4th Quarter Outlook

Here’s a quick snapshot look what we’re seeing in the local Twin Cities market as we get deeper into Fall.

Contact us if you or someone you know might need some guidance regarding the best time of year to go to market.

Strategies for Multiple Offers

When a listing receives multiple offers the biggest offer is always tempting, but multiple offer scenarios need to be approached carefully by both the seller and the buyer. Sellers should be careful to review all details in every offer as the highest price is not always the sure bet. Same for buyers: make sure your big offer is smartly positioned and avoid some red flags that might scare off the seller.

Here’s a quick checklist:

Closing Cost Padding – The big offer price on page one may look high, but if the seller is asked to pay part of the closing costs that may go against the buyer for two reasons. 1) it reduces the overall net to the seller; and 2) with the inflated price a seller may get concerned about the house appraising and choose a buyer with a similar “net” price who has not padded the price with closing costs.

Financing Terms – Not all terms are equal. In order of preference: cash, more than 20% down, 20% down, 15% and so on. Better terms typically result in a smoother close.

Letters to Sellers – Be careful on this one. Before you provide a heart-felt letter about your beautiful family with two kids make sure you know the sellers’ situation. If they are divorcing, for instance, this letter may not have the effect you hoped for!

Inspections – Most buyers today still include an inspection on a home, but in any deal – particularly one with multiple offers – an offer that waives the inspection can be more enticing to a seller. Despite how common inspections are, even in older homes that might typically warrant an inspection, in a multiple offer situation the phrase “contingent on inspection” can send message of hesitance to the seller. A buyer can cancel during the inspection period for any reason, including “2nd thoughts,” and sellers know this. That said, before you consider removing an inspection to win a house, make sure you are confident in what you are buying, and have some dollars set aside for surprises that may come up. Or better yet, if you can, bring a contractor or an inspector with you to a showing – before you make the offer.

Waive the Radon Test and Do it After Closing – Radon tests are almost always included now during buyers’ inspections. A good listing agent will prepare a seller for the cost to mitigate upfront which can run from anywhere from $1,200-2,000. If a house shows up with radon this is almost always an automatic that goes back to the seller to put in a system. As a buyer, if you are willing to take care of radon testing after the closing, you could put your offer at a significant advantage, with it potentially not costing you anything since there is a chance that the radon levels are fine.

Ask Questions – We make sure to find out any information we can that can give our clients an advantage: What’s the seller’s situation? Is there a closing date that is preferable? Are there any other concerns of the seller? (i.e..they may not want to move the pool table, include it, so the seller doesn’t have one more thing on their list they have to worry about.

When market inventory is low, multiple offers are common. The guidance of an experienced team can be the difference that leads to a successful bid and smooth close. Contact us if you or someone you know might need some guidance.

Kicking Off the Spring Season

With the Super Bowl buzz worn off for folks in Minnesota many have shifting their thoughts to spring – with some considering putting their homes on the market to lure spring buyers. But, when exactly, is the best time to list?

The Super Bowl – Across America, Super Bowl Sunday is seen as the start of the spring housing season. Statistics show that listings and deals skyrocket in many markets in February. Spring is, indeed, our busiest season in Minnesota. But, like our gardens, our market heats up a little later. And, boy, has been HOT recently. Houses are being gobbled up in record time. In 2017, median days on the market in the Twin Cities was right around 30 days.

Go now – One strategy is to get your house ready in the cold of the winter and list as soon as you can to be included in the early spring momentum. As you are reading this, if you are wondering if now is THE time to make a move, connect with us and we can determine if an early spring timeline is smart. But don’t worry…

Waiting a bit is okay – When the local market gets flooded with listings in March, being one of many may not be the best opportunity for your home to grab the spotlight. If you’re still deciding, holding off on listing for a month or even 90 days may be wise as your home will likely be positioned more prominently as a “new listing” among the homes still remaining in the MLS from the initial spring push. Plus you’ll have more time to work through any improvements or staging items you’re considering.

Ultimately, the circumstances for each home owner are unique, and the decision if/when to list typically requires some significant planning to maximize the opportunity. We’re here to help work through the details! Contact us if you or someone you know might need some guidance through a possible spring sale.

Inspection Insights – Fireplaces, Radon and Sewer Lines

Buyers are increasingly adding more items to the inspection process. Sewer line and fireplace inspections have been added now along with testing for radon. A savvy seller might have these items looked at and mitigated before they go to market to help speed the process.

Fireplaces

In older homes, fireplaces and their chimneys tend to raise red flags in inspections – and can lead to insurance issues if problems are not remedied. Particularly if your home was built prior to the 1960’s, having your fireplace inspected in advance of beginning the selling process is important. Weather-proofing, cleaning, sealing and securing existing brickwork are basic necessities for safety. If an old fireplace is meant to be used again for burning wood – or to one day be converted with a natural gas burning insert – installation of a flexible chimney lining may be the solution that leads to the least negotiation during the selling process.

Radon

Radon is a naturally-occurring, odorless, radioactive gas that can’t be seen and may lead to lung cancer over prolonged exposure. Minnesota and other northern states are often recorded to have high levels of naturally-occurring radon in soil around homes. Conducting a radon test is the only way to determine its presence. Do-it-yourself test kits are available as well as professional services who may monitor the air quality in your basement over a number of days. If your tests indicate your radon levels are above recommended levels (4 pCi/L) and you hope to sell your home, preparing your home by undergoing mitigation efforts may help to speed your selling process. Solutions may include sealing any openings in old foundations or installing a fan that pulls air from your soil around your foundation and pushes it outside. Read more at Radon.com.

Sewer Lines

Sewer lines are a part of a home that are just expected to work and are often overlooked. In older neighborhoods–and particularly those with large trees and roots that may interfere with sewer lines–inspecting in advance of selling may identify the age of the line and the need for cleaning or even replacement in worst case scenarios. Many plumbers have remote cameras that can be used for the inspection. Cleaning a clogged or partially obstructed sewer line is a fairly easy remedy. Replacing a failing or crumbling sewer line is more serious, but new “trenchless” methods can be employed in some circumstances where new sewer lines are pulled through the old line rather than digging up the entire yard.

If you are thinking of selling, being proactive and identifying and remedying possible red flags before getting too far in the process can lead to a quicker sale with fewer surprises.

Contact us if you’d like to chat through any of these ideas or would like a referral to a service who can assist.

Choosing the Right Builder

When considering a remodeling project selecting the right builder for the job is critical. Here is a list of questions and helpful tips to keep in mind when going through the interviewing process and collecting bids:


How long has the builder been in the business? Ask for photos of recent projects that might be similar in style so you can see their work.  Better yet ask if you can visit a current job site.

Does the company have a designer or architect they work with, and if so is that service included in the overall cost of the project or separate?

Is the company familiar with the city you live in with respect to permits, code and process?

How long have the builders had relationships with their subcontractors and how long have the subcontractors been in business?

Ask for a sample contract. Contracts should be as specific as possible and include the following:

• Specific materials that will be used—make/model/brand

• Labor that will be performed

• Estimated timeline including start and finish dates

• Payment schedule

• Warranties

How would communication work? Who is the point person? How often will there be phone or face to face meetings?

Is there a sense of rapport? Does the builder seem excited about the project? Does their personality fit with yours?


Remodeling Financing

Whether you are looking to buy a new home to remodel, or renovate an existing home, here are two important questions to consider: 

  • Can the location support the new value?
  • How will you pay for it?

As real estate agents we help our clients navigate this process and make knowledgeable decisions based on location and market trends. The best place to start is to explore different financing options associated with remodeling a home. Here are three of the most common:


Home Equity Line of Credit –  A Home Equity Line of Credit (HELOC) allows you to borrow funds against the equity in your home. A HELOC allows you to draw funds as you need them, up to your credit limit and are typically set at an adjustable rate. Many plans have a fixed time period. Interest paid may be tax deductible

Home Equity Loan – Like a HELOC, a Home Equity Loan (HEQ) is based on your home’s equity. You will receive the entire loan amount at closing. HEQ’s are generally a fixed-interest loan with terms up to 15 years. Interest paid may also be tax deductible.

Refinancing Your Existing Mortgage – For many, refinancing is still a great option, and with today’s historically low interest rates, it’s an even better way to finance a remodeling project. For those who haven’t built up a lot of equity, yet, many lenders offer future value loan programs which set a loan amount based on the future value of the home after remodeling.