The many for the price of one myth

In business, the word “team” is used to refer to a group of people who work for the same company, department or office. The word is overused and in most cases, the term “workgroup” is more accurate.

A team is a group of people who work together to achieve a common goal. Sports teams work together to achieve a common goal.

The real estate team helps team members get more “leads” and it is a way for the leader to make more money.

The leader gets some of the agent’s commissions. For new agents, teams can be a great way to get some hands-on experience and training but to be honest that is what a broker is supposed to provide.

Sometimes the clients of real estate teams get this mental picture of several people working on selling their home or finding them a new one but it almost never works that way. One agent works on selling the house while the others work with other clients or on lead capture.

There is a real estate team leader who insists that when anyone on his team makes a sale he gets credit for it. That way he has more sales than any other local agent has.

He leverages the myth that the agent with the most sales is the best agent. People who hire the agent end up working with someone on the team who will use the name of the lead agent.

If I call a team and ask about a home for sale usually no one but the actual listing agent knows anything about the home. In fact, it seems like they don’t talk to each other at all.

They don’t actually help each other when problems arise and they do not tap into each other’s expertise. Homes do not sell faster because they are listed by a real estate team.

Some teams do work together. There are a couple of smaller teams where each person on the team knows what is going on. I can call one team member and ask another team members listing or offer. Often these teams are families or couples who work together.


How important is the previous sale price?

Home buyers like to know how much the current owner paid for the home. Sometimes they take the information into consideration when making an offer.

blue house
small house

It is wonderful that there is so much information out there for home buyers. it is easy to find out who owns a home when they bought it and how much they paid for it.

Knowing how much someone paid for a home is interesting but what someone paid for a house in the past does not impact the current value. The owners may have gotten the house at a bargain basement price or they may have paid too much for it. Maybe they bought it for a song and then made expensive improvements.

If the house is in St. Paul it is easy to look it up on the city of St.Paul website property look-up and see if there were permits for work on the house. Maybe there is a permit to put on a roof and a few for plumbing and for a new heating plant. Each permit will list an approximate dollar value.

Determining the current value of a house is not an exact science. The best way to come up with a number is to compare the home to three houses in the immediate area that were sold in the last year. Location, condition, and size determine the value of a house.

Buyers who are working with a REALTOR® should ask for a comparative market analysis before making an offer. Home sellers should do the same before setting the asking price.

Closing cost and you

calculatorHome loans are not free. First time home buyers are often surprised when they find out about closing costs. Those pesky fees are in addition to the down payment. Lenders will provide a “good faith estimate” which will show the closing costs.

Here are some examples of typical closing costs:

1. Loan origination fee

2. Appraisal fee

3. Pre-paid homeowners insurance.

4. Property taxes prorated from the day of closing and for the rest of the year.

5. Mortgage registration tax

6. Pre-paid interest and taxes (prorated from the day of closing)

Typical closing costs in Minnesota are about 3% of the purchase price which is usually not the same as the loan amount. In addition to closing costs, most home buyers will make a down payment. The down payment can be as little as 3%. There isn’t any truth to the rumor that home buyers need to put 10 to 20% down to buy a home. There are some down payment assistance programs too.

Home buyers often ask sellers to pay their closing costs. Typically that means that the buyer borrows 3% more and those funds are applied to closing costs. I encourage buyers to do the math and understand that the closing costs come off of the seller’s bottom line. I encourage sellers to pay attention to the bottom line and I let them know that paying the buyer’s closing costs is common and often necessary.

To estimate closing costs the lender needs to know what day the closing will be held on and will have an exact figure available to the borrower 3 days before the closing. The lender will provide a good faith estimate shortly after the loan amount is known.  Closing costs should never be a surprise.

Closing costs are generally lower in Minnesota than they are in other parts of the country.

You had it inspected but there is a problem

Bird House
Bird House

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.

Getting ready for the 2019 home buying season


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.

Make a great offer

Minimalists have more space

I see the inside of 300 or more homes a year. Many if not most homes do not have enough storage space. It seems like homes with more storage space have more stuff in them that is being stored.

Sometimes when people put their homes on the market they can make it feel a little more spacious by removing items and putting them in a rented storage unit. Sometimes they end up keeping the storage unit after they move and end up filling up all of the storage space in their new home.

Most of us are storing stuff that we will be moved more often than it is used. There are advantages in having less stuff. Having less makes moving easier and it can mean a smaller house.

Having a smaller house can mean lower monthly expenses and more money for travel or whatever else a person might want to spend money on. It has been my observation that people who have less stuff have more space.

Before starting the home buying process it might be a good idea to make some decisions about how much stuff you want to have and where it might fit in a home.

1 out of every 10 Americans rent offsite storage—the fastest growing segment of the commercial real estate industry over the past four decades. (New York Times Magazine).

The average American woman owns 30 outfits—one for every day of the month. In 1930, that figure was nine (Forbes).


storage lockers

If you are looking for a small house we have them in St. Paul and I would be happy to help you find one.