St. Paul Real Estate

Go West

One of St. Paul's best kept secrets is the West side of St. Paul.  The West side is composed of the neighborhoods that are on the South side of the Mississippi River.  I am not making that up.  The area is split into a couple of neighborhoods like Cherokee Heights which is near Cherokee Park.  There is a whole section of the West side up by Prospect Terrace Park that has some of the most beautiful homes in St. Paul.  Prospect Park is right on the river bluff and overlooks downtown.  The neighborhood has some great views of the city skylines and many larger historic homes. 

 

This row house was built in 1891 and no they don't build them like that any more.  There are many Victorian era homes in the neighborhood. 

This photo was taken from Prospect Park on the shortest day of the year. Probably at 3:00 in the afternoon . . or maybe later.  Through out the West side you can find craftsman style homes, 1940's bungalows, row houses, Tudors and Queen Annes.  If you are house hunting, take a drive through the area.  You might like what you see.  Prospect Terrace Park is small park that runs right along the bluff with some benches to sit on and a sculpture. It is there just so there is a place to enjoy the view.  There is also a small tot lot.

Getting Legal advice

If you are working with a Realtor to buy or sell a home you can also get legal advice from an attorney.  If your Realtor discourages you from doing this . . find another Realtor.  It is best to engage an attorney who has some kind of experience or expertise with Minnesota real estate. 

Here is an extra little tip that most buyers and sellers don't know.  Let your Realtor know right away that you have an attorney who will be giving you advice.  What tends to happen is buyers or sellers will show the purchase agreement contract to their attorney after everything is signed.  At that point it is very difficult to change it.  Have your Realtor draw up the agreement, send it to your attorney before it has been signed by another party.  Let the attorney review it and give advice before you sign anything.

Not all attorneys are equal.  I have had attorneys who want to change Minnesota boiler plate on contracts.  In that case it is best if they do the paperwork on my clients behalf and represent them in the purchase or sale. I have also worked with attorneys who have no awareness of standard business practices or experience with real estate transactions and don't seem to be familiar with real estate law.  They make my job much harder but my job is to honor my clients wishes and work with the attorney and I am not qualified to judge how good and attorney is. 

Do you need an attorney to buy or sell a house?  I can't advise you on that one, it is your call. Most buyers and sellers use Realtors but we can not by law give any kind of legal or tax advice. Amazingly I have had clients over the years who are attorneys and in general I found them to be easier to work with than most other clients. They have a better understanding of contract law and of what they are signing. 

As a Realtor I have taken the time to attend the Minnesota real estate contracts class every year.  It is taught by a lawyer who works for the Minnesota Association of Realtors.  The class is not required but I find it invaluable.  The contracts change every year and the attorney goes through them line by line and talks about how they work and outlines the best practices for filling them out.  He goes over the pitfalls and legal implications, and sites court cases concerning real estate contracts. 

I am not an attorney and some people just feel better about the whole process if they hire one.  I say go for it. If you buy a home in New York you can work with a Realtor but it is a real estate attorney who actually writes the contract and follows the process to closing.  Not a bad system.

On the opposite end of the spectrum there are buyers and sellers who don't want legal advice or to work with a Realtor.  They are confident that they can navigate the contracts and the legal issues. They know all of the nuances and pitfalls and confidently forge ahead.

Renter No More

by G. Sax (@gsax)

So are you still not sure if you want to own a home?

The $8,000 tax credit isn't drawing you in. The high affordability in our marketplace doesn't have you swooning. You're not enticed by the abundance of decent foreclosure and short sale property that would never have been on the block four years ago, let alone on the block at the prices they're at now. That's some resolve you have there.

Well, let me tell you a story.

I was raised by a single mother, and my mother never owned a home. Which means I never lived in an owned home growing up. Most of my friends did. Whether I want to admit it or not, this affected me. For a long time.

Over the next 20 years, I rented 25 different places. It took me 10 years just to rent a single-family house. Most of my friends and similarly aged family members settled into homes of their own; some were even starting to trade up. Meanwhile, I wandered. It was, at times, exhilarating and exciting; and at other times, it was very, very unsettling. And I don't like to use the word "very," so you know I'm being serious.

When my wife convinced me to take the next step (yes, I actually had to be convinced), it was a revelation. I'm still doing exhilarating and exciting things, but now I have a base of operations. I have a safe place. I have reached gool, safe from the tag of another rental.

My basement gets wet. My neighborhood could use a good scrub-down. My yard needs a total do-over. There are no right-angles atop my 112-year-old foundation. My home is worth at least 10 percent less than when I bought it, probably more.

But you know what I hear in all that? My home.

I recognize that my story doesn't have anything to do with supply and demand or affordability or median sales prices. It doesn't take loan structure and mortgage rates into account. There's nothing about school districts and crime maps. All that stuff matters, certainly.

But let's not forget that a house is not a home. That has to come from the stories and emotions and feelings you put into your house and whether or not those silly little things matter. That image at the top of this article? That's an expression of the warmth and contentment I've felt ever since I bought a house and turned it into a home in the beautiful city of Saint Paul, Minnesota.

It is Time to Plan the garden

For Realtors spring is the busiest time of year, even in a bad year. I have had gardens for each of the last twenty years and each year I wonder how I am going to get it all in on time.  I have to wait for the soil to be dry enough to till and on that perfect day for starting the garden I may be out showing houses.

For me one of the joys of home ownership has always been gardening.  I started with a lot that had a house on it and nothing else.  Over the years it has been planted and landscaped.  One side of the house doesn't have grass at all, just native plants and hostas. It never needs to be mowed and requires little water or weeding.

The rest of it is a little harder to manage. I grow a lot of lilies and they tend to multiple so in the spring I dig some out and rearrange them a bit.  In the back yard I have a large vegetable garden.  This week I will buy some seeds and put them in little peat pots by the windows.  I could buy them at the nursery but planting them myself is more rewarding.

They will sprout in a week or so and eventually they will be placed on the back porch during the day and in the house at night and will be planted in the garden when the weather is right and when I am home to do it.

There isn't anything tastier than home grown tomatoes. In a good year I have plenty to share with neighbors and in a bad year I have enough for the family.  My daughter is a vegetarian and when she comes over in the summer she raids the garden on her way into the house.  

Gardening is also good exercise and for me a social activity as my neighbors stop by to chat.  I highly recommend it and now really is the time to start planning. One place to start is the Burpee web site.  The local nurseries and building stores have everything you need. 

Love it or don't buy it

We usually don't get to buy our dream house the first time out and for some of us we never buy it because a 3000 square foot Victorian on Summit avenue just isn't practical for us. 

First time homes buyers in particular like to ask how many homes they will need to look at before they find the right one.   Please don't ask because I don't know.  Everyone is different.  What I do know is that when you find that home you will know it.  You will love it.  If you don't feel that way about it, don't buy it. 

Chances are anyone who purchases a home this year and finances most of the cost will need to live in that home for at least five years, probably longer.  It will cost more than the 8K first time home buyers tax credit to sell it sooner.  Take advantage of the tax credit if you can but don't feel pressured to buy a home for the tax credit unless it is the right home.

The roof

I am not proud of them but these are the icicles hanging off the roof near my home office.  Ice dams are not a good thing.  They are caused when one part of the room is warmer than another which means heat is leaking out through the roof.  They can cause damage and sometimes water backs up and gets under the shingles and leaks into the house.  No leaks in my roof but still not good and winter isn't over yet.  Usually the problem can be solved by adding some more insulation.

When I look at a house I look at the roof right when I pull up to it.  This time of year we can't see the shingles because of the snow but we can still get some information by looking at the roof.  If it doesn't have any snow on it that isn't a good sign.  The roof may be just find but chances are the home doesn't have enough insulation.  If the roof is covered with snow and there aren't any ice dams or maybe a little ice here and there then chances are the home is insulated.  Sometimes I see roofs covered with snow but there is one bare spot and again that is an area where there isn't enough insulation and heat is leaking out.

If the roof is covered with snow we can look at the sellers disclosure to find out how old it is and look for reports of leaks.  I like to open closet doors in houses and look at the ceiling because that seems to be a good place to find water stains.  An old stain on a ceiling doesn't mean that the roof needs replacing and buyers should always have the home inspected by a professional before they buy it.

Actually Owning a Home

When we talk about home ownership we usually mean giving a bank a mortgage. We borrow money, our home becomes a lien and if we don't pay they take it away.  We don't have any equity in the home until it is worth more than what we owe on it.

This is just an opinion but I don't like 30 year mortgages.  Twenty year 20 year mortgages make more sense, and shorter term is even better.  They are less expensive and it doesn't take as long to accumulate some equity and over the life of the loan more money is put toward principal and less is paid in interest.  The idea here is that more money is being put toward actually owning the home.

Most people don't think in terms of  paying off a home mortgage but it can be done. Using a $100,000 home mortgage as an example, take a look at a 30 year loan Vs. a 20 year loan:

$100,000 Home Loan

Payment $536 on a 30 year fixed at 5% = $193,256

With first payment the borrower is mostly paying interest and after 120 payments,  the borrower is still paying more interest each month than principal.   This is just an example.  The actual payment would probably include 1/12 of the annual home owners insurance and 1/12 of the property taxes. After it is all paid off the borrower will have paid $193,256

Payment $659.96 on a 20 year fixed at 5% = $158,390

  In this example it is a 20 year loan at the same interest rate with the same amount borrowed.  Yes the payments are higher, but  there is a savings of $34,896 and after the very first payment the borrow has twice as much equity as he would have with the 30 year loan.

I know that people don't think this way when they buy a house and if they did I suspect that the thirty year mortgage would not be as popular as it is. The payments are lower with the thirty year and for most that means they can afford a more expensive house. A more expensive house is wonderful but owning one free and clear has some advantages too.

The right time to sell

This is the time of year when home owners who want to sell start doing their homework.

The first thing we have to determine is the value of the home.  I don't set the price the market does and I determine the value in the standard way which is by comparing the home to comparable homes in the area that have sold. 

I like to use comparable homes that are within a mile of the home in question and that have sold in the last twelve months.  Even though I use numbers and data to come up with a price it really isn't a science, it is more of an art.

Sellers want to know when the best time to sell is.  I remember last winter the when home owners wanted to wait until spring I predicted prices would be lower in the spring.  I was right.

In 2007 some sellers wanted to wait until next year.  Prices went down from 2007 to 2008 and then went down again last year. I don't think they will go down again this year, but I don't think they will go up either. The market seems to have stabilized a bit.

Homeowners are asking when will prices go up?  This is just a guess, and more of an art than a science but I will go out on a limb and say that there will be some upward movement in 2012. 

In 2010 the best time to put a home on the market might be right now.  Sure the weather is cold and the buyers are still in hibernation but they are starting to search.  They want to take advantage of the interest rates which are now at an all time low and they wouldn't mind getting the $8000 dollar home buyers tax credit or if they are what we call move up buyers they wouldn't mind getting the $6500 dollars tax credit.

Looking into the crystal ball that I have next to my computer tells me that the best times to sell might be now or 2012.  In 2012 home prices will look more like they did in 2007 or 2008. 

For buyers I think this is the time to buy if you can afford it and your financial house is in order, and you can stay put for a decade or so.   The downside is the inventory of homes on the market is much lower than it has been in recent years which means there are fewer choices.  The upside is the low interest rates, the tax credits and the possibility that I am right and that prices will go up in 2012.

Foreclosure Vs. Short Sale

January is when the buyers start looking at houses and everyone is looking for a bargain and there are plenty of bargains. 

Foreclosures can be a good value, they can also be money pits that cost more to repair than they are worth once they are repaired.

Short sales almost always look like the best value for the money and buyers flock to them.  A short sale happens when the bank that hold the loan on a property will accept less than what is owed on the home as a payoff for it and can be an attractive option for sellers who don't want to go through foreclosure. The seller comes out of it will a lower credit score but usually they come out better than they would if they went through a foreclosure.

When it comes to buying one of these homes it is very different from buying a bank owned foreclosure.  For one thing even though the home is listed at a certain price on the MLS there is no way to know what price the bank will accept and the bank has the final say.  The seller can accept an offer but it is subject to bank approval. 

Even if the buyer offers the asking price or above the bank may not approve the offer.  Instead they may wait for a higher offer or get a new price opinion and list the home at a higher price.  If they do accept the offer it can takes months to get a yes from them. Often buyers with draw their offers before there is any answer at all and move on.

Some of the Realtors who list the houses are short sale experts but that doesn't help the buyer. The truth is even an expert has no control over the bank and they don't really know when the bank will give them an answer.  It isn't at all uncommon for the agent to say that it will go quickly but the buyer waits and waits.

Most of the homes listed as short sales go into foreclosure.  Some get sold and actually close but not very many.  There are success stories out there but there are far more stories of buyers who just gave up and moved on and homes that went into foreclosure.   Once they get to the foreclosure stage the bank owns them and they are much easier to buy and usually even less expensive.  The banks are not much fun to do business with but they will sell and often quickly.

I am finding more and more short sales on the market and often have to explain what they are to buyers who get excited about the price.  In the public MLS systems it is hard to tell if a home is a foreclosure or a short sale. One way to tell is to look for phrases like "subject to bank approval".

There are plenty of bargains out there.  Buyers who want to take advantage of the 8K tax credit should avoid short sales, in favor of homes they can actually buy and close on before the tax credit runs out.

What the heck is RESPA and why should I care?

Does anyone know what RESPA is?  I have to know so that I don't break any laws and lose my real estate license.  I get information and training but that doesn't help home buyers very much, often by the time I even meet them they have already met with a lender.  Consumers who never heard of  RESPA don't know the rules and they don't know if a lender, Realtor or closer are breaking them.

The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. The purposes of RESPA are

1. to help consumers become better shoppers for settlement services and
2. to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.

Simple enough yet complicated.  This year the Feds have rolled out a new Good Faith Estimate form that everyone likes to call a GFE, shorter I know but the words "good, faith & estimate" are more meaningful.  They mean that when you meet with a lender you can get a good faith estimate of what your total costs on a home loan will be and you can compare the costs of two or more loans.  Now they have to use a special form and their estimates have to be pretty close to what the actual costs come out to be and the Good Faith Estimate has sections that match up to the HUD-1.

What is a HUD-1?  it is a government form that is used at settlement and settlement is when you close on a house.  it means you settle up, you sign a bunch of papers that mean you will make mortgage payments and you get the keys to your house, all on the same day. 

Here is a section from the good faith estimate form:

If you click on the graphic you can see if better. The form spells it all out pretty well as long as the borrower understands that the monthly payment will probably include 1/12th of the property taxes for the year and 1/12th of the home owners insurance.  The actual house payment will be higher than what shows up on this part of the estimate. 

The new Hud-1 still looks like it was made by the IRS but it has been improved a little.  It is now possible to match up some sections on the settlement statement with sections on the good faith estimate.

This is all well and good as long as the borrower understands it all.  If they don't it doesn't do much.  Reading up on RESPA and having an understanding of what to expect from a lender or a closer is a good idea but most people don't know anything about it. 

The best source of information is through the Federal Government and they have pages of information on the internet.