Real Estate Snippets

How Much Is My Saint Paul House Worth

Time after time in our recent market, real estate agents have heard the words, ". . . but our house appraised for $$$ last year."  Those words are not just a reflection of the decline in property values, but can also be a reflection of the difference between appraised value and market value.  Confusion is compounded when an astute home seller notes, " . . . but my Saint Paul real estate taxes gave the value as $$$".  Once again, the difference is not just because property has lost value but can be a difference between the assessed value and the market value of the house.

Here are three important definitions relating to real estate value.

• Assessed Value - the dollar value assigned to real estate for the purpose of collecting taxes
• Appraised Value - the dollar value assigned to real estate to make sure the lender has enough collateral to justify the mortgage amount
• Market Value - the dollar value a ready, willing, and able (loan worthy) buyer is willing to pay for the property

When any market changes drastically like the real estate market has, it is difficult for the assessed value to keep up with the market values.  Assessed values are sometimes confined by regulation limiting the change that can be made each year.  As a result, assessed values may be lower than market values when market values are increasing and higher when market values are decreasing.  Assessed values are not used in St. Paul to determine the amount for which a home should be listed.  The two values are usually not comparable.

Appraised values are determined by appraisers who have a copy of the purchase agreement and know what the "target" value is.  There are specific guidelines appraisers must use in determining the safety of the bank's loan for the property.  In the case of FHA and VA loans, there are specific guidelines as to the condition of the property as well.  Because appraised values for homes are usually based on recent sales, they will go up and down just like the prices in the real estate market.  An appraised value last year for a home equity loan usually will not be the same value this year.  If the market values have gone down, as they have in St. Paul, so will the appraised values.

Market values are gleaned from recent sales in the MLS or in public records usually within the last 4-6 months.  Market values are always buyer driven.  In the first four years of this century, buyers were willing to pay any price necessary to get a home.  Interest rates were low and qualification standards for home loans were lenient.  Because many home buyers could qualify for mortgages, there weren't enough houses for everyone.  Buyers were willing to outbid their competitors in order to buy that "rare" home.  As a result, market values went up.

Today, market values have gone down.  Why?  Because buyers are no longer willing or able to pay the same high price for a home.  Interest rates are still low, but qualification standards for home loans has become stringent.  There are fewer home buyers in the market and more homes for sale.  Buyers today know there will always be another house that they can buy so they are not willing to pay such high prices.  Home buyers today are shopping for the best price and best condition.

Just like there are bear and bull markets in the stock market, there are buyer and seller markets in real estate.  Knowing the market is important to determining the value of your home.  Always use the market value when listing your home for sale.   An appraiser could be hired (note the word hired means for a fee) to determine the market value  of your Saint Paul home or you could contact a real estate agent (that's me!) to determine your market value based on the recent sales in your area.

Flower Borders

We've all seen these brilliant red salvia flowers in St. Paul.  Most often they are planted in groups or in several rows creating dramatic borders.  What a surprise to discover some species of the salvia plant are in danger of being outlawed!  The salvia plants in question are purported to be the next marijuana.  Florida and Alabama both have legislators concerned with possible chemical abuse by smoking the salvia plant.

Sage is also a member of the salvia family.  What would Thanksgiving dressing be without sage?  Imagine Grandma sneaking down to the local drug dealer so she can spice up her dressing properly.

Other articles on salvia can be found in the Cleveland news, the Associated Press, and Google produced pages and pages of information for those really interested in the family of flowers called salvia.

Thanks to Carole Cohen of Cleveland Real Estate News for a heads up on this "dangerous" flower!

Get Rid of Those Magnets

There are several big bad no-no's in taking listing pictures.  They include taking pictures of your own purse which you dropped on the table in order to take the picture; leaving the toilet seat open; magnets on the fridge; etc. 

The picture at left was one of my St. Paul listings.  We all have refrigerators that look like this one, but part of preparing your house for sale is to remove all of those magnets and notes and pictures and REALTOR cards, so the fridge has a clean face.

Maybe the inventors at Amana had real estate in their blood because they have created a new solution to this problem, the jot fridge.

I wonder if it comes with an eraser?

Too Many Choices

One has to find humor in the St. Paul real estate market or go nuts in the process.  Three different times on the same listing buyers appeared to be "going to write".  Three different times!  That's a lot of interest for one home. 

One case was an unrepresented buyer.  They even asked where they could get blank purchase agreement forms!  In two cases the buyer's agent called with several questions and then called back again and again.  Each time there was another set of questions requiring more answers.  Each time the seller answered to the best of their knowledge.  Both agents left me with the words, "Let us know if there's any interest from another party."  In a different market those words would have been the precursor to an offer being written within the week.  In this market, it's just plain nerve wracking. 

I feel like I'm plucking petals from a daisy:  "Will they write; won't they write?  Will they write; won't they write?"  Eventually, someone will take the plunge.  The St. Paul absorption rate is close to 9 months so sometime before next summer someone should make an offer.

In the meantime, we'll keep plucking petals from that daisy!

A Clump of Dirt

There are a couple of happy sellers in St. Paul tonight because a clump of dirt was exchanged between them and a happy set of buyers.  Congratulations are in order. 

The sellers can now breathe a sigh of relief.  They can leave the house without checking to make sure every little detail is perfect.  Fluff the pillows, wash EVERY dish, straighten towels, empty the trash, and on and on.  Now the night shift worker can finally go to sleep without interruption.

Once the inspection is done, we'll be shopping for their new home as well!  Maybe we can just keep passing that clump of dirt along!

While the Seller's Away

Real estate agents joke among themselves that if business is slow, plan a vacation.  Invariably someone will call and want to list a house, write an offer,  see your new St. Paul listing, etc.  It's never easy to take time off when one is self-employed but a real estate agent is often expected to be available 24/7.  We sometimes feel vacations are against the rules.

As planned, my honey, our son, and I left on a 4 day weekend  All the relatives including the Hawaiian branch would be in the UP (Upper Peninsula of Michigan) together.  The plan was to leave Friday at 11 AM.  Thursday night the real estate calls began and carried on into Friday morning.  The road trip was underway with BlueTooth firmly implanted in my ear!

Peace and quiet reigned until 7 AM Saturday.  Phone service was bad in the UP.  Internet was non-existent in our rooms, but this call got through!  A bad storm had gone through St. Paul and my son's St. Paul house had huge trees down.  There was a showing requested for 1 PM that day.  What should his friend do?  The house was okay but the trees were blocking the sidewalk.  We opted to confirm the showing request.

Our trip was shortened and the following pictures greeted our son as he returned to his listed house.

One block away.
	By this time electricity had been out for 36 hours.  The cardboard sign reads: generator for sale $350.

His St. Paul house is still for sale.  It's behind that pile of brush created with 27 man hours and one huge storm.  You can even see the "for sale" sign if you look closely.  A buyer needn't worry.  The REALTOR® approved purchase agreement has a clause stating all personal possessions and debris be removed from the property prior to closing.  I guess those tree parts have got to go! 

Sellers Disclosures

The sellers disclosure form used in St. Paul is nine letter size pages long. Various questions are asked ranging from when the seller purchased the home to details about various mechanicals.  Filling out all nine pages is a tedious task.  I know because I did one just a couple years ago.

Answering truthfully is normal for me, but even more so since I am a real estate agent.  If something was not disclosed it reflected not only on my personal integrity but my professionalism as well.  Consequently my answers were quite detailed.  My feeling as a seller was the more I disclosed, the better.  I didn't want an unhappy buyer.  Like other sellers, I loved my house and I wanted the new buyer to feel the same way.

It was at the point of the sellers disclosure when my husband suggested he fire me as his real estate agent and hire someone else!  If I wasn't the listing agent couldn't I be just a tad bit less detailed?  The resounding response to his query was that I could not be less detailed.  Whether I was the listing agent or not was irrelevant because I was the seller in both scenarios.  It is the seller's responsibility to honestly answer the  disclosure questions to  the best of his/her ability whether they are the listing agent or not!

When asked how much to disclose, more seems better than less.  Buyers want to know what they are buying.  It's best to reveal the known defects ahead of time.  Not all buyers will consider some things as defects, and not all defects are known to the sellers!  The key is to answer honestly about what the seller knows about their St. Paul home.  When known defects are fully disclosed, the seller doesn't have to worry about later discovery and possible problems after the sale of the house. 

Oil Tanks

It's a nightmare when the buyers' inspection reveals that the 3" diameter pipe that's been in the sellers' flower garden for 17 years is actually the fill pipe for an unused underground oil tank!  It's especially bad when the storage tank is buried under the cement driveway!

Oil as a heating fuel has become less common in St. Paul, but a few homes still do have an active oil storage tank on their property.  Sometimes the tank is in the basement and sometimes it is buried underground.  A potential buyer will often ask that an abandoned tank be removed or properly abandoned as condition of the sale. 

If your St. Paul house is one of the unlucky few to have a buried beast that is not in use, it is in your best interest to determine how large it is and  become familiar with the process needed to either remove the tank or "abandon" it in place.  Residential tanks with less than 1,100 gallon capacity have different regulations than those that are larger, however, any tank that has not been in use for a full year is supposed to be "abandoned" or removed. 

Oil storage tanks are something the home sellers need to approach proactively.  Even steel tanks will eventually corrode and collapse causing a sink hole or contamination of the soil from oil left in the tank.  Since oil storage tanks are regulated by the local fire marshal, the local fire department is the first place to call for regulations regarding whether the tank must be removed or can be left in place and how to abandon the tanks that are left buried. 

House Affordability

Lenn Harley is one of my gurus.  She's my mentor and doesn't even know it.  I want to be like Lenn when I grow up.  For those who don't know, Lenn is a woman despite her name!  She's also a REALTOR® of great wisdom, professionalism, and common sense insight.  She's a straight shooter as well.  But this post is NOT about Lenn albeit it was inspired by one of Lenn's recent blog entries.

Lenn's no nonsense approach says it all.  Despite what the media is saying about the real estate market.  Despite what the economic experts might be saying about the real estate market.  Despite what the National Association of REALTORS® might be saying about the real estate market.  Despite the many people who have an opinion about the real estate market, the only people that have the truth about the real estate market are the ones who matter, the buyers.  They are the ones that are creating the trend in lower prices, longer days on the market, and reduced number of sales.  Buyers are the ones St. Paul home sellers and their listing agents should be listening to.

What buyers are telling me is that some are still buying, but they are unwilling or unable to pay the price that sellers are asking.  They are still buying, but they have lots of houses to choose from so they're choosing the exceptional house for the exceptional price.  They are still buying, but they expect sellers to give some kind of concession or they'll move on to the next seller.

Some of my St. Paul sellers have heard the message.  These sellers are pricing their homes lower than the competition.  These sellers are making their homes look like models for Pier 1 Imports!  These sellers are repairing their deferred maintenance items.  These sellers are negotiating to find where the buyers' requests overlap the sellers' ability to meet the requests.

Some St. Paul sellers have not heard the message.  They haven't looked at the figures.  Lenn was right in checking out how family income has risen compared to housing costs.  In St. Paul, the median family income in 2000 was $48,925 and in 2006 it was $52,809.  Income increased by 7.8%.  The median cost of a home in 2000 was $119,900 and in 2006 it was $199,900**.  The cost of home purchases increased by 66.6%!  No matter how much a buyer might want to live in a home, the inflated prices have removed many buyers from the market!  The cost of housing has outstripped income in the last 6 years.

The story continues.  Fewer qualified buyers mean less homes sell.  The lack of sales increases inventory.  The supply of homes outstrips the demand for homes.  The old economic principle of supply and demand asserts its authority once again.  Too much supply forces prices down.  Once prices decrease to an affordability level, buyers can, and will, return to buying.  Until that time, home sellers are going to have to look at the painful truth.  The house they own today cannot sell today for what it might have sold in 2004.  The market has turned.  The prices hit the glass ceiling and now must come down.  If selling is necessary, the seller is going to have to price according to today's market, not the market of 2003 or 2004.

**Based on information from the REGIONAL MULTIPLE LISTING SERVICE OF MINNESOTA, INC for the period 2000 through 2006.

Vacant Listings

More and more of my showings in St. Paul involve vacant houses.  Some of these St. Paul houses have been lost to foreclosure, but a good share of them involve sellers who have just moved on.  Job transfers or job losses, family emergencies, and/or financial issues are some of the reasons houses become vacant while listed.  If you are a St. Paul home seller with a house left behind, take into consideration some of these suggestions:

• Houses show better with some furnishings.  They feel more homey.  Either leave some of your own behind or hire a stager to place furniture in the house until it sells.
• Even though you are gone from the home, the spiders, ants, mice, and dust still are looking for a home of their own.  Ask a trusted friend, a cleaning company, a neighbor or your agent to make sure cobwebs and dust are regularly cleaned away, and that pests do not move in!
• The toilets should be flushed and the faucets used occasionally during the vacancy.  Toilets develop a mold ring when not flushed, and need to be cleaned occasionally even though they are unused.
• Leave the heat and electricity on.  Heat is necessary to prevent winter damage in colder climes.  Electricity is necessary for real estate agents to show the house after dark!  Keep lamps in rooms that have no overhead lights.
• Secure windows and doors and take efforts to make the house appear occupied.  Lights on timers can be rotated by the same person that checks your house occasionally.
• A closed house becomes stuffy and smells with time.  The person checking your house may periodically open windows throughout the house to air it out or place fans about to move the air.
• An untended yard is a definite turn-off to potential buyers.  Hire a service to maintain the grass, bushes, weeds, pick up debris and unwanted deliveries, and shovel the walks.
• Let the police department know that your house is vacant so they can more carefully observe possible unwanted activity.
• Make sure all deliveries are stopped:  mail, newspaper, phone books, etc.