The Minneapolis Real Estate Blog: April 2007

Take it from me, or anyone else you know for that matter, deciding to buy a fixer-upper and tackle the task of remodeling is no easy feat. Sure, all those infomercials out there claim you can make quick money flipping, but what they neglect to tell you about is all the headaches that come with it too.

My husband and I have done three homes - one small 1000 square foot home built in 1945 and two huge Queen Anne Victorians of 4000 square feet each. Here are some things we learned.

• Don't let your eyes be bigger than your pocket book, no matter how much you love the home.
• If that little voice inside your head is telling you to walk away, do what it says! Don't force the purchase of a home that will turn into a money pit.
• Alwaysuse a contractor. Yes, I know you do-it-yourselfers out there will disagree, but for the hassle of handling 6 sub-contractors yourself, being on the job site everyday, and making sure the city doesn't shut you down because you forgot to pull a permit, is just not worth the ulcer it will cause.
• Always get a written contract with the Contractor that is VERY specific on what the contractor will be doing for his fee. A hand shake over lunch is just plain dumb. Protect yourself!
• Always put any changes you make during the project in writing and what the cost will be. Don't make the mistake of hearing from the contractor that he doesn't "remember" those changes. It will cost you more money!
• Do not pay for the entire project up front and do not pay with cash. Create a paper trail with receipts and signatures.
• Better yet, tell the contractor you would like to pay any bills to the sub-contractors directly. The last thing you need is for the contractor to tell you he paid them, when he just pocketed the money. (We lost $5000 this way)
• Please, please, please pull the proper permits. Don't be dishonest just to save a few bucks.
• If you are not happy with the way something looks, don't be afraid to speak up. Tell the contractor to fix it, and at no cost to you. Their mistake or poor work is not your fault.
• If your contractor doesn't show up one day and is full of excuses, fire him now! If you let it happen once, he will keep taking advantage of you. Oh, and if you smell alcohol on any one's breath, get rid of them.
• Lastly, ALWAYS have an exit strategy. Know if you are going to keep the home as a rental, flip it fast, or move into it.

All of the confessions above happened to us in one way or another. While I don't know if we will ever tackle another project, I still get the urge every time I see a beautiful home hidden by dirt and debris!

Do you have any horror stories or advice to add? Let me know !

Article courtesy of my blog Minneapolis Real Estate.

I decided to start a series called "Day Trips" where I travel to local towns in MN and explore the area. It's a great way to get away and to also take the kids along for some excitement. I will probably do this every couple weeks, time permitting. There are so many interesting small towns around the Twin Cities and also along the Mississippi River that I haven't seen. Now that Spring has finally arrived, I can get out and explore!

If you have every heard of Red Wing Shoes, well, this is where they are made. The town is only a 1 hour drive from the Twin Cities. You drive through some beautiful farm country and end up on the banks of the Mississippi River. Take a lunch and eat at Baypoint Park or tour the many antique stores or the Red Wing Pottery showroom. One of the things I like to do is stroll down the residential streets and enjoy the town's numerous historic homes. They have great examples of Second Empire, Queen Anne, and Italianate. They also have great parks for hiking or for the kids to play. This year the town is celebrating 150 years of being incorportad so be sure to visit the city this summer for special events.

...well, at least according to the new issue of Midwest Living. Now some of you might think your small town should have been noted in the magazine. So I am giving you the opportunity to tell me about your town via comments. Those that nominate their town will see their town highlighted here, as long as it is a "Day Trip" from the Twin Cities. I will visit, take photos, and write a short blog about your town, with a special thanks to you! Just give me time in the next couple months to visit.

I posted this article on my Minneapolis Real Estate Blog and received a request by a reader to also include a small town on the WI side of the Mississippi. Since day trips are all about small towns you can visit in a day, I think this is a great idea to highlight river towns on the WI border as well. We all need to explore where we live and find a place to "get away" to. I look forward to suggestions!

Here are the towns that made the top 100:

• # 9. Stillwater, MN
• #13. Lanesboro, MN
• #21. Northfield, MN
• #26. Ely, MN
• #27. Grand Marais, MN
• #42. Nisswa, MN
• #44. Park Rapids, MN
• #50. Wabasha, MN
• #55. Red Wing - check out my post, Day Trip to Red Wing
• #75. Detroit Lakes, MN
• #91. New Ulm, MN
• #100. Mantorville, MN

This weeks showcase Historic Home is 318 Summit Ave.

I was going to post this home upon completion of its current renovation, but since the Pioneer Press did a fantastic article recently regarding the current owners, I decided to highlight the home early, and then come back in May for more comments when renovations are scheduled to be finished.

Built in 1893 by William H. Lightner for a sum of $24,000, the home was designed by the well known architect Cass Gilbert. Gilbert is credited with building a total of 8 homes on the Avenue. The home is a classic and simple representation of the Romanesque style, made famous by H.H. Richardson, in which the home is constructed of large, rough-cut stone. It is quite easy to recognize this architectural style on Summit Avenue in Saint Paul (approximately 12 homes were built between 1883-1893) as each of these home stands out from the common Queen Anne Victorian .

The current owners bought the home in June 2006 for $1,425,000 and are converting the home back to single family residential as it has been a multi-family home for a number of years. It sits on about a half an acre and boasts 8600 square feet, five bedrooms, and 8 bathrooms. The home has the honor of being selected as this years Showcase Home by the American Society of Interior Designers.  Tours of the completed project will run May18-June17. It will be interesting to see the finished product and what the designers have added or taken away. I am sure they will keep the beautiful leaded glass, oak and mahogany woodwork, and the grand staircase. I will let you know in a month on what I see!

...and any company for that matter that makes money.

It seems every time I turn on the TV, I hear about how some big corporation is being bashed by the media or sued by some unhappy people. I listen to what they have to say, then make my own judgement. See, that's the key point...make your own decision. Don't incorporate what someone else tells you is fact. You must do your own research to find out the truth.

Why to I love Wal-Mart? Well, to make a long story short.  I lived in Pensacola, FL when Hurricane Ivan hit us head on in September 2004. Being our first Category 4 hurricane, we really did not know what to expect when we returned home. Little did we know there would be no drinking water, no electricity, no cable, no phone, no air conditioning, and more importantly, no food. FEMA was having a hard time getting into the area and the military was trying to get water and MREs to those of us that stayed or came back early. What Wal-mart did was see before the hurricane hit, the potential need to get their stores up and running as soon as possible. They had  semi-trailers standing by with food and water for the people. They were on a mission. After 5 days of eating military rations, my local Wal-mart was open to the public before any other business. What does this mean to me? Well, for one thing, I will always give them my business, most possibly for life. (Sound familiar?) They didn't bombard me with free stuff and ads, they gained my loyalty through action. They gained my trust by looking out for me when I didn't ask for it. They got my respect when they didn't seek media coverage to highlight their good deed. The truth is, no matter how many other people bash Wal-mart for being a big "evil" corporation, I have first hand knowledge on why they are not.

How does this tie in to being a real estate agent? Well, since the housing boom, the media has portrayed all agents as greedy, unethical, make too much money, give nothing back type of people. We, too, are considered "evil" and some are currently trying to take us down and get rid of us for the "benefit of the people". The fact is, Realtors are some of the most giving people I know. We give to charities, build homes with Habitat for Humanity, and lobby for the consumer at the local, state, and national levels. 

Like Wal-mart, it is our job as professionals, to change this perception with our past and present clients by gaining loyalty through our actions, building trust through constant contact (whether they need it or not), and obtaining their respect by forgetting about ourselves and looking out for them first. Once we do this, we will be gaining clients for life.

So the one thing I want you to remember is, next time you start to grumble against another profession, criticize another's business model, or jump on a band-wagon that your friends are riding, get the facts first. Think about what our nation was founded on, capitalism, plain and simple. Remember how you have to constantly defend yourself as a Realtor and your validity in today's market...then put yourself in someone else's shoes (who you are saying is "evil" because they make money) and change your way of thinking.

Think about what it takes for you to gain and keep a client, then think about how much money a major corporation has to spend to do the same. Just because they are successful, doesn't mean they want to stomp on the little guy.  Corporations not only supply work for millions of people, but they also shell out millions to charities. (See the parallel?) And no matter what the media say about Realtors, if we weren't here, the consumer would have many more laws and taxes drafted against them. We truly look out for the consumer as a group, now lets start doing it as individuals too.

Last week I wrote a post about Minnesota's transfer tax on the deed anytime a property sells. On Luxury Homes, this can be quite expensive. Well, if the Senate Finance Committee votes the wrong way, it could become more expensive for every home owner. This Wednesday, April 25th, the committee will be voting on Senate File 442 to increase the state deed tax by 50%. That's right, 50%!

The Minnesota Association of Realtors is asking for your help. Send a letter to your state senator saying:

"Please vote NO or ask members of the Senate Finance Committee to vote NO on Senate File 442, "The Housing Solutions Act".With the real estate market going through significant difficulties it is not an appropriate time for legislators to increase the price of housing.Below are a few concerns we have with the 50% tax increase":

• A Deed Tax increase adds significant burden to those facing foreclosure or short sales. People close to foreclosure will now be further in debt because of this "housing solution." This bill raises the cost of selling for families facing foreclosure, adds significant tax burden to rental property when sold increasing rents, and ultimately makes all housing less affordable - what kind of solution is that?
• Deed Tax makes housing less affordable. By increasing the state deed tax, sellers will need to adjust their sales price up or receive less equity at closing. Increasing a tax on housing only raises the price of housing to everyone.
• Deed Tax is Regressive. Federal Government abandoned this type of tax in 1976 because it was felt that the tax was discriminatory and inequitable.
• Minnesota has the nation's highest home ownership rates. More Residents of Minnesota own homes than in any other state. Government should focus its attention on prioritizing current revenues already being generated by the economy and not burden property owners and businesses with more hidden, regressive taxes.

I feel any "Housing Solutions Act" that raises taxes on homeowners is only solving the governments failure at spending money wisely, buy squeezing residents pocket books even more. Instead they should find ways of cutting the fat and frivolous spending too common in the state government. Hopefully this bill is defeated, or else the state Senate might see a lynch mob on its doorsteps.

This weeks follow on to the Minnesota Homes in Foreclosure series explains the Methods of Foreclosure found in Minnesota. Not all states have the same methods, so check with your local agent for more information.

Remember that the reason for a mortgage is to give the lender the right to foreclose, have the property sold, and the debt paid out of the sale proceeds. So upon default, the bank has three options:

 Foreclosure by Advertisement - also known as the power of sale method, this is the most commonly used method in Minnesota. It allows the bank to conduct a foreclosure and sheriff's sale without taking the matter to court. The property must be advertised by publishing a notice in a newspaper in the county where the home is located for six weeks prior to the sale. Also, at least four weeks prior to the sale, a copy of the notice must be sent to the homeowner.

Judicial Foreclosure - if a mortgage does not contain a power of sale clause, then the mortgage must go to court. The lender must file a lawsuit in the county where the property is located. An attorney will further record alis pendens, making the judgment of the court binding on all persons that have interests in the property. The judge will then order the sale of the property.

Deed in Lieu of Foreclosure - some borrowers might have the option of giving the deed and title directly back to the bank, rather then going through the foreclosure process. Some banks might except this as it saves them time and money, but they may decline and proceed with #1.

Be forewarned that in some cases, the proceeds of a foreclosure may not cover the full amount owed to the bank. The lender might want to seek what is called a Deficiency Judgment in order to get the full amount owed. However, know that a DJ is not allowed after the Foreclosure by Advertisement method if redemption periods are 6 months or five weeks. If the redemption period is 12 months, then it is possible to get a DJ, or else the lender must close by Judicial Foreclosure.

I know this all might be confusing, so if you are facing foreclosure, my best suggestion is to seek the advice of an attorney. Everyone has different circumstances. Check back next week when I post the third instalment on What Foreclosure Means for You. Also read part one of this series about pre-foreclosures and redemption periods.

Visit Bandana Square in Saint Paul

My son loves trains. Loves them. Anytime he sees Thomas the Train, he gets really excited and just has to grab it. If we are driving and see a train, we must stop, roll the windows down, so he can see and hear it. Of course, we love to oblige him because it is just too cute.

Last week I took my Wisconsin real estate class in St Paul, at a complex called Bandana Square. It is an old train station used at the turn of the century, and is currently used mostly for offices and a Best Western Hotel. The complex is on the National Registry of Historic Places. The Children's Museum was located here a few years ago too. It is a fantastic place to visit and see what an old train complex used to look like. Even though offices now reside inside, much of the original internal architecture is still present in the rafters and the exterior facades are in fantastic condition.

Take you kids to visit the Twin City Model Railroad Museum. It has scaled down displays of model trains and is a treat to see. If they love trains then it will be very hard to get them out of the museum. They also have a couple Thomas the Train activity tables where kids can play while you look around.

Well, it looks like we could be having a funeral very soon. Let's all cross our fingers and pray for it to die. I'll be the first to shovel some dirt over the coffin...and let's make sure we dig a really, really deep hole so it cannot resurrect itself in the future.

What am I talking about? For those of you who have never delt with a foreclosure or short sale this might be news. See, when your client short sales their home and sells if for $150,000 instead of the $200,000 they owe, the bank issues a 1099 to the federal government. The government sees you as actually getting $50,000 (the difference between the two numbers) and sends you a tax bill. That's right. You got stabbed in the gut with a really large knife when you lost your home or had to short sell it, then the government steps in and twists it back and forth just to make sure it hurts a little more.

But now the National Association of Realtors is very close at getting the Federal Government to stop twisting the knife. The House of Representatives has introduced H.R. 1876, the Mortgage Cancellation Tax Relief Act, which will no longer tax individuals when they have had a part of a mortgage loan forgiven or have been forced to foreclose because of their inability to pay their mortgage.

Let's pray that this bill passes. With the increase of foreclosure and short sales being seen all over the country, it has the potential to affect thousands of home owners by ridding them of one financial burden being replaced by another.

Finally, a court is ruling in favor of a real estate company. Remember the guy who has been going around the country, calling brokerages and demanding to be taken off their internal Do Not Call list? If they didn't comply he threatened to take them to court, but if you paid him $5000, he would quietly go away. Sounds like a scam to me.

Well, Mr Swanberg finally had a brokerage tell him to put up or shut up. According to a post on Realtor.org, a Remax brokerage in Oregon decided to sue him.

According to the article, "A Minnesota federal court has entered an injunction against Ryan Swanberg ("Caller"), who had threatened real estate brokerages across the country with litigation last fall for not complying with his request for their company "Do Not Call" policy within five days of the request. The injunction prohibits the Caller from "citing or relying upon the TCPA or its regulations as grounds upon which to make demands, seek payment of money or the compromise of any claims whatsoever".

So if he tries to pull this stuff on you, tell him to take a hike.