• For Home buyers
  • Give me money

    I recently read an amendment to a purchase agreement where the buyers agent asked the seller for several hundred dollars. It did not specify anywhere in the agreement when this money should be paid or how it should be paid. Sellers don’t give buyers money. Sometimes sellers reduce the sale price or they pay the buyers closing costs or maybe a few months of association dues but  sellers do not “give buyers money”.

    If there is a situation where  cash needs to go from the seller to the buyer the money needs to show up on the final settlement statement. I can not think of any circumstance where money would be passed between buyers and sellers outside of a closing unless they had a separate agreement to buy or sell personal property that wasn’t part of the real estate sale.

    Sometimes home owners want to throw in a carpeting allowance or money for some other repair. The cleanest way to handle that is to pay some of the buyers closing costs or pre-paid’s if allowed by the lender. That way the buyer has to bring less cash to the closing and can use the money to buy carpeting.

    We all wish someone would just give us money and while home buyers are always looking for a deal home sellers are always trying to get as much as thy can for their home.

    Maple leaf
    Maple leaf
  • For Home Sellers
  • Small repairs can cost big bucks

    Gravity Furnace
    Yea very old gravity furnace - should it stay or should it go?

    Sometimes the repairs don’t cost all that much but home sellers end up getting a lot less for their home because a repair is needed. A buyer may ask for $5000 off of the sale price for a $200 dollar repair. A new furnace isn’t a small repair it is a big one but again a buyer may want to subtract twice the amount that a new furnace will cost from the asking price. A Minnesota home has to have a working furnace.  The gravity furnace in the picture happens to work just fine but it scared a few buyers away.

    Sometimes home owners believe that their asking price is in line with the condition of the house and that may be true but buyers will still think in terms of paying less than the asking price because repairs are needed. It ends up being a kind of vicious circle and in my job I see all the drama it causes.

    If you plan on putting your home on the market don’t spend any more money on it than you have to. It usually isn’t necessary to remodel anything or buy all new appliances but if the place needs a new water heater, furnace or a roof it might be cheaper to do the work rather than trying to sell “as-is”. A house has to have a roof and even though they can get expensive they are not considered a luxury.

    Banks will sometimes require that repairs be made before they will lend the money and of course sellers can say no and sell the home to someone else who will need to borrow money and who will also run into some difficulties.

    Investors will buy homes that need a lot of work but they need to pay below market value in order to pay for the work that is needed and turn a profit when they resell.

    My advice is to make repairs before the home goes on the market.

  • Local Market Conditions & home prices
  • homes sell and fewer are for sale

    Homes for sale in St. paul
    Closed home sales in St. Paul
    Closed home sales in St. Paul

    As we head from fall and into that other season the number of homes on the market remains fairly low yet at the same time home sales are fairly high because homes are selling quickly which is part of the reason why there are so few on the market. I’ll go out on a limb and say that we will have as many home sales in 2016 as we had in 2006, which was a banner year for home sales.

    No there are not enough homes on the market. Buyers end up looking at more homes over a longer period of time before the find the right home.

  • For Home buyers
  • Cameras as home monitors

    The other day I was touring a home with some buyers when I noticed a camera on one of the book shelves. The camera was on but I didn’t see the little blinking green light so it may not have been recording but there could have been someone watching through the interent. Hard to tell.

    These cameras are popular as baby monitors and can be set up as motion detectors that will send an email to the owners who can activate an app on their tablet or smart phone or use a computer to get the same view the camera is getting. They are becoming more common.

    In other words a homeowner could be away and watching people inside their home and listening to what they have to say. The cameras can see and hear, zoom in or out and pan the room.

    I have to admit I would be tempted to watch if it were my home being toured by potential buyers. We use cameras instead of an alarm system.



    This picture is coming from a camera placed near the ceiling on a cabinet. It automatically adjusts to gray scale in low light situations so that it even works in the dark.

  • For Home buyers
  • Low appraisals

    coinWe are seeing some low appraisals. Buyers make an offer and their lender orders an appraisal. The appraisal comes back and shows the value of the home, and that value is less than the amount in the buyers offer. The lower appraisal lowers the amount of money that the bank will lend to the buyer which means the buyer will have to kick in more cash. Sometimes the purchase is renegotiated and the sales price is lowered.

    Buyers who do not want to pay more than the appraised value of a home need to let their agent know. Most of the contracts I see do not have an out for the buyer if the appraisal does not come out high enough. Getting out of a purchase agreement and holding onto earnest money can be difficult unless some kind of stipulation was put into the contract stating that the buyer doesn’t have to buy the home for more than the appraised value.

    From a home sellers point of view the offers that have a little more cash in the and a little less financing are more likely to work out. Which means that the highest offer isn’t always the best offer.  The offer that doesn’t stipulate that the home has to appraise may also be better but it does carry some risk. Many purchase agreements have finance addendums that stipulate that if the buyer can not get financing for the home he/she/they doesn’t have to buy it.

    Sellers ask me if the can have their home appraised before they put it on the market. The answer is yes but the buyer’s lender has to do an appraisal before they can approve a loan and the new appraisal won”t be the same as the old one because it won’t be.