On September 1, 2010, Northstar MLS started to offer rental properties into the Multiple Listing Service tool.  This means that Twin Cities Realtors now have the ability to assist both renters find properties and landlords looking to find tenants by using the power of MLS to deliver information.  Reasons why this change were made were outlined by Northstar MLS –

With the opportunity to offer consumers help finding rental properties, you can better establish relationships with people who will eventually be in the market to buy a home.  Or if you have a seller who cannot find a buyer, you can now help them better market their property for rent for a time until they are ready to look again for a buyer. 

Types of Rentals

Only residential rentals will be offered but they will span the complete spectrum of housing.  From single family to townhouses, condo’s and apartments.  Personally, I think the best opportunity is in the “non-apartment” sector. 

Why Use MLS To Find Rental Homes?

There are lots of people in this economy who still like the idea of “their own place”.  By using MLS as a tool you might be able to get more information than you get from Craigslist which seems to be the tool of choice for apartment rentals.  You might also find places which offer things like “rent to own” where tenants might want the services of a Realtor who can help evaluate a property for issues and current market value.  A Realtor who assists you find a property can scan for properties that meet your criteria or set up automated searches that get sent to you on a regular basis.

Why Use MLS To Find Tenants?

As a landlord, using a Realtor and MLS to find tenants can help tap into a new market for potential renters.  The 15,000+ Realtors in the Twin Cities have a vast array of people they work with that may need either short or longer term housing.  The landlord needs to offer some compensation to use MLS but the benefits of finding the right tenant are easy to quantify and compensation is typically similar to what a property management firm is paid.  Rental listings can enjoy the same broad exposure as “for sale” home listings currently have on numerous websites.  In addition, the same booking tools used to show houses are available to easily set up showings to prospective tenants.

How Fast Is It Taking Off?

We are only 7 days after launch and there are already 58 rental properties listed with MLS.  These include 33 single family homes, 12 townhouses, 9 condo’s and 4 other types. 

Conclusion

Whether you are looking to rent a property or are a landlord looking for renters, the MLS system offers a new solution to help you meet your needs.  For more information about what is available or the fee’s associated to get listed feel free to contact me.  As with traditional house sales, there’s no fee to a renter and the fee for a landlord is only paid upon successfully finding an acceptable tenant.

The Minneapolis Association of Realtors released their Weekly Market Activity Report today and for the 15th straight week the Twin Cities real estate market has seen significantly less transactions than a year ago.  We continue on a pace of an approximately 40% sales decline from last summer, even while interest rates continue at record low levels.

For 12 consecutive weeks now, the number of homes for sale in the Twin Cities housing market has been higher than it was a year ago, and the gap between this year’s inventory and last year’s inventory at the same time has been steadily growing. There are currently 27,784 homes for sale, up 8.1 percent from this time in 2009. Inventory is not growing due to an influx of new sellers putting their homes on the market. Rather, its growing due to a drop in buyers who once were absorbing supply.

For the week ending August 21, there were 601 signed purchase agreements, down 40.6 percent from a year ago. That’s the 15th consecutive week of significant declines compared to a year ago.

With supply growing and fewer buyers to purchase it, home sellers can expect a challenging fall and downward pressure on home values. Motivated sellers who want to move quickly may have to pursue aggressive pricing to attract buyers.

With the end of the summer home buying season just about over one has to wonder what this fall is going to bring.  One thing is for certain, there aren’t many buyers out there and those sellers are facing even further drops in house values and longer time on market.

The Twin Cities real estate market has been difficult the past 5 years and statistics show that there are now approximately 20% fewer Realtors than there were during the up market.  That still leaves 15,000+ agents out there to choose from so a question that comes up often is “What should someone ask when interviewing a Realtor?”  Home sellers are entrusting a large financial transaction to whomever they choose so this choice shouldn’t be taken lightly.  The following 2 big questions should help you differentiate a large number of Realtors from each other.

Question 1 – Are You A Full-Time Realtor?

The National Association of Realtors estimates that more than 60% of Realtors are either part-time or hold a 2nd job and that number has been increasing with the slow down in the economy.  While there may be some legitimate reasons to hire a part-time agent the majority of those that aren’t full-time go out of their way to keep their status hidden from potential clients.  Reasons for hiring a full-time Realtor include:

• Availability – Marketing a home doesn’t fit neatly into a certain set number of hours.  Potential buyers and their agents can call any time of day for information about a property that might turn into an offer.  Being available and proactive to market a home is extremely hard to do if a person has priorities other than their clients.  In addition, an agent often needs to be available on short notice to address issues or negotiate on deals and that’s hard to do if they are busy running a cash register at Walmart or taking care of their young children.
• Education – When a Realtor isn’t working with clients they spend a lot of time improving both their skills and knowledge of the market.  In Minnesota, a Realtor needs to obtain just 15 hours/year of training to maintain their license.  An active, full-time Realtor spends countless hours each week getting smarter about using technology, honing their skills and most importantly, staying up to date with the current state of the housing market.  Knowing the market is critical when it comes time to set expectations with clients or negotiate on offers.
• Success & Track Record – Most sellers want to hire someone who gives them the highest chance of a successful transaction and one of the best ways to ensure that is to find a Realtor with a track record of success and a good list of recent clients to use as testimonials.  A full-time Realtor is much more likely to be able to provide that.  In fact, many agents are not full-time because they don’t have a track record of success to offer.

Question 2 – Do You Have A Full-Time Staff With Specialized Skills?

More and more agents seem to be cutting corners and trying to take on all aspects of selling a house instead of using specialists and administrative help.  While there may be some Realtors with all of these skill sets, each of these tasks require someone with very specific knowledge in order for a home to be marketed most effectively:

• Staging – HGTV has a very loyal viewer base with many TV shows dedicated to the importance of staging a property for sale.  A home that shows well gets a higher price and sells faster.  While it’s quite possible that some Realtors may possess staging skills at a certain level (they know what generally looks nice or can hand you a list of ideas) it takes a specialist who knows design, color and consumer psychology to really make a home show its best.  The condition of a home and its emotional connection with a buyer is critical to getting an offer.  Finding a Realtor who has these skills or brings them in by using a specialist means more money to a seller.
• Photographer – The current statistic is that 93% of all buyers use the internet to find a home.  You get 10 pictures on MLS to tell the story of your home and attract enough interest to get them to come see it in person.  Just go out to any home search site and you can see listings littered with bad pictures.  While everyone can take a picture with their spiffy, small digital camera it is imperative that someone have specialized equipment (like wide angle lenses & tripods) and a photographers eye to get the most out of your 10 pictures.  That’s why hiring a professional photographer will often mean better pictures and more showings.
• Marketing – Some may think that sales and marketing are the same thing but they are actually quite different.  Getting your property marketed in its best light on numerous websites, brochures, mailings and other new social media outlets takes both time and an eye for what looks good.  While many agents may be able to do this using some of the tools and templates that exist it is often best left to a specialist.  Many of the larger real estate teams will have a person to do this with a marketing background.
• Technology – The use of technology in real estate is becoming more and more important and knowing how to use it in order to better communicate with clients and market a property is a big differentiator.  There are still a lot of Realtors who don’t know how to use social media, promotional websites and the latest hardware gadgets (like a Smartphone).  Again, these are skills that can be hired as either a full-time assistant or outside resource to better serve clients.  Lack of communication is one of the biggest complaints that sellers have about their Realtors.

Conclusion

After you’ve made the big decision to sell your house there are 2 other primary decisions that must be made that can make all the difference.  One of those is hiring the right Realtor (and the other is setting your price).  By asking these “2 Big Questions” when interviewing Realtors you will go a long way toward helping yourself find an agent that gets you to a successful transaction.

While I sell all over the Twin Cities and focus on Dakota County, I have a special affinity for Rosemount since I live there.  Recent sales data keeps coming in to discuss the rotten state of the housing market but it might be more instructive to give specific data for a city like Rosemount.  Therefore, I decided to look at home sales statistics year to date through August.

Rosemount, MN Data

The Minneapolis Association of Realtors puts out monthly data on each city showing the overall sales transactions by month and year (seen above) but it doesn’t go very deep to show what might really be happening for real sellers who are interested in trying to market their homes in today’s tough real estate market.

So far in 2010 there have been 130 completed sales transactions for single family homes in Rosemount through August 24, 2010.  You can see from the chart above that there were 174 through July but that includes townhouses and condos.  While 130 transactions might not sound bad they break down as follows –

In other words, only about 1 in 3 sales are a traditional seller and we are averaging a paltry 8 sales/month for those sellers in 2010.  There are more homes being sold that are bank owned and short sales (bank mediated) than traditional sales.

Median Sales Price Decline

The table below gives a very good idea of what’s happened to average sales prices through the decline in home prices over the past 5 years -

Rosemount has seen a drop in median sales price from almost $250,000 to approximately $200,000 today – almost a 20% decline.

Other Statistics

Other data you can gather from looking at the 47 sales that have taken place includes:

• The average Cumulative Days on Market for the homes that sold was 159 days.  In other words, those houses that did finally sell had a long wait to find a buyer
• The average home had a final sale price of $104/finished square feet but this varied by $20+ each way (ranges from $80-$130)
• Of the 47 transactions, 31 of them had seller concessions needed to finalize a deal.  The average seller concession for those 31 deals was $7,567
• The average discount was 5.2%.  This is the amount of the final sale price from the list price at time of sale and includes seller concessions as a discount
• Only 12 of the 47 homes were sold without ever having a price reduction.  In other words, almost 3 of 4 had a price that was too high to start with.  The market is still saturated with both sellers who start out too high and Realtors who set too high an expectation to get a listing and then push price reductions later.

Conclusion

For those people that want to sell their homes, one of the most important decisions in selecting a Realtor is finding someone who can best set expectations about the current market.  To do that you need to have data that gives the most accurate measure of the current state of the market.  This view into the Rosemount, MN home sales statistics through August, 2010 is an example of what you should be asking for as it is readily available from the MLS.

The media has been full of stories recently about both the Twin Cities and national housing markets.  Almost all of them have painted a bleak picture of what’s happening in real estate as sales are down significantly and the inventory of homes available continues higher.

For example, the Minneapolis Association of Realtors published their weekly Market Activity Report yesterday which shows sales in the Twin Cities are down 42% for the past 3 months as compared to last year.  Active listings are now up to 27,784 – an 8% increase over last year.

Today the Star Tribune posted a story about how the incredibly low interest rates haven’t stopped national home sales from falling to their lowest levels in 15 years.  Sales in the US were down 27% in July.

While it’s always a good idea to know what the current state of the market is like the question I hear most often is “what is going to happen to home prices in the future?”  The graph at the top of this article is from a blog called Keeping Current Matters and uses data from MacroMarkets which surveys 100 economists and housing experts for 5 year projections in real estate.  Based on this data they conclude that –

If you are selling, the price you can expect to receive for your house will be lower over the next two years than it is today.

If you buy today, you could see a cumulative appreciation of almost 10% in five years.

Are they right?  I don’t know but hopefully by combining the data from 100 experts we get a better picture of what to expect.  The one thing I do know is that there will be a bottom to the market and trying to predict the exact best time to buy or sell is an inexact science. 

Almost all buyers are told about the importance of conducting a home inspection before buying a home but there are many good reasons for sellers to consider hiring a home inspection to be done on their own home before selling.  The cost of conducting a proactive home inspection is typically in the $250-400 range (depending on the size of home).  This cost is something many home sellers try to avoid but when one considers the benefits it is often money well spent.  Typically this would be done in what we call our “pre-MLS” stage which is after we sign a listing agreement which leads into our professional staging consultation and professional photo shoot.

Benefits of a Seller Pre-Inspection

1. Marketing – For those clients that have conducted a seller home inspection, we are able to proactively communicate that to potential buyers.  The fact that a seller has already completed an inspection and is willing to share the results with buyers is a strong selling point and shows them that the seller is not afraid to lay out the condition of their home.
2. Proactively Improve Condition – The condition of how a home “shows” is a primary factor in setting a price and getting an offer.  One of the reasons we hire a professional staging consultation with our listings is to make sure we do everything possible to make a home look its very best since so many buyers want a “move-in ready” home that elicits an emotional connection.  That said, staging helps from a decorating standpoint but buyers are also looking at the physical condition of a home and a home pre-inspection can help a seller know where they should spend time before going on the market to get their home to show in its best light.  This may include things like replacing missing siding, addressing mechanical issues or problems that might arise from an FHA appraisal like missing GFI outlets or gas shut off valves.  These items will probably come up as issues during a buyer inspection so why not get them addressed before selling to make the home show better and be able to market the fact that these issues have already been handled.
3. Saving Buyers Money Helps Negotiations – Many times, if a buyer is willing to use the same inspector used by the seller, that home inspector won’t charge them nearly as much.  The inspector will just arrange to meet the buyers at the home to go over the inspection they already conducted and point out their findings.  While saving a buyer money is not a primary concern of a seller, it can help with negotiations when the actions of the seller have reduced the buyers costs to purchase the home.  Plus, if the buyer does use your inspector in this way you are guaranteed not to have any new issues identified.
4. Protection During Buyer Inspection – Negotiating on the Purchase Agreement terms is a stressful time and it oftentimes gets worse once the buyers make additional demands after their inspection is completed.  A seller just made concessions during the negotiations and is often not real happy to hear that a buyer is now making additional demands as a result of the inspection.  By doing a home inspection before going on the market (and addressing its results) a seller should have already eliminated many potential “asks” by a buyer.  In addition, the inspection can actually help to give reasons why a seller will not agree to additional concessions by showing that their inspection counters what a buyer inspector may be trying to make an issue out of.
5. Peace Of Mind – Finally, by doing a preemptive home inspection it gives home sellers peace of mind about the condition of their home and that there should be no major issues to worry about through the buyer inspection process.  Just yesterday I had a seller agree to the sale of their home that said they wish they’d done the pre inspection just so they wouldn’t be nervous about waiting 3 days to hear back about the buyer inspection results.

Price and condition are the 2 major factors that determine getting a home sold.  Home sellers can’t do much to address market conditions that affect average home prices but they can proactively do a lot to improve the physical condition of their home and doing a home inspection before selling is one of the primary ways to do that.

Last fall I wrote a post about Rosemount’s Evermoor Development describing the different neighborhoods that make up the 560 acre development.  It has proven to be one of my most popular entries and has encouraged me to focus more energy on providing more information to homeowners on very specific markets.

Evermoor 2010 Home Sales

Through June 5, 2010 there have been 24 closed transactions year to date in Evermoor.  That might seem like a good number until you look a little closer at the details -

There are quite a few new homes being sold, especially in the Glendalough neighborhood being built by Lennar which has seen 10 new home transactions in 2010.  Glendalough has quite a bit more space to build in and should be active with new homes for the next couple years.  The other 4 are in the new DR Horton called Westport which has almost filled all of their empty lots.

Four of the bank owned sales are also really new homes as the remaining unsold Bard’s Crossing Condominiums are bank owned and accounted for 4 of the sales. 

Only 2 traditional sellers have sold homes for more than $350,000 in 2010 including the highest priced sale at $563,000 which was my listing.  Both of those listings were in the Westmeath/Drumcliffe neighborhood.  There are a large number of existing owners that paid a lot more than $350k for their homes.  As a point of comparison, there are currently 40 active listings in Evermoor and 25 of them are priced above $350k.  Of the current 40 listings 2 are bank owned and 5 are potential short sales.

There are currently 7 pending transactions, including 2 new homes and 3 townhouses in the Talcott Glen neighborhood.

Potential Going Forward

Evermoor is still the premier development in Rosemount and one of the nicer ones in all of Dakota County.  Its overall size, integrated trails & parks along with newer homes and unique neighborhoods sets it apart as a place to live and raise a family.  The following video gives you a brief feel for the types of homes you see in each of the neighborhoods of Evermoor -

Recent road improvements, new shopping/dining choices and additional planned public transit options are all helping to shape Rosemount as a great place to live.

As an Evermoor resident I help homebuyers and sellers in Rosemount to get the most value from their Realtor when selecting someone to work with since I know the neighborhoods and home values so well.

The Twin Cities real estate market is awash in personal tragedies brought on by the collapse in the housing market over the past 4+ years.  Thousands of people have been affected by the 20%+ drop in prices that have left the market back at levels seen in the very early 2000’s.  Therefore, I find it interesting when I read stories or hear people tell me how Realtors charge too much to sell a house or are making so much money.

As I wrote back in February, full-time Realtors make on average less than $40,000 per year with no benefits and are leaving the industry in droves – Number of Twin Cities Realtors Declines

Financial Impact

Over the past week I’ve been working on finding a home for a buyer who is looking for a short sale or bank owned property in Dakota County.  One thing that is interesting is how many properties I see that are owned by an Agent.  In Minnesota, a real estate agent must disclose in MLS when they are owner of a property for sale.  I decided to do some research to see exactly how prevalent this was and the numbers were quite large.

• There are currently 222 active homes in the Twin Cities that are on the market as short sales and marked as an “agent owner”. 
• There are currently 30 homes in a “pending” status as a short sale with an agent owner.
• Since January 1, 2009 there have been an additional 267 homes in the Twin Cities that have sold as a short sale that were agent owned.

Conclusion

I’ve talked before about how consumers might be better served by finding a full-time Realtor who is successfully selling homes today vs. hiring a part-time agent, Uncle Joe or a friend of a friend.  Now it looks as though asking about whether a Realtor has their own financial ship in order might be an additional question one might want to inquire about before entrusting such a large financial transaction.

On November 30th the US Treasury Department laid out new guidelines that are designed to help speed up the short sale process by issuing new rules which should benefit Dakota County homeowners.  This should help those homeowners that have had a hardship and are at risk for losing their home due to foreclosure. 

What is a short sale?

The National Association of Realtors defines it the following way -

A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.

What are the new rules?

The best explanation I’ve seen is the following from the NAR Realtor Magazine site -

Government Announces Short Sales Guidelines:

The U.S. Treasury Department announced new guidelines this week designed to make short sales go more smoothly.  To qualify under these new guidelines:

 

• The property must be the home owner’s principal residence.
• The home owner must be delinquent on the mortgage or close to defaulting.
• The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
• The borrowers’ total monthly mortgage payment must exceed 31 percent of their before-tax income.

Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.  Borrowers who complete a short sale under the program must be “fully released” from future liability for the debt, according to the guidelines.

Why do they need new rules?

New rules were needed because short sales are taking too long to process, they often are complex negotiations with multiple lenders who are more frequently putting up barriers to success and there continues to be roadblocks to helping consumers through the process when doing a short sale is better for the homeowners long-term credit situation.

Unfortunately, these new rules don’t actually take affect until April 5, 2010.  They are scheduled to expire December 31, 2012.  Lenders are encouraged to implement it earlier so hopefully the new short sale rules will become a reality for those Dakota County homeowners that need help sooner.

Additional Resources

• This press article does a good job of laying out the new announcement – Treasure sets guidance to simplify “short sales”
• Program details from the US Treasury on the new short sales & deed in lieu of foreclosure program rules – Home Affordable Foreclosure Alternatives
• A previous article I wrote showing how successful short sales were falling behind successful foreclosure sales here in the Twin Cities – Foreclosures Selling Faster Than Short Sales

As I’ve written about before, I’m a Certified Distressed Property Expert and have the processes and knowledge needed to help homeowners avoid foreclosure.  If you know of someone facing a hardship contact me via e-mail or cell phone (651-338-0355) for a confidential consultation about the options.

The Minneapolis Area Association of Realtors published their Weekly Market Activity Report for the week ending November 23, 2009 and the numbers continue to point to signs that it may be a good time to sell your home in Dakota County.  These are the Top 5 reasons why this may be a good time to sell now:

• Home Inventory Way Down – As their report shows, the number of active listings is down significantly in the past year and this is especially true of single family homes.  A balanced market is considered 20,000 active listings and we are approaching that now.  The full report also shows Days On Market declining and Percent of List Price Received increasing which are positive for sellers.
• Extended Home Buyer Tax Credit – The extension of the Homebuyers Credit will continue to artificially pull buyers that may have bought later in 2010 into making a home buying decision before the April 30th deadline.  In addition, the expansion of the Credit to go beyond First-time Buyers opens up a new demographic of buyers that may be moving up into a larger home.  Many expect that home prices will stagnate and possibly drop in price once the Credit expires and almost no one expects another extension.  Home Buyer Credit Details
• Interest Rates – With 30 year fixed rates hovering close to 5.0% we still have very cheap money out there to help purchase homes (for those that can get financing).  Almost all economists are expecting rates to increase at some point.  Keep in mind that for every 1% rise in interest rates it cuts buying power by 10% so these low rates are allowing buyers to get into more expensive homes.  Wall St. Journal – Fed Not Quite Ready To Raise Rates
• Move Up Buyers Benefit – While the prices of homes has definitely fallen in the past 3 years, this actually benefits buyers who are looking to move up to a more expensive or larger home.  Since the prices on larger homes has fallen both on a dollar basis and percentage basis further than any other category, the gap between a starter home and move up home is a lot smaller now.  This makes it a lot easier to justify vs. looking at how much less your own home may be worth now.
• Foreclosures - While we saw a bit of a lull in the foreclosure rates in 2009 the pace of foreclosures is expected to increase again into 2010.  This time the foreclosure increase is being driven by all those people without jobs instead of bad loans.  There are also a number of people just walking away from homes because the value has declined.  If there are more lender owned homes it certainly won’t help home values for traditional sellers.   LA Times – Foreclosures Keep Rising in 2010

I offer a free Comparative Market Analysis for anyone that wants to look at getting an idea of their home’s value if they want to consider selling their home in Dakota County now.  Contact Me For Free CMA