Rethink the Bridal Registry! A Dream HOME Could Make the Happy Couple VERY Happy!

When I was married we didn't have a fun barcode readers to capture and share our favorite towels, toasters and china patterns but they seem to make life simple for today's bride and groom. But wouldn't it be awesome to point that thing beyond the department store wares and head out to the nearest neighborhood of cozy bungalows and tag something that a the happy couple also needs, their first home? Imagine engaged couples browsing the internet listings on realtor.com or dropping by an open house and using a scanner to click the QR-type code on their favorite new home so the front door key could be handed over as the bride is carried over the threshold. AWESOME idea, right?

It is an off-the-wall idea but couples getting married this year may have a tough time finding first time buyer financing. Zero down loans have all but disappeared from the landscape and first time buyers need cash in their pockets to put toward a new home. As mortgage programs continue to change and evolve, it is essential to save for that down payment. A forward thinking young couple might want to divert some of their wedding funds and gifts into an investment in a new home, in which they can begin their lives together.
 Buyers wanting to purchase this spring will NEED a down payment for a house. Not just a few bucks either. In most cases a buyer will require a minimum of 3-5% to put down. With an average Minnesota starter home in the $175,000 price range, today's brides and grooms will need to save at least $5,000-$10,000, plus closing costs.

All is not lost for first time buyers, but a little forward thinking is in order. There is a lot of money involved in most weddings; both on the party planning and the gift recipient side. A savvy bride and groom might be able to figure away to have the perfect wedding AND a dream home.

New Home Gift Registry Young couples getting married register for gifts to let their friends and family know exactly what they want and need. If you need a house, why not let your guests know? Maybe the insert in the wedding invitation should read:“The couple is registered for a small number of necessities at Target, JC Penneys and Macys. If you would prefer not to shop, they are also saving for a down payment for a new home and would a appreciate monetary gift toward their dream.”
I don’t know what Miss Manner’s would say about but I think a financial wiz like Suze Orman would applaud the idea.

Wedding Budget With the average dream wedding going for over $20,000, maybe a little arranging of the budget is in order. Those saved dollars from the dream wedding can go toward that dream home instead. Now, I am not suggesting "cheaping out" on anything or everything. But it would be prudent to take a look at where you can economize on your budget. Maybe you can go fore go the fancy invitations or select a less expensive dress. Is it possible the honeymoon trip to Hawaii would be a better choice for your fifth anniversary and a road trip to Duluth, MN to create newlywed memories along the north shore of Lake Superior could be considered instead? Whether on wedding details, reception or the honeymoon, if just 25% could be saved on the average wedding, approximately $5000 cash that could go toward your dream home.

So brides and grooms start thinking about your future lives together and create a plan for your dream home. Though those scanners will not work outside of the department stores, I do! As a professional REALTOR® , I have helped many young couples find the first home of their dreams. I know the north and east Twin Cities housing market and can help you spot a deal whether want a dream home in Maplewood, Forest Lake or Blaine. I will assist you in writing a fair offer and negotiate a deal so your dream can become a reality. And having your OWN agent doesn't cost you any additional fees--The seller pays my commission! Working with an agent to find your first home, takes the stress out of the home buying process so you can focus on making your wedding day special rather than moving in details too. 

Copyright 2013 www.terieckholm.com

Going, Going, Gone! Why Homebuyers Need to be Ready to Write an Offer

It seems a bit unbelievable to some homebuyers. After a few years of hearing about a real estate market where buyers were in the driver’s seat now buyers are hearing, "Sorry, that home is SOLD!"

That is the very market we are now in folks! There are still homes being listed every day. But with these phenomenally low interest rates (Did you ever think a 15 year mortgage would be UNDER 3%?!), there are many more homebuyers off of the fence and in the market. If you are a first time homebuyer and looking for a home in the $100K-150K range, you are not only battling against first time homebuyers but also investors to find a good deal. Investors have plans to fix up and resell or put a renter into the home. And since investors often pay with cash, there are no worries to the seller as to whether the home will appraise or the financing will fall through. It’s tough competition for an FHA first time buyer who wants the seller to pay closing costs. 

So what’s a homebuyer to do? 

Get organized. If you want to buy a home at a good price in this market, you need to have a plan.

Plan to Work with a REALTOR® This is not a market to go at it alone. Find a good, trusted professional who is willing to show homes as soon as they hit the market and sign a contract for buyer’s representation. In most cases, it will not cost you anything because the seller will pay the commission.

Plan to Get Pre-Approved for a Loan Without a pre-approval letter, you won’t be able to submit an offer. Most sellers won’t consider accepting a purchase agreement without a letter from a loan officer stating the buyer is qualified to purchase the home. Some bank owned properties only will accept specific types of financing so proactive buyers will be pre-approved for a loan.

Plan to Define Your Criteria Once pre-approved, you know what you can pay for a home so define all other aspects of your purchase including location, school district, number of bedrooms, bathrooms and garage stalls.

Plan to Get Set Up to Receive NEW Listings Call YOUR REALTOR® and ask to be set up to receive all new listings as soon as possible. This is one of the best perks of working with one agent, they know what you are looking for and will help you find it. I like to use a program called Listingbook  so my buyers can leave any property related questions for me to answer on their favorite homes. This is a great way to weed out short sale listings that already have offers too. I review favorites and if there are any short sales with an offer in to the bank but still listed as active on the MLS, we can note it and move on.

Plan to Be Ready to See Homes ASAP The good ones are going fast in this market. If a property meets your criteria, you will need to see the home as quickly as you can.

Plan to Make a Quick Decision Many homes are in multiple offers after a day or two on the market. When a serious homebuyer sees a home that they are interested in, they have to make a quick decision and write up the purchase agreement as soon as possible.

Prepare for Multiple Offers In the first time homebuyer price range, I have seen multiple offers on almost every home I have written a transaction on this summer. Many homes are listed at low prices to encourage more than one offer. If the home appears to be an excellent value, plan to write your “highest and best” offer on it!

Persistence Pays! This summer I had a young couple looking for a starter home who wrote SIX offers before finding their dream home. They were persistent and finally realized their dream. Another young family wrote four offers. In a lower price point, it may take a few offers to get a home, but the reward is worth the effort!

Copyright 2012 www.terieckholm.com

Question from First Time Homebuyer--Is a Home a Good Investment?

 “Is buying a home really a good investment?" That question is asked quite often these days especially as the real estate market continues to show signs of recovery. As the market heats up and there are more homes with multiple offers due to low interest rates, some first time homebuyers continue to wonder whether buying a home is a good financial investment.

For decades, buying a home was considered one of the safest investments a person could make. It was "The American Dream". But then came came the crash or burst bubble and people became more cautious about real estate investing. Now, homes are selling again but the question does remain; Is owning a home a good financial investment?

In my opinion, YES, buying a home can be a wise investment and not just because I am a REALTOR®, but because I, too, am a homeowner. The key is treating your home like the investment that it truly is. It takes discipline and time for your investment to grow. And like any other investment, if you have to sell when the market is down, there is a chance that you will not realize as much profit as you may have expected.

So what are some of the key points that must be considered when investing in your first home?

• Buy Smart

**Price **Interest Rate **Type of Mortgage **Resale Potential **Equity Builder?

• Maintain and Protect Your Investment

**Home maintenance **Insurance

• Don’t Put in Your Asset in Jeopardy

The best way to have a healthy balance sheet when you decide to sell your home is to Buy Smart in the first place. Buying smart is not just about getting the home at a low price though that is a very important piece to the puzzle. Homes were a at rock bottom prices a few months ago and when coupled with extremely low interest rates, many people started thinking now may be the time to buy that first home. But with more buyers in the mix, multiple offers are becoming the norm. It is important not to over extend and get caught up in a bidding war that you cannot afford to get that "perfect" home. 

Buying smart also means getting a mortgage that you can afford and that is safe, preferably at a fixed rate rather than an adjustable rate, that can fluctuate into something that you cannot afford. Interest rates are at record-breaking low rates. Talking to a knowledgeable loan officer is a great way to get started in the home buying process and find out what options are available to first time buyers now.

But buying smart goes beyond the price paid and the loan used to finance a first home. It is also buying with resale in mind. Many, who purchased homes in the price climbing frenzy of before the market crashed, snatched up any home they could  get an offer accepted on. They were tire of submitting multiple purchase agreements and being beat out by other buyers in multiple offer situations. They stopped worrying about the perfect floor plan or caring whether the home was on a busy road or next railroad tracks. As the market picks up, buy smart and always think about the need to potentially resell the home.

As a REALTOR® who works often with first time buyers, I spend time helping my them to understand the positives and negatives of the location of each property they view. I point out how something quirky like having no basement or having a hot tub built in to a bedroom could affect the resale value by limiting potential buyers. Paint and wallpaper can be easily changed but foundation, plumbing and property location are much more expensive to deal with. Oddities it a home can drastically affect value when it is time to sell.

Lastly, buy smart by determining whether equity can be built with good old fashioned hard work! If the home hasn’t been updated, a good sprucing up could raise its value. A house that has an unfinished basement, could build equity if it can be done at a reasonable cost. Don’t take shortcuts and avoid permitting because that can be costly if you go to sell. Is landscaping your forte’? Look for a home with a yard that can be upgraded over the years. Just be frugal and realistic in what your resale will be in the end.

Beyond a smart buy, maintenance is essential as is proper insurance to be certain a home owner can afford the required repairs should the unexpected happen. Time after time I have to bear the bad news when presenting a market analysis at a home where the interior and/or exterior has not been repaired or replaced in decades. These homes are not worth what a neighboring, updated home is worth. Doing several projects over time allows a homeowner to enjoy the improvements while retaining the property value. Likewise, not insuring a home properly can be a huge risk. Worse yet, are the homeowners that make a home insurance claim and receiving payment for a repair but opt to use the money for something else.

Finally, it is important for a homebuyer to not put their investment in jeopardy. Many of the people who lost their homes in the market downturn put their homes in jeopardy but taking risky loans against the equity. Some people took home equity loans at reasonable rates but didn’t use the funds to improve their home. Some of these loans were at very high adjustable rates and as the payment rose, the homeowners just couldn’t make the payment. When I was growing up, I remember learning to never take a risk with anything you couldn’t afford to lose. I think a home falls into this category.

Like any investment, a home’s value will fluctuate. But a house is unique as an investment because it serves a dual purpose: It is a your place to live as well as a way to increase your net worth. By using the money that would be paid for rent and putting it toward a house you can afford with a plan to protect and maintain your property, a home purchase is still a good investment. 


 Copyright 2012 www.terieckholm.com

Bridal Registry Out of the Box! Newlyweds Want Dream Home!

Why can't a bride and groom take that little bar code scanner from Target or Macy's and scan a photo of a new home instead? I know couples need the department store stuff like blenders, coffee makers and blankets but they will need a first home too!  

What if brides and grooms could  browse the internet listings on any real estate website or drop by a neighborhood open house and use a special "dream home scanner" to click on a favorite home. Then they could receive the keys to their dream home just in time to be carried over the threshold. THAT, my friends, would be a fairy tale ending or beginning; a really start to happily ever after.

It may sound off the wall but newlyweds are going to face a tougher time finding a loan without a down payment.  Zero down loans have all but disappeared from the landscape and first time buyers will need cash in their pockets to put toward a new home. As mortgage programs continue to change and evolve, it has become imperative to save for that down payment. Forward thinking young people might want to divert some of their wedding funds and gifts into an investment in real estate.

In this changed real estate market, new home buyers NEED a down payment for a house. Not just a few bucks either. In most cases a buyer will require a minimum of 3-5% to put down. Minnesota starter homes run about $150,000 in the north and east Twin Cities metro. So,  newlyweds today will need to save up a minimum of $5,000-$10,000, plus closing costs before making a first home purchase.

All is not lost for first time buyers, but a little forward thinking is in order. There is a lot of money involved in most weddings; both on the party planning and the gift recipient side. A savvy bride and groom might be able to devise a plan to have the perfect wedding AND a dream home.

New Home Gift Registry Young couples getting married register for gifts to let their friends and family know exactly what they want and need. If you need a house, why not let your guests know? How about adding a note to the invitation stating your gift preference?

“The couple is registered for a small number of necessities at Target and Macys. If you would prefer not to shop, they are also saving for a down payment for a new home and would a appreciate monetary gift toward their dream.”

I don’t know what Miss Manner’s would say about but I think a financial wiz like Suze Orman would applaud the idea.

Wedding Budget With the average wedding pushing $20,000, maybe a little rearranging of the budget could be a way to find some funds. Those saved dollars from the perfect wedding can go toward that dream home instead. Now, I am not suggesting going the bargain basement route on anything and everything, just economize where it makes sense. Maybe you can go opt for less fancy invitations or choose a less expensive dress. Maybe that cruise to the Caymans would be a better choice for a future anniversary and a honeymoon in Duluth, MN creating newlywed memories along the north shore of Lake Superior would be be a budget friendly change. Whether on wedding details, reception or the honeymoon, saving 25% of an average wedding bill would be $5000 cash toward a new home.

So young couples start planning your future with a plan for your dream home too! While the current technology does not allow a scanner to work outside of a department store, I do! Adjust the budget to come up with the down payment and I can assist you with finding your dream home.

As a professional REALTOR®, I have helped many young couples find their first home.. I know the north and east Twin Cities metro area and can help you spot a dream home deal whether you are looking in Lino Lakes, Blaine, Andover or anywhere in the Forest Lake school district. I can assist you in writing a fair offer and negotiate a deal so your dream can become a reality. And (more budget friendly advice here)....Having your OWN agent doesn't cost you any additional fees--The seller pays my commission! Working with an agent to find your first home, takes the stress out of the home buying process so you can focus on making your wedding day special rather than moving in details too. 

Copyright 2012 Teri Eckholm 

First Time Buyer Question—Is a Buying a Home a Good Investment in 2012?

Is Buying a Home a Good Investment?

“Is buying a home really a good investment?" Great question huh? Especially in this slowly stabilizing economy. For decades buying a home was for decades regarded one of the safest investments a person could make; the epitome of the American Dream. But now first time buyers are confused as home values and average sales prices plummeted. Is the real estate market current downturn a opportunity to grab one's piece of the American Dream? Does owning a home make sense as a financial investment?



MOST AMERICANS say YES! In a January 2012 survey of voters by the National Association of Home Builders, "74 percent said that despite the ups and downs in the housing market, owning a home is the best long-term investment they can make." That is 3 out of 4 voting Americans who still believe in the value of home ownership!

And I agree,  buying a home is a wise investment and not just because I am a REALTOR®, but because I, too, am a homeowner. The key is to treat your home like an investment. It takes discipline and time for an investment to grow. And like any other investment, if you have to sell a stocks, mutual funds or a home, when the market is down, there is a chance that you will not realize as much profit as you may have expected.

So what are some of the key points that must be considered when investing in your first home?

• Buy Smart

**Price **Interest Rate **Type of Mortgage **Resale Potential **Equity Builder?

• Maintain and Protect Your Investment

**Home maintenance **Insurance

• Don’t Put in Your Asset in Jeopardy

The best way to have a healthy balance sheet when you decide to sell your home is to Buy Smart in the first place. Buying smart is not just about getting the home at an extremely low price. With many homes at rock bottom prices, it is a good time to consider buying a first home. But buying smart also means getting a mortgage that you can afford. One that is safe, preferably at a fixed rate rather than an adjustable rate, that won't fluctuate into something that you cannot afford. Interest rates are at record-breaking low rates. Talking to a knowledgable loan officer is a great way to get started in the home buying process and find out what options are available to first time buyers now.

But buying smart goes beyond the price paid and the loan used to finance a first home. It is also buying with resale in mind. Many, who purchased homes in the price climbing frenzy of a few years ago, snatched up any home they could after submitting multiple purchase agreements on several homes. They often overlooked an unusual floor plan or that the home was railroad tracks with several trains passing by at all times of the day and night. They adjusted their needs to accept the powerlines in the backyard or the noise from Interstate 35 just a few blocks away. But now if these same families are faced with trying to relocate, they are frustrated that buyers refuse to compromise on same aspects that they overlooked.


As a REALTOR® who loves to work with first time home buyers, I spend time helping my them to understand the positives and negatives of the location of each property we view. I point out how something quirky like having no basement or having a hot tub built in to a bedroom could affect the resale value by limiting potential buyers. Paint and wallpaper can be easily changed but foundation, plumbing and property location are much more expensive to deal with. Oddities it a home can drastically affect value when it is time to sell.

Lastly, buy smart by determining whether equity can be increase with good old fashioned hard work! If the home hasn’t been updated, a good sprucing up could raise its value. A house that has an unfinished basement, could build equity if it can be done at a reasonable cost. Don’t take shortcuts and avoid permitting because that can be costly if you go to sell. Is gardening your hobby? Look for a home with a yard that can be upgraded over the years. Just be frugal and realistic in what your resale will be in the end.

Beyond a smart buy, maintenance is essential as is proper insurance to be certain a home owner can afford the required repairs should the unexpected happen. Time after time I have to bear the bad news when presenting a market analysis at a home where the interior and/or exterior has not been repaired or replaced in decades. These homes are not worth what a neighboring, updated home is worth. Doing several projects over time allows a homeowner to enjoy the improvements while retaining the property value. Likewise, not insuring a home properly can be a huge risk. Worse yet, are the homeowners that make a home insurance claim and receiving payment for a repair but opt to use the money for something else.

Finally, it is important for a homebuyer to not put their investment in jeopardy. Many of the people who lost their homes in the market downturn put their homes in jeopardy but taking risky loans against the equity. Some people took home equity loans at reasonable rates but didn’t use the funds to improve their home. Some of these loans were at very high adjustable rates and as the payment rose, the homeowners just couldn’t make the payment. When I was growing up, I remember learning to never take a risk with anything you couldn’t afford to lose. I think a home falls into this category.

Like any investment, a home’s value will fluctuate. But a house is unique as an investment because it serves a dual purpose: It is a your place to live as well as a way to increase your net worth. By using the money that would be paid for rent and putting it toward a house you can afford with a plan to protect and maintain your property, a home purchase is still a good investment. 

If you are buying, selling or relocating to Minnesota and need help from a professional REALTOR®, give me, Teri Eckholm of RE/MAX Specialists, a call or visit my website for a FREE Relocation Packet or Homebuyers Success Packet. I specialize in acreage and lakeshore properties in the north and east Twin Cities metro area including Ham Lake, Lino Lakes and all communities in the Forest Lake School District! Serving Anoka, Chisago, Ramsey and Washington Counties in Minnesota.
Copyright 2012 www.terieckholm.com

“They Don’t Need an Agent!”—How First Time Homebuyers Find their Way Home!

My cell phone rang as I pulled into the parking lot of my RE/MAX real estate office in White Bear Lake one afternoon. The caller said he and his fiancée had just driven by a listing of mine and could I show them the inside. My first question is always, “Are you working with a real estate agent?” “No”, he answered. The meeting was set for the next evening.

The young man and his fiancée arrived with an entourage of parents and assorted other friends and relatives. Being first time buyers, they wanted assistance and approval on their very first home purchase. Looking over the home from top to bottom, they liked what they saw but needed time to think. I asked the question I always ask, “When you are shopping for a home, are you shopping for a REALTOR®?” One of the dads quickly answered. They don’t need an agent and won’t be signing any contract with a buyer’s agent. They will get a better deal working directly with the listing agent.

I explained why this wasn’t true but could tell from the look on this dad’s face, he wasn’t about to believe me.

I avoided the debate but went on to explain agency to the young couple. I asked them to sign the disclosure on agency as required by the State of Minnesota. Buyers need to understand that with any of my broker's listings, I am under contract to work for the seller and protect their interests. However, if the couple decides to sign a buyers’ representation agreement with me, they would be in a DUAL agency when looking at any property currently listed with RE/MAX Specialists. They had seen many homes over the last several weeks with dozens of other REALTORS®, but I was the only listing agent who explained agency to them or asked them to sign the required disclosure.

Days later, a decision was made; the young couple wanted to make an offer on my listing. A contract was signed for buyers’ representation for the specific home only. Dual agency now applies. As an agent working for both parties, I could not do anything that would hurt either the buyer or seller. Because the agreement was only for the specific home, I could not discuss other property options. An offer was presented, but terms could not be agreed upon. The buyers went away.

A few weeks the price was reduced on my listing. I called this young couple to see if the lower price would be enough to renew their interest. It would. But there was also another new construction house in a different area that was being considered.

Another showing. They were sure that they had it down to between the two homes. I could see the indecision and confusion on their faces. I asked about the other home they were considering to help them contrast it to my listing to help my selling clients and put their home in a better light. As with most homes, neither home was a perfect fit. I am a firm believer that after weighing all of the pluses and minuses, homes will sell themselves if they are the right home. A week passed. No offer came forth.

Finally a phone call came from the young man. We have made a decision. We are not going to offer again on your listing. It is not the right home for us. In fact, neither home is right. We are starting over and think we need our own agent. "Would you help us find a home?"

Now as their buyers’ representative, I got to work. For the next few weeks, we visited half a dozen or so homes from the hundreds currently on the MLS that met their criteria. Traveling from Stillwater to White Bear Lake and Hugo to Forest Lake, we narrowed down the field of potential homes to a couple of favorite houses. Finally, one sparked enough interest for a second showing with the parents, but this home also had a few quirks that raised concerns. That same evening, since we were out, I set up another showing for a home in a development that hadn't considered but I knew would be a very good match for their needs. As it turned out, the second home was perfect for these buyers!

With the perfect home, there was no delay or hesitation in signing the offer. Things fell into place. With every visit to the home for the inspection and showings, the young couple became more excited about their first home.

At the final walk-through, with minutes to go before they were to receive the keys to their first home, I asked them, “So, are you glad that you decided to sign with a REALTOR®?”

They answered together, “Yes!! You made it so much easier to find the right home! Especially for first time buyers.” I don’t make this stuff up…Those were their exact words.

After the closing, I received a hug and sincere, “thank you for everything”, from my young clients. As they set off to begin life in their dream home a thought struck me, I absolutely LOVE my job!

Counties in Minnesota.



Copyright 2010 Teri Eckholm 

First Time Homebuyer’s Real Estate Word for Today is Fiduciary

A couple of weeks ago, a friend mentioned a new company had opened in the Minneapolis/St. Paul area. He later realized it was just Fair Isaac now going by the new name, FICO. I was taken aback by the confusion because most people living in the Twin Cities north metro are aware the business analytics company, Fair Isaac Corporation, has been located in Shoreview for decades. What surprised me is that few outside the real estate and mortgage industry may have made the connection that FICO is an acronym for the Fair Isaac Corporation.

Once again, I was a bit surprised that such a simple term I use everyday as a REALTOR® would be unknown to others. But then it got me thinking of all the times a glazed look came over a buyer’s eyes when I talked about escrow or earnest money. These can easily be confused with other real estate and mortgage terms like down payment or cash to close. It is totally understandable because most homebuyers do not buy houses everyday.There are so many terms that could possibly confuse a First Time Homebuyer that I thought an online glossary of real estate terms might be helpful. So over the next several weeks I am going to have a series of posts for the first time homebuyer with explanations of the most often used (and sometimes confusing) real estate terms. This way you can skip buying that big “how to buy a house” book or attending that First Time Homebuyer Class and have a quick resource at your fingertips. Today’s Real Estate Term is:

Fiduciary—A relationship of trust created when a buyer or seller signs a contract with a REALTOR®. After a contract is signed, a real estate agent has several fiduciary duties that protect their client not just through the transaction but beyond it as well. This means as a first time buyer, once you sign a contract with an agent, that agent cannot tell others anything that is private about you or your situation to anyone. In Minnesota, these duties require your agent to be loyal, confidential, and obedient with your instructions. They are accountable to you and must disclose any information they learn that would benefit you in the purchase of a home. Throughout the transaction and afterward, they must use reasonable care to protect you and your interests.

It is important for a first time buyer to understand this term because every seller that is listed with a real estate broker has a contract in place. This means when a buyer calls the listing agent for information or stop by at an open house, the friendly REALTOR® asking you about your ability to buy a home is under contract with and WORKING for the SELLER. This agent has a fiduciary duty to disclose everything you have said to the seller of the home. But it is not a two way street. The friendly agent cannot tell you anything about the seller that the seller doesn’t want you to know. Because of their contract, the agent cannot say why the seller is moving or if a price reduction is in the works.

As a home buyer, it is essential to interview potential agents to assist with the home search as soon as possible in the process. When good match is found, sign a contract with a REALTOR® so that your interests and information are protected. Then REALTOR® can make calls to other agents on homes, set up private showings and assist you through the homebuying process. The agent will work for YOU! The contract does not have to be a long term commitment. I often sign up new clients for a couple of weeks and extend the contract once we have formed a stronger relationship. Rest assured that even if you decide to part ways with your agent, the fiduciary duty to keep your information private continues forever.

Copyright 2010 Teri Eckholm 

First Time Homebuyer’s Real Estate Word for Today is Equity

Last week a friend mentioned a new company had opened in the Minneapolis/St. Paul area but later realized it was just Fair Isaac had changed its name to FICO. Most people living in the Twin Cities north metro are aware the business analytics company, Fair Isaac Corporation, has been located in Shoreview for decades. But I hadn't realized that few outside the real estate and mortgage industry have made the leap that FICO is an acronym for the Fair Isaac Corporation. Once again, I was a bit surprised that such a simple term I use everyday as a REALTOR® would be unknown to others. But then it got me thinking of all the times a glazed look came over a buyer’s eyes when I talked about escrow or earnest money. These can easily be confused with other real estate and mortgage terms like down payment or cash to close. It is totally understandable because most homebuyers do not buy houses everyday.
There are so many terms that could possibly confuse a First Time Homebuyer that I thought an online glossary of real estate terms might be helpful. So over the next few weeks I am going to have a series of posts for the first time homebuyer with explanations of the most often used (and sometimes confusing) real estate terms. This way you can skip buying that big “how to buy a house” book or attending that First Time Homebuyer Class and have a quick resource at your fingertips. Today’s Real Estate Term is:

EQUITY—The amount of ownership one has in a property is the equity. This means if a home is appraised at $200,000 and the homeowner owes the bank $150,000, he would have $50,000 in equity.

An FHA buyer initially has very little equity because of the very low down payment required for the loan (usually 3.5%). Whereas a conventional buyer, who puts down 20% or more on the home, will have a greater percentage of equity.

It is important for a first time buyer to understand this term because it can be used in property descriptions. A home that is in a “negative equity" position is a short sale. This means the homeowner owes more to the bank than the home is worth in the current real estate market.
Other real estate ads will describe homes as an “equity builder”. This is where a buyer can build equity in the home faster by making improvements like finishing a basement so the home increases in value more quickly than if nothing is done on the home.

Another term used by REALTORS® in advertisements is “sweat equity”. This is similar to an equity builder but often describes a home that could need significant work to bring the property to its full value.



Copyright 2010 Teri Eckholm http://www.terieckholm.com/

First Time Homebuyer’s Real Estate Word for Today is Escrow

In a recent episode of the Emmy award winning television show, Cash Cab, several people with stumped by the acronym, FSBO. This is a often term often used in the real estate world to describe a person selling their home by owner (For Sale By Owner). As a REALTOR® I was a bit surprised that such a simple term I use everyday would be unknown to so many. But then it got me thinking of all the times a glazed look came over a buyer’s eyes when I talked about escrow or earnest money. These can easily be confused with other real estate and mortgage terms like down payment or cash to close. It is totally understandable because most homebuyers do not buy houses everyday.

There are so many terms that could possibly confuse a First Time Homebuyer that I thought an online glossary of real estate terms might be helpful. So over the next few weeks I am going to have a series of posts for the first time homebuyer with explanations of the most often used (and sometimes confusing) real estate terms. This way you can skip buying that big “how to buy a house” book or attending that First Time Homebuyer Class and have a quick resource at your fingertips. Today’s Real Estate Term is:

Escrow This term can be confusing as it is used a few different ways. In some states, going into escrow is defined as the period of time after the purchase agreement is signed but prior to closing. In Minnesota we call that time period, pending, not escrow.

In Minnesota, the term escrow means funds held by a third party for a future payment. The most common time a first time buyer hear the term used is in regard to the required funds held in escrow by their mortgage company on a monthly basis to cover the taxes and property insurance for the home. This amount will be added to the monthly payment and the mortgage company will be then responsible for making the payments directly to the insurance company and the county for taxes. Putting funds into escrow is not required for all buyers. If a significant down payment is made at the time of purchase, a lender will not require funds to be placed in escrow for taxes and insurance. A buyer can then pay their insurance company and county directly.

There is another time when funds may be placed in escrow. There are some instances where essential repairs cannot be made prior to closing. In this instance, a mortgage company may allow funds to be place into the title company's escrow account on the date of closing and held there until the repairs are made. It is now rare that a mortgage company will allow this; usually only in the case of off season weather where it would be impossible to make the repair such as installation of a septic system or cement driveway in the winter.



Copyright 2010 Teri Eckholm http://www.terieckholm.com/

First Time Homebuyer’s Real Estate Word for Today is Earnest Money

In a recent episode of the Emmy award winning television show, Cash Cab, several people with stumped by the acronym, FSBO. This is a often term often used in the real estate world to describe a person selling their home by owner (For Sale By Owner). As a REALTOR® I was a bit surprised that such a simple term I use everyday would be unknown to so many. But then it got me thinking of all the times a glazed look came over a buyer’s eyes when I talked about escrow or earnest money. These can easily be confused with other real estate and mortgage terms like down payment or cash to close. It is totally understandable because most homebuyers do not buy houses everyday.

There are so many terms that could possibly confuse a First Time Homebuyer that I thought an online glossary of real estate terms might be helpful. So over the next few weeks I am going to have a series of posts for the first time homebuyer with explanations of the most often used (and sometimes confusing) real estate terms. This way you can skip buying that big “how to buy a house” book or attending that First Time Homebuyer Class and have a quick resource at your fingertips. Today’s Real Estate Term is:

Earnest money The funds that a buyer submits with their offer or purchase agreement to demonstrate to the seller their seriousness about buying the property. It should be an amount sufficient enough to indicate to the seller that the buyer will not walk away from the deal without good reason. It is not the same as a down payment. If your offer on the home is accepted, the earnest money check will be cashed and placed into a broker’s trust account. The funds will go toward the purchase price of the home.

Copyright 2010 terieckholm.com

First Time Buyer Question—Is a Home Still a Good Investment?

Since the economy, in a word, tanked a few years ago and the values of homes in some areas plummeted, I often get asked the question, “Is buying a home really a good investment?" It was for decades considered one of the safest investments a person could make; the epitome of the American Dream. A few years ago, skyrocketing values seemed to put home ownership out of reach for many but with the market downturn many would be first time homebuyers are confused. Does owning a home make sense as a financial investment?

In my opinion, YES, buying a home is a wise investment and not just because I am a REALTOR®, but because I, too, am a homeowner. The key is treating your home like the investment that it truly is. It takes discipline and time for your investment to grow. And like any other investment, if you have to sell when the market is down, there is a chance that you will not realize as much profit as you may have expected.

So what are some of the key points that must be considered when investing in your first home?

• Buy Smart

**Price **Interest Rate **Type of Mortgage **Resale Potential **Equity Builder?

• Maintain and Protect Your Investment

**Home maintenance **Insurance

• Don’t Put in Your Asset in Jeopardy

The best way to have a healthy balance sheet when you decide to sell your home is to Buy Smart in the first place. Buying smart is not just about getting the home at a low price though that is a very important piece to the puzzle. With many homes at rock bottom prices, it is a good time to consider buying a first home. But buying smart also means getting a mortgage that you can afford and that is safe, preferably at a fixed rate rather than an adjustable rate that can fluctuate into something that you cannot afford. Interest rates are at record-breaking low rates. Talking to a knowledgable loan officer is a great way to get started in the home buying process and find out what options are available to first time buyers now.

But buying smart goes beyond the price paid and the loan used to finance a first home. It is also buying with resale in mind. Many, who purchased homes in the price climbing frenzy of a few years ago, snatched up any home they could after submitting multiple purchase agreements on several homes. They didn’t worry about the perfect floor plan or that the home was on a busy road or next railroad tracks or if it had a weird small room that could not be used for anything. Now, if they are faced with trying to relocate, they are frustrated that buyers refuse to compromise on aspects that they overlooked.
As a REALTOR® who works often with first time buyers, I spend time helping my them to understand the positives and negatives of the location of each property they view. I point out how something quirky like having no basement or having a hot tub built in to a bedroom could affect the resale value by limiting potential buyers. Paint and wallpaper can be easily changed but foundation, plumbing and property location are much more expensive to deal with. Oddities it a home can drastically affect value when it is time to sell.

Lastly, buy smart by determining whether equity can be built with good old fashioned hard work! If the home hasn’t been updated, a good sprucing up could raise its value. A house that has an unfinished basement, could build equity if it can be done at a reasonable cost. Don’t take shortcuts and avoid permitting because that can be costly if you go to sell. Is landscaping your forte’? Look for a home with a yard that can be upgraded over the years. Just be frugal and realistic in what your resale will be in the end.

Beyond a smart buy, maintenance is essential as is proper insurance to be certain a home owner can afford the required repairs should the unexpected happen. Time after time I have to bear the bad news when presenting a market analysis at a home where the interior and/or exterior has not been repaired or replaced in decades. These homes are not worth what a neighboring, updated home is worth. Doing several projects over time allows a homeowner to enjoy the improvements while retaining the property value. Likewise, not insuring a home properly can be a huge risk. Worse yet, are the homeowners that make a home insurance claim and receiving payment for a repair but opt to use the money for something else.

Finally, it is important for a homebuyer to not put their investment in jeopardy. Many of the people who lost their homes in the market downturn put their homes in jeopardy but taking risky loans against the equity. Some people took home equity loans at reasonable rates but didn’t use the funds to improve their home. Some of these loans were at very high adjustable rates and as the payment rose, the homeowners just couldn’t make the payment. When I was growing up, I remember learning to never take a risk with anything you couldn’t afford to lose. I think a home falls into this category.

Like any investment, a home’s value will fluctuate. But a house is unique as an investment because it serves a dual purpose: It is a your place to live as well as a way to increase your net worth. By using the money that would be paid for rent and putting it toward a house you can afford with a plan to protect and maintain your property, a home purchase is still a good investment.

Copyright 2010 Teri Eckholm 

Rethink the Bridal Registry! Today's Bride & Groom Want a First HOME!

Wouldn’t it be great to take one of those little barcode readers beyond the department store towels, toasters and flat screens and head out to the nearest neighborhood of cozy bungalows and tag something that a new bride and groom really need, their first home? Imagine browsing the internet listings on realtor.com or dropping by a Sunday Open House and using that scanner to click on your favorite new home so you could receive the front door key just in time to be carried over the threshold. Only in a perfect world, right?

I know it is a crazy idea but brides and grooms getting married this year are going to face a tougher time finding a loan as first time buyers. Zero down loans have all but disappeared from the landscape and first time buyers will need cash in their pockets to put toward a new home. As mortgage programs continue to change and evolve, there is a reality to saving for that down payment. A forward thinking young couple might want to divert some of their wedding funds and gifts into an real estate investment in which they can begin their lives together.

In this changed real estate market, new home buyers NEED a down payment for a house. Not just a few bucks either. In most cases a buyer will require a minimum of 3-5% to put down. With an average Minnesota starter home in the $175,000 price range, today's brides and grooms will need to save at least $5,000-$10,000, plus closing costs.

All is not lost for first time buyers, but a little forward thinking is in order. There is a lot of money involved in most weddings; both on the party planning and the gift recipient side. A savvy bride and groom might be able to figure away to have the perfect wedding AND a dream home.

New Home Gift Registry Young couples getting married register for gifts to let their friends and family know exactly what they want and need. If you need a house, why not let your guests know? Maybe the insert in the wedding invitation should read:“The couple is registered for a small number of necessities at Target, JC Penneys and Macys. If you would prefer not to shop, they are also saving for a down payment for a new home and would a appreciate monetary gift toward their dream.”
I don’t know what Miss Manner’s would say about but I think a financial wiz like Suze Orman would applaud the idea.

Wedding Budget With the average dream wedding going for over $20,000, maybe a little arranging of the budget is in order. Those saved dollars from the dream wedding can go toward that dream home instead. Now, I am not suggesting 'cheaping out" on anything or everything, just take a look at where you can economize on your budget. Maybe you can go forego the fancy invitations or select a less expensive dress. Maybe that trip to Hawaii would be a better choice for your fifth anniversary and a road trip to Duluth, MN to create newlywed memories along the north shore of Lake Superior should be considered instead. Whether on wedding details, reception or the honeymoon, a 25% savings on the average wedding is $5000 cash that could go toward your dream home.

So brides and grooms start thinking about your future lives together and create a plan for your dream home. Though those scanners will not work outside of the a department store, I do! As a professional REALTOR, I have helped many young couples find the first home of their dreams. I know the north and east Twin Cities housing market and can help you spot a deal whether you are looking in Forest Lake or Andover. I will assist you in writing a fair offer and negotiate a deal so your dream can become a reality. And having your OWN agent doesn't cost you any additional fees--The seller pays my commission! Working with an agent to find your first home, takes the stress out of the home buying process so you can focus on making your wedding day special rather than moving in details too.

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Copyright 2010 Teri Eckholm