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Edina Realty
Edina Reality
Twin Cities Real Estate

Welcome to the June 1, 2009 edition of carnival of real estate.

A lot of people like reading Top 10 lists and I was intending to do a Top 10 list, however this week I didn’t feel like there were 10 submissions worth sharing with you all so here is my:

Top 9 Post Submissions

#1 – Reminding us that real estate is always local and showing us why
Tallahassee Real Estate presents Killearn Lakes Unit 1 Home Prices Holding posted at Tallahassee Real Estate Blog, saying, “A classic example of why most real estate reports are flawed. They lead you to believe that prices are going up or prices are going down, solely based upon the movement of the average sales price. This article shows why it is possible for the average home price to go up, while real home values are dropping.”

#2 – A variation on the same theme
Danilo Bogdnaovic presents Best Condo Investment Opportunities in Loudoun, Fairfax County posted at Loudoun Foreclosures, saying, “Though this post is hyper-local, the reasoning/logic behind it holds true throughout the US and should be considered by all agents and real estate investors (imho).”

#3 – Multiple offers are everywhere today (at least in my market) and we all need to bone up on our sales skills
Dan Melson presents I’m Competing Against Multiple Offers. How Do I Proceed? posted at Searchlight Crusade.

#4 – I too have many objections to Case-Shiller… check out my association’s data for some examples of better info: 1, 2, 3, 4, 5
Dan Green presents Why The March 2009 Case-Shiller Home Price Index Is Good News For Housing posted at The Mortgage Reports, saying, “To economists, the Case-Shiller Index is helpful. To homeowners, it’s almost worthless.”

#5 – Foreclosures impact many families… each house foreclosed means a family affected
Donna Johnston presents “Mommie are we going to have to move?” posted at Talk Charlotte Real Estate Blog, saying, “This hits me right in my heart.”

#6 – This is a little bit of a “duh” post but hey…
Jim Reppond presents What social networks are agents marketing on? posted at The Seattle Specialist, saying, “Internal Top Producer poll that suggests most agents are now using social media to promote their listings – especially Facebook.”

#7 – MI is deductible but sometimes there are better options
NetBiz presents How To Avoid Paying PMI (Private Mortgage Insurance) posted at Your Finish Rich Plan, saying, “List of ways you can void paying for PMI, thus lowering your monthly mortgage payments”

#8 – Green building is increasing in my market, how about yours?
Mark Donovan presents Definition Green Building Product posted at HomeAdditionPlus, saying, “Green home building is a phrase that is often overused and misunderstood. In this article Mark Donovan discusses the process of assessing whether or not a green home building product is truly green for your particular green custom home building project.”

#9 – There’s a sucker refinanced every minute…
nickel presents Beware the “No-Cost” Mortgage Refinance posted at fivecentnickel.com.

That concludes this edition. Submit your blog article to the next edition of carnival of real estate using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

Technorati tags: carnival of real estate, blog carnival.

To Our Customers,

The dramatic events taking place in the financial services industry and economy are historic in scope and proportion. You may be asking yourself, “What does this mean for me as a home buyer or home seller? When I want to obtain a mortgage, will there be funds available?” The answer is simple: at Edina Realty Mortgage, it’s business as usual. Yes, we continue to originate mortgages for home purchases and refinances. Our wide product range features FHA, VA, MHFA, Conventional, Jumbo, Relocation, Renovation, and Reverse Mortgages. We are committed to helping as many customers as possible enjoy the personal and financial benefits of homeownership. We provide competitive, fully disclosed, and responsible and fair pricing for all borrowers.

A Solid, Stable and Secure Lender

We want to assure you that we remain a solid, stable, and secure mortgage lender. We are a well-capitalized company, and we hold fast to our long-standing responsible lending principles. Edina Realty was one of the first real estate companies to offer integrated mortgage services more than twenty-five years ago. For over ten years, Edina Realty Mortgage has been a joint venture between Wells Fargo Home Mortgage (a division of Wells Fargo Bank, N.A.) and HomeServices of America, a Berkshire Hathaway Affiliate. Wells Fargo Bank, N.A., is the only bank in the United States, and one of only two banks worldwide, to have the highest credit rating from both Moody’s Investors Services “AAA,” and Standard & Poor’s Rating Services, “AAA.”

We Are Committed to Your Successful Closing

We stand by our word. Our exclusive On-time Closing Guarantee (1) ensures that you will close on time AND for the amount quoted on the Good Faith Estimate, or you will get money back. Are you already working with another lender? We will be happy to review your Good Faith Estimate and Truth-in-Lending Disclosure Statement. This no-obligation second opinion from us takes just few minutes, and we may be able to provide reductions in interest and/or closing costs. (2)

As a responsible lending leader, we work closely with our customers to help you reach your personal and financial goals through homeownership. Our team works hard to know you, understand your needs, and listen to you. We put you at the center of everything we do.

Thank you for trusting us with your business.

Todd Johnson
President and CEO
October 2008

1. Available on all qualified purchase transactions. Other terms and conditions apply. See a Home Mortgage Consultant for details.
2. If you have a current lock-in agreement with another lender, this is not an inducement to transfer your loan.

All first mortgage products are provided by Homeservices Lending, LLC Series A dba Edina Realty Mortgage. Edina Realty Mortgage may not be available in your area. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. ©2008 Edina Realty Mortgage. All Rights Reserved.

• Home Depot will take Lowe’s coupons.  I’ve used a couple “$10 off a purchase of $50+” in the last couple weeks with no problems.  I like some of what HD has better than Lowe’s so this is great.
• Behr paint is drastically cheaper in the 5 gallon pail.  If you are using more than about 3 gallons of paint you might as well buy the 5 gallon and have extra for touch-ups, more rooms, 2nd coats, etc.
• In partnership with Xcel Energy, Home Depot has reduced the price on a lot of their fluorescent bulbs by $1-$4 per package.  This means 60 watt bulbs are now under $1 each… a bargain considering that each bulb can save $30 or more over its lifetime.  If you use a bulb 2 hours a day and your electricity is $.08/kw, then you save $.22/bulb/month in electricity costs.  This means in a little under 5 months the bulb is paid for and you’re saving real money.  Multiply $.22/bulb by replacing your 20 most commonly used bulbs and suddenly you are saving $50/yr!

Welcome to the 91st edition of The Carnival of Real Estate. This is my 2nd time hosting the carnival and I think there’s some good articles in this week’s carnival but I couldn’t pick one that stood out from the others… I suggest you browse them all.

From 20+ posts I’ve whittled it down to 9 that I think are worth your time.  To be honest, the spam posts were much higher this year over last… it is a shame that such a great tool is taken advantage of by so many. Maybe we should figure out a way to block repeat junk posters?  There was also some submissions that were so location-specific or minuscule in subject that they just did not make good candidates for a national blog carnival.

Trevor Mauch presents Marketing To Pre-Foreclosures – Why Most People See ZERO Results? posted at Real Estate Investing Brain. This article explains how mailing to pre-foreclosures is a numbers game… you have to be in front of them not once, but many times to get the point across… not unlike farming a neighborhood.

TerryT2 presents Negotiation Tactics and Tricks posted at Actual Real Estate Profits. A good list of tricks to employ or defend yourself against.

Sagar Satapathy presents The Foreclosure Investor’s Cheat Sheet: 100 Useful Web Resources posted at International Listings Blog. A good list of web sites for reference… several of which I bookmarked.

Ken Haedrich presents The Whole World is Waiting for Ourselves posted at Annapolis Home Digest. I have to agree Ken… I feel you on this 100%.

MoneyNing presents Right Time to Buy a House? posted at Money Ning. I get this question a lot too and if you look at the comments, they run the gamut of responses.

Debt Freedom Fighter presents Home Equity Loans: Why They Don’t Make Sense as Part of Debt Reduction Plans posted at Discover Debt Freedom!. Seems obvious to me, but I know a lot of people who get trapped by this.

Dan Melson presents A Good Listing Agent’s Most Important Responsibility posted at Searchlight Crusade. Yep, Dan’s right on the money with this.

Tim Soper presents “Walk Away” Foreclosures Sign Of Times? posted at Will & Grundy County IL Real Estate Report. I see this trend too… it’s disgusting. Maybe we need teacher unions that invested heavily in CDO’s to do a course on “responsible borrowing” and teach little Johnny & Jill to go home and tell their parents to own up to their responsibilities….

Joe Manausa presents Short Sale Advice posted at Tallahassee Real Estate Blog. Some good tips from Joe on how to be prepared for a short sale and what to expect.

That concludes this edition. Submit your blog article to the next edition of carnival of real estate using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.  Thanks for stopping by!

Technorati tags: carnival of real estate, blog carnival.

If you need something, do not hesitate to call or email me.

Nerd & Model:

Biker & Mom:

Grandma & HipHop:

Hunter & Yoga Gal:

Nerd & Model Outtake 1:

Nerd & Model Outtake 2:

There are many, many things that my association does well but this is a prime example of a ridiculous message at a horrible time.  I don’t know if there is a single consumer out there today that expects that a house they buy today will double in the next 10 years… and I think most understand that the housing market is not going to move higher for several years.

This ad simply promotes the misconception that REALTORS do not understand what is actually happening in the real estate market today, or that we simply will not accept it.  When sales are down 30%+ from two years ago (and consequently commissions) and we’re seeing more empty desks and less people in the office, I can assure you that we as agents understand that this is a different market with different needs.

Instead of trying to sell promises of sunshine in the middle of a hurricane, the National Association of REALTORS would be much better off to admit that this market isn’t perfect for everyone, but that there are good opportunities out there for certain people in certain situations.

NAR: Please either promote a more realistic message or shut up entirely… I don’t need the kind of help you’re giving me right now.

I personally see this as a positive as the current capitulation in the market will hopefully mean a quicker trek to the bottom and should help drive buyers waiting on the sidelines back into this market.  I also feel like these stats finally show what I think many people have felt out in the market for quite some time…

With the HAI hitting 149 & a historical average in the mid-150’s (RREAR Page 2 and January Monthly Indicators Page 12), we’re getting awfully close to historical affordability levels.

Due to our seasonal nature in Minnesota real estate I still think we won’t see a bottom until Q4 2008 but the acceleration downward makes it seem more possible that this market will find its bottom in 2008 and not limp slowly down the hill for years to come.  Add to that the plan the 6 banks are putting forward to renegotiate loans already in default and I sense that this market is finally starting to make steps that will lead to a definite bottom in the future.

It’s impossible to time the market bottom and with interest rates still near all-time lows it isn’t a bad time to make a move up to a more expensive home or to buy a first home.  Prices may fall further but if interest rates move higher on inflation fears, any additional decrease in sales prices may be erased by equivalent or greater increases in interest rates.

If you’re wondering if now is a good time to buy for your situation, feel free to call or email me to discuss your situation.

Pretty cool information… thanks Lisa & Jason!

In this slowing market, where inventory is at record levels, Buyers have almost too many choices to make and Sellers have so much competition for each of those buyers, make the same choice that nearly 1 in 5 customers in the Twin Cities make, work with an Edina Realty agent.  Since 1955, Edina Realty has helped Buyers and Sellers through both good and bad markets.

Edina Realty – Now, more than ever.

Aaron Dickinson + Edina Realty = Even Better! 

One of my roles as a Realtor is to negotiate for my client’s best interest… and 99% of the time my client gets what they wanted.  Here are professional politicians, a.k.a. negotiators of everything, and they can’t come to any sort agreement on one of the biggest issues we’ll have in this state.

Write your representatives, force the issue, be heard before we lose any more time!

For the period of January – August 2007, there have been 28,739 closed sales, down 14.9% over last year and down 27% over two years ago.

It’s a slowing market… which is great for 1st time buyers and move-up buyers but not great for downsizing households.  Houses can sell quickly though… just sold one of my listings in 3 days!

The homes I had been looking at were primarily ramblers (or ranch, or one story, depending on your area).  Actually, I had a pretty detailed set of criteria:

• One story
• 3/4 master bath or better (full highly preferred)
• Big master bedroom (15 x 12 minimum)
• 1980’s and newer
• 1500+ sq ft on the main floor (bigger room sizes)
• 4+ bedrooms (for roommates, office, guest bedroom)
• Walkout basement
• Big 2 car garage
• .4 acre lot or bigger
• Privacy off back yard
• Inside the 94/694/100/394/494 NW quadrant
• Under $375k

Needless to say I didn’t find much for sale!

What I’ve always hated about a traditional two story home (I call it a center stair two story) is the formal living room.  See, I don’t have a piano, don’t read books (Google is my library), and don’t know why you would sit in a room without a TV/DVD/stereo/computer/etc. so I see it as space that I have to fill with nice looking crap that won’t get used!  I LOVE modified two story homes and those with stairs on one side of the house or the other because it eliminates that room but keeps all the other goodies that a two story offers:

• Separation of bedrooms from living areas
• Big master suites
• Most/all bedrooms on one level
• Bigger room sizes, since foundation size isn’t the issue
• Dramatic curb appeal (when done right!)

Due to the area I was looking, there aren’t really any two story homes with the floorplan I liked, so consequently I was looking at ramblers.  You have to get pretty big on the foundation size for ramblers before you get those bigger rooms and layout.  So, I made an offer on one in a short sale and several months later found out that we were $40,000 off in price and they didn’t want to budge.  So, bye-bye offer!

I went around and looked at some other ramblers, but none of them really caught my eye.  I was very disappointed and had decided that things were not going to work out right now when one of my coworkers suggested a property she had seen.  She said: “Aaron, I know it is priced higher than you wanted to go and it’s a two story, but it is a really nice house and you should take a look at it.”

I got the address, pulled it up online and decided to take a look.  Long story short, she was right… it was a great house!  Went back with another coworker who thought it was solid too, had him write an offer (more on that in a future post) and some back-and-forth with the seller and now I’ve got a new home!

I’m still doing inspections and whatnot so I don’t want to get into details but needless to say I have a lot of things I’d like to tell you.  Stay tuned for updates!

This was a quote from one of my buyers today… and he’s right on the money.  My buyer came in from Germany (the country not the town), flying 1/2 way around the world to look at houses for 5 days.  We had already narrowed down a list of houses to see before he came and quickly found one that met his needs.  Unfortunately the inspection went poorly and we had to walk away.

When we walked away that only left us with 1/2 of a day to find another home.  We requested 4 short notice showings (showings within 2 hours) and were only approved for 1!  Two said they needed 24 hours notice (though no mention of that was listed on the MLS) and the third never answered any of the requests for the showing.  When it was all said and done, my buyer and I had to concede that we were not going to find something for him before he had to leave.

When we were parting ways he gave me that line and it made us both think how crazy it is to be a seller trying to sell a home in this more competitive and slower market when you won’t let a ready, willing, eager and able buyer into see your home!  Something tells me they won’t see a SOLD sign anytime soon.

Moral of the story: You can’t always say “yes” to all showings, but you better make the best effort to say it to every showing you can!

If you are a buyer looking at houses online, what is your first impression about a home for sale in June that still has snow in the main photo?  My guess is that it’s not a good impression… feel free to leave your specific thoughts below.

Market shift: What is the culprit?
by Jeff Allen, MAAR staff

As the Twin Cities residential real estate market enters the busy spring season, it’s becoming apparent that buyer activity will not rebound from its post-boom recess as quickly as many of us had projected and nearly everyone had hoped.

No one should assume that a return to boom-level activity will be quick and easy. After all, we’re fresh on the heels of several consecutive years of unmitigated market expansion. But indicators of buyer demand have begun to noticeably decline again after a brief relative uptick this past winter, with newly signed purchase agreements (pending sales) in March 2007 falling 18.9 percent behind March of last year, and weekly April sales figures reflecting the same decline.

What is the culprit for this sluggish buyer showing? Let’s start by defining what the culprit is not.

Not affordability. After reaching a decades-low point in the middle of 2006, the affordability of our region’s homes has made dramatic improvements due to stubbornly low interest rates and slight declines in home prices. Our market, like the rest of the country, does face some remaining price-to-income disparity issues and will into the foreseeable future. But the simple truth is that homes in the Twin Cities have not been this affordable in two years.

Not interest rates. The popular media has been quick to highlight increases in interest rates, but they are slower on the draw when rates are on the decline. The cost of borrowing money to buy a home remains low—holding steady at 6.1 percent in April.

Not a lack of choice. At the end of March, there were 19,776 single-family detached homes, 5,703 townhouses, 3,281 condos and 540 twin homes on the market for buyers to choose from. While the growth of inventory appears to be slowing as builders and consumers adapt to a changed demand landscape, it’s still setting monthly records.

Those looking for a simple answer to the question of why buyers remain on the sidelines despite an environment that sits so firmly in their favor should look elsewhere. There is no silver bullet, no single or definitive cause. There are many interdependent factors at work. But two such factors are having the largest effects upon our discernibly muted spring home sales season, and likely will into at least the summer.

Consumer confidence. The public’s perception of the housing market is anything but certain right now. Housing is on the tip of everyone’s tongues, but the conversations aren’t usually positive. With overwrought analysis in the popular media, it’s hard to blame them. While affordability is improving and choice is excellent, housing market psychology is immersed in a contrary perspective for now due to a barrage of stories on bursting bubbles, foreclosures, mortgage fraud and subprime lending.

A return to tighter lending standards. New uncertainties in the lending industry brought upon by excessive exuberance in the subprime mortgage market have created a renewed sense of caution to the mortgage community and a new round of hyperactive government legislation. “Riskier” loan applicants are facing a tougher road to financing their home purchases. The net results are a decline in qualified buyers and undue caution from those who are qualified.

It is important to keep perspective and recognize the diamond in the rough. Much like declining home prices leading to improved affordability, a market-wide recalibration period will cause some uncomfortable months ahead but will ultimately benefit our market in the future as consumers, lenders and REALTORS® have their expectations realigned.

Time will tell how prolonged the correctional pause will be, but regardless, be assured that it will not be as severe as market declines seen in decades past that were fueled by recession. The long-term health of the Twin Cities housing market is being strengthened as we speak by the current market experience that some find disconcerting.

• You have to be the best price and best condition.
• Talk to your agent.  If you’ve got questions or concerns, ask them!
• If you’re not getting any showings, check your marketing, check your competition, check your photos, then drop your price.
• Agents can’t make your home sell if you’re overpriced… price is still the #1 determination on saleability.
• Market times are averaging 80-90 days right now… if you’re at that you need to sit down and go over things like you did before you listed.
• If you want to talk to other Realtors that’s fine, but you cannot sign a new listing agreement until your current one is cancelled or expired.  Post-dating the contract doesn’t make a difference… it cannot be signed at all until you are clear of your current contract.  This is a state rule.
• Agents cannot openly solicit you for a listing if you are currently under contract, but can respond to any inquiries you make.

#1 - Combination lock boxes.  Agents are securing a home with a $30 manual lockbox that can be opened by anybody with the code and leaves no trace of accesses?  Some of the homes we saw were very nicely furnished… I’d hate to hear that a home was burgularized and then be a suspect simply because at some point I had shown the home.

#2 – Master bathtubs that face the front of the house.  Honestly – there was a house that had a 1/2 acre back yard looking out onto open fields and they put the master bath in the front of the house looking over the rest of the neighborhood and the street.  That’s just a bad decision.

#3 – Skimping on kitchen storage.  Few of these homes have dedicated pantry space, which seems odd given that these kitchen often have $50k+ into them.  What good is it all without enough storage?

#4 – A picture window in the main floor bath overlooking the front entry.  This is true as well – a full-size window, right next to the toilet, which overlooks the front entry to the home.  Don’t know about you but I don’t think that rooms should be designed with windows that always need to have their blinds down!

#5 – Small master bedrooms.  One of the houses we saw had a master bedroom space that couldn’t have been more than about 13′ x 12′, while the bath and closet were at least that size.  Today’s bedroom furniture is typically oversized and consequently the room should be sized appropriately.

I applaud this as a great step towards improving a situation that is still worsening… large numbers of home in Minneapolis are vacant/foreclosed homes… but more help is needed, and fast.

According to the article, in just the first 3 months of this year Minneapolis had 678 foreclosed homes sell at sheriff’s auction.  70 homes is barely 10% of that figure… while a very good start, it will take a larger effort to make a significant difference in this market.

Well, normally this is all done well before we get to closing however in this case the bank waited till two weeks before closing to get title work ordered, which means I got to learn a new term and my buyers and I got to worry about whether we would close on time or not.

Houses priced right and in the right condition are selling quickly again… some in as few as 3-4 days in certain areas of the Twin Cities.  This doesn’t mean an end to the housing slump, but it does suggest we’ve turned the corner.

I’ve been to this event in previous years and so I’ve come to expect that parts of the day would be slow and that I wouldn’t agree with all that was said in the room, but that in general we are all aligned with the same common goals.   Unfortunately my association embarassed and disappointed me a little this year…

As in previous years, we invite members of the governor’s administration as well as elected representatives from the capitol to come to discuss their views on housing issues and to open up a Q&A section.  This year we were skunked by the governor again but did get the director of the Minnesota Housing Finance Agency (MHFA), several other members of the administration and several elected officials from both sides of the aisle to come in and speak to us.  The speeches were great and the Q&A’s for the most part were done well too.

So how did I get embarassed and disappointed?  Well this year my state association decided it would be really neat to make big signs and put them on sticks and have REALTORS hold them up while their guests were speaking.  The signs had to do with “living within our means” i.e. don’t raise taxes on the state deed tax or expand the sales tax to include services… both of which are on the table. 

These signs seemed to be a pretty tacky way to reinterate to our guests a position they are already well aware of, as we have a kick-ass team of lobbyists on the capitol.  This was a conference, not a two-bit rally, and to hold these signs up when our guests were speaking seems inconsiderate and unprofessional.  To make matters worse, several of the signs had the same message misspelled!  There was a sign at each table and someone at my table held ours up, much to my disdain.

This alone was enough to get me a little miffed that I paid $50 to be a part of this spectacle, but it got a little more annoying when Chris Galler, Senior VP of MNAR and a great guy, was going over the results of a survey that the association had commissioned regarding taxes.  They asked citizens how they felt about their state government and their current tax burden and then put the results into some great pie and bar charts.

I thought, “hey, this is great to get some feedback.”  Then Chris continued and explained what some of the questions were.  This is one that was asked: “do you think you pay too much , just about right, or too few taxes?”  Can you guess how people responded?  Yep, most said too much or just about right.  Another question asked “State and local government costs you about $.16 out of every dollar you make, do you think this is enough?”  What do you think they said here?  Again, the clear majority said it was enough.  Well crap, the association could have given me the $10k-$20k they paid to get those answers!

When I’m talking to sellers and we’re discussing the commission rates that are available to them, I don’t say to them: “Mr. and Mrs. Seller, I can charge you 6%, or I could charge you more if you’d like… what would you prefer?”  That’s a question alright, but it doesn’t educate them as to why a higher commission brings additional benefits that may have significant value to them.  Without knowing the added benefits, I find it hard to believe that anyone would want to be charged more “just because.”

I sit more in the middle of the road politically, vote Democrat on most issues, and do think that sometimes increased taxes can be justified.  It would have been great to see a report that really probed constituents on their beliefs about taxation for things like affordable housing, healthcare, transportation, etc.  Instead all I got to see was a report that catered to the 80% +/- of my peers that are Republican.

I want my $50 back…

When I got this I immediately realized this was a solicitation that was fired off because my credit was pulled by my loan officer and therefore shows that I’m in the market for a home loan.  While she had warned me about this months before, it was still a little surprising and made me feel a little violated too.   I don’t want people to solicit me when I make an inquiry with someone else… it’s none of their business.  Further, I would never do business with someone like this, or with someone who spams me.  Just won’t do it.

If you don’t want to receive similar offers, contact the credit bureaus and ask to be removed from their “prescreened offers” list.

• Bank Owned
  • The bank has aquired title (ownership) to the property.  The bank is the seller.
• REO or “Real Estate Owned”
  • Can be read simply as “bank owned”
• Corporate Owned
  • Many times this is just another way to say “bank owned”
•  Foreclosure
  • This is the process by which a lien holder aquires the property through court procedures.  Each state operates a little differently, but this process can typically take several months once started and typically does not start until the owner is 60-90 days behind.
• Pre-Foreclosure
  • This is commonly referred to as the time during the foreclosure process but before the sheriff’s sale.  In this time period you are still negotiating with the seller but the bank may have to be consulted in cases where a short sale is needed.
• Short Sale
  • When a seller is in a distressed situation and the offer that is submitted does not cover the expenses to sell the home and pay off the lender, the seller may ask the bank to take a “short payoff” on the loan, meaning to accept less than what was owed.  Banks will sometimes do this because they do not want to own homes, they want to make loans.  Each circumstance is different and the bank is not required to accept any short payoff.
• Sherriff’s Sale
  • In Minnesota, the foreclosure process finishes with a “sherrif’s sale” of the home.  The county sherriff holds an auction where all interested parties make a bid for the home.  Most often a representative of the bank is the only bidder for the home.
• Redemption Period
  • In Minnesota, this is a 6 month window from the date of the sheriff’s sale that the property owner can still occupy the home and if they can get the cash or funding, they can pay off the entity that bought it at the auction (most often the bank) and keep the home.

While everyone would agree that it is a boon for buyers, almost all of those people would also say it is a detriment to the seller.  While the competition is high, that also means that it should be much easier to determine at what price a seller’s townhouse or condo will sell for, given its current condition, view/location, and updates.

In this market sellers that try to argue that their’s is worth more than the one next door because of XYZ will struggle but those that look at the competition and the comparable solds and price accordingly will find that the sales process isn’t as bad as they thought.  Buyers can choose the house in the best condition AND with the best price.  If you’ve got that, you’re home free.

In the days when houses sold in days, if not hours, and there was a huge undersupply of housing, buyers had to act quickly to make an offer on the house the liked the most.  In today’s market there’s no urgency and no scarcity, so the buyer has no outside encouragement to make an offer quickly.  In the last year I’ve worked with two different buyers that have looked at over 50 homes without making an offer.

Buyers need to keep in mind that while choice is nice, it can also cause you to lose focus on what you’re really looking for.  It is important to have a list of your “must-have features” and to really understand what price point you’re comfortable with and stick with both of them.

The buyer interviewed several lenders of his own choosing and settled on one that had appeared competent and had the lowest fees/interest rate and was supposed to close at 1pm on Wednesday.  At 3:45pm on Tuesday, I got an email from my buyer saying that the loan officer could not get the loan closed because of further documentation he needed to provide that was never asked for up until now.  This documentation would have taken approximately 2 weeks to procure.  His email was one of desperation… he thought he was dead in the water!  He said to me: “Aaron, can Edina Realty Mortgage help?”

Cheryl Stuntebeck and I conferenced in with him and they got to working on an application for him, with Cheryl working late into the night on Tuesday.  Wednesday morning came and we find out the original loan officer was refusing to reassign the appraisal, had instructed the appraiser not to assist my buyer, and had cancelled the 2nd mortgage as well.  She told me that she wouldn’t let this file go and that she was going to do everything she could to keep him, though she couldn’t get him closed for approximately two weeks!

Throughout the day Cheryl worked with the underwriter, loan processor, closer, operations manager, site manager and appraiser to see that my client got through the whole process quickly.  Our original closing was scheduled for 1pm on Wednesday… we closed at 5pm that day… barely 24 hours after all of this drama had started.

While I very regularly work with Cheryl on my clients’ purchases, I’ve also had great success with other loan officers that the buyer has selected or that I have recommended.  What has been driven home for me here though is that the relationship with the loan officer (and closer too!) is critical.  In the future if my buyers do not have a previous relationship with a loan officer, I am going to more ardently encourage them to consult one of the loan officers that I have worked with.

The steps to buying a home involves many people throughout the process, any one of whom can either make your purchase a success, drive you nuts during the process, or outright ruin it for you.  I am very happy to have a team that was able to swoop in and save the day with such amazing results.

Radon is a cancer-causing, radioactive gas. You can’t see radon. And you can’t smell it or taste it. But it may be a problem in your home.

Radon is estimated to cause many thousands of deaths each year. That’s because when you breathe air containing radon, you can get lung cancer. In fact, the Surgeon General has warned that radon is the second leading cause of lung cancer in the United States today. Only smoking causes more lung cancer deaths. If you smoke and your home has high radon levels, your risk of lung cancer is especially high.

I was recently working with a buyer who during the inspection process also requested a radon test because he was planning to put an office in the basement and consequently would be spending a lot of time there.  When we received the results back from the test we found out that the levels were significantly above the EPA action level of 4.0.

At first I thought: “damn, this could be really expensive to mitigate.”  After speaking to my colleagues and to a couple of mitigation contractors, we found out that the process is relatively easy and not very expensive at all.

The process typically involves digging a hole in the foundation about the size of a 5 gallon pail and then installing solid PVC piping from the hole up through the roof line, with something similar in size to a bath fan installed in the piping in the attic.  This fan exhausts the radon gas up and out the roof where it dissipates quickly.  In houses that have a drain tile system installed the installation can typically get the radon levels below 1.0 because of the efficiency of the drain tile at getting a broad suction around the foundation.

Once the system is installed the contractor will run a second test to confirm that the radon levels have been brought down within safe limits.  If the level is still elevated, a larger fan typically resolves the problem.

Depending on the contractor chosen and the difficulty of the work to be done, most projects are in the $1000 – $1800 range and can be completed in a day!

The contractor we used for my client’s home was Brad Nyberg from Quality Radon, 612-521-3580.  He did a great job and has nearly two decades of experience installing these systems and has been training others for many years as well.

These clauses apparently state that if a borrow defaults early in the repayment period or if the loan had underwriting defects, such as bad appraisals, that the originator must buy back the loan.  Needless to say that this allows the big banks to keep the good loans and kick back a large portion of the bad loans back to the people that shouldn’t have lended the money in the first place.

While this process will prevent the big banks from hemmoraging too much profit margin, it will put some (or possibly a large number) of the subprime lenders/originators out of business.  Many of these lenders/originators have limited assets and use corporate lines of credit to finance the loans they close until they can resell them to the bigger banks. 

When these banks send these loans back (for failure to pay), this means that the subprime originator has to borrow against their line of credit, reducing their ability to make new loans.  If enough of these loans get sent back, the mortgage originator may consume all their credit line with these bad loans and may not be able to fund closings on their new ones.

Enter the headache for buyers and sellers: Imagine sitting at the closing table waiting for a wire transfer of the buyer’s funds and come to find out that the buyer has no funds because the originator has no money! This scenario will come true, it is just a question of how many originators will have the problem.

In the last few years lenders really softened up their lending requirements, allowing a lot of low credit score borrows to go “stated income” or “no doc” loans which basically paired up risky borrowers with risky loans.  In the rush to make as much money as possible, some mortgage brokers/originators went one step further and either omitted or falsified information on the applications to get buyers approved that shouldn’t have.

Because we are still in a rising interest rate market and we haven’t exited the housing slowdown, there’s still a long time for these loans to go into default and come to the attention of the big banks that bought them.  As more of these loans come under scrutiny, I think we’re going to see much larger problem than many expect.

If you’re buying or selling a home, it is eminently important that you know where the money is coming from and that the lender will still be in business at closing!

Today I now average more than 200 visitors per day to my web site, but alas, I’m lucky if I get one inquiry per day that comes through it.  Then I thought about it… a standard web site is like an Open House in that I’m inviting people to come in to see what I have to offer them (commentary, community information, for sale homes, and sold home search) but it’s an Open House where no one is home.

I’m currently implementing a click-to-chat feature on my site that allows my visitors to quickly ask me a question if I’m sitting on the computer while they’re visiting my site.  I’ve had a couple people use the tool so far and I’m hoping that more of you will take advantage of this feature in the future.

Word of warning to bloggers: several of the submissions I received had unresponsive servers or incorrect URLs…. I tried what I could to find the articles but PLEASE check your blogs for availability and double-check your URLs before you submit them.

This week’s best post prize goes to Kris Berg’s post on Bloodhound Blog for her article: “The Plastic Pig (and How to Pick Your Agent).”  I too am very frustrated with some agent’s inability to service their clients properly and/or their inability to do their job impacting the ability to do yours.

The runners-up include:

Bad Credit Advisor’s contrarian view on the recovering real estate market: “The housing bubble – why I think the real estate bubble is here and going to get uglier”  While I disagree on the conclusions that are offered, it is a good review of the many challenges in our market.

Teresa Boardman, a fellow Twin Cities REALTOR who I have never met but have read many of her articles, presents Keeping Local Real Estate, Well… Local posted at Real Estate Tomato.  You take St. Paul and the East Side, I’ll take Minneapolis and West.  Together we will rule the Twin Cities Blogosphere (muhhahahaaha)

Toby Boyce presents Dear Ms. Seller: Why Would You Sign a Six-Month Contract? posted at Sadie’s Take on Delaware Ohio.  This is a great reminder for agents: the goal is not to get a seller under contract until the end of time, the goal is to sell their home.  If you do everything you can and are truly striving to sell their home, if you can’t do it in 90 days you should be able to establish their trust to get a renewal at that point.  If you can’t do you really want to work with a pissed off seller anyway?

Michael Price presents Mike’s Corner Web 2.0 For Real Estate Pros: How Podcasting Impacts Local Search Relevancy posted at Mike’s Corner Web 2.0 For Real Estate Pros.  Podcasting is a growing force, Mike explains how to work it to your advantage.

Sagar Satapathy presents No Easy Answers To Florida’s Pains posted at Homeowners Insurance Lowdown.  Up here in Minnesota, we have cold and an occasional tornado that may affect 100-200 homeowners a time but we do not have earthquakes or hurricanes… regional insurance issues should be solved regionally… don’t make me pay for your beachfront property!

Athol Kay presents We Can Always Reduce the Price Later posted at The Real Estate Guide. Price it right the first time, every time!

Erik Hersman presents Online Video in the Real Estate Industry posted at Realty Thoughts.  Video can convey more than pictures or text… when it’s done right.  Erik reviews a few different options for agents.

Drew Meyers from Zillow has a review on another new consumer-focused web site on house price analysis, HouseMath 2.0 in the article: “How Much Does Purchasing a House Really Cost?”

Cliff Jacobson presents A Letter From Real Estate 3.0: AmaZoogleBayMart posted at WebHomeUSABlog.  This is a futuristic and what many agents would call “Doomsday” scenario.  Interesting read.

Melanie Narducci presents A Picture’s worth a thousand words, but it’s all in how we say it posted at Condocontessa San Francisco Real Estate.  Yes, some developer sites are way too flashy and miss the point of view of the consumer completely.  Argh.

While the number of listings in the market will rise dramatically, this is also the time when we see the largest increase in buyer activity as well.  Last year from January to May we saw supply increase in lock-step with demand such that the ratio of buyers to sellers remained relatively flat until summer.  If trends remain the same this year we should see the same pattern which means more choice for buyers but also quicker turnover of what is listed for sale.

Here’s a few of the cities that have released the interactive map:
Golden Valley
St. Louis Park
Plymouth
Minnetonka
New Hope
Crystal
Maple Grove
Richfield
Robbinsdale

At its low in July 2006, the index was at 125.  For December 2006 this number had risen all the way to 140.  An HAI of 140 means the median family income is 140% of the necessary income to qualify for the median priced home using a 20% downpayment, 30-year fixed rate mortgage.

Since MAAR began tracking housing affordability in 2003, the record high HAI was 156 set in April 2004.  While we’re still nearly 20% down from peak affordability seen in 2004, we’re also 12% more affordable than we were at the recent local market lows in July 2006.

In December 2006 housing supply remained quite high, at a total of 7 months supply, up nearly 48% from December 2005.  While this inventory is still at record highs, New Listings in the last week in December 2006 were only 2% ahead of the same week in 2005, and Pending Sales were only 1% behind the year-ago number as well.  These figures show that the number of new sellers and the number of new buyers are regaining balance, which may lead to a slightly tightening in the housing supply for 2007 if the trend continues.

While we’re not expecting any dramatic or immediate changes to the Twin Cities housing market in 2007, the consensus from many active agents I’ve spoken to is that the tone of the market has been improving in recent months and there’s great optimism that the very worst of this market correction may be behind us.

To search for homes that have sold in the last two years, click here.

Beginning today the RMLS is now permitting agents and brokers to display basic information about listings that have sold in the last two years on their web sites.  Up until this point consumers were only permitted to view listings that were currently for sale and consequently did not know what they sold for until the county posted the sales price… in many cases months later.  Now Edina Realty’s new tool pulls in new sold information in almost real-time.

As a real estate agent you may think that I would be concerned about giving up what’s been considered the holy grail of information: comparable sold properties.  Far from it, I’m actually quite excited to see our company and local MLS board progressing forward.

The information that we’re publishing is by and large already published by other sources, most notably the county in which the home resides.  Zillow and others currently use this tax data on their web sites.  The big problems with tax data are that it usually takes several months or more to get the sales information posted and the other information the counties have (beds, baths, garages) is often inaccurate.

Enter the REALTOR.  If the information already publicly exists, why not make it easier for the consumer to get timely & accurate information from us directly?  Some agents look at it as we are giving away the farm; I look at it as a way to increase dialog between buyers, sellers and REALTORS.

Information in today’s society is fluid and many times free, but information is worthless without an ability to analyze and interpret that information.  Just as many people use WebMD to look up their physical ailments and self-diagnose, buyers and sellers now do a basic “diagnosis” of the housing market and get a feel for valuation.  But just like doctors, when it’s time to bring out the scapel, or in this case sell or buy a home, consumers still look to a professional to see that the job is done right.

This time of year, most sellers have been on the market for several months (or much longer!) and are growing weary from showings (or lack of them) and are frustrated with the slower tempo of the market.  This time of year weekly Pending Sales are about half of what they are in March, April and May.  As a buyer, this gives you a great opportunity to be a hero to a seller by bringing them an offer that would end their struggle to sell their home before the New Year.  The reward for your heroism is likely to be a lower sales price than you would have received earlier this year or what you may receive next year.

While not all sellers are motivated enough to significantly drop their price, there are good bargains in this market as many of the houses for sale are already priced well.  Very recently I was in a negotiation with a buyer on his first home.  We looked at everything in his price range and this home was far superior to the rest.  We made an offer about $10,000 under its $220,000 asking price but ended up settling on the seller’s counter of $3500 under asking.  We both looked at each other and said “you know, this house is priced right and in excellent condition… it’s worth every penny of $220,000.”  Had the house been greatly overpriced, more aggressive negotiations would have been needed.  My buyer is thrilled with the outcome and closes in January.

If you’ve been sitting on the fence about buying or been thinking that you’ll wait to January to get serious, you may be missing out on the best values in the market!

Why am I so elated with what appears to be bad news?  While this does signal a significant slowdown for builders, this slowdown in activity will help moderate the increasing inventory in our market.

I’ve included a page from a recently published MAAR report which shows the months of housing supply currently on the market in the $250,001-$350,000 price range.  In all but the condominium market, new construction supply is dramatically higher than existing homes.  This exacerbates the stress of lower buyer activity, creating more pricing pressure on both the existing and new construction markets.

With the diminishing numbers of new housing starts, new construction inventory should slowly reduce over the next 6-9 months, which should bring supply down to more manageable levels.  This in turn will help stabilize pricing and bring back consumer confidence in the housing market.

Cheryl Stuntebeck, Edina Realty Mortgage, had this to say about the mortgage market:
“While interest rates are .75% higher than they were at their lows in 2005, the current 6.1875% rate on a 30 year  fixed mortgage is still about 1% lower than the 10 year average.  Many industry analysts speculate that rates will slowly climb higher in 2007, making it prudent to lock in a purchase now.”

She also posed the following comparison:
“If a buyer purchases an average-priced home today, $285,000, with 20% down payment their total monthly payment would be around $1700.  If that same buyer buys the same home when rates are .5% higher, their monthly payment would be  around $1800, an increase of $100 per month.  To put it another way, if rates were to climb .5% that buyer would have approximately $16,000 less buying power at the same monthly payment.”

Earlier this year many sellers were not willing to accept that the marketplace dynamics had changed and that it had become a buyer’s market.  Fast forward a few months and many of those sellers still have their homes for sale today.   Most of them have had to reduce their price one, two or even three times.

Today most sellers understand that we’re in a buyer’s market and are pricing their homes more appropriately; understanding that they need to be willing to make some concessions to the buyer to get their home sold.  This can be  simply taking an offer under asking price or paying the buyer’s closing costs, or can get more creative with the seller paying down the interest rate on their mortgage, prepaying townhome/condo association dues, escrowing money for  new carpet, etc.

So Buyers: by taking advantage of the market today, you can save both on the purchase price and the interest rate while also taking advantage of the largest selection of homes ever available.

80       Average days on market

43%    More listing on the market than 1 year ago totaling 60663.

41%    Of the inventory that has sold in last 30 days has had a price adjustment

5.3    Months Absorption Rate=the time it would take for all the listings to sell if no more homes were put on the market

8      For every sale that takes place, there are 6 more homes that haven’t sold 
 
18     Showings for every home that sells (From Edina Realty appt center statistics)

Here’s this week’s report:
MAAR Weekly Statistics – August 21, 2006

While these numbers are great, it can also be helpful to look at the market as a whole in summary:

AUGUST 2006 CURRENT RMLS STATISTICS MARKET UPDATE

69       Average days on market

45%    More listing on the market than 1 year ago totaling 60663.

35%    Of the inventory that has sold in last 30 days has had a price adjustment

5.3    Months Absorption Rate=the time it would take for all the listings to sell if no more homes were put on the market

6      For every sale that takes place, there are 6 more homes that haven’t sold 
 
36     Showings for every home that sells (From Edina Realty appt center statistics)

In recent years we have seen a large runup in Average Sales Price during the spring and summer months.  This year was marked by much smaller gains, which has lead to us “catching up” with last year’s price.  While this means that sellers cannot expect any appreciation in their home over last year, it also means for sellers that are moving up that their future home will not cost as much as they expected.

This is not a sign of a bursting bubble, this is only a continued ease in the housing market that is bringing more historically common market times and appreciation back into the market.  We’ve been cooling off for several years now and this has sharply reduce the chances for a dramatic price drop.

While this rate drop is a pleasant surprise, buyers should not expect it to continue to drop or to stay this low for very long.  Most professionals in the industry expect rates to resume their slowly upward climb and reach 7% near the end of the year.  Think of this as a great reason to get out and buy a house this week!

Property maintenance issues are high on the list of City Council goals for the community. City staff takes about 40 property maintenance complaints each month, and due to the age of Golden Valley’s housing stock, that number is expected to escalate.

Click here to read more about the proposal from the city’s web site.

State of Minnesota statute requires agents to disclose Agency at first substantive contact, like when discussing your price, terms and motivation, but it can be difficult for many agents to explain Agency before you discuss personal items. See here for the Minnesota Agency Relationships in Real Estate Disclosure Form.

Walking through an Open House without an agent has another potential pitfall. If you decide that you want to purchase the home you see at the Open House and have a different agent write the offer for you, that agent may have trouble collecting their commission from the listing agent, due to a term called Procuring Cause.

Members of the National Association of Realtors participate in a local Multiple Listing Service affiliation, known generally as the MLS. In the MLS there is a published commission offered to Realtors who bring forward a buyer to purchase the listing. So when a buyer’s agent shows a home listed on the MLS to their client, they are assured of receiving a commission if the transaction closes successfully.

Where the problem of Procuring Cause comes in is when a buyer is first introduced to the property without their agent present, as in when a buyer walks through an Open House or calls the listing agent directly to schedule a private appointment. In that situation the listing agent may argue that they were responsible for the buyer making an offer on the home and that the agent that wrote the offer for the buyer had no direct influence on the resulting sale. In these cases, a buyer’s agent may receive only part of the commission normally offered, or may receive no commission at all.

The third reason to be represented by an agent when visiting homes is that an agent working in your best interests will likely point out positives and negatives of each property that you may not have noticed yourself, and can provide valuable insight into specific things to consider when evaluating each home. That consultation may help prevent you from purchasing a home that you may later regret or give you further assurance that the home you picked was the right one for you.

Appraisals are not necessarily an indicator of market value
Over the last few years many sellers have refinanced their homes to lock in lower rates or to take cash out for remodeling, a 2nd home, etc. I have seen some appraisals that showed significantly over-inflated values. If I turn my head sideways, squint out of one eye and hold the comparables far enough away, I could have come to that same number! Likewise, some appraisals can be lower than true value since unless otherwise instructed, many appraisers will stop counting once they’ve hit the value necessary for the transaction. While appraisals are helpful, I rarely see them as the definitive answer of true value.

Taxable values can vary greatly
Many people look to the Taxable Market Value in county records as a benchmark for value. Considering that most assessors are in the subject property for just a few minutes, and maybe see the home every 4-5 years, it is easy to see how the taxable market value can be off by 10% or more. I’ve seen many cases where two nearly identical properties that are just blocks from each other have market values that are more than $15,000 apart.

Homes currently listed for sale (and have not sold) are not your basis for value
Though a house like yours just down the street may be listed for $255,000, if one just like yours sold last month for $240,000, you should expect that your house will sell closer to the $240,000 price point. Just because the sellers are asking $15,000 more for a similar property does not mean they will get it. Price yours at $245,000 and interested buyers will come and negotiate with you instead of them.

Sales activity is changing quickly
Because the housing market is changing quickly, your best comparables will be those that have sold in the last 90-120 days. Sales longer than 6 months ago are ancient history.

Each week, look to see what has just been listed for sale, what has received an acceptable offer (pended) and what has closed. Take a look at how your competition is doing; if many homes are selling in 3-4 weeks and you’re already at 5 weeks on the market, it’s definitely time to reevaluate your strategy.

Price it right from Day One
There are probably 2-3 (or more) houses very similar to yours for sale within a mile or two of your house. If you’re priced even $5000 higher than the other comparables for sale, buyers will likely go and negotiate with them and not with you. If you’re priced considerably higher than you should be, many buyers will not even schedule a showing to see your house!

Many sellers decide to “try it at this price and we can drop it later if we need to.” The problem with that is that most buyers will notice that your home has been on the market for a long time and will perceive your home as being overpriced or having some kind of problem even after you bring the price down to the correct level. In addition, the greatest amount on interest in your house will come in the first 30 days on the market… not the best time to be “testing” a price!

Provide a pre-inspection
If you complete an inspection of the house at the time you list it for sale, you get the benefit of being able to fix some of the problems before a buyer sees them. Additionally, this is a great way to stand out from the competition since your house has already been through a thorough examination, buyers will feel more confident about its condition. It may also speed closing as it eliminates one of the steps in the after-offer process.

I think the biggest benefit for sellers is that it eliminates a 2nd round of negotiation after the offer has been accepted. What would be worse than thinking you’re going to walk away with a certain amount of money at closing… only to find out a week after you’ve accepted the offer that there’s a list of items that are in disrepair and the buyer expects you to fix them? In some cases the inspection turns up such large unexpected problems that the buyer will decide to cancel the contract. Talk about a huge, and expensive, disappointment.

Any offer should be taken seriously
Some buyers are submitting lowball offers. While it may be upsetting to see an offer that is considerably below your asking price, remember that this is a negotiation and that you have a ready, willing and able buyer interested in the home. Talk with your agent about presenting a fair and well thought out counteroffer. An effective agent will work hard with both parties to find a solution that works for everyone.

When an offer does come in
Make sure that the earnest money is enough to motivate the buyer to follow through on the deal; 1% of the purchase price is typically appropriate. If a buyer only gives you $500 earnest money and then does not show up at the closing table, you only get $500 for your troubles.

Ask for the lender to provide a final underwriting commitment well before closing. Without a final commitment from the lender, the day of closing may come before you learn that the buyer can’t secure the financing to buy the home.

Check the loan officer/lender’s credentials. A quick call to the loan officer by your agent to verify the information in the pre-approval letter can sometimes uncover problems that you were not aware of. The pre-approval letter itself provides no guarantees whatsoever that the lender will fund the loan.

For sellers that listed their home previously, they are now forced to reevaluate their pricing in the face of the new competition.  If they do not adjust their price accordingly, any potential buyer is likely negotiate an offer with the better-priced seller.

Moral of the story: stay informed on your competition.

In today’s changing real estate market, strength and leadership is key to success.  Edina Realty has been a leader in the Twin Cities market for years and continues to show its leadership today.  There’s a reason we’re #1!

Some sellers are considering waiting to sell their homes in belief that the housing market will improve.  Yes, the market is definitely in the buyer’s favor right now but this is the beginning of a multiyear trend.  The number of houses for sale has increased each year for the last four or five years, and will probably continue to rise for at least another year.  Houses that are priced correctly do sell relatively quickly.  As interest rates slowly rise, this will put further chill on the market.  Many of the homes that have had to reduce their prices were priced based on 6%, 8% or more appreciation over last year.  In fact, appreciation is 1%-4% and will likely average 2%-3% each year for the next several years. So on $250,000, some of the houses listed are $10,000 or $20,000 high because the sellers think there should be higher appreciation than there really is.  Prices may decline slightly but we are not seeing signs of any dramatic price depreciation… just flat or slight appreciation.
 
The competition that’s in the market means you do need to be competitive with others for sale, and that includes price, location, style, amenities and condition.  So if you price the house with others that have newer appliances, roof, windows, furnace, flooring, etc then you would also need to have those features to be competitive.
 
As a seller it is tougher, but as a buyer you are more in the driver’s seat.  Though you may not get quite a much for your current home, your next home will also be priced lower than it would be otherwise.  If you’re planning a move to a higher price range, it should actually be in your favor.  Additionally, interest rates are expected to rise .5% to 1% over the next 6-12 months, which can take 7%-15% of your buying power away because of the higher monthly payments.
 
So my suggestion would be that if you are planning to move in the next 18 months, then I would strongly consider moving now to take advantage of the good interest rates.  If you’re comfortable for another couple years or more, then I wouldn’t worry about trying to time the market and just move when you’re ready to.

While the change in the market has been easy to see as a buyer, many sellers are slower to understand the new market dynamics. Almost every seller I talk to says they have “the best house in the neighborhood and it will sell quickly because everyone will want to live here.” While agents do their best to educate their sellers about the market realities, many sellers are still not wholly convinced.

So when you see the seller’s home and you decide to make an offer, most buyers focus on the offer price and closing date. While those certainly are critical components, there are many other terms in a Purchase Agreement that are important, especially to sellers.

In today’s housing market you are likely inclined to make an offer below asking price… maybe substantially below asking price. While a low offer may not be what a seller is looking for, choosing the other terms of the contract carefully can help the seller see past the low offer price.

Closing Date. If at all possible, know the closing date that the sellers want and give it to them! Also find out if they need/want several hours, or a day, to get moved out of the house. If you feel comfortable allowing it and have the flexibility to do so, this is an easy way to reduce the seller’s anxiety.

Inspection. When your offer is presented, it helps to already have the appointment for the inspection ready to go and to schedule it as soon as possible. Keep the negotiation timeframe long enough to take care of any issues that come up, but short enough that the seller sees a quick conclusion to the inspection. 2-3 business days to complete an inspection, 1 day to make an repair requests, and 1-2 days to negotiate repairs is typical and preferred. While you can ask the seller to not show the home to other prospective buyers during the inspection period, asking for that provision is likely to upset the seller.

Financing. Sellers will expect a pre-approval letter, but many will also look for the buyer to provide a final commitment from the lender to close the loan. Most lenders can review the title work and appraisal and get final approval from the underwriter in 3 weeks or less. By providing this commitment to the seller, the seller has further assurances that the home will close and close on time.

Personal Property. When making an offer, you are trying to buy a home. Sounds simple, right? The Purchase Agreement is usually not the best place to ask for things other than the appliances listed included in the sale on the MLS printout and Seller’s Disclosure Form. If you’d like to add a special mirror, furniture, additional appliances, grills, etc. it is best to negotiate those items separately after the Purchase Agreement is complete. If you ask for too much or ask for something they have a personal attachment to, you may upset the seller over something that is easily replaceable by you after closing.

Explaining What’s Wrong. If you’re coming in low because the recent sales in the neighborhood show a market value below list price, or because there is extensive repair work to be done, why not explain those things in an attachment or cover letter to the offer? If a house down the street that’s exactly the same sold for less a week ago, mention it.  If the house has old electrical, appliances and roof and all the other comparables had been updated, put in a reasonable estimate of what those upgrades would cost.  Tact is important here, you want to explain your reasoning to the seller without insulting them or their home in the process.

In today’s housing market, you as a buyer do have an advantage, but the seller still needs to want to sell to you. Ultimately the terms you choose to make in your offer will depend on your individual situation and how important it is to you to purchase the home you are offering on.

What does this mean to you as a consumer?

If you are selling your home, expect it to take 60-80 days to receive an acceptable offer.  If you price your home even a little high, buyers are likely to make an offer on the houses that are priced appropriately, rather than try and negotiate you down to the level of the correctly priced homes.

If you are a buyer, you now have more options available to you than this market has seen in many years.  There are likely 2, 3, or more houses that are in the price, location, style and condition you are looking for.  While this does provide you with many options, it may make it tougher to make a decision on just one.  If you’re having problems deciding, it may be easiest to do a side-by-side comparison between the two homes and weigh the pros and cons of each.

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• Active listings at month-end are up 42.9% over March last year
• Closed sales are down 2.2% through March, as compared to last year
• Median sales price is up 2.7% over last year, to $225,000

If you are a seller, this means that there is likely several homes in your area that are currently listed and are competing with your home.  This means that pricing, staging, and condition are critical to receiving an offer.

If you are a buyer, you now have real choice in a market that for years was quite tight.  In this market the nicest homes still sell very quickly but all things being considered, you have significantly more leverage with sellers than there has been in many years.

As we near the end of the year, I encourage buyers sitting on the fence to go out and find your home now while the market conditions are in your favor.  For sellers, keep in mind that a buyer who is looking at houses this time of year may be very motivated… if you take your home off the market till the new year, you may miss the buyer looking for a home like yours. 

For more data on the current housing market, please see the Minneapolis Area Association of Realtors Weekly Activity Report.  For more current information, or for information specific to your area, feel free to call me anytime at 612-251-5599.

While the current number of homes on the market does provide buyers with many options, that does not necessarily mean that they can offer sellers “low-ball” offers and expect them to be accepted.  While there is some bargaining room, especially in areas with lots of inventory, many sellers are remaining firm and receiving their asking price or close to it.

Supply-Demand Ratio – Click here to View

As can be seen on my home page, if a buyer visits this site and purchases and closes on a house yet this year I will provide them with a FREE 1 year home warranty!  Couple that with the strength in buying power due to the low interest rates and time of year and buyers have the potential to save thousands of dollars versus waiting till the spring!

This slowdown was expected.  With the summer half over and interest rates slowly on the rise, Buyer demand is waning.  This is a traditional seasonal pattern that happens around this time every year but it seems to be shaking up Realtors more this year than last.  For Buyers that are still out looking, your options haven’t been this good in many years.  For Sellers, expect that your home will be on the market longer and at 30 on the market you should consider a price reduction.

Even as sales are at and near all-time highs, the number of homes for sale are also high.  There are currently more than 23,000 single family homes for sale on the MLS right now.  That’s more than double what it was five years ago and up double digits from last year as well.  This is a boon for buyers as it allows for more buying decisions.  Sellers are having to realize that most homes no longer sell in the first week on the market.  In fact, I’m seeing price reductions on many homes for sale more than 30 days.  This is not a sign of a “price bubble burst” but rather a very normal market.  Sellers that want top dollar will need to spend more time “staging” their home for sale so that it shows well against the increased competition.

If you read the latest statistics from the Minneapolis Area Association of REALTORS, you will see what appears to be the formation of a maximum in the New Listings and Pendings (offers accepted) data. In a typical year, new listings and offers both begin to slow down as the summer approaches. Last year, the entire summer stayed strong due to the low interest rates. It’s uncertain whether or not this will continue this year or if we will fall back into a more “normal” summer. Interest rates haven’t moved much since last month and the job market outlook is improving so all the signs point to a relatively strong summer season.

If you’ve been thinking about waiting until fall to find a home, consider this: if rates move from their current 6.25% up to 7% by fall, your monthly payment will go up by MORE THAN 10%.

Interest rates have jumped since last month’s lows and are currently around 6.25%.  Most economists and loan officers feel that the lowest interest rates our behind us and that rates will continue to slowly climb throughout the rest of the year.  It still looks like a great year for both Buyers and Sellers!

When buying a home, it is VITAL that you understand the entire process up to and including closing before you even write the offer.  Likewise as a Seller, you not only need to understand what is involved in selling your home, but also have an agent who will do their homework on the buyers who do write an offer on your home so that you know they are prepared as well.

As is typical in a good market, the best homes for sale at the best prices are still being swept up in a matter of days.  I was very pleased to have a home in Crystal sell in 5 days with multiple offers and a townhome in New Hope sell in two weeks with multiple offers.  The sales for the first two months of this year is lagging slightly behind last year’s record pace but are still well above the 5 year average.

The rest of March looks great for both buyers and sellers since we have such a great balance of the two right now.  If the interest rates continue to stay this low, you may see more hurried purchasing in the months to come.

I expect January to be more active than December but there will be an even greater pickup of new listings and new buyers in February and March.  While I am still waiting to see final compiled statistics, 2003 will go in the record books as the best year in Twin Cities real estate history.  With the stock market continuing to push upward, jobless claims continuing to fall, low interest rates, and warmer months ahead, we are shaping up for another strong “Spring Market” for real estate sales.

If you are a buyer, this is absolutely the best time to make an offer… before most buyers hit the market in the coming months.  If you are a seller, you should be working on preparing your home for sale now.  Please see my tips for suggestions on how to prepare your home for showings.