Foreclosures and REOs

Continuing on the topic of getting a deal, there is a lot of talk about foreclosure and bank owned properties (REOs) these days. People often think this is the best way to get a good deal.

Occasionally there are good deals to be had, but more often the properties are in disrepair and banks are not very open to negotiation. Their definition of TLC and yours could be worlds apart! Be prepared to invest both time and money, and be aware you are buying the property in 'AS IS' condition.

Banks also take their own sweet time. Even though our purchase agreements specifically state that 'time is of the essence', it's not uncommon to wait weeks to get a response during which time they collect multiple offers. Where negotiation usually is part of coming to an agreement, banks most often just accept or reject an offer...so make your best offer up front if you are making an offer on a bank owned property.

The best deals are still most often made buying from a 'real person' rather than a bank. They tend to be more motivated to sell, their properties tend to be in better condition and they are usually more willing to fix issues that may come up in an inspection.

Getting a deal

With all the buzz these days about foreclosures and the current buyer's market thoughts often turn to the deals that can be made.

It's a great time to be buying, but don't expect to buy for a price way below list price. In any market, list price is an indication of what a seller is willing to accept at that point in time... current market conditions have likely already been taken into account, and the current price may have already been reduced from original list price.

In any market, some properties are overpriced and some properties are priced below actual value. Before making an offer, do a comparative market assesment to get a sense of the property's current value... it could be that you're getting a good deal even at full list price!

Year-to-date average sale price in the 13-county Twin Cities metro area is 95.4% of list price. This means the metrowide average sale price for a home listed at $225,000 is about $215,000.

Keep in mind this is the metrowide average, and market conditions can vary significantly from community to community. Click here to find out current market conditions for 125 Twin Cities communities.

Going out of town? Have someone watch your home...

Yesterday was a good example of why it's important to have someone checking on your home while you're out of town.

We stopped at a client's home yesterday to take some measurements, and were welcomed by a fairly strong gas smell. We called CenterPoint Energy and sure enough...there was a gas leak! If we hadn't stopped by, there could have been signficant gas buildup by the time the owner got back home after a few weeks...a potentially dangerous situation.

When you smell gas inside your home or building:

1) Leave immediately! Do not use electric switches, telephones (including cell phones), or anything that could cause a spark.

2) Call CenterPoint Energy Emergency/Gas Leak Service - they check suspected gas leaks at no cost to you

Minneapolis/St. Paul Area: 612-372-5050
Toll-free: 1-800-722-9326

Click here for gas leak information from CenterPoint Energy.

SOLD!

With all the talk of the downturn in the real estate market one would think buyers can take as much time as they want to make a decision because the property will still be available while they make up their minds.

Well, my experience just the last few days has shown that not to be the case. I had one client write an offer on a property to find that she was competing with another buyer...it happens in any market. I can't tell you how many times I have shown a property that has been on the market for a long time then ends up in multiple offers.

The lesson here is...if you find a property you really like, don't wait...it only takes one person to buy and you never when that person is going to come along. If you're thinking about making an offer on a property, ask yourself how you would feel if you decided to buy and it was gone. If you find yourself feeling extremely disappointed or have knots in your stomach...it's time to make an offer!

I'm going out with a buyer today who had selected three properties to view. Since yesterday morning, one by one all three have sold! Now we're starting over with a new list...hopefully we'll have some properties to see today.

Interest rates have been on the rise...could that be inspiring the buyers who have been waiting to see what the market is doing to make the move?

Location, Location, Location

You've probably heard it said that the three most important things in real estate are location, location, and location. It's usually spoken in regard to property value and resale value, which has validity.

What you don't hear as often is how important location also is in personal value. It's so important because it's something you can't change. You can create interior place in your home that reflects you wherever you are...but you can't change the location of your home. That's something you choose but can't change unless you move, and if it doesn't fit it can have a profound impact on your sense of well-being.

If you're considering a move, it could just mean moving to another part of the area where you already live, but it could also be that you are looking for a whole new place experience. If you are considering a move to a different city, area or country think about the different factors that make up that sense of place and what impact they will have on you. Sense of place includes things like:

• Geography, climate
• The way people live on the landscape
• The sights, sounds, music, smells
• The people, myths, stories and other intangibles that give it a specific 'feeling'

If you're ready for a change but don't know where you want to go, a couple of fun sites that can help you find a place that's a good fit for you are linked below. They both have a quiz to take to help you identify possible locations that could be a good fit for you.

• http://www.bestplaces.net/
• http://www.findyourspot.com/

As far as I'm concerned, I continue to love the sense of place in the Twin Cities of Minneapolis and St. Paul. Our walk yesterday on the Stone Arch Bridge over the Mississippi River in downtown Minneapolis demonstrates the wonderful mix that creates our Twin Cities sense of place...water, trees, parks, walking/riding paths, flourishing arts community, thriving city.

Market Update

Last week's market report compiled by the Minneapolis Area Association of Realtors shows that new listings are relatively flat compared to last year, but newly signed purchase agreements continue to decline, now over 20% behind this same time last year.

When you look at this year's activity in the chart below, you see that the trend is for increasing listings but relatively flat sales...resulting in the buyer's market you have heard so much about.


One factor contributing to the decrease in buyer activity is a tightening in lending standards. In recent years "subprime" mortgages opened up homeownership to people who traditionaly couldn't buy because of weak credit or little money for a down payment. The volume of "subprime" mortgages is expected to drop by about 30% this year, according to the Mortgage Bankers Association in Washington, DC. This means a smaller pool of qualified buyers.

The after effects of those lending practices are also causing a sharp increase in short sales and foreclosures due to a combination of declining values, no appreciation, 100% financing and unaffordable monthly payments due to increasing adjustable rate mortgages. This means an increase in the number of homes for sale, especially bank owned properties.

Many people seem to think that bank owned properties are the best way to get a good deal. My experience has shown that while that may sometimes be the case, you'll more often get a better value buying an owner-occupied property. Not only will you usually get a home in better condition, you may also get a better price. While owners may be willing to negotiate to get a sale, banks are often in no hurry to sell...they know what price they want for a property and are often willing to wait until they get it. They are also often slow to respond to an offer, with response time sometimes stretching into weeks.

In spite of public perception that the housing market is anything but certain right now, this is a good time for buyers if you're ready to buy. Homes in the Twin Cities are more affordable than in recent years, interest rates continue to be historically low inspite of the recent increases and there continues to be a big selection of homes from which to choose.

Market conditions aside, buying a home is about finding a comfortable, safe place to live...something that is always a wise investment when you're financially ready to buy.

Gardening

Last Saturday I gave a seminar on 'Third Age Life and Housing Transitions'. One of the many things we talked about was thinking about what you would miss about your current home and what you would look forward to in a new home if you were to move.



My husband and I moved from a house to a townhome about 8 years ago. Although many people love gardening and working in the yard, that was one of the things we were all too happy to leave behind. However, that doesn't mean we don't appreciate beautiful gardens. We now have the best of both worlds...beautiful grounds and gardens throughout the complex, tended by residents who love to garden. Hardly a day goes by that I don't think about how much I love living here!

One thing we don't have in our gardens, however, is rhubarb. Our son and daughter-in-law brought us a treasured package of freshly picked rhubarb so of course I had to bake a rhubarb custard pie to share. Maybe one day they'll bring us another treasured package...maybe even one of rhubarb plants so we can share with our gardening neighbors! YUMMMM....