This is a newer form in the state of Minnesota to further attempt to clarify issues in a purchase agreement, when dealing with a short sale. This is a great form because it does clarify 3 points that keep coming up. All of these points are negotiable. Below is the main language from the front page of the form.
SHORT SALE CONTINGENCY ADDENDUM
This form approved by the Minnesota Association of REALTORS®,
which disclaims any liability arising out of use or misuse of this form.
© 2009 Minnesota Association of REALTORS®
PART 1) The proceeds of the will not be sufficient to fully pay off all mortgages and other liens against the property. As a result, Seller must obtain “short sale” approval from one or more creditors. There may be various lien holders from whom Seller may need approval: this includes but is not limited to senior and junior liens, if any, homeowner’s associations or tax liens. Short Sale Approval in this Addendum is defined as a mutually acceptable agreement between the creditor and Seller to release their liens. This Purchase Agreement is contingent on the Short Sale Approval by Seller’s creditors. Seller shall obtain the Short Sale Approval(s) and notify Buyer, or licensee representing or assisting Buyer, in writing of the approval(s) no later than ______________. If Seller fails to obtain the necessary approval(s) and provide Buyer, or licensee representing or assisting Buyer, with written notice by this deadline, this Purchase Agreement is canceled, in which case Buyer and Seller shall immediately sign a Cancellation of Purchase Agreement directing the release of the earnest money to Buyer
The following provision(s) modify and supersede any conflicting term(s) in the Purchase Agreement and any Addenda there to ONLY IF the corresponding box is marked (Select appropriate option(s)
PART 1 EXPLAINS THAT THERE IS A TIME LIMIT ON HOW LONG THE BUYER WILL AGREE TO WAIT FOR THE SELLER TO GET THE NECESSARY APPROVAL IN WRITING FROM THE BANKS TO MOVE FORWARD WITH A SHORT SALE. THIS IS A VERY NEGOTIABLE POINT BECAUSE IT HAS TO BE LONG ENOUGH FOR THE SELLER TO OBTAIN APPROVAL BUT NOT LOCK THE BUYER IN FOR 6 MONTHS. IT ALSO MAKES BOTH PARTIES AWARE THAT THE BANKS DO AVE TO GIVE APPROVAL. SOUNDS OBVIOUS BUT TO SOME IT IS NOT. IF THE SELLERS DON'T GET APPROVAL WITHIN THAT TIME LINE CONTRACT IS CANCELLED.
PART 2) Not withstanding any provision of this Purchase Agreement to the contrary, Buyer shall not be required to provide earnest money until Short Sale Approval has been obtained. Buyer shall pay the earnest money within three business days after Seller provides written notice to Buyer, or licensee representing or assisting Buyer,
that said approval has been obtained from all mortgagees and lien holders.
PART 2 EXPLAINS WHERE THE EARNEST MONEY STAYS. TYPICALLY IN THE STATE OF MINNESOTA IT IS REQUIRED THAT THE EARNEST MONEY BE DEPOSITED IN TO A BROKERS TRUST ACCOUNT WITHIN 3 BUSINESS DAYS OF FINAL ACCEPTANCE.
PART 3) Not withstanding any provision of this Purchase Agreement to the contrary, the time frame to perform inspection(s) shall commence on the date that Seller provides written notice of Short Sale Approval from all mortgagees and lien holders to Buyer, or licensee representing or assisting Buyer, rather than on final acceptance of this Purchase Agreement.
PART 3 EXPLAINS THAT THERE WILL BE NO INSPECTION UNTIL APPROVAL OF A SHORT SALE HAS BEEN OBTAINED RATHER THAN WITHING X NUMBER OF DAYS FROM THE FINAL ACCEPTANCE. THIS WAY THE BUYER IS NOT SPENDING MONEY ON A HOME THEY MIGHT BE ABLE TO BUY.
PART 4) Notwithstanding any provision of this Purchase Agreement to the contrary, Seller, or licensee representing or assisting Seller, SHALL or SHALL NOT have the right to continue to offer the property for sale until this contingency is removed.
PART 4 EXPLIANS THAT SOME BUYERS FEEL THE HOME SHOULD BE PUT INTO PENDING AS SOON AS THE BUYERS AND SELLERS AGREE TO THE CONTRACT. DUE TO THE LENGTH OF TIME TO GET AN APPROVAL FROM THE BANK, THIS MAY NOT BE A WISE MOVE ON THE SELLERS PART. IT ALL COMES BACK TO NEGOTIATION AND WHAT THE OTHER PARTS OF THE CONTRACT SAY.
THIS PAGE IS PART OF A LEGALLY BINDING CONTRACT BETWEEN BUYER(S) AND SELLER(S).
IF YOU DESIRE LEGAL OR TAX ADVICE, CONSULT AN APPROPRIATE PROFESSIONAL.
This form has saved a lot of hassle and misunderstanding for me on both sides of a transaction and is some thing to consider.
As always please consult a real estate attorney with any legal questions you may have and your accountant for any tax questions.
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or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
Thursday, February 4, 2010
Monday, February 1, 2010
Short sale seller information. Some facts you should know before making a decision.
I am continuing with short sales in many of my blogs due to the continuing confusion about them completely understandable. There seems to be so much misinformation floating around about them. Not to mention the amount of calls and emails I receive from both buyers and sellers wanting information. They usually begin with I heard from my friend or read some where about x, is that true?
Even though both sides of the transaction feels the pain of the whole thing, there are very different things to consider if you are a seller vs. a buyer. Below is a basic outline of what I typically cover with a seller when we sit down the first time to discuss the selling process. The one thing you always want to keep in mind is every transaction is different and there are many unknowns that come up. That is something you can't control no matter how prepared you are. An experienced agent will be very helpful in that regard. Again I can't stress enough how important it is to speak with an attorney and tax accountant before making a decision to short sale your home. Every states laws are different and you need to know where you stand.
A short sale occurs when the proceeds of your home sale will not be sufficient to fully repay your creditors. Because of this, it will be necessary to come to an agreement with your creditors to accept less than the full amount of the debt you owe in order to release the liens on your property. Without this agreement, your home cannot be sold (unless you are able to bring money to the closing). If you are facing foreclosure, the decision to proceed with a short sale or to allow the property to be foreclosed is a difficult one. You should consult with an attorney or tax advisor before making your decision. There are also several nonprofit organizations that may be able to help with this decision.
Should you choose to pursue a short sale, there are a number of issues to keep in mind:
Your creditor will likely communicate with you by mail to indicate whether it will accept less than it is owed. If the creditor approves, the creditor will agree to release the liens on the property. But you should also determine whether the creditor intends to waive its rights to any shortfall, or whether it intends to pursue you for the shortfall after closing. If the communication regarding this issue is at all unclear, it is very important that you contact the lender for clarification before continuing with the sale.
If you are in the process of foreclosure, it is important to understand that the process will continue even though you are pursuing a short sale. Typically, a foreclosing lender will not delay the foreclosure process because you have the property on the market or even if you have a purchase agreement signed. Therefore, you need to stay informed about your foreclosure process, and in particular understand the redemption period deadline that may apply.
There may be tax consequence to you as a result of the short sale. For example, if your short sale involves the sale of property that is not your primary residence, you will be taxed on any “forgiven” debt. Other rules apply; it is important that you contact a tax consultant before making your decision.
In Minnesota we have a longer redemption period than many states which can work in the favor of both the sellers as well as the buyers. It can take a long to get all of this sorted out, so know as much about the process going it. Believe it or not the more you know of your situation the easier it will be to make the right decision for you. Don't just jump into it without all the facts, the process is hard enough on a family already. By doing the research first it should ease the burden a bit.
As always please consult a real estate attorney with any legal questions you may have and your accountant for any tax questions.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
Even though both sides of the transaction feels the pain of the whole thing, there are very different things to consider if you are a seller vs. a buyer. Below is a basic outline of what I typically cover with a seller when we sit down the first time to discuss the selling process. The one thing you always want to keep in mind is every transaction is different and there are many unknowns that come up. That is something you can't control no matter how prepared you are. An experienced agent will be very helpful in that regard. Again I can't stress enough how important it is to speak with an attorney and tax accountant before making a decision to short sale your home. Every states laws are different and you need to know where you stand.
A short sale occurs when the proceeds of your home sale will not be sufficient to fully repay your creditors. Because of this, it will be necessary to come to an agreement with your creditors to accept less than the full amount of the debt you owe in order to release the liens on your property. Without this agreement, your home cannot be sold (unless you are able to bring money to the closing). If you are facing foreclosure, the decision to proceed with a short sale or to allow the property to be foreclosed is a difficult one. You should consult with an attorney or tax advisor before making your decision. There are also several nonprofit organizations that may be able to help with this decision.
Should you choose to pursue a short sale, there are a number of issues to keep in mind:
Your creditor will likely communicate with you by mail to indicate whether it will accept less than it is owed. If the creditor approves, the creditor will agree to release the liens on the property. But you should also determine whether the creditor intends to waive its rights to any shortfall, or whether it intends to pursue you for the shortfall after closing. If the communication regarding this issue is at all unclear, it is very important that you contact the lender for clarification before continuing with the sale.
If you are in the process of foreclosure, it is important to understand that the process will continue even though you are pursuing a short sale. Typically, a foreclosing lender will not delay the foreclosure process because you have the property on the market or even if you have a purchase agreement signed. Therefore, you need to stay informed about your foreclosure process, and in particular understand the redemption period deadline that may apply.
There may be tax consequence to you as a result of the short sale. For example, if your short sale involves the sale of property that is not your primary residence, you will be taxed on any “forgiven” debt. Other rules apply; it is important that you contact a tax consultant before making your decision.
In Minnesota we have a longer redemption period than many states which can work in the favor of both the sellers as well as the buyers. It can take a long to get all of this sorted out, so know as much about the process going it. Believe it or not the more you know of your situation the easier it will be to make the right decision for you. Don't just jump into it without all the facts, the process is hard enough on a family already. By doing the research first it should ease the burden a bit.
As always please consult a real estate attorney with any legal questions you may have and your accountant for any tax questions.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
Short sale buyer information. Some facts you should know before making a decision.
I am continuing with short sales in many of my blogs due to the continuing confusion about them completely understandable. There seems to be so much misinformation floating around about them. Not to mention the amount of calls and emails I receive from both buyers and sellers wanting information. They usually begin with I heard from my friend or read some where about x, is that true?
Even though both sides of the transaction feels the pain of the whole thing, there are very different things to consider if you are a buyer vs. a seller. Below is a basic outline of what I typically cover with a buyer when we sit down the first time to discuss the buying process. The one thing you always want to keep in mind is every transaction is different and there are many unknowns that come up. That is something you can't control no matter how prepared you are.
When we are talking about a short sale, we are not talking about a bank-owned property. A short sale occurs when the proceeds of a home sale will not be sufficient to fully repay the seller’s creditors. Because the creditors cannot be paid in full, the seller will need to obtain an agreement from the creditors that they will accept something less than what they are owed. While it is possible to get a good deal on the price of a short sale property, there are a number of issues unique to short sales that are worth considering:
First and foremost, you typically need to have a lot of patience when trying to purchase via short sale. Even though you may have signed a purchase agreement with the seller, it will take some time before you know whether the transaction will close. It can easily take 30-60 days to get a lender to respond to a request for a short sale. It may take longer. And there are sometimes multiple creditors from whom approval will be needed. This can further extend the wait time.
Many short sales are not approved. Just because you might have the highest offer for the property does not mean that it will be approved by the lender. Many purchase agreements fail because the lender chooses not to approve the short sale or because the lender grants approval on terms unacceptable to the seller.
You could have expenses that are not reimbursed. For example, if you incur the costs of an inspection or an appraisal prior to creditor approval, you will typically not be able to recover those expenses.
Unless otherwise agreed in the purchase agreement, the seller may accept offers that come in after your offer. Just because you had the first offer that was accepted by the seller does not mean that you have a superior right to the property. All purchase agreements will typically be contingent on bank approval, and the bank will approve only one, normally the highest and best offer.
As always please consult a real estate attorney with any legal questions you may have and your accountant for any tax questions.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
Even though both sides of the transaction feels the pain of the whole thing, there are very different things to consider if you are a buyer vs. a seller. Below is a basic outline of what I typically cover with a buyer when we sit down the first time to discuss the buying process. The one thing you always want to keep in mind is every transaction is different and there are many unknowns that come up. That is something you can't control no matter how prepared you are.
When we are talking about a short sale, we are not talking about a bank-owned property. A short sale occurs when the proceeds of a home sale will not be sufficient to fully repay the seller’s creditors. Because the creditors cannot be paid in full, the seller will need to obtain an agreement from the creditors that they will accept something less than what they are owed. While it is possible to get a good deal on the price of a short sale property, there are a number of issues unique to short sales that are worth considering:
First and foremost, you typically need to have a lot of patience when trying to purchase via short sale. Even though you may have signed a purchase agreement with the seller, it will take some time before you know whether the transaction will close. It can easily take 30-60 days to get a lender to respond to a request for a short sale. It may take longer. And there are sometimes multiple creditors from whom approval will be needed. This can further extend the wait time.
Many short sales are not approved. Just because you might have the highest offer for the property does not mean that it will be approved by the lender. Many purchase agreements fail because the lender chooses not to approve the short sale or because the lender grants approval on terms unacceptable to the seller.
You could have expenses that are not reimbursed. For example, if you incur the costs of an inspection or an appraisal prior to creditor approval, you will typically not be able to recover those expenses.
Unless otherwise agreed in the purchase agreement, the seller may accept offers that come in after your offer. Just because you had the first offer that was accepted by the seller does not mean that you have a superior right to the property. All purchase agreements will typically be contingent on bank approval, and the bank will approve only one, normally the highest and best offer.
As always please consult a real estate attorney with any legal questions you may have and your accountant for any tax questions.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
Tuesday, January 26, 2010
Foreclosures vs. Short Sales, what is the difference?
I thought it was worth revisiting this topic even though is is well covered ground. Besides if you were not interested you would not read this. If you don't know the differences or can't remember, then this blog is for you. Real estate in and of itself can be confusing with all of the different terms, laws and other issues. Being that these are still very much apart of the real estate landscape at least in the metro area of Minneapolis/St. Paul, I felt it never hurts to review.
The easiest way to remember the main difference between the two is a foreclosure (as is property, lender owned, corporate owned, ect...) is the bank owns the home out right. The foreclosure process is now over and the bank can sell it to a perspective buyer without issue. Please understand when the bank puts a home on the market it as been assigned to an asset manager. That is the go between of the bank and listing agent. The listing agent answers to the asset manager and the asset manager answers to the bank. They have set it up this way and you as a buyer can't change this. If your agent feels compelled to try and bully any of these parties, it could cost you the home.
Please stop watching late night TV. Those people are NOT in the real estate business, they sell cd's and dvd's. For all you know a year from now those same people will be selling how to get rich selling crap on the Internet. Find a local real estate professional to help you. If you are not sure how to choose one please read my blog on how to hire a buyers agent and the questions you should ask. This is a critical step in the process. A great agent will be worth heir weight in gold when t comes to helping you put a deal together, foreclosure or short sale. Point is the bank does NOT want to talk to you. They want you to go through proper channels to present your offer.
A short sale is typically a situation where the seller has fallen behind in their payments for a variety of reasons. They can no longer afford to stay in the home and ask the bank if they would accept less than what is owed to sell the home. Why would any bank agree to this you ask? Because statistics have shown that the 1st lien holder will recover about 80% of what is owed. With a foreclosure that drops to about 55%. But this does not mean banks will always make the right decision.
Laws vary from state to state so you need to know how the state you live in views foreclosures. In the state of Minnesota there is a 6 month redemption period after he Sheriff's sale. It is very important to know where the property currently stands in the foreclosure process. Here is the general time line in the state of Minnesota. Seller falls behind on payments. They get a few months of late notices in the mail. If the sellers do not get current the bank will typically send another letter informing them that the bank is starting the foreclosure process. Then the sellers will be served by the county sheriff or someone hired by he bank. From that day the sheriff's sale is scheduled to take place in 30 to 45 days. From the date of the sheriff's sale in Minnesota here is a 6 month redemption period where he seller could still redeem the home by paying all they owe in late payments, interest and penalties. If at the end of he 6 months they have not redeems the home, the bank takes it over and the foreclosure is final.
You as a buyer can try to buy that home on a short sale anytime during this process up until the end of the redemption period. Once that ends if your purchase is not final and closed, the purchase agreement becomes null and void because the seller no longer has rights to the property. Be careful when you hear the term "pre-negotiated short sale", I don't believe that it exists. Sure the bank may tell the listing agent that they have agreed to allow the seller to try to sell the homes short but in my experience no bank will agree to anything more than that until the offer is in front of them with every last detail.
My feeling as a real estate agent is that both can be great and both can be bad. That can be said about any real estate transaction. Be prepared, hire a qualified agent to represent your best interests and above all understand as much of the process as you can. It will make you a better buyer and help to make things work out much easier for you.
As always please consult a real estate attorney with any legal questions you may have and your accountant for any tax questions.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
The easiest way to remember the main difference between the two is a foreclosure (as is property, lender owned, corporate owned, ect...) is the bank owns the home out right. The foreclosure process is now over and the bank can sell it to a perspective buyer without issue. Please understand when the bank puts a home on the market it as been assigned to an asset manager. That is the go between of the bank and listing agent. The listing agent answers to the asset manager and the asset manager answers to the bank. They have set it up this way and you as a buyer can't change this. If your agent feels compelled to try and bully any of these parties, it could cost you the home.
Please stop watching late night TV. Those people are NOT in the real estate business, they sell cd's and dvd's. For all you know a year from now those same people will be selling how to get rich selling crap on the Internet. Find a local real estate professional to help you. If you are not sure how to choose one please read my blog on how to hire a buyers agent and the questions you should ask. This is a critical step in the process. A great agent will be worth heir weight in gold when t comes to helping you put a deal together, foreclosure or short sale. Point is the bank does NOT want to talk to you. They want you to go through proper channels to present your offer.
A short sale is typically a situation where the seller has fallen behind in their payments for a variety of reasons. They can no longer afford to stay in the home and ask the bank if they would accept less than what is owed to sell the home. Why would any bank agree to this you ask? Because statistics have shown that the 1st lien holder will recover about 80% of what is owed. With a foreclosure that drops to about 55%. But this does not mean banks will always make the right decision.
Laws vary from state to state so you need to know how the state you live in views foreclosures. In the state of Minnesota there is a 6 month redemption period after he Sheriff's sale. It is very important to know where the property currently stands in the foreclosure process. Here is the general time line in the state of Minnesota. Seller falls behind on payments. They get a few months of late notices in the mail. If the sellers do not get current the bank will typically send another letter informing them that the bank is starting the foreclosure process. Then the sellers will be served by the county sheriff or someone hired by he bank. From that day the sheriff's sale is scheduled to take place in 30 to 45 days. From the date of the sheriff's sale in Minnesota here is a 6 month redemption period where he seller could still redeem the home by paying all they owe in late payments, interest and penalties. If at the end of he 6 months they have not redeems the home, the bank takes it over and the foreclosure is final.
You as a buyer can try to buy that home on a short sale anytime during this process up until the end of the redemption period. Once that ends if your purchase is not final and closed, the purchase agreement becomes null and void because the seller no longer has rights to the property. Be careful when you hear the term "pre-negotiated short sale", I don't believe that it exists. Sure the bank may tell the listing agent that they have agreed to allow the seller to try to sell the homes short but in my experience no bank will agree to anything more than that until the offer is in front of them with every last detail.
My feeling as a real estate agent is that both can be great and both can be bad. That can be said about any real estate transaction. Be prepared, hire a qualified agent to represent your best interests and above all understand as much of the process as you can. It will make you a better buyer and help to make things work out much easier for you.
As always please consult a real estate attorney with any legal questions you may have and your accountant for any tax questions.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
Tuesday, January 19, 2010
Looking back on 2009 in the Minneapolis St. Paul Real Estate market. What does 2010 look like?
I like to review the year that was to see where we have been and hopefully get some insight as to where we are going. In looking over the stats for the year I am starting to see some balancing of the market. I don't know if we have at this point but we appear to be headed that way. I think by June we should have a good idea of where we stand.
A lot will depend on the so called "tidal wave" of foreclosures that is headed our way. Ask anyone heavily involved in that from the banks to the listing side and they all seem to agree on two key points. First that the "title wave " is coming. Second that most will be higher priced homes. Typically the answer to that is $400,000 plus. That is the part I am most curious about is will that number hold up? It seems that many of the lower priced homes were involved in some of the fraud that was taking place along with entire neighborhoods. My guess would be a larger section will be affected from $2500 on up. The reason being is the job loss and another group of arm products that are set to expire. The word on the street is that there are 7 million foreclosures on the horizon. If that is correct it could be roughly 5 1/2 times larger than 2005. The 2nd half of 2009 seemed to finally clear a lot of that up. So if there are that many more homes coming on it will really affect values in all areas of real estate.
The other question will be how much of that will be commercial buildings? With the shift in the job market many business' had expanded to far and are now scaling back. Below is year end data for The Minneapolis St. Paul real estate market. There are always differences from Lakeville to Bloomington to Anoka so this is just an over all view.
13 County Metro Area
According to data released by the three Twin Cities area REALTOR® associations:
In the 13-county metro area, total pending sales for 2009 ended at 52,167 – up 18 percent over 2008 and the highest number of units sold since 2005.
The median sales price in the 13-county metro area in 2009 was $166,000 - down 14.9 percent from 2008. However, prices have seen stabilization recently. December’s median sales price was only down 3 percent from one year prior.
2009 traditional median home price: $204,000 (-8.3 percent from one year ago)
2009 median sales price for lender-mediated: $124,000 (-14.2 percent from one year ago)
In 2009, 43 percent of closed sales were lender-mediated compared with 31.4 in 2008.
2009 closed sales were up 16.7 percent over 2008.
At the start of 2010 active listings were down 22.3 percent from a year ago.
2009 new listings decreased 11 percent from 2008, the lowest showing since 2003 and the third consecutive year of substantial decline.
Average days on market were at 132 in Dec. 2009 compared with 148 in Dec. 2008.
Based on information from the “2009 Year End Housing Sales Statistics Press Release” published in concert by the Minneapolis Area Association of REALTORS® (MAAR), Saint Paul Area Association of REALTORS® (SPAAR) and North Metro REALTORS® Association (NMRA). Data collected from the REGIONAL MULTIPLE LISTING SERVICE OF MINNESOTA, INC. for residential properties in the 13-county region exclusively.
I think it is very encouraging but there are still a lot of unanswered questions at this point. One thing is for sure, it will be an interesting year in real estate for sellers as well as buyers.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
A lot will depend on the so called "tidal wave" of foreclosures that is headed our way. Ask anyone heavily involved in that from the banks to the listing side and they all seem to agree on two key points. First that the "title wave " is coming. Second that most will be higher priced homes. Typically the answer to that is $400,000 plus. That is the part I am most curious about is will that number hold up? It seems that many of the lower priced homes were involved in some of the fraud that was taking place along with entire neighborhoods. My guess would be a larger section will be affected from $2500 on up. The reason being is the job loss and another group of arm products that are set to expire. The word on the street is that there are 7 million foreclosures on the horizon. If that is correct it could be roughly 5 1/2 times larger than 2005. The 2nd half of 2009 seemed to finally clear a lot of that up. So if there are that many more homes coming on it will really affect values in all areas of real estate.
The other question will be how much of that will be commercial buildings? With the shift in the job market many business' had expanded to far and are now scaling back. Below is year end data for The Minneapolis St. Paul real estate market. There are always differences from Lakeville to Bloomington to Anoka so this is just an over all view.
13 County Metro Area
According to data released by the three Twin Cities area REALTOR® associations:
In the 13-county metro area, total pending sales for 2009 ended at 52,167 – up 18 percent over 2008 and the highest number of units sold since 2005.
The median sales price in the 13-county metro area in 2009 was $166,000 - down 14.9 percent from 2008. However, prices have seen stabilization recently. December’s median sales price was only down 3 percent from one year prior.
2009 traditional median home price: $204,000 (-8.3 percent from one year ago)
2009 median sales price for lender-mediated: $124,000 (-14.2 percent from one year ago)
In 2009, 43 percent of closed sales were lender-mediated compared with 31.4 in 2008.
2009 closed sales were up 16.7 percent over 2008.
At the start of 2010 active listings were down 22.3 percent from a year ago.
2009 new listings decreased 11 percent from 2008, the lowest showing since 2003 and the third consecutive year of substantial decline.
Average days on market were at 132 in Dec. 2009 compared with 148 in Dec. 2008.
Based on information from the “2009 Year End Housing Sales Statistics Press Release” published in concert by the Minneapolis Area Association of REALTORS® (MAAR), Saint Paul Area Association of REALTORS® (SPAAR) and North Metro REALTORS® Association (NMRA). Data collected from the REGIONAL MULTIPLE LISTING SERVICE OF MINNESOTA, INC. for residential properties in the 13-county region exclusively.
I think it is very encouraging but there are still a lot of unanswered questions at this point. One thing is for sure, it will be an interesting year in real estate for sellers as well as buyers.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
Thursday, January 14, 2010
What are some important questions you must ask before hiring a buyers agent
Finding an agent to represent you is not always the easiest thing to do, especially if it is your 1st home and you may not know what to ask. First I would like to talk about why you would want an agent to represent in the 1st place
Let's start with this question, If you were being sued in a court of law, would you hire the same attorney that is representing the person suing you? Probably not, although this is an extreme example it is important to understand how an agent represents you. The point I am trying to make is if you walk into an open house remember that agent is representing the seller. It doesn't mean that agent can't represent you the buyer as well but their fiduciary responsibility is to the seller at that point. When an agent represents both the buyer and the seller it is called dual agency. In the state of Minnesota an agent can represent both parties but you will want to check your state to see if the same laws apply. If you hire an agent to represent just your side you will never have to worry that they are truly working in your best interest.
Along with that I challenge you to not just pick what ever agent happens to be standing in front of you but interview several agents just like you would if you were hiring someone for a job. The worst thing you can do is hire someone who is not willing to work hard for you or goes against your beliefs and wishes. As long as it is legal and ethical your agent should follow your direction. They are there to give advice, answer questions and talk over options and strategies. They are not there to tell you what to do, they are there to help you.
Here are some questions to help get you started-
1) What is the difference between a short sale and a foreclosure? You are looking for details with this one not just one is bank owned.
2) How many homes have you sold in the last 12 months? This is important to get an idea of how much business they do.
3) Are you full or part time? Hire a professional full time agent, not uncle Bob.
4) What does the clause "time is of the essence" mean? Timing is everything especially when you are dealing with a bank foreclosure.
5) What is the procedure for submitting an offer and how does it differ depending on what type of sale it is? They have to be ready with a plan weather it is a foreclosure, short sale or regular sale.
6) Does the agent understand the language in a bank supplement or addendum? This one is tricky and you are looking for some key points that are common in most bank addendum's. It is always a good idea to ask an attorney to look over these documents to answer any legal questions you may have.
7) Do you know what a "Per Diem" is? This could be costly to you if the deal does not close on time.
8) Will you do a bpo (buyers price opinion or current market analysis) for me before I write an offer? You want comps of the neighborhood and area to back up offer your offer price.
9) Ask the agent what type of negotiation skills they have? Ask for a few success stories.
10) Can the agent explain "agency" to you? They have to be able to explain how it works when you are helping a buyer or seller along with their fiduciary responsibility to you.
Hopefully this will give you a start on your road to a great home buying experience. This process helps the listing agents as well because there is nothing better than working with a professional on the other side of the transaction. As always if you have any legal or tax questions please consult your attorney and tax professional.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
Let's start with this question, If you were being sued in a court of law, would you hire the same attorney that is representing the person suing you? Probably not, although this is an extreme example it is important to understand how an agent represents you. The point I am trying to make is if you walk into an open house remember that agent is representing the seller. It doesn't mean that agent can't represent you the buyer as well but their fiduciary responsibility is to the seller at that point. When an agent represents both the buyer and the seller it is called dual agency. In the state of Minnesota an agent can represent both parties but you will want to check your state to see if the same laws apply. If you hire an agent to represent just your side you will never have to worry that they are truly working in your best interest.
Along with that I challenge you to not just pick what ever agent happens to be standing in front of you but interview several agents just like you would if you were hiring someone for a job. The worst thing you can do is hire someone who is not willing to work hard for you or goes against your beliefs and wishes. As long as it is legal and ethical your agent should follow your direction. They are there to give advice, answer questions and talk over options and strategies. They are not there to tell you what to do, they are there to help you.
Here are some questions to help get you started-
1) What is the difference between a short sale and a foreclosure? You are looking for details with this one not just one is bank owned.
2) How many homes have you sold in the last 12 months? This is important to get an idea of how much business they do.
3) Are you full or part time? Hire a professional full time agent, not uncle Bob.
4) What does the clause "time is of the essence" mean? Timing is everything especially when you are dealing with a bank foreclosure.
5) What is the procedure for submitting an offer and how does it differ depending on what type of sale it is? They have to be ready with a plan weather it is a foreclosure, short sale or regular sale.
6) Does the agent understand the language in a bank supplement or addendum? This one is tricky and you are looking for some key points that are common in most bank addendum's. It is always a good idea to ask an attorney to look over these documents to answer any legal questions you may have.
7) Do you know what a "Per Diem" is? This could be costly to you if the deal does not close on time.
8) Will you do a bpo (buyers price opinion or current market analysis) for me before I write an offer? You want comps of the neighborhood and area to back up offer your offer price.
9) Ask the agent what type of negotiation skills they have? Ask for a few success stories.
10) Can the agent explain "agency" to you? They have to be able to explain how it works when you are helping a buyer or seller along with their fiduciary responsibility to you.
Hopefully this will give you a start on your road to a great home buying experience. This process helps the listing agents as well because there is nothing better than working with a professional on the other side of the transaction. As always if you have any legal or tax questions please consult your attorney and tax professional.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
Wednesday, January 6, 2010
Inspections - How they can help the seller as much as the buyer.
Inspections are an important part of the transaction when buying and selling a home. It is a very common thing for buyers and becoming more common for the sellers. I thought it would be worth pointing out a few of the positives for both sides, no matter what side of the fence you are standing on.
Every state and city is different with their laws and regulations so you will want to check to see what is required in your city and state. In Minnesota there are several cities in the metro area that require a truth in housing, time of sale or point of sale inspection. Currently the cities are Bloomington, Brooklyn Park, Crystal, Golden Valley, Hopkins, Maplewood, Minneapolis, New Hope, Osseo, Richfield, St. Louis Park, St. Paul, South St. Paul and Robbinsdale. That is where the city requires a seller to have an independent inspector out to do a home inspection either before the home goes on the market or before it is sold. These types of inspections are different from a home inspection in that the inspectors are looking for code violations and city requirements.
The most common home inspection that most people think of is the one that a buyer has before they purchase a home. They hire an independent inspector to evaluate the home not only to find potential problems but also as a guide to how the home works. That includes general maintenance, where the gas shut off is located and other information. I have always maintained as a buyer that you should hire a professional to inspect a home you are thinking of buying. I consider it cheap insurance and it always help to have another opinion. The tricky part is choosing a good inspector. I am not sure about other states but in the state of Minnesota you do not have to be licensed to be a home inspector. Anyone can print cards and become one. It is very important that you interview several inspectors and choose one that has a background in the trades. They understand electric and plumbing issues, can test a furnace and so on.
Having an inspection done for a buyer is obvious to most people, I want to challenge a seller to consider having one done before they list their home for sale. You as a seller can have the very best of intentions and do a full disclosure on your home but may not know of an issue. If you have an inspection ahead of time you can benefit in a couple of ways. First it keeps you in control of the transaction by knowing things ahead of time. If there is something that needs to be repaired you can have the work done right but not at the mercy of a buyer. If the inspection comes back clean with no issues that is a wonderful sales tool to promote your listing. The buyers can always have their own independent inspection done but what if they hire someone who is not qualified? Now your inspector is on your side and can discuss it with the buyers inspector. You always want to disclose everything you know about your home and do your very best to have it in it's best working order.
One thing I have learned over the years is if there is any type of problem it is always best to meet that head on and find a solution. You don't want to be put in a position where a small issue gets blown way out of proportion. To learn more about what a home inspector does and their standards of practice are visit www.ashi.org. It is one of several organizations that home inspectors can belong to. They offer continuing education and many other benefits to the inspectors.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
Every state and city is different with their laws and regulations so you will want to check to see what is required in your city and state. In Minnesota there are several cities in the metro area that require a truth in housing, time of sale or point of sale inspection. Currently the cities are Bloomington, Brooklyn Park, Crystal, Golden Valley, Hopkins, Maplewood, Minneapolis, New Hope, Osseo, Richfield, St. Louis Park, St. Paul, South St. Paul and Robbinsdale. That is where the city requires a seller to have an independent inspector out to do a home inspection either before the home goes on the market or before it is sold. These types of inspections are different from a home inspection in that the inspectors are looking for code violations and city requirements.
The most common home inspection that most people think of is the one that a buyer has before they purchase a home. They hire an independent inspector to evaluate the home not only to find potential problems but also as a guide to how the home works. That includes general maintenance, where the gas shut off is located and other information. I have always maintained as a buyer that you should hire a professional to inspect a home you are thinking of buying. I consider it cheap insurance and it always help to have another opinion. The tricky part is choosing a good inspector. I am not sure about other states but in the state of Minnesota you do not have to be licensed to be a home inspector. Anyone can print cards and become one. It is very important that you interview several inspectors and choose one that has a background in the trades. They understand electric and plumbing issues, can test a furnace and so on.
Having an inspection done for a buyer is obvious to most people, I want to challenge a seller to consider having one done before they list their home for sale. You as a seller can have the very best of intentions and do a full disclosure on your home but may not know of an issue. If you have an inspection ahead of time you can benefit in a couple of ways. First it keeps you in control of the transaction by knowing things ahead of time. If there is something that needs to be repaired you can have the work done right but not at the mercy of a buyer. If the inspection comes back clean with no issues that is a wonderful sales tool to promote your listing. The buyers can always have their own independent inspection done but what if they hire someone who is not qualified? Now your inspector is on your side and can discuss it with the buyers inspector. You always want to disclose everything you know about your home and do your very best to have it in it's best working order.
One thing I have learned over the years is if there is any type of problem it is always best to meet that head on and find a solution. You don't want to be put in a position where a small issue gets blown way out of proportion. To learn more about what a home inspector does and their standards of practice are visit www.ashi.org. It is one of several organizations that home inspectors can belong to. They offer continuing education and many other benefits to the inspectors.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
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