Putting your best offer forward

The median number of days on market for houses in St. Paul is around 12 days. Considering inspection periods are often ten calendar days long that means that half of St. Paul homeowners are accepting offers after their house has been on the market for two or three days.

There are houses that stay on the market for a few months before the seller accepts an offer. Often those homes are priced too high.

It is a frustrating time for home buyers, especially during the spring which is when there are more people buying houses.

There are a few things that make offers appealing to sellers

  1. Offers that are at least full price. (make sure the house is priced right)
  2. A pre-approval letter from a lender
  3. Large downpayment or all cash.
  4. Short inspection period
  5. Conventional financing
  6. Flexibility on the closing date
  7. Offers that are not contingent on the sale of another house.
  8. Short inspection period (I can not recommend skipping the inspection)
  9. Earnest money

Houses for sale get the most attention from buyers in the first few days on the market.

There are more houses on the market now than there were a few months ago but we still have a shortage of homes for sale. During the great recession, we flipped to a city where there are more renters than homeowners.

Home buyers should be prepared to make a few offers.  Being the first to make an often means that the seller will let all interested parties know there is an offer and it will be leveraged to get more offers quickly.

Sellers who just listed their house are often reluctant to accept a full priced offer the first day. They are always wondering if an even better offer is just around the corner. Asking too much for a house usually results in the house being on the market for months.

Local Housing Data

I have been writing about the shortage of housing for a couple of years. In the metro area, there isn’t a lot of new construction. A new luxury apartment building here and there and some large expensive homes and even a few affordable housing units.

At the same time, the population and the need for housing have grown.

A large number of current homeowners are not ready to sell. They are older and more likely to stay put than to move. The end result is that there are not very many homes available and that is driving prices up.

Here is some data from the Met Council:

Metro housing data
Data from the Met Council

Most of the growth is in Minneapolis and St. Paul. The math is simple in that the population is growing faster than the supply of housing.

I think the situation will ease up a bit in the next decade unless we people start moving out of the area or we start building affordable housing.

 

Housing by generation

Monday is a good day for data. Today I have an infographic that shows some generational trends of recent home buyers and sellers.

It is never a good idea to make assumptions based on generation but it is helpful to understand current trends if you are planning on buying or selling a home.

It shouldn’t be a surprise that the Millennial generation is the largest group of homebuyers. It is the largest generation and they are entering prime home-buying years.

inforgraphic

Generational home buying trends

We have OLD houses in St. Paul

If you own a home in St. Paul don’t get too excited about the “instant offer” programs out there. They are often not available in St. Paul zip codes. It is because our houses are old. The median age is around 80 years.  I mention this because Zillow instant offers just came to Minnesota.

When the promise of an instant no hassle offer has fine print that says: “restrictions apply”,  age of the house is sometimes a restriction.

There are companies that buy old houses for cash.  They have been around for decades but were almost invisible during the housing market crash.

Right now it is fairly easy to sell a house and it is up to the seller if they want to clean, paint and or have open houses. Houses that need repairs can be sold. Offers are not instant but it doesn’t take long and in most cases, the seller can call the shots when it comes to terms like the closing date.

People with newer houses in the suburbs will have an easier time with some of the new internet-based programs for buying and selling residential real estate.

old house
Old house

 

 

REALTOR isn’t a job title

REALTOR isn’t an occupation. A REALTOR is someone who belongs to the National Association of Realtors. We are misunderstood but I don’t think anyone has time to read the thousands of words I could write on that topic. Here are some statistics:

REALTOR® Demographics
65% percent of REALTORS® are licensed as sales agents, 21% hold broker licenses, and 15% hold broker associate licenses.
The typical REALTOR® was a 54-year-old white female who attended college and was a homeowner.

67% of all REALTORS® were female, up from 63% last year.

The majority of REALTORS®—84%—owned their primary residence and 38% owned a secondary property.

54% of REALTORS® were affiliated with an independent company.

Nearly 9 in 10 members were independent contractors at their firms.

The median tenure for REALTORS® with their current firm was four years again in 2017.

9% of REALTORS® worked for a firm that was bought or merged in the past two years.

In 2017, 36% of REALTORS® were compensated under a fixed commission split (under 100%), followed by 23%with a graduated commission split (increases with productivity).

REALTORS® with 16 years or more experience had a median gross income of $71,000 compared to REALTORS® with 2 years or less experience that had a median gross income of $9,300.

The largest expense category for most REALTORS® was vehicle expenses, similar to last year, which was $1,370.

[SOURCE National Association of REALTORS]

Members of NAR are held to a code of ethics and standards of practice.

There are generally more REALTORS than there are home sales and even more real estate licensees. It is hard to survive in real estate sales in the Metro area without being a member of NAR. Most of the local real estate companies make joining NAR mandatory.

A couple of the numbers that stand out is the 67% female up 5% from last year and that the median age went up from 53 to 54. The entire population is aging but the median age of REALTORS was going down.

St. Paul Vs. Minneapolis

view of downtowns
View of St. Paul and Minneapolis from Indian Mounds Park in St. Paul

We call them the “Twin Cities”. They are not identical twins that is for sure. For some Minneapolis is the place to go for fun and St. Paul is the place to call home and get a good nights sleep.

The personalities of the two cities are quite different. St. Paul is much more like a small town. I like to use the word parochial.

Minneapolis has fewer hills and is much more bikeable than St. Paul but I have to say as a St. Paulite I am not afraid to climb a hill or two or go over a few bridges. That keeps my legs strong in case I ever have to race someone in Minneapolis.

Both cities have many lovely parks. In fact, a person could just live in the Twin Cities because of the parks.

The picture was taken at Indian Mounds Park in St. Paul. It shows both downtown St. Paul and downtown Minneapolis. Minneapolis is off to the right.

Often the two cities get lumped together. I am never surprised when I find out that the actual location of a Minneapolis event could be in St. Paul or in Bloomington.

Even though each of the twins has it’s own downtown, when someone refers to downtown they almost always mean Minneapolis. . . unless they are from St. Paul.

The median asking price for a home in Minneapolis is $349,900 and the median asking price for a home in St. Paul is $274,750. The prices are as of yesterday.