Multiple Offers Are Common Again

Multiple Offers Are Common Again

The real estate market is moving at a rapid pace and once again, multiple offers are a common occurrence on new listings that are priced at or below market value. Sellers love them, and buyers hate them. 

Over the weekend, I showed a house the first day on the market and there were already 10 agent business cards in the house, from showings before mine. By the end of the day, at least one offer was received, and the agent called for highest and best offers by the end of the next day. My client loved it and submitted an offer $35,000 over the list price. No word yet if it was good enough.

Another one of my buyers has been looking for a while and they need to sell their home in order to buy, but they want to find a home first because they have very specific desires in a home, and they fear they will sell their home and not find what they want. Every home they like sells in the first day or two and the sellers won’t accept a contingency for the sale of their home. They are now exploring other financial options.

One of my listings sold in multiple offers for 10,000 over the appraised value, and the buyers couldn’t afford to make up the difference, so the sellers dropped their price to match the appraisal. All  the offers the sellers received, included seller paid closing costs for the buyers. It was a first-time home buyer house and none of the buyers had the cash to pay their own closing costs or make up the difference between the offer price and the appraised value.

Many buyers are so tired of losing in multiple offers that they are offering the maximum amount they can afford, regardless of value and they are not including an inspection contingency, which can be extremely risky. Some buyers are purchasing a Home Warranty in lieu of the inspection, which provides some protection, but doesn’t replace an inspection, in my opinion.

It is common for buyers to be first into a new listing, submit an offer right away, only to have the listing agent and sellers wait for several days to collect as many offers as possible before they review them. Some buyers will withdraw their offers as they don’t want to be in a bidding war or they may put a deadline for a response to their offer.

The Minnesota Realtors® approved listing agreement, asks the seller to decide if multiple offers shall be disclosed to the buyers or not. Most people think you should disclose multiple offers to create a bidding war and drive the price up, but it doesn’t always work that way. There are buyers that don’t want to be in a bidding war and there have been cases where disclosing multiple offers has chased all the buyers away and the seller had no offers on the home, which increased the marketing time.

An experienced real estate agent can provide you with a market analysis on the home you want to purchase so you can make an educated decision on how much to offer in a multiple offer situation.

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.

Chisago County Real Estate Market Recovers From COVID-19

Chisago County Real Estate Market Recovers From COVID-19

According to the Multiple Listing Service, the number of residential listings that went under contract, in Chisago County, for May was up 20% compared to May 2019. There was pent up demand after a 6 week decline in sales due to COVID-19. Even though the stay at home order was in effect, real estate services were deemed essential. Buyers, sellers, and agents practiced safe procedures while viewing homes.

The number of new listings in May was slightly lower than 2019, but the median list price was up 3% to $299,400, compared to last year. We are experiencing a seller’s market with higher prices and low inventory, during the best-selling season of the year. 

Closed sales were down 19% compared to last May, but the median sale price was up 4% to $259,700. Most of these homes were sold during the 6-week slow down. During the COVID-19 slow down, the least expensive homes were the most popular homes sold.

When we compare January through May of 2019 and 2020, the number of home sales for this year is 10% higher than 2019 and the median sale price is up 6%. 

New construction sales are up 28% from January -May compared to last year, townhome sales are up 25%, and waterfront sales are down 30%.

In the past week I sold 3 homes and listed 2 others, all of which involved sellers and or buyers moving out of the Twin Cities to get away from high density living. Buyers coming to Chisago County are pleasantly surprised at the value they get here compared to the metro area.

If you are thinking about selling your home, you should contact an experienced real estate agent for expert advice on when to sell and for how much. Most homes show their best in June and early July.

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.

Despite Corona, 40% of New Listings in May 2020 Sold Fast!

Despite Corona, 40% of New Listings in May 2020 Sold Fast!

Inventory is still low and anxious buyers are waiting for new listing to hit the market. According to the Multiple Listing Service, new listings were down 25%, for the first two weeks in May, in Chisago County, compared to the same time period last year, but the median days on market for the pending sales, that were listed in May, was only 8 days and the median list price was up 5% from last year, at $299,650. This market prompts many properties to sell on day one and in multiple offers.

May is typically one of the busiest months of the year as the buyers want to move over the summer, but sellers are not listing their homes because of COVID-19 fears. New lake home listings were down by 47% for the first half of May compared to last year, but new construction listings were triple last year’s listings.

For sellers thinking about selling, now is a good time to get your home on the market. In a normal year, the market starts slowing down after school gets out, as people start vacations, weddings, graduations, etc. This year could be completely different with social distancing, and the cancellation of large gatherings. 

Buyers are waiting for the right home and right price, so even though the market is moving fast, homes need to be priced right. With new construction listings up, some neighborhoods are seeing a decline in pricing as buyers prefer to purchase a new home than a pre-owned home.

We do not know for sure how COVID-19 will impact the real estate market in the coming months. But there are indicators; some homeowners and renters have taken advantage of deferred payment programs and if the homeowners or renters can’t catch up on their payments, we could see an influx of foreclosure properties. There is also high unemployment, and lenders are requiring 4-6 weeks of steady employment once they return to work, which can delay sales and closings. Some lenders are requiring higher down payments, which can eliminate some buyers from qualifying. Some Air BnB and VRBO companies are recommending that owners with mortgages, sell their vacation properties due to high cancellations and increased expenses. With more and more businesses electing to keep their workers at home they may need less office space, and some businesses are closing for good, which can increase the commercial property inventory. We are also seeing sellers trying to sell their condominiums downtown and move to the suburbs, to increase social distancing.

If you are thinking about selling your home, you should contact an experienced real estate agent for expert advice on when to sell and for how much.

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.

Should You Make an Offer Contingent on the Sale of Your Home?

Should You Make an Offer Contingent on the Sale of Your Home?

Many buyers want to purchase a new home, but they have an existing home to sell first. They are apprehensive about selling their home until they know they have a place to move to. They often want to make their new purchase contingent on the sale of their existing home. This is not a good idea when we are in a seller’s market, like we are now when the housing inventory is so low.

Many sellers are receiving multiple offers and if one of the offers is contingent on the sale of the buyer’s home, it will quickly be thrown out as the seller has no assurance of when or if there will be an actual closing.

If a seller does accept an offer contingent on the sale of the buyer’s home, the listing status is changed from “Active” to “Active Contingent on the Sale of Another Property”. This means that the seller still has the right to continue to market the property to attract other buyers. There is an immediate notification to other buyers out there that someone wants this house but can’t buy it without selling their home. If another offer comes in for the property, the new buyer can bump the contingent buyer. The contingent buyer will be given notice that the seller wants to remove the contingency, within 2 business days, or whatever time period was previously negotiated. The buyer must provide a true and valid purchase agreement on the buyer’s existing home, with no contingencies other than financing, to remove the contingency and move forward with the purchase.

From a seller’s perspective, if the contingent offer is the only offer on the table, then they would most likely accept the offer as it can generate interest from other buyers, and it can keep the contingent buyer motivated to get their home sold quickly to remove the contingency before they get bumped.

I advise my clients that know they want to move, to get their home sold before they write an offer on another property so they are in a position to purchase without the contingency. As soon as there is an accepted offer accepted on their existing home, we start looking for their new home and try to time the closings for their sale and purchase on the same day. Their offer may be contingent on the successful closing for their existing home, as they need the proceeds for their down payment, but it is no longer contingent on the sale of their home.

 An experienced Real Estate Agent can help guide you with the best negotiation advice for your unique situation.

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.

Many Sellers Are Dropping Prices

  July is the beginning of the yearly slow in residential real estate sales, which means inventory increases and the buyer pool decreases. According to the Multiple Listing Service (MLS), there are 282 Active Listings, in Chisago County, and 105 of those show price reductions since they were listed. Price reductions started as soon as 10 days on the market, but the majority dropped their price at about 30 days on the market. The median marketing time for the Active listings is 56 days. The median price is $319,900.

  There are currently 119 Pending listings on the MLS. This means there is a contract with no contingencies than financing and title work. The median days on market for the Pending sales is 24, and the median list price is $267,000, which is 20% lower than the homes that haven’t sold.

  According to the MLS, there were 144 new listings, in July, in Chisago County and 49 of those sold in the same month. Three of those listings were cancelled or expired. Twenty-Five of the July listings were new construction and 7 of those sold. The median list price of the July listings was $292,949 and the median list price, of those that sold, was $243,800.

  You can see the homes going on the market have a much higher median price than what the buyers are purchasing (the Pending sales). One reason for the high prices is because March, April, May, and June typically have the most sales, the lowest inventory, and the highest prices because of multiple offers. It usually takes 30-60 days to get most homes closed. Selling prices aren’t disclosed until a sale is closed, so when agents do their market analysis, they are using the high sale prices, in the Spring, which doesn’t take into consideration the current market activity. 

  There are still many homes that sell quickly. A lot of new construction sales don’t go on the market until they are sold, so they may show up with zero days on the market. There is a shortage of lake homes, first time home-buyer homes, and affordable one level living homes.

    New listings normally slow-down in the fall, and many existing listings will expire, which will help reduce the inventory, so the sellers that need to sell should be able to. 

     An experienced real estate agent will continue to provide you with market data, while you are on the market, to determine if a price reduction could help you achieve 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.

Offer Contingent on the Sale of Buyer’s Home May Bring a Higher Price

  Buyers and sellers differ on their view of offers that are contingent on the sale of the buyer’s home. According to the Multiple Listing Service, in Chisago County there are only 11 out of 290 Active listings that are sold contingent on the sale of the buyer’s home. There have been many offers submitted to sellers with this contingency request, only to be rejected. 

  Much to the surprise of many sellers; showings slowdown in July. Think about how busy your July schedule is with vacations, friends, weddings, reunions, etc. In Minnesota, July is the best month of the year for most of us. Buyers have the same schedule, and they don’t want to spend their weekends going to open houses or scheduling showings. July can easily move from a seller’s market to a buyer’s market.

  On the other hand, sellers seem to think July is the best time to list their home. This could be true for waterfront homes, as visitors to the lakes are intrigued and want to see what is available. Senior housing, and first-time homebuyer homes are typically in demand year-round, but the rest of the homes tend to have longer marketing times in July, which brings a lot of price reductions.

   If a seller accepts a contingent offer, the status on the Multiple Listing Service shows that the listing is Active contingent on the sale of the buyer’s home. The property can still be shown to other buyers and the contingent offer can be bumped by a non-contingent buyer, should the seller elect to do so. 

  It is true that if a seller accepts an offer contingent on the sale of the buyer’s home, that showings typically slow down. But if there are very few showings anyway, it may make sense to consider a contingent offer instead of reducing the price to compete with the other listings on the market. Contingent buyers are usually very serious about the property they make an offer on, which can mean a higher sale price for the seller, and the buyers are motivated to get their home sold quickly.  

  When my sellers consider an offer contingent on the sale of the buyer’s home, I do a market analysis on the buyer’s home, and help the seller’s decide if the buyer’s home is priced competitively, we review the neighborhood activity, and the likely-hood of a quick sale.

   Every property is different, and there is no set rule for dealing with contingent offers. 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.