Monday, November 19, 2012

Going it Alone is a Thousand Dollar Plus Gamble

Working with home buyers is fun and rewarding. It can be the best part of my job as a REALTOR®  Whether they are First Time Buyers. Move up Buyers. Relocation Buyers--You name it—I love them!
That is why when a young, pre-approved couple called for a showing on a home I have listed awhile back, I was excited. I pulled together my Home Buyer’s Packet with information and tips for people in the process of buying a home and headed out.

I've been doing this for some time now and realize that most people do not fall in love with the first home they are shown. But, home buyers today are better informed. They scour the internet for weeks, even months before calling or emailing a REALTOR®. So after a few pre-qualifying questions, I knew this young couple was ready to buy their first home.

I arrived to the home first and turned on all the lights to brighten up the place. A few minutes later several cars pulled up. The young couple, both sets of parents and a few assorted siblings got out to inspect the property. After looking everything over, I asked the young people the big question:
"While you are out looking at homes, are you looking for a REALTOR® at the same time?"
Usually the answer is vague so I am ready with my speech about choosing a real estate agent. But before I can start my spiel one of the dad’s spoke up.
“They don’t need an agent. They will get a better deal without one.”
OK. I just met the young couple and their parents so I knew it was in my best interest to tread lightly here. I wanted a further explanation of this guy's reasoning, so I asked. It was his belief that with both sides of the commission on the table a better deal could be negotiated.

Interesting theory...I've heard it before, but that's almost never what really happens. Yes, there can be variable commission rates with dual agency so the offer could be a bit more attractive to a seller so maybe some of that could get passed to the buyer. But that amount is negligible in the grand scheme of things when buying a first home.

The total commission paid by the seller on a $200,000 home will run anywhere from $8,000 to $14,000. Now unless the agent is with a very small independent firm and also the listing broker, a percentage of the commission will go to the brokerage; usually 25-50%. Now we are down to a total commission for the agent of $4,000 to $7,000. How much of that will the buyer see in a lower purchase price? Maybe $1,000 to $2,000.
Is it worth a thousand bucks to gamble that a great agent is going to be the listing agent on YOUR dream home?
In the alternative, if a home buyer signs a buyer’s representation agreement with a REALTOR
®, the savings can be in the tens of thousands. When you work with a REALTOR® to show you properties, that agent will help you through the negotiations, prepare a market analysis for the neighborhood, and assess each property with you. When you walk into a home unrepresented, the listing agent is working for the seller unless you sign a contract and agree to dual agency. The agent owes the fiduciary duties only to the seller, including disclosure and confidentiality, so everything you say about your financing and interest in the home is disclosed to the seller as required by the listing contract.

Minnesota state law requires that I disclose that I am working for the seller when I first meet with buyers. When I explained the Minnesota agency disclosure document to this particular young couple, it was the first time they had seen or heard of it after viewing several homes with a variety of agents. It was obvious to them that not all agents are following this law.

This is where I will leave the story of these first time buyers but I want anyone considering buying a home to remember this, buyer’s representation with a REALTOR will save you money. Here are a few examples of how this savings can work:

New Construction—When buyers visits a model home, the sales agent in the house will quote the list price and discounted savings that the builder is offering. That's it...End of Story. But, if buyers sign with their own agent, often a better price can be negotiated with the builder. I had clients who saved an additional $15,000 last year on their dream home from the price quoted by a sales agent. Had my buyers walked into the model without me as their REALTOR
®, they would have paid more for their home.

Existing Homes—As I walk through each potential home with buyers, I point out concerns to address in the purchase agreement. Will the upgraded fixtures stay with the home? Is that discoloration a moisture problem? The carpet, roof and/or furnace needs replacing, can it be done prior to closing?

As a buyer’s agent, I discuss these issues with my buyers on each home and assist in structuring an offer addressing the defects and repairs that might be needed. I also assist my buyers in determining a fair initial offer on the home based on comparable homes that have been recently sold in the area. If the home is overpriced, we might be able to negotiate a lower sales price. If the roof needs replacing and we are able to negotiate a new roof, that can be $4000-6000 in savings alone.

Will the listing agent point out all concerns or that the home is overpriced? The short answer is no, as they are working for the seller.
Unless it is a material fact about the property, there is no duty to disclose to the unrepresented buyer.
Septic Systems and Wells—These are important and very expensive issues when considering purchasing an
acreage property. A REALTOR® who work mostly in the Minneapolis/St Paul metro might not know how to address these home features. If after agreeing on a price for the home, the septic or well does not pass an inspection, who pays the thousands of dollars for the repair or replacement?

If you are looking at an acreage property, having a REALTOR® that understands how the testing process works is essential. The cost of replacing a failing septic system can be cost $10,000-20,000, not including replacing landscaping for the new drain field. Wells can have a similar price tag if complete replacement is required.

Service Professionals—Whether you need a loan officer, title company or inspector, a REALTOR
® will usually have a list of service professionals at their fingertips to get the job done efficiently and at the lowest possible cost to you. Most buyers do not have first hand knowledge to make a great selection for these professionals. When making the single largest purchase in your lifetime do you really want to take your chances finding someone on Google? I work in this industry everyday and know when it is worth it to pay a few dollars more and when the savings is not worth the cost.

The bottom line when buying a home is, you need a knowledgeable adviser in your corner. Partner with a REALTOR
® you trust before you find that dream home. Not only can it save you thousands, it can save you headaches as well.

Copyright 2012

Sunday, November 18, 2012

Essential Paperwork when Selling a Minnesota Acreage Home--Disclosures!

Selling a home requires a bit more paperwork than just a listing contract. There is an important form, the seller’s disclosure, that is essential to complete if you are selling a residential property in Minnesota. There are alternatives for owners who have not lived in the home like bank representatives in the case of foreclosure or the personal representative of an estate, but most sellers do complete this for in its entirety.  

The current seller's residential real estate form is nine pages long. That probably seems like a lot of pages, but if your home was built after 1978 or does not have city water and sewer, there are even more. 

If a home was constructed prior to 1978, the seller must fill out a two page federal disclosure regarding lead based paint. If a home has a septic system, the seller needs to complete a three page disclosure for subsurface sewage treatment systems. And if a home has ever had a well for water, there is a specific three page disclosure for wells. This must be completed whether the well has been sealed or is currently in use.  And a handy-dandy location map is required for well/septic systems too.There is an additional disclosure form if a home has ever been used for the production of methamphetamine, but thankfully, most home sellers do not have to complete that one.
So the grand total of required disclosure paperwork for acreage homes in Minnesota is 16 pages—or 18, if built prior to 1978. That’s a lot of paperwork for listing your acreage home but it is essential. More importantly it is essential to that it is completed completely and correctly.
One of my pet peeves is when the well disclosure isn’t properly completed. There simply is no excuse on a recently constructed home

One of the first questions on the form…and probably the most important is, what is the Minnesota Unique Well Number and the depth and type of well. Often this is blank. I understand that most people have no idea of what the exact information is off the top of their heads. But for homes constructed after 1975, this is very simple information to obtain. There is a website and look up tool for wells in Minnesota.

I have a link to the Minnesota Department of Health’s Unique Well Number LOOK UP TOOL on my website so all my clients can easily locate this essential information. Every well constructed since the late 1970's has been tagged with a metal tag and its unique number. The numbers are logged and tracked by the MDH. So even if it is 30 below and Minnesotans are experiencing a horrific blizzard, a homeowner can log on to the website and find the necessary information to complete their disclosure form. (It's soooo much easier to find this time of year!)
Once located, I recommend that sellers print out a copy of the report and attach to the disclosure paperwork because it shows all the necessary well construction details (i.e. who constructed, when, depth, type, etc.) 

HELPFUL TIPS FOR USING THE LOOK-UP TOOL I have noted a few important tips for using this website because it can be a bit frustrating if you are not familiar with it. Here are a few quick tips to simply your look-up experience:
  1. Use Internet Explorer as your browser. The site doesn’t work well with newer browsers like Firefox and Google Chrome. There isn’t a mobile app for this yet either.
  2. Disable pop-up blockers. The map and information will show in a pop-up window and it looks like the site isn’t working if you have pop-up windows blocked.
  3. The information posted will not always show the current owner but the name of the owner or builder that filed the original paperwork.
  4. Sometimes the well will not always be listed by street address but still can be found by looking at the plat map of the street.
Take the time to fill out the form correctly as this is important information for the new buyer. Buyers appreciate when the seller takes the time to put the correct details on the disclosures. It takes a bit of time and research, but in the end, your buyer will have all the information needed to make an informed decision. Since many other sellers leave this information blank, sellers who go the extra mile will make their home stand out from the rest!

Copyright 2012

Saturday, November 17, 2012

Gobble Up Some Interesting Facts about Thanksgiving!

Thanksgiving is so more than just turkey dinner with pumpkin pie for dessert. It's not just day of football games and planning a Black Friday shopping strategy either. It's a time for families to come together and express their gratitude for everything they have in their lives. Thanksgiving is a holiday that is rich with history...and some interesting facts:

  • The first Thanksgiving celebration in Plymouth, Massachusetts, was held in 1621 and lasted three days. The menu did not include turkey and mash potatoes. However, lobster, rabbit, venison, chicken, fish, squash, beans, chestnuts, hickory nuts, onions, leeks, dried fruits, maple syrup, honey, radishes, cabbage, carrots, eggs, and goat cheese are what historians believe were consumed in the first Thanksgiving feast.
  • In 1789, George Washington was the first to issue a Thanksgiving proclamation. He asked Americans to be thankful for the "happy conclusion to the country's war of independence and the successful ratification of the U.S. Constitution."
  • Pumpkin pie was missing from the first Thanksgiving due to a lack of eggs, milk and sugar. But there is a record it was on the menu for the second feast.
  • New York was the first state to officially adopt an annual Thanksgiving holiday in 1817.
  • In 1863, Abraham Lincoln issued a 'Thanksgiving Proclamation' to officially set aside the last Thursday of November as the national day for Thanksgiving.
  • The date remained that way until 1939, when Franklin D. Roosevelt moved Thanksgiving up a week, to November 23, to spur economic growth and boost sales. But not all states adopted the change. It was two years before Congress passed a law on December 26, 1941, declaring that Thanksgiving would occur every year on the fourth Thursday of November.
  • The first Macy's Thanksgiving Day parade was in 1924. The annual event stretches for more than 2 miles and boasts over 2 million spectators lining the streets to watch every year.
  • Since 1947, the National Turkey Federation has presented a live turkey and two dressed turkeys to the President of the United States. The live turkey is not eaten but "officially pardoned" and allowed to live out its days on a farm.
  • In the US, about 280 million turkeys are sold for Thanksgiving celebrations. The birds are roasted, baked and/or deep fried and an estimated 90% of Americans have turkey for their holiday feast.
And if your family plans to sit down to dinner as picture perfect as a Norman Rockwell painting, think of this, the pilgrims didn’t have forks at the first Thanksgiving. They used spoons and fingers! Nothing can be perfect…just be thankful!


Copyright 2012

Thursday, November 15, 2012

On or Off the Market this Holiday Season? What Should a Home Seller Do?

Thanksgiving is only a week away...the relatives are planning for a visit...the turkey is in the freezer and grandma's secret stuffing recipe has been pulled from the vault. Yes, the holiday season is almost here but the house hasn’t sold.

What should a home seller do?
A first inclination for most home sellers would be to withdraw their home from the market for a few months. This is especially true in Minnesota where a white Christmas is pretty common. There is a belief that the home buyers will be preoccupied with the holiday season and only a handful of people in the market. While there is some truth to this belief, sellers can be ignoring another more important truth: Buyers looking at houses during the holidays are V-E-R-Y serious buyers. 
There are not many tire-kickers running around with a REALTOR® when there are presents to buy and gifts to wrap. November, December and January showings are a seller’s opportunity as most homes that buyers will visit at this time of the year are vacant. A buyer’s choices are down to model homes, empty relocation properties and foreclosures. Just imagine how a buyer perceives a warm home filled with the colorful sights, delightful sounds and wonderful aromas of the season. Staging a home for a sale during the holidays is a unique opportunity giving the traditional home seller the edge!

Tips for Showing & Selling During the Holidays
  1. Decorate! Tastefully of course. This might not be the year that you do the Griswold display of lights as in National Lampoon’s Christmas Vacation, but a decorated tree, candles and wreaths can add a special touch.
  2. Bake and leave out a plate of Christmas Cookies. Why should Santa have all of the extra calories?
  3. Keep the home fires burning! Make sure the fireplace is burning bright, warm and welcoming!
  4. Play holiday music. Leave out the barking version of Jingle Bells and go for instrumentals or uniquely Minnesota regional artists like The Blenders.
  5. Shovel and salt the sidewalk and driveway if necessary. No one wants to spend the holidays in the emergency room with a twisted ankle.
  6. Leave the front light on! Don’t forget it is dark during those early evening showings. Make certain buyers and their agents are able to see their way to your front door and lockbox. 

  Copyright 2012

Tuesday, November 6, 2012

Act NOW on that Real Estate SLEEPER Before it is SOLD!

Maybe you don't know what I mean by a "sleeper". Well, if there's a home you have been watching for a  few months that seems to be priced right but just isn't selling. It's not a short sale but it just isn't moving. In some ways, compared to some of the homes recently listed, it is a steal of a deal. Yet you are kind of waiting on the sidelines, not sure if now is the time to buy a home. You are timing the market so to speak, waiting for the perfect moment to make your move and watching to see if seller of that real estate "sleeper" is going to drop the price. Well wake up bargain hunters...You might not be the only one with an eye on that sleeper and if you wait too long it will be SOLD!

A real estate "sleeper" is a home that is priced fantastically and is a great deal but few people, if anyone, is paying attention to it. It is a solid property, in a good location, structurally sound and priced well but has not sold. In a buyer's market where there is significant home inventory but few buyers, sleepers are abundant. And surprisingly, while inventory has gotten tight with few new listings coming on the market, there are still some sleepers out there too!

How does this happen? Maybe the home was originally over priced and though price reductions have brought it into line, it is continues to be overlooked. Some buyers only look at just listed homes and avoid houses that have high days-on-market statistics.

Possibly several very similar homes went on the market at the same time and maybe this one just didn't compete as well in decor. Picture for a second, three homes listed during the same week in a cookie-cutter development where all the homes have roughly the same floor plan. All the home are the same age, condition, and priced very well, but only one homebuyer comes through the neighborhood during the first few weeks. So after 30 days, there are two sleepers left that didn't sell. Since the two houses are essentially the same as the neighboring home that sold, it's wasn't because the homes aren't properly priced. This is another scenario that will cause a sleeper.

But if you are sitting on the sidelines and just watching your perfect home for another price reduction, beware. I have recently had a buyer working through the numbers and watching a sleeper in northern Washington County. In this case, nothing was happening on the property but there was one price reduction, then another and suddenly the home was SOLD straight into pending! In this particular cases, if wasn't the cookie-cutter variety either. It was a beautiful new construction model in Scandia. The home was in a perfect location with a nice private lot. 

And then are my listed homes after being on the market for a few months suddenly will have over half a dozen serious buyers take a look at the home. Agents and their buyers are nonchalant when I stress the home has had a sudden surge of interest. Many even "pooh-poohed" the idea and mildly accused me of trying to coerce an offer. When the first offer came in, sellers don't want to wait and see if another offer might materialize. They make their decisions and the homes are suddenly sold!

If the sleeper phenomena had happened only one time this past year, I would consider it a fluke but I have experienced this situation on homes throughout Ramsey, Washington, Chisago and Anoka Counties recently. In some cases I was the listing agent and others I was representing buyers.

So homebuyers heed my warning, if you are on the fence watching a sleeper, now might be the perfect time to make your move...Before someone else beats you to it!

Copyright 2012

Saturday, November 3, 2012

My Smoke Alarm is Possessed (Or How Do I Shut the Stupid Thing Off?)

As a REALTOR® showing houses, I often have to show homes in an environment with chirping. Many vacant homes can be filled with an annoying sound of a battery that needs to be replaced in a smoke alarm. No big deal. It is an easy fix. But some homes, and these are often occupied, have missing smoke alarms and that is another story all together.

I picture someone being woken up from a sound sleep at 2 AM to a house full of shrieking alarms. With their hearts racing, the family jumps from bed and has to decide whether to run outside in their PJ’s and wait for the fire department to find the cause for the alarm or search to see if it is a false alarm. In my experience, this situation never happens during the day. It’s the middle of the night when the smoke alarms malfunction…Always! It’s like the stupid things are programmed to go off  as a defect only after a house has become dark and quiet for 1-2 hours—It’s either that or they are possessed.

I speak from experience…Last night’s experience to be exact. At 1:30 we got the unexpected and unwanted wake up call out of a sound sleep. Usually we just have to find the Firex alarm with the blinking red light and pull the battery. If the device is functioning properly, the house will go quiet and we can replace the battery in the daylight. Last night, we pushed every reset button and the 7 shrieking alarms didn’t stop.  Now fully wide awake, I realized it was time to pull the battery. Yea!! Silence!!

About 15 minutes later, resettled in bed and just about to drift off…BAM! They ALL go off again! Now we are half deaf due to having 4 alarms on the bedroom level of our two-story home, all shrieking at once. We start thinking, is something maybe burning in the attic or walls that we cannot see/smell? My husband offers to check outside to see if there are flames shooting from the roof (and get away from the noise) while I start unplugging the alarms. When I got to the one with the red blinking light…silence! We still had two of the hardwired devices plugged in; one on the main level and one in our bedroom. We were able to go to sleep without further worry of an unseen threat. But after about 30 minutes of ear piercing, mind jarring noise, it wasn’t easy.

We had been through this once before. With seven alarms hardwired into our home, it is always an adventure to pinpoint a malfunction. We even have spare alarms for the process now. But it is a job best done during the day with a clear head.

We don’t just slam in new batteries and hope that would resolve the problem. We have done that in the past but replacing the battery won’t keep a defective alarm from an unwanted, heart-stopping wake up call.   

Here’s our process for finding a malfunctioning smoke alarm:
1.      Disconnect all the alarms.
2.      Remove the battery of the first unit.
3.      Push the test button until all of the charge is drained.
4.      Wait a 10-15 seconds.
5.      Install a brand new battery.
6.      Reconnect the alarm to the ceiling.
7.      Wait an hour or so.

If all remains quiet, with an exception of a double beep from the alarm noting it reset approximately 10 minutes after the install, we are good to move on to next smoke alarm.

I know it sounds like a pain in the neck to do it this way but it is cheaper than replacing all alarms. (We have done that too!) It was obvious last night that we had a defective alarm. That sound barrier shattering noise that wouldn’t stop had us ready to take a hammer to every alarm….but common sense prevailed. We know it is foolish not to have fire alarms in our home so we won’t just leave them down or in disrepair. But we don’t want to end up with another middle of the night wake up call either. This step by step process will keep us safe and get the defective unit that triggers the long term shrieking out of house for good!

As  Daylight Saving Time ends today, it is the day to Change Your Clocks and Change Your Batteries! And don’t forget to change the backup battery in the carbon monoxide detector too.

Copyright 2012