Monday, March 31, 2008
Saturday, March 29, 2008
Friday, March 28, 2008
I get a call at least once a week with an upset home owner asking if I could let them know what their home is worth. Frightened of this upside-down real estate market, home owners this last week have been receiving their 2008 tax bills in the mail. They don't like what they see.
For many, their tax assessment is valued for more than the house could sell for if it became available for sale. Some are even $100,000 less than the assessed value. So what is to be done?
For now, nothing.
Counties like Dakota County, understand that home owners are upset, but there is little they can do right now. With budgets sky rocketing over the last five years, cities have been enjoying the financial wind fall brought to them through higher property taxes. Now that property values are declining, cities have to awaken to the fact their annual budgets are going to decrease over the next few years. Of course, they can't raise property taxes to find the revenue, right?
We all know that once a government gets our money, they don't just give it back freely, or without a fight. Minnesota law requires that county assessors only take into account the previous 12 months of sales when looking at real estate values. So as time moves on, the declining value indicated by sales will eventually be shown though property taxes. However it could take two years before anyone sees relief.
Homeowners can appeal their local assessor and ask for a revaluation. I have known some people who have successfully got their property taxes down because they asked. So if you find yourself having a heart attack after opening up your tax bill, either call the tax assessor, or wait a year or two for the counties to get around to recalculating your bill. Either way, it won't be an easy task.
Tuesday, March 25, 2008
One thing I love about Minnesota is the amount of space they set aside for nature and wildlife. Conservation signs like the one above are commonly seen in areas where counties are trying to find a good balance between neighborhoods, wildlife, drainage issues, zoning, etc. Instead of clear cutting for construction, developers are now having to designate a certain percentage of land to green space.
Monday, March 24, 2008
The Twin Cities Housing Affordability Index is showing that buyers are getting back into the game and can once again afford to buy a home. I can only assume that 2008 will also see a similar increase. Good news for our market!
Sunday, March 23, 2008
I am sure she didn't feel threatened by this man at first as some agents never give a second thought to their safety. Many people, not just agents, are too trusting of others. Unfortunately, even the best mannered people can turn out to be criminals.
If you are an agent, please always be aware of your surroundings and have a plan of escape.
If you are a buyer wanting to see a home, please understand if the agent has some "rules" before they show you a home. Many agents will do or ask you the following:
- Meet them at their office first
- Show valid ID
- Take your license plate number
- Check in multiple times with their office as they are giving you a home tour
- See parts of a home, like a basement, without them
Understand that they are just looking out for their safety and mean nothing personal against you.
Friday, March 21, 2008
Thursday, March 20, 2008
Now, in Minnesota, you are not represented by an agent until you enter into a written agreement. Failure to do so means that most agents will not show you homes, because quick frankly, they are looking for loyalty from a client. They will also not give you any advice or answer any questions because of legal issues, state laws, etc.
Back to the buyer...he did not want any representation, so the other brokerage politely told him they could not help him. Since I represent the sellers of my listing, I had no problem showing him the home. He would just understand that I do not represent him, and thus anything he tells me I could, for the most part, relay to the sellers. By Minnesota real estate law, I owe no duties to him save confidentiality.
The real problem came down to when he wanted to see the home, which was Wednesday evening. Unfortunately, it was such short notice that I was not able to drop everything and meet him there. Reasons being,
- I had other appointments to keep.
- I had never met this person or spoken with him over the phone, so I was naturally concerned about my safety. Real estate agents have to be very careful when showing homes and take proper safety precautions. While it doesn't happen often, we have been attacked by prospective "clients".
Who knows....but the point to remember is that many real estate agents cannot show homes on a moments notice. Many of us have prior appointments, or often the seller cannot accommodate the request either. While we definitely want to sell a home, we do not done Superman attire that can make us be in two places at once. When you make a request to view a home, please have a couple of times set aside, in case one of them is not available. Much like you have to give notice to your doctor for an appointment, so must you do when looking at homes to buy in the Twin Cities real estate market.
Tuesday, March 18, 2008
Now I will just have to go back in summer and take some more seasonal photos of the depot.
Monday, March 17, 2008
Each year the National Association of Realtors comes out with a "30 under 30" contest, highlighting the best Realtors under 30 years old that are doing well in the business. I have never wanted to submit myself before, because for one, I hate having my photo taken (much like a fellow blogger in Saint Paul).
One of the winners last year has recently been indicted in Las Vegas for bank fraud, money laundering, etc:
"The government alleges Mazzarella and Grimm bought more than 200 properties at inflated values using limited liability companies and more than 400 straw buyers to make purchase offers." (CNBC)
Just goes to show you that getting to the top is not done by cheating. What goes around comes around, and when you fraud the government, they will find out. I am giving this Realtor, who will most likely never be a Realtor again if convicted, the Dunce prize for stupidity.
Friday, March 14, 2008
Last evening I was granted the pleasure of witnessing one of the best sunsets I have seen for a long time. After the open house I held for one of my listings that sits a top the Mississippi River Bluffs, I grabbed my camera and began snapping away. Enjoy!
Thursday, March 13, 2008
Does this mean that all refinances in the last four years were presented by predatory lenders? No. Does it mean that there are some people out there that are being foreclosed on because they made a poor judgement? Yes. Is it the government's responsibility to bail everyone out that made a bad decision? No...but they will anyway.
The point is, the foreclosure debacle was inevitable. We just moved, and I haven't unpacked my crystal ball yet to see where this is all going in the next couple of years, but I do remember consulting it in 2004. It was SO obvious that buyers were going to get in trouble when their ARM loans reset, and it is really hard for me to believe that no one else saw it coming.
That year I worked with many first time home buyers who normally would not have been able to obtain a loan. When they came to me with financing that included an ARM, I personally called the lender and told them to find a different loan, or lose this client. I then sat down and explained what was going to happen in three years to them financially, when their rates increased. Most were amazed and had no idea. They quickly understood that an ARM was the worst thing for them to consider. I often used the analogy of a nice shiny apple: it looks yummy from the outside, but cut if open and you will find it rotten to the core. First appearances can be deceiving, so it is best to dig deep into the details to fully understand the structure of the loan.
So here we are, and my crystal ball correctly predicted the fallout we are now in. Home owners throughout the nation are scrambling to save their homes. The government is intervening, but for some it is too late. Oh, wait...I just found my crystal ball. It is a little dusty, but I think it is saying that the government is going to get TOO involved, it is going to pass some stupid laws that enforce more regulations on the mortgage industry that are going to actually hurt home owners (which won't be realized for ten years), and their "intervention" is going to cause interest rates to climb.
An interesting tidbit is the fact that for years banks have been lobbying the government to let them brokerage real estate. Well, here is the chance to prove their worth and ability to run a good real estate business. Unfortunately, they are not doing so well as it appears banks are having a hard time keeping up with the shear volume of foreclosures. Homeowners and real estate agents are calling banks before foreclosure and trying to work out deals in which the bank will except a short sale, change the rate, or change the loan terms. However there are banks out there, like Countrywide, who are making it nearly impossible for homeowners to find some relief. Not to good of a report card for me to approve banks getting into real estate.
Wednesday, March 12, 2008
Tuesday, March 11, 2008
Pushy Seller : Take for instance one case where I represented the buyer for a home they loved. The home was listed for $140,000 and the bank appraisal came in at $131,000. The seller was furious when he heard the news and demanded a new appraisal. We granted him one, using an appraiser of his choice, but made sure to sign an agreement that the buyer's were not bound to the new evaluation. Well, you can imagine what happened. The new appraiser was told about the situation and low and behold, the new value comes in at $160,000. Ummm, I might be mistaken but a $29,000 difference in appraisals starts to smell of bad fish. The comparable adjustments were obviously pushed beyond normal market and the bank refused to accept it. The sellers ended up selling at $131,000.
Pushy Builder : Or how about the builder who offers incentives if you go with their preferred mortgage lender. Many times I have seen them use in-house appraisers, who do a drive-by analysis, and give the value the builders are looking for. In the down turning market, I have seen some appraisals that appeared to have been pushed. The home we recently bought, for instance, had a fourth comparable that dated a year back. The appraisers notes mentioned this was not part of the original appraisal due to sale date, but added it at the request of the lender (who was the in-house lender for the builder). The notes stated this helped show the value. Well, any idiot can see that...but the market was still doing well a year ago, and since then, prices have come down and that home would no longer sell at the same value. So that "value" is now a false value, and should not have been used at all. That home "pushed" the value up on our home and I feel the appraiser should never allowed the builder to influence her judgement.
NEW RULES WILL CHANGE ALL OF THIS
Starting in 2009, some new rules are taking effect:
- Lenders will no longer be allowed to use in-house staff for initial appraisals
- Lenders are prohibited from using appraisals from companies they own or have an interest in
- More stringent appraisal review process to weed out junk appraisals
Of course there are many people screaming that this will hurt the appraisal industry. Yes, it will...by weeding out the bad apples that plague the industry, just like is happening in the real estate industry. But it will be a good thing for consumers, who might have paid too much for a home because the appraiser didn't have the guts to stand up to the bank.
I for one would like one more little piece added to the new rules:
- appraisers should not know the purchase price of the home when they do the appraisal. I believe this gives them a mark to shoot for and unfairly influences the appraisal.