Great Properties Sell in Any Market

2-Story Single Family Home
Built 1961
Sq Footage 2,090
Bedrooms 4
Bathrooms 2
Parking 2 Car garage, attached
24 Hr Recorded Information
1-888-391-9039 Ext 312

DESCRIPTION
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Great family home on more than a 1/3 of an acre! 4 BRs on upper level, open spaces, formal dining room plus eat-in kitchen. Huge yard w/900 sq’ deck. Carefully refinished hardwood floors on main & upper levels, family room, office, 2 fireplaces and more! Quiet neighborhood, low traffic, close to shopping.

How Much Should You Spend on a Home?

This is not a simple question to answer. First, there is no mathematical formula that exists to arrive at this elusive number. You can and should collect information about current mortgage rates and payments, home values, and economic conditions. But accurately predicting what will happen with these criteria in the future, in a timely manner is next to impossible. You can drive yourself crazy attempting to formulate a process that is beyond analytical analysis.

So what does one do? The answer is to stick to the time-tested basics and keep your real estate perspective focused on the long-term. Your house payment must be a manageable part of your monthly budget, have a fixed interest rate, and have the shortest loan term you can afford. Also, select a location that will satisfy not only your current but your likely future needs. In addition, choose a home that satisfies your current lifestyle with an eye to what your future needs are likely to require. For example, in this “buyer’s market” take the opportunity to buy a home with three bedrooms instead of just the one or two you might need right now.

Take advantage of softening demand and prices….but re-consider an exceptionally low offer. Many buyers are beginning to realize that home prices are now great values. Multiple offers are becoming commonplace again. Multiple offers are never favorable for buyers. When you are preparing an offer with your real estate agent, submit an offer you can quickly negotiate to agreement. This will save you the heartache of missing out on a great home at a great price. Great homes attract attention in every housing market.

Short Sales and Our Real Estate Market

A real estate short sale is the process where a lender ultimately accepts less than the full amount owed by a borrower as satisfaction of a loan obligation.   The borrower either sells their home for what the market will bear or deeds their property directly to the lender.  However, the details of this process aren’t quite so simple or predictable.   There is a protocol for dealing with a short sale but the players involved in such a transaction often fail to agree on key decision points along the way. 

In fact, short sales play into our current market reality for a number of reasons.  First, there is no guarantee that a short sale will be accepted by a lender.   Second, many home sellers (short sellers and non-short sellers) continue to put their homes on the market even though the market is not calling for yet another poorly priced, poorly prepared, and poorly marketed home for sale.  Finally, buyers skewed expectations of real estate value are becoming more and more irrational. 

Lenders are like every other seller with a property on the market.  They want market value for their properties.  Market value is determined by the presence of a ready, willing, and able buyer and seller coming to terms.   However, lenders and their “Loss Mitigation” departments have fallen short in dealing with the administrative demands short sales and foreclosures have placed on them.  Too many properties, too few quality REALTOR relationships, and too few internal resources committed to the issue all lead to the inability of lenders to efficiently liquidate their inventory.

In a market like ours, over fifty percent of the listed properties will not sell this year.  The time-tested truths still apply; price, condition, and marketing.  At this time, there is no room for error.  Yet, there is a proliferation of service providers willing to list a property with virtually no seller education about the current state of affairs.  The allure of an “easy sale” at a “low cost” is more than some sellers can resist.  Ultimately, uninformed sellers bring properties to market that buyers don’t want.

Buyers face challenges too.  Buyer expectations have quickly morphed into wanting good properties at steep discounts.  Since sellers in our market aren’t panicking, the result is a real estate gridlock.  We are even seeing lenders hold properties in inventory for extended time periods of time and declining offers outside of “reasonable valuation.”  As a result, non-lender sellers put off plans to transition their lives and buyers continue to wait for the great deals that will never materialize because they already exist…they are just unable to see them.    As is always the case, as soon as they great deals are obvious to buyers in general, the deals won’t be so great.

The bottom line is people are buying and selling houses.  Those that understand and act upon the realites of our market will make sound real estate decisions and will continue to prosper in the long term.

Where Buyers Found the Home They Purchased in 2007

The sources of  information used by the real estate buying consumer continues to evolve.  The percentage of consumers who now use the internet during their home search process has grown to 84%. This is not surprising because instant, convenient, and efficient home search lends itself very well to the internet.  Most of us comparison shop online to gather information for infrequent and/or major purchases.  Access to this information gives a baseline of confidence to buyers.  Interestingly, 87% of buyers who found their home on the internet hired a real estate agent for expert guidance during their buying process. 

The numbers below illustrate buyer resources used:

Internet……………………………………… 39%
Real estate agent………………………….. 30%
Yard sign/open house sign………………. 15%
Home builder or their agent……………….. 6%
Friend, relative, or neighbor……………….. 6%
Print newspaper advertisement………….. 3%
Other…………………………………………. 1%

Data Source: The 2007 National Association of REALTORS Profile of MN Buyers and Sellers

Do You Know Who is Working for You?

If you’re thinking about buying a home, there is is a lot of information available.  First, the internet research.  Then talking with friends and family about the process.  Ultimately going to a few open houses to get a feeling for location, value, and space.  Along the way you may meet a real estate broker/agent that you feel comfortable with.   At this point it is important to understand what your business relationship is with the broker/agent.  Are they obligated to represent your best interests in the search for and purchase of a home?  The answer is no.  Unless you have a buyer representation contract for with your broker/agent, your broker/agent is obligated to work in the best interest of the seller.  Why?  Because of compensation.  As part of a negotiated commission between the seller of a home and a listing broker/agent, the agreement also provides for the compensation of a buyer broker/agent.  Since the commission paid by the home seller ultimately compensates the buyer broker/agent, the representation remains with the seller unless a buyer representation contract is agreed to and signed by the buyer.

How to Sell Your Home in a Buyer’s Market

The stories are everywhere…it’s a buyer’s market and homes aren’t selling.  While it’s true that approximately half of the properties on the market this year will not sell, yours does not have to be one of them.  The following steps will help you achieve your goal of a quick and profitable home sale.

To start your preparation to sell, get an idea of what the market value is for your property.   Visit www.mikeweiland.com and use our home search engine.  Compare the number of bedrooms, bathrooms, garage stalls, and square footage.  Take the five least expensive properties and commit to pricing your home below these competitors. 

The condition of your property is a make or break reality in today’s market.  De-cluttering used to be optional but now it’s an absolute must!  For example, by removing 3/4 of your closet contents you will add to the feeling of space in your home.  It also sends a subtle yet positive message to potential buyers that you take pride in the care and maintenance of your home.

Light sells homes!  Surveys of  home buyers continue to show light as an important reason why people buy a particular property.  Window treatments, clean windows, and proper arrangement of furniture are key to maximizing natural interior light.  Overgrown shrubs and plants, as well as poorly placed lattice, pergolas and fencing are common obstructions that also block natural light sources.

Your home must be clean, clean, clean!  Stop smoking inside your home, find alternative living arrangements for your pets, and pay your kids to keep their rooms clean.  The kitchen and bathrooms must appear in like-new condition.  This does not mean tens of thousands of dollars in improvements.  A fresh coat of paint and empty counter tops in the kitchen while new towels, fresh grout/caulking and new shower curtains will make your bathroom space stand out.

Finally, an often overlooked key to success is the agent you hire.   Contrary to popular belief, all agents are not the same.  The 80/20 Rule absolutely applies in real estate sales.  Twenty percent of agents sell eighty percent of the properties.  Make sure you hire an agent who is in the top twenty percent.  By researching agent websites and calling local realty offices to speak with a top agent will dramatically increase your chances for success.  These agents know what it takes to sell properties in this market and will consult with you in the preparation and pricing of your home.  These agents often deal with multiple offers (therefore delivering a higher sale price to the seller) because they know how to create value in buyer’s minds.

Is Minneapolis a Declining Market?

It depends on who you ask and who is appraising your property.  As lenders continue to tighten their lending policies due in part to government mandates, some areas in Minneapolis are vulnerable to “declining market” status.  In an attempt to identify areas with an oversupply of housing that will likely lead to downward pressure on housing prices, banks have charged appraisers with responsibility of determining whether a particular property receives the “declining market” designation. 

The implications are important because “declining markets” are interpreted by lenders as increased risk.  For example, a property located in a “declining market” will require buyers to contribute 10% down-payments when as recently as last fall, zero or 5% down-payments were required.  This creates affordability problems for most first-time home-buyers and removes these important players in our real estate market. Those looking to move up to a larger home or downsize will be faced with even fewer buyers to purchase their properties. 

The “rub” here is that appraisals are an art as well as a science.  Competent, professional appraisers will identify similar properties in the same area in different ways.  One reason for this is our market continuously changes.  Properties continue to come on the market and sell.  Certain sellers may be highly motivated to sell quickly while others are content to wait months for a buyer.  In addition, appraisers are under great scrutiny to produce accurate appraisals due to the foreclosure problems our market is currently facing.   Some appraiser’s results will be more conservative and therefore arrive at a “declining market” designation.

The Impact of Homebuilder Activity

According to the Builders Association of the Twin Cities (BATC), there were 364 housing units permitted in January 2008 in our 13 county metro area.  The number is down from 896 in January 2007.  The January 2008 number of permits issued in Minneapolis was 56.  The January 2008 permit numbers are the lowest for the month of January in four years.  These numbers are important because home builders are acutely aware of supply and demand for housing.  When permit activity declines, it illustrates the prediction home builders are making about near-term demand for housing.  For more details, visit the Builders Association of the Twin Cities report.  This housing market measurement, when combined with other important indicators, will help consumers understand the demand for housing and the direction of our real estate market.