What You Should Know About Foreclosures

Many of my clients are interested in the foreclosure market. Often times these homes can represent a great opportunity for a buyer to acquire a home significantly below market value.

Currently in Hennepin County there are over 700 homes in foreclosure. And indications are that this number could increase in the coming months. I have been on both sides of a foreclosure sale many times. Here are important facts that buyers need to know:

1. Homes listed for sale by real estate agents often times come from an asset management company that represents the bank that has foreclosed on the property. The bank becomes the formal owner of the home by having purchased the Sheriffs Certificate at the Sheriffs Sale and then waiting for the previous owners 6 month redemption period, or their right to cure the default and bring all back payments, late fees and interest current, to expire.
2. Listing agents perform Broker Price Opinions to determine a price that the home should sell for given current market conditions. Often times these list prices are further supported by multiple appraisals and assessments to ensure that the asking price is “fair”. Does this mean there is absolutely no room for negotiation? Not necessarily. You can expect a small bit of flexibility, but generally not more than 10% off the asking price. Many banks will state that if you plan to offer less then 90% of asking price, your offer will be outright rejected. In fact, you’ll probably have better luck negotiating a bigger discount from a private party than a bank.
3. The bank doesn’t “have” to sell. They will sell, but generally not at ridiculous discounts.
4. Foreclosures are prevalent at all price points from the $30,000 1 1 /2 story in NE Mpls or St. Paul to the million dollar homes in Orono or Eden Prairie.
5. Foreclosure is a label describing the financial state of a previous owner who could not make payments. It is generally associated with homes in disrepair and poor condition, but not always. I have seen homes in EXCELLENT condition that are foreclosures too. Just be aware of the following:
   • Most of these homes have been winterized, meaning that all the plumbing has been turned off, and water meters disconnected. Some times electric and heat have also been turned off, so bring a flashlight.
   • You’re buying the home “as is”. What you see is what you get. Most bank foreclosures have separate addendums making sure you understand the sale is “as is” and repeat this verbiage multiple times in all the information that is provided. The bank has never occupied the home and makes no warranties or representations about the home or it’s condition. Be prepared to satisfy yourself!
   • You can have a home inspection(s) and generally speaking you can cancel the purchase agreement and receive your earnest money back if you are not satisfied with the home inspection report and act within the specified time frames. In some cases however, this option to cancel, (aka the “escape clause”), must be warranted based on the findings in the inspection report. In other words, if you are purely looking for a way out because you changed your mind, and the inspection gives no indications of anything wrong with the home, plan on losing your earnest money.
   • Make sure you can be approved to purchase the home and secure financing. In some cases, if your financing falls through for any reason, you lose your earnest money.
   • Earnest money requirements can range from a minimum of $1,000 or $2,000, to 2% – 3% of the sales price, whichever is more and often times must be in the form of a cashiers check, so be prepared for this type of an investment. Bear in mind that often times, depending on your mortgage, if you are financing 100% of the sales price and the seller is paying your closing costs, you can expect that a good portion of your earnest money to be refunded to you at the closing.

I recently found a single family foreclosure for sale in Eden Prairie that was listed $270,000 below tax assessed value. Now that’s a big upside, especially when the asking price was $100,000 below all other homes that had sold over the past year within 1/2 mile of the property.

Great deals can be found, but don’t expect to “lowball” the asking price of a foreclosure. They are already priced to sell and many times represent excellent opportunities at face value. Adjust your expectations and you could find a gem, otherwise, you’re probably just wasting your time.

For help finding great opportunities in the foreclosure market, contact me at michael@keybisrealty.com or call me directly at 763.257.9249

Staged home gets top dollar!

I recently represented a buyer who was looking for a town home. We looked at various locations, many of which were attractive in their own respects. Suprisingly, most of the homes were unkept and none were thoughtfully staged. A number of homes were vacant too, and a few were in foreclosure, needing paint and carpet at a minimum.

Then we found this one….Staged beautfully, immaculate, and priced well, especially considering the overall condition and impressive staging.

After discussing the details with my client, I called the listing agent and informed him of our intentions to write an offer. After submitting the offer I received a call from the agent stating another offer was coming in. Flabbergasted, I asked him what it would take for him to tell the other agent that they were not accepting any other offers and that the home was sold. As you would expect, he said give me full price and it’s yours. I should say that my buyer was extremely well qualified, non-contingent, and had a $5,000 earnest money check.

Nonetheless I said, okay, let me talk with my client and I’ll get back to you. The home was perfect for my buyer. It showed beautifully and the location and overall appeal were top notch, so she said let’s do it. I immediately revised the offer, and we sealed the deal.

The moral to this story is that even in a tough market, if a home is priced well, updated, in good repair, staged immaculately, and in a favorable location, you, as a seller, can reap the highest reward. Hats off to the listing agent on this one. He played his cards perfectly and my client bought a home she absolutely loves!

Getting full price or close to full price in a tough market is not impossible. Do the right things and you can sell for top dollar. For more home staging tips, click here or send an email to michael@keybisrealty.com for a free consultation.

Prepare your home for showings

Assuming your home is marketed effectively with high quality materials and signage, and exposed to millions of potential buyers where they look most, (click here for information on my marketing methods), preparing your home for showings and open houses is absolutely critical.

Turn on lights, bake some cookies, clear off the counter tops and remove the refrigerator magnets (if you haven’t already), stage the furniture, de-clutter (even in the closets), take down personal photos, play some soothing music, and make sure the house is CLEAN! Clean your windows inside and out, vacuum the carpets, wash the floors, clean the bathrooms and the mirrors, clean the counter tops, and remove the dust. The appearance of a well manicured, clean home goes a long way to impress potential buyers.

The goal is to make potential buyers say WOW. If we get the WOW, we get the offer. No WOW, generally, no offer, or low offer and that’s not the result either of us want. Take the time and it will pay off, especially when your competition is not as prepared =)

As I like to think of it, a clean car may be nice, but one that’s detailed makes you say……WOW!

Sometimes a little paint is all it takes

One of the easiest updates to make to your home is a little paint. Paint your walls,…paint your ceilings. Not only will your home look great, it will smell new. Fresh paint always goes a long way, but be conscious of the colors you choose. The earth tone colors generally go well with any decor. But don’t overlook your overall decor, furnishings and accessories. It is important to consult with a real estate professional and or an interior designer to get recommendations on paint that will not only spruce up your walls and ceilings, but also bring out the best in your home furnsihings and accessories.

For more information on why contacting me for a free home consultation is a great idea, click here.

What it takes to sell

Many of my clients are wondering…what does it take to sell in this market?

To some extent the same old addages hold true. Location, Price, Amenities. But let’s take that a step further. In today’s marketplace, sellers have a choice to make. Do they want top dollar for their home or do they want to compete on price?

The decision to update, upgrade, stage, and increase curb appeal, (or do the HGTV thing as I call it), should be made accordingly. One of the best ways to determine what you should do to create that necessary “degree of separation” is to go with your Realtor and view your competition. If competing homes listed for sale have granite kitchen counter tops, then you will need granite kitchen counter tops at a minimum to compete. You should make many more comparisons too. Mechanicals, roof, bathrooms, floor plan, lighting, landscaping, interior decorating etc…. Make the comparisons and buck up or plan to concede on price. It really is that simple.

I have years of experience and know what it takes to maximize a home’s interior and exterior curb appeal, and frequently bring my home stager along on appointments for a second “expert” opinion.

If you don’t have the desire nor the financial means to keep pace with the competition, then plan to adjust your price accordingly. I recently visited with a client who thought because there were not many homes competing with him at present, that his home’s condition was just fine, kind of a take it or leave it approach. Well, yes and no. Competition will come if it isn’t there already. My advice was to update because frankly buyers expect updates, especially when you, as the seller, expect a good offer. This seller did update, further differentiating his home from the field, and increased his chances of selling for top dollar.

Needless to say, this is a tricky balance, but can be well founded with a little research. Sellers and agents will benefit from the exercise of seeing first hand what the competition is doing. You’ll define the necessary “degree of separation” and the price point that will procure the buyer and leave your competition in the dust.

For more reasons on why contacting me to sell your home is a great idea, click here.

Hello world!

Welcome to my blog! Here you will find lots of information relevant to the twin cities real estate market in Minnesota. Hot topics will include valuable information on sales statistics, market snapshots, community information and events, home staging, property values, buyer and seller representation, foreclosures, short sales, investment opportunities, mortgage matters, buyer and seller resources, housing developments, first time home buyer resources, building codes, home construction methods and technologies, green building techniques including geo-thermal heat, insulated concrete forms (ICF’s), solar panels, photovoltaics, and other renewable energies, real estate technology, marketing techniques, and more!