Longfellow Nokomis Real Estate Guide

$8000 Tax Credit Helps Sellers Too!

Hurry!  Your time is almost up.  The $8000 tax credit is only for first-time home buyers who close before December 1st.  Do the math...  If it takes 45 days to close after finalizing negotiations on a purchase agreement, that means you need to be in a contract by October 16th.  That's just fine if you are actively looking, but if you are still procrastinating meeting with a lender...uh...hurry? 

Should everyone run out and do this?  Well, probably not.  Don't make long term decisions like buying a home just to get your $8000.  Don't buy a home that you will out grow in two years.  Don't buy a home that you can't afford.  Don't buy a home if you might be moving to Washington D.C.

However, if it makes sense for you to buy a home in the next year, then I'm talking to you.  HURRY UP!  You might not find a home.  You might decide not to buy after meeting with a lender or real estate agent (I know a good one by the way).  But if you want to have the option, ACT NOW, or the decision will be made for you.

And if you're a seller, the time-line is even tighter.  Do you want the buyers rushing to find a home before the deadline to have your home to choose from?  Or do you want to miss the boat? 

Not sure what your home is worth (who is anymore?)?  Not sure if your home is in the price range first time buyers are looking in?  Not sure if you should replace that shag carpet and flocked wallpaper?  It's time to figure it out.  Call your agent this week.  Did I mention I know a good one?

Too Busy to Blog

Dear Blog,

I'm soooo sorry.  This Spring has been crazy busy, and you've paid the price.  Good homes in popular neighborhoods are being snapped up like it's 1999.  But really Blog, it's not my fault.  If more people with good starter homes would put their homes on the market at appropriate prices, then I could get my buyers into those homes and have more free time to spend with you.  We could blog about which businesses haves closed (Firefly, Isabel's, Re Gifts) and which have opened (Nokomis Yoga, Nokomis Pet Clinic, Pizza Joe's).  We could post pictures of the first blossoms of Spring.  But alas, more of my Nokomis and Longfellow neighbors will need to take advantage of this market first.

Housing Shortage?

What?  That's crazy!  Haven't you heard the news?  It's a buyers market, the market is flooded with foreclosures, and banks aren't lending money.

Well maybe not.  First, banks are lending money.  I've yet to have one qualified buyer turned down for a loan.  Underwriting is taking a little longer, and sometimes they are raising issues the day before closing, causing a delay, but they are still making loans.

Second, listings are down.  Plus a big portion of the listings that are out there are in foreclosure and in poor condition.  Because of changes in the lending industry, first time buyers are almost exclusively buying with FHA loans.  FHA has certain requirements for the condition of the homes it will back a mortgage on.  Most of the foreclosures don't qualify.  So the fanciable inventory is down even further.

Third, who wants $8000?  Any guesses?  Give up?  The answer:  everyone.  This means more buyers.

This is creating a situation where the number of qualified buyers is out growing the number of attractive fanciable well priced homes.  We are seeing homes sell in a week, in a day, in a few hours.  They are all well priced homes, so don't confuse this to mean that your home is actually going up in value.  Buyers still have high expectations for what they can get for the money.  But your chances of selling may be better than you thought.

I'll List Your Home For Free!

   

There have always been choices when it comes to hiring a real estate agent.  From do it yourself brokers that put your home on the MLS with pictures you provide for an upfront fee, to full service companies that charge up to 7% of the sale’s price.  Then within each company there are many different agents with different styles, experiences, talents, and ethics.

It’s a lot for the consumer to sift through.

I want to discuss one of the options:  Free.

There are several companies and agents who are trying out a plan where they charge no commission to list your home.  In turn you must agree to work with them on the purchase of your next home, where they will be paid a cooperating commission from the listing broker of that home.

And they do everything a full service agent does, except for open houses.  But you are free to hold your own.

Yeah, right.

Trust me.  Don’t expect them to do anything other than put your home on the MLS and put a sign in your yard.  And they may charge a fee for that much.

Here’s why I don’t like it:

1)        It’s not free.  You still have to pay the cooperating broker that represents the buyer.  That’s typically 2.7%.

2)       You’ve now entrusted what’s most likely your most valuable asset to someone who has told you that what they do is of no value.  If it was of value, they would charge you for it.  I’m willing to cut your hair for free.  Any takers?

3)       Saving $6,000 in commission and then selling your home for $10,000 less than a good full service agent could negotiate for you is hardly a deal.

4)       You have a no-value, limited-service agent on your side.  The buyer may have a full-service, full-value agent on theirs.  Good luck.

5)       The financial incentive of your agent is not connected to the price of your house.  It’s only connected to the price of the next home you buy.  Their best case is to under price your home and sell it quickly at minimal expense to them. 

And remember, I’ll LIST your home for free too.  But I will charge a commission when I SELL it.

Things That Go Bump in the Night

Your haunted house is the prefect place for a Halloween party.  Other parties have to spend lots of money creating the illusions of ghosts and ghouls.  It takes lots of wires, motors, and smoke machines.  You, however, were lucky enough to end up with a truly haunted house.  Sure the spirits keep you up at night, but all your friends say you have the best Halloween parties.  I mean, no one is willing to spend Christmas at your place.  But once a year, October 31st, it's all worth it.

But now, you decided to take a job in Salem and you have to sell your home.  Do you advertise that it's haunted?  Perhaps people will pay a premium for poltergeist.  Or do you paint over the bleeding wall and keep it all a secret? 

I'm not going to tell you what to do, but you should familiarize yourself with the law.  The state of Minnesota requires a nine page disclosure.  In which, it is necessary to disclose any material facts that would affect the normal use and enjoyment of the home by any future buyer.  But you are in luck.  There are a few exceptions to this rule.  And one of them is haunted houses.

Page 9, lines 39-42:  There is no duty to disclose the fact that the property...was the site of a suicide, accidental death, natural death, or perceived paranormal activity.

But I assure you, after the new owners move in and meet the neighbors, they'll learn all about your paranormal parties.  And expect their lawyer to come knocking, regardless of duty to disclose.

I'll rent it for a year!

When I talk with homeowners about the price to list their homes, they almost always want to list it a little higher so they have "negotiating room." Unfortunately, in this market adding 5% above where you "should" be listed is enough to price you out of the market, and decrease your showings. 

I've been meeting homeowners who purchased a home 4-5 years ago, took out a line of credit on the home and spent considerable money fixing it up and want to sell it at a profit. Lately, it seems I've been the bearer of bad news. Most of the profit the homeowners where hoping to realize, is eatin up by closing costs so they won't get the profit they were hoping for, and in fact it's likely they'll need to bring $5,000-$10,000 to closing.  In response to that they say "I'll just rent it for a year!"

There are no current market indicators that show home prices in the Twin Cities will appreciate 5% in the next year so these homeowners can sell and at least break even. All this year I've been saying "it will take until the end of 2009 to even out." I'm not an economist, but I do know how much inventory there is on the market and how long it takes banks to sell foreclosed properties.

If you're a homeowner who is planning to rent your home for a year, you may want to plan on renting it for at least 2 years to make it worth waiting. 

Then, bone up on landlord requirements and save some money to fix the house up again before you put it on the market. Here's a workshop that's a "must attend" for you brave souls entering into the land of landlords:

Rental Property Owner Workshop

Sponsored by the Minneapolis Police Department and Housing Inspections

Thursday, October 23, 5-9 pm
St. Mary’s Greek Orthodox Church
3450 Irving Ave. S, Minneapolis

Pre-registration required. Cost: $20 if registered by Oct. 16; $30 thereafter. The fee covers a manual and other materials, a DVD on Housing Court and a box meal.

This 4-hour workshop includes useful information on:

• The ABC’s of property management
• Dealing with tenant behavior issues
• Tenant screening
• Effective leases
• Housing Court
• Working with the MPD and Inspections
• Much more

The workshop is particularly helpful for new owners and those owners/managers who are having problems at their properties. There are more details and a registration form at http://www.ci.minneapolis.mn.us/safe/workshops.asp.

Another Tip to Sell Your Home Quickly

My colleague and fellow blogger Karin Rockstad posted excerpts from a Wall Street Journal article about selling your home quickly. As I read it, I thought about a number of different things happening in the Minneapolis real estate market to add to the list.

Avoid "allowances." The MLS is filled with statements like:  "$2000 allowance for carpet" or "Seller will negotiate building a garage." or "Seller will replace washer and dryer with acceptable offer." When I'm acting as a buyer's agent, I can tell you these aren't enticements to show your home. Instead of thinking "Great, my buyers will get a deal!" my reaction is "Why didn't they replace/fix/repair [fill in the blank] so the house is ready to sell?"

Buyers have the mindset that they are going to get a deal on the price of the house. The media has drilled it into them. Why, oh why, would you give them more ammunition to haggle over the price of your house?

Getting a house ready for the market is no small feat.  It takes time, money and energy. I understand the thinking. As  a seller you think: "the person that buys it will change it anyways" "I don't have the time to deal with that right now" and "I don't want to spend the money to replace that."

Imagine for a moment you're the product specialist at Target. Instead of marketing your home, your job is to sell lawn furniture. What would happen if you put an ad in the Sunday Star and Tribune that said "Lawn furniture for sale. For sale as-is with no warranties. It was in our warehouse, if you offer to buy it we will fix the torn upholstery, repair the scratches and clean it."  You'd have to wonder why a consumer would offer to buy it when sitting right next to it is a shiny new lawn furniture set that's ready to go. Perhaps you would get an offer from the bargain hunters who were looking for a steal on lawn furniture.

This scenario holds true for marketing your home too. To correctly price your home, you already have to beat the competition (price it lower).  Unless you don't mind discounting further, don't stop short of getting it ALL THE WAY ready for the market.

Selling in the Summer?

Nothings worse than stepping in to an unheated home in January.  They may have just refinished the floors, but no way am I taking my shoes off.  My toes are cold enough in here with them on.  The homes that show well in January feel warm and cozy.  It's a great time of year to try the old "bake cookies before a showing" trick.

Just the same, it's really tough to show a hot stuffy house in the summer.  No one wants to stay long.

If you have central air, now is the time to show it off.  Nothing feels better than walking into a fresh cold home during a hot afternoon of driving from one hot house to another.  Heck, if you've got a couple of showings scheduled in the same day, turn the thermostat down a couple of degrees.  Not only will the air conditioning show off the features of your home, it will make a buyer think twice about buying any home without it.  If your home is too comfortable, they may not want to leave...and that's a good thing!

You want to look at houses in this weather?

This photo is a very close approximation to the look on my face when I realized I would be outside showing homes this last weekend. Only the hardiest of home buyers venture out into the artic weather to look at homes. When it's double digit below zero windchill it doesn't seem to matter how many layers you have on, it's skin-burning, eye-watering, bone-chilling cold. The silver lining was we were looking at longfellow and nokomis listings.

Sellers, if you have a home there are a few things you should know about selling this time of year.

• I understand your need to reduce costs and turn down the heat.  Two things will happen as a result. First, I'm not taking off my shoes to walk on the cold hardwood floors in 0 degree temperature. Second, the buyers don't take long to look at your home. Even if it's the best home we see all day, we may not realize it because we don't stick around. It's too cold even for us Minnesotans. If you have to turn down the heat, don't go below 65 degrees or so. We may have our coats on, but we've removed our shoes and there's nothing worse than cold feet.
• BIG RUGS.  If there are three or four of us coming in your front door at the same time, make sure your front rug is big enough to accomodate all of us and our shoes. We really try to be respectful and make sure we don't drag in muddy snow.
• Cold metal burns fingers. It hurts. The showing agent (ME) is likely to be inflicted with pain if you have numerous keys in your lock box that aren't marked. The showing agent will fumble through the cold metal keys to try to get your cold metal door knob to turn.  Likewise, if you have both a deadbolt and a locked door knob, please provide the keys for both. Don't make the showing agent run around looking for another way to get into your home because both keys aren't there. It's cold!

It's Monday and I've recovered. Good thing since I'm doing it again today!

Thank you to francis baby for the cute photo.

Sellers-4 ways to beat your competition

You learned this in high school: Increased inventory decreases demand and puts downward pressure on prices.

We all seem to know this basic economic principal but we don't practice it. We know there are more houses on the market in March and April. Yet, most sellers wait until March and April to list their homes, when there is the most inventory on the market.  They list their homes during a time when they are least likely to be seen!  I tell my clients who are planning to sell their home to take advantage of this economic principal and get their home on the market early.  If ever there was a year to take advantage of this rule, this would be the year! With incredibly low interest rates, and speculation housing prices are close to reaching the "bottom," it's prompting buyers back into the market place.

The goal is to have a strong offer on your home before the end of March- BEFORE there's a sharp increase in the number of listings. To take full advantage of this basic economic principle

1.  Price it right. This is not the time to test the market or play games by trying to list it higher so you have negotiating room. You have a small window of opportunity and to take full advantage of it, you need to hit the market priced correctly.  Know your competition and make sure you're the best deal on the market.  Remember, in less than two months it will be MUCH more difficult to be the best deal on the market, because there will be so much more competition!

2.  Make sure your home is perfect. If it's broken, fix it. If it's green or purple, paint it. Get a pre-inspection and address anything that comes up on the inspection. Polish and spit shine your home to perfection. You'll be one of the few sellers who do, and you'll have an advantage. 

3.  Have your marketing plan ready to go. Make sure your internet ads, brochures, sign in the yard, flyers and print ads are timed to be published on the day you go on the market.  Then, follow up on week two with another spurt of marketing. New listings get the most attention. Make sure your home stands out! The pace of the market has been slower, and real estate agents in turn operate at a different pace than three years ago.  Make sure your agent is willing to hustle to make sure everything's ready to go BEFORE you're listed in the MLS!

4. After week 2 re-evaluate. Listen carefully to the market. Look at the number of internet hits and other exposure your home has recieved and ask yourself why you haven't yet gotten an offer. One of your strongest points of negotiation as a seller in this market is the number of days you've been on the market. You must re-evaluate early, and make the necessary changes to get yourself an offer. Changes might include making changes to the home, terms you're willing to accept, or yes, a price reduction.