From rental to owner occupied

This year in St. Paul we are seeing single-family homes that were being rented out hit the market. I know that small investors are struggling with the new rent control law. Rent increases are capped at 3% but with the cost of everything going up, including property taxes and fuel, rental property in St. Paul isn’t a great investment.

The houses are the perfect opportunity for owner-occupants. They tend to be priced lower than similar properties and often need some updating and minor repairs. They seem to be on the market a little longer than other types of housing.

Sellers will sometimes accept less than the asking price.

There are also duplexes on the market. A person could buy one and turn it back into a single-family home. There are many homes that were converted to duplexes in the 70s and 80s that could be converted back into single-family residences.

Former rental properties are a great opportunity for home buyers. Prices start at 100K. Some of the rentals that are on the market are small condos.

There are fewer protections for cash buyers

spare change

Paying cash for a house makes the whole process faster, easier, and less expensive.  Partly because there are fewer protections. An appraisal is not required and neither is any kind of an inspection. To be eligible for most types of financing a house has to be “livable”.

Mortgage lenders protect themselves and by extension the home buyer.

Having a complete home inspection is important. Cash buyers rarely have the property appraised but they could.

The financing addendum will usually give buyers an out if they can not get the loan to pay for the house. They get their earnest money returned. Cash buyers may end up having to forfeit their earnest money if something goes wrong and they can not close.

Cash buyers should make sure there is a title company involved in the purchase and buy title insurance. Working with an experienced real estate agent is recommended.

All cash sales are becoming more common and account for at least 25% of purchases.

Should you give the seller a deadline?

Sometimes buyers want to put a deadline on an offer to buy a house thinking they will get a faster response from the seller. Sometimes sellers are not available or in the case of


an estate, there may be four or five sellers. The listing agent may be at parent-teacher conferences or a child soccer match. There could be a death in the seller’s family.

When offers come in over the weekend I have had seller’s agents tell me that “we always wait until Monday to accept an offer” and some say that it is always best to deal with the offers on Sunday night.

Great offers tend to get faster responses than not-so-great offers. If the house just came on the market and the offer is for less than the asking price chances are sellers are not going to accept it right away and rather than negotiating, they will wait a few days for a better offer.

During the last buyers market, things were very different. Buyers had the upper hand. For the last few years, a strong seller’s market has given the seller’s the upper hand.

As a general rule responses of any kind do not happen during the day. They happened between 8:30 PM and 1:00 AM.

Home buyers can withdraw their offer at any time while waiting for sellers to respond.

Once a seller does accept the offer it is important to keep things moving along because until the contract is signed and executed it is easy for sellers to accept another offer.

Sometimes patience pays off and the buyer who is willing to wait a few days may end up being the buyer who gets to buy the house.

Every situation is unique. Buyers should ask their agent for advice on how long to wait for a response on an offer from the seller.

Buying “as-is” is sometimes misunderstood

Maybe you are looking to buy a house or you want to sell one. You have heard of buying or selling “as is”. It just means that what you see is what you get and that the seller will not make nay repairs or changes.


It doesn’t mean that the buyer can not have an inspection. A complete home inspection is necessary and part of the home buying process. In the case of “as-is”, it is even more important.

Buyers have the right to know what they are purchasing as-is. Sellers will not make repairs but if the purchase is inspection contingent the buyer can cancel the purchase.

If buyer inspections are not allowed my advice is to pass on the house because it may need expensive repairs. Government entities and corporations sometimes sell houses and will not turn the utilities on so that the house can be inspected.

Selling “as-is” does not give the owner permission to deliberately hide property defects, nor does it protect them from lawsuits.

Corporations and government entities that sell real property do not always fully understand what “as-is” means and may prohibit inspections or hide material facts.

Several municipalities including St. Paul require truth in housing or tie of sale inspections. Selling as is does not mean that the house is exempt from such inspections.

In a general way, all houses are sold as-is. If the buyer has an inspection and the homeowner makes a repair the house is then sold “as-is”.

Record low unemployment in Minnesota

I almost missed this news but it does matter. Minnesota’s unemployment rate is usually lower than the average for the country. Even so we hit a new record low last month.

The unemployment rate or 2% in May 2022 – a new record low since the metric has been tracked in 1976, according to numbers released today by the Minnesota Department of Employment and Economic Development (DEED). The decline in the unemployment rate over the month was entirely due to people moving from unemployment to employment. The labor force participation rate rose from 68.3% to 68.4%.

  • Gains were in Construction (up 4,100), Manufacturing (up 1,100), Professional & Business Services (up 2,500), and Educational & Health Services (up 3,200).
  • Losses were in Leisure & Hospitality (down 4,300 jobs), Government (down 900 jobs), and Retail Trade (down 800 jobs).

Nationally, the unemployment rate stayed the same at 3.6%, and the labor force participation rate ticked up a tenth of a point to 62.3%.

Now might be a good time to find a new job.

Factory worker

Just smell that basement

Sometimes when I am looking at houses that are for sale and I see a picture of the basement I can almost smell it. Damp basements are very common in old houses. With the recent rains, I can usually smell the damp basement as soon as I enter the house.

Some of the basements will have puddles of water, and others will appear dry but smell wet. Some will have dehumidifiers running. I have an old house with a new basement. I have one of those dehumidifiers that only runs when it is needed. It has been running most of the time for the last week.

Damp or wet basements are not necessarily a deal killer when buying an old house. It is important to understand where the water is coming from. In some parts of St. Paul are built in a boggy area that was drained. In those old houses, the water tends to seep up through the basement floor.

In other cases, water is leaking in through. basement walls. Maybe the grading around the house needs improvement or the house needs gutters with extensions that will keep water away from the foundation. Sometimes there is water damage in a basement because of a plumbing leak at some point.

Drain tiled basements with sump pumps are common in some neighborhoods and very rare in others.

Homebuyers should get a complete home inspection and find out as much as they can about that wet basement.

I’ll never tell a home buyer that mold is harmless but most of it is. I send them to the Minnesota Health Department website where they can learn all about mold.  Once the moisture source is removed mold can usually be cleaned up with a solution of bleach and water. I have used soap and water but I am kind of a rebel.

The seller’s disclosure and the truth in housing report may have additional information on them about water in the basement.