The Minneapolis Real Estate Blog: September 2007

Selling real estate is hard enough, but when you choose to sell real estate, while raising kids at the same time, it is near impossible. I have two kids under two, so getting together with a client takes alot of planning. It never fails that someone starts running around refusing to put on his shoes when it is time to leave. I have to leave an hour early sometimes to see a client so I make sure I am not late!

Watch this video next time your kids send you to the edge of the cliff. After a long day last weekend of battling with our two year old, my husband found this video on YouTube and it made us feel instantly better knowing that we are not alone.

This guys got talent and his lyrics are spot on!

This weeks showcase Historic Home is 260 Summit Avenue.

Built in 1902 by the famous Clarence Johnston, the home was designed for Louis W. Hill, the son of James J. Hill, who's own large mansion was just a few houses down the street.

As you can see, it looks as if there are two homes in front of each other. The original house at the back with the gambrel roof was built in the Georgian Revival style in 1902. Needing more space, the front addition was added in 1912 giving four guest bedrooms and bathrooms on the first floor, and a grand ballroom on the second level. The front portico was saved and moved from the original spot to the front of the new addition. Combined together, the home has a total of about 25,000 finished square feet!

The home has had many uses over the last century. When Louis Hill died in 1948, the home was sold to the Roman Catholic educational guild, and then bought in 1961 by the Daughters of the Heart of Mary and used as a retreat. It went mostly untouched until 2001 when it was purchased by a local family and restored to its original splendor (at a purchase price of $1.7 Million). They currently use it as their primary residence and rent space out for special events.

Local history has F. Scott Fitzgerald attending a party here once. A costume ball held at the mansion even found its way into his story, "The Camel's Back".

I have had some recent requests about how the condominium real estate market is doing here in the Twin Cities so I read over the data supplied by the Minneapolis Association of Realtors to get an update. There are a couple different categories to view to see the big picture, but I will warn you, the picture can be seen quite easily in the stats.

Housing Supply Index : There are over 3400 units for sale right now, with 2285 of those being previously owned condos, up 6.3% from 2006. If you were to try and sell everyone of these, without adding to the inventory, it would take almost 11 months to do so. This time last year, the magic number was 7 months, so we have increased selling time by 40%!

Home Sales : When looking at the real estate data and seeing what is being bought, condominiums do not top the list. In fact they are the least desired type of property right now, with closing this last year being 23% less than a year ago. The best thing selling right now is single family homes. Not good news for condo owners needing to dump their condo in downtown Minneapolis or St Paul.

List Price vs. Sales Price : Any condo owner looking to sell really needs to take a hard look at what a unit is actually selling for and compare it to the original list price. When a unit hits the market now, a sale hinders on the entry list price. Price too high from the get go and most likely you won't be selling for a while. Price it ahead of the market and you have a much better chance of getting rid of the unit. Currently, resales are only getting 94% of the original asking price.

Average Sales Price : Real estate is local, even for condos, so when we take an average of the Minneapolis condominium market, we group everything together. So far this year, builder of new units are seeing the greatest drop in sales price, about 9.2%. The average new construction unit is around $259,000, while the average price for an owned condo is about $171,000.

The graph above breaks down the inventory of condominiums into price ranges. If you want to check out a particular range, then this is the place to look. Condos in Minneapolis are the hardest real estate to sell. Builders increased new construction by so much that now there are too many for sale, and not enough buyers. Those that do need to sell because they bought at the height of the market when it was cool to do so, are now paying the price by not making any money on their unit. Some are breaking even, but others are selling for less than the purchase price or going into foreclosure.

I hate to be the bearer of bad news, but such is the life of real estate. Things will get better once the amount of inventory has decreased and the doom portrayed by the media is gone. Just keep your chin up and hold for the next couple of years.

Blogging is now the IT thing to do. Just look at Active Rain...we are now approaching 50,000 members. When I started at the beginning of the year, we were around 20,000. 

If someone could write a book about blogging etiquette, maybe we should make it mandatory that everyone who wants to join the blogging world take the course, as a requirement. Maybe we could even get CE credit for it. It would certainly help with my latest problem I have been experiencing on my outside blogs.

This last week I have been receiving SPAM in my comments. My platform is Blogger who has a system set up to help prevent this, but it doesn't always work. Even though there is no rule book on blogging etiquette, there are well known courtesies, especially if it is a professional blog like real estate.

The recent offender is another real estate agentwho has left at least 5 comments, on two of my blogs. Normally this wouldn't be a problem as I love comments from my readers. However it does become a problem when each message is the same, with a link to his site. He is obviously trying to get search engines to follow his site and give him some SEO (search engine optimization). The only problem is that he is committing blogging no-no number one by spamming me.

My only solution is to reject his comments.

Some people would go ahead and publish his comments, not caring if they are SPAM or not. Bloggers get really hung up on how many comments they receive. But giving into a spammer is not the way to go. So whetheryou have a blog here on AR or an outside one, don't let comments rule your life. Comments are not your main concern, but posting quality content should be. If you get SPAM like I described, don't feel bad by deleting their comments. It will make you look more professional by not cluttering a good post with Bologna.

By the way, is there a book on blogging etiquette?

Also, do search engines look at comments for SEO?

Many people in Minnesota have never heard or RESPA, especially when they are completing a real estate transaction, but it is very important to know what your rights are under it. It is a federal law so states, and cities, like Minneapolis, are not exempt from its rules.

The Real Estate Settlement and Procedures Act was enacted by Congress to keep consumers from unnecessarily high settlement charges. Some companies were abusing people and getting as much money out of them as possible. Here are some things that the Act covers:

• Prohibited Fees - It is illegal for anyone to pay or receive a fee, kickback, or anything of value for referring a real estate client to a particular closing company or business. For example, a title company cannot give me $100 for referring business to them.
  
• Fee for Work- anyone performing work on a closing, like a lender, lawyer, title company, etc can charge a fee for their service. Only when someone tries to collect a fee for doing nothing is it a violation of RESPA.

                                                                                    RESPA Disclosures

There are also disclosures that must be produced during and after settlement. These protect the consumer by keeping them informed at all times on what is "going on" with their loan and the entire closing process.

• Good Faith Estimate - Anytime you apply for a loan, the lender is require to provide you with a good faith estimate of settlement charges you will most likely pay. If a lender refuses to give you one, red flags should go up and you should walk away as fast as possible.
  
• Servicing Disclosure Statement - a lender must tell you in writing, when you apply for a loan, if anyone else will be servicing your loan
  
• Affiliated Businesses - if a lender, title company, or brokerage is affiliated with anyone who will be handling your closing, they must disclose this to you in writing. Many times businesses are owned by the same parent corporation.
  
• HUD - 1 Settlement Statement - it is law that you must be presented with your settlement statement, which lists all the final charges, 1 business day before the closing date. I see many companies violating this rule and getting the document to the consumer the same day as closing. When representing my clients, I make sure they get it 1 day prior no matter what.
  
• Escrow Account Disclosure- most lenders require that an escrow account is established for tax and insurance monies and you will have to pre-pay for two months worth at closing. With in 45 days of closing, you will receive a document that lists all your expected payments for the next year.

One of the best things you can do is ask your Minnesota real estate agent if you have any questions about disclosures you receive during settlement. Your agent will also review the HUD-1 before closing to make sure you are being charged correctly. Here and there I have found mistakes on the HUD that have saved my clients a couple thousand dollars. Another good reason to use an agent!

Picking the Lot

So anytime you decide to build, one of the most important factors is location. Not only do you have to decide if the neighborhood will work for you, but you have to pick out the exact lot you want to live on. Many things can affect your lot decision:

• Direction the House Faces - think about how the home will sit on the lot with regards to the sun. East-West facing means you will get direct sunlight in the morning and evening, possibly causing a larger energy bill in the summer to cool the house.
  
• What or Who is Behind the Lot - Will there be other homes behind your lot? Is there vacant land like a corn field that could be built on in the future? Take into consideration whether you can live with what is behind you. Vacant land always has the possibility of being built on, so never believe when someone tells you it can "never" be built on. Zoning laws change over time.
  
• Street or Cul-de-Sac - If you have children, living on a cul-de-sac might be more appealing for safety reasons. Look and see if the street carries heavy traffic during the day or during rush hour, which might require you visiting the house a couple times.
  
• Trees or Clean Slate - Decide whether you want a treed lot or one that has been fully cleared. Many developers just cut everything down, but you can ask for them to leave select trees. Older trees add more shade and are already established when compared to new landscaping.
  
• Builder Premiums - If the builder thinks a lot is more desirable, they might add what is called a "premium" to the lot. This can be anywhere between a couple thousand to tens of thousands of dollars.
  
• Size of Lot - some people want a small yard so they have less work. Others like a couple of acres to give them more privacy. One of the most important factors is if the lot is big enough for your home. Talk to the builder and look at the various possibilities on where the home will sit. Don't forget to ask about set back lines and any easements that might run through the property.
  
• Lot Location - is the lot near any commercial businesses, does it back up to a retaining pond, does it sit off a busy road with lots of noise? Do larger power lines run along the back lot line? These are just a few things you should think about as they could affect future resale value.

Ok, so what did we do? This is a new home construction series about the home we are building after all. Well, check my follow up post to learn more.

While not exactly a historic home, the Lakewood Cemetery is one of the best preserved examples of historic Victorian design. Founded in 1871, local affluent society members created the park which consists of 250 acres of land. They wanted an upscale location where the local affluent could be buried. Though a cemetery, it doesn't feel like one. It almost has a romantic feel, with its gentle, winding curves, tall trees, and views of Lake Calhoun.

Located in the historic area of Lake of the Isles and Lake Calhoun, the cemetery is nestled between million dollar historic homes in Minneapolis. As soon as you enter, beautifully carved monuments cover the grounds: Goddess looking figures, obelisks, temples, etc. Some very famous people are buried here including:

• Hubert H. Humphrey - United States Senator of Minnesota, 38th Vice President of the United States under Lyndon Johnson
  
• John S. Pillsbury - founder of Pillsbury and Company, Governor of Minnesota

The beautiful building in the photos is the Lakewood Memorial Chapel, designed by Harry Jones. It was built in the Richardson Romanesque style, with influence from Byzantine and was modeled after the Hagia Sophia in Istanbul. It is said to be the only surviving example of Byzantine design in the United States. The park is truly inspiring and is a wonderful place to stroll.

The park is open to the public daily until 7pm, with the ability for self guided tours.

Details for the Southwest Minneapolis Real Estate Market

Due to Minneapolis encompassing a large area of real estate, the local Realtor association has created 11 areas in Minneapolis in order to better organize the sale data.The Southwest region is denoted by the number 309 in our multiple listing system and includes the Lake Harriet area .Following is some year-to-date (YTD) sales information.

Average Sales Price : YTD the average sales price is $363,370. In 2006, it was $344,448. Surprisingly home prices in the Lake Harriet area have increased 5.5% this last year. Good news indeed! 

 % of Original List Price Received : currently sellers are getting 96% of the list price, where in 2006, sellers were receiving just 96.8%. Prices are holding steady and sellers are doing pretty well compared to other parts of Minneapolis.

Average Days on the Market : If you are a seller in the southwest region, you are doing quite well. Currently it is taking only 113 days to sell. While this may seem long when comparing days on the market for 2005 and 2006, it is actually more of what a normal market should bare.

New Listings vs. Closed Listings : YTD there have been 1167 homes listed for sale down 19% from 2006. At the same time, only 558 have closed this year, which is down 14.8% from 2006! While you hate to see sales down, this is one of the best selling areas in Minneapolis.

As you can see, the Lake Harriet real estate market is holding it's own this year. While many news stories report that the market is sour all over the Twin Cities, this is just a generalization. Real estate is truly local, even down to specific neighborhoods.

 Look for more updates every couple months as the new data is released so you can get a better view of how the market is progressing as the year goes on!

I am a big fan of the Back to the Future movies. Reading an article today by the Real Estate Journal made me think back to a scene in the second movie. Marty is in the future with Doc and sees an antique store. He goes inside and looks into buying a Sports Almanac. While he is leafing through it, the sales lady shows him a Dust Buster and comments how it was used in the "past". I always laugh at this scene as it makes me wonder what will become an antique in my lifetime.

Apparently one item will be antique before I could even imagined. Start saving some of your incandescent lightbulbs...they are about to become history. According to the article, "The House and Senate are working on legislation that over the next seven years would phase out the conventional light bulb, a move aimed at saving energy and reducing man-made emissions believed linked to climate change". I won't get on my soapbox and tell you how much I hate something like this being "legislated" into law. In my opinion, if the people really want lower emission light-bulbs, it will happen all on its own. It is already starting to happen. We just don't need the government making something into law that the free market is already handling quite well. There, I've said my peace.

The bill will have all conventional bulbs gone from the world market by 2014. By 2020, all lighting, no matter if a lamp in your house, or a ceiling light in your office, will have to be the kind "that can only be met by the compact fluorescents or other technologies that can match their efficiency". Bye-bye lightbulb. I will miss you. Of course the stores that sell lamps are loving this because everyone will have to buy new lighting sources because their "old" bulb lamps will no longer "work". Oh, the power of lobby groups.

So my question is, once the current bulb is gone, what will happen to the jokes about how many people it takes to screw in a light bulb? Or what object will be shown when an idea is created? Only the government could ruin all our fun.

An article appeared in the Real Estate Journal today which provides a valuable lesson to home owners thinking of remodeling a bathroom or kitchen in the near future.

The author, Jeff Opdyke or the Wallstreet Journal, decided to remodel their bathroom, a project that was to be their first. They knew they wanted an Asian theme with lots of slate. What they forgot to do though was thoroughly research how much their dream bathroom was going to cost them. After all was said and done, the project ran over budget by 75%!

After watching the video Mr. & Mrs. Opdyke made of their experience, a couple things came to light which could be the reasons for their costly expense.

(Photo Courtesy of cbmd on Flickr)

1. They failed to research the cost of completing a "themed" project. Themed rooms always cost more. Slate tile is quite expensive, especially if you request the contractor design a pattern on the floor. Also adding unique faucets, bowls, cabinets, etc, will quickly run up the price tag.
   
2. They neglected to take charge of the project. Once the contractors were in completing the work, the owners became doormats. Instead of telling the contractors the way it was going to be, they allowed them to dictate how the work was going to be completed. The contractors obviously didn't stick to the budget, and if a question was raised about it, the contractors pretty much told the owners they "had" to pay the expense. What the owner's should have done was put their foot down and held the contractors to their contract.
   
3. It takes two to supervise a remodel. One thing I have learned through rehabbing a couple of homes with my husband, is that it works out better if both spouses are involved. In this home owner's case, the husband pretty much took over dealing with everything and left the wife out in the cold. This mistake cost them dearly as the husband could have kept on track had he consulted with another party, his wife. My husband and I approached ours by having me in charge of the design, him in charge of the budget, and both of us making final approvals on everything in between...a sort of check and balance if you will.

Probably the number one thing to remember is to research, research, research. Look at the space you have and come up with multiple ideas on how to remodel it. Get quotes from different sources with a time line for completion. And for God's sake, GET IT IN WRITING!