From the category archives:

St Paul

Turning Down a Listing

Contrary to what most might think, many real estate agents aren’t desperate for listings. Yes, there are those out there that will take a listing because they really need it, no matter how overpriced the home will be, but I am not one of those agents.

Recently I turned down an expensive home simply because the home owner and I could not agree on a price. He saw it as a million dollar home, but I knew it was not worth anywhere near his dream number. I did my research, showing him what similar homes in the area had sold for. I even went so far as to take him out into the local marketplace and show him active listings, comparing those million dollar homes to his, hoping the information would sink in that his home in no way compared to those high-end homes. But alas, he still felt his unluxurious home was superior to them. We parted ways that day with a handshake, and I wished him all the best in the sale of his home.

He seemed surprised that I was turning down the listing. “Wouldn’t you like this home to be showcased on your website?”, he asked. I would have liked to have plainly said “Yes, but only if it is priced correctly”, but I was nicer than that.  Here are some reasons why I don’t take overpriced listings:

  • I was asked how much marketing it would take to get his home sold and I flat out told him that no amount of money thrown into marketing the home would make it sell if it was overpriced. See, agents don’t get paid unless a home sells, so we have to put thousands of dollars into photos, brochures, marketing, etc before we see a dime in commission. If the home doesn’t sell, then we are out all those costs. Taking an extremely overpriced listing means that the odds of that home selling are so rare that it is just not worth wasting my hard earned money. Buyers are pretty savvy in today’s tech world and know when a home is overpriced. Looking at it is just a waste of their time.
  • Telling a home owner that their home is worth more than it actual is is a Realtor Code of Ethics violation. Standard of Practice 1-3 of the Code states that “Realtors, in attempting to secure a listing, shall not deliberately mislead the owner as to market value”. I don’t know about you, but I really don’t want to ever be accused of an ethical violation.
  • I believe in being completely honest with home owners, even if I know they are not going to like what I tell them. They might throw me out of the house (never have had it happen), but at least I walk away knowing I gave them legitimate information and that it is truly their problem if they don’t like the data.
  • Beating up a home seller every couple of weeks for a price reduction is not something I like to do. Instead, I choose to educate sellers that pricing their listing correctly from the beginning ensures them that I won’t be calling them and getting on their nerves. While markets do change during a listing period and price reductions do happen, I would rather be able to back my advice up with real market data, then make up some random number just to make a seller happy.
  • When selling a home, many times a home owners number one “enemy” is the real estate appraiser. If he can’t find evidence to support a contract purchase price, then you won’t be selling your home anytime soon. And waiting for a cash buyer isn’t the best strategy.  While many won’t order an appraisal since no lender is involved, million dollar cash buyers are pretty smart and know when a home is overpriced. Don’t pray for a stupid cash buyer – they don’t exist.

Getting back to my recent experience. Another agent ended up taking the listing, which doesn’t surprise me. What does surprise me is the listing price, which is extremely overpriced. Not only will the home never sell at that price, I can’t imagine how the agent justifies wasting everyone’s time. At least I can sit back knowing that I made the right decision in walking away. Let that listing be someone else’s headache. I won’t take part in overpriced listings.

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Twin Cities in the Eyes of the Census

The New York Times has a great interactive map which gives insight into population growth and decline, housing trends, and ethnic/racial concentrations.  Real estate agents are not allowed to comment on neighborhood/city demographics, so this interactive tool will answer many of the questions you might have. You are even able to zoom into Twin Cities neighborhoods to get a  more detailed look on what is going on in your neck of the woods.

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The Most Expensive Home For Sale in St. Paul

It’s always fun to know what’s for sale, especially when we’re talking about multi-million dollar homes. In St. Paul, the most expensive homes sit on or around Summit Avenue, one of the most famous streets in the Nation for historic homes, so it should come as no surprise that the following home sits just a few blocks away.

Luxury Historc Mansion Frederick Weyerhauser

Known as the Frederick Weyerhaeuser Mansion, it is currently listed for sale at $2.75 Million. It sits on the bluff overlooking St. Paul and has quite a large yard at 1.3 acres.

Learn more about this historic home, please visit Historic Homes of Minnesota.

[idx-listing mlsnumber=”4030090″ showpricehistory=”true”]

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Comparing Market Value with Assessed Value in the Twin Cities

I think the answer to this post on comparing Market Value vs. Assessed Value can be summed up in four simple words, “Just Don’t Do It“. In the past few months I have seen an increased objection voiced by some buyers over home prices. When I ask them to justify their reasoning, I am quickly told something along the lines of “Well, the home is only assessed for X. Why should I pay more than that?”

To make it simple, Market Value in Minnesota is what a buyer is willing to pay for a home, where Assessed Value is a valued placed on a property by a governemnt tax assessor for the purposes of taxation. The two are not the same. Every state is different in how they calculate property assessments, and Minnesota uses a system that is different from any state I have lived in.

Take for instance Dakota County.The current 2011 tax statements that were sent out this year are not based on current home prices. Instead, they are taken from home sales that occured between Oct. 1, 2009 and Sept. 30, 2010, data that no home appraiser would be able to use under financial guidelines as the sales are too far into the past. So if I were to buy a home towards the end of 2011, the “values” used by the county assessor could be off by two years!

Now look at homes currently for sale on the open market. The most important job of a real estate agent is determining what the Fair Market Value of a property is by comparing it to other properties that have recently sold in the area. This “market snapshot” is a more accurate, not to mention more up-to-date, representation of a home’s value. If buyer’s are willing to pay “X” for a similar home down the street, then there is a good chance another buyer is willing to pay around the same amount for your home.

While homes that are priced in lower tax brackets tend to show assessed values and market values closer together, homes in the upper-bracket real estate market, especially waterfront properties and historic homes, tend to be further apart when comparing the two values. County tax assessors generally have poor to no knowledge of what the true value of an expensive home might be, as they rarely have direct access to the interior of homes. Take for instance a large historic home I sold in Minneapolis. It was a truly unique home with nothing remotely like it on that side of town. The historic elements inside the home were priceless and would be near impossible to duplicate, but according to the tax assessor, the home was assessed well below its true market value. When a buyer did come in with an offer, they had it priced at the assessed value. I literally laughed when I saw the exact number and had to do the buyer’s agent’s job for her by showing where proper comparable home’s would come from (she was an out of town agent). After some negotiating, the seller and buyer were able to come to an agreed to price, which was up considerably from the assessed value first proposed by the buyer.

So please, when you are shopping for a home, do not use the assessed value of a home as the basis for an offer. Instead, look at what other comparable homes in the area have sold for and go from there!

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F is for Photo – Round Barn Near Red Wing

Historic Round Barn Near Red Wing

This beautifully restored round barn just outside of Red Wing, Minnesota can easily been seen from the Highway and if you call ahead to the Bed and Breakfast owners, you can even take a tour. To read more about the history of the barn, please visit my historic homes blog.

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F is for Photo – A Taste of Spring

With all the snow on the ground, I just had to stop by the Como Conservatory in St. Paul a week ago and take a stroll through the sunken garden. This photo is of the Winter Flower show which ends March 20th. Beginning  March 26 and through May 1, the garden will showcase the Spring Flower Show of tulips, daffodils, hyacinth and much more.

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Luxury Home Financing Update for the Twin Cities

A few months ago I reported that financing for the upper bracket home market in Minneapolis and St. Paul was having some difficulties. Banks were being very cautious for million dollar loan requests, and the new norm for down payment was at least 30%.  The word of the day was “documentation”, and banks required a ton of it. Now it looks like banks might be easing up on luxury home buyers…well, maybe just a little bit.

According to Lisa Wells of Residential Mortgage Group, the luxury real estate market is getting a little easier to finance, but still remains cautious. She says, “Loan amounts for 1 million or less are pretty decent for interest rates and the underwriting process, but buyers still need 2 years of solid income and at least a 700 credit score rating.” It appears that a down payment of 20% is also OK, but if you want a better interest rate, than banks would like to see at least 25% down.

If you require a loan amount of over $ 1 Million, things will be a little bit different. Now two appraisals are required by the bank, with the lower of the two used for the loan.  The borrower must have at least 12 months of payments in the bank in a liquid reserve and ideally more, and of course a high credit score.  Ms. Wells says she has found that final loan approval in the million dollar plus market, even if the buyer meets all the requirements and guidelines, “is still left to the discretion of the Underwriter, and that she should have a very, very strong borrower with 35%-40% down.  The thought out there is the upper bracket market still might have some downward pressure, and therefore, anything with loan amounts of $1.5 Million or more is just hard”.

Home owners looking to sell this year should realize that there is a real obstacle with million dollar home financing, as buyers must be able to come up with the dough. Price is not always the reason for why your luxury home hasn’t sold – it could be the lack of qualified buyers. With the tougher rules in place for loan approval, sellers should require that all buyers be pre-approved. In this way, Twin Cities home owners can have a little bit of comfort that a financial capable borrower is knocking on their door.

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New Luxury Real Estate Boutique Opens in the Twin Cities

Some of you might be wondering where I have been the past month. While I hate to be away from the blog so much, it happens sometimes that other parts of the business take me away from writing. I have to say that the reason this time is a good one, as I have just done something I have been dreaming of doing ever since I entered real estate – opening my own real estate brokerage.

The company is small to start out with, but that’s the way I like it. Too many real estate brokerages spend tons of money of what I call “Go Big, Go Large”. Their money goes to expensive offices that no one visits, nor any agents actually work from. Overhead eats them up, and their agents suffer. The old way of running a real estate company is dying. I plan on being a part of the new way.

Kirby Fine Homes Luxury Real Estate Brokerage 

My boutique firm sells real estate in the Twin Cities, including Minneapolis, Saint Paul, Lake Minnetonka, and the surrounding Metro areas/counties. While we cater to all price ranges, special emphasis is given to luxury properties, historic homes, and waterfront/lakefront real estate. By keeping the firm small, we will be able to better serve our client’s needs with personal attention. Clients will not be lost in a shuffle of a big box firm where no one knows their name.  While our goal is to be the best, it is not to be the biggest. Think “Jerry McGuire” if you will.

Being as I have just opened Kirby Fine Homes, it will take time to get everything in place. This year a new website will be developed for the brokerage, and knowing me, an Internet presence will quickly be established. I am very excited about this new venture, and can’t wait to see what 2011 brings for the local real estate market!

“Kirby Fine Homes – Opening Doors to the Most Exceptional Homes in the Twin Cities”

 

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Most Expensive Home on Summit Avenue

If you don’t know Summit Avenue, then you don’t know much about St. Paul. It is only the most prestigious street in the entire city, and some will go so far as to say in all the state of Minnesota. Summit Avenue is where all the old historic mansions are located, and is known to be one of the most best preserved historic districts in the nation, with its origins beginning in the 1850’s.

[idx-listing mlsnumber=”3854514″ showpricehistory=”true” showschools=”true” showextradetails=”true” showfeatures=”true” showlocation=”true”]

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Where Do Minnesota Buyers Find Their Homes?

Whenever I speak to a Minnesota home owner who is thinking about selling their home, I discuss the technology I use to help market the home, and how implementing the power of the Internet is a big factor in my real estate success.

Statistics are extremely important when selling a home, so some data that I go over with a seller includes the infamous “Where do Buyers Come From?”. Below is current information for the 2008 real estate market in Minnesota. As you can see, 33% of home buyers found the home they bought through a real estate agent. (Please note, this means the agent showed them homes and one of those homes was bought by the buyer. It does not mean that only 33% of buyers used a real estate agent to purchase a home.)

The next piece of data which is so important is that 45% of Minnesota home buyers found the home they bought via the Internet. Wow! That is huge, and shows right away how important it is to market a home for sale on-line in our state.

Please also note, for those of you who still believe in print advertising, that in Minnesota, only 2% of buyers found their home from the newspaper, and only 1% found their home from a home book or magazine. Print advertising is dead and just doesn’t bring in the buyers.

Now looking further into the national statistics for “How do Buyer’s Find Homes?“, the National Association of Realtors has compiled data since 2001 of real estate trends concerning this issue. As you can see in the below table, over the last eight years, buyers finding their home, from the research of a real estate agent, has decreased 14%. At the same time, and probably the most dramatic change, is that buyers have increasingly found their homes via the Internet, up from 8% in 2001 to 32% in 2008. Wow!

When you look at Minnesota versus National, you can easily see that the Internet is more readily used in a buyer’s home search, 45% to 32%. So for home sellers, if you don’t hire an agent that is Internet savvy, you could be losing market time and money in selling your home.

For the small minority of people out there who feel the Internet is making the real estate agent obsolete, please know that even with all these buyers using the Internet to search for homes, 86% of these buyers are still utilizing a real estate agent to help with the home search and purchase. The good agents are using the power of the Internet for success, integrating it into their marketing plan to help facilitate the sale of their client’s home.

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