Monday, March 31, 2008

Winter Wonderland ..wait...It's April!

...ok, it's really the last day of March. Talk about going out like a Lion!

Saturday, March 29, 2008

What is it? - Photo 3

This one might be a little tougher for you all!

Friday, March 28, 2008

Not Happy with your Tax Bill - Tough... least that is what some local counties are saying to home owners.

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

Minnesota Conservation Efforts

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

2007 Real Estate Market in Review, Part 2

Over the last few years, with increasing home values, real estate prices in Minneapolis and the Metro area were getting so high that many buyers were being priced out of the market. Housing affordability was at an all time low in 2006 and helped put on the brakes for the out of control real estate market. With the release of the 2007 Market Report this last month, some good news is coming forth.

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

My Last Post Gives Me Chills

In my recent post about not showing one of my listings on short notice, I mentioned a real estate agent's safety as one reason for not doing so. It just so happens that I found out, a day later, that a Wisconsin real estate agent was killed by a man she was showing homes to. Evidently he didn't like her questioning him about his buying power, so he beat her and strangled her to death...then tried to cover up the evidence.

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

For All You Warm Weathered Readers

Thought you might like to take a look at what our first day of Spring looked like this morning. Yep, that's about six inches of fluffy snow sitting on my deck...and it is still coming down. They say we might get a total of eight inches. And here I was already thinking about gardening....

Thursday, March 20, 2008

Sorry, but I Cannot Drop Everything to Show You a Home

Wednesday morning I was contacted by another real estate company letting me know they had a buyer lead for one of my listings. I thought it strange that they would be sending a buyer my way, without helping the gentlemen themselves. After some questioning, I discovered that they will only show buyers homes that enter into a Buyer's Representation Agreement with their real estate brokerage.

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".
Today I was finally emailed back by this gentleman. He no longer wanted to see the home because I was not able to meet his request for a short notice showing. I thought this strange. If he really wanted to see the home, then he should understand that short notices often do not work out, and to schedule another time for the showing that fits both parties schedule. It makes me think that maybe he did mean ill will towards the agent that would have shown him the home, or maybe he is just a looky-loo and has no real interest in buying the home.

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

The Minnehaha Depot

Located in Minnehaha Park, this Gothic style train depot was built in 1875, replacing a smaller station. The railway line was the first one ever into the Twin Cities from Chicago, and many residents used the train to visit the park in the summer, which includes the spectacular Minnehaha Falls. The depot is owned by the Minnesota Historical Society and was the first building to be restored by the museum.

Now I will just have to go back in summer and take some more seasonal photos of the depot.

Monday, March 17, 2008

Here's a No Brainer...

...if you are going to be in the national spotlight, then you might want to make sure you don't screw up. Better yet, if you have done some bad things in the past, you might not want to apply for competitions or national recognition in the future, putting yourself under the magnify glass.

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

Most Amazing Sunset Ever Over Minnesota

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

Where's My Crystal Ball?

Today Inman News Blog posted about a group of ACORN protesters demanding for the mortgage industry to save their homes. Apparently there are some home owners out there that didn't know what they were doing when the refinanced their mortgage. There are even some who took out huge amounts of equity from their home, and put it into paying off credit card debt, college debt, etc. Now they find themselves in a pickle when the current value of their home is less than what they refinanced for.

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

Last Bits of Snow

We have had a big melting of snow the last few days, but I was able to take this photo last week after a dusting. Soon spring will be here and I will have budding plants to photograph.

Tuesday, March 11, 2008

Pushy Appraisals Could Be No More

I have been in the real estate business long enough to see some iffy appraisals come across my desk for my clients. No more was this so then during the housing boom. Appraisers seemed pressured to "make it happen". And needless to say, some home owners and real estate agents, not to mention the banks, placed this burden to "sell, sell, sell" fully on the backs of the appraisal industry. Fearing retribution via "blacklisting", many appraisers felt the need to push value in order just to stay in business.

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.


Starting in 2009, some new rules are taking effect:
  1. Lenders will no longer be allowed to use in-house staff for initial appraisals
  2. Lenders are prohibited from using appraisals from companies they own or have an interest in
  3. 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 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.

Friday, March 7, 2008

Rain Gardens

This week I attended a introductory class to rain gardens, sponsored by Blue Thumb. The Dakota County Blue Thumb initiative is a partnership of the Cities of AppleValley, Burnsville, Eagan, Farmington, Lakeville, Hastings, Mendota Heights, Vermillion River Watershed, Friends of the Mississippi River, Dakota County Water Resources, and Dakota County Soil and Water Conservation District. It's goal is to create better water quality by using nature and plantings to absorb water runoff in our neighborhoods and along our shorelines.

I had never seen rain gardens implemented until now, and they are a wonderful idea. A Rain garden is a garden that forms a depression in the ground. It is filled with perennials, wildflowers, and shrubs that don't mind some water. Rain gardens take in water during a rain, and help water to be reclaimed naturally, instead of running into sewers and our Minnesota lakes, rivers, and streams.

The city of Burnsville recently did a study on the use of rain gardens in one of the neighborhoods surrounding Crystal Lake. Areas of the curbs were cut out to let water run into the rain gardens, and once each garden was full, the water was allowed to flow back into the street, making its way to the next rain garden. The project has been a huge success, one which other towns throughout the Twin Cities should look into implementing.

If you haven't thought about a rain garden before, you should really think of it as a good way to take water from your roof, and put it back into the ground, the natural way. We just moved into our new home, and I am talking with a landscape designer about putting a rain garden in our yard.

Thursday, March 6, 2008

New FHA Loan Limits Available for Minneapolis

The new updated loan limits for FHA, Fannie Mae, and Freddie Mac are in today. Hennepin, Scott, Ramsey, Dakota, Washington, Wright, and Anoka counties all find themselves with the highest mortgage limits, due to the proximity of the Twin Cities Metro Area. This is good news for buyers as it keeps up with the increased cost of housing over the last few years. Buyers will still need to qualify for the loans and the full amount is not guaranteed.

Tuesday, March 4, 2008

And A River Runs Through It

One thing I love to do is walk through local parks after a fresh dusting of snow, and of course, take photos. The other day I was at Lake Nokomis in Minneapolis and took this shot of one of the many trail bridges bordering the lake.

Monday, March 3, 2008

Negotiate the Deal, Unless the Agent Kills It

I cannot believe I haven't written a post since, it couldn't be that long. Wow, time really does fly. Unfortunately, it wasn't all fun, more work than anything.

Over the weekend, an offer came in on one of my listings. No big surprise but it was a low-ball offer. Needless to say, the sellers were not too happy, especially because the buyers saw the home four times this last week. Now, if you are going to make an offer on a home, and have taken four days of the seller's time for showings, wouldn't you think to be a little nicer?

The sellers counter offered, but the buyers rejected it, stating the sellers were living in la-la land. Problem was, they had an agent with faulty data. Yes, that's right, faulty data. Some agents just don't know how to evaluate a home and find comparable homes. Just because a home has the same square feet, doesn't mean it is comparable. You can read all about what I am talking about on my other blog.

But my point with this post is, many times, the agent kills the deal. The agent tries to negotiate on a home or price range that they have no experience in. They "think" they "know" what they are doing, but in reality, they have no clue. Take for instance, writing an offer on a property priced above $1 Million. If you don't know how the luxury market works, don't jump into it without doing your homework. But agents are thick headed, and won't admit their limitations, so they jump in anyways, and quickly drown.

I have seen plenty of agents kill the deal. They let emotions get in the way, take personal offense to my negotiating techniques, lack experience, lack knowledge....the list can go on and on. Unfortunately, their client is the loser and doesn't realize the agent and their "negotiating" skills were the problem.

I would consider myself a blunt person, and usually tell my clients upfront that I don't believe in sugar-coating things. Some have asked me to put a few sprinkles on top, just to appease the sweet tooth, but it always comes back to honesty. I take my career seriously, and do so by educating myself as much as I can. That includes talking to vendors and asking questions on their profession. Many times, the things learned don't come from books or classes. They come from the field. Sadly, most agents never take the time to learn.

Did you know that 85% of all real estate agents have no prior sales experience before coming into the real estate industry? Or how about the fact that only 17% of all real estate agents have earned at least one real estate designation or certification? No wonder the drop out rate is high and the profession is bulging with terrible agents. Maybe the agent I dealt with this weekend needs to take a class on doing a proper CMA...but I highly doubt that will happen.

One thing to think about, if you are a home buyer or seller, is to ask your agent about their experience. Are they all things to all people, or do they specialize in certain areas? Don't be afraid to ask questions. If you don't, you could be losing out on a home you love through no fault of your own.