Real Estate Snippets

Happy Halloween

Happy Halloween everyone.  When I was young, before razors in carameled apples, drugs in candy bars, and purchased costumes, Halloween was my favorite holiday.  Friends and I would spend weeks working on our costumes.  We lived in a Osseo, Minnesota, a town of about 2500.  We were just a few miles from the next bigger, but still small town of Anoka, the Halloween Capital of the World.  As elementary kids we were allowed to trick or treat by ourselves and we went in groups with pillow cases for bags.  We covered the entire town on our side of Main St.  It was fun.  Kids now have no idea how much fun Halloween used to be.  My family made the treats.  Homemade caramel apples, popcorn balls, big Halloween cookies. . . hundreds of them!  I look back and realize more than half the fun was in the anticipation and the preparation.  We truly tried to camouflage who we were.  A successful costume was when the neighbor next door had to ask our names!

Today is the big trick or treat day again.  It's that way in the blogosphere as well.  Teresa Boardman and my entry to The Real Estate Tomato's Carnival made 6th place!  (Were there only 10 entries?)  Maureen McCabe has a great list of Halloween reading at Columbus Best Blog.  I've created a little personal Halloween greeting of my own that you can see here.

Halloween Carnival Entry

A collaborative entry for the Halloween Blog Carnival written by Teresa Boardman of StPaulRealEstateBlog and myself.  The tune can be heard here.

Written to the tune of The Monster Mash by Bobby Pickett/Leonard Capizzi.

1.  I was in the office late one night
When my eyes beheld an eerie sight
When Zillow, from its server, began to rise
And suddenly to my surprise . . .

Refrain:
It did the mash, it did the web mash up bash,
The mash up, what a cyber space smash,
It did the mash up, it caught on in a flash,
It did the mash up, it did the web mash smash.

2.  From my office in the capitol seat
To the California coast, where the techies meet
The Realtors all came from their humble abodes
To get a jolt of "Z's" electrodes.

Refrain:
It did the mash, it did the web mash up bash,
The mash up, what a cyber space smash,
It did the mash up, it caught on in a flash,
It did the mash up, it did the web mash smash.

3.  The critics were having a barrel of fun
It seemed the party had only begun.
The guests included the Realtor.com
Sellsius, Undressed, and the blog My Mom

Refrain:
It did the mash, it did the web mash up bash,
The mash up, what a cyber space smash,
It did the mash up, it caught on in a flash,
It did the mash up, it did the web mash smash.

4.  The scene was rocking, all were digging the sound
Inman on chains, backed by the Bloodhound
The FTC was about to arrive
With their vocal group, The Crypt Keeper Five

Refrain:
It did the mash, it did the web mash up bash,
The mash up, what a cyber space smash,
It did the mash up, it caught on in a flash,
It did the mash up, it did the web mash smash.

5.  Now everything's cool, Drac's part of the band
And my monster mash is the hit of the land.
For you, the living, this mash was meant
When you get to the door, watch for the dement.

Final refrain:
It did the mash, it did the web mash up bash,
The mash up, what a cyber space smash,
It did the mash up, it caught on in a flash,
It did the mash up, it did the web mash smash

Neighbors

If you think you have trouble with your neighbors you might want to check this Snopes article out.  The story gives new meaning to the term "flipping the bird".  Thanks to Pat Kitano of Transparent RE for the heads up on this story. 

The Wedding

There aren't many better ways I can think of to spend that "fall back" hour tonight than as newlyweds.  The invitation to this wedding and delightful evening was sent by my friend, former client, and his new bride to be.  The wedding invitation thrilled me.  The young man and I had shopped for his townhouse a few years ago.  We had laughed and joked and looked and analyzed ourselves silly in the process.  We "one upped" each other with tales of our trips to Khan's Mongolian Barbecue which we both thoroughly enjoyed.  The completion of his house quest was a day of celebration.  Never did I connect a future "Mrs." to the completion of his purchase.  Tonight, however, a blind date was completed with the promise to love, honor, and cherish 'til death do us part.  Congratulations Jon and Sara!   I wish you many happy, fun filled years ahead.    

Daylight Saving Time

Tonight's the night of the big clock change.  Each of us will get an extra hour to play, relax, sleep, or just waste because this is the "fall back" clock change.  That means we get to relive the hour between 1:00 AM and 2:00 AM an extra time tonight!  Don't forget to change your clocks.

Value Range Pricing

In a seller's real estate market, buyers' agents developed gimmicks to win in multiple offer situations.  Now that it's a buyer's real estate market in Minneapolis and Saint Paul, the need for gimmick creation has been transferred to the sellers' agents.  Voila!  Value range pricing is being re-visited by listing agents.  Value range pricing actually publishes a range between the lowest price and highest price the seller will consider in an offer on their home. 

Okay, I'll bite.  Not every new idea is necessarily bad because it's new.  My logic is this.  When I represent the buyer purchasing a home in which I know the seller's lowest acceptable price, I'm still going to check the comps and see what the other homes are selling for in the area.  If the lowest price the seller will accept is still too high, I'm going to suggest the buyer write an offer below the lowest published price.  If the comparable homes in the area have sold for more than the lowest published price, I'll suggest the buyer offer the lowest published price.  Why pay more if the seller will accept less?

Just recently I found one home value range priced in our Regional MLS.  It's not common in the Minneapolis Saint Paul area . . . yet.  In some states, value range pricing has been around for a decade and is now really taking hold.  One example is San Diego county in California where value range pricing was done on 56% of the listings in 2004!  That's a lot of homes.  Value range pricing did not guarantee a higher purchase price for the home, but it did shorten the length of time on the market.  In Minnesota's real estate market that would be considered a boon on many listings.

Why the success of this marketing technique?  My first reaction is if the seller is willing to sell at the low price, why not list it at that price?  Why would buyers be more attracted to the house with a value range than one that is priced low?  What is the draw?  Is it possible that the buyer sees the "value" range much like buying clothing on sale?  They see the original price marked to the new discounted price and automatically assume they're getting a deal!  Bargain shoppers.  My mom bought 7 leaf bags of skeins of yarn which she never used because they were such a good deal!  Is that what value range pricing is doing for the buyer?  Thinking they have a bargain in hand?  My caution is to check comparable sales in the neighborhood.  The "range" the house is valued in may be higher than what others have sold for.  Ask your agent to check and make sure!

REALTOR Hue and Cry

I really doubt that Chris Galler, senior vice president for the Minnesota Association of REALTORS, expected to see his Resource Update from October 11, 2006,  plastered all over the nation.  But, then again maybe he did.  Whether Chris expected the notoriety or not, his article: "Is It Time for a Career Adjustment" has spread through real estate networks and blogs nationwide including Inman Blog and Bloodhound Blog.  The article's bottom line is that there are too many agents in a market that has declining sales, therefore, unless the casual agents switch to a different career, Chris is concerned that the quality of service to the consumer will be watered down by less than serious agents. 

REALTORS are either lauding the article or are appalled.  A few passed over the e-mail because of its length.    The "Hue and Cry" has sounded.  Some are applauding with "Hear! Hear!"  Others feel they have been betrayed.  A few see that brokers need to take responsibility and weed out the non-performers.  Another group says they are part-timers after paying many years of blood, sweat, and tears (not to mention Association dues!), and deserve to continue to do just a few transactions a year without being labeled as less than competent.

The article is linked.  You can read the premise yourself.  Suffice it to say, I'm from Minnesota "where new agents are more officiously advised to fall on their swords."

First McMansions, Now Doggie Mansions

It looks like a playhouse to me, actually a pretty swank playhouse, but what you see is a new Doggie Mansion produced by Donald Gorbach, a real estate broker in Palm Beach, Florida.  Base price starts at $10,500!  I'm not sure if that includes the wall air conditioner and flat screen T.V. pictured on the website or not!  Your pooch can live in the lap of luxury with "digs" of his/her own.  Your dog's real estate agent can benefit as well since a 10% commission is offered with each referral that purchases a Doggie Mansion!

Credit goes to Inman Blog for this example of vast prosperity!

Tips for New Real Estate Agents

Small practical tongue in cheek suggestions for inexperienced real estate agents:

• Never open a refrigerator that is not running in a vacant house.  The smell may kill you!
• Check to make sure your socks match and are not holey before showings.
• Buy lots of slip on shoes.
• Buy leather seats in your car in case someone spills or the baby has a blow out.
• If the seller makes skunk smells in the bathroom before exiting make sure they put the fan on.  (True story:  my buyers were sure there was a sewer back up.)
• Keep your mouth shut about anything personal relating to your client including that they're moving twice, out of state, have a relative who is a craftsman, etc.  The sharks will use it to their client's advantage.  (I know because I'm a shark.)
• If the hair on the back of your neck stands up when you enter the house, get out of there!
• If the mouse is slow moving, it probably had too much D-Con and will soon die.
• If the snake falls on you, pray that it's not the constricting kind.
• If there's a body in the bed, turn the light off and quietly exit.
• If you see 2 pair of naked legs pull back quickly from sight, you might want to holler "REALTOR!" a little louder.
• Don't lift the toilet lid in a vacant house.  (Another true story.  Been there.  Done that.  Bought the t-shirt.)
• Be careful when Friday the 13th falls on a full moon.

1031 Real Estate Exchange

Most often when we think of the word exchange, we think of returning an item to the store for a different size or we think of changing our currency for the currency of another country to which we are traveling.  Usually it's only the experienced real estate investor who thinks of an exchange as applied to real estate.

A real estate exchange or 1031 exchange was created to help investors defer paying capital gains taxes on their investment properties until a future date.  Capital gains taxes are charged on investment properties at the time of sale unless an exchange is arranged.  The rules are quite stringent for completing an exchange so it's wise to consult a real estate agent who is experienced in exchanges.

A summary of the rules follows:

• The property being exchanged must be an investment property.
• The property being exchanged (the property being sold) must be exchanged for a like kind property of equal or greater value.
• Like kind property means investment property exchanges for investment property.  For example, a residential rental property may be exchanged for a warehouse rental property.
• The money from the sale of the first property must be held by a qualified intermediary.  The seller cannot touch any of the money from the sale.
• The seller of the exchange property has 45 days from the closing of the relinquished property in which to identify 3 properties or 3 groups of properties which will be purchased to complete the exchange.
• The seller of the exchange property has 180 days from the closing of the relinquished property in which to close on one of the three properties or groups of properties identified as the exchange properties.
• Monies from the relinquished sale will be applied to the purchase of the exchange property.

If the criteria above is not met, the seller will have to pay the capital gains tax on the property s/he sold.  More information can be obtained here.

My husband and I own 80 acres which we have used as a weekend retreat and hunting land.  We have owned the property for many years, but never rented it.  We recently considered placing the property on the market.  One of the issues we considered in our decision making was the fact that we will have to pay capital gains tax on the "profit" from this land.   We realized that if we wanted to avoid that tax problem, we would have to turn the property into a rental for a minimum of 2 years and then "exchange" it by selling it and buying a new "rental" property.  Once we purchased the rental with the cash from the acreage, we could mortgage the new property and use the funds from that mortgage for home improvement or for any fun thing we'd like.  Prior to the purchase with the exchange funds, we could not touch that money.  We haven't yet decided if we want to "rent" our acreage or not.  It may just become an inheritance for our children, and they can worry about the taxes!