Key Variables: Type of School, Buyer Characteristics

Homes on busy streets typically fetch a discount.
Is there an equivalent discount for homes located across from a school? (which, in a way, is really just a subset of “busy street” — call it, an “intermittently busy street”).
I’ve never seen formal data on this, but I’d guess “yes.”
I’d further speculate that the discount varies depending on the following three factors:
One. School size.
Here’s my formula: Bigger = more traffic/congestion = bigger discount.
Two. Upper or lower school.
In Minnesota, at least some 16 year-olds start to drive, smoke, litter, and generally call more attention to themselves. You’d guess that being next to a teenager-filled high school would be more disruptive than being next to an elementary school — and therefore warrant a bigger discount.
Three. Combination of setback, setting, and aesthetic appeal.
At one extreme, the lower campus of the Blake School in Hopkins is straight out of a postcard: set on a picturesque hill several hundred yards removed from the street.
I doubt very much its neighbors mind that view — in fact, they might be willing to pay a premium for it!
By contrast, being near a loud, dirty, graffiti-covered school that could pass for a minimum security corrections facility would likely require a hefty discount.
Discount or Premium . . . to Whom??
As with anything in real estate, the identity of the individual client and their subjective preferences matter.
In that vein, wanna guess the ideal Buyer for a home located directly across from a good school?
A big family with lots of young kids.
P.S.: Due to federal and state anti-discrimination laws, listing agents (representing Sellers) avoid using such seemingly benign terms as “Family-sized,” “Perfect Family Home,” etc. in their marketing.
See also, “Explaining High Turnover on a Busy Street“; “Marketing a Home on a Busy Street”; “You Can’t Change a House’s Location (Can You??)”; and “Garage/Driveway Switcheroo.”

The post Determining the Discount (Premium??) for Homes Located Across From a School appeared first on City Lakes Real Estate Blog.

Comparing Honey Crisps to Braeburns

One of the more quizzical looks Realtors get is when they (try to) explain to a prospective home Seller that their neighbor’s house isn’t a “Comp” (Comparable Sold Property).

In plain English: it isn’t relevant ” at least directly ” for pricing their home.

For the uninitiated, a Comp is one of the three homes Realtors and appraisers use to determine fair market value; once the relevant Comp’s are identified, step #2 is to go through a formal “compare-and-contrast” process between the subject home and each of the Comp’s called a “CMA” (Comparative Market Analysis).

So, why doesn’t the neighbor’s house make the cut?

Because one (or more) of the following usually apply:

One. Timing. Specifically, it sold too far back.

To be a Comp, the sale must be within the last six months.

Two. The neighbor’s house has yet to sell ” that is, it’s “Active” or “Pending.”

While a neighboring home that is currently for sale may very well compete with another house on the block, because there’s no established sales price yet, by definition, it’s not a Comp.

Three. The neighboring home is too different.

As I like to put it, “you can compare a Honey Crisp apple to a Braeburn apple . . . but not to an orange.”

In non-layman’s terms, the maximum adjustment allowed between the subject home and the Comp is about 20%.

Beyond that, the adjustments become so big that they become unreliable.

So, if the neighboring home is significantly bigger or smaller; in dramatically different condition; or a completely different housing style ” it doesn’t qualify.

Bad ” and Good ” Apples

None of the foregoing is to say that the value of neighboring homes doesn’t affect yours.

Thankfully, at least in real estate, one bad apple seldom spoils the bunch ” it takes a couple of bad apples to do that.

However, once multiple foreclosures or derelict properties appear on a block, they pull down values ” whether they’re Comp’s or not.

Conversely, if the neighborhood is clearly on the upswing, that can be very helpful.

But strictly for the purposes of determining a list price for a specific home, a neighboring home that’s too different or sold too far back isn’t one of the three homes that go into the CMA.

See also, “Bracketing, Explained.”

The post Why the Neighbor’s House Usually Isn’t a Comp (“Comparable Sold Property”) appeared first on City Lakes Real Estate Blog.

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Beauty in the Eye of the Beholder Buyer

When should a listing agent (representing the Seller) explicitly acknowledge in their marketing that a home “needs cosmetic updates” (or the equivalent)?

Less often than you might guess.

Here are my three reasons why:

One. The pictures tell the story.

For years, real estate websites have allowed an unlimited number of home photos; since June 2018, so does MLS.  See, “Max Number of Photos on MLS Now? “The Sky’s the Limit”.”

Given all that exposure, the listing agent hardly needs to tell prospective Buyers that the home “just needs your decorating touches” ” they can see for themselves (note: the asking price often suggests that as well).

Two. “Beauty is in the eye of the beholder.”

Yes, many (if not most) Buyers might agree that a given house is dated.

However, it’s always possible that the Buyer loves the home just the way it is.

In that case, conceding that the home is dated is essentially an unforced error that hurts the Seller’s negotiating power (and sales price).

Tiki Bar in Basement: Bug or Feature?

Exhibit A would be the basement Tiki bar in a Fern Hill home years ago that caused at least two agents (I wasn’t one of them) to decline the listing because they thought the Seller was asking too much.

The upshot?

The ultimate Buyer loved the Tiki bar, which clinched the sale.

Three. The flip side of ubiquitous “sales puffing” is that Buyers (and Buyers’ agents) automatically assume that the home’s condition is worse than the listing agent is letting on.

So, “just needs your decorating touches” can often translate into “needs a general contractor, lots of sub’s ” and a healthy rehab budget.”

Meanwhile, “home needs substantial updating” often means “tear-down.”

Of course, when a home really is in tough shape, it’s best to acknowledge that, and market the home appropriately.

As I tell my selling clients, I’d rather attract 10 serious Buyers who are pleasantly surprised by the home, than 100 prospective Buyers who feel they’ve been misled, and leave in a huff.

See also:  “Real Estate Euphemisms ” New & Improved“; and “Real Estate Clichés & How to Avoid Them.”

The post Real Estate Marketing 101: When to Confess a Home’s Warts & Blemishes — & When NOT To appeared first on City Lakes Real Estate Blog.

Don’t miss your chance to be just the fourth owner of this super-spacious, 5 BR/4 Bath Colonial in St. Louis Park’s high demand Fern Hill neighborhood.

Just two blocks from Minneapolis’ Cedar Lake, this home is also convenient to Uptown, Downtown, and the Chain of Lakes (Isles, Bde Maka Ska, Harriet, etc.).

The sprawling .25 acre lot has plenty of room for kids, pets, gardening — or all three!

Priced at $850k, this is the perfect opportunity to put your decorating and/or updating touches on this well-maintained home.

The post Coming Soon! 2733 Huntington Ave. South in St. Louis Park’s Fern Hill Neighorhood appeared first on City Lakes Real Estate Blog.

Savvy Buyers making an offer on a newly remodeled home want to make sure they’re not inheriting a liability from their Seller.

Specifically, they’ll want evidence that the Seller has paid all their contractors in full.

The evidence? A legal release — called a “lien waiver” — that the contractors execute once they’ve been paid.

And if a contractor hasn’t signed a lien waiver?

They have the right to ultimately put a lien (legal claim) on the property for the amount that they’re owed.

180 Day Window

At least in Minnesota, the issue of lien waivers seldom arises, for two reasons:

One. The vast majority of homeowners pay their contractors in full once work is complete.

Two. Minnesota contractors have a limited window — specifically, 180 days — to file a lien waiver.

Practically, that means if the remodeling works was completed more six months ago, unpaid contractors have effectively waived their right to place a lien on the home.

Voila! Unless the remodel is of recent vintage, prospective home buyers (and their agents!) can relax . . .

The post Forgot Lien Waivers? Why (Most) Home Sellers Don’t Need to . . . um, Sweat It appeared first on City Lakes Real Estate Blog.

This fabulous Lowry Hill Twinhome will not disappoint. Enter into a magnificent kitchen with center island work and eating space plus room for a dining table next to the bayed window, over looking your neighborhood of beautiful homes. This main floor offers sun filled views from the front though the beautiful living room with a gas fireplace a wall of windows/doors leading you to the large deck and yard. The equally spacious upper level offers two sunny grand bedrooms, one of which has a gas burning fireplace. The lower level offers the 3rd bedroom ensuite, laundry room, storage and garage access plus an additional large storage room. If your clients are looking for a amazing move in ready to enjoy home, and a quick closing, this is it!

The post Just Listed! 1907 Fremont Ave. South in Minneapolis’ Lowry Hill Neighborhood appeared first on City Lakes Real Estate Blog.

When Subjectivity Isn’t Just Superficial

If the Comp’s aren’t convincing enough, Realtor “Jane Doe” will take Sellers on tours of comparable properties. “They can see this other house is in much better condition, and it’s priced $20,000 less than theirs. It’s eye-opening.”
–Spokane agent, sharing her strategy for working with unrealistic Sellers in “Setting Them Straight”; Realtor Magazine. 

Unh-unh.
Sorry.
Been there, done that.
In my experience, would-be Sellers who harbor unrealistic ideas about their home’s appeal (or lack thereof) are hardly objective observers when it comes to sizing up their neighbors’ homes.
The two times (in 19+ years) that I’ve actually persuaded recalcitrant Sellers to physically view competing homes with me, they both ended the tour with exactly the same reaction:
“I had no idea my home was so much better than those other ones. I think I should ask more.”
I didn’t end up listing (never mind selling) either home . . .
See also, “Realtor Prayer 2020.”

The post Taking Would-Be Sellers on a Tour of Competing Homes? Bad Idea appeared first on City Lakes Real Estate Blog.

“Not a Drive-By!” “Must See!” Yada, Yada, Yada

One of my favorite Mad magazine cartoons (circa 1970) shows a vendor in front of a food stand with the following sign: “turkey burgers,” “chicken burgers,” “buffalo burgers,” “tuna burgers,” “veggie burgers,” etc. etc.
The caption: “we have some with ham, too, but we don’t know what to call them.’
So, too, in real estate, avoiding clichés — overused, and therefore meaningless phrases — is an occupational necessity.
Step #1
Of course, to avoid using clichés, you first have to know what they are.
If you’ve been in real estate longer than six months, that’s like shooting fish in a barrel (sorry).
Some of the choicest clichés:
–“Not a drive-by!
–“Must see!”
–“Amazing opportunity!”
–“Great bones!”
(For more in this vein, see “Real Estate Euphemisms ” New & Improved“).
Step #2
The problem with all of the above — besides suffering from overuse — is that they’re generic; far better to shine a spotlight (last one — promise) on specific, factual information.
Such as:
–“Five(!) Bedrooms!”
–“Over 6,000 square feet!”
–“Walkout abutting lakeshore!” (if you can’t see it from the street).
–“Solid ’50’s construction with cherry mill work, hardwood floors, and cove moldings.”
All of the above draw Buyers’ attention to unique and easily overlooked attributes — and give Buyers a concrete reason to see the home, vs. just telling that they should.
See also, “Real Estate Euphemisms — New & Improved.”

The post Avoiding Real Estate Clichés Like the Plague (see what I mean??) appeared first on City Lakes Real Estate Blog.

Getting One Out of Three Right

We’re in Minnesota, so here’s the weather forecast: the rest of April: cold; May: cold; June: cold; July: somehow hot as hell. Back to y’all.”

–Saturday Night Live; cold open (April 10, 2021).

As a Minnesota native and long-time Twin Cities resident, I can attest to the “perpetually cold” weather forecast (our brief, yet hot-and-sticky Summers aside).

However, SNL gets two things wrong:

One. Far from being short, the weather segment can easily take up to 10-15 minutes of a 30-minute local newscast — more if the weather is threatening (blizzards, hailstorms, etc.).

It’s in places like San Diego where the weather forecasts are “blink-and-you-missed-it” quick (“tomorrow’s forecast is 70 degrees and sunny — just like yesterday, and the day before yesterday, and . . . “).

Two. The locals are known for saying things like “You betcha,” “Don’t-cha know,” and “pop” (instead of “soft drink” or “soda”).

However, I’ve never heard a real Minnesotan utter the word “Y’all.”

See also, “There’s No Place Like Home: Garrison Keillor’s Homage to the Twin Cities in National Geographic“; “Winter Humor: Minnesota vs. Tampa Bay (& Elsewhere)”; “True Minnesotan” — Summer Edition“; and “After the Harvest, Before Winter*: The Connection Between Oct. 15 and November 3 (at least in Minnesota).”

The post <span class="number">1.</span> Minnesota’s 10-Second Weather Report (According to Saturday Night Live) appeared first on City Lakes Real Estate Blog.

MLS: “3rd Bedroom on Upper Level is Large & Has Lots of Storage”

There’s certainly nothing wrong with an Upper Level Bedroom (pictured above) that’s large and has lots of storage. But, what’s notable — at least to me — is what’s omitted.

Errors of (C)omission

Namely, any mention of a Bathroom, or whether the space has good overhead — always an issue with 1.5 story expansions. Sure enough, pulling up the tax records shows that the home is actually 1.2 stories, not 1.5.

Meanwhile, pictures elsewhere in the listing indicate that the home’s two Bathrooms are on the main and lower levels, respectively.

Owner’s Suite vs. Storage Space

The lack of a bed can also be telling, except in this case the home is vacant.

Finally, “lots of storage” is something I associate with a basement or garage — not an Owner’s Suite.

See also, “Is One of the Two Bathrooms Upstairs?”; and “When is a 1.5 Story Not a 1.5 Story?

The post Paying Attention to What the Listing DOESN’T Say appeared first on City Lakes Real Estate Blog.

“Substantially the Condition,” Defined (Sort of)

[Note to Readers: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]

“Buyer has the right to a walk-through review of the property prior to closing to establish that the property is in substantially the same condition as of the date of this Purchase Agreement.”

Minnesota residential Purchase Agreement; lines 358. — 360.

“I know it when I see it.”

United States Supreme Court Justice Potter Stewart’s threshold test for defining obscenity.

What’s fair game for raising issues during the Buyer’s walk-through inspection? (typically, conducted within 48 hours of closing). At least in Minnesota, any changes to the home since the Purchase Agreement was finalized that substantially alters the home’s condition.

The Golden Rule

In practice, such major problems as flooded basements, roof damage, broken furnaces or central a/c units are all fair game (and things you’d certainly expect a Seller — at least one who was still living in the home — to be aware of and already addressing).

Out-of-bounds: minor, handyman-type issues and — while upsetting to many Buyers — less than pristine fridges, floors and toilets.
While the standard is ill-defined, my advice to departing Sellers is to follow The Golden Rule: leave the home in the same condition you would expect if you were the Buyer

See also, “Home Buyer’s Final Walk-Through Inspection.”

The post In-bounds or Out? The Standard for Buyers’ Walk-Through Inspection appeared first on City Lakes Real Estate Blog.

(Un)Grammatically Speaking

One of the less-heralded parental duties is (gently) correcting your kid’s bad grammar — or trying to.
Witness this exchange between me and my (then) 8 year-old daughter:

She: “Did you know that Raffy (family dog) digged a big hole in the garden?”
Me: “It’s “dug,” not “dig.”
She (with emphasis): “Did you know that Raffy dugged a big hole in the garden?”

Third time the charm??

The post “Dig . . . Dug . . . Dog” appeared first on City Lakes Real Estate Blog.

Comparing Honey Crisps to Braeburns

One of the more quizzical looks Realtors get is when they (try to) explain to a prospective home Seller that their neighbor’s house isn’t a “Comp” (Comparable Sold Property).
In plain English: it isn’t relevant — at least directly — for pricing their home.
For the uninitiated, a Comp is one of the three homes Realtors and appraisers use to determine fair market value; once the relevant Comp’s are identified, step #2 is to go through a formal “compare-and-contrast” process between the subject home and each of the Comp’s called a “CMA” (Comparative Market Analysis).
So, why doesn’t the neighbor’s house make the cut?
Because one (or more) of the following usually apply:
One. Timing. Specifically, it sold too far back.
To be a Comp, the sale must be within the last six months.
Two. The neighbor’s house has yet to sell — that is, it’s “Active” or “Pending.”
While a neighboring home that is currently for sale may very well compete with another house on the block, because there’s no established sales price yet, by definition, it’s not a Comp.
Three. The neighboring home is too different.
As I like to put it, “you can compare a Honey Crisp apple to a Braeburn apple . . . but not to an orange.”
In non-layman’s terms, the maximum adjustment allowed between the subject home and the Comp is about 20%.
Beyond that, the adjustments become so big that they become unreliable.
So, if the neighboring home is significantly bigger or smaller; in dramatically different condition; or a completely different housing style — it doesn’t qualify.
Bad — and Good — Apples
None of the foregoing is to say that the value of neighboring homes doesn’t affect yours.
Thankfully, at least in real estate, one bad apple seldom spoils the bunch — it takes a couple of bad apples to do that.
However, once multiple foreclosures or derelict properties appear on a block, they pull down values — whether they’re Comp’s or not.
Conversely, if the neighborhood is clearly on the upswing, that can be very helpful.
But strictly for the purposes of determining a list price for a specific home, a neighboring home that’s too different or sold too far back isn’t one of the three homes that go into the CMA.
See also, “Bracketing, Explained.”

The post Why the Neighbor’s House Usually Isn’t a Comp (“Comparable Sold Property”) appeared first on City Lakes Real Estate Blog.

Getting Ready to Leave the Nest

It’s not just human parents getting ready to bid goodbye to their youngsters — specifically, this year’s graduating high school seniors.
So are Mama and Papa ducks.
In the photo above, the male duck (“drake”) is at the lower left; the mother and her eight ducklings are in the center.
The whole family seemed to be enjoying the balmy weather and placid Lake Calhoun (“Bde Maka Ska”) water this afternoon (like me!).
I don’t know about the ducklings, but our (18 year old) offspring officially leaves the nest in September . . .
See also, “Early Move-In (No Agreement)“; and “The Two Meanings (at Least) of “Taking Someone to School”.”

The post Congrats to the Class of ’21 appeared first on City Lakes Real Estate Blog.

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Short Answer: Buyer’s Call

[Note to Readers:  The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.  If you need legal advice, please consult an attorney.]

RISK OF LOSS: If there is any loss or damage to the Property between the Date of this Purchase Agreement and the date of closing for any reason, including fire, vandalism, flood, earthquake or act of God, the risk of loss shall be on Seller. If the property is destroyed or substantially damaged before the closing date, this Purchase Agreement is canceled, at Buyer’s option, by written notice to Seller or licensee representing or assisting Seller. If Buyer cancels this Purchase Agreement, Buyer and Seller shall immediately sign a Cancellation of Purchase Agreement confirming said cancellation and directing all earnest money paid here to be refunded to Buyer.
–Minnesota Purchase Agreement, lines 321. – 326.

While the Twin Cities has been blissfully spared (so far) severe weather this Spring, outlying areas haven’t been so lucky.
What happens if, after the Buyer and Seller come to terms, a tornado or other storm significantly damages the home?
“Force Majeure” Clause (aka, “Risk of Loss”)
As with most residential real estate matters . . . step #1 is to consult the contract. 
For those allergic to legalese, let me translate the “Risk of Loss” clause (above) that governs such situations for Minnesota home buyers and sellers: “It’s up to the Buyer.”
Just one word of advice to emotional Buyers, however, before they (too) hastily pull the plug on their now-sullied dream home:
Look past the temporary damage, and consider this: once insurance has replaced the roof, windows, and any other storm-related damage, the home you’re taking title to may actually be in better condition than the one you originally contracted to buy.
Perhaps that’s why severe weather derails fewer home deals than one might expect . . .
P.S.: Once upon a time, the term “Final Acceptance Date” was used instead of “Date of this Purchase Agreement.”
I’m guessing the change was prompted by one or both of these reasons: 1) “Final Acceptance Date” — when all parties have signed all the contract’s terms, making it officially “executed” — was too technical for consumers; and 2) if the tornado damaged the home after the date on page 1 of the Purchase Agreement, but before the date of “Final Acceptance” . . . the parties wouldn’t have consummated the contract (at least, not without first explicitly addressing the storm damage).
See also, “Accepted Offer” vs. “Fully Executed Purchase Agreement”.”

The post Uh-Oh! What Happens When a Tornado (or Earthquake, or Flood) Damages a “For Sale” Home Before Closing?? appeared first on City Lakes Real Estate Blog.

When “Sold” Doesn’t Mean “Sold”

At least in Minnesota, when you see a “Sold” rider above a “For Sale” sign in front of a house, it doesn’t mean “Sold” — it means “Pending.”

Huh??

The (admittedly confusing) convention is to pronounce a home that’s under contract and past Inspection — but not yet closed — as “Sold,” even though it’s technically still “Pending” on MLS.

So, why not just put up a sign that says “Pending?”

That would be my suggestion (and is the practice in at least some states).

However, I suppose then people would just be confused about what “Pending” means.

Whichever term is used, the goal is to let prospective Buyers know that the home in question is spoken for (and maybe, just a little, cement the Buyer’s sense of ownership).

When the home is really sold, you’ll know . . . because the “For Sale” sign will be gone.

P.S.: “Confusing Real Estate Terms – Advanced Beginner”: so, who are Realtors referring to when they say the “selling agent?” The agent representing the Buyer (the listing agent represents the Seller).

See also, “Quick! Who Does the Selling Agent Represent?“; “Accepted Offer” vs. “Fully Executed Purchase Agreement”; and “Final Acceptance” ” Real Estate Edition.”

The post “Sold?” No, “Spoken For” (or if you prefer, “Under Contract”) appeared first on City Lakes Real Estate Blog.

“Screened Porches” vs. “3-Season Porches” vs. “4-Season Porches”

[Note to Readers: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.].

Quick! Which kinds of porches are included in a home’s finished square feet?

A. Screened
B. 3-Season
C. 4-Season
D. All of the above.

Correct answer: “C.”**

If Realtors routinely confuse the various types of porches . . . I don’t know what chance a layman has.

Perhaps that’s why, as a public service for Twin Cities Realtors, the local MLS helpfully describes the differences — and critically, addresses when to include an enclosed porch in a home’s finished square feet.

According to the Northstar MLS’s “Rules Roundup,” here are the distinctions:

4-Season Porch/Sunroom

“A 4-season porch is a room that functions as an interior room, but allows you to take in the views of the outdoors year-round. It has permanent heat and is included in the finished square footage of the home.”

3-Season Porch

“A 3-season porch has windows with integrated screen systems and can be used for long periods throughout the year. They can shield you from outdoor elements such as rain, wind, sun and insects, but 3-season porches are not heated. Therefore, it is not a part of finished square footage, but is considered an enclosed space.”

Screen Porch

“Screened porches are a covered porch that has screened openings instead of windows. A screened porch may be less sheltered from the outdoor elements, but still offers protection from the sun and bothersome insects in the summer. Screen porches should not be included in the finished square footage.”

Practicing Conservatism

With that as prelude, here’s a practice pointer (my own, vs. MLS’s):

When in doubt, under bill vs. over bill.

That is, better to call it a 3-season porch than a 4-season, and safer to exclude the porch from finished square feet than to include it.

P.S.: Given how conspicuous a porch (of any type) is, it’s arguable whether — even if a Seller misstated its attributes — a Buyer would be entitled to rely on the Seller’s misrepresentation(s).

That’s especially after viewing the home multiple times (likely before making an offer), then subsequently inspecting it once there’s a signed Purchase Agreement.

See also, “Partial Bathroom“; and “Proposal: the Fractional Kitchen.”

**Note what’s missing from the possible choices: a “2-Season Porch.”

That’s because there’s no such thing.

The post 4-Season Porches in a 2-Season Climate (“Winter” & “Road Construction”) 🙂 appeared first on City Lakes Real Estate Blog.

Multiple Offers and Appraisal Worries (Still)

Alice in Wonderland would’ve loved today’s bizzaro housing market.

That’s because — in the midst of an unprecedented Buyer feeding frenzy — “up” is often “down,” “in” is “out,” and “down” is “up.”

Exhibit A: the Minnetonka home seller who reportedly countered a Buyer $20k below the price offered by the Buyer.

Outlier Offer

The background: almost immediately after listing their home at $400k recently, the Seller received multiple offers above their asking price.

Well above.

The presumptive winner?

An (over)eager Buyer who offered $450k, leaving their competition (never mind the asking price) in the dust.

Done deal, right?

Not so fast.

Seller’s Counter-Offer

The Seller — no doubt counseled by their listing agent — worried that their home wouldn’t appraise at $450k.

Instead of taking the deal at that price, they countered the Buyer at $430k — as in, $20k below the price the Buyer offered.

In addition to the lower price, the Seller’s Counteroffer stipulated that the Buyer: a) waive any recourse if the home appraised below $430k; and b) agree to put in more cash to cover any appraisal (and therefore mortgage) shortfall.

“Done” and “done.”

Just don’t expect to see that scenario repeated when (if??) the housing market ever becomes more balanced . . .

See also, “Buyer: “Too Low!” Seller: “Too High!” (Huh?!?).”

The post “Wait a Second! Don’t Sellers Try to Get MORE for Their Home, Not Less?!?” appeared first on City Lakes Real Estate Blog.

Closing Headaches — Exhibit A

[Note to Readers: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced. If you need legal advice, please consult an attorney.]

It’s not the biggest mistake Sellers can make — the maximum exposure is typically “only” a couple hundred dollars — but it’s still a headache that can delay if not jeopardize closing.

The mistake?

Representing that a non-homesteaded home is in fact “homesteaded.”

Background

What’s the distinction — and why does it matter?

At least in Minnesota, the government cum taxman distinguishes between principal residences . . . and everything else (2nd homes, investment property, etc.).

Depending on how you look at it, either the former qualifies for a (negligible) property tax discount, or the latter are assessed a slight premium.

In the standard Minnesota Purchase Agreement, if the Seller indicates that the property is non-homestead, the Buyer and Seller must then decide if the Seller is to pay any of the difference between non-homestead and homestead taxes.

If the “homestead” box is mistakenly checked . . . the Buyer and Seller have to address that issue prior to closing.

P.S.: “Homestead” status can also qualify homeowners for lower insurance premiums.

The post Getting the “Homestead” Disclosure Wrong appeared first on City Lakes Real Estate Blog.

The “You Know it When You See it” Test

While it’s true that every Mid-Century Modern home was built in the 1950’s (or thereabouts), it’s decidedly NOT the case that every home built in the 1950’s is a “Mid-Century Modern.”

In fact, in real life, very few are.

On MLS, for every home that I see billed as being a “Mid-Century Modern,” perhaps only one in four (25%) really qualify.

The rest are more properly described as “inspired by Mid-Century Modern design,” “Mid-Century Modern style,” “Mid-Century Modern influence,” and other adulterated adjectives.

Not-So-Telltale Sign: Name Brand Architect

So, what qualifies as the real thing? (apologies to Coke).

If the home was designed by an architect famous for their Mid-Century Moderns, their firms, or by one of their disciples . . . it probably is.

That list includes Joseph Eichler, the Keck brothers (George Fred and William), Henry P. Glass, Ludwig Mies van der Rohe, and Frank Lloyd Wright.

Of course, if any of those architects designed the home, the listing agent would loudly trumpet that fact — and the home’s list price would likely include an extra zero (or two!).

Test: “Perpendicularity”

Assuming that’s not the case, however, how else does one identify a genuine “Mid-Century Modern?”

It’s more of a feel than any particular list of attributes, but I’d include such things as: sleek, spare design; horizontal, almost Prairie-style lines and spaces; 90° angles and what I’ll call “perpendicularity”; a flat or barely pitched roof; recessed lighting; and lots of glass and windows, especially transom windows that show off the tall ceilings.

And while I suppose it’s possible for a Mid-Century Modern to be two stories or a split-level, the classic version is just one, albeit with the aforementioned high or lofted ceilings (excepting those by Frank Lloyd Wright, whose homes famously have low overhead).

Finally, Mid-Century Modern homes typically have Mid-Century Modern furniture, sometimes custom-made for the home (however uncomfortable — another hallmark of Frank Lloyd Wright homes).

P.S.: Memo to listing agents: if you say a home is a Mid-Century Modern and it isn’t, it’s worse than simply not saying it at all.

Discriminating Buyers know the difference, and will feel misled once they’ve seen the home (if the pictures didn’t already give it away).

The post “Mid-Century Modern?” Or Just “Mid-Century?” appeared first on City Lakes Real Estate Blog.

When the Neighbors are the Dealbreaker

Prospective Buyer: “We love the house. But we could never live across the street from that pornographic statue.”
Phil Dunphy: “Oh . . . huh . . . I never noticed it.”
Prospective Buyer: “Yeah . . . you can see it from inside when you look out the window.”
Phil Dunphy: “Oh . . . ahh . . umm . . are you talking about that one?” (points).
Prospective Buyer: “It’s quite large.”
Phil Dunphy: “I’ll take your word for it.”

—-Modern Family; “Marble With Wood” episode.

Unlike TV Realtor Phil Dunphy, I’ve never had a listing torpedoed by an obscene statue on the neighbor’s front lawn (this is Minnesota, after all).

But, I’ve had sales where the neighbor’s snowmobile(s)/kayak/under-repair-motorcycle was an issue.

Sugar vs. Vinegar

Step #1 is always a friendly, “We’d really appreciate it if you could relocate your [ _____ ] while our house is on the market.”

If the “For Sale” homeowner doesn’t feel comfortable making that request, it’s certainly appropriate for their agent to (note: a six-pack of beer and/or a helping hand can help grease the skids).

If that doesn’t work — depending on exactly how odious the item is — step #2 is in order.

Namely, contacting the local municipality to see if the offending item(s) violate any city ordinances.

See also, “More Phil Dunphy-isms.”

**The TV producers digitalized the statue’s offending parts.

P.S.: Next-door dumpsters can be a turn-off, too.

But, as I like to point out: a) they’re temporary; and b) they can indicate that the homeowner is doing a (major) remodel, which is good for adjacent home values.

The post What to Do About the Pornographic Statue** on the Neighbor’s Front Lawn appeared first on City Lakes Real Estate Blog.

Identical or Fraternal?

Look closely in the photo above, and you’ll see not one but two trunks at the base of this tree, located about 1/2 mile west of Minneapolis’ Cedar Lake in St. Louis Park’s Fern Hill neighborhood.

The tree — make that tree(s) — command a key intersection, which give passing motorists (and pedestrians) a treat this time of year.

P.S.: a (slim) silver lining to this year’s coolish Spring: the prolonged blooming period — I’d guess 7-10 days instead of the usual 3-4.

The post “Minnesota Twins” x 2 appeared first on City Lakes Real Estate Blog.

But First . . . a Brief History Lesson

I don’t know about other states — I’m only licensed to sell real estate in Minnesota — but here, residential property taxes are due twice a year: May 15 and October 15.

Those non-randomly chosen dates stretch back to when Minnesota’s economy — like practically every other state’s — was agrarian-based.

The two times a year farmers predictably had money were in the Spring, before they’d planted; and in the Fall, after they’d harvested.

Tax collectors — no dummies about such things — realized that those were the best times to dun its citizens for property taxes (note: the May 15 payment covers the first half of the year; the October 15 payment the second half*).

Debits and Credits

Which leaves the more contemporary question, “if you’re selling your house in early (or late) May, do you pay the first half property taxes?”

The short answer (or at least mine) is, it depends on whether the Buyer’s lender is escrowing (collecting in advance) for it.

That’s usually resolved by a quick call to the Buyer’s closing company.

Generally, though, the safe guidance is to tell Sellers closing before May 15 to pay their first half property taxes, those closing after . . . not to.

Settling Up at Closing

Either way, the federal closing statement (called “the ALTA”) should reflect a pro rata adjustment between the Buyer and Seller.

If the Seller paid the first half taxes, they’ll get a credit for the May — June 30 portion corresponding to the new owner’s time in the home.

If the Buyer escrowed the property taxes, the Seller’s net proceeds will be debited (subtracted) for the interval between January 1 and the May closing, when the Seller still owned the home.

*Calculating pro rata property taxes for closings on (or close) to June 30 and December 31 is easy: they should be zero (or very small).

See also, “What’s in a Name? From “Settlement Statement” to “HUD-1” to “ALTA” Back to “Settlement Statement.”

The post May Closings & (Minnesota) Property Taxes appeared first on City Lakes Real Estate Blog.