step think about who they should hire?

Tracey Henkels  47:49

Yeah, that's a really excellent question, because I can tell when people like Google, like, what questions should I ask my realtors, they actually do ask some questions that a lot of people don't ask, and well, one of no one's ever asked me this question, but one thing I do tell people is, you have no idea how important my relationship and my standing in our real estate community is. Like, people just don't think about that. Like, are you seen as someone that is not only like fair and honest, but like you're not, you're not easy to work with, but you're not going to be difficult, because there are a lot of realtors in Portland. I think around 7000 I feel like I'm throwing out numbers, and I'm not going to like be exact, but I think it's around 7000 realtors, and like 20% of the realtors do 80% of the work, that 8020 rule. And so in the top 20% you run into the same realtors over and over, and I know when I've worked with someone that is not good with details, or you know, it's just has been difficult to work with them, I get offers accepted because people want to work with me and my team because our reputation, but also just that we're fair and honest, and we want everybody to win. That's the other thing. It's like some people have a mentality that they have to win and other people have to lose, and a lot of times that ends in a sale fail, or it ends not well, or it just ends with people like it. Just doesn't have to. I don't feel like it should be that way. I think people, if they have a win-win, they want everybody to kind of go away from it feeling like they won. I think the world would work a lot better if that too, because that's just the truth. Like, no one wants to lose, everybody can win if you just are kind of level headed. And, and then, okay, so there's that. The relationships, your experience doesn't always mean that you're going to be a better realtor, but knowledge base, definitely. I don't have very many people ask me to talk to past clients, but I think that is a very smart thing to do if you're wanting to understand or read reviews, like, you know, Google reviews that are kind of give you a sense of. What it's like to work with people or work with a realtor, specific person, and I think just it's like when I've like talked to people about why people choose to work with you, it's usually because they like you and they trust you, they know you're good at what you do and they also like you, and if you have both of those things, so it's like it's a personality thing, and I'm not going to be the right fit for everybody, but, like, I am just myself and authentic, and I think when you do that in business, you attract the people that you're supposed to work with, and obviously competency is really important in, like, your business, my business, and I think to a lot of people going back to the whole thing with the thing about commissions and buyer's agents, commission. I think a lot of people, I remember reading an article, is like this is the end of buyer's agents, people don't need buyer's agents anymore, and I just chuckled because it is such a complex process, and there are so many moving parts, and so many things that are happening that the amount that a realtor gets paid is a drop in the bucket compared to some of the things that could go wrong, not even talking about liability, but just getting correct information, negotiating contracts, knowing what to offer on a house, like I feel like the value when you work with a good realtor is if everybody had an experience of working with a really great realtor, they, they would be like, yeah, of course, like that totally makes sense. And the liability, I think people don't think about liability, that's one thing.

Tracey Henkels  51:31

When I think, if people, if everybody understood the liability that we take on as agents, and there's a reason for that, it's just there's too many things for a person to know about it, and, and then the, you know, so if you've got that all the knowledge, the expertise, the relationships, and then you feel like the person cares about you, that I would tell people, like, pick the person that doesn't have necessarily the cheapest commission, if you're like listing, and a lot of times, if you do the math, it's really not that much money to work with someone that you trust and you like, and you know they're gonna hopefully like the way I kind of look at it is I try to really feel like treats people like you're a close friend or a family member, like when you're working with them, and always do what you'd want, do the extra things that you know that you should do to, like, for instance, getting contractors over to the house and doing the extra things, so they feel comfortable and feel like this is a huge decision, so within reason, right? Like, there's some, you could get 80 contractors over to your house, that's probably not going to be realistic, but big things we could be like we may not be negotiating that and we don't really need to get an estimate right now, but if you guys really would like to know, like, how much it would be to replace the windows, that's something you'd want to do on the road, we can work that in and do those extra things, so there's a lot of questions you could ask, I had somebody like definitely googled and they made me like do a spreadsheet of the properties I sold recently, and like what I listed them for, and what they sold for. I was like, "Wow, you definitely did a Google Google thing.

Natalie Slagle  53:10

Yeah, that's fine. You know, people have different ways of getting out, but I think to your point, like, the it's not just like negotiating expertise that you have, but I also like, I felt a huge value for us that you did, that I'm sure you do with all of your clients, is you make sure they're not buying the right, the wrong home, which is very costly, and having a third party, like working, you know, Dan and I thinking about buying a home, or any couple buying a home, you kind of need that neutral third party to really get lift you out of your emotions, in this. I mean, obviously emotions will always be there, but like, be practical and be realistic. And there were like, I was so impressed by you and Kelsey just being like, I don't think this is the right one, like, I don't think this is the best one, or like, you don't need to go, and I was like, oh my gosh, it just felt so like speaking of trust, that was such a trustworthy moment. They're not here to just get a check, they're here to make sure that we are going to end up in the home that is best for us. It just felt so reassuring, and such a trustworthy experience, and I feel like a good realtor is going to help you say no to the right homes, just like they're going to help you find the one that that you will call home someday. So I can attest to that for you. Yeah,

Dan Slagle  54:31

I can too. And it was, we've talked a lot about, like, the questionnaire you provide your clients, and then it being a process of like going to each home, understanding what do you like, what don't you like, and then in our circumstance we were kind of on a time crunch, given like what was happening with our current state of where we were living, and we just didn't want to feel I feel like we felt a little like pressure to like put an offer in, and I think a lot of people potentially get to this point where they're just. Like, there's nothing we like, okay? Should we put, just put an offer on this one? And, and you and Kelsey were just like, "No, don't, don't do it, like

Natalie Slagle  55:07

don't do it on a home you don't love. Exactly,

Dan Slagle  55:10

exactly. That was a huge win for us, just going through that experience with, with the two of you.

Tracey Henkels  55:15

Yeah, I've only had one client over 22 years that called me about six months after she bought the house, and I tried to talk her out of it three times during the process, and she called me crying, saying I can't live in this house, and I wanted to like almost be like, oh my god, oh no, I was just like devastated, but then I was like, and then I started being like I should have been more firm with her, but, but I was like, this is not my thing, right? I talked to her three times, and she convinced herself, and she was on a timeline, and they were at the point where they would have needed to move into a rental, but I don't think the amount of money they lost in that was significant, and I don't, I think it would have been worth them moving into a rental, and so I kind of do remember that, and I push a little bit harder sometimes than other times than I have in the past, just making sure people have are slowing down a little bit, for people, you know, so some people I have to push them a little bit, I have to give them a little bit of a push if we're seeing houses that everything is in their parameters, but they're not writing offers right. And then sometimes I have to slow people down and kind of be like, I don't know if we've looked at enough houses, or from what you've told me, this just doesn't feel like what you're explaining, or that you're not getting. I think you're giving up too much, and I think we can do better, and I tell people when I meet with them, I had a couple clients that thought I was being negative, and I, so I kind of prep people, I'm like, I'm kind of hard on homes, but it's to protect you, and so then I kind of, I give them a heads up that I'm not trying to be negative, but my job really is a fiduciary, and so my job is to take care of you and to look out for your needs and make sure that you're accomplishing your goals as much as I can with the knowledge and the expertise that I have, and so

Natalie Slagle  57:12

great. Well, thank you, Tracy, so much for being on the show today. It's been such a pleasure having this conversation. I've learned a lot. Anyone in the Portland area looking for a realtor, Tracy and Kelsey are a fantastic team. Highly recommend. Tracy will, will put your contact information in the notes, so if you need that, go to the notes, and it'll be right there. Thanks so much, Tracy. We appreciate it.

Dan Slagle  57:36

Thanks, Tracy,

Tracey Henkels  57:37

so much. Thank you.

Dan Slagle  57:41

Hey, if you've enjoyed this episode and are looking for personalized financial guidance, schedule a free complimentary consultation using the link in the description below. Natalie and Dan Slagle are the founding partners of Fyooz Financial Planning, a registered investment advisor. The information provided in this podcast is for informational purposes only, and should not be considered investment advice or a recommendation to buy or sell any securities. Investing involves risk, including the potential loss of principal. Advisory services are offered to clients or prospective clients where Fyooz Financial Planning and its representatives are properly licensed or exempt from licensure. For more information, including our disclosures, please visit our website at www dot Fyooz financial.com

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