multiple offers or bidding war?

From Flickr commons WWI

Ah yes, it is fun to play with words. When see, hear or read news reports about the housing market they report that there are “bidding wars”.

Using the word “war” adds an extra element of drama to the situation and probably makes the winner feel extra special.

In real estate offices and when talking with our peers we talk about “multiples” everyone knows what we mean when we say “it sold with multiples”, or “we got multiples”.

No matter what it is called competing with other buyers happens when buying homes in St. Paul. Buyers need to know that they may not get to negotiate. The sellers will accept the best offer so it is important that buyers make their best offer.

Buyers who win and have their offer accepted should say that they won a bidding war. Buyers who loose out should say that they lost out in multiples. 🙂

Sellers who are expecting multiple offers but are not receiving them should revisit the asking price, the decor, the condition or all three.

To arbitrate or not

In Minnesota home buyers and sellers are required to decide if they want to use binding arbitration to settle future disputes over real estate they are buying or selling.  New this year, arbitration will only apply to claims for more than $15,000, smaller claims should go to conciliation court.

This year 20 pages have been added to the Minnesota purchase agreement explaining arbitration. The purchase agreement without the arbitration disclosure is 13 pages long after a page about wire fraud was added on August 1st.

Home buyers and sellers should be prepared to learn all about arbitration. It is a Minnesota thing.

After reading all of the pages of the arbitration disclosure my understanding of it is about the same as it was before I read the 20 pages. There is something about that legal style of writing that makes it hard to follow.

Going forward I think I will give my clients the arbitration disclosure early on in the process because consumers need to understand arbitration and make an informed decision.

It is also important to learn about lead-based paint, we have a pamphlet for that and about radon, we have a disclosure for that.

Arbitration – from the Minnesota arbitration disclosure

real estate really is local

 

Real estate is local. That doesn’t mean that what is happening in other cities won’t happen here.

Over the weekend there were news stories about the housing market slowing. It was about parts of the country where the rise in home prices has slowed considerably and the number of homes on the market is growing.

Here is St. Paul we have more houses on the market than we had a month ago. Yet if our inventory of homes for sale grew by 300% we would still have a shortage of homes for sale.

We are still seeing multiple offers for more than the asking price especially for homes priced under $250,000.

There is a little evidence that home prices are softening. There have been more price reductions lately.

Housing prices are ridiculous in parts of the country and in parts of St. Paul too. I think increases in home values will start to slow down especially as interest rates slowly rise.

I have seen national headlines that suggest we are in for the biggest slow down ever in the housing market. That sounds ominous yet if you look at how hot the real estate market has been it does seem like something needs to give.

I’ll have some local real estate numbers next week. Here are the numbers for June 2018

Housing supply absorption rates

Gradually and oh so slowly the number of homes on the market in St. Paul is rising. Here are absorption rates for 4 metro counties. The numbers for Dakota county are almost exactly the same as they are for Anoka County.

absorption rates
absorption rates

Absorption rates show how long it will take for all the homes on the market to be sold if buyers continue to purchase them at the current rate. Also, assuming that the supply of houses on the market remains steady. The overall absorption rate for the 7 county metro area is 1.6 months.

Housing supply is the tightest in Ramsey County and the trend line is flat. We are in a very strong seller’s market. In a balanced market that does not favor buyers or sellers, there is a six month supply of houses on the market.

During the housing market crash ten years ago we saw absorption rates at around ten months. That was a strong buyers market. Some of those buyers are today’s sellers.

Nationally home prices are up, sales are down

Home sales are down slightly. It isn’t because people are not buying homes, it is because fewer people are selling homes. Demand remains strong and that has driven prices up.

“Incredibly low supply continues to be the primary impediment to more sales, but there’s no question the combination of higher prices and mortgage rates are pinching the budgets of prospective buyers, and ultimately keeping some from reaching the market,” said Lawrence Yun, NAR’s chief economist.

Median existing-home sale prices in the U.S. hit a record $264,800. The number of existing home sales declined for the 3rd month. Here in St. Paul average days on market have dropped below 25 for the months of April, May, and June.

Click graphic to enlarge –

If you are planning on selling your home now might be a better time to do it. The infographic does not have numbers for the bold North, but you can contact me for local real estate numbers and I can evaluate your home and let you know about how much it will sell for.

Random advice from the internet

Many of us use the internet to do a little research when we have a question. When looking for answers to questions about buying or selling a home pay close attention to the source.

Real estate is local but there is a lot of generic real estate content on the internet. The articles often have titles with numbers in them. They suggest there are six things you should know or five things you should do etc.

When reading advice found on the internet look for a date on the article and where it was written and who wrote it. California has the most real estate agents per capita and a large number of real estate writers.

Generic information about real estate is easy to find. It is everywhere and everyone is a real estate expert.

Topics about how to get a house ready to sell and how to win in a multiple offer situation are generic topics. Articles about sellers disclosures, condo doc, termite inspections, escrows, utility costs and more are area specific.

Some municipalities require inspections before a home can be sold. Start by going to your city website and searching for information. The rules for selling a home in St. Paul are different from the requirements in Minneapolis. The city of South St. Paul requires a “time of sale” inspection. The city of West St. Paul does not require an inspection.

Real estate is regulated by the state department of commerce. Most commerce departments have websites. Those sites have information about local laws and even have information about how to get a real estate license.

Information can also be found on state attorney general websites and state department of health websites.