Confusion Over Contingent Offers

Confusion Over Contingent Offers

 Buyers and sellers differ on their view of offers that are contingent on the sale of the buyer’s home. Currently in Chisago County there are only 3 listings that are sold contingent on the sale of the buyer’s home. No doubt there have been many more offers submitted that have been rejected by the sellers.

 One buyer that I worked with wanted to find the perfect house before putting her home on the market as she didn’t want to sell her home until she knew she had a place to move. She was not qualified to purchase another property until she sold her home. I explained the risk involved with a contingent offer, as if the sellers accept her offer they will continue to market the property to try to find a non-contingent offer. If the sellers do receive another offer, they can bump her offer and accept the other one.

 Once a contingent offer is accepted, the listing status on the MLS is changed to reflect the contingent offer. This draws the attention to savvy buyers that it is a good property which they can bump, or it can cause confusion to buyers that think the property is sold so they don’t go see it.

 In order for the buyer to remove the contingency for the sale of her home, she would need an accepted purchase agreement on her home, by a pre-approved buyer, that is not contingent on anything other than financing.  This could take at least two weeks to get through an inspection contingency, even if her home sells right away. This allows plenty of time for another buyer to bump her.

 Knowing all of this, the buyer still wanted to submit an offer contingent on the sale of her home. The offer was for full price, as it was the first day on the market. The seller did not accept the offer because they had several other showings on the first day, and they feared if the listing was marked sold on a contingency the showings would slow down.

 My advice was to put her home on the market right away, price it competitively, and hope that the home she wanted to buy would be available when her home sold. After two weeks the buyer’s home sold and she submitted a new offer for $25,000 less than her original offer.

 In hindsight the seller would have been better off accepting the contingent offer as it was for full price and the buyer had a good home, that was priced to sell quickly.

 An experienced agent can provide you with the best advice on contingent offers for your home.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

There’s Still Time to Sell Your Waterfront Home!

There’s Still Time to Sell Your Waterfront Home!

 According to the Multiple Listing Service, in July there were 18 new waterfront listings in Chisago County, 13 sales that are pending or closed, and 6 more under contract with a contingency. The median marketing time was 20 days and many waterfront homes sold in multiple offers. There is very little inventory for buyers to choose from and sales are down from last year due to the lack of new listings/inventory.

 The highest number of new waterfront listings for 2017 was in March with 20 new listings, but there were only 8 waterfront sales. April had 16 new waterfront listings and 21 sales. June had 12 new waterfront listings and 11 sales.

 The best 3 months so far, this year selling water front homes were April, June, & July. August looks to be another good month. The median price for the Chisago County Waterfront homes was $312,450 with 47 days on the market.

 The highest priced waterfront property that has closed this year was on Chisago Lake for $535,000, but there is one pending sale on Green Lake for more. The lowest priced waterfront house, was the only sale on South Lindstrom Lake this year for $138,500. There were 2 condo sales on North Lindstrom Lake for $51,000 and $72,750.

 Green Lake had the highest median sale price of the Chisago County lakes/river at $415,000 with 11 sales. North Lindstrom has the lowest median sale price 3 sales and a median price of $197,750 excluding the 2 condo sales mentioned above.

 There were 10 homes sold along the Sunrise River with a median price of $238,500. Chisago Lake had 4 waterfront sales with a median price of $350,000, North Center Lake; 6 sales with a median price of $307,500. South Center; 6 sales with median price of $310,000. For this article, I focused on waterfront with at least 3 sales, but Kroon Lake gets an honorable mention with 2 sales and a median price of $441,750. The marketing time for those 2 sales averaged 429 days.  

 If you are thinking about selling your waterfront home, contact an experienced waterfront agent to get a personal home evaluation today.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Home Equity is Up

Home Equity is Up

Many sellers think they still don’t have equity in their homes and are surprised to find out they can sell their home and walk away from closing with a substantial check. Foreclosures are down, but there are home owners that get behind in their mortgage payments, receive a foreclosure threat, and give up. If you know anyone in this situation, they should talk with an experienced real estate agent as soon as possible. There are more options available earlier in the foreclosure process than later, and it is sad to see a homeowner lose their equity because of a job loss or change in life.

Many septic systems need to be updated to sell, and this has been holding some sellers back. There are options available where the seller doesn’t need to come up with the cash before closing, as some sellers don’t have $10,000-$20,000 to pay out of pocket.

The Chisago Lakes Area has a lot of seniors looking to move off the lakes and into one level living with less maintenance and less stairs, but they are not ready for a nursing home. Many of these homeowners are in their late 80’s and 90’s and their homes may have laundry and mechanicals in the basement, the bedrooms maybe upstairs or the bathroom isn’t near the bedroom. Now that they have the equity to sell and purchase or rent a one level home, they are finding there isn’t enough inventory available for them to move to.

With home prices up, it is a great time to sell your home, but it may sell quickly and you may be hard-pressed to find a place to move. It is a good idea to explore your options before you put your home on the market. Find a community where you would like to live and determine if it is possible to purchase or reserve a home before you sell.

An experienced real estate agent can estimate your selling proceeds and give you options on where to move and how to best accomplish your goals.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Open Houses Are a Success!

Open Houses Are a Success!

 There are very few open houses in July as many agents as well as buyers are vacationing. Last weekend there were only two open houses listed on the MLS in zip code 55013 and both were mine. I thought I must be the only crazy agent in town until I sold both to visitors of the open house. The previous weekend, I had the same success at another open house.

There are many differing opinions when it comes to the value of an open house to sell your home. Most sellers don’t like them and fear that that nosey neighbors will want to check out their home and they feel an invasion of privacy. The upper bracket home owners have additional fears that non-qualified buyers will come to the open house and they may also have security concerns over valuable art or other collections.

 Some real estate agents love open houses and some refuse to do them as they see them as a waste of time. Some sellers and real estate agents don’t see the value in an open house to sell the home but rather see it as an opportunity for the agent to attract new buyers to work with that are not interested in purchasing the home being held open.

 According to the National Association of Realtors, 87% of today’s buyers their home searching on the internet as they like to educate themselves on the real estate market before they look at homes with a real estate agent. Once they find homes of interest on the internet they drive by homes to check the curb appeal, the neighborhoods, and home values. They love the opportunity to visit open houses to help determine what they want to buy and sometimes they purchase the home being held open.

 The benefits of an open house are: internet exposure as many of the major real estate websites color code the listings that have an upcoming open house bringing added attention to the listing, the listing shows up on open house lists, buyers tend to go farther on their own than they would with their own agent, the listing agent knows more about the property and the neighborhood than the buyer’s agent so we have an opportunity to sell features and benefits that the buyer may not notice with their own agent, we get valuable feedback directly from the buyers, open house signs bring more attention to the listing and neighbors may call someone that may be interested. Even if buyers don’t show up to the open house we see a bump in internet activity on the listing and showings typically increase after the open house.

 Every home requires a unique marketing plan and an experienced real estate agent will provide the best plan for you.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Limit Spending When Selling Your Home

Limit Spending When Selling Your Home

 Sellers often ask how much they should they spend to improve their home to get top dollar when they sell. In most cases, my response is, as little as possible. I am all for cosmetic updates, like painting, cleaning, flooring, staging, and deferred maintenance items, but not major remodeling. This week I met a seller that did just the opposite, based on the advice of a stager and contractor. Of course it was in the stager and contractor’s best interest to do the remodeling for the seller.

 Before you do any remodeling you need to know what your home would sell for “as is”. In this case, it was easy to determine, as it was a rambler with 3 bedrooms, 2 baths, and a 1 car garage. There were 4 identical homes that sold in the neighborhood in the past few months. They ranged in price from $210,000-$217,000 and they were all in similar condition to the subject property. The average sale price of the 4 homes was $216,000 so I would assume the subject property is worth at least $216,000.

 The seller spent $28,000 on the kitchen, 2 bathrooms, painting, and flooring. It took 3 months to complete the work and the seller did a lot of the labor himself, which is not reflected in the $25,000. They bought furniture to stage it, and the property looked great!

 To break even they needed to sell it for $244,000. They put it on the market for $249,900 and sold quickly for $249,900 with the seller agreeing to pay 3% towards the buyer’s closing costs, which means the net sale price to the seller is $242,403, less the seller’s closing costs.

 The seller felt really good about getting such a high price, and didn’t understand that he actually lost, $1597 plus his own labor. Another problem is the appraisal. The property has to appraise for the purchase price of $249,900 in order for the buyer to get financing. No doubt the appraiser will give some credit for the beautiful remodeling, but probably not $34,000 more than the average price of the comparable sold properties, which means the seller will end up losing even more, as he will have to drop the price to match the appraisal price in order for the buyer to get the loan.

  An experienced agent can provide you with staging and remodeling advice to help you get the highest return for your home.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Open House is Valuable Tool

Open House is Valuable Tool

 There are many differing opinions when it comes to the value of an open house to sell your home. Most sellers don’t like them and fear that that nosey neighbors will want to check out their home and they feel an invasion of privacy. The upper bracket home owners have additional fears that non-qualified buyers will come to the open house and they may also have security concerns over valuable art or other collections.

 Some real estate agents love open houses and some refuse to do them as they see them as a waste of time. Some sellers and real estate agents don’t see the value in an open house to sell the home but rather see it as an opportunity for the agent to attract new buyers to work with that are not interested in purchasing the home being held open.

 According to the National Association of Realtors, 87% of today’s buyers their home searching on the internet as they like to educate themselves on the real estate market before they look at homes with a real estate agent. Once they find homes of interest on the internet they drive by homes to check the curb appeal, the neighborhoods, and home values. They love the opportunity to visit open houses to help determine what they want to buy and sometimes they purchase the home being held open.

 I believe open houses are an important part of a marketing plan for sellers. This past weekend I held 3 of my listings open, and most of the visiting buyers were working with another agent, but the advantage to my sellers was my neighborhood expertise. Many buyers are working with a friend or relative from outside of the area that have no knowledge Chisago lakeshore, acreage, well and septic systems, etc. It is easier for an experienced agent to sell the visitors on the value of the home listed compared to some other properties they may have seen.

 The benefits of an open house are: internet exposure as many of the major real estate websites color code the listings that have an upcoming open house bringing added attention to the listing, the listing shows up on open house lists, buyers tend to go farther on their own than they would with their own agent, the listing agent knows more about the property and the neighborhood than the buyer’s agent so we have an opportunity to sell features and benefits that the buyer may not notice with their own agent, we get valuable feedback directly from the buyers, open house signs bring more attention to the listing and neighbors may call someone that may be interested. Even if buyers don’t show up to the open house we see a bump in internet activity on the listing and showings typically increase after the open house.

 Every home requires a unique marketing plan and an experienced real estate agent will provide the best plan for you.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Real Estate Sales Change with the Season

Real Estate Sales Change with the Season

 New listings were up 16.6% for Chisago County in May 2016 over May 2015, according to the Minneapolis Area Association of Realtors, however, closed sales were down 6.4%. This is most likely attributed to our warm winter weather, which brought the buyers out early for 2016. Closed sales in April were up 17.4% over April 2015. Closed sales are based on purchase agreements that were written approximately 45-60 days before closing.

 The inventory of homes for sale in Chisago County was at its highest point for 2016 in May. A lot of buyers weren’t ready to put their homes on the market until May as it took time to get updates complete, the landscaping looking good, and they prefer to move over the summer. Many sellers also saw an opportunity to take advantage of the media’s hype of the “seller’s market” with homes selling in multiple offers over list price due to low inventory. The problem with listening to the media hype is that they are reporting on historical data (closed sales) and not the current market activity.

 We started 2016 with low inventory, which was down 18.2% in January, 11.3% in February, and 11% in March compared to the inventory in 2015. It stabilized in April in and increased in May. The low inventory months are typically best for the sellers.

 With more inventory comes lower prices, which moves us into a buyer’s market instead of a seller’s market. The median sales price dropped from $230,000 in April 2016 to $210,000 in May 2016. This means there were more options for buyers, more negotiating, and lower prices for sellers.  

 This is not all bad news as the inventory for May 2016 was still below the inventory for May 2015 by 19.6% and our median sale price year to date was up 10.7% over 2015 from $189,700 to $210,000. The average list vs. sale price was at 96.3% through May 2016.

 Now that we are in our prime vacation season for the area, we should see an increase in waterfront home sales and acreage as more buyers visit the Chisago Lakes Area and fall in love with our wonderful community!

 An experienced real estate agent can provide you the current market data to help you determine if now is a good time to sell or buy your next home.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Out-House Loses Grand-Fathered Status at Time of Sale

Out-House Loses Grand-Fathered Status at Time of Sale

   This week I met with some homeowners that have a seasonal cabin on Green Lake with a grand-fathered out-house. Like many homeowners they thought they could sell it as a cabin with an out-house, but that isn’t the case. When they sell, they lose their grand-fathered status and they must meet the Chisago County Sewage Treatment System Standards.

 This particular lot is not deep enough for a septic system with a drain field, so their option is a tank, which may need to be pumped frequently, depending on their usage. They can keep the out-house and put a septic tank under it and connect the well water to the out-house, but then they would need to install a second tank for the house if they want water going to the kitchen. The other option is to not have water going to the house and pump water from the well and carry it into the house.

 This cabin is in excellent condition so it doesn’t make sense to tear it down, and in my opinion, the best option would be to eliminate the out-house and convert the cabin to a year-round home with a bath and full kitchen with one septic system. Either way it will be expensive, but the future value will be better as a year-round home.

 I have another client purchasing a home on Rush Lake where the 20-year-old septic system failed the compliance inspection and the seller has opted for a septic box instead of a septic mound because the box takes up less space and it is less expensive. The treated cedar box will sit in the front yard and will be approximately 5’ high x 12’ wide x 28’ long. Luckily this is a wide lot so it won’t be directly in front of the house. This system will cost the seller about $13,500.

The Chisago County Sanitarian is extremely helpful and knowledgeable regarding sewage treatment systems. One of my clients was lucky enough to receive grant money earlier this year for a mound replacement.

 If you are thinking about selling in the near future, get your septic system inspection scheduled the next time you have your tanks pumped and keep your compliance certificate. Septic systems are not normally inspected in the winter as the ground needs to be thawed, spring road restrictions cause delays, and contractors are extremely busy trying to catch up in late spring and early summer.

 An experienced real estate agent can answer questions about required inspections, and can help you plan your next move.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Do Open Houses Work?

Do Open Houses Work?

 There are many differing opinions when it comes to the value of an open house to sell your home. Most sellers don’t like them and fear that that nosey neighbors will want to check out their home and they feel an invasion of privacy. The upper bracket home owners have additional fears that non-qualified buyers will come to the open house and they may also have security concerns over valuable art or other collections.

 Some real estate agents love open houses and some refuse to do them as they see them as a waste of time. Some sellers and real estate agents don’t see the value in an open house to sell the home but rather see it as an opportunity for the agent to attract new buyers to work with that are not interested in purchasing the home being held open.

 According to the National Association of Realtors, 87% of today’s buyers their home searching on the internet as they like to educate themselves on the real estate market before they look at homes with a real estate agent. Once they find homes of interest on the internet they drive by homes to check the curb appeal, the neighborhoods, and home values. They love the opportunity to visit open houses to help determine what they want to buy and sometimes they purchase the home being held open.

 I believe open houses are an important part of a marketing plan for sellers. This past weekend I held open houses on six of my listings with price points ranging from $164,900 to $1,195,000. The approach is different for the upper bracket listings as the open house is marketed on the internet only, there are no open house signs, and the open house is limited to an hour and a second agent is present.

 The benefits of an open house are: internet exposure as many of the major real estate websites color code the listings that have an upcoming open house bringing added attention to the listing, the listing shows up on open house lists, buyers tend to go farther on their own than they would with their own agent, the listing agent knows more about the property and the neighborhood than the buyer’s agent so we have an opportunity to sell features and benefits that the buyer may not notice with their own agent, we get valuable feedback directly from the buyers, open house signs bring more attention to the listing and neighbors may call someone that may be interested. Even if buyers don’t show up to the open house we see a bump in internet activity on the listing and showings typically increase after the open house.

 Every home requires a unique marketing plan and an experienced real estate agent will provide the best plan for you.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.

Student Loan Debt Delays Homeownership

Student Loan Debt Delays Homeownership

The National Association of REALTORS® (NAR) teamed up with American Student Assistance®’s (ASA’s) SALT® consumer literacy program to conduct a survey of student loan borrowers who are current in repayment. Of the respondents 71% cite student loan debt as the factor delaying them from buying a home.

The U.S. currently has a student debt load of $1.3 trillion, which accounts for 10 percent of all outstanding debt. As the magnitude of student debt continues to rise the homeownership rate falls, especially among young people. Among the respondents 39% owe $30,000 or less, 48% owe between $30,000-$100,000 and 14% owe more than $100,000. Only 55% of student loan borrowers are current in repayment.
 
Of this group only 18% are homeowners, 78% say they can’t save for a down payment, 63% can’t qualify for a mortgage due to high debt to income ratios, 47% can’t afford to buy their preferred house or neighborhood, and 69% don’t feel financially secure enough to buy a home.
 
Among homeowners, 31 percent say student debt is impacting their ability to sell an existing home and move up to a different home and 7 percent have problems with their credit caused by student loan debt.
 
The average delay in buying a home among those with student debt is five years. Those with higher amounts of student loan debt and those with lower incomes expect to be delayed longer.
 
Forty-two percent of the respondents were delayed in moving out of their family member’s home after college because of student debt. Forty-six percent of younger millennials currently live with family. Twenty-one percent rent with roommates. Seventy-one percent are employed full-time.

According to the National Association of REALTORS® Profile of Home Buyers and Sellers, among recent homebuyers, one-quarter have student loan debt and the typical amount is $25,000. The share of those with student loan debt rises to 41 percent among first-time homebuyers. Even among successful homebuyers, this amount of debt is cited as a difficulty in the home-buying process.

Student loan debt doesn’t only impact the housing market. Sixty-six percent of respondents said their student loan debt effected their ability to take a vacation, and 57% said it effected their ability to purchase a car.

 An experienced Real Estate Agent and Loan Officer can provide advice on how much home you can afford.

 Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.