Sellers: Will You Get Paid At Closing?

In recent weeks we’ve seen several mortgage lenders close their doors and others dramatically scale back their loan products, tighten their underwriting standards, and stop funding some closings entirely.  In this market it is especially important that you know who the underlying lender is for the loan.  While the buyer’s loan officer may still be in business, many mortgage brokers do not fund the loans themselves but rather by lenders like Countrywide.

It is worthwhile to check in with the buyer’s loan officer every week or two till closing to verify that there’s still money there when you close!

Well, I was a Buyer!

Through the process of inspections I discovered that my soon-to-be home had some major issues that were either unknown to the sellers, misunderstood by the sellers, or were intentionally hidden.  I don’t know what the real story is and it doesn’t matter since I didn’t have the money to fix what I found and wasn’t sure that I could be certain to fix all the problems there.

Morals of the story:

  • Always get inspections!  I’ve seen how many houses and still missed something big!
  • If you’ve got something wrong (or had something wrong) in your house, disclose it!

I'm a Buyer Too, You Know

After having made an unsuccessful bid to purchase a house via short sale back many months ago, an agent in my office suggested I take a look at a house which I hadn’t considered.

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!

Motivated Seller – Come Back Next Year!

Yes Folks, you read that right!

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!

Snow in June? Really?

In this busy time of year, I see a lot of listings on the MLS.  Amazingly, a significant number of houses are the market 120+ days have snow in the main photo.  I did a random sample of 400 houses on 120+ days and found a total of 14 with snow in the photo.

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?

Jeff Allen is one of the great staff members we have at the Minneapolis Area Association of Realtors.  He’s very articulate and has a great ability to analyze dynamics in our market.  He recently wrote another great article to local Realtors and I thought it would be a good read for all of you too.

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.

This is as Good as it Gets

If you’re a seller or planning to be a seller yet this year, this is the best this market is going to get so you better get going!  Here’s a summary of things to keep in mind.

  • 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.

Wanted: New Sellers

Shameless Plug:

Over the last few months I’ve been selling my inventory rather quickly and with my most recent sale last week I’m down to only 1.5 listings (the “.5″ is a co-list with my good friend, Lisa Dunn).  I’m always trying to keep 3-4 listings active at a time so that means I’m looking for approximately 2 new sellers looking to make a move.

I’ve got some awesome tools for advertising my listings online to get the broadest exposure possible, I have about $600 in camera equipment for great photos, and my full color market brochures really make your house stand out… if you’re thinking about selling, give me a call and I’ll be happy to meet with you to demonstrate how I can sell your home quickly too.

Give me a call. 612-251-5599

Update: Sellers came out of the woodwork in May and early June… I’ve got lots of good inventory now… make sure to check my home page for my current listings.

2006 Twin Cities Sales Activity Report

The Minneapolis Area Association of Realtors puts out an annual report that summarizes yearly activity on both a regional and city level.  It’s jam-packed with information that is great for getting a feel for what happened in the previous year.

In March, MAAR issued the 2006 Residential Real Estate Activity Report.  This is available from their web site directly, but I’ve also seen some agents telling web site visitors that they’ll email them the report only after giving the agent their contact information.  This is a free and publicly available report… you don’t need to give up anything to read it.

Great New Market Statistics from the Minneapolis Area Association of REALTORS.

MAAR released a great new tool that charts sales activity at the city level. The reports cover 100 cities closest to the Twin Cities Metro Area.

This new report tool shows some cities that are seeing dramatic additional slowing of sales activity as compared to last year while some communities have quite a bit more sales activity as compared to last year.

These reports will be updated every month and are a great resource for consumers and agents alike.  You can view the reports here.