A similar home will probably be a home that was built around the same time and is the same or similar style and has the same number of beds, baths, and garage stalls. That explanation is a bit simplistic. We actually use a kind of fuzzy logic based on experience and knowledge of the area. So far there isn’t any software or web site that can replicate what an experienced real estate agent can do.
Pricing is important. Setting the price too high often leads to a lower sale price as the home sits on the market longer. For some reason, buyers avoid overpriced homes rather than offering less than the asking price.
Underpricing is rare but when it happens multiple offers bid the price up if the home is on the market long enough to get more than one offer.
Pricing isn’t easy and owners can’t always be objective. Sometimes the features the owner believes will bring top dollar actually lower the value.
We are still in a strong seller’s market in St. Paul. Homes that are priced correctly often sell quickly and sometimes with multiple offers.
Most homes are going to get an appraisal too but that is done by the buyer’s lender after the seller has accepted the offer. The purpose of the appraisal is to help the lender decide if the value of the home is at least high enough so that it can be used as collateral to cover the loan.
Pricing a home isn’t an exact science. If it were my job wouldn’t be nearly as much fun.
Making an offer on a home contingent on a complete home inspection is wise. Houses cost a lot of money and buyers need to know what they are getting themselves into.
Even a complete home inspection is no guarantee that there won’t be problems later on. Sometimes houses sit vacant for a time and problems go unnoticed.
Other times a house that has been occupied by one or two people suddenly becomes a home for 4 or 5 people and things get used differently and they break.
Everything can be in working condition before the closing and then break on the day of the closing. Personally, I really hate it when that happens but it does happen.
My intent isn’t to scare first time home buyers away from our old St. Paul houses but to educated people to the fact that there are no guarantees. Just because something is working today that doesn’t mean it will work tomorrow.
Most everything in a house wears out and we can’t always anticipate what might fail, leak or break. Home buyers can buy a warranty. There are several available that will pay for some repairs. Buyers can pay for it themselves, or ask the sellers to pay for it.
Often the first thing a new homeowner does when there is a problem is to look for someone to blame. There isn’t always someone at fault and it is possible to live in a house for years and not know about a defect.
It is important to set a little money aside to deal with an emergency. At some point, there will be an emergency repair. It might not be in the first year of home ownership but it will happen eventually.
I have a dream that one day this nation will rise up and live out the true meaning of its creed: “We hold these truths to be self-evident, that all men are created equal.”
– Martin Luther King, Jr 1963
Minnesota and the Twin Cities are home to some of the worst racial disparities in the country. In metrics across the board—household income, unemployment rates, poverty rates, and educational attainment—the wealth gap between white people and people of color is significantly larger in Minnesota than it is most everywhere else. There is also a large gap in homeownership between people who are white and people of color. Homeowners have a significantly higher net worth than renters have which is one of the reasons for the large wealth gap.
There are numerous events today around the Twin Cities today in honor of King. Please consult Google for locations and times.
Photograph from the Minnesota Historical Society collection
The shortage of homes for sale continues. Home buyers need to get ready to compete with other buyers as homes in many price ranges and neighborhoods will get multiple offers.
Serious buyers will need to put their best foot forward and make their first offer their best offer in a multiple offer situation because they may not get the chance to negotiate. Home buyers who are not pre-approved for a home loan can not buy a home unless they can pay cash. Get pre-approved before you go shopping.
Often home buyers imagine scenarios where they offer X amount and sellers counter at X amount and they end up getting the house for the amount they had in mind. It is best to go into negotiations with an open mind and realize that in the current seller’s market homeowners are calling the shots.
The best offer isn’t always the offer of the most money. Financing is important too. Buyers who are putting more than 5% down may have an advantage. Cash buyers may have an even bigger advantage. More cash in the mix means that there is a greater chance that the loan will close.
Closing dates matter. homebuyers who are inflexible will have less negotiating power. The best strategy is to ask your agent to find out what the sellers have in mind for a closing date. Sellers who need to move into a home that they have an offer on may have to pass on an offer that is 110% of the asking price with a closing in 90 days or maybe the offer is perfect for them.
Flexibility on possession date and time can be important. I have seen situations where sellers need to move out of one home and into another on the same day that they are closing on both the sale of their home and the purchase of another. Not an ideal situation but it happens. Buyers who can allow the seller a little more time to move out can have an advantage in a multiple offer situation that doesn’t cost them a dime.
The amount of the offer is important. I have never seen a lowball offer win in a multiple offer situation. If the home just came on the market today the seller may not be ready to consider a less than full price offer.
When the perfect home comes on the market it may be sold by the weekend, be ready to make an offer now. Have a pre-approval letter ready. See the home as soon as you can and make an offer or let your agent know you want to make an offer as soon as possible. Sometimes sellers will wait a few hours or even a day for an offer even though they have others if they know the offer is coming and the reason for the delay.
Assuming that the sellers have a lot of money that they can contribute to closing costs is a mistake. Sellers who owe a lot of money on a home may not have the resources to pay the buyers closing costs. An offer that does not require a seller contribution may be more attractive to a seller even though it is for less money.
Last year some buyers were skipping the home inspection to make their offer more competitive. I never recommend such a strategy.
Work with an agent who is prepared and who can quickly write an offer and one with a lot of experience in multiple offer situations.
It is Friday and Fridays are for fun. I was thinking about 2018 and what I think was the biggest story of the year in St. Paul. It all seems so long ago but it was just last June when St. Paul made the national and international news, because a raccoon climbed a 25 story office building downtown. #MPRraccoon It took the critter hours and hours. The tired rodent took a nap on the roof of the building before being captured and removed.
If there is a life lesson it is about how hard the little raccoon worked to climb the building and how all of that work was wasted when she was captured and brought back down to the ground by a man. Apparently she just wanted some pigeon eggs for breakfast and she knew where she could find some.
The news media did an excellent job of covering the event but I thought I would use my crazy photojournalistic skills to fill in some of what the media did not cover. After all, it is Friday. (Scroll over the photos or click on them to see captions)
If you go way back to the time before the housing market crash, like before 2007 you could find new construction homes for sale. I know I sold a few back in the day.
There are currently 33 new construction type properties for sale in Ramsey County and 5 in St. Paul. Average new construction prices are in the $400K range with 2500 square feet of finished living space.
Builders say they can’t make a profit on small affordable houses. No, it isn’t your imagination. Housing is getting more and more expensive and there are more people living on the streets and in tent camps too.
The average rent in St. Paul is close to $1200 a month. Rents are lower outside of the city and in the nearby suburbs.