Timing for homebuyers in a sellers market

blue house
small house

We are in a strong housing market. Demand for homes is high and supply is low.

During the buyers market, a decade ago, people who needed to move could look at houses months ahead of time, make an offer and get the sellers to agree to close a few months later.

In today’s market sellers can set the terms and most are looking to close soon. Starting the search too soon doesn’t work because the houses you look at today will be sold in a few weeks.

However, there are always houses for sale shown on the internet. Homebuyers can browse and get familiar with the market months before they actually start touring houses.

When there is a shortage of homes it is a good idea to start looking 60 to 90 days before you plan to move.

Buyers will need to plan ahead and be pre-approved for a mortgage and be ready to write an offer.

People who are renting should try to enter into a month to month lease with 30 days’ notice to move. Flexibility makes a difference and makes it easier to win in a multiple offer situation without having to go far above the asking price.

Plan on getting pre-approved for a mortgage four months before you need to move. Start working with a real estate agent three months before the move.

Why can’t we think outside the big house box?

tiny house

There is a housing affordability crisis in the Twin Cities and all over the country. I think that tiny houses and micro-apartments might be a solution.

There isn’t really an agreed-upon definition for a tiny house.  I think of homes that are less than 500 square feet and have found many that are less than 300 or even 200 square feet of finished living space. When they get down to 100 square feet they seem too small to call home.

These dwellings are much less expensive than a more standard size house. The idea is to spend less on housing and have fewer belongings and more time to spend doing something besides working for money and accumulating stuff that requires space.

Smaller houses also cost less to heat and cool and to insure. They require less maintenance and less furniture.

On average people who own tiny houses have money in the bank and many of them have no mortgage.

Today isn’t at all unusual for first time home buyers to be looking for at least 2000 square feet and the averages for new construction, at least in the burbs is closer to 2400 square feet. They don’t have enough stuff to fill it up so they start acquiring and accumulating.

Some studies have suggested that families who live in tighter quarters get along better because they spend more time together. Yet the most common reason for wanting a bigger house is to have room for children.

Many of the tiny houses are mobile and can be moved to a lot. Of course in the city, you mostly can’t do that but in some parts of the country the demand for tiny houses is changing local zoning laws, but in St. Paul laws are slow to change.

Having a tiny house far away from the city isn’t as sustainable as having it in the city close to amenities and jobs and perhaps using public transportation.

Accessory dwellings units, which are tiny houses in people’s back yards have been permitted in St. Paul, since 2016. I have seen a few. They can only house relatives or be used as offices or studios.

Adu – from the city of St. Paul web site

I think there is a market for tiny condos in downtown St. Paul. There are spaces that are less than 500 square feet. They are never marketed as tiny condos but they should be. Most have full-sized kitchens which really seems like a waste of space. Why not have a galley kitchen? I like the idea of a Murphy bed too or a sleeper sofa that can double as a place to sit.

When something comes on the market in the area that is small I usually go see it. We all have the idea of a dream house, I dream small.

There are numerous websites dedicated to tiny houses and they can be built from kits that can be ordered online but there aren’t any kits for tiny condos. 🙂 We are not seeing micro-apartments yet but they are sure to travel from the coasts and make it inland in the next decade or so and eventually maybe we will be able to put some tiny houses on city lots.

Small houses on small lots

Longer days and more light

Ask any stager, real estate agent or designer and they will tell you that light matters. Generally more light is better. If you have a home to sell and can not afford to fix it up nice clean it, wash the windows and light the light shine in.

Remove heavy drapes and open the window blinds. The days are still too short to look at houses in the evening but that will change in a few weeks when daylight savings time starts.

Sometimes homebuyers are like moths. They are attracted to the light and they may not even realize that is why they love one house and like another.

Loft – This unit has huge windows and is East-facing
Well lit rooms
North Facing Home – photographed with lights on

 

Most real estate agents can’t measure

old brick building and new apartment building

When homes are put on the market we are required to put some measurements in the MLS. If you read the fine print it says right in the NorthstarMLS that the information provided is deemed reliable but not guaranteed.

It is recommended that buyers agents verify the measurements. Personally, if I were buying a home and the measurements of it and of each room were important to me I would measure it myself.

Several years ago some clients of mine took measurements of the house they made an offer on during the inspection. It was smaller than advertised by 300 square feet.

They withdrew their offer which is kind of unusual. Apparently, they didn’t like the house enough to negotiate a lower price.

When buyers use financing to buy a house the buyer’s lender sends an appraiser to determine the value of the house. The size of the house does matter when determining the value.

Sometimes when I list a house the owner provides measurements. If they came from blueprints or an appraisal I accept them. If not I measure.

Measuring a house isn’t as easy as you would think. The total square footage can be obtained by measuring the foundation. They are rarely rectangular or square which ads complexity.

On a true two-story the second floor is the same size as the first assuming there are no additions on the first floor. Sometimes total above ground square footage can be obtained by measuring the foundation and multiplying by two.

Finished square footage is where the floor, ceiling, and walls are finished but if a person has to walk through an unfinished space to get to it we don’t count it.

My own house is quite complicated but I have measurements from an appraisal. They differ from what tax records have as the total finished square footage.

It is possible that they are the measurements of the house that was previously on the lot but that burned to the ground.  The house is a story and a half because the second floor is smaller than the first.

However, the second floor is actually more than half as big as the first. It is really a story and three quarters but there isn’t a box I can check for that.

I once measured my own house for practice. I can out with about 20 more finished square feet than what was on the appraisal. We call that REALTOR math.

If interested don’t wait for open house

open houseThe real estate market has been competitive these last few years. Houses sell quickly with multiple offers. Buyers who wait for an open house are likely to miss out.

When a house comes on the market ask your agent for a private showing. Houses are the most salable when they first hit the market. Don’t miss out by waiting for an open house.

Most of the houses that sold in St. Paul last year were never held open. This coming weekend about 8% of the houses that are for sale in St. Paul will have open houses this weekend.

Also see Open house 101 for buyers

How much does it cost to heat?

We will experience some January cold here in the next few days. It will be cold but I will call it kind of cold because it can get a lot colder. We

Statue of Marcie in rice park
Marcie – Rice Park

should hit -10 over the weekend. We can get temperatures in the -20 to -35 range in late January.

Before buying a house it is a good idea to find out how much it costs to heat. St. Paul homeowners can get some averages by calling Xcel energy customer service, or by looking at their billing and usage history online.

It is also helpful to find out how many people are living in the house. A household with one or two people will generally use less energy than a household with four or more people.

The efficiency of the furnace or boiler makes a difference and so do windows and the amount of insulation in the attic. New windows might reduce heating costs but it takes a long time to save enough in energy bills to pay for them.

Look for energy star ratings on appliances. We had an old dehumidifier that was a real energy hog.

Using less electricity can be a matter of turning off lights or maybe using some timers. Use energy-efficient light bulbs and motion detector switches in basements and outdoors.

The City of Minneapolis now requires a Truth in Energy report to go along with the truth in housing reports that homeowners need to have before they sell their house. Homeowners will not be required to make repairs.

St. Paul home buyers should talk to their home inspector about the condition of the heating plant and how the home uses energy.

Here are some energy-saving tips I found on the Xcel Energy website.