Thursday, February 28, 2008

Confessions of New Construction, Part 8

Putting on the Finishing Touches

Your new house really starts to feel like a home when the walls are finished. The only things left to do are install all cabinets, appliances, flooring, lighting, and plumbing fixtures. These tend to go in fairly quickly, meaning you are at most one month away from closing.

At this time, or a month before, the mortgage company will be contacting you about locking in your interest rate. Some will even let you float it down once before you close, just in case rates go down. Our initial rate went down 1/8 of a point, so we floated down to the new rate.

The initial walk-through could be two weeks out from closing. At this time you will want to walk through the home with a fine-toothed comb. And when I mean fine-tooth, I mean microscopic. Yes, it could take you three hours to do, but don't even let the tiniest nick pass you by. This is after all, YOUR new home. Here are a few things to look for:

  • open all cabinet doors making sure they are not warped, cracked, broken, hung wrong, etc
  • make sure the wall paint is not showing through any of the primer
  • look for nicks in the walls, broken light fixtures, etc
  • open every window and make sure they work properly and latch securely

Don't be afraid to ask for an item to be fixed. The builder should want you to be completely satisfied and not have a problem fulfilling your request. On our home, for example, they had installed the exterior door hardware a month before closing. So every contractor had used these to gain access, and thus worn the finish off the handles. We asked these to be replaced, and the builder said ok.

Right before closing, you will have a final walk through to make sure all items have been fixed, and also learn how all your mechanical systems work. It is time consuming, but you won't care once you call it your own!

Read previous posts from the series below:

Part 7, Framing the House and Adding the Guts

Part 6, Finally, Construction!

Part 5, Digging the Foundation

Part 4, Staking the Lot

Part 3, Shopping Day

Part 2, Picking the Lot, and Part 2.1,

Part 1, Picking the Builder

**If you want to learn more about the luxury side of real estate in Minneapolis, check out my other blog.

Tuesday, February 26, 2008

What is it? - Photo 2

Here is another photo up for grabs, asking what is it? Any ideas....

Monday, February 25, 2008

Home Owners Want to Be Lied To... least this is what I am finding out, and I don't understand why.

A few weeks ago I went on a listing appointment. I had already walked through the home, so I knew what needed to happen in order for the home to sell quickly. The owners asked me to be very honest about the condition of their home, and wanted me to be brutally honest. I don't sugar coat listings, so being completely upfront and blunt about their home was not a problem for me.

During the appointment, they wrote down all the things that needed to change to get top dollar for their home. Here are a few things I saw:

  • the fruit wallpaper in the kitchen had to go - replacing with neutral color paint updates the home and make it look more modern

  • the ceiling fan in the kitchen had to go - ceiling fans not only distract buyers when looking at a kitchen, they are usually ugly, and dated. No one puts ceiling fans in kitchens anymore, and buyers hate them.

  • the carpet needed to be replaced - the new carpet they told me about over the phone was in fact 10 years old and hadn't been cleaned in 10 years

  • the home needed to be painted inside and all child damages to walls fixed

  • the aromatherapy scent had to go

The sellers believed their home was a certain price, in its current condition. I told them that their home would not reach that price unless they changed the things I mentioned. They were comparing their home to other homes, that no appraiser would use as comparables. While the price that I told them to list at was $10,000 below what they had hoped, they said they understood and would fix the items on the list. Before the seller left, he asked me if it would be possible to list higher. I told him he could do anything he wants, but that I would be coming back to him in a month for a price reduction.

I thought things went well, but when a week passed of no returned phone calls or emails, I knew something was up. Finally I got the call that they were hiring another real estate agent to represent them. Through sources, I found out that the husband was offended and thought I had told him his home was crap.( If memory serves me right, he told me he wanted me to be brutally honest.) I also found out that the agent walked through his home, telling him:

  • his home was beautiful and not a thing needed to be changed

  • his home was worth $10,000 more than I told him - the magic number he wanted to hear

I guess what he really wanted was for me to lie to him, and give him a lot of fluff. Sorry, but that is just not my style. See, I believe that if you really want to sell your home, then you need to do things to set your home apart from all the other junk out there. Trust me, there are so many homes on the market that are average, that buyers find it hard to choose. So the only solution is to make your home look as good as it can. Painting is one of the cheapest ways to add value to your home. Removing anything that dates your home, like tacky wallpaper, or gold colored light fixtures, is a good thing, and relatively cheap to fix, too.

There are also a lot of desperate agents out there that will tell a seller anything they want to hear, just to get the listing. These are the mediocre agents that plague our industry. They will take an overpriced listing knowing full well that in a month, they will be asking for a price reduction. My question is, if the first month of a new listing is the most crucial time of the entire listing, why would you start by overpricing it?

Buyers, and their agents, KNOW when a home is overpriced, and instead of taking a look at it, they will pass it buy. Like I said, there are just too many homes for sale in the Twin Cities to choose from, so the easiest way to eliminate homes is to throw out those that are overpriced. Bottom line, if you want to be lied to, at least admit it to yourself before the listing appointment. And if you let the agent know as well, then you may not waste their time, by having unrealistic expectations.

Sunday, February 24, 2008

Pond Hockey in the North

In the winter, Minnesota and Wisconsin hockey fans like to get outside and play hockey on real ice...what we call "pond hockey". Usually the teams are limited to 4-on-4, that way injuries can be lessened. As you can see, pond hockey is the real thing, playing boards to ram your opponent into, or else you could end up on someone elses rink.

Of course Zambonies cannot go out onto a lake, so clearing the snow away from the pond ice requires man power, and really big shovels. Oh, and you have to get up early, too, before the hockey players get there.

Probably the best part of playing hockey on a lake is you get to see some amazing sunrises and sunsets. Hopefully, you are not playing in below zero temps!

(Photos are courtesy of my brother-in-law who just played in a pond hockey tournament last week)

Saturday, February 23, 2008

Ignore the Headlines!

My broker was kind to leave a copy of an article from Time magazine in my mailbox, titled "Ignore the Headlines". It pretty much backs up what I have been telling people about our current housing market, and why now is a good time to buy. This has nothing to do with the market bottoming out, real estate agents trying to make money, or a grand conspiracy to fool people into buying.

This comes down to the secret that the wealthy understand and live by, and the mistake that everyone else makes. Many people never become wealthy because they refuse to step away from the herd and take their own leap of faith. John D. Rockefeller, a man all Americans have heard of, was by far one of the richest men in history, with a reported wealth of $1.4 Billion by the time of his death in 1937. He lived by the motto " The way to make money is to buy when blood is running in the streets". I believe he made his wealth by seeing opportunities and taking them, instead of meekly standing with the herd and complaining about his lot in life. While his statement might seem graphic, the logic is timeless - buy low.

Money manager Peter Lynch is quoted as saying that the best thing to buy right now, over stocks, is a home. His statement rings true, "When prices are falling FEW people have the discipline to buy stocks, a house, gold...or any other asset. But those who DO pull the trigger, excel in the long run". Like I have said in past posts, buying now, at least here in the Twin Cities, could prove to be very profitable in the long run. It is common knowledge that holding any investment long-term usually results in good profits, but unfortunately headlines that scream of recession, sub prime woes, housing crashes, rising oil, etc scare many people into sitting on their hands, waiting for times to get better. But if you wait, could you miss the train of gold?

Jim Svinth, the chief economist of Lending Tree, thinks so. He mentions that once interest rates begin to climb, any "further drop in prices might be offset by rising financing costs". The example used puts a home, bought at $218,900 (20% down, 30-yr fixed rate mortgage), with a rate of 5.5%, at a Principal and Interest payment of $994.31. If you were to wait for the market to go lower, and in 12 months, that same home sells for $197,010, but now at an increased rate of 6%, your P&I payment would be $994.94. Pretty much the same number, and you gained nothing by waiting except for the anxiety of holding out for a "better" market.

Buy low, sell high. Right now, the Twin Cities real estate market could be hitting a low. It could go a little lower, but honestly, I just don't see that happening too much. There are many areas where prices are leveling out and some great deals are available. Interest rates are still low, so why wouldn't now be a great time to buy?

If you have good credit, a down payment, and plan to hold for a few years, you really should take advantage of the fallen market. If you want investment property, then please, take advantage. The rental market will most likely see a decrease in vacancies, so being a "landlord" right now could prove to be profitable. I haven't met one investor that has held for the long term and not made money on a property. Remember, it takes discipline to buy when no one else is doing it. The only ones buying right now are the wealthy, or those looking to become so.

So which group do you want to be in? Where do you want to be financially in 20 years?

Thursday, February 21, 2008

2007 Real Estate Market in Review, Part 1

Today the Residential Real Estate Activity Report for 2007 was released by the Minnesota Association of Realtors. It tells us what we all knew was happening. Listings stayed high, while closed sales took a nose dive. To put it in numbers, over 105,000 listings were for sale, but only 40,055 closed. That's roughly a sale rate of 38%.

In the last few months, I have had people ask me about the market. I have always told them that while the market is down, we are back to 2002 sales levels, which in itself wasn't too shabby of a year. Low and behold I was right on the money! We all new the roller coaster ride had to end sometime. Now we can look back the last five years and follow the trends. Trends typically follow a sine curve, so it will be interesting to see if 2008 will be the year we hit bottom.

With record sales the last five years, we can also see what areas of the Twin Cities sold the highest volume of homes. NO big surprise but the Lake Minnetonka area tops the list. Homes around the lake have sky rocketed, with older homes being torn down and being replaced with mansions. Other areas have seen the same trend, especially in Edina. There have been a couple controversial tear-downs the last two years.

The next installment will look at appreciation levels and housing affordability.

Wednesday, February 20, 2008

Luxury Home for Sale in Eagan, Minnesota

This week I have the honor of marketing a beautiful home in Eagan, Minnesota.

Priced at $1.1 Million, the custom built home sits on two wooded acres and Angel Pond. Featured in the 2007 Corvette Calendar, the large boulder lined drive winds down to the home site and provides unique privacy for the home owner.

One marketing piece I develop for my luxury home sellers is their own website, highlighting interior and exterior photos of the home, as well as important documents, web links, floor plans, etc. You can view this luxury home's website, which I am still in the process of completing, here.

Monday, February 18, 2008

Back in a Few...

We moved into our new house this weekend and I just got my computer service back. I had planned on going to a coffee shop to get on-line over the weekend, but moving proved to take up all my time!

Thursday, February 14, 2008

New Photo Post Series Asks, What is It?

Ok, so my readers know I love to take photos. I have to say that most, not all, but most of the photos on my blogs have been taken by me. As I was going through a picture to post today, an idea popped into my head. How about posting photos were it isn't obvious what the photo is of, and then let your readers guess?

So here you go, the first one of the series, What is It?

Tuesday, February 12, 2008

Flipping Homes and the Bad Rap it Gets

I will be the first to say that there are some good things that come out of our Realtor Associations, like consumer advocacy, Realtor education, and the option now for health care. But I don't agree with everything that comes out of the mouths of our so called "leaders" here in the Realtor world.

Today I was reading an article written by Glenn Dorfman, the COO of the Minnesota Association of Realtors, in which he implies that flipping and making money fast in the real estate world is a bad thing. He even states that professional Realtors "deplore" the practice. Now I am glad he had decided to speak for me on that account because I would have hated him to state how I actually feel. To say that I should deplore making fast money, is like saying I should deplore the rush caffeine brings..

Before the market started booming, I flipped homes because they were affordable (Once it became fashionable to flip, we got out of the business because you could no longer find a good deal). My husband and I found homes that were usually abandoned by the owners, negotiated a purchase price with the home owner (usually an heir who no longer wanted the home, or lived out of state) that was a win-win for both parties, then rehabbed the homes and updated them to the current tastes of the market. It was a great business. Sure, we made a profit when we were finished, and trust me, the houses we rehabbed afforded maybe a profit of $10,000 when all was said and done. But as a real estate agent, it was even more rewarding when a neighbor approached us to thank us for what we had done....that being removing an eyesore from the neighborhood and replacing it with a home that would help improve surrounding property values.

In the past few months, a lot of negative publicity has been given to flippers. Sure, there were those that jumped into the market to make a quick buck and at the same time, produced a lot of bad remodels. But there were also those out there that operated the flip as a business, not a hobby, and did a lot of good. They gave buyers a product they wanted, and not only rehabbed homes, but rehabbed neighborhoods.

I for one took personal pride in each home we finished. I remember when a contractor had put together a kitchen, and the countertop seams did not meet properly. When I asked him to fix it, he made the comment that a buyer in this price range of a home wouldn't mind the flaw. But see, I don't produce shoddy workmanship, no matter what type of home it is and his "flaw" was not acceptable to my standards. I told him to fix it, or not get paid, which no big surprise he fixed.

Flipping homes is not a bad thing, it is just another way of selling a home. Some people buy homes, rehab them, then rent them out. But not every home fits nicely into that model. Believe it or not, a home that has been rehabbed does hold a higher market value than it used to, and if the market bares the new price, then there is no problem with flipping. Like I said before, flipped homes, when looked at as single home, does not afford a large profit. It is only when you have volume that you can make a lot of money in flipping. (Don't believe what all the HGTV shows tell you about the huge profits those featured home owners are making. They never reveal the true profit, after capital gains, taxes, expenses, etc are taken out. )

So there you have it, my view on the issue - one that comes from experience in the matter. Greed is defined as "the selfish desire for or pursuit of money, wealth, power, food, or other possessions, especially when this denies the same goods to others". I think the term "greed" is being thrown around too easily in our society today and being used to describe instances when it shouldn't. Making money is not greed, it is capitalism.

Monday, February 11, 2008

Confessions of New Construction, Part 7

Framing the House and adding the Guts

Once you see framing going up on your new home, you get even more excited for completion day. At this point you are able to walk the floor plan and get a better idea of how the space fits together.

**first piece of advice - the foundation footprint always looks smaller around framing time and you will think you might have made a mistake, picking a floor plan that is too small. TRUST me, it is just an illusion.

For many new homes in Minnesota, it only takes a week to frame the house. One weekend we stopped by and saw the first photo of our new the next weekend, framing was completed all for one small section of the roof, and we were able to walk inside to find the second photo. During our walkthrough of the home, we were able to discover, shortly after framing was complete, that the master bathroom was the wrong design. It was quickly changed once we informed the field manager of the mistake.

After framing, things pick up and the "guts" of your home are installed:

  • electrical & gas lines

  • plumbing

  • heat ducts

  • insulation

  • windows and doors

At this point it is very important that you get out your electrical diagrams and make sure that everything is in place. Outlets could be off a few feet, recessed lighting might be in the wrong place, or cable might be missing out of one bedroom. If you catch these problems before dry wall is installed, your life will be much easier.

It helps that you will most likely have a Pre-Drywall Inspection with the builder. They will walk the entire home with you, pointing out every detail, and making sure everything meets your expectations. It might take up to three hours for the inspection, but it is well worth the time. In our walk through, we were able to see that a few of the recessed lights were in the wrong positions, which the field manager noted and gladly changed for us.

**second piece of advice - walk the house every weekend, especially after installation. Being a part of the progress is extremely important,allowing you to catch mistakes quickly...and without further cost to your pocket book.

Read previous posts from the series below:

Part 6, Finally, Construction!

Part 5, Digging the Foundation

Part 4, Staking the Lot

Part 3, Shopping Day

Part 2, Picking the Lot, and Part 2.1,

Part 1, Picking the Builder

**If you want to learn more about the luxury side of real estate in Minneapolis, check out my other blog.

Sunday, February 10, 2008

The Cathedral of Saint Paul

Today I celebrated the Rite of Election into the Catholic church, and what better way then at the St. Paul Cathedral. It is a beautiful historic building, overlooking downtown St. Paul. How can you not feel inspired when you walk inside, to see the sun rays beaming through the old stain glassed windows?

Friday, February 8, 2008

Unique Homes Require Unique Marketing

Times have changed. No longer can you just stick a sign in the yard and get a home to sell. Agents and home owners have to come up with innovative ideas that will spark interest in a buyer's mind. For some homes, this is a relatively easy task, but there are those rough gems out in the world that need all the help they can get. So if you have a tank, you might enjoy the following property.

My father-in-law has a brother that lives in Montana. If you have ever been to Montana, you would know that it is a very vast space of land, where remote locations could be only ten miles out of the nearest town. It is also a state that doesn't have a large caravan of relocating buyers coming across the border. Anyway, I was sent the web addressfor my relative's remote property that he has for sale.

The first photo is of the drive way in winter. He states,

" This is truck country - 4 wheel drive only certain times of the year. If you don't plow the last mile you will probably be snowed in for a few months every year. The road is 3 1/2 miles long - the first 2 1/2 miles is a mostly unmaintained forest road - the last mile is a private road. The road is gravel, dirt, rock, and at certain times of year mud. If you like mudding - this road can be an absolute hoot. There are certain times of year that 1000 feet of this road can be little more than a mud bog. Well, maybe I'm overstating a bit, but there have been times and I hope you get the picture. If you do not have to go anywhere this road can be the perfect isolating mechanism for your own private retreat. Got a Hummer or tank, not worried about the road, take your best shot".

Now does that paint a picture of what you are getting into if you like this property?

I love the fact that the entire description of this property is telling people what to fully expect and paints the reality of living on this land. He lets you know up front that this home is not for the city slicker hoping to move out to the wilderness, with no remote living experience, to rough it in retirement. He even write "This spot is not for wimps, those that are fainthearted, or those that are weak".

Did I mention that you have to produce your own electricity, as this property is not on a grid?

After portraying who this property is not for, he goes directly into who the property would be perfect for, a writer, someone seeking solitude, etc. He also highlights the wildlife, and the amazing mountain views. He mentions that the land could be great for a summer cabin, or a hunting retreat. But I love the ending:

"I dare you to live there year round; however, be aware you could be risking your life or your sanity."

Do you think he will sell this home, using such an unconventional way of attracting a buyer? What do you think of his approach?

Wednesday, February 6, 2008

It's Back...

...time once again for the Spring Parade of Homes Tour, which runs February 9th-March 16th.

I like the Parade. It gives me a chance to see anything new and creative that builders are putting into their homes. Last year one idea of saw that I had not thought of was a washer and dryer for the master suite.

It is also fun to look at the Dream Homes, both in at over $2 Million. This year the two lucky homes are located in Bloomington and in Stillwater. It does cost $5 to see the home, but the money goes to a worthy cause.

If your tastes run a little green, the Parade has a mini tour just for you. These earth friendly Green homes will showcase ways they have made home construction safe for the environment, and some homes will even have seminars to give buyers information on the Green options now available to them in the Twin Cities. Minnesota is the first state to develop a green certification program for builders and remodelers.

To get your hand on a copy of the Parade of Homes Book, visit any Holiday gas station around the Metro area.

Tuesday, February 5, 2008

Unsticking the Wheel of Real Estate

People are depressed this winter. Not only has the sun been mostly non-existent , but the negative press about the woes of the housing market have done little to brighten Minnesota residents spirits.

But I have to say that the last two weeks have been extremely busy. It seems like someone has opened the barn doors and both sellers and buyers are coming out for Spring.

I hope this puts a little smile on your face. You would think that there are NO buyers out there, according to the media, but I have to tell you that I have a handful of buyers coming into town over the next few months. Many are requesting relocation packets in order to get a good idea on what Minneapolis and St. Paul have to offer. I can only imagine that other real estate agents are experiencing the same influx of business.

On the other spectrum, sellers have been calling and getting advice for selling this spring. Listing appointments have really picked up, and I have to say the homes going on the market are really other words, not foreclosures or short sales. Hopefully this is good news for the market, but it won't solve all the woes. Only time can heal that wound.

Sunday, February 3, 2008

Minneapolis Historic Home - The Longfellow House

This weeks Historic Home in Minneapolis is 4800 Minnehaha Avenue.

Built in 1907, the home was constructed for Robert F. Jones and originally located at 4001 Minnehaha Parkway East. It was constructed as a 2/3 scale replica of a Colonial house located in Cambridge, Massachusetts that was owned at one time by Henry Wadsworth Longfellow.

The home originally sat on 4.6 acres, part of Longfellow Gardens, a zoo and botanical gardens,which was run by Mr. Jones. When Mr. Jones died in 1934, the park was closed a short four years later. The property was deeded to the city of Minneapolis, which used the house as the Minneapolis public library up until 1967. Over the years, the historic building fell into ruin. It wasn't until 1994 that the house was saved, when the home was moved by the Minneapolis Park and Recreation Board to its current location and renovated by the Kodet Architectural Group.

As part of the Minnehaha Park, including Minnehaha Falls, the Longfellow House is used as an interpretive learning center.