Flipping the calendar to 2018 brought a surprisingly quick start to the home buying and selling season here in frosty/not frosty/frosty again Minnesota. Homes are being listed and brought under contract quickly – and across all demographics – which once again demonstrates a strong appetite on the part of home buyers. As you stare out the window waiting for the car to warm up and maybe ponder a sale of your home – to feed the growing mass of home buyers searching in vain for a roof to put over their head – here are a couple of important steps for home sellers to consider.
Offer Price and the Bottom Line – I approach the home seller enthusiastically, a smile on my face as I prepare to present them with the opening salvo in the negotiations. I prefer structure and order, so I start at the top of the purchase agreement…the seller wants to know one thing: “HOW MUCH?!”. If the number on line 35 of the Minnesota standard purchase agreement is close enough to their asking price, I might get a smile. Then we start counting backwards….every home seller should have a copy of the a net sheet in their possession – taking a sale price and subtracting any outstanding mortgage, property taxes, commissions, and other closing expense. The bottom line number on that sheet is the most relevant figure as it gives you the best estimate of the funds you’ll have burning a hole in your pocket as you walk away from the closing table.
Earnest Money – High on the list is the pledged amount that accompanies the offer. Whether it’s called a deposit or earnest money, this serves to instill confidence that when you are evaluating the offer you know that it’s backed up with more than wishful thinking. If the amount is greater than the customary minimum (generally 1% of the sale price), it’s a signal that the would-be buyer is more than just a little serious about completing the transaction. It’s still in the best interest of the seller that they demonstrate their financial ability to deliver on the deal (along with a pre-approval letter from a qualified, reliable, and locally based lender). Important to note, earnest money doesn’t necessarily constitute a guarantee of a sale. There are a number of ways a buyer can cancel a transaction and retain their deposit – your agent should make these clear to you, one of which is the…..
Inspection provision – Almost every serious offer will be contingent on the property passing a thorough inspection—but this is a risk element that’s largely controllable by the seller. It’s the reason some Saint Paul sellers get ahead of the game by investing in their own inspection before listing. Twelfth-hour discoveries of issues that could have been fixed beforehand can throw a big bucket of cold water on a transaction that had been proceeding smoothly. If a condition has been properly disclosed in advance, evaluating an offer will include verifying acknowledgment of disclosures and which steps are necessary to get a deal done!
Everything else – An offer may have any number of other provisions, so properly evaluating an offer means carefully weighing the practical impact each may have. The timing elements can be crucial. Stretching out the closing date can be inconvenient and add a degree of uncertainty. Pushing for a quick closing may create an interim “no-place-to-live” situation and that can be awkward and expensive! An offer that is contingent on the sale of the buyer’s home adds a degree of uncertainty that needs to be evaluated with knowledge of that area’s specifics. Lastly, your buyer’s lender will want to appraise the home to ensure they (and you) are getting what they (and you) are paying for. Successfully traverse the field with all of these landmines (hopefully your agent is walking alongside you with a map) and you will enjoy the “slide the keys” moment at the closing table!
Success in evaluating an offer for your home—or comparing multiple offers when that thoroughly enjoyable situation occurs—often means a lot more than a simple yes or no decision. Coming up with a strategic counter-offer is often called for—and that’s when there’s no substitute for having an experienced agent by your side to help fashion a strategic win-win counter offer.
To discuss these important steps for home sellers and all the other steps that will result in the successful sale of your property, give me a call to arrange a no-obligation consultation at (651) 251-4898 or email me at firstname.lastname@example.org.
Across the U.S., first-time home buyers have been staging a disappearing act for a worrisome long time. The causes were pretty universal across much of the country: a sluggish economic recovery and tight labor market contributed to the national phenomenon. Rises in Saint Paul residential prices haven’t helped those seeking to become new homeowners locally.
For Saint Paul homeowners who follow such things, the phenomenon was slowly becoming a worrisome fact—one that didn’t look like it was going away anytime soon. When you own a home, its value as collateral and at sale depends on a healthy real estate market—one that supports sustainable activity.
That means that new buyers should appear in numbers at least equal to those who seek to sell and move on. If fewer and fewer new buyers appear…well, that can’t be good over the long haul. The fact that the percentage of first-time home buyers had been dwindling for three straight years was the statistical equivalent of fingernails on a blackboard.
The new edition of the National Association of Realtors’ 2016 Profile of Home Buyers and Sellers is the annual compilation of activity across the nation. The Profile has been a yearly fixture since 1981, making it the longest-running continuous series of measurements of who is buying and selling residences in the United States. If you are taking a reading of the market, it’s one of the most valuable gauges out there. But even before the recent reports of returning economic optimism, it’s now clear that a reversal had been underway for a while. This latest Profile marks a turnaround in first-timer activity: they’re back.
Saint Paul real estate watchers were already well aware of the continuing gradual rise in U.S. home prices, but the new information shows a bounce back toward a more normal market makeup. A second move in that direction also surfaced: the proportion of single female buyers, which also had been on the decline, showed a return toward normal. According to this year’s report, their numbers increased to about 17% of total purchases (not including investment and vacation home purchases). That is slightly more than twice the number of single male buyers—which is close to what is normally expected.
For first-time home buyers as well as others in all categories, the majority given for choosing homeownership was a traditional one: the appeal of owning a place of their own. Also frequently cited was “renter fatigue”—a phenomenon that surfaces whenever homeowners are seeing their equity on the rise.
This all comes as cheering news as we head toward the new year. If 2017 looks to be a year when your own Saint Paul real estate plans come into focus, I hope you’ll consider giving me a call to discuss how I can help turn those plans into reality!
Last week I added a new Eagan listing to the MLS, and the reaction from the buying public reinforced the notion that the market is ripe with first-time home buyers ready to pounce!
Conveniently located (and priced to move at $249,900) near 35E and Diffley Road, this 4 bedroom, 2 bath split home offers a tremendous opportunity for first timers to take advantage of the continuing low lending rates and land in a great spot!
The upper level features a modern kitchen with tons of storage and counter space. Granite counter tops highlight the room which clearly provides both function and style to the property. The kitchen sits adjacent to an informal dining room and large living room. Updated windows provide ample light throughout this level, which also has two bedrooms and a full bath AND opens to a nicely sized deck that overlooks the patio and backyard.
The lower level is where the family gathers and your guests will stay, with a nicely sized family room and adjacent den perfect for relaxing or entertaining. Two more bedrooms and a bath make this the right home for a larger family or those that enjoy hosting out of towners.
The 2 car garage is loaded with storage space and shelving, and is attached so your walk to car is short and warm during the winter months.
This home is already with hit with house shoppers in the South East Metro. If you or someone you know is looking for value, location, and comfort please reach out to me ASAP to get a look at this new Eagan listing…before it is gone!
It was fairly clear that the table had been set for last week’s Federal Reserve meeting to result in a minimal rise in mortgage interest rates. Their Fed Funds rate directly influences the mortgage interest rates that banks observe. Since real estate activity – in St. Paul and around the country – can be spurred or dampened by the monthly payment amounts mortgage lenders offer applicants, this national story has meaningful local repercussions.
It wound up as a non-event that nonetheless spawned action—albeit in a minor way. In May, Chair Yellen had said that a rate increase would be “appropriate” over the summer months. In the lead-up to last week’s meeting, other Fed governors had strongly implied that it was now time for a slight Fed Funds bump.
Still, most commentators kept their prognostications vague; they had been vociferously anticipating a move for many cycles, only to hear serial postponements from the Fed. In addition to having been burnt before by Fed head fakes, there was also another reason why a no-go might happen this time around. Regardless of what the jawboning had been, economic and employment growth was still stuck in first gear—and a rate hike could retard improvement.
The commentators weren’t wrong to hold fire. Once again, the Fed did nothing (except make even more noise about an interest rate hike…later).
Yet, even so, the market forces that nudge mortgage interest rates one way or the other did seem to react. After the non-announcement, rates barely budged at first—but then continued steadily lower (the lowest in weeks, in fact). By week’s end, the Mortgage News Daily announced that the string of moves had brought mortgage interest rates into a “post-Brexit range”—similar to the conditions “that sent rates plunging toward all-time lows.”
The reasons last week were less than certain, although frustration with the Fed’s lack of coherence was fairly unanimous. CNBC interviewed big time investment manager Bill Gross, who said that investors were left “very confused” by the meeting’s outcome. He pointed to the likely rate raise that Yellen had emphasized at last month’s Jackson Hole speech, as well as to Fed Vice Chair Stan Fischer’s earlier assurance that there would be two hikes this year.
All this left Saint Paul mortgage interest rate watchers to make their own assessments about what to expect for future conditions—most importantly, whether current favorable low interest rates could be counted on for long. There had been at least one indicator that optimists could welcome. Almost unnoticed was a footnote to the Fed’s announcement. Back in June, the Fed had predicted the lending rate to end 2016 at .9 percent. It now said the likely number would be .6%. That would result in mortgage interest rates still comfortably in the historically low range—hardly a flashing red light for would-be borrowers.
Wherever the Fed heads eventually, it’s indisputable that right now Saint Paul mortgage interest rates remain fetchingly low—creating rare opportunities for buyers and sellers both. Why not give me a call to explore how you can take advantage today?
The first Monday of the month is set aside for bill paying, otherwise known in our house as “You Spent How Much on What?” day. Full disclosure, that’s a sentiment that travels down both sides of the street (inserted in order to preserve marital harmony). Monday #1 is also known as Why Does It Have to Be So Difficult Day?!
That second designation stems from my frustration with trying to solve problems via a conversation with a real human being. More and more, I find myself being sucked into a whirlpool of automation when all I want is to speak to another person.
Listen, I’m not one of those guys that wishes we still used rotary phones and leaded gas. Advancements in technology are good things. I like “pay at the pump” and being able to avoid the movie store (for both pick up and drop off) by down loading the latest offerings. You also know I’m a fan of newly constructed homes (done to scale, fitting in the neighborhood, etc), and being able to track my kids’ whereabouts via the phone is chillingly satisfying.
Monday, I decided the time had arrived to approach my lender about the private mortgage insurance premium (PMI) we’re paying each month. I don’t know about you, but I can buy a lot of hockey equipment with another $175 in my wallet each month.
If you’re paying mortgage insurance (and many home owners are), once the principal balance of your loan is 78-80% of the home’s value you may be able to eliminate the PMI.
The process with my lender is fairly straightforward – send them a letter indicating you’re desire to eliminate the PMI and a check to pay for an appraisal. They order the appraisal, and if the loan balance meets the 78-80% benchmark the payment is eliminated.
Easy right? Unless you spend all morning trying to reach a human being to communicate the message!
Automated dead end
Automated dead end
Check clock to make sure it’s business hours
Automated dead end
Check calendar to make sure it’s not a holiday
Automated dead end
Blame cat, call branch office and leave message.
To their credit, I did receive a return call – two days later – from a real person.
We’re not in a place to refinance (can’t go much lower on the rate than we already are), nor do I have any interest in moving. So I’m not compelled to find a new lender. But I am compelled to take them off my list of vendors I share with clients. Too bad, there was a time I believed they provided great customer service.
The moral of the story – to me – is twofold.
First, if you’re in the business of providing a service, provide great service and make it easy for your customers to connect with you. They’ll spread the word and you’ll benefit.
Secondly, it’s up to you as the consumer to send the message that it’s not ok to be treated like I was AND you should do something about it!
And don’t blame the cat.
I’m a real estate junkie. I love reading about housing trends, issues, quirky stories and – of course – keeping up to date on the latest data from our local market. Knowledge is power (I didn’t make that one up), and I think it’s important to have a firm grasp on the industry in order to provide the best possible guidance and service to my clients and friends. That’s why I try to stay on top of the latest real estate news.
So where do I go to get my real estate news? My “favorites” are a pretty eclectic mix of local housing data, national industry news, and cool or quirky out-of-market stories.
The first stop is always the local association updates. The Minneapolis Association of Realtors (MAAR) and the St. Paul Area Association of Realtors are great sources of information for REALTORS and consumers. Reams of housing data, links to important real estate resources, and my favorite – The Skinny – a brief yet informative video that’s easy for the consumer to digest.
If you want great coverage of the local single family, multi-family and commercial real estate industry, my favorite read is Jim Buchta’s Just Listed blog for the Star Tribune (and his regular coverage). Jim’s updates are always timely, on point, and he tells a great story. He’ll get you the down and dirty housing news one day, and a cool feature on the history of homes on one Lake of the Isles lot the next. It’s great to have a local journalist with his finger on the pulse of the industry.
Also found on the Star Tribune website is Reuben Saltzman’s The Home Inspector blog. Ruben is with an inspection firm called Structure Tech, and while I’ve never met Reuben personally, I have had the pleasure of working with a number of the Structure Tech staff. They are fantastic inspectors, and all come with a load of personality – which isn’t hard to imagine if you read Rueben’s blog. I’ve seen some crazy things in homes over the years, but many of them pale in comparison to some of those documented by Reuben over the years!
My favorite national industry outlet is called Realty Times. The site is a clearinghouse for news, advice, tips for buyers and sellers, data and opinion pieces from agents and industry experts. There’s a lot going on with that site, but if you come in with a plan you can usually find the information you’re looking for.
You know what else is great? When the local TV News Guys reach out to your favorite REALTOR for some dynamic insight on the spring housing market….handsome guy!
Finally, if you’re interested in learning more about two of the industry’s more dynamic markets, check out the real estate coverage in the New York Times and LA Times. In The Big Apple, a view of the river can be bought for a mere $15.5 million. That puts things into a little bit of a weird perspective. Also, don’t we all let our 13 year old pick out a $14 million apartment? Out in Hollywood, the real estate wheelings and dealings of the rich and famous are always fun to follow. Amazing views and architecture along with price points most of us can only dream about.
Factual and frivolous, these are just a few outlets can that can expand your knowledge of the housing industry.
What a stuffy name for a blog post! And wholly unoriginal to boot. But, since the business of buying a home is a serious one I thought it was appropriate to run through the key factors for St. Paul home buyers and sellers in as formal a manner as I can.
Which is pretty informal. So I apologize ahead of time.
Let’s boil it down to FOUR big things that will impact your home buying and/or selling experience in 2016.
- MONEY! – Doesn’t it always come down to money? Actually, yes it does. And it should, because buying a home is darned expensive…so if you can be wise with your dollars….well that’s smart. Shop wisely when it comes to a lender. I think the decision you make to work with a particular bank or mortgage broker is second only in importance to the home you choose (well… and that’s after the whole “picking a REALTOR thing”). Talk to them about rates, products they offer, the type of loan you should look at, what you’ll need for a down payment and ORIGINATION AND LENDING FEES! I throw that one in using capital letters because that’s a piece of the puzzle the consumer doesn’t pay enough attention to. Lending regulations clearly dictate that you (as a consumer) will be thoroughly informed of the cost of getting the loan at the start of the process. You should ask a lender to clearly lay out the expense to you and then you should shop around. Look for a lender that can explain the process from pre-approval to close in a clear and concise manner. Make sure you’re comfortable with what you hear and then consult with your favorite REALTOR before moving forward. I have a network of great lenders you can talk to (and strong feelings about many), don’t hesitate to ask for their contact information before you lock in on one.
- Bare Shelves – Old Mother Hubbard went to the cupboard, looking for a home to buy. When she got there, the cupboard was bare….except for the bank-owned property that leans slightly to the left and doesn’t have any pipes or floors in it. THE HOUSING INDUSTRY NEEDS HOUSES TO SELL! I’m not kidding, just today a client gave me a list of criteria for a new home. I plugged those criteria into the MLS machine and it spit out THREE houses! One of which I mentioned in the first sentence of this paragraph. The inventory of homes on the market remains limited, and that means the ol’ supply and demand curves are shifted towards the sellers. There is tremendous competition for properly priced homes. Some neighborhoods feel more pressure than others (hello Mac-Groveland), and it is not uncommon for sellers to field multiple offers shortly after listing. Good for sellers….actually really good for sellers so if you’ve been thinking of selling call me…but bad for buyers. Get ready to compete for that dream home, start searching under the couch cushions for more money because you’re gonna need it. I hope the onset of spring brings more sellers out of their hibernation and we get some homes on the market. I expect that to be the case but buyer demand – especially for first time home buyers who are finally figuring out that renting stinks – is huge. Low interest rates, reasonable home prices, and high buyer demand. The potential is there for a busy season but it won’t happen if we don’t get more signs in the yards!
- Location, Location, Location! – My home base in Merriam Park offers me access to a number of great neighborhoods in St. Paul and South Minneapolis. With a couple of kids and a strong desire to avoid dishpan hands, my family dines out more than we should. It is important to live in a place that we can live in….if you know what I mean. A home buyer should be on the lookout for schools, retail storefronts, dining, coffee shops, parks, all the things that round out your life (unless you’re my 14 year old son and all you need is a nearby Jimmy John’s and speedy Wi-Fi). With limited inventory and healthy home values, sometimes the most desired neighborhoods are tough to access. I encourage my clients to think outside the box when it comes to location. I love Como for first time home buyers. Great housing stock, cool shops and restaurants popping up everywhere, parks and green space, and easy access to both downtowns. Maybe you work in downtown St. Paul – have you ever considered West St. Paul? Take a quick trek across the High Bridge and drive around. Again, really solid and affordable housing stock in a neighborhood that just keeps getting better. South Minneapolis, Midway, and Newell Park in St. Paul are great options for first timers too. As a REALTOR, I take pride in being able to help my clients uncover areas they may have never considered.
- What Do You Want? – And more importantly, how badly do you want it? With limited housing supply and stiff competition, home buyers are finding out that they have to shorten the list of things they absolutely MUST HAVE! A 3-car garage in the heart of South Minneapolis or St. Paul. How do you feel about tearing down the existing garage and building your own? Master Suite? 3rd (even 2nd) bathroom? Granite counter tops? Open floor plan (thanks HGTV)? All of the above regularly find their way onto my client’s list – and they’re all great features in a home, but hard to find under one roof sometimes. My advice, be flexible. Consider taking on some post-purchase renovation projects or plan on bringing a little more money to the closing table. More than anything, work with a REALTOR who can not only scour active listings on the MLS, but also beat the bushes and network like crazy to uncover a home that may not be on the market yet!
Those are four important things to keep in mind when buying or selling in 2016. The list could on much longer, and I would encourage you to call me at (651) 251-4898 or email me at email@example.com with your questions about home shopping and selling.
2016 is going to be a great year to make a move, and I’m hoping you sell your home for the right price and as quickly as possible. And for those of you looking for a home, get in touch with your favorite REALTOR and let him help you find your place (tag line courtesy of RE/MAX Results)!