The exterior is the first thing potential buyers will see, and first impressions set the tone for their entire visit... so make sure the outside of your home is clean and inviting. Touch up painting, landscaping, clean windows, inviting entry are all important and not major investments. In fact, replacing your front door can often give you the biggest return on your investment because it sets expectations for the whole showing.
Fix defects... buyers will over-compensate in price.
The real inspectors you must satisfy when you sell are your potential buyers. Even minor flaws can become big deals. It is often said that buyers will ask for a price reduction or compensation of $3,000-$5,000 for every $1,000 of perceived defect. This means making repairs before listing your home for sale could save you money in the long run.
Don't overlook the little things.
Little things like worn woodwork, caulking in bathtubs and showers, old wallpaper, marred walls and stained ceilings, loose knobs, sticky windows, doors and cabinets that don't close properly, broken light switches, dirty or worn flooring can all add up to a bigger impact than you might think. Kitchens and bathrooms are the two most important rooms in the house... evaluate them with a critical eye. Again, keep in mind that buyers will over-estimate the cost of these repairs and their reduction in the price they are willing to pay. But perhaps most important, don't overlook the importance of having your home sparkling clean... buyers notice!!!
Don't go too big.
If you decide to more significant updates, be careful of investing too much. Many buyers will make their own updates when they move in so this isn't the time to invest in a major kitchen remodel, although moderate updates will likely reap benefits... paint and resurfacing can go a long way. Upgrades that are almost always worth it are refreshing paint and flooring. Windows can also be a good investment, depending on the condition of your current windows in relation to the rest of your home.
Don't overlook the condition of your mechanicals.
Buyers are nearly always concerned about the age and condition of the furnace, air conditioner and water heater. If they are at or near the end of their life, expect it to come up in negotiations. Again, buyers are likely to over-compensate in price reductions or may require that you have it replaced prior to closing before moving forward. If the furnace/AC are really limping along, replacing before listing could give you a double benefit... instead of being a negative it becomes a positive in your favor.
Well. Septic system.
If you have a well that is in use, expect that you will need a water quality test as part of your sale. If you have a well that is not in use, expect that it will be required to be sealed. If you have a private septic system, expect that it will need to be certified to be in compliance with applicable regulations. When these testing requirements are part of a purchase agreement you usually have a 5-10 day window to provide the results. You can reduce stress by having them done ahead of time.
That crisis is still affecting both buyers and sellers today, who are much more informed and cautious. It peaked in 2010, and over 7.7 million families lost their homes throughout the period between 2008 and 2012... no wonder buyers are more cautious!!
One of the key factors brought up by CoreLogic's chief economist is the connection between jobs and homeownership. At the peak of the crisis, the national unemployment rate was 7%. In February 2017 the nationally adjusted unemployment rate was 4.7%... with an even lower rate of 4.0% in Minnesota. A healthy economy is driven by jobs... which usually drives consumer confidence that leads to homeownership.
Foreclosures have been dropping steadily since their peak in 2010. CoreLogic's report suggests the country will be back to 2005 levels by the end of 2017.
In Minnesota, February foreclosed sales only accounted for 7.5% of total sales... a good sign for traditional sellers and a healthy real estate market... and a frustration for those in the renovation business who no longer have a big supply of foreclosure properties to renovate.
You are buying a new home, super excited, you have your mortgage preapproval and are ready to go - or are you? One piece that all lenders need to do is verify the money used in your mortgage transaction. We need a 60 day history. That sounds easy, right - just two months of bank statements. Maybe. Maybe not.
Once you have written your purchase agreement, you will need to write an earnest money check. Most lenders will need to verify that the earnest money cleared your account. That may mean we need another bank statement. Maybe we can't wait for another statement - maybe we need a bank printout showing the check cleared. That will also work - but it needs to show the bank name, your name and at least a partial account number. It also needs to show the transaction history back to the last bank statement including daily balances.
Underwriters are looking for large deposits that may be from another source besides your payroll. Maybe you got a gift from your parents - that should be fine, but we need to document that it is a gift and you do not need to pay it back. Did you sell a car or something else? We need to document that you owned the item you sold and what the value was. Underwriters want to make sure there is not a new loan that could affect your ability to make your new mortgage payment.
Do you have automatic deposit or do you deposit your paychecks? If you deposit your paychecks, you will need to send copies of the paystub to your lender to match up with the deposits into your bank account. If you are self employed and make deposits during the month, you will need to document the deposits. Keep copies of what you deposit so you are prepared to give them to your lender.
Cash deposits can't be used - we can't document where the cash came from. They may actually lower your available bank balance so try to avoid cash deposits.
Look at your bank statements and see if there is anything that might trigger a question. If so, talk to your lender about it so they are aware of what is going on. Expect underwriting to go through every page of your bank statement - if that last page is just advertising, we still need it if it's part of the numbered bank statement. If the statement says it's 6 pages, we need 6 pages. If you aren't sure about it, talk to your loan officer. Unfortuantely, bank statements can be one of the first things that get questioned by an underwriter! If you are prepared, it can make your mortgage approval that much easier - and keep an approval as an approval!
"Sometimes your joy is the source of your smile, but sometimes your smile can be the source of your joy."~ Thich Nhat Hanh
NOTE: I spend my Wednesdays Unplugged from appointments. It's my day to stay home, enjoy cooking and welcome our kids and grandkids for dinner in the evening. We end our meal with quotes from the Norwegian 'Quote Cup' passed on to me from my grandmother. I share a quote and a recipe here each week, and sometimes some photos of family fun. I love trying new recipes...and love getting recipes you would like to share!
This week saw the first day of spring, and also the announcement of the happiest country in the world. This year it was Norway, which was especially joyful for us because both my husband and I are of Norwegian heritage! He brought lots of happiness tonight by playing the mummy game... wrapping our grandkids in toilet paper, then filming them breaking out. There was much laughter involved!
RECIPE OF THE WEEK
This week's recipe was a deliciously simple way to cook salmon... and perhaps the most moist and tender salmon I have ever eaten. The recipe came from Damn Delicious.
FOIL-WRAPPED BAKED GARLIC BUTTER SALMON
1/2 cup unsalted butter, melted
1 tablespoon brown sugar
1 tablespoon lemon juice
3 cloves garlic, minced
1/2 teaspoon dried oregano
1/2 teaspoon dried thyme
1/2 teaspoon dried rosemary
Kosher salt and freshly ground black pepper, to taste
2 pounds salmon
2 tablespoons chopped fresh parsley leaves for garnish, if desired
Preheat over to 375 degrees F. Line a baking sheet with foil, making it long enough to wrap around salmon and seal.
Melt butter in measuring cup. Add and whisk together brown sugar, lemon juice, garlic, oregano, thyme, rosemary, salt and pepper to taste.
Place salmon onto prepared baking foil and fold up all 4 sides. Spoon the butter mixture over the salmon. Fold the sides of the foil over the salmon, covering completely and sealing the packet closed.
Place into oven and bake until cooked through, about 15-20 minutes.
Serve immediately, garnishing with parsley if desired.
I received the following email last week from another home inspector here in Minnesota regarding the inspection of electrical panels:
Today I received a call from a local electrical contractor in <omitted>, MN. He decided he needed to call me and tell me that "I'm not a licensed electrician and I have no business removing electrical service panel covers" or testing outlets, etc as part of my inspection. He named some statute that states that you have to be licensed to inspect any electrical. I just listened and thanked him for the call. Sounded like he was a friend of a home seller who's house I recently inspected with some electrical issues.
Just curious what your understanding of this is?
This is not a new story.
I've heard similar stories from numerous home inspectors here in Minnesota. There is no law that applies specifically to home inspectors in Minnesota, because home inspectors are not licensed. Thankfully, the rules can be found in the 2016 Minnesota Statutes that cover construction codes and licensing. They're in the electrical section under 326B.33 Licenses, Subd. 12: Unlicensed individuals. I'm pretty sure that this would have been the section that was quoted to my fellow home inspector. This section of the Minnesota Statute says the following:
(a) An unlicensed individual means an individual who has not been licensed by the department to perform specific electrical work. An unlicensed individual shall not perform work...
There's a lot more to it than just that, but that's the important part that has been brought into question. For the purposes of this discussion, home inspectors are typically unlicensed individuals. The obvious next question is "what constitutes electrical work?" For that, let's turn to the definitions section for electrical work.
What is electrical work?
Electrical work is defined under section 326B.31, Subp. 17, which says the following:
"Electrical work" means the installing, altering, repairing, planning, or laying out of electrical wiring, apparatus, or equipment for electrical light, heat, power, technology circuits or systems, or other purposes. The installing, altering, repairing, planning, or laying out of electrical wiring, apparatus, or equipment for electrical light, heat, power, technology circuits or systems, or other purposes includes, but is not limited to, the performance of any work regulated by the standards referred to in section 326B.35.
So there you have it. Removing an electrical panel cover to see inside the panel does not constitute electrical work. There is no rule or law in place that says that home inspectors can't do this.
The Standard of Practice of the American Society of Home Inspectors (ASHI) also requires the inspection of panel interiors. ASHI SOP (7.1.A.5) says the inspector shall inspect interior components of service panels and subpanels.
I recently encountered a couple different properties that were both being sold subject to HUD Guidelines 24CFR206.125. Huh? What does that mean?! The guidelines are stipulations for the sale of reverse mortgage foreclosures. Again, what does that mean?!
First... what is a Reverse Mortgage?
A reserve mortgage is a special type of home loan that lets homeowners 62+ years old who own their home outright or have a low mortgage balance convert a portion of the equity of their home into cash. The cash may be paid out in monthly payments or in a lump sum like an equity line of credit. The homeowner must live in the home and pay real estate taxes, utilities, and homeowners insurance. However, unlike a home equity line of credit, there are no monthly payments and the loan doesn't have to be repaid until the property is sold or is no longer used as a primary residence. There is even a purchase option to allow the purchase of a smaller home and never having a house payment.
If you are looking for 50's nostalgia be sure to check out 50's Grill in Brooklyn Park. But don't go just for burgers and shakes... there are many places to get great burgers and shakes in the Twin Cities. Go for old-fashioned homemade comfort food like a hot turkey sandwich or meatloaf... or their homemade Chicken Pot Pie, their number one seller for 20 years and the best in town. And then of course there are their homemade pies...
With servers in poodle skirts, an old Coca-Cola vending machine with bottles and 50's decor, it feels like a trip back in time... to a time when most food was homemade.
I love most things old, including myself! Ha. But really, I love an old piece of furniture mixed in with new for a character piece. It is also fun to take an old chair and reupholster it with modern fabric for a twist.
But every once in a while you just have to scrap the old completely. No matter how cool the nostalgia.
This 1920s kitchen had seen it's better days but it had an actually ice box. Yes an ICE BOX!. And it had the pass through window for the milk man to leave his daily delivery. I love that stuff!!
It would have been so nice to have incorporated those into a new updated kitchen somehow but it just wasn't possible. The kitchen was just so small for today's standards that we needed every spec of space to make a buyer want to buy this rehabbed home.
New bright white cabinets, vinyl wood plank flooring, quartz counter tops, and a vintage look back splash brought this kitchen into the current century as well as the current decade. The original heat register is still there which is so cool and that, along with the vintage inspired back splash, keeps this modern kitchen having tons of charm.
Buyers loved it and the home sold with multiply offers and over list price.
Sometimes the old just has to go.......
When rehabbing a home for sale be sure to bring in the professionals. A professional Home Stager and experienced Realtor will be able to assist you with achieving the best return on your investment.
Shar Sitter, owner Rooms With Style Home Staging and Redesign Minneapolis MN. CHSE and APSD Home Stager Pro Trainer www.RoomsWithStyle.com 952-567-1124
The supply of homes for sale is not only down in the Twin Cities, it is down dramatically nationwide as you can see from the chart below from Keeping Current Matters. The orange dotted line indicates a balanced market.
Our local supply inched up a little in February, but it is still dangerously low. Total supply of homes for sale was down 25.3% compared to last year, and months supply at 1.8 months is still historically extremely low... and 28.0% below February 2016. As interest rates rise, buyers are scrambling to find homes to buy and are frustrated to find them sold almost as soon as they hit the market.
The shortage is still lowest in prices ranges below $350k, but at least months supply crept up a bit... more notable in move-up price ranges. This is significant because potential move-up sellers in starter price ranges have been afraid to sell for fear of not finding a home to buy in higher price ranges... perpetuating the shortage cycle. We are seeing evidence of a continued increase in supply in March but it still isn't enough... the housing logjam needs to loosen to get the market flowing again.
Although February 2017 listings were higher than January they were still down 7.5% compared to February 2016. Total supply of homes for sale was down 25.3%. It should be obvious new listings are desperately needed!
Pending sales were eerily close year-over-year, up only 0.5% in February 2017. It would be much higher were there more homes for sale. Closed sales are hampered by the inventory shortage of a couple months prior (those tiny, flat red bars on the grey chart further above from the Minneapolis Area Association of Realtors).
Fierce competition for the homes that are on the market continues to drive prices... down a little from last month but up 7.6% compared to last year. Median price for February 2017 was $223,000. With many properties selling in multiple offers at prices higher than list price, average percent of list price received was 96.5%.
The key to keeping price growth to a moderate rate is an ample supply of housing... sellers, we need you!
The figures above are based on statistics for the combined 13-county Twin Cities metropolitan area released by the Minneapolis Area Association of Realtors.
Never forget that all real estate is local and what is happening in your neighborhood may be very different from the overall metro area.
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A Great Relocation Experience We flew in from NYC with anxiety and expectations to find a place in three days. With seemingly infinite patience, kindness and compassion Sharlene found us the perfect home, the perfect neighborhood (and the perfect commute)...she made our dreams come true.