Don’t sit on that offer

I

Turrets
I love turrets

If your home is for sale and you receive an offer, it’s best to accept, reject or counter it promptly. Even if there’s no specific deadline in the offer, homebuyers can and do cancel. If there is a reason for sitting on an offer then let the other party know what is going on. Let them know when they can expect a response.

Remember, an offer in hand is worth more than potential future offers. If the offer doesn’t meet your expectations, don’t hesitate to make a counteroffer. Rejecting an offer works better than trying to wait it out.

Buyers should respond promptly to counteroffers. Don’t play a game of “we had to wait, now they can wait”. That just causes hard feelings and can make the home-buying process harder.

Both home buyers and sellers sometimes believe there is a special way to “game” the process of buying or selling real estate. After working with hundreds of clients, I have found that the best way to handle any transaction is to keep it simple, have open communication, and to always be honest.

Houses are smaller in 2024

blue house
small house

The median size of a newly built single-family home in the first quarter of 2024 was 2,140 square feet, according to the U.S. Census Bureau. During the same time period in 2023, it was 2,256. That shrinking trend tracks with data collected by the NAHB and the U.S. Census Bureau’s Survey of Construction.

In 2023, the median size of a new single-family home was 2,233 square feet, down 9% from 2015
In 2024, the median size of a new home was 2,179 square feet, the lowest since 2010.

Why are homes getting smaller? For years they were getting bigger. Buyer demand for small homes is up, partly due to lower costs.

As the owner of a small home with what I call a “micro kitchen”, I have always felt that smaller is better. Smaller means less cleaning and maintenance and less space to heat. It can also mean less storage space for storing all that excess stuff.

When I look for houses that I would like to own I am always looking for homes that are smaller than what I have now. Yes size does matter. It really is a matter of personal preference. Space costs money and it takes time too.

As does the “micro kitchen,” it has an efficient layout. It is a galley-style kitchen that opens into a dining room. There is plenty of food prep space because of an antique kitchen queen with a pull-out counter just outside the kitchen.  There is enough cupboard space but some of it is in the dining room. I have too many pots and pans and have started moving the cookware I do not use to some shelves in the basement.

Most people don’t keep a case of creamed corn and a large Dutch oven under their antique buffet in the dining room but it works for me.

One thing we learn from living in a small house is how to get the most out of verticle space and we learn to put our stuff away to avoid that cluttered look.

When searching for your “dream house” dream smaller and enjoy the advantages of having less house.

Buyer representation contracts in Minnesota

butterfly
Monarch butterfly

In Minnesota, we have used buyer representation contracts for a few decades. Home buyers who are working with Realtors are required to sign an agreement with their agent. The agreement outlines the Realtor’s duties and how they will be paid.

As of last week, Realtors are required to have a written agreement with people who want to tour homes we listed for sale.

Previously, we could show anyone our listings without a contract or agreement with people who want a tour.  On the plus side, this new practice may weed out the holiday housing tourists who are just curious and have no intention of buying a house.

On the other hand, home buyers hate to sign anything, making it a struggle. It is easier to sell a house if we can show it to anyone interested without paperwork. I do not plan on charging anyone anything for showing my listings but I could and the new system makes charging a fee easier.

The good news is that contracts or agreements buyers sign with Realtors do not require the signer to buy a house. You can sign an agreement with a Realtor to go house hunting but that does not obligate you to buy a house.

Do you really need a buyer’s agent?

House

We did not work with a buyer’s agent when we bought our first house. At the time we thought that we came out alright. We did not know what we did not know.

With the help of a buyer’s agent, we may have paid less for the house and if we had made an inspection contingent offer we may have been able to negotiate some repairs.  The seller’s agent wrote our offer, she was helpful but did not negotiate or work on our behalf.

It wasn’t until many years later as I started working as a real estate agent representing buyers that I realized we missed a few things when we bought the house.

Buying a second or a third house is a little easier but each house is unique and so is each seller. Rules and laws change over time. If you bought a house twenty years ago you might not be aware that laws have changed.

No, you don’t have to have a buyer’s agent representing you but most home buyers need one.

Choose an experienced agent. An inexperienced agent can be worse than no agent at all.

If you choose to go it alone consider consulting a real estate attorney.

Words matter in purchase agreements

kitchen
Stainless steel appliances – granite countertop

Remembering way back to one of my first clients. I sold their house and when we got to the closing the buyers were most upset that the sellers took the microwave with them when they moved out.

Microwave ovens that are not built-in are considered personal property. Unless the buyers ask for them specifically and unless the sellers agree to include them in the sale they can be packed up and moved away.

The buyers refused to close unless the sellers paid for a new microwave and the sellers refused to do so. At the time a new portable microwave oven cost around $100.

Anything built-in is included in the purchase of real estate in Minnesota. That included the kitchen sink, light fixtures, built-in appliances, cabinets and shelving.  If a microwave is built-in then it is included when the house is sold. Light fixtures are included as are curtain rods.

Perennial plants, bushes, and trees also run with the property and are included in the purchase.

If it is a portable model that sits on a table it is considered personal property. It can be included in the sale if specified in writing. Sellers can specify in writing items they do not want to include in the sale.

When asking for personal property the buyer should be specific.  Ask for the ______(model) microwave oven, as seen in the kitchen on this day______.

Sellers who do not wish to sell a light fixture with the house should remove it and put in a new light fixture before putting the house on the market.

Over the years I have seen more misunderstandings and disagreements over property that is worth less than $100 than over anything else. There are gray areas as to what is personal property and what isn’t. When in doubt spell it out and get signatures from both parties.

Experienced real estate agents know the difference between personal property and part of the property.

2008 all over again?

Coins, moneyLet’s not forget what happened during the housing crash. Many homeowners ended up in a negative equity position. In other words, they owed more on their houses than the houses were worth. I well remember sellers bringing money to the closing so the mortgage could be paid off.

Here we go again with loans that guarantee the borrower will have no equity from the start via zero-down mortgages.

United Wholesale Mortgage (UWM), one of America’s largest mortgage lenders, is offering zero-down mortgages, opening up home ownership to more people but revitalizing a controversial practice that carries as many risks as advantages for cash-strapped home buyers.

Here’s how it works: For first-time homebuyers making 80% of their area’s median income or less…

  • Buyers take out a mortgage for 97% of the value of the house they buy.
  • The remaining 3%, up to $15,000, is a second interest-free mortgage.

The second mortgage has to be paid back in one payment when the first mortgage is paid off or the house is sold or refinanced.

Under the program homebuyers start without any equity, so if the value of their home decreases, they would instantly owe more than the house is worth.

If a buyer has to sell quickly, they’ll still have to pay back the entire second mortgage or risk default/foreclosure.

Buyers may get stuck with a higher mortgage rate, even if the Federal Reserve starts to cut interest rates because to refinance, borrowers need to have enough cash to pay back the second mortgage.

Please think before you borrow and borrow responsibly.