Seller May be Liable for Repairs After Closing

  Occasionally I hear from buyers after they have closed on their home and moved in, that something isn’t working properly, and they want to know if the seller will pay to fix it.  When I get these calls, I refer to the Seller’s Property Disclosure Statement and the Buyer’s Inspection Report, to see if there were any comments about the issue prior to closing.

  I hear different types of complaints, from the air-conditioner isn’t working (usually from winter sales when the AC can’t be tested), to water in the basement, and most recently that there was hail damage to a roof 2 weeks before closing that no one knew about as the home was vacant.

  Once we determine the defect wasn’t disclosed, I contact the seller’s agent and ask for the seller to repair or replace the defect. In many cases the seller writes a check and we are done. If the seller declines the buyer may opt for Arbitration, Conciliation Court, Mediation, or District Court. Personally, in 30 years, I have never had a buyer sue a seller or request Arbitration or Mediation.

  Some buyers elect to purchase a one-year home warranty or ask the seller to provide one. One of my clients recently got a new dishwasher and central air-conditioner a few months after closing. I hear from many clients, that they have used the home warranty for miscellaneous repairs.

  Minnesota Statutes require that sellers disclose to prospective buyers all material facts that the sellers are aware of that could adversely and significantly affect an ordinary buyer’s use and enjoyment of the property. Buyers need to be aware that there may be problems that the seller is not aware of and therefore they are not disclosed.

  There is a 12-page Seller’s Property Disclosure Statement form approved by the Minnesota Association of Realtors, that the sellers complete at the time of listing the property. If there are any changes that occur prior to closing the seller is obligated to update the disclosure. 

  In some cases, there is a Seller’s Disclosure Alternative form, where the seller does not answer the disclosure questions. This typically occurs in foreclosure properties, investment properties, or estates where there is a Power of Attorney or the seller has not lived in the home for some time.

  The disclosure form is not a warranty, and buyers are encouraged to have an independent home inspector inspect the property. Most purchase agreements are contingent on a buyer’s inspection. During this contingency, the buyer has the option to ask the seller to make repairs, provide compensation in lieu of repairs, or cancel the purchase agreement because of the condition.

  It is also recommended that buyers walk through the home again before closing to ensure it is in the same condition as when they purchased the property and that agreed upon repairs were made.

  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.

Low Inventory Brings Higher Prices

  May is one of the busiest months of the year in the real estate market, and once again, and the lack of inventory and buyer demand can increase selling prices at a pace faster than the appraisers can substantiate.   Because buyer demand is so high, many sellers are asking for prices higher than the appraisals can substantiate. Some of the buyers have been waiting for the perfect home for a while and they are willing to pay more to get what they want. 

  If a buyer is paying cash, there is no appraisal, but if a there is financing the lender will determine how much they are willing to loan. For example; if the purchase price is for $300,000 and the property appraises for the purchase price and the buyer is putting 10% down, the buyer will pay $30,000 and the loan will be $270,000. If the property only appraises for $290,000, the down payment is $29,000 and the loan will be $261,000. That leaves a $10,000 shortage, that the buyer may or may not be able to cover. The listing agent may challenge the appraisal and may be successful in getting an increase, or the buyer may be able to cover all or part of the shortage, but if not, the seller must decide to either lower the price to match the appraisal or look for a new buyer and hope for a better appraisal.

  According to the Multiple Listing Service (MLS), the number of new listings for March in Chisago County was 75 with 68 Sales. In April there were 150 new Listings with 107 Sales. Through May 24th there were 135 new listings and 107 listings under contract. 

  Not all homes sell quickly and there is some older inventory on the market, bringing the total Active listings in the County to 249, 49 of which are under contract, and 75 of the Active listings are new construction homes, which are more expensive than pre-existing homes of the same type.

  In the Chisago Lakes School District there are no single family that qualify for FHA or DVA financing under $200,000. The first-time home buyer market has been hit hard with the lack of inventory and increase in prices. 

  There are currently no available Active listings on the MLS on the large Chisago Lakes priced between $269,900 and $800,000, other than new construction, which are on less desirable lake lots. Lake homes are moving so fast that many of them are sold before they go onto the MLS.

    An experienced real estate agent can provide you with a market analysis to see what is happening on the Active market verses the Sold market to sell your home for the highest price in the shortest time period.

  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.

 

NIMBYism Limits Apartment Construction

The National Apartment Association conducted a survey of government officials, developers, and owners, and found that despite skyrocketing rents, they are unable to build more apartments due to not-in-my-backyard (NIMBY) mindsets.

Most communities are sympathetic to affordable housing needs, especially business owners that have a difficult time keeping employees due to high rents and the cost of commuting, and young people that want to stay in the community after school. 

City planners and administrators struggle with community resistance for zoning changes to allow for multi-family homes, which is why they are primarily located in downtown areas, or along major corridors. 

Following NIMBYism as the number one issue affecting multi-family development, was the cost of construction and land availability.  Construction, development, and land costs have escalated tremendously over the past few years, so it isn’t cost effective for developers to build small units. If developers do build affordable housing, they typically require community participation in the form of tax credits, or grants. In many cases it is easier to get a trailer park approved than an apartment complex.

The result of the lack of apartments is higher rents. In Chisago County, there are very few apartment buildings, so most renters live in detached houses, or trailer parks. The average renter is paying between 35% to 50% of their income in rent, which makes it extremely difficult to save money to purchase a home. We see many younger people return home after college or after renting for a while, to live with their parents to save money.

Residents are often more open to luxury apartments than subsidized rentals. There is a need for both in the Chisago Lakes area, as many older homeowners are opting to sell their home, live in the south in the winter and want a place to rent in the summer, or homeownership becomes to difficult to maintain and they need to lower their expenses.

Chisago County and several of our Cities have been working on updating their comprehensive plan to take our future growth into consideration, and there are several proposed developments being discussed. There has been a local housing study which is published on the Chisago County HRA-EDA website, for you to review the current and future housing needs. Your City’s website has a calendar of public meetings to hear about potential new developments.

  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.

The Real Estate Market is Heating up!

  After another long, hard winter new listings are starting to enter the market. Inventory is extremely low and multiple offers are common as buyers are competing for homes to buy. In March of 2018 there were 113 new listings in Chisago County but there were only 87 new listings last month. 

   There is especially a shortage of one level townhomes for seniors, lake homes, and homes that first time home-buyers can qualify for. 

  Looking at the current Active Listings on the Multiple Listing Service for affordable homes that first time homebuyers qualify for; a 3-bedroom, 2 bath, rambler with 1700sf (including basement) and 1 garage stall in Rush City was listed for $160,000 and had multiple offers the first day on the market. The best buy in the Chisago Lakes Area was in Taylors Falls with a 3-bedroom, 1 bath home with 1150 sf and a 2-car garage for $190,000. It also sold in multiple offers the day on the market.

  There are 18 pre-owned waterfront homes on the market, in Chisago County, with a median price of $342,450. New construction is driving prices up with 11 “to be built” homes on waterfront with a median price of $490,000.

  There are 31 townhomes on the market, 12 of those are pre-owned with a median price of $222,500. There are 19 new construction townhomes on the market with a median price of $255,900. The median price of the new construction, one level living townhomes in the Chisago Lakes Area is $296,900. 

  Homes that sell in April and May typically get the highest prices, because of the pent-up buyer demand. New listings will continue to increase through June, but if your home isn’t sold by July, you run the risk of selling off season. Home prices typically start to decline in August through the end of the year.

  If you are thinking of selling soon, now is the time to talk with an experienced real estate agent for advice on the best time to sell your home, and tips to get the best possible price. 

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.

Median Home Price is Up 10% Over Last Year

By the end of May the median home price in Chisago County rose to $243,000, year to date, compared to $220,500 for the first five months of 2017. The number of closed sales is down from 351 to 291 for the same period, according to the Multiple Listing Service. Our low inventory is pushing prices higher. Many homeowners I talk with are afraid to put their homes on the market for fear of selling to quickly and not having a place to go. 

There were 92 closed sales in May, in the County, with a median sale price of $250,337, with an average marketing time of 17 days. The most expensive home sold in May was on Chisago Lake for $650,000. The least expensive home was sold for $99,900 in Rush City.

Chisago Township had the highest median sale price, in the County, of $399,500 with 6 sales in May. Followed by Chisago City with 9 sales and a median sale price of $300,000.

North Branch had the most sales in the County with 21 sales, and a median price of $235,000.

The best values can be found in Shafer with the median price of $182,000, but you must be quick as the average marketing time is only 12 days. 

Homes also move fast in Lindstrom, with an average of 14 days on the market, and the median price of $252,366.

There were 11 waterfront homes that sold in May with a median price of $384,000. The highest waterfront sale price was on Chisago Lake for $650,000, and the lowest priced waterfront home was on West Rush Lake for $209,000.

There were also 11 new construction home sales, spread throughout the county, that closed in May with a median price of $283,700. The highest was $417,000 and the lowest at $182,482. 

We are still experiencing a seller’s market with low inventory, shorter marketing times, and higher prices. This trend should continue for the next few months.

An experienced real estate agent can help you determine the right price for your home, to help you sell quickly, and maximize your net proceeds. 

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.

Higher Prices for Lake Homes

Chisago County has several beautiful, large, recreational lakes 30-50 miles from the Twin Cities including; Green Lake, Chisago Lake, North & South Lindstrom Lakes, North & South Center Lakes, E & W Rush Lakes. Home prices on these lakes increased 11% in 2017 over 2016. There are many smaller lakes and rivers that also saw price increases.

There were 64 lake home sales, on the above-mentioned lakes, with a median sale price of $314,950 in 2017. The highest price was $810,000. In 2016 there were 71 sales with a median price of $283,900 and a high price of $675,000.

The Chisago County lakes are still a great value compared to Forest Lake, White Bear Lake, & Lake Minnetonka. Below is a comparison chart for 2017 sales broken down by lake.

Lake Name # of Sales Median Price High Price
Chisago Lake 5 $350,000 $535,000
Green Lake 16 $412,500 $655,000
N Center 8 $319,000 $350,000
N Lindstrom 6 $272,250 $540,557
S Center 8 $277,000 $429,900
S Lindstrom 3 $412,000 $810,000
E Rush Lake 5 $305,000 $439,000
W Rush Lake 13 $218,500 $615,000
Big Marine 11 $476,500 $1,235,000
Forest Lake 42 $482,500 $1,200,000
White Bear 11 $890,000 $1,350,000
Lk Mtka 178 $1,181,250 $8,271,000

 

Currently, there are very few lake homes on the market, so it is a good time to study the options on the lakes. You will want to be prepared to make a quick decision when they become available, as they could sell fast. There are many considerations other than location or price, but prices are projected to continue to rise. 

 

I see more buyers from the Twin Cities or Wisconsin buying our lake homes than current residents, as some people prefer more land or larger houses. The Chisago Lakes Area received a lot of attention over the past year with the work of the ABC Committee and the school district improvements, and many people that grew up here are returning to raise their children in our great community. Living on the lake is like living on vacation!

 

An experienced real estate agent can help you compare the features and benefits of the waterfront homes available in Chisago County, including the recreational lakes, small private lakes, or riverfront homes. 

 

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.