Friday, August 31, 2007

Just Who is Responsible?

Yesterday I was reading an article in the Wall Street Journal about Utility Companies closing down local offices, in favor of on-line customer service centers. No longer can you walk into their office to pay your utility bill, but must do so on-line. But what happens if there is a computer glitch and your payment isn't processed? Well, some utilities are "employing" the help of cash checking stores for customers to hand deliver their payment to.

The big scandal about all of this is that customers taking this route are also being lured into taking out high interest rate loans at these very same check cashing locations. Seems they just can't say "no" once they get in the door. Their solution? Complain to the Utility Company that they are unfairly being targeted by these instant loan companies because they "have" to pay their electricity bill there.

Let me get this straight. These people are blaming the power company for having no self-control? It is suddenly the companies fault for adults not being able to say NO? It you don't have the money now, then don't take out a loan against your next paycheck, it is as simple as that. But in today's society, personal responsibility no longer exists.

Take a look at the mortgage "crisis" happening today in all the headlines. For the most part, the entire blame is being heaped on the lenders. Sure some might have supplied loans to those that really never should have been approved, but geez, who really are the ones that should be wondering why they are in foreclosure?

Many of the real estate foreclosures, which Minneapolis is not immune to having, are the result of people not being honest with their current financial situation. In the need to keep up with the Jones's, people overextended themselves without thinking about what they were doing. All they cared about was reporting to friends and family that they, too, had just bought a home, or that they had just bought a house to "flip" and make millions of dollars on. Unfortunately, people forgot that real estate is not a commodity.

These same people then took out home equity loans to furnish this new lifestyle. Oh, and let's not forget that many also took out adjustable rate mortgages. They knew they could not afford the mortgage in three years, but were hoping that they would get that job promotion, which would make it possible. Like I said, not being realistic with their financial situation.

Now I know that not every person in foreclosure fits into this category. Sometimes things happen you cannot control. Like when the home we were rehabbing got hit by a hurricane and selling it became a nightmare. We were months away from foreclosure, but we knew that is was our responsibility. We had made some bad choices along the way that got us to that point, so in the long run, our situation was nobody's fault but our own.

Owning a home is a right, but it is also a privilege. It is a responsibility that should not be entered into lightly. If you cannot take care of a home, then don't buy one. Stay in your rental and let the leasing office take care of maintenance. Raise the 10% down you will need to put on the home. You will be amazed at the discipline it takes to put away money that you cannot use. If you find yourself facing foreclosure, take responsibility for your actions. Blaming the lenders and demanding the government bail you out, is not the trait of a responsible individual.

Yes, this is sort of a rant. I guess I am just tired of people in our society not taking responsibility for their own actions. It takes two to close a loan, the lender and your signature. So instead of seeking new legislation to stop defaults, why not stop underwriting loans for people who have no business buying a home (at least 100% ones). The free market will fix this, not some men in Congress.

Thursday, August 30, 2007

Sunny Days are Here Again

It was such a beautiful day today that I had to take a photo of the sky, and the big fluffy clouds that were floating along with the breeze. Minnesota has on average 205 sunny days a year, about 58%. Spring comes late and fall comes early here in Minnesota, at least compared to other parts of the country. Having lived in San Diego and Pensacola, where seasons don't really exist, it is nice to have a Midwest Fall on its way!

Tuesday, August 28, 2007

Confessions of New Construction, The Pilot

This is my Pilot episode of the series I am writing about highlighting the construction of our new home. So over the next six months, I will be posting about our home building experiences, including photos of the process, along with any rants or grumblings that will come with it. :)

We have been looking since January at the resale market, but could never find what we were looking for. When we did find it, the home was overpriced and the seller was unwilling to negotiate. (One seller was months away from foreclosure, and refused to take anything but full price.) Beginning to burn out, we took a stab at new construction.

Up until a few months ago, builders were also sticking to their guns and refusing to negotiate or offer incentives. But with the Twin Cities Association of Home Builders reporting the worst months for permits in June and July, builders seemed to finally wake up and smell the coffee. Here are some rules we stuck to. You should to if you intend to buy new construction soon.

Rule #1 - Narrow down the areas you want to live in, then look for builders who are currently in that market.

We knew we wanted to live south of the Twin Cities. My husband didn't want to be too far away from work, and South of the Minnesota River looked to be our best bet.

Rule #2- Take into consideration PRICE, LOT location, and Amenities. Know what you want.

In almost every subdivision we looked, we were able to find a lot we could live with. Our goals were to have a big backyard for our growing boys to run around on, and enough square footage for 3-4 bedrooms and an office. (I work from home)

Rule #3 - When figuring out what the cost of the home will be, pile on the amenities. The number will most likely be more than you want to spend, but you can work with it.

Once we put in everything we could imagine, the home for each builder was about $20,000 over our planned budget. We then looked at what we could take out, things we could live with out, or projects we could do at a later time. Getting rid of the items we would never use or need also helped.

Rule #4 - It is a Buyers Market. If you don't ask for concessions, you won't get any!

A semi-custom builder we spent three weeks with designing a home, gave us a computer generated "price". Being a Realtor, I knew this was a 2005 number and unrealistic. The builder was offering a $30,000 "off the lot" incentive, but told us to make an offer. We offered $65,000 less than his computer price...he countered at $50,000 off.

Another builder we spent two weeks with designing a home, told us they DON'T negotiate. Then they let us know they were running a special promotion, giving $30,000 off everything, money toward landscaping, and paying a large amount of closing costs. (Hmmm, sounds like negotiating to me!)

SO...who did we go with?

Well, this IS the pilot episode, and I have to leave you with a cliffhanger. So tune in for the next episode of "Confessions of New Construction" in a few days!

Sunday, August 26, 2007

Please take my Photograph

I was taking pictures last month of local Minnesota wildflowers and almost snapped the photo when curious bumble bee decided he wanted to be a part of the shot. I decided to give him a chance of a great profile, but he wouldn't sit still. He kept moving before I could get the perfect picture with his yellow colors. Oh, well, this is the best I could do. Fall is fast approaching and many of the local flowers are fading. I didn't have enough time to capture all the wildflowers I wanted to ...guess I have to wait until next year!

Saturday, August 25, 2007

The Good Faith Estimate, Part 1

When you apply for a loan, the loan officer is required to provide you with what is called A Good Faith Estimate. The name says directly what it is, an estimate of charges you, the buyer, will incure for closing the loan.

Two terms that are always on the estimate, but sometimes never charged are the Loan Origination Fee and the Loan Discount Points. Many people confuse the two and you should understand the difference.

  • Origination Fee : This fee is charged by the lender for servicing the loan and preparing the mortgage application, and can either be a set rate or a percentage of the loan. Typically in Minnesota, 1% is charged to the borrower.
  • Discount Points : A Point is a one time fee charged by the lender. It does two things. One, it increases the lenders yield on the loan, about 1/8 of a percent. Second, it allows the buyer to "buy down" the rate over the life of the loan. A Point is typically 1% of the loan amount. If you plan on staying in your new home for a long time, paying additional points at the beginning could benefit you by having a lower interest rate.

My two cents? I think origination fees are junk fees. Many lenders will tell you they "have" to charge this fee to make any money. However what they are neglecting to tell you is that some sell the loan shortly after you close, and get paid a fee similar to this from the investor who buys the loan. Some lenders will tell you they have to charge you a higher interest rate if you do not want to pay an origination fee, in order for them to make any money. But again, most don't tell you they get paid for selling the loan too. Also, if the origination fee pays for the work they do on preparing the loan, then why do they also charge you a "Preparation Fee" and also an "Application Fee"?

Make sure to ask questions on every fee that is charged to you. On a $300,000 home, a $3000 origination fee can take out a huge chunk of the money you were going to use for a down payment. And contrary to what many lenders will tell you, you DO NOT have to pay for an origination fee. Move on to someone else and save yourself some money!

Friday, August 24, 2007

Don't Take Threats Lightly. Do something about It.

I received a call the other day from a distressed home owner who has already been foreclosed on, but it just awaiting the day of the actual Sheriff's sale. He wanted to know how he should handle threatening phone calls he has been receiving from various debt collectors, namely from a collector wanting payment for the second mortgage.

Unfortunately, the one thing I cannot do, nor can any real estate agent, is give any advice that might considered of a legal nature. Since I am not a lawyer, it is illegal for me to speak as one. I know the home owner was not happy with my answer, but my hands are tied by the state. I was able to answer a few questions about the foreclosure process for him, which he was much appreciate of.

One word of advice I was able to give was to record the threatening phone calls. The debt collector was actually threatening the owner with bodily harm. I let him know this is a violation of the Federal Trade Commissions Fair Debt Collection Practices Act (FDCPA). You can file a complaint as the FTCs website if you think you have been a victim of abusive debt collectors. Don't take it lying down. Just because you owe money does not give anyone the right to violate the law to get money from you.

Wednesday, August 22, 2007

Lowry Hill Historic Home #5

This weeks showcase home is located in Lowry Hill, just off downtown Minneapolis. Located at 1769 Dupont, the home was built around 1926 as a single family home. It has since been divided into two condominium units, with one on each floor of the home.

The Italian Renaissance style in which this lovely home was built is not that common in the Twin Cities, but is found here and there in the more affluent neighborhoods. Italian designed homes feature low pitched hip roofs covered by ceramic tiles, bracketed eves, and classical columns around the porch entrance. (Not to be confused by Mediterranean styled homes which do not have bracketed eves nor classical columns.)

Unit number 1, I just discovered, is still for sale. It has been on the market for 14 months and is currently priced at $1 Million dollars. With about 3500 square feet, the home is feeling the market as condominiums are some of the hardest units to sell, especially when priced in the million dollar range.

Tuesday, August 21, 2007

Minneapolis Market Update - August 2007

It has been two years since the local real estate market topped out in late 2005. Since then home prices have been in a steady state of decline, with no indication on when we will hit bottom. So far this month, home sales are almost 12% behind where they were in 2006.

Builders are finally beginning to pull back the reigns on new construction. I spoke with one local builders agent and she commented that while the builder has plenty of available land to construct new homes on, they are slowing development until the market figures itself out. Thank God. One of the reasons for the supersaturated numbers of homes for sale is because builders have kept building homes at a record pace. Now with their slowdown, the market can breath a little better and hopefully start to recover.

Minneapolis recently was ranked #2 for Top Home Buyer's Markets in the nation. Our Minneapolis Area Association of Realtors president, Deb Greene, was a guest on CNBC this week and had the opportunity to discuss the Minneapolis real estate market. Click on the video to hear what she has to say.

Sunday, August 19, 2007

Friday, August 17, 2007

Reality Bites for Local Minneapolis Builders

After the countless number of viewings of resale homes since January, and three negotiations with different builders, we have finally found the house for us. Yes, we are diving into new construction.

Minneapolis home prices have been steadily declining over the last year. Resale homes in the Twin Cities have been the quickest to fall, and builders have been reluctant to give in to the price reductions. We have looked the last year at new construction but were finding that builders still wanted 2005 prices. It got to the point that the best option for us was to look at resales. Well, of course months went by and we just couldn't find what we were looking for, the most bang for the buck so to speak.

Finally we checked out a couple more builders and saw they were starting to negotiate their prices. Building permits were at their lowest in years and homes have been sitting for over a year.

-one builder came down from his 2005-2006 prices as much as $75,000, but we felt his homes were still too overpriced for this market. The problem was that he purchased the land at a record price in 2004 (the farmer made a killing off this developer) and he still needed to charge high prices for the lots to make up for his purchase.

-another builder wasn't willing to pay our closing costs. On his home, if he wanted us to pay his price, then we wanted other incentives, like paying for a buy-down. But he wouldn't budge...five months later, that lot is still for sale and the builder is trying to sell off the lots to another developer to get out of the subdivision.

-the builder we decided on, just so happened to be having an August promotion on his homes in which they were giving $30,000 in incentives, $5000 for landscaping, and $7,500 toward closing costs. The key was that his homes were never massively overpriced to begin with. We found a lot we liked with trees in the back (for added privacy) and negotiated a couple more items. It was a win-win for both parties.

Amazingly, the first builder called me yesterday and said he was willing to come down another $20,000 if we were still interested. Granted we loved his floor plan the best, and the location was top notch, we had to weigh our options. Go with him for the reasons I just stated, or go with the other builder who was offering a finished basement and a nice deck (both for the same price). Since we really wanted the most bang for the buck, we declined his offer. Our short term plan is to hold this house for five years, and then move to an area with more acreage. If we get a huge discount on adding the additional finished square feet in the basement now, then we will come out better monetarily when we go to sell. The first builder wasn't offering a finished basement or deck.

Granted we would love to wait until the spring to put a new home under contract, (as we feel the market is only going to get worse for builders), we decided to go ahead and get it over with. I mean, we have been looking for 8 months and it is starting to stress us out.

So, get ready for a fun couple of months. I will be writing a series called Confessions of New Construction during the building process, highlighting things that happen and taking photos so you can see the overall process. Building this home is sure to be stressful,especially since it will be built during the winter months, but hopefully I will only have happy stories to tell, and not horror ones. So check back periodically for updates!

Wednesday, August 15, 2007

Where has all The Water Gone?

As far as water goes, this summer has not been kind to us. It has hardly rained and when it has, the storms have brought high winds, floods, and golf ball size hail. I had the pleasure of waking up two nights ago to a lightning display that rivals those I have seen in Florida. I think I was blinded by the flash every 10 seconds and had to close my eyes to walk around the house.

Almost every city around the Twin Cities has watering rules in affect. Our local lawns are suffering much, as most people don't have sprinkler systems, and the pretty brown grass is everywhere. Real estate owners cannot water everyday and bans exist anywhere from 8 am in the morning to 6 pm at night. Most restrictions don't end until September 30 and could result in a fine if you sprinkle your lawn at the wrong time.

Of course having a brown lawn is not good curb appeal if you are trying to sell a home in this market. Make sure to keep it watered as much as possible. Get it GREEN. Buyers might understand our lack of rainfall this year, but they will not be so understanding when they view your home. Even the tiniest flaw matters with our supersaturated real estate market, and a brown yard will surely kill the chance of a sale.

Tuesday, August 14, 2007

Best Hockey in the State

I didn't grow up watching hockey like my husband did, so technically it isn't in my blood. However now that I have been with my husband for some 10 years, I have been subjected to the sport so much that now I do enjoy watching the game. If my boys end up playing hockey in Minnesota some day, I have been told I will end up the "hockey mom". Who knows, maybe they will both be Gophers some day.

Well this week the honor of being the top ice arena in the state went to our beloved Burnsville, just south of Minneapolis. The Burnsville Ice Center received the James Padgett Award which recognizes the constant improvement of ice delivery. The ice arenas recent updates to the concession stand, ice surfacer, etc helped it win the award. Another interesting reason Burnsville won was their dedication to growing Adult Hockey, a sport that is quickly becoming more popular every year. My brother-in-law already plays on a team in Chicago, and my husband hopes to get onto a team sometime next year.

Just to show you non-hockey states how popular the ice is in Burnsville, there are two buildings (pictured above), each with its own sheet of ice. This complex alone attracts over 350,000 visitors each year and has hockey, figure skating, learn to skate programs, youth and adult hockey, and curling. And yes, you can skate on the ice during the summer months!

Saturday, August 11, 2007

Ode to Blogging

I have been writing on my two blogs about Minneapolis since January of this year. So far I have written around 260 posts between the two blogs. I also post weekly on my social blog on Active Rain. Many times I am writing after 10 pm, after the kids are in bed. While I cannot always write daily right now, like some other bloggers I know, I try my best to get posts out. Looking for a home has been taking up so much time as of late!

Some bloggers have been hitting the sphere since 2005 with over 700 posts. Will I last that long? Who knows, but I hope so. With technology changing daily, will blogging last or be replaced by something else? Who knows, but it will be fun to find out.
I don't have the readership yet of the big players on the blogosphere, but then again I don't post about national news too often and get controversial. I keep it local to Minneapolis, something most blogs fail to do (that is keeping it local).

The next year will soon be upon us, as time always flies when you are typing away! It will be interesting to see where this market will take us. I'll keep you posted as best I can, just keep visiting and reading when ever you can...

Friday, August 10, 2007

Hitting the Grindstone Again.

Well, my husband and I are back to looking at new construction homes this weekend. The last couple weekends we have been viewing resales that are anywhere from 3-10 years old, but haven't seen anything that is making us say "We Love It!". (Especially when it comes to price versus the amenities)

We found a builder that is offering alot of incentives in one Minneapolis subdivision, so we are checking out a couple lots and pricing out some options. Since we have been looking since January, we are in no hurry to buy. We also make sure to not fall in love with any properties. The last thing we need is to get emotional and pay too much because we can't let go.

Last week we walked away from one builder who is just not facing the local real estate reality yet. He will most likely have to take a loss on the lots as he bought them for too much in 2005; however, he is still praying for those uneducated buyers to come along that will pay his premium. Good luck to him...but we won't be those suckers.

Wednesday, August 8, 2007

The Minnesota Landscape Arboretum in Summer

The University of Minnesota Landscape Arboretum is located just 20 minutes west of downtown Minneapolis in Chaska. It encompasses over 1000 acres featuring woods, wetlands, various gardens, and model landscapes. There are also over 12 miles of walking trails for the nature enthusiast, as well as a 3 mile scenic drive for those that would rather enjoy the beauty from inside a vehicle.

The Arboretum displays different shows each season. Summer is a great time to view the roses in the Rose Garden in full bloom and the many varieties of lilies, wildflowers, and perennials planted throughout the park. More than just a display of wildlife, the facility also offers adult gardening lessons, children school programs, and cooking sessions. The University is very interested in the research of different plant species and has a separate division for each highlighted Eco-system.

The Minnesota Landscape Arboretum is open 363 days a year, only closed Thanksgiving and Christmas days. Various types of Tours are available depending on group size and what you would like to see. Admission and directions are as follows:

  • Adults: $7
  • Children 15 and under: Free year-round
  • Arboretum members: Free year-round
  • Free admission all day every Thursday through April 26.
  • Beginning in May, free admission for all ages after 4:30 p.m. every Thursday.

Tuesday, August 7, 2007

What Not to do When Selling a Home

Tip # 1

Pets are wonderful! I love all animals, but right now just have a cat who has been with me for 12 years. My husband would love a dog, but with two kids running around, that is quite enough right now.

We love our pets, and treat them as one of the family. That puppy you just got is so darn cute. Who couldn't resist?

Well, if you are trying to sell your Minneapolis home, a cute little dog may not thrill everyone.

Yesterday we took a lunch break to view a home that looked amazing on-line. It had much of what we were looking for and was also in our price range. The listing company let us know a dog was in the home. This usually means the dog will be crated or in the garage. As we walked to the front door, I noticed the dog was in the front window, sitting on the back of the couch. He was a small poodle and immediately started barking when he saw us.

Ok, no big deal. So I opened the door. The dog rushed me and if I hadn't reacted quickly and shoved my foot and leg in the way, the dog would have run outside. When we were finally inside, the dog started jumping on us. My husband hates dogs that have not been disciplined and trained to not jump on people, so this was not a good sign for the home. We then began looking through the main level, the whole time having to endure the dog's non-stop barking. My husband finally shut the dog in a room to leave us alone.

But the damage was all ready done. We were so annoyed by the dog's behavior, that we became annoyed with the house. All the flaws now showed themselves more brilliantly and made us disenchanted. The dog was still barking in the other room. We just couldn't look past this bad experience and notice the good things anymore.

Our solution? We left before seeing the rest of the home...that's how mad we were. Of course we had to let the dog out of the bedroom. He proceeded to run over to my two year old son, jump on him, and nearly knock him over. My son wasn't expecting this and got scared, started crying, etc. Now I was really mad! (don't hurt a mom's kid in front of her)

So seller's, take the time to lock up your pet because they might just kill your sale. It did in this case. Here are some tips to think about should you have a family member with fur:

  • Put your Dog in a Crate when your home is being shown.
  • Don't rely on an agent to keep your pet inside if not crated. If the animal gets out and is injured, it is nobodies fault but your own.
  • Put up the animal's food so kids don't get into it.
  • Make sure the litter is fresh and clean. Poop on the floor is disgusting!
  • Take into consideration that kids might be at the showing and be scared of the animal
  • Check for pet odors before you sell can get rid of them.

Doing all of these things may not sell your home, but at least the buyers will be able to look through the pet's behaviour and actually SEE your home. If you really want your Minneapolis home sold, put yourself in the buyer's shoes and be respectful. Make the showing as perfect as possible!

Monday, August 6, 2007

Interstate 35-W Traffic Information

As I-35W in Minneapolis is such a vital transportation artery, we anticipate major adjustments to our transportation infrastructure in the immediate disaster area. Three websites have emerged as logical locations for current information:

Metro Transit is another good resource for transportation options available to commuters after the bridge collapse. For instance, free rides will be offered all this week from certain Park & Ride locations. Click here for more information.

Sunday, August 5, 2007

A Place for some Shade

Living in Florida during the summer could be brutal, especially with the sun beating down on you with high humidity. You couldn't leave the house without breaking out in a sweat. Of course it never really gets that hot up here in the North.

Even though Minnesota doesn't live close to the equator, we still need to take precautions from the sun's strong rays. One way to enjoy the outdoors is to lounge in the shade under a canopy.

Popular here in Minneapolis and St Paul are Gazebos. Some are made of wood and attached to the back porch. Screening them in is useful to keep the bugs out and enjoy the evenings as well. You could go with the option to the left and just buy a simple metal frame canopy that will keep the sun and rain off of you. Touring the pond and landscape tour last week I saw the tiki hut above. It is a great variation and helps give a theme to your backyard.

The best time to buy patio furniture is after the summer is coming to an end. Yeah, I know, you won't be able to enjoy it for long this year, but you will save a ton of money and not pay retail. Pull it out next year and enjoy your great buy. Now if I could just find a home before the sales end!

Wednesday, August 1, 2007

My Prayers Offered to Those Injured

It's really shocking to have a major interstate bridge collapse. I pray that everyone is ok. My family and my husband's family all live in other states. So many people have been calling loved ones to make sure they are ok, that cell phone coverage right now is shaky. My relatives have been having a hard time getting through and of course, worry even more. The last hour I have been trying to call people to let them no we were not involved.

Many people read my blog, so rest assured I am ok. I didn't travel to Minneapolis today as my son had a doctors appointment. I have experienced earthquakes when I lived in California and lived through three Hurricanes while living in Florida. Disasters are never fun.

At times like these, make sure you have an emergency plan. Tell family how to contact you other than by cell phones. Many times phone lines are destroyed or overrun by customers, making it hard to get through. And you never know when something like this will happen, so it is equally important to have your estate in order, should something happen. Make sure you have a legal will in place with specific directions about your family and financials.

You could lose a loved one at any time, so live everyday to the fullest!