Real Estate Snippets

Inspections

Years ago real estate inspections in the Minneapolis/St. Paul area were almost non-existent.  Now there are inspections for each phase of a real estate transaction. 

In pre-owned homes, the first inspection may be a city mandated "point of sale" inspection.  This inspection is done before the property is placed on the market and is one of the seller's costs.  By making an inspection a condition of the sale, the city exerts some control over the property maintenance in their town.  A "point of sale" inspection is done by a city inspector or by an approved representative for the city.  Most cities require defects discovered in the inspection be repaired by the seller before the sale is completed.  The only city in our area that currently treats their "point of sale" inspection as a disclosure is St. Paul.

When an offer is made on the house, it often is contingent on a buyers' home inspection.  The private inspector is selected and hired by the buyer.  Many times the buyers' inspector will spend several hours in the property as this inspection is more detailed than the point of sale inspections.  A buyer may choose to request repair of defects found in their inspection.  The seller has the choice of doing the repairs, refusing the request, or of cancelling the purchase agreement.

Appraisals are not really inspections, but often buyers and sellers place them in that category.  An appraisal is required by the buyers' mortgage company to determine that the house is worth the amount of the loan.  Even though the appraisal protects the lender's interests, it is still paid for by the buyer.  Some types of loans (usually FHA & VA) may also require repairs as a result of the appraisal.

Ultimately both buyers and sellers are protected by the inspection process.  Sometimes sellers chafe at the inspections because they could get 3 different lists of requests for repairs.  Occasionally buyers complain about the cost of the private inspection and appraisal.  However, the more review of the property, the less likely a hidden defect will surface later to cause problems for the buyers, or for the sellers if litigation occurs.

(c) Bonnie Erickson 2006

Pricing

Pricing your home is one of the most challenging factors in marketing a home.  A saying in the real estate industry is there is always a buyer for every home IF the price is right.  So it seems finding a buyer is pretty contingent on finding the right price!      And some agents wonder why I slave over my comparable market analyses!

A seller normally wants to get the highest price possible for his/her home.  A buyer usually wants to pay the lowest price possible for his/her home.  The pricing dilemma is to find the area where the seller's price range overlaps with the buyer's price range.  Or, by real estate school definition:  market value is the price a ready, willing, and able buyer will pay for a home.  Ready and able are the keys.  I've heard many willing buyers say, "I would pay that much for that house IF I could afford it!"  To be ready and able, a buyer must be pre-qualified by a mortgage company saying s/he can afford the house.  Otherwise, they are not ready and able to buy, so their opinion of the house value is irrelevant.

In like manner, the seller's opinion of the house value is pretty irrelevant, too.  I know I'm really hanging my professional career in the balance with that statement, but don't quit reading yet.  Many times sellers want to price their house based on what they paid for improvements, what they owe (Oops, they took out too much equity on a credit line!), or what the home seems to be worth in their minds.  Repeatedly I warn sellers that they can ask ANY price for their home, but if they want to SELL their home, they'll have to list their house at the market price.

The only way to determine the market value for a home is to find similar homes in the same neighborhood that have sold in the recent past (usually within 6 months).  Finding a similar house that sold in an entirely different neighborhood, doesn't count.  Location is a factor in pricing. Condition is a factor as well.  Improvements are a factor.  And the market conditions.  If the house being listed is in tough shape with a worn out roof and badly stained carpet, it will sell for less than the identical, but pristine, house next door.  Also, if there are 3 similar houses in the same neighborhood for sale, and only one buyer, the lower priced house probably will get the most serious consideration.  Additionally, different improvements add different amounts of value to the home.  Kitchens and baths are highest in value adding improvements.  It's because of the variables in each house, that a real estate agent's input is important in determining the list price for your home.

(c) Bonnie Erickson 2006

Whining About Discipline

This blogging is quite a discipline.  It's similar to journaling which I've always wanted to do, but never "had the time".  Now, I'm making time.  Ahhhh, time management again.  I do feel like I'm attempting to break down the mass of knowledge, experience, creativity, battle scars, and what not into little bits to share on a daily basis.  It's a daunting task.  But, enough of the whining . . . if I don't watch it someone will bring me some cheese to go with my "whine".  (And when I remember which REALTOR first shared that with me, I'll give him/her credit!)

Happy Valentine's Day

Valentine's Day, the day of romance, the day when all lovers get in trouble if they forget to be romantic!  I did a little history search and found that the origin of Valentine's Day is really not clear.  According to the history channel, there are 3 theories all centered around the priest Valentine.  The first theory purports that Claudius II forbid his soldiers from marrying because he thought single men were better fighters.  Valentine supposedly secretly continued to perform marriages and when discovered, lost his life as penalty.  The second suggests that Valentine helped Christians escape the Roman prisons.  The third places Valentine in jail himself where he falls in love with a young girl and sends the first Valentine greeting to her before his death.  Regardless of the origin, the tradition of Valentine greetings has held fast over time.  So, spend time with your special person today.  Enjoy a dinner out, a box of chocolates, a single rose, or a walk in the park.  Take time to relax and enjoy the day!

Parade of Home Thoughts

The Parade of Homes started today in the Twin Cities.  There will be all kinds of lavishly decorated new construction available to tempt the consumer.  There's a magic about the Parade.  It's almost like the Pied Piper.  The music plays and we all follow mindlessly along.

If you are a Parade shopper, consider these points:

• The models you are viewing are not going to sell for the lowest price that is advertised.  Usually the model homes are filled with upgrades.  I've only seen two builders in the metro area that historically had built their models with one that is the "stripped down" version so the buyer could see what they would normally be buying.  When you view the model, ask the host/hostess how much the one you are looking at would actually sell for AS YOU SEE IT.  You may be surprised at how much those little additions can add up!
• Another thing to remember is that if there's a real estate agent acting as host in the model, that agent is representing the builder, not you.  That means the builder gets the agent's loyalty; obedience; confidentiality; benefit of the agent's skill, experience, training, and negotiating abilities; and ANY INFORMATION YOU SHARE WITH THE AGENT will be conveyed to the builder.  When you disclose too much personal information, you may compromise your ability to negotiate.
• If you want a real estate agent to represent you in negotiating with a builder, ask your agent to go with you and "register" you in each of the developments.  This allows your agent to not only represent you, but to get paid for the work they put into your purchase.
• Just because a property is new does not mean it will be perfect.  On several occasions, my buyers' private inspector has found issues that need correction even after the final city inspection has been done.  Even new mechanicals can breakdown immediately after you move in.  It's unlikely, but "newness" does not guarantee perfection.  Be realistic and remember new is nice, but not perfect!
  

Sore Muscles

Time management is the nemesis of many REALTORS.  There are many reasons for this but a primary one is that agents have to be available when their clients are available.  We have to do some amount of scheduling our lives around the calendars of our clients or we won't survive in the business, and our clients' needs won't be served.  One of the first things I'm apt to eliminate is my fitness routine.  I justify this choice with the thought I'll do it later in the day.  But, I'm also time impaired, which means when later comes, I've just plain run out of time.

When my nest was full of chicks I had a regular exercise routine: 3 days swimming laps during the kids' swim lessons (I hated sitting by the sidelines proclaiming my child's worth with the other moms!) and the alternate days playing racquetball with a woman 10 years my junior (She smoked so we were on a level playing field!).  My days were ordered and as orderly as a mom's days can be.  My life revolved around the schedule of others.

To my chagrin, ordering my life around the schedule of others is still happening.  Like many people in the world, I hate GOING to the club.  Once I'm there I enjoy the workout, but the getting going is difficult.  I mix this natural reluctance on my part to GO with my life long habit of ordering my schedule around the schedule of others (There's that REALTOR excuse again!), and I find it very easy to slough off.  Sloughing off creates weak muscles.  Getting back into workouts creates SORE muscles.  Learning new weight routines creates really SORE muscles.

Tonight I have sore muscles that are familiar AND sore muscles I didn't know I had.  I've got to schedule, REALLY SCHEDULE, my workouts into my calendar.  I've got to learn how to say, "Can we meet Thursday at 2:00?" instead of always canceling the workout for an appointment with a client.  When I learn this one simple time management tool, I won't have to go through the "on again, off again" of sore muscles!

The Big Flap About Zillow.com

Real estate agents across the nation have been ruminating about Zillow.com, the new "Expedia" of real estate that went live this week.  The website is supposed to give you the value of your home by just plugging in your address.  Many comments were posted on a national real estate list serve from professional agents regarding their "test drives" of the site.  Each one found the service to be inaccurate. Some were overpriced.  Some were too low. Could REALTORS be eating sour grapes?

Finally tonight I had a few minutes to do my own trial run of the site.  Afterall, it might end up being an effective marketing tool for why one SHOULD use a REALTOR!      My first test property was my current home.  Since I purchased this home 18 months ago and have subsequently put thousands of dollars into renovation, I felt this was a good starting point.  I knew what I paid and am familiar with the neighborhood.  Much to my surprise, the site values my home at $21,000 less than I paid.  The homes used to compare with my 3 story Victorian in St. Paul were 2 story Sears catalog homes in an entirely different city: Minneapolis!!!!  The closest comparable home used by Zillow was 5.8 miles away.  Not even in the same neighborhood or the same city!

Okay, so they messed up on that one.  I figured I'd give them another chance and chose my former home address.  That home, even though it had a recently recorded sale, was also valued at $20,000 less than the sale price.  Plus Zillow said our old house had 5 bedrooms when it was only a 3 bedroom home.  That's a significant difference.  I'm guessing Zillow has been programmed to reflect a "bubble" deflating in the real estate market which is not the case in the Minneapolis/St. Paul market.  My additional check on other home prices all reflected similar errors.

My conclusion:  A comparable market analysis takes hours of personal attention by an experienced real estate professional. . . a human being with training, experience, and the ability to make judgments.  I labor over mine, trying to find the homes in the same neighborhood most like the one I'm evaluating. 

A computer cannot compensate for the esthetic value of being across the street from a park or lake; having an older home with all the original wood versus the same home that has been stripped of its character; having new mechanicals; etc.  A computer can't tell that the house it's comparing to the subject property is across a major railroad track and near a lake, in a totally different neighborhood.  The computer uses only properties within a certain mileage or whatever parameter it has been programmed to use.  It cannot think and discern that the two identical homes are in two completely different neighborhoods and will have completely different values as a result.  The computer cannot make the judgment calls that a trained professional real estate agent can!

Multi-Cultural Wisdom

Being a REALTOR has given me the privilege of meeting many people of different cultures, something I probably would not have been able to do in another work setting.  One of my Nigerian clients has shared delightful wisdom from his homeland with me.  I stand in awe of the insight these Nigerian proverbs reveal as well as the depth of understanding their analogies show.

To describe someone who has a large ego, but little personal substance:  "An empty drum makes the loudest noise."

About people who are going through difficult times that their acquaintances can't see because of outside pretense:  "The monkey is sweating, but for the fur on his body."

Regarding large organizations/nations/powerful people vying for top billing and the subsequent damage to the weak:  "When 2 elephants fight, it's the grass that suffers".

And about children growing up: "If a child washes his hans clean, he will dine with the eleders".

The depth of the symbolism in these proverbs is fascinating.  They aren't things that can easily be understood without visualizing the situation they describe!  What a rich cultural heritage!

To read more Nigerian proverbs, search on Google for "Nigerian Proverbs".  Several sites exist, although, I'm not sure the full understanding is possible without hearing the explanation from someone of that culture!

The Attack Cat

I once was attacked by a cat in a vacant house!  At least the listing company told me the house was vacant when I requested the showing.  I LIKE cats!  I'm comfortable with cats!  Cats don't bother me!  But this cat was the big mama of all cats and she had it out for me!  I had invaded her territory and she was totally unhappy with MY presence in HER domain!

The house was a split entry (you come in the entry on the ground floor and go up or down a half flight of stairs to get to the living areas) and I obediently removed my shoes upon arrival .  I walked to the "UP" stairs only to come face to face with a hissing growling fur ball!  Knowing by the twitching tail (as if the hissing and growling weren't evidence enough) that I should choose to go downstairs instead of up, I proceeded downstairs.  The house appeared to be empty.  Much to my chagrin the fur ball followed me growling and spitting all the way.  Had I not removed my shoes the poor feline would have gotten a mouth full of foot, but the thought of shoving my bare foot anywhere near those fangs was not real tantalizing.  The cat stood its ground in the hallway, blocking my exit to the stairs.  I searched for an alternate route.  I even considered braving a cold snowy exit out the sliding glass door without shoes!  Lightbulbs went on as I saw a couch and grabbed one of the cushions to shield my movement down the hall to the bathroom.  The bathroom was my sanctuary while I waited for the growling to lessen.  When the growling receded, I quickly exited the bathroom, sprinted up the half flight of stairs, dropped the cushion, grabbed my shoes and left!  I even put my shoes on outside the front door.  Needless to say, I called the listing company to report the ferocious beast who had made its home in their supposedly vacant house!  They were unaware of its presence.  I thought it belonged to the owner as it wore a collar and tags.  It just goes to show how traumatic moving is on animals . . . or at least that one big cat!  And how one big cat can be traumatic on REALTORS!    

REALTORS Share Funny Anecdotes

Our professional magazine has started a new series that shares funny things that happen to agents when they show houses.  You can read several stories at REALTOR Magazine Online.

The following quote is from a real estate list serve community I participate in:

"I remember showing houses once when the buyers just couldn't make up their minds on "what" they wanted. My husband is a cop, and the day before had been using my SUV.... And forgot that he left his weapon in it. I rounded a curve after looking at 10 houses, and the gun ended up somewhere around the gas pedal. It was awkward because I couldn't drive properly, so I reached down, retrieved the gun from underneath the gas pedal and placed it beside me on the seat.  Lol....the husband was in the back seat, wife in the front, and I jokingly said "now just how many houses DID you want to see before you buy one?".

Oh, it got worse, they laughed (it WAS funny) but I called my husband when we were at the next house to tell him he left his weapon in MY car, and of course would need it to go to work, which wasn't going to be before I got back home. He got my schedule, and said he'd meet up with me to get his gun. Little did he know, it would happen sooner than he thought.

I locked the keys in the car at the next house they didn't like, and had to call him on his cell to bring me a spare set, get his gun and go to work.  Rofl! Just picture this: it's 105 degrees - in the shade!! We can't get back in my car, and a gun is sitting on the front seat. We wait for my husband to come "save us" and he is laughing about how he left his gun in my car, I locked the keys in it and it is 105 friggin degrees in the shade, so hurry up and buy a house and get over it! LOL, the next house we saw, they fell in LOVE with and bought. 5 years later they decided to sell and called me back - they have since moved to NY and we still keep in touch and laugh about the whole 'gun-locked the keys in the car in the 105 degree heat' incident."

Paula Bean, REALTOR, Orlando, Florida