Buying a house and making repairs

brick turretMost of the houses I sell are old because St. Paul has mostly old houses and that is mainly where I work. My own house is over 165 years old. I have sold new houses and new construction too.

One mistake old house buyers commonly make is to try and fix and or upgrade everything right away. That isn’t a good idea. A home buyer can end up spending too much money.

The best approach, and this advice is from a Realtor® and an old house owner is to come up with a plan. Prioritize repairs and upgrades and create a budget. Start with a big list and break it down into a 3 or 5 year plan.

Also have an emergency fund. Things wear out in any house. It helps to have funds available to replace major appliances.

It is important to keep in mind that everything doesn’t have to be fixed right away.

Owning an old house, or a historic house like mine isn’t for everyone but all houses require maintenance and periodic repairs. Most everything in a house can be upgraded.

Baby boomers own a lot of real estate, when will they sell.

The boomer housing sell off is going to be gradual but will drop 9.2 million homes in the next 10 years . . according to Freddie Mac.

  • Declining boomer ownership will free up 9.2 million homes by 2035, a Freddie Mac report found.
  • The 32 million homes owned by boomers will drop to 23 million by 2035, when the oldest members of the group are pushing 90.
  • Homeownership rates “gradually starting to decline as households age beyond age 75,” the report said.

“The offloading of homes will accelerate in the 2030s as boomers reach the ages of 70 to 80, Freddie Mac said, based on an analysis using American Consumer Survey data. The 32 million homes owned by the generation as of 2022 will drop to 23 million in 2035, when the oldest boomers will be close to 90 years old.” [Business Insider]

. . . but don’t start making plans or knitting little things because this model is based upon the trends of former generations and so far the baby boom generation has been unpredictable and doesn’t always follow their elders.


A reminder that commissions are and have always been negotiable

coinsYes, it is true real estate commissions are negotiable. They always have been.

Agents are independent contractors who set their own rates. Some agents will not negotiate. Agents are not required to negotiate.

There is no “going rate” but I’ll admit I have benefited from the myth. For many years I have charged less than what people believe to be the “going” rate.

Real estate agents are selling experience yet new agents often charge the same rate an experienced agent charges. Personally I wouldn’t pay it but people do.

There are many real estate agents to choose from. In fact, there are more agents than there are houses to sell. If one agent charges too much and won’t come down in price find an agent who will.

Real estate agents are salespeople taught how to sell themselves and negotiate fees and commissions. Real estate agents do not get paid until after a sale closes and most work on a 100% commission basis. There are no paid vacations and there is no group health insurance.

Some agents show this chart that shows how much of the commission they get to keep after fees and splits with their broker. To that I say who cares. That is the agents problem.

The good news is that people can buy and sell houses without the help of a real estate agent. It can work out very well especially considering that home buyers and sellers often do not know what it is they do not know and won’t know if they ended up spending more or getting less because they did all on their own.

Real estate commissions and fees are spelled out in the contracts home buyers and sellers sign.  It is a good idea to read the contract before signing it. We can not list a house or work with a buyer without having a signed contract.

It is true that real estate agents can make a lot of money but most do not but don’t feel sorry for those who don’t make a lot of money.

What you don’t know about your real estate agent

Small Blue House with flower boxesPeople choose their real estate agents for all sorts of reasons. Often because the agent is “nice”.  Sometimes that “nice” agent is inexperienced and sometimes they can cost you money or even the home you want to purchase.

Last year a well-meaning but very inexperienced agent encouraged her client to ask for all sorts of minor repairs. She waited until almost the end of the inspection period. The seller was blindsided and somewhat angry. He did not make all of the repairs but he did make some of them. Later when I talked to the buyer I found out that none of the repairs were his idea but his agent felt he should ask for something.

Sometimes we get purchase agreements from new agents that we have to talk them through re-writing so that they are written correctly. Once I got an offer from a person with an expired real estate license. I had a hard time finding his broker who had no idea that the agent was out representing buyers without a license.

Another agent gave her client a bunch of documents that he thought were all of the condo documents required by the state. Most of the required documents were missing. I sent the agent a link with a bunch of information and made sure that the buyer got all of the documents.

There was this agent in a Facebook group for appraisers asking for some specific information regarding St. Paul Truth in Housing inspections and requirements. An appraiser isn’t an expert on such things and the agent was referred to the city of St. Paul website and told to ask her broker if she needs help.

Recently a new agent carefully explained to me how I should handle offers on one of our listings. Why? Was that necessary?

Most of us learn early on that no matter how we would like things to go they don’t always work out that way. We can never predict what our clients will do or what other agents will do. We learn to adapt and we learn flexibility.

There are more real estate agents than ever before and fewer home sales. It is more likely than ever before that the agent you choose has never sold a house.

At the very least agents should be asked if they have ever sold a house. There is a surplus of experienced agents who are looking for work to choose from.

It is easy to get a real estate license. All agents have them and learn on the job. New agents don’t have a clue what it is that they don’t know. Home buyers are in the same boat and don’t mind working with new agents as long as the agents are “nice”.

You are being watched

The sign outside my office

When touring homes with buyers I always assume that someone is watching or listening or both. Houses have doorbells that can see and hear and some have smart speakers on the kitchen counter. There may be cameras throughout the house.

Sometimes homeowners will hold it against the buyer who comments on how ugly the couch is.

Sellers can get pretty worked up about what they see and hear.

If you are touring houses it is best to hold your comments until you get far enough away from the house so that the doorbell camera can’t hear you. On the other hand, if you have something to say that you want the sellers to hear and you believe they can hear you go for it!


2024 has arrived

Happy New Year
Happy New Year

Happy New Year to all. No, I didn’t stay awake and ring the new year in. Sleep is too precious, and I fight for every Z I can get.

With that said I’ll make a few predictions for 2024.

  1. Mortgage interest rates will go down.
  2. Mortgage interest rates will be too high.
  3. Home prices will continue to rise.
  4. There will be fewer home sales than there were in 2023. (This prediction is for the Twin Cities Metro area only)
  5. There will be more lawsuits against the National Association of Realtors and they will lose most if not all of them.
  6. We will see a new organization emerge from the ashes that the National Association of Realtors will be by November 2024.
  7. The new organization that replaces NAR will be run by men but they will be younger and more diverse.

If you have a house to sell in 2024 you can sell it. If you would like to buy a house in 2024 there will be fewer to choose from and they will be expensive. Please take advantage of downpayment assistance programs. 

If you have not purchased a home in the last three years ask your lender about first-time home buyer programs. If the lender can not help you with that choose another.

Also, home buyers should get their paperwork in order and file a tax return for 2023 early in the year.