Twin Cities Real Estate

Staying Neutral

Showing houses this time of year defines for a buyer the conservative and liberal nature of neighborhoods.  I encourage sellers when they are listing their house with me, not to display anything that would define their religious or political persuasion. You might not believe this, but a buyer can eliminate a property based on the "vibes" they get from the house. I showed a house where there hung a picture of the owner standing in the oval office next to the President.  My buyer did not like the President and told me he did not think he would like the seller.  I asked him if he was planning on becoming friends with the owner. Does it sound silly?  Yes.  Does it really happen?  Yes.

 

The best way to show a property is neutral.  Even too much sports memorabilia can do in a house.  A few years ago I showed a house in Eden Prairie.  When we got to the basement, it was very apparent who the seller was.  He played for the Vikings and had been traded recently.  Framed on the walls were all the jerseys of teams he had played for.  He had more beer signs behind the bar then I can remember seeing before.  Was it difficult for my buyers to see this room as their children's play room?  Yes.

 

Even teenagers who want to express their opinion of the world need to "cool it"when the house is on the market. A buyer carrying around a six month old baby believes their child will never become someone who would hang such posters. 

 

People walking through houses cannot eliminate items that get them to think too much.  Seeing that vote for , , ,  sign in the front yard can turn their mind to not accept the house.  It can be subconscious and the buyer does not even realize it is happening.  Worse yet is the showing agent who thinks it is funny to make comments about the distraction and they make matters worse.

 

Neutral is good when you are selling your house.  Once the place is sold and you are onto your next property and express yourself.  I am all for people displaying what makes them happy. Just don't do it next to the For Sale sign . 

Cars and Neighborhoods

 

This past week a buyer asked me if I thought they would fit into a neighborhood that had a house they really liked.  I would never go near such a question even if it were a close friend.  That question is so personal and how would one know.  Ethically and legally as a Realtor I am not able to comment on the characteristics of a certain neighborhood.

 

I do tell my buyers to go back on a Saturday morning and walk the neighborhood.  See what kinds of cars are parked on the block.  Do those vehicles look like they would be owned by people you would want to associate with? One winter I was showing houses in a suburb that was further out.  Many of the houses had snow mobiles parked along the sides of the houses.  My buyers decided the area was "too out-doorsy" for them.  A buyer can learn a great deal by looking at the vehicles, any recreational vehicles parked or stored on the property, and who is driving up and down the streets.

 

As they  walk the block I encourage them to make eye contact with people out doing yard work, and see if the residents were open to being friendly.  I even told them to ring door bells and ask open ended questions about the community.  Look at how yards are kept.  Count the number of play sets in the backyards.  Listen for barking dogs.  How do people handle their garbage?  Sights, sounds, and smells can tell you a great deal about a neighborhood

Falling House Prices and Income Limitations

In Thursday's Minneapolis Star and Tribune an article was written stating that about 30% of the homeowners in the Twin Cities have house payments so high, that there is little left for the other necessary things like food, insurance, utility payments to make it through the month.  This did not surprise me.  I don't think it should have surprised the average reader.  House prices rose from 2003 until 2006 at an appreciation rate that no one had their incomes rising at the same rate.  It does not take a math genius to figure out that the growing distance between income and house prices would crash the market.  Low interest rates and creative financing masked the real problem.

 

Weekly .I hold buyer seminars to help educate buyers about the buying process and simple math for qualifying purposes.  I run an example where someone buying a $200,000.00 house on FHA financing with 3% down with today's interest rate would pay about $1350 per month for their mortgage.  I think most people at the seminar are taken back by the $1350.  They don't expect it to be so high.  You can figure in today's interest rate market that one will pay about $6.00 for every thousand they borrow.

 

When I was growing up, many mothers only worked for "pin money."  It was money to buy the extras but not money to make the monthly mortgage.  Few families today can live under those standards.  Many single persons are owning houses,and it is their sole income that pays the bills.  The reality is that house prices got too high. 

 

All home owners loved to see on paper how much their house was worth.  It was like a savings account that they did not need to put money into. The property would keep appreciating, and when they went to sell there would be all this money for them.  Sweet idea,but it is not working today.  Some pieces of real estate have seen a $100,000.00 drop.  The seller never had that money in their pocket, so they did not literally lose it.  They did take a hit on money that they had planned on being their for them.

 

The market will come back and houses will start appreciating again.  I do not believe in the Twin Cities we will see that run away appreciation.

It was like a kid who had freedom in a candy store and got to eat everything in sight.  Four hours later and with much discomfort that kid found out eating all that candy was a dumb idea.  We found out a real estate market out of balance is a dumb idea also

Internet Information vs. a Real Estate Agent

80% of buyers today go on line to view real estate rather than call a Realtor and start looking at houses.  That same 80% when they become serious  about purchasing a property contact a Realtor.  I firmly believe the two can work in harmony.

 

The nature of buyers in their 20's and 30's is to be information gathers and look on their own.  This is true weather they are seeking real estate or a new bed.  You cannot get in their face, as they will back off and not become engaged at all.  When this buyer is feeling comfortable, they are more than happy to work with a professional. 

 

The problem is that the information on line and pictures seen on the internet are not always helpful.  An untrained buyer does not know if a 11x 12 kitchen is large and the fish bowl look of many on line photos make them look large.  A trained Realtor can help the buyer read the MLS and identify the aspects of photos that are most telling.  My goal is to help that buyer read the information correctly and not be frustrated when they go out to view the house and see it does not meet their needs.  After selling houses for so many years, I can identify information on line that the untrained person may not. 

 

I do like that buyers can sort through houses prior to going through them.  It means a better qualified buyer is walking through the door.  If the woodwork is painted, the buyer knows this from the pictures and won't walk in and say, "Oh, painted woodwork.  I don't like it."  Why waste the time of everyone evolved if painted woodwork rules a property out?

 

Realtors should never feel that the internet will replace them.  If I have knowledge, experience, skills at negotiating, and am available for my buyers, they will always turn to me when they are ready to do serious looking.  The Realtor that does not demonstrate their worth, should have fear of the internet.

School District and Real Estate Values

When I meet with a seller to discuss the value of their property, one of the first things I discuss is what schools the children of that household would go to.  Some don't care as they never had children and never gave it any attention.  Others are proud and expound on all the great things their family derived from attending the neighborhood school. I am asking this question to help establish value on their property.  The stronger the school district, the more perceived value in that property.

 

Buyers many times will tell me what school district they want to purchase a house in.  Some buyers have children with specific needs and the school district is of up most importance to them.  Those needs could range from a child with a learning disability, a child with a physical challenge, a gifted student, an excellent swimmer, a child with musical or drama abilities, a child needing fifth year Spanish, the needs are varied. 

 

A challenged house is one in which the property is located in one municipality ,but it is in a school district of another city.  District boarders do not always run with the boarders of that city.  Even with open enrollment, it can be difficult to sell those houses.  Market time in some of these cases is increased or decreased and the house can sell for more or less.  Never accept the word of a Realtor that a student can go to one school.  Always check with the school district as district populations are always changing.

 

A Realtor legally cannot judge a school district.  That can be considered steering.  District web sites, arranging for families to interview schools, and the magazine School House are good resources for families.  A copy of this magazine can be received by emailing me at jane@thepaulusteam.com and requesting a copy.  This magazine not only rates public but private schools in the Twin Cities. 

 

Residents are aware of the value of their schools not only to educated the children of that community, but as a draw to bring new families into the community.  Voters many times will vote in favor of a school referendum to keep their district valued.  Unfortunately, the school building is no longer the brick building with the playground at the end of the block.  It is no longer the central meeting ground for the children of the neighborhood.  Kids are usually bused to school and the building does not have the neighborhood presence it once had.  Hopefully, the spirit of the school is central to the student and his family, and they continue to volunteer and support the programs of the school.  The one advice I do give my parents is,"No school alone can educate a child.  It takes the family to work with their child to ensure the best education for their child."

 

How Accurate is a MLS Listing?

 

This weekend I showed a property that was listed on the Multiple Listing Service.  We toured the property and my buyers asked the question,"How accurate is this information?  That is a difficult question to answer.  There is a disclaimer at the bottom of the MLS that states the information is to the best of everyone's ability but nothing is guaranteed. 

 

This does not excuse persons who stretch the truth.  In the case this weekend an agent called the house a three bedroom house.  Two bedrooms were on the first floor and one up.  The one up was a finished expansion and one had to walk through one of the main floor bedrooms to get to the upper bedroom.  Because you walked through the one room to get to another, it became a two bedroom house.  Naturally, putting it on the MLS as a two bedroom house would have reduced the amount of showings.  It really did no good to pull us to see the property and then disappoint us with the bedroom situation.  My people had no interest in it ,and the sellers were kicked out for the showing.  What was the point of not being accurate?

 

Listing agents need to be fair to their sellers and to the buyers who are viewing the property.  Showing agents cannot always know how accurate that information is until they get into the property.  I do feel that all parties need to feel the information is fair and accurate on the Mpls.  Room sizes should be wall to wall and not into the eve of an expansion.  Bedrooms in the lower level need to have legal, egress windows, closets, and a door to the room.  A bath in the basement had better be more than a toilet sitting by the washing machine.A first floor family room is disappointing when it is a small porch converted to a four season room.

 

As Realtors we need to "do unto others. . ."  That might mean standing up to our sellers and telling them the listing cannot read as they want it to read if it is not correct.  It means as a Realtor we don't do it because all the other Realtors do.  I believe brokers need to review listings and ask their listing agent to make corrections when necessary.  It is the broker who holds that listing contract ,and they are the ones legally responsible.All of us in the real estate profession need to raise our standards when listing a property.  It is not so much a question as to what is legal but ,what is fair and right to do

Appraisals

 

Each house that is sold with new financing must have an appraisal done by an appraiser representing the lending institution that is financing the property.  Each purchase agreement with a financing contingency is not a finalized purchase agreement until the appraisal is completed and approved by underwriters.  This can take several weeks or up to a month for this to be completed.

 

Realtors in our market did not have large concerns about appraisals.  They seemed to come in at purchase price and the lending process went on.  In recent months I have seen appraisers get very conservative about the value of properties.  Even conventional loans with 20% down are coming in under purchase price.  Appraisers have been given strict instructions to evaluate houses on only current sales, factors in closing cost concessions, and stay tight on value. 

 

The FHA purchase agreement has an escape clause that says if the house does not appraise at purchase price the purchase agreement is null and void or terms can be renegotiated.  Conventional does not have that clause.  In this market is it prudent to have that written into the conventional financing. 

 

Last week I had a solid, redone, rambler in SW Mpls. come in $4,000 under purchase price.  It was conventional financing with 20% down.  The seller was not happy and was very reluctant to reduce the price.  He really didn't care what the appraisal said.  It is true that there is a human component in the appraisal process, but there is not much any party can do when an appraiser has spoken.  Buyers in this real estate market just don't want to buy a property at too high a price.  In the end the issue was resolved, but all parties must be very aware of appraisal concerns.  It is not just a problem for the buyer.  It is time for all parties to compromise when a low appraisal comes in

The Kitchen Table

The most powerful position in a home is the kitchen table.  So much besides meals happen at the table.  This is where small children start drawing.  It is where kids do their homework shouting out to their parents for answers.  It is the site where birthday presents are wrapped.  It is where family and friends gather not only for nourishment but to solve the problems of the world.  Good times and bad times happen at the kitchen table.

 

When I visit with sellers to discuss selling their house, I always ask to go to the kitchen table.  It is a natural place to talk about decision making.  Think of all the decisions that have been made at the table.  I always ask which chair to take.  Have you noticed how every family has unmarked but assigned places to sit at the kitchen table?  I want the husband and wife to sit together.  I never want to come between them.  It should be a casual and informative time together.  I never want to feel like a salesperson.  I want to feel like that friend or neighbor who was invited in for coffee to discuss whether a move is a good idea. 

 

My take on helping owners decide on whether they should sell or not is to first be a ear to listen to how they are feeling.  You bounce ideas off of what they are expressing.  They will come to their own decision, but my role is to help them get there.  I do like the kitchen table to do that talking at.

Pumpkins

It is that time of year when the pumpkins are ripe for the picking.  Few of us go to the field and pick, but we do buy at the store.  They are pricey and in tough times we need to pick and choose what we can buy.  I still hope the budget can have room for a pumpkin.

 

The pumpkin is a universal symbol of fall.  You see a pumpkin and think of crisp days.. They bring color to the front steps as our summer flowers are dying.  They are a symbol of thanks.  The pumpkin has us think of the pilgrims and how they gave thanks for the harvest.  At the end of October the pumpkin can be carved and you have a smiling face to welcome your trick and treaters.  Recycle by putting it at the end of your garden and letting the squirrels have a go at it. 

 

We need to hold onto some of our happy traditions in tough times.  They keep us grounded and let us know that good times will return.  So,here is to a pumpkin on everyone's front steps.  It will show all of us that we still have the faith

Lawns

The other night my husband, Charles, was watching TV.  He watches television by going from channel to channel and pausing for 15 seconds.  He called me into the room to see this new clip on selling houses in Sacramento, Calif. 

 

This area of the United States is very depressed.  They have subdivisions where more house are for sale than not for sale.  Many of these houses are vacant and they look very lonely from the street.  The lawns are brown and dead.  A man invented a food dye that lasts for about 3 months and he sprays these lawns and they look alive and well.  Naturally, he sprays them green.  The city is even hiring him on foreclosed properties to help keep the vandals away.  It costs about $300 an application.

 

The point to my example is, look at what people will do to have the lawn look better.  Homeowners should attempt to keep their lawns healthy and looking attractive.  You never know when it will be necessary to sell your property.

 

This fall you can take steps for a better lawn next spring.  Right now you can apply a fertilizer to stimulate root growth.  In late fall apply a winterize fertilizer that builds resistance to the cold and provides nutrients to extend the green period in the fall and green up quicker in the spring. 

 

The lawn is the initial statement to the house.  An edged lawn gives the viewer the impression  house must be unbelievable inside.