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Helpful Hints on Home Descriptions

Properly Marketing a Home For Sale

Beautiful Flower Beds

Most real estate agents are not good writers, so it should come as no surprise that when you read through real estate listings the descriptions are lack luster. Some agents just don’t care, some just don’t know how to write well, and some agents are so “old school” that they know no other way. Sadly, home owners are the ones hurt because poorly written descriptions fail to attract buyers, so it is extremely important to choose an agent that writes well and takes the time to create a story about your home.

I continualy write on this blog about the importance of good listing photos and how they are the first things buyers look at when searching for a luxury home in the Twin Cities. Photos are the window into the soul of the home, but to make them even better, you must have a description that tells a buyer what they are looking at.

What to Do

  • Accurately describe the home. Calling it the “Best” home in the neighborhood might not be a bad thing, but you better make sure you can back it up with photos and reasons on WHY it is the “Best” home.
  • Use good adjectives that attract buyers like “Beautiful, Lovingly Maintained, Great Landscaping, Spacious”.
  • Include longer descriptions of photos that highlight great features of your home.

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What Not to Do

  • Don’t use negative adjectives to describe your home. Words like “As-Is, Motivated Seller, Small, Needs TLC, Good Value” might not sound all that negative, but they can be a “red flag” to buyers who might think the home is not worth seeing, or needs too much work.
  • Don’t put photos of your listing on the MLS without descriptions. Simple words like “living room” no longer cut it. Buyers want to know exactly what they are looking at and the best way to attract them to your home is to provide ample descriptions.
  • Don’t be lazy. Check up on your Realtor and make sure they are giving your home the marketing it deserves!

(Of course if you pick the right agent from the beginning, you probably won’t have to do much. A great agent will make your listing shine!)

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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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Insuring the Million Dollar Home

Probably one of the last things a luxury buyer thinks about when shopping for a new home is how he is going to insure it and how much is it going to cost. One of the hardest things to figure out is WHO is going to insure it. Luxury homes are not insured by every insurance company out there, and most likely, buyers will have to choose from a small pool of companies.

For instance, Minneapolis and St. Paul have an extensive inventory of historic homes with many showcasing architectural elements that would cost a fortune to reproduce today. Sorry, but Allstate just won’t do.  Buyers and home owners can’t just pick any insurance company to cover these beautiful and rare items; therefore, the best way to protect your home is to choose an insurance company that has a specific policy covering old homes.  Placing a value on items can be tricky, so agents can come to your home and evaluate original stain glass windows, rare woodwork, imported tile, expensive wall coverings, stone carvings…you name it, they have the expertise to value your home’s special attributes.

The initial appraisal and inventory of your home is crucial. Agents will take photos and detailed notes of everything in your home, so that should a disaster strike, your home can be reconstructed as best as possible to its original state. Most of these special insurance companies will go above and beyond the policy to make sure your home is returned to you better than before, even updating your home to current code at no additional expense to the home owner.

 Some companies that you might look into for insuring your luxury home include:

  •  HUB International – can quote from the Top 5 upscale insurance companies
  • Fireman’s Fund
  • Chubb 
  • AIG/Chartis
  • ACE
  • PURE

Many of these companies offer increased coverage for Wine Collections, Jewelry, multiple properties, flood insurance, Kidnap and Ransom, Fine Art, etc.

Home Owners, you aren’t left out of this conversation either.

 Over the years, million dollar mansions are updated and improved, but many homeowners neglect to call up their insurer and inform them of the improvements, leaving their home undervalued. When disaster strikes, homeowners could find themselves in a tough place when they don’t get the correct dollar value to replace their home and personal items. It is suggested that homeowners update their policy every year to make sure they are fully covered.

And don’t let the declining real estate market, which might state the value of your home has decreased, affect the insured value of your home. Home values have little to do with how much it will cost to rebuild and replace everything lost, so don’t get caught in that trap.

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Lake Harriet Minneapolis MN

What’s Going on in Lake Minnetonka?

Real Estate Update for Lake Minnetonka

Today I thought it would be good to give a market update for those who live around Lake Minnetonka to show what has been happening over the last year. Below are some details and graphs to help explain the current market, with colors for graphs indicating year of data.

Median Sales Price

For the last three years, Median Sales data for Lake Minnetonka has stayed relatively the same. While 2009 saw a 12.6 % decrease from 2008, the market has rebounded slightly this past year with median sales prices increasing…good news for luxury homes around the lake. Some of the hardest hit areas in sale price over the last year have been Excelsior and Wayzata, with Spring Park having the largest increase.

Lake Minnetonka Median Sales Price for Luxury Homes
Lake Minnetonka Median Sales Price

 

Housing Supply and Days on the Market

The housing supply, or current inventory of homes for sale in Lake Minnetonka, is considered healthy if it is around 5-6 months. As you can see, for the last few years, expensive homes in the area have been no where near that number. Currently at 23.9 months, it will take almost a full year to sell all of the current homes on the real estate market. This number takes into account all homes surrounding lake Minnetonka so each individual town will have a different number. For instance, Excelsior has seen the largest increase in housing supply, with Greenwood and Tonka Bay coming in at a close second, but on the other end, towns like Minnetonka Beach, Wayzata, and Orono have seen a decrease in housing supply.

Number of Months to Sell Lake Minnetonka Inventory
Lake Minnetonka Housing Supply
Amount of Days on the Market Lake Minnetonka Homes Sell
Lake Minnetonka Days on the Market

With home sellers, one of the most important real estate statistics they want to know is how long it will take to sell their home. For Lake Minnetonka homes, it’s going to take awhile. Over the last year, it has taken an average of 244 days for a home to sell (Agents call this “Days on the Market” or “DOM”).  The price of homes in an area will greatly effect the DOM, so naturally the more expensive the home, the longer it will take to sell due to the fewer number of buyers able to purchase a luxury home. For Lake Minnetonka, the towns with homes taking the longest to sell are Tonka Bay, Deephaven, and Minnetrista.

  

 New Listings Vs. Closed Sales

The amount of New Listings that have hit the market over the last year for upper tier homes around Lake Minnetonka  have decreased 20% from the amount in 2009. So far this year, Mound and Orono hold the records for most homes to come onto the market, but for the most part, sellers are deciding to wait out the market before selling. The decrease in available homes means that buyers have less to choose from, but in the same instance, the number of homes that have sold in the last year has increased. So I guess having less homes makes it easier for buyers to make a choice, but most likely, with the percent of the original list price received by home sellers declining in many Lake Minnetonka towns, buyers are just finding homes more affordable than in 2008.

Lake Minnetonka New Home Listings March 2010 to February 2011
Lake Minnetonka New Listings

 Closed Sales over the last year for Lake Minnetonka luxury homes has increased 11% for those near or above a million dollars, with homes $500,000+ having over 22% more closed sales.

Closed Sales March 2010 to February 2011
Lake Minnetonka Closed Sales

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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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That’s Not the First Time a Buyer has Seen Your Home

Contrary to what you might think, when you get the call from your listing agent that a buyer wants to look at your home for sale, the buyer already knows what your home looks like. They have toured it, peeked in the windows, driven by it at night, walked through your bedroom – you name it, they’ve done it. Surprised?

Today’s real estate market is shopped by buyers from the convenience of their living room couch, from their office, or on their lunch break. In fact over 45% of Minnesota buyers, according to a survey conducted by the Minnesota Association of Realtors, found their home on the Internet. Buyers are touring your home before they even make the call, so in this case, don’t you think it best to put your best foot forward from the very beginning?

I recently wrote about the old saying, “You never get a second chance to make a good first impression”, which was in relation to how you have a buyer enter your home. This can also hold true for photography. So many times I see photos like the one below of a multi-million dollar home ( in the photo below, the home is listed for sale at $2.9 Million) where the lazy real estate agent has gone in with a point and shoot camera and done the work themselves. Sadly, high-end buyers are going to pass this home up when they are searching online because it doesn’t grab their attention. Instead of seeing the beautiful architectural and historical details of the home, they see a lop-sided photo of some wood and a partial table.

bad luxury minneapolis home mls photo

Example of a bad MLS photo of home currently for sale in the Twin Cities

 As a seller, you would think you would be pretty upset to find out your agent is marketing your property in this manner. But believe it or not, I find that in most instances where I ask a seller whose home has not sold, to take a look at the photos in MLS, the first thing they say is that they have never seen the photos of their home. What?  A good real estate agent should be showing a seller their marketing pieces, and as a million dollar listing, a good real estate agent should be having a professional photograph the home. Sellers have only one chance to grab a buyers attention, so proper angles and lighting are extremely important to highlight every detail of the listing.

When it comes time to sell your home, please make sure you choose an agent who specializes in luxury home marketing. It’s not about selling your home, it’s about marketing your home. Any agent can try and sell a home, but it takes a true professional to market it correctly.

So, when is your first showing? As soon as the buyer clicks the mouse. Do you want that buyer to click on through to the next home, or stay on yours for a while and enjoy the view?

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A Home’s Entry Point Can Make or Break a Showing

Twin Cities Luxury Home EntrywayMost retail businesses have their customers enter through a main entrance. This entrance is attractive, easy to enter, and immediately lets the customer know what the store represents. They want you to feel at ease and like what you are about to see because as the old saying goes, “You only get one chance to make a good first impression”. Businesses know that if you walked in through the back door, you would most likely would turn around and walk right back out. Simple concept, right?

So why do I see so many home owners not thinking about the importance of a buyer’s first impression? I can’t tell you how many times I have walked into a home via a backdoor or garage. Trust me, it doesn’t start the showing off with a bang as usually the first thing the buyer sees is a basement door, mudroom, or kitchen.  You don’t want them seeing your muddy shoes or kids backpack – you want them to see the beautiful foyer, grand staircase, or open floor plan. Even if you don’t use your front door, it is extremely important to have any potential buyer’s enter through it.

Buyers are pickyer than they have ever been, and they will quickly write off a home with just one small negative. Do yourself a favor, spruce up your front entrance and make the “window of your home” more presentable. It will give a better first impression to a buyer, and give you, the seller, a better chance of getting that offer you have been waiting for.

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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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Days on the Market for Twin Cities Luxury Homes

The Difference in Days on the Market

Days on the Market for Twin Cities Luxury HomesReal estate agents in the Twin Cities metro area are pretty lucky. We have Realtor associations that produce outstanding market statistics, which other cities across the nation lack. One bit of data that is extremely important to us agents, and our seller clients, is the number of days that a home is actively for sale before a buyer produces an acceptable offer – otherwise knows as DOM, “Days on the Market”.

When these numbers are compiled, they are usually presented in generalities. We might have a number that is averaged out for a certain county, city, or neighborhood, but usually the detailed numbers per zip code are over looked. All price points are usually included, so the statistics can be skewed depending on how many high-end, or low-end homes are included.  For instance, the current DOM for the Twin Cities market is 118, so an agent that comes into a luxury listing appointment using this generic stat in their CMA (Comparative Market Analysis) could be doing the seller a disservice. 

Instead, the agent should be taking into account the area the seller lives in, and presenting those statistics. As an example, in Excelsior, where homes are much more expensive, the average days on the market is around 79. Wayzata is 144. Around Long Lake, it’s up to 173. The difference is staggering for luxury homes, especially if there is a lake nearby, or if the number of homes available to purchase is less. My main point is that when dealing with upper bracket real estate, sellers should be making sure they get the most accurate and detailed market statistics available for their home. And the only way to do this is choose an agent who specializes in the luxury home market.

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