Tips for Buying a Foreclosed Home on Minnesota Acreage

Though prices are starting to edge upward in the Minneapolis/St Paul metro area, current prices on acreage properties in the north and east metro are still extremely attractive. Throughout Anoka County, Chisago County and northern Washington County there many homes on large and small acreage that are quite affordable. However, buying a foreclosure is different than buying a  home from a more traditional seller. The biggest difference when buying a bank-owned property is that buyers almost always required to waive their right to a seller’s disclosure. This actually does make sense since no one at the bank actually lived at the home and can properly complete the disclosure. In fact, it is doubtful that anyone at the bank has ever set foot on the property or even the state of Minnesota for that matter. So when buying a foreclosure on acreage, what other things need to be considered to protect yourself and do your due diligence?

**Ask for a Compliance Test for the Septic System.

 

Most rural homes have a private septic system to handle sewage and waste water. Not all systems are created equal. They are designed for the specific property and size of the home. Even a new septic system can fail if not properly maintained. How do you know if the septic system is working? Ask the bank to have a third party inspect the system and  supply a report of compliance. This MUST be written into your purchase agreement as a contingency of purchase. (i.e. Sale is contingent on the buyer reviewing a current compliance certification for the septic system.) Some banks will not do this test, so be prepared to pay for a compliance test yourself or assume the cost associated with any potential septic failure in the future.

If you have never lived on a home with a septic system, it is important to educate yourself on how to best maintain your system. Additional information on Septic Systems.

**Well Disclosure is Mandated by State Law

 

In Minnesota, well disclosure is mandated by state law as a part of the Ground Water Protection Act. A seller, yes even a bank, must provide information on the location and status of all wells on a property at the time of sale. If this information is known and not provided, the buyer has 6 years in which to file a claim against the seller.

If you chose to waive your rights to disclosures when buying a foreclosure AS-IS and it is a large acreage parcel of land, it is a good idea to visit the MN Dept of Health webpage on Finding Abandoned Wells prior to purchase. Abandoned wells can be very expensive to seal properly. Improper sealing is not only illegal, it can be detrimental to the ground water. 

**Are there any underground fuel tanks?

Often people looking at acreage for the first time will have questions about the huge propane fuel tank located near the home. These tanks are usually only seen in the city at gas stations where homeowners fill their small propane tanks for the weekend BBQ. In the country, the large tanks are in many backyards as the source of fuel to heat the home and run appliances.

But what if there is no visible tank?  Could there be an underground fuel tank somewhere on the property?

Don’t immediately assume the home is heated with natural gas. Homes on large acreage are rarely heated with natural gas as the cost of bringing the gas line to the home can be cost prohibitive. Check for underground fuel tanks. Even if there is a propane tank visible, there could be still be an old fuel tank on the property either above or underground. While this is a required disclosure by a traditional seller, a bank will not know whether there is an underground tank or not. The removal of underground fuel storage tanks can be expensive and dangerous. The removal procedure is regulated by the Minnesota State Fire Marshal as well as the Minnesota Pollution Control Agency.  

**Check the Trees! 

Buying a home AS-IS also applies to the landscaping. If there are dead trees on the property, it would be a good idea to assess them to see if they died due to a disease. Many times the value of the acreage is in the mature trees surrounding the home but there are several diseases and parasites that can wipe out acreage landscaping. The big three to be concerned with in Minnesota are oak wilt, Dutch elm and the Emerald Ash Borer.

Copyright 2012 www.terieckholm.com

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

It may be hard to believe that the acronym FSBO could stump a game show contestant. But in an episode of the Emmy award winning television show, Cash Cab, a taxi full of New Yorkers couldn't come up with the answer. FSBO 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 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 2012 Teri Eckholm

Zero Down Financing is Available in Chisago County with USDA Rural Financing!

And just because the financing is rural, it doesn't mean you will have to buy a farm either! 

It's still the American Dream to own a home. With prices very affordable and interest rates are extremely attractive, now is a great time to purchase a first home! But not every potential homebuyer has sufficient funds for a downpayment and closing costs. So what are the options in the northeast Twin Cities Metro? USDA rural financing!

Most loan officers will tell you that a conventional mortgage can require 5, 10 or 20% for a down payment. Even government backed FHA loans will require that buyers have a minimum of 3.5% of their own funds to invest in their home. Our veterans have always had a wonderful zero down program available and the VA loan program is still a great option to those who have served our country. But for other buyers trying to come up with the minimum 3.5% down payment required by FHA or 5-10% down for a conventional loan is a road block to in their path to a new home.

There is good news for those considering buying a home in Chisago County. Most communities in Chisago County are designated rural areas and qualify for the zero down option, Rural Development Program through the USDA. Best of all this is NOT a program limited to first time home buyers…Anyone can take advantage of the USDA financing program if the home and your income meet the requirements.

Now when some people hear "rural", they immediately start to think I will have to buy a broken down old-time farmstead in the middle of nowhere. Nothing could be further from the truth! According to the USDA Rural Development website, the program was created to "build stronger, more vibrant rural communities across the nation." This unique housing loan program does apply in many counties in the north and east metro that aren't so far from the cities and they don't have to be farmsteads either! Communities in Isanti and Chisago Counties including North Branch, Stacy, Chisago City, Lindstrom, Shafer, Taylors Falls and many others can possibly qualify for this program. If you are considering buying a home in any of these communities, USDA is a great program to look into. But only a handful of loan officers really know the ins and outs that make a program like this work.

I do work many north metro communities where the deals are nothing short of amazing. Homes that are 5-6 years old are being sold for $30-50K less than just a few years ago! Amazing properties with 4 Bedrooms, 2 Baths, 3 car garages and ½ acre yards priced in the $200K range. Beautiful homes in move in condition…And with the USDA program they can be purchased for ZERO DOWN!

I work with some very good loan officers that understand USDA financing and can get you started on your path to home ownership.. These mortgage professional assist buyers and sellers all over Chisago County using this unique CONVENTIONAL LOAN program. Some of the features and benefits of the program include:

• NO down payment
• NO monthly PMI
• The seller is allowed to pay all reasonable closing cost and prepaids up to 6%
• NO hit to the interest rate for the zero down
• NOT just for first time home buyers
• NO reserves needed

There are income limits to the program that will prevent some buyers from qualifying. These numbers have recently increased to allow more potential buyers to take advantage of this unique opportunity. Household income does include all residents in the home that work so yes, your teenager’s income from a job at the local fastfood chain will be included as would be your retired mother’s social security payment if they are living in the home. These income limitations are guidelines and, in some cases, may be exceeded.

Understanding the restrictions is essential but the benefits to the program are enormous! If you are considering a home in Chisago County, plan on speaking with a qualified loan officer that understands the rural development loan program before starting your home search. You could be able to afford more home than you expect. Likewise, working with a REALTOR ® that knows understands the current market conditions of the communities within this program are just as critical to your dream home becoming a reality.

Copyright 2012 www.terieckholm.com

Why Should A Seller Pay a Home Buyer's Closing Costs?

Why Should A Seller Pay a Home Buyer's Closing Costs? The short answer is....To SELL the HOUSE! But how does this work and why is it so important in the sale of a home? Let me explain...

When I list a home for sale,  sellers are given a net sheet with estimates of closing costs associated with the sale home. One of the items on the list is “Seller contribution to the Buyer’s Closing Costs.” If the home is one that would be attractive to a first time buyer, I will put in an amount that is roughly 3% of the list price. Every now and again, I hear a seller scoff when they see this. "Why would I want to pay a BUYER'S Closing Costs?”
 
The answer is very simple: So they can BUY the house!
 
Today almost all buyers are required to put down a minimum of 3% of the purchase price of the home as a down payment. The closing costs for a buyer include title insurance, home owner’s insurance, appraisals, loan origination fees, name search fees, filing fees and more. As a REALTOR® for communities of Anoka, Chisago and Washington Counties and throughout the north metro Minneapolis/St. Paul area, I see closing costs that range from $3000-$7000 for a first time buyer. Couple this amount with a required down payment and only a handful of buyers have all the funds required to purchase a home.

So buyers have the option of waiting and saving the required closing costs or asking for seller assistance. In many cases a financial institution will allow a seller to assist a buyer by paying either points to reduce the interest rates and/or closing costs.

How does this work? Let’s say that a home is on the market for $200,000. The buyer writes their offer for $195,000 and their financial institution allows up to 3% seller’s assistance with fees and closing costs. They decide to ask the seller in their purchase agreement document for $5000, thus the net offer to the seller for the home is $190,000. However the since the home was sold at $195,000, it must appraise at this higher amount.

If a seller does not want to pay the closing costs, the buyer in many cases will not be able to purchase the home. It the offer is accepted, the seller’s proceeds at closing would then be reduced by the $5000. Sellers do not have to come up with the funds in cash if there is sufficient equity in the home to cover both the buyer's and the seller's costs.

When a purchase agreement is received on a home listed for sale, it can be confusing to a seller as to what the sale price versus net number is. In the case above, the $195,000 would be the sale’s price on the purchase agreement but by paying the $5000 in closing costs, the seller’s net number is really $190,000 (less the seller's own closing costs including all fees and commission).

If as a seller you decide to counter on the original offer, you can counter on the sales price of the home and/or the amount of closing costs paid. When counter offers are involved, a seller needs to make certain that they understand what the net proceeds will be in each offer and counter offer.

This is where the assistance of a good, professional REALTOR® comes into play. As a real estate agent, I provide my clients with a seller's net sheet that outlines all costs and fees that has been updated after receiving the offer. When counter offers start going back and forth, I reiterate at each step what my seller's net number to help eliminate the confusion.

Assisting a buyer with closing costs can be the ticket to getting your home SOLD in any real estate market. Understanding the process is simple with the assistance of a knowledgable real estate agent!

Copyright 2012 www.terieckholm.com

Holding your OWN Hand when Buying or Selling a Home!

Well over a decade ago, I was on a weekend shopping excursion with my family. Just as we were about to step off the curb into the busy parking lot of the local Target, I attempted to take the hand of my precocious son when he announced to my husband and I, “I can hold my own hand!” And being obstinate and still in that "terrible two" stage, he did.

He put one chubby little fist inside the other behind his back and attempted to step off the curb and into traffic. And like the mama lion I was, I stopped him by the scruff of his neck...well actually, the collar of his jacket.

Realizing his need for independence, we explained to our child the danger of his actions. (Hey Bud...A driver of a car cannot see a tiny person out their windows as they back up their cars.) We compromised. He was allowed to hold his own hand everywhere we went except busy parking lots and when crossing the street. Then he would be required to hold mommy or daddy’s hand or hang on to his brother's stroller for his own safety.

Holding your own hand is good in life but there are times when one must rely on a professional to help them through a new or difficult situation. As a real estate agent, I realize most clients want to “hold their own hand” through a transaction for the most part. They do it with the knowledge that when they will need to “step off the curb”,  I am by their side  ready to explain and guide them through every step of the process. Whether it is a question from a home seller about getting their home ready for the first showing or a first time home buyer wondering whether a townhome or single family home would be a better investment, I am there ready to educate and assist.  

A good REALTOR® knows it is important for the client to make the decisions—it is our job to guide and educate our clients through the home buying or selling process.

Copyright 2012 www.terieckholm.com

Cruz through History Every Friday Night in North St Paul!

If you stop the quaint downtown main street of North St Paul tonight or any Friday night in the summer, you might feel that you have stepped a few decades in time. Since 1996, the Friday Night History Cruz has been summer tradition in North St. Paul. The History Cruz is an informal car show where several hundred classic enthusiasts park along 7th Avenue on Friday evenings so residents and visitors alike reminisce about days gone by  while enjoying a corn dog, a cone from the Hometown Creamery or homemade fries from Village Pizza.

My husband and I head down to the suburban car show at least a few times every summer. As we walk down the sidewalk we notice there are many antique shops where  Miller’s Shoes, Harry’s Drug and the flower shop used to be. It is times like this,  I realize how much has changed in the community of North St Paul. The movie theater was demolished long before my husband and I were married and there is an empty space where Mac’s Dinette used to be not so long ago.

My kids weren't even aware there used to be a roller skating rink or bowling alley in town as Silver Skate roller rink has been a church for decades and Weber's was transformed into an office plaza before they had a chance to bumper-bowl on a Saturday afternoon. Now there is a wind turbine that shares the landscape with a new North High school and the ever-smiling snowman. Still there are homes and families that have been a part of this community for over a century. As former North St Paulites we always run into one or two familiar faces.

North St Paul is a community rich in history.

As much as things change, there are those maintaining the past, whether a historic home or classic car. North St Paul continues to have the buzz of a vibrant community, especially when the classics come to town!

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

Dangers Lurking on Minnesota Acreage

We are in the Dog Days of a very warm Minnesota Summer! The weather is perfect for lakeshore picnics and weekends at the cabin. Many Minnesotans are itching to get out and enjoy the beauty of our area but nobody wants to be literally "itching". It is time to heed the warning of potential hazards on Minnesota acreage.

Anoka, Chisago  and Washington Counties in Minnesota boast some of the most beautiful, desirable acreage and lakeshore properties in the state. As a REALTOR® who works throughout the Ham Lake, Forest Lake, Blaine and Lino Lakes areas, I have to walk acres with clients to assess the land.  We walk the perimeters of wetland and hobby farm acreage properties to understand the property lines. Whether in a suburban backyard or  wooded field, whenever I show homes on Minnesota acreage, I am prepared. There can be dangers lurking in the underbrush.

Poison Ivy-- It is important to be extremely very aware of these poisonous plants as they are all over in Minnesota yards and wooded areas. Many property owners don't even realize the plants are poison ivy. Poison ivy is found all over the US while a close relative poison oak is found most often in the west. The plants to have a similar look and exposure to either of these plants will cause a similar, painfully itchy reaction.

Poison Ivy in will be rampant in the Summer

• Classic poison ivy is grown to full "itchy" potential in the early summer.
• Some leaves are notched.
• Some leaves are not.
• New leaves are shiny and still somewhat reddish.
• Older leaves are duller.
• Be careful not to accidentally burn poison ivy as you can have an allergic reaction to breathing in smoke too!

Poison ivy can be a ground cover, a vine or a bush. One small neglected patch can spread very quickly to a huge area. Exposure to this plant is an itchy nightmare that can last for several weeks unless treated with
prescription medicines, usually steroids. These plants can leave oil on clothing which can spread in the laundry. Be aware of this hazard when walking in any wooded area that you are unfamiliar with.

Think you can identify poison ivy? Take the POISON IVY PHOTO QUIZ

Wood Ticks/Deer Ticks--While the woods are often a haven for white-tailed deer, the beauty of these
animals is overshadowed by a frightening reality. Deer ticks are carriers of Lyme disease; a painful disease that can be quite debilitating if untreated. Deer ticks (or Black-legged ticks) are rarely found in maintained yards and are very tiny and often not noticed even after having bitten a host. The best defense is prevention of a deer
tick bite.

• Dress Appropriately When walking acreage with underbrush or on property that has not been maintained, wear long sleeves and tuck in pant legs.
  
  
• Use Bug Spray Effective repellents include DEET and Permanone. Spray clothing with Permanone repellent prior to wearing as it is not to be sprayed directly on the skin. DEET can be used on clothing and/or skin.

For additional information on ticks commonly found in Minnesota, read article "Minnesota Ticks and Their Control", by Jeffery D. Hahn.

Mosquitos--And don't forget that mosquitoes that are found in the wetland acreage. Mosquito bites are for the most part just annoyingly itchy in the spring. But in the fall, there is more of a risk of West Nile and encephalitis. This disease can be extremely serious and occasionally deadly, so mosquito spray is an essential when veiwing homes located near ponds, lakes and wetlands.

Copyright 2012 www.terieckholm.com