There are terms and there are terms

If you are buying a house you need to know that a good offer is about more than money and in some situations other terms will win out over more money.

old brick building and new apartment building
Panama Flats and Irvine Exchange apartments

Here are some things to consider:

  1. Closing date – having the flexibility to choose a closing date that works well for the sellers.
  2. Down payment – Yes downpayment matters. It doesn’t have to be 205 but a higher downpayment makes an offer more attractive because the house is more likely to appraise for at least the loan amount.
  3. Agreeing to take on repairs.

Those are the top three but also consider offering to let the sellers leave anything behind that they don’t want.  Such an offer may be especially attractive to older homeowners who are downsizing or in situations where the house is part of an estate.

Ideally, buyers agents should ask what the sellers are looking for when it comes to the closing date and if there is anything else the buyers can do to make the offer appealing to the sellers.

Buyers should not expect sellers to pay their closing costs. In a multiple offer situation that is almost always a deal killer.

First house Vs. Dream home

We talk a lot in real estate about buying your “dream home”. I’ll step out on a limb here and openly admit my husband and I are not living in our dream home. My dream home would be on the shores of a lake. So far I haven’t found any that are in a location I like and in my price range.

I haven’t exactly lead a life of deprivation but it hasn’t been a life of dreams that come true either. I live in a house that we own and we do like the house. It isn’t perfect but it works and was as much as we could afford when we bought it.  When we moved in the neighborhood was kind of rough but it has changed. Some would call it “gentrification”.

Most first-time homebuyers will not be able to buy their dream home.  I always encourage people to make two lists. One is a list of “must-haves” and the other is a list of “nice to haves”.

Home prices vary by neighborhood so do housing styles. It isn’t unusual for a home buyer to want to live in a certain neighborhood only to find that the housing styles don’t have some of the “must-haves”.

Homebuyers sometimes choose neighborhoods that don’t have any housing that they can afford.

If there were more houses on the market buyers would have more choices. For now, there are two choices.  Either buy the house you can afford or wait this out. In the next five to ten years the housing market is going to shift as the oldest baby boomers reach their 80’s. Baby boomers account for about 42% of all homeowners nationwide.

Lake Superior
Lake Superior at Grand Marais MN

Yes some buyers are offering cash

This is one of my “real estate is local” messages. I recently got a press release that stated that nationally that 30% of offers on houses are cash offers. I haven’t found that to be true in the metro area so I started looking at actual data from real home sales.

coins
spare change  

In July in St. Paul, a little more than 10% of the closed home sales were cash offers. I looked at data for Hennepin, Ramsey, Dakota, and Anoka counties and got a range of 5% (Washington county) to 11% in Dakota county. 9% of homes that closed in July in Anoka county were all-cash offers and in Ramsey county close to 12%.

The type of housing matters too and the percentage of cash offers is higher in the burbs than in the city.

Yes, people do pay cash for houses but most home buyers use some type of financing. Borrowing money is still a thing. Find out what the norm is for your area and type of housing.

 

Measure twice sell once

The measurements in our MLS are not exact. Those same measurements are fed to a zillion other websites. We expect them to be close but sometimes they are way off.

Room measurements are usually rounded and expressed in whole numbers which is alright for most uses. When it is time to buy flooring the measurements will need to be more accurate.

Houses are not easy to measure. We start with the foundation and then do some math to get the total square footage. Then we need to figure the finished square footage.  Each of those measurements is important when determining the value of a house.

My own home shows up in tax records as being 30% smaller than it is. That is why I don’t assume that the Realtor’s measurements are wrong and the tax assessors are right.

I find houses that mysteriously gain a few hundred square feet. Sometimes it is because part of the basement was finished or unfinished space was added or whoever got the measurements either accidentally or intentionally got them wrong.

Often home buyers will bring rulers to the inspection and take new measurements. Several years ago I had some clients who did that and then backed out of the purchase when a few hundred square feet went missing. For them, it was more about the honesty of the seller than it was about the size of the house.

Most of the houses that are on the market today were not measured. The measurements from the last time they were on the market were used instead. Appraisals usually include measurements and they are accurate to the point where I wouldn’t waste my time arguing with an appraiser. 🙂

I keep four types of measuring devices in my car and I am not afraid to use them or lend them to my clients to use while house hunting.

Buyers agents during a sellers market

I recently talked to a home buyer who has worked with a couple of agents this year. When choosing the right buyer’s agent experience is very important but it is also important to choose an agent who has time for you.

Houses are on the market for a very short time. Your agent will need to show you homes on short notice. If that agent is already working with several buyers who have a similar timeline for when they want to buy a house it could end badly.

Your agent will need to work very hard for you. That agent will need to be able to help you make an offer within deadlines imposed by home sellers. Your agent should have experience with the type of housing you wish to buy and the area where you are looking.

In the current market working with home buyers is very challenging for home buyers and their agents. Choose your agent wisely, do not choose the busiest agent.

Ask the agent what his/her limit is on how many buyers they can work with at once and how many they are currently working with.

If the agent doesn’t have a limit that too should be a red flag.