The Minneapolis Real Estate Blog: March 2007

One of my real estate specialties is historic homes. Their prooven strength at surviving the elements of time inspires me, and "they just don't build them like that" any more. If you haven't been to Minneapolis and St Paul, then you are missing some of the most beautiful old homes you have ever seen. I have been posting a featured Historic Home each week this year on my Luxury Blog, and thought I would share them on AR as well. I will post one home each week so be sure to check in periodically. Enjoy!

This weeks Showcase historic home is 495 Summit Avenue

Built in 1881 by Cyrus B. Thurston, this home stands out on a beautiful corner lot and is one of the only homes on the avenue with an original date panel built into one of the gables. Originally the home was painted white and had a beautiful full facade front porch that slightly wrapped around the western corner of the home. You can easily see the original outline of the roof, around the only remaining portion of the porch.

The architectural design of the home is Victorian Queen Anne and was the first built on the Avenue in this style. Common elements that the home has with other Queen Anne homes are the numerous gables, dormers, and high pitched roof. The home also has bay windows and porches that break up the surface of the walls, giving the home a unique feel that only a Queen Anne can give. Unfortunately the architect of the home is unknown. The home boasts approximately 5200 finished square feet, has two stories + finished attic space, 4 bedrooms and 4.5 baths, and sits on a little less than half an acre.

I have not posted a comment lately about the Minneapolis Real Estate market because it really hasn't changed much in the first quarter of 2007. But seeing as it is the end of the first quarter, I thought you might like to see the statistics.

According the the Minneapolis Association of Realtors, buyers are still exercising caution when choosing to purchase a home in the local market. Just because it is a "Buyer's Market", doesn't mean they are actually buying. Pending sales (those under contract) are 14% behind where they were this time last year. At the same time, listings have increased by 10% above what they were in 2006.

Spring has arrived which is usually a good time to purchase, but when sellers wait until Spring to list their home, a huge influx of listings appear and once again supersaturate the inventory. Last fall there were 35,000 listings and now we stand at 29,000. Do note that 19% of this inventory is new construction. That's alot of new homes....now you know why competition is so fierce. If you are even thinking about listing your home, you have to price it right from the get go or you might never sell. Currently we have a Housing Supply of at least 7 months. This means it will take 7 months for the current homes listed to sell. I doubt many home owners have that long. Most need to be somewhere else yesterday.

If you would like statistical information for a certain price range, please feel free to comment and I will update the post!

Stats for the $200,000-250,000 price range are shown in the comment below.

One Creative Solution in a Multiple Offer Situation

So you are touring possible Minneapolis homes for sale and finally walk into the house of your dreams. You run through every room three times just so you can make sure all your furniture will fit. The trusty real estate agent you hired writes up an offer to purchase and delivers it to the seller, while you sit back and dream of your new home.

Then the phone rings...it's your agent telling you she has just learned another offer has been submitted. As you start to visualize your dreams come crashing down, your agent tells you to hold on a minute, there might be a solution to getting your offer accepted. At least this is what I would tell you, however, not all agents are familiar with multiple offers or what to do about them. Here is one solution to consider:

• write up the offer with the purchase price you are most comfortable paying
• next, add an addendum stating that you will pay "X" dollar amount above and beyond any other offer presented to the seller
• also, add a maximum dollar amount you are willing to go up to
• finally, add that if your offer is accepted, proof of the other offers purchase price be provided asap and have your approval before the final contract is executed

Here's an example, we'll use $100,000 as a simple calculation base:

You offer $100,000 on the home. You really want this home, so once you hear of another offer, write up a document that says you will pay $1000 above and beyond any other offers, up to a Maximum of $110,000.

Most agents and buyers submit an offer that just gives a purchase price. An example is when the listing price is $100,000, but you offer $110,000 above it just to get the home. The major problem with this scenario? What if no one else ever puts in another offer? Now you just paid $10,000 more for a home you could have gotten for $100,000!

However if you do what I suggest, not only will it help you save money, but it also keeps the seller honest. I hate to say it but I have encountered instances when a seller has lied about multiple offers just to get a higher price for the home. In these cases, if you don't have something in the contract requesting proof of those other offers, you are out of luck.

Multiple offers don't happen all the time, but you should always be aware of real estate solutions available to you should the need arise!

Fire Sprinkler Systems in the Luxury Home

A new home trend that is still an idea in most peoples minds, but sure to become the future norm, is the home fire sprinkler system. We all know that commercial properties and apartments buildings are required by law to have an operating sprinkler system, but apparently there is a push to have future homes equipped with them as well.

I have some insider knowledge as my husband works for Northstar Fire Protection in Eagan, MN as a Project Manager. He designs and oversees the installation of commercial sprinkler systems. One day last year we were talking about a project he was handling in Las Vegas and our conversation turned toward real estate. He mentioned that he had the feeling sprinkler systems would one day be required in residential homes. I laughed it off at first, but as we talked further about government regulations, lobbying groups, and insurance companies, I realized that he had a great point. A Decade ago, groups successfully lobbied to have airbags installed in every vehicle, so what is to stop them from lobbying the government to require the installation of a sprinkler system in every home? It is a safety factor after all, and the government loves to regulate our safety.

While doing some research into the topic, I came across the Home Fire Sprinkler Coalition, a nonprofit group who's goal is to educate the public on the benefits of the home sprinkler system. I gained some valuable insight from a survey they did in late 2005. Here are some interesting facts from them, and my husband:

• Each sprinkler is individually activated by heat, so a localized fire in one room will be the only room affected by water disbursement (less water damage to personal items).
• A home sprinkler system is estimated to add 1-1.5% of the total building cost to new construction. On a $300,000 home, that is roughly $3000.
• Sprinkler heads can be recessed into the ceiling and concealed from view.
• Smoke and toxic fumes are greatly reduced by quick sprinkler response and might even put out the fire before the fire department arrives on the scene.
• About 69% of homeowners believe a fire protection system adds value to their home.
• Sprinkler systems will most likely lower insurance premiums. For example, State Farm offers its customers with sprinkler systems a 5-10% discount off the premium.

While huge luxury homes with 4000 square feet or more would greatly benefit from an in-house sprinkler system, homes of 1200 square feet might not feel the need for installation. Some city codes require homes with three above ground levels install a sprinkler system on the third floor, especially if you are converting attic space into finished square feet, example being a Queen Anne Victorian historic home.

If you are thinking of installing a system into your new home, make sure to use a professional fire sprinkler company. Most states require the work to be completed by a licensed contractor.
Don't get me wrong, the availability of a sprinkler system is a great home option. It not only can save lives, but it can also reduce substantial insurance claims against loss. We plan on building a new home in the future and will definitely install a fire sprinkler system. I just hope installation never becomes mandated by the government.

Has anyone installed a sprinkler system into their home, or have you seen it in the marketplace?

More Minnesota Buyers should Look into a C.L.U.E Report before Purchasing

A great little report that can tell you more than the sellers might, but is mostly unheard of by the majority of the public, is a CLUE Report. What is a CLUE report you ask? To begin with, the acronym means Comprehensive Loss Underwriting Exchange. It is a database used by the insurance industry which includes information about any and all claims filed on a particular property.

In Florida, where I am also licensed, the report is being utilized more often due to the amount of past hurricanes. While full disclosure of any problems associated with a home is required by sellers, some sellers do neglect to inform prospective buyers if any damage has ever occurred to the home. A CLUE report will tell a buyer exactly what kind of claims have been filed against a particular property and when. Some might think such a report is not needed for Minneapolis real estate, but with hail storms, tornadoes, and fires still possible in the area, the report can be used as just another piece of information to put buyers mind at rest.

Buyers, the report can only be requested by the owner of the insurance policy, so don't try to do it yourself if you are thinking of purchasing a home. Instead, make your offer contingent upon review of the document. Consider it an extension of the Inspection Report.

Sellers, from the beginning, always disclose any and all damage & repairs that have effected the home during your ownership. If a buyer asks for a CLUE report, gladly provide one. While you might see it as an annoyance, it could just be the final key to selling your home.

{Update: I forgot to include a link where sellers can request their C.L.U.E. report. Visit www.ChoiceTrust.com for more information.}

Under the guise of public safety, the city of Brooklyn Park, MN is added to the list of 11 other local cities that require a Point of Sale Inspection before the transfer of property to a new owner. Anyone that owns a single family residence, condominium, townhome, duplex, or any other type of residential real estate is required to apply for and obtain a Certificate of Inspection from the city. (The few exemptions to this rule include a new construction model home, new construction not previously occupied, and inherited property not occupied by the heir.)

According to the city, an application fee of $150 must be paid and then it is the responsibility of the home owner to order the inspection. The entire property must be made available for inspection, with the inspector looking at compliance for all city and maintenance codes. Consider this:

• If you have a code violation, then you must fix the problem, even if you do not sell the home.
• If your home is in compliance, than your certificate is only good for 18 months. If you take your home off the market and decide to wait a few years to sell, than you must apply all over again and pay the fee.
• a temporary Certificate of Inspection might be issued if the inspector determines there is no hazardous conditions present and a buyer agrees to accept responsibility for repairs and complete them within 180 days of ownership transfer.
• Ordinance does not go into effect until September 2007.

The city is trying to "clean up" its neighborhoods and blighted areas which is noble. But the only ones really being hurt are the home owners with good properties. They are the ones more likely to sell by this new ordinance... and no matter what the city calls it, it is still a tax. My question is, what if the homeowner is just too financially strapped to make the repairs. What will the city do, refuse to let them sell? And is it fair to put the responsibility on the new buyer, who also may not have the income to complete the repairs in 180 days? More interesting is the blighted properties that do not go up for sale, are still blighted, the whole reason for this ordinance. What a waste of taxpayer money by punishing those without the problems!

How does your Luxury Agent measure up?

We all have heard of The Ritz-Carlton for it represents one of the finest luxury hotel chains in the world. You might never have stayed in a Ritz, but through their successful marketing, you know they are simply the best at providing superior customer service.

Today I learned their mission statement or credo:

"The Ritz-Carlton Hotel is a place where the genuine care and comfort of our guests is our highest mission. We pledge to provide the finest personal service and facilities for our guests who will always enjoy a warm, relaxed, yet refined ambiance.The Ritz-Carlton experience enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests."

I also learned that every employee of the Ritz must complete 180 hours of customer service training each year. Wow! Now I understand how they take such good care of their clients.

This got me thinking...how does your Minneapolis luxury real estate agent measure up to their standard? In Minnesota, only 15 hours of continuing education is required each year. 15!! Look at what the Ritz does, 180! Here are a couple of things to ponder:

• If your agent is only doing the bare minimum, do you think they are reaching their full potential?
• If your agent does not seek out additional education above and beyond what is required, do you think they have the knowledge and skills to represent you and give the best customer service?
• Has your agent sought out real estate designations and certifications, thus setting themselves apart from the vast majority of average agents?
• Does your luxury home agent have a Mission Statement? If they don't, are they running their business efficiently? If they cannot run their business, how can you expect them to run yours?
• Most affluent home owners run a business, and of course, have a business plan. Have you asked your Minnesota real estate agent if they have implemented a business plan? If they can't plan their own budget, will they be able to properly market your home?

Just a few ideas to consider next time you are interviewing an agent to market your Fine Home. Are there any questions or thoughts you have concerning what you expect out of a Luxury Real Estate Agent? Post a comment and let me know your recommendations!

Yesterday I was showing homes to a buyer...namely myself. We are in the market for a larger home, so naturally, I can easily see any home at any time because I am being very flexible for my buyer's agent, me. My client decided to look at three homes, in three different parts of the city. My client's husband had spent numerous hours the week before scouring the web for possible homes that match our taste. Oh, how excited we were to let the search begin!

House #1 looked great online. While is was quite a bit older than the other two on our list, say 20 years older, the current owners had done quite a bit of remodeling. The first thing we noticed when we drove up was the next door neighbors car collection. Wow, what it must take to service 2 minivans circa 1980, 1 beat up Chevy, and something else we couldn't quite make out. We decided that wasn't a total scar on the home, so we went inside. Now here is where the sellers lost us. As I opened the door, the lovely aroma spilled out into the snowy cold. Unfortunately it wasn't the spell of Roses, or cookies, or cinnamon apples, but the smell all real estate agents know is a deal killer, pet urine.

You have to understand, while I can see a way out of the situation, like giving the home a head to toe bath, my husband is not so forgiving. His crinkled nose tells me that no matter how great the inside looks from this point on, there is no way we will be buying this house. I convince him to go inside anyway. The sellers have done a pretty decent job...a great new kitchen, hardwood floors, and a refinished basement. However even I notice the poor tile job, the unfinished trim, and the shoddy painted walls, and I have to join my husbands prior unspoken position. We decide to move on to #2.

The 2nd home was more expensive than the last and had more square feet. With no bad odor greeting us at the door, we preceded downstairs to the beautifully remodeled lower level. Wow, this was great! It even had a huge office with french doors, perfect for me! As we ventured upstairs, thinking this was the one, we headed to the kitchen. See, I am a cook, so I am very picky about my kitchen...this one got a B, but it needed updating. I could over look this, so we headed upstairs. As soon as we started up, another wonderful odor hit us head on. No, not roses again, but this time mothballs and must. Unfortunately it had to be me to scratch the home off the list, as I am allergic to both these smells. I couldn't even continue up the stairs it was so strong! Now that my allergies are all messed up, it is useless to proceed to #3. We decide to go home to regroup and venture out on another day.

So what is the moral of the story? Sellers, please get an outside third party to smell inspect your home before you put it on the market. Do not be offended if the report issues you a citation for having a smelly house. If you do not take care of the problem now, the home will never sell. The easiest solution is a thorough cleaning...no, do not just cover it up with a spray. It only adds to the problem. Realtors, do not be afraid to tell your clients their home does not smell like roses. Offer them suggestions to improve it and tell them it will not go on the market until odor is fixed. Why waist your marketing dollars if a seller refuses to listen to you? Anyway, if your home is stinky, you won't be smelling anything green.

Once a week I go grocery shopping and on the way out grab one of those real estate magazines which list all the homes for sale. I, too, like to see what is being advertised, and I look at what my fellow Minneapolis real estate agents are doing.

While flipping through the pages, I often see a home I like and look at the description to find out the price. Lately I have been noticing that many Realtors in the Twin Cities are not putting the price of the home anywhere in the ad. How annoying! What they want you to do is call them so they can "capture" you and hopefully build rapport enough to create a sale. Now, this is a good way to prospect for clients, but if I find it annoying, and I am a Realtor, I wonder how the public feels. It would seem more logical for the price of the home to be included, that way buyers know immediately if the home is within their financial means.

Other ads for more expensive homes say "Upper Bracket". To me this means that I am obviously too poor to even think about calling for the price. If the home is 6000 square feet on Lake Minnetonka, than it would be pretty stupid if I didn't realize the price was most likely $1 Million +. Stop being "snooty" and just put the price in the ad. With more buyers shopping via the Internet, you can quickly lose someone by not including the most important information in your print ads like price.

Does anyone else find this annoying or is it just me?

The Minneapolis International Market Square

If you desire a new look for your tired room, or need to furnish your brand new home, then be sure to visit the International Market in downtown Minneapolis. A candy jar for interior design fanatics, this multi-level building has over 70 showrooms which offer every solution possible to make your home a showcase. Not just for bedrooms and living spaces, they also offer bathroom and kitchen showrooms too.

There are some rules for shopping. While it is open to the public, you cannot just pick up a piece you see and buy it on the spot. One option is to find the items that interest you, then contact your interior designer. She/he can they purchase the piece for you, sometimes at a much more discounted rate. Another option is to use the Markets buying service. Just don't forget, you can ask each shop what their buying policy is. Some will work for you without an interior designer, which means it might take less time to acquire the piece.

If you do not have a designer, International Market has a great service where they will help you locate one. You can browse their online site for a designer by type of service including, but not limited to, Historical Preservation, Lighting, Vacation Homes, and even Church design. Want to see a portfolio of a designer? Then walk through the portfolio wings showcasing photos of completed projects with bios on the designers and their work. It is a great way to get a feel of someones vision and decide if it will compliment your tastes.

Make sure to block off a couple of hours to view the various showrooms. The Market is open weekdays 9-5 and Saturdays 10-1. This summer two new showrooms will be opening featuring Cambria and Valcucine. International Market also hosts design events through out the year which are open to the public...please vist the calendar for a current schedule. Don't forget to take a note pad with you because you can easliy forget which places you have visited and what look you MUST have. Happy shopping!