BuyCurious - Twin Cities Real Estate

So how do I buy a foreclosure? I'm still interested

2008-11-26T17:05:00.002-06:00

Here's the deal:

If you really want to buy a foreclosure, and have the guts and the money, vision and heart, you can.

Plan to look and look and look to find the stuff that is good. Most of it is pretty horrifying, or overpriced. Or both.

And have a very strong credit score and a good mortgage broker.

Oh, and you need a good real estate agent. One willing to bring you through stinky and perhaps dangerous places. And then maybe get paid 2.5% of $9,000 for all of this work. Remember --we're paid on commission and 2.5% is a pretty typical payout to a buyer's agent. On $9,000, that's $225... and that's before my boss takes her cut. At those commissions, it's a hard thing for a realtor to do. We spend hours working on purchase agreements, hours searching for property, and worst of all, every hour we spend working on a deal that will pay $225 is every hour we are NOT working on bigger and better things.

But I really want to buy a house for pennies on the dollar!

2008-11-26T16:17:00.006-06:00

Okay, fine. Let's find you a house for pennies on the dollar.

They are out there, they certainly are -- but again -- it's not what you think.

I once spent a couple hours talking a client OUT of buying a foreclosure for a rehab "project."

There are many, many homes out there that have been foreclosed and are available for low prices. Here are the current low prices in my nearby neighborhoods:

On the West Side:
403 Curtice Street E, $14,000

In Merriam Park:
1145 Selby Avenue, $43,900

In West 7th:
301 Goodrich, $28,500

In Midway:
1478 Sherburne, $29,900

In the area the MLS calls Crocus Hill:
332 Fisk #3S, $49,900

In Highland:
1774 Norfolk, $69,900

In Dayton's Bluff:
738 Bradley, $7,000

In Frogtown:
512 Edmund, $9,900

On the East Side:
1330 7th St E, $11,000

And you are probably thinking: Wow! I could put one of those babies on my credit card!

You sure could. And then you are looking at thousands and thousands of repair costs to make the home livable. Several of the above homes are slated to be torn down, they are just too far gone.

Just start thinking of the cost to rehab a house...
Roof: $5-$10k
All new wiring: $5-$15k
New pumbing: $10k
Exterior rot/siding repair: $5k
Regrading: $500 with a lot of shoveling
Plaster/drywall repair: $1k-$10k
Flooring:$5k
Paint: $1k-$15k
Kitchens: $10k-$30k
Baths: $5k-$25k

Low end:$48k
High end:$125k

And believe me, any house listed for under $50k is likely to need $125 worth of work.

I have seen many foreclosed houses. I will say the cheapest one I have ever personally seen was about $30,000. At that price, the houses are pretty bad. I can't imagine what they are like at less than that. I have seen more expensive homes than the ones above with extensive mold, with foundations that were collapsing so badly it was a little scary, with environmental hazards, with no plumbing or heating, with no plaster, drywall, or flooring, with smells so horrifying I remember them to this day.

These houses are NOT for the average person to buy and rehab. These homes will take hundreds of hours of repairs, and many of them are too far gone to be repaired. Many of them are not even worth $125,000 when they are remodeled, because of the nearby properties, even if they had the perfect HGTV makeover. Even if Ty from Extreme Home Makeover ripped the top off and added new Kenmore appliances.

Let's pull some highlights from some of the comments on these homes:
- This property is going to be demolished and after the demo this listing will be transferred to a vacant lot listing.
- Category 3 on VBR list. Fire damage throughout. Location near highways and shopping.
- Boarded property. Needs lots of plaster, paint and carpet needed. Needs doors in and out. Property is SOLD As Is. Buyer is responsible for any work orders or repairs for a boarded property.

So what's a category 3? It means the CITY IS PLANNING TO TEAR THE PLACE DOWN. Sometimes investors can post a bond to the city to save the home from demolition, but the costs to rehab a house with "fire damage throughout" usually is prohibitive.
With properties the City of St Paul has declared Category 2 or 3, those homes MUST be brought up to CURRENT code. Since these buildings are older, that may mean MASSIVE retrofitting and repairs.

And where is all of that money coming from -- to make these repairs? Some buyers of Category 2 or 3 property must have cash out of pocket to give to the city as a bond to prove intent to repair the property. There is very little financing out there in the mortgage world to do these kinds of projects.

So -- if you plan to buy one of these houses, go ahead. But I hope you have $100,000 in the bank that you plan to spend on the rehab.

Can I really buy a home for pennies on the dollar? The Infomercial Promises

2008-11-26T16:05:00.005-06:00

Well, not really pennies on the dollar. And it's not what you think it is.

I know some of you have seen these articles or infomercials telling people that they can buy foreclosures at the sherrif sale. That is true, but Minnesota has very different rules than other states, making it impractical. The current market also makes this undesirable.

Here's what the infomercials tell you to do:
1. Read the legal notices in the paper and choose a property from the foreclosure notices that you are interested in. And all of the addresses are in legal description, so be up on your legal descriptions. (Such as: Anna E Ramsey's Addition, Lot 10 Block 3. That's in the Lexington Hamline neighborhood.)

2. Then, go to the courthouse and pay the price at the sheriff sale.
Sounds so easy! But here are some problems:
- You need to pay cash. Pretty much then and there.
- It is very unlikely you have seen the interior of the property, as the owners still live there
- The price you will pay is some amount ABOVE the mortgage amount. Many people going into foreclosure today owe more than the house is worth. So you are paying WAY MORE than the house is worth.
- And the big kicker, if the previous items aren't enough: in Minnesota, after the sheriff sale, the owners have 6 more months to live in the property. That's right -- if you buy that property at the sheriff sale, you have just bought a property with tenants that will be living there for free for 6 months. And you cannot control what they will or will not do to the property.

So, good luck with that.

Newsflash: Caron NOT to be Obama's VP Pick

2008-08-22T20:27:00.009-05:00

At this late hour, I can now announce that I will NOT be Barak Obama's VP pick.

While friends, family and neighbors have speculated that I was speaking with Obama's campaign during my extensive and furtive cell phone conversations, it was simply clients, loan officers, other realtors and the occasional robo-caller.

My Sunday "open house schedule" has also been suspect, with family assuming I was spending time at Obama's Raymond Avenue Minnesota HQ. I was actually in St Paul and nearby suburbs, holding open houses.

With my extensive experience with the local real estate market, the foreclosure crisis, my credentials as a board member of the Lexington Hamline Community Council and prestigous Bachelor of Fine Arts, I was a must-call for the campaign.

However, I have decided the campaign trail would simply take too deep of a toll on The Annoying Cow Dog and The Brown Dog.

I have referred the campaign to other Famous LexHam/St Paul Bloggers. We'll see how they respond to Mr. Obama's inquiries.

Petit Flower
LexHam Rand
The Pirate
The Dork
Little Latin Lupe Lu
Blacktop Desciple

On the Other Side of the Shell Game

2008-08-22T16:52:00.003-05:00

My last post talked about the death of the last $0 down program.

However, the bill passed by Congress also had some interesting angles for first time homebuyers.

One of them is a tax credit. If a first time homebuyer buys a house between now and next summer, you will get a $7,500 tax credit on your next tax bill.

You don't get a check when you close your house -- you get a giant refund check when you file your taxes.

What's the catch? Oh yeah, there is a pretty big catch.
This tax credit must be REPAID. Yep, the IRS giveth and the IRS taketh away.

What it means is that each subsequent year you file your taxes you will pay back (interest free, mind you) a few hundred dollars to the IRS for that $7,500 tax credit.

No, you cannot use the tax credit for your house downpayment, but you will get a fat check come next year. You can buy whatever you want with it.

I would buy cartons and cartons of Camel Lights and 50 pounds of prime rib.

(And no, I don't smoke. I just think the idea of buying cigarettes is funny.)

It's Now or Never, People

2008-08-22T16:40:00.004-05:00

The party is officially over. A few weeks ago Congress and the Senate passed a big housing bill to help the flailing housing market. Some of what they did helped, some of it could hurt.

The biggest news: last $0 down "program" in the mortgage world is kaput as of October.

It was a funny deal -- called a Downpayment Assistance Program, it allowed a home seller to give a "gift" to a nonprofit who would turn around and give a buyer that money to use as a downpayment on the house purchase. My lawyer client called it legalized money laundering, but it is (was) legal. And now it is almost gone.

Sooo.... if there is anyone out there that wants to buy a house -- they can use this program now (and I mean, like, today, time is ticking) or they can save up 3.5% for a downpayment next month.

The difference is more than dramatic, to be frank.

Think of it in these terms:

You are a renter. You want to buy a house. You make, say, $50,000 a year. Or you're a couple and make $80,000 or so a year.

You can buy a house NOW for $0 down (well, you do need a few hundred dollars for the inspection and whatnot)

OR

Next month, you will be required to put down 3.5% of the purchase price. On a $200,000 house, that would be $7,000.

All I know is when you are 25 years old and buying your first house, it is not an easy thing to scrape up $7,000.

But you protest:
I already own a house! Why would I care?

Because housing is a trickle down (trickle up?) kind of situation.
People sell $200,000 houses to buy $350,000 houses.
People sell $350,000 houses to buy $500,000 houses.

So if there are no buyers for a $200,000 house, that seller can't turn into a buyer for the next bracket up.

It's really tough out there and it just got tougher.

And -- if you are renting and want to buy something relatively soon and don't have $10,000 sitting in your bank account -- call me today. For reals, today. The house needs to be found, the offers need to be written and at the mortgage office by Friday August 29.

Everybody's Buying a Foreclosure

2008-07-09T13:37:00.003-05:00

I think I have had only 2 deals this year that did not involve some kind of foreclosure/short sale/distressed property.

My buyers are pretty good at recognizing a bargain and are willing to go through the agony of it all to end up with a good house.

Last night I was lying in bed thinking about how fewer "normal people" are listing their homes and more and more the selection for buyers is mostly bank-owned property.

I dug through a report put out by the Minneapolis Area Association of Realtors called Foreclosures and Short Sales in the Twin Cities Housing Market. A quote illustrating my point is here:
The market share picture is similar for home sales, with foreclosures and short sales comprising a larger portion of overall sales than they have before. In Q1 2008, 27.6 percent of total residential closed sales were mediated by a financial institution, up substantially from the first quarter of the two years prior. And the number of traditional closed sales fell from 8,896 in Q1 2006 to 4,790 in Q1 2008, while the number of bank mediated sales increased from 324 to 1,828 for the same time period comparison.
So we are talking almost ONE THIRD of all sales in Q1 2008 were foreclosures. That's not ending anytime soon, either.
Read the full report here:

http://www.mplsrealtor.com/downloads/market/Reports_Analysis/Foreclosures-and-Short-Sales-in-the-Twin-Cities-Housing-Market.

I'm seeing lots of bank-owned and soon-to-be bank-owned in Lakeville and Apple Valley, where I have some buyers. This is going to hit the suburbs, and it will be tough, very tough.

And when one third of all listings are foreclosures -- just by mathmatical odds -- a third of all of my sales should be foreclosures. We are all dealing with this, not just the "inner city," or the late-night infomercial watchers. It's here.

Land Ho!

2008-07-09T13:27:00.002-05:00

I've been talking with my friend John from Shelter Architecture about how now is a good time to build your dream home in the city.

Here's why -- it's really hard to find a lot in the city. However, the glut of cheap foreclosures could allow someone to tear down an existing house to build a new house. With houses selling for as little as $7,000 in the metro, it's a good time to jump on this. And yes, there are foreclosures in all neighborhoods -- from Bald Eagle Lake and North Oaks to Kenwood and Crocus Hill.

Financing is tight right now, but I think this is a nice opportunity time for a lot of people.

It's also a good time to take a shell of a house and turn it into something new.

Incredibly Lucky

2008-07-09T13:08:00.004-05:00

Serendipity seems to strike every once in a while in real estate.

I was in the office making my open houses flyers and the front desk paged me. There was a walk-in customer that wanted to talk to an agent.

I was rushing to get to my opens and I did not have much time to talk. I went away with some doubts -- first time homebuyers, small budget, grand ideas. Not sure this was going anywhere, but I agreed to meet him next week.

I was really busy and scrambled to put together a couple houses to show them. I thought at least I could talk to them more and find out if buying was a possibility for them, or just a dream.

I showed them two houses in their price range - both foreclosures on the West Side. One was a grandpa house that needed a lot of work. The other was a beautiful house that had been overlooked for a long time because it was a foreclosure. It had just been reduced in price, and the buyers loved it. It was in great shape and just needed appliances.

It's unusual to find a beautiful house in a great neighborhood for dirt cheap, and my buyers knew it. They acted quickly, and found out that night that they were approved for $5,000 less than the list price.

We wrote the offer for $5,000 less than the list price -- exactly what the buyer was approved for. The next day I was sick with the flu, and the bank counters with a few thousand over the level the buyers can spend. I was demoralized and I told the list agent we would work with the lender to get my buyers approved to go to the new level, which might be hard. While I slept off the flu, I got an email that the list agent had simply re-submitted our offer and we got it!

I was thrilled. It's so rewarding when you have a buyer with a small budget and you can find them a beautiful house in a good neighborhood. We are all thrilled, I'm excited to see this one close.

Forcing It

2008-07-09T12:33:00.004-05:00

This year I have had several closings (all related to distressed properties, go figure) that were pretty brutal. A closing usually takes about an hour and I have had several now that have taken 3 or more hours. Yesterday was a whopper -- I was at the closing office for almost 5 hours.

The property was incredible, in the historic district, and cheap cheap cheap. About 30% less than the previous owner paid a few years ago. It was a real once-in-a-lifetime for the buyer.

My buyer was incredible -- smart and motivated and charming to boot.

The deal was less than incredible. A short sale, with Countrywide, while they were going through a merger with Bank of America. The seller lives in Europe and was hard to reach, and maybe did not want to be reached.

Luckily, the list agent was a gem. She worked really hard on this but she almost gave up on the deal because Countrywide was not approving any short sales during the BOA merger and was giving them the runaround.

About 5 months after we wrote our offer, Countrywide decided to take it. It was a huge effort by the list agent to get Countrywide to accept a big loss. It was a definite relief, but it was not the end of our hurdles.

It was FHA financing, and there is nothing FHA loves more than to require a house to be painted before it is sold, or not allow it to be sold at all. And yes, this big old Victorian needed paint, and fast. The buyer got to work and had it painted in less than 3 days. I was shocked and stunned, and knew this closing had a chance to happen.

Yesterday at the closing table we were missing a few elements, but the buyer began signing anyway. As he signed the last few papers, we still did not have an email or phone call back from Countrywide with final approval on our numbers.

We let the buyer go and I got on the phone. I called the number we had. I called other Countrywide numbers I found online. I could not reach the "only person" that would be allowed to approve this sale. We had to have it wrapped up in 48 hours or the entire deal would be lost. It was high stakes and I was not going to let it fall apart.

Finally I checked Countrywide's SEC filings and called the number that connected me to the office where the executives are. I was connected through to one of the VP's admins and she was more than happy to stop coloring spreadsheets and pulled a few strings for me. After more than two and a half hours on the phone, Countrywide approved the sale.

I think it took six days off my life, this closing. It's kind of a miracle it happened at all -- the list agent filled me in on some details that I did not know before that make it clear this is a real miracle.

I had champagne on the buyer's new deck last night with his friends and family. It was very rewarding to have this one done. As I was going to sleep that night, all of my adrenaline came rushing through and my heart was just palpitating. I had spent so long keeping a cool head that it all fell on me right then. I don't think anyone other than other realtors know what we go through to keep it together sometimes.

Who Wants to be on HDTV?

2008-03-05T11:08:00.002-06:00

Dude, seriously!

Last year one of my clients worked for HDTV. They are now casting a new season of "Sleep On It" -- concept is homebuyers sleep overnight in the home they are thinking of purchasing as a kind of test drive.

I got an email from the producer, and she was wondering if I have any buyers or sellers that would be interested in participating. They want "high-energy" people (no duds, please).

I'm not very sure how this is going to work out, but it does sound fun, and why the heck not???

Anyhow, let your friends know I have the HGTV hookup and drop me a line asap if you are interested.

amycaron@edinarealty.com

Vacation Realty

2008-03-05T10:58:00.002-06:00

So I was in Montana over the weekend. Not a vacation, but a grandma's funeral.

On our non-funeral day, we went to Red Lodge, a cutesy ski town not far from Yellowstone. There were 4 or 5 brokerages in the little downtown, all featuring the listed properties on color copies in the front windows.

It's funny -- vacation property always seems so much like home, and so much not like home.

Cute 1 bedroom bungalow in a good location? $179,900! Just like the swanky neighborhoods here!

Overdone, new construction, too many finished square feet for anyone other than a family of ten -- $799,900! Just like here!

616 acres of open land -- $189,900!

Hold the freaking phone! Over 600 acres??? Here, good open land goes for much, much, much more. A quick search of the MLS for parcels in excess of 600 acres brings me listings well above a million dollars. The climate in Montana is very arid, and I would imagine the 616 acres is only good for grazing land.

But I do have this fantasy of buying up a lot of vacant land. They aren't making any more of it, you know.

Get While the Gettin' is Good

2008-03-05T10:49:00.003-06:00

I've had some conversations with some mortgage guys lately (yeah, somehow they are all guys) and lending rules are tightening up.

For the most part, it is making it much more difficult for first time homebuyers to make deals without a big downpayment. The zero down programs are drying up, and the entire Twin Cities area has been tagged a "decling market." (At least the declining market tag no longer just applies to my own ghetto address). The declining market designation means, to the buyer, that they will automatically need to put 5% down to get a conventional loan. (5% of $200k=$10,000!!)

There are still first time homebuyer programs that allow zero down, but they do have income restrictions. The limits are pretty high, but many of my first time homebuyer clients last year did not qualify.

I spoke to Todd Ingebretsen on the phone today. He works for Advisors Mortgage and is definitely very dedicated to knowing all of the little details of as many mortgage programs as possible. Since he is so dedicated to knowing the little details, the poor guy is on overload. Every day he gets piles of emails from the lenders outlining the changes in the mortgage programs.

All I can tell you all is that if you don't have a house now, and want one in the next couple years, do it now.

Blinkers

2008-02-13T16:27:00.004-06:00

You know how they put blinkers on horses so they aren't distracted by the carnage going on around them?

I think that's how lots of realtors are feeling, like we wish we had blinkers on.

I need a little attitude adjustment. Need to light the real estate candle, tidy up my desk, and focus on the good stuff that's going on. And, there is a lot of good stuff. Maybe it's just January that's getting to me.

So I'm hoping to make $169,000 this year

2008-02-04T13:34:00.000-06:00

I was talking to my mom on the phone and she was talking about how they paid off the mortgage a while ago. She told me that when they had us 3 kids, my dad had one week where they had only $6 left, because they paid the mortgage that week.

I was like -- WHAT??? --- YOU COULD PAY THE MORTGAGE ON ONE PERSON'S SALARY???
And what's more, my dad was paid weekly so it was just ONE WEEK'S SALARY.

God in heaven! My attorney husband's salary takes two weeks of work to pay one week of mortgage -- and we have a cheap house.

So I pulled together some stats:

Current Nerstrand Stats
(Where my parents live)
A house down the street for them sold for $120,000 recently. Some sold for more, some less, we'll use $120 as our average.

Mortgage on $120,000, with 5% down, FHA 5.5% interest:
$642 each month
$78 taxes
$720 total

To pull in a salary to pay that mortgage payment in one week's salary, you would need to make $57,200 per year.

The factory my dad was working in when they bought the house is still around. My sister works there now too, and she is not making ANYWHERE near $57,200. I think salaries there are in the high $20k-$30s for the average workers.

So now let's do St. Paul.
I pulled the average house price for my area, Merriam Park. Average house price is $329,530.

Mortgage on $329,530, 5% down, FHA 5.5%
$1777 payment
$338 tax
$2115 total

To make $2115 after-tax each week, you would need to make $3250 pre-tax, for a pre-tax income of, yes, $169,000.

I don't know anyone that makes $169,000 in a factory when they are 28.

Signs of recovery

2008-02-04T13:27:00.000-06:00

Last week we had the big Edina Expo -- a big conference at the Xcel Center for all of the Edina agents.

We had an economist there talk about the state of the market and the possibility for recovery. He believes we will see better conditions for home sellers and stabilizing prices near to the end of this year.

He also shared the elements that he says will tell us that the market is turning and the bottom is past:

1. The number of new listings is less than previous months and less than the same month last year. This will signal two things: Sellers have realized now is NOT a good time and the foreclosure new listings are decreasing.

2. Days on market is decreasing. This means houses are selling more quickly and there is more demand.

3. The listing price and the sold price are closer to each other. This will signal that buyer have less bargaining power.

We have seen none of these things yet. I am thinking of running these stats in just my neighborhood. I do know we had fewer listings in my neighborhood in 2007 than 2006. I'll keep you updated as to the results.

What is "subprime" anyway?

2008-02-04T12:58:00.000-06:00

The news media sure does love talking about the "subprime mortgage mess."

But it seems some of the talking heads don't really know what they are talking about.

There are a few things going on in the mortgage mess. Here's part of the story:

1. Subprime. Subprime borrowers are people that had credit scores and/or debt to income ratios that were less than would qualify them for mortgage programs and rates that people with average to good credit would get. Most of the subprime borrowers got into morgages with tough terms, some had adjustable rates, and some of the borrowers were given more mortgage than they could actually afford. Some of these borrowers did not have enough money to pay the first payment.

2. Adjustable rates. Many homeowners, some of them subprime and some of them good credit borrowers, took advantage of the very low teaser rates that the Adjustable Rate Mortgages offered. These mortgages all have different rules on how and when the rates adjust up, but the monthly payment difference from the first cheap payment to the subsequent adjusted payments are usually pretty steep. Lots of borrowers assumed that property values would continue to increase, and they would be able to refinance out of the now-adjusted loan. However, some ARM borrowers bought at the height of the market, and the house is not worth what they paid for it, making it impossible to refinance.

Both of these scenarios have lead to the foreclosure mess. It is not just subprime borrowers getting foreclosed, but lots of people. Of course, those people that are most economically vunerable are the most affected. I am seeing foreclosures in virtually every neighborhood, in the city, in the suburbs, in the gated communities.

Waiting for the Bank

2008-01-24T02:04:00.000-06:00

The thing about the current market is there are a lot of short sales (homeowners trying to save themselves from foreclosure by selling the house) and bank-owned properties.

Dealing with the banks can be a time-consuming process. Banks are only open business hours and don't keep Realtor hours. The short sale responses can take a month or more, and the bank-owned properties can be really quick or really slow. And all of the bank departments are really really busy now, and I think some of them are even hiring temps to deal with all of the foreclosure work.

Right now I have a handful of purchase agreements from buyers out there that all need signatures from the bank. I'm just waiting! I am not good at waiting, but there is NOTHING I can do.

It's tough for buyers to purchase this property. They usually have some kind of condition problem (somewhere between needs new carpet to needs new everything) and they are usually sold as-is. And then to have to wait for answers to the offers is excruciating.

Keep your fingers crossed that these offers come through for me, will ya?

The Road to Hell: A New Kitchen

2008-01-24T01:24:00.000-06:00

Long story short I bought some display model cabinets.
They fit my kitchen perfectly, and the style is so perfect for my house.

I'm going to have a new kitchen sometime this summer.

But, at my house, the motto has always been Champagne Living on a Beer Budget.

We're going to be doing the kitchen in phases. Not terribly long drawn out phases, but there might be a point when the current stove we have is in it's current place and there is an open spot for the new stove that is not yet installed.

And I think there might be some plumbing and wiring sticking out of the walls for a while.

It's all great news but I know it's going to be some trouble.

I guess the good news is the first of the contractors came by today. I wanted to find out if I needed to sister in some of the notched joists (don't ask if you don't know), or at worst, needed to replace some of the original 1900's supports. The answer is that my supports all look good! I think he was staring at my bra when he said that, though.

Anyhow, I'm getting a little kooky running through color scenarios in my head. For a while I could not get past dark khaki/forest green but now I am on to french gold to match the toile in the dining room.

Why Doesn't Someone Just Buy Up All of the $50,000 Houses on the East Side?

2008-01-24T01:20:00.000-06:00

One of my colleagues asked me this earlier this week.

I told him it's because there are $50,000 houses on the West Side, and in Midway, and all over town.

I've just seen so many bottom-dollar houses lately. Good stuff, even, good condition. Just foreclosed, and needs to get sold. For me to see a house that is shockingly cheap I think it has to be under $50,000.

Speaking of Suing

2008-01-24T01:16:00.000-06:00

Really, there is this dumb myth that "You can sue anyone for anything."

No. You can't. You just can't.

I can't sue Craig Finn because he won't come to my parties. Nor can I sue the asses that broke my dad's car windows, or the jackass that had that loud party.

Sometimes you can try to sue someone without a good reason and you will fail, if a lawyer will even bother to take the case. Lots of lawyers can't or won't take them.

So please stop thinking that. Or saying that. Because it's just not true.

Seriously Addicted to Marshmallows

2008-01-24T01:11:00.000-06:00

Really, I've never loved marshmallows until this winter.

Now, I can't get enough. I told my husband I was going to get a drink when we were watching Lost last week. Came back with a mug full of hot chocolate with marshmallows, hold the hot chocolate.

I'm really trying to not eat the whole bag. We know where this is going.

The Declining Market is VERY Localized

2008-01-24T01:05:00.000-06:00

So about a month back I applied for a HELOC (home equity line of credit).

When they ran my address through "the system" my ghetto address came back tagged as declining market and the bank wasn't too excited to give me tons of cash. It turned out okay in the end, but this declining market stuff is B.S.

So I had a buyer looking at a house one mile over and 3 blocks south of me... basically my old neighborhood. This owner is selling the house for $100k less than he bought it for in 2002. When talking to the mortgage guys about it, they checked it for declining market status: Nope! it's fine! No declining market there!

Seriously, this is such B.S.

Let the Suing Begin

2008-01-10T14:53:00.000-06:00

As you all know the foreclosure thing has really gotten out of hand. Foreclosures have even *gasp* hit the suburbs. Being good Americans and having a government that holds a loose grasp on business, when things get out of hand, we sue.

So the city of Baltimore has begun to sue Wells Fargo over "reverse redlining" -- a fancy way to say Wells Fargo is alleged to have given loans with the harshest terms to those in the poorest (read: blackest) neighborhoods. The city of Baltimore (as well as cities across the nation) must now deal with the fallout of having lots and lots of vacant homes to deal with. The city must inspect, maintain, and protect these homes. Sometimes they are set on fire, and there's no one to cut the lawn.

The cost to the other homeowners on the block is terrible. Lowered home prices on your block mean lower home prices for your own house -- as well as dealing with vacant houses that are never maintained and are a break in and fire risk.

Additionally, Fannie Mae and Freddie Mac (quasi-governmental agencies that buy mortgages from Wells Fargo, Countrywide, US Bank, etc.) has announced new guidelines for lending. They are saying that if you are in a declining value area you may not be able to get a 100% loan as you have in the past. The funny thing is that no one can figure out what these declining areas are. Will the correspond with the poorest neighborhoods in town? Will they also correspond with the most ethnic neighborhoods in town? Will this lead to a Baltimore-style lawsuit?
Realtors are pretty up in arms over this. We are taught to be unendingly fair in our treatment of neighborhoods, and this announcement rubbed us all the wrong way. It will be interesting to see where it leads.

Hooray for Klondike Kate!

2008-01-10T14:46:00.000-06:00

In a surprise move, my friend Audra tried out for AND WON the title of Klondike Kate!!
I am ridiculously thrilled for her. I can't wait to get my picture taken with her in her Kate getup.

Curiously, this is not the first Kate I have know. The very talented Kari Schaff is a past Kate and friend of a friend. Funny, I've never known any of the queens or princesses, though. I guess I am just more of a Klondike Kate kind of gal.

Photo from the Strib:

So I'm Super Dorky

2007-12-26T13:44:00.000-06:00

I am seriously into financial data.
You have seen that the Case Shiller index recently published the October index results.

The Case Shiller Index is a Wall Street invention to try to track home prices. An index is kind of an artificial scorekeeping method to track things that are a little bit difficult to track. You may all know about the inflation index -- when the cost of a few goods that everyone buys goes up (milk, gas, etc.) the cost of living goes up a few points. Now, no one is taking any "points" out of your wallet for a gallon of milk, but you get the idea. They have made a similar points system for house prices -- the Case Shiller index.

To my delight, Case Shiller tracks not only national data, but metro-area data, including Minneapolis. So after shoveling out again today, I settled in with some Minneapolis area Case Shiller data. Whoo-hoo!

What I was wondering about was kind of twofold-- first off, when was the high point, and how far have we fallen from there?

Well, the high point was in mid-2006.
Prices have fallen now to about the same level as they were in early 2005.

Really, it's not as bad as I thought it would be. We've lost a few years of growth -- but the prices at the peak were SO inflated.

Realtors and Mortgage Originators Working Harder than Ever

2007-12-12T09:32:00.000-06:00

I know, realtors and mortgage people don't have a very good reputation right now.

But the good news is that this mortgage mess and housing slowdown are doing good things to the industry.

Last year the State of MN implemented a licensing program for mortgage originators. Believe it or not, in the past, there was no requirement to have a license. Now all mortgage people need to get training, hold a license, and even have a net worth of $250k in their business. This is good news.

Already the number of people working as mortgage originators has fallen. And it has fallen a lot. So hopefully the bad eggs and the part timers are getting out of the business, leaving the work to be done by the pros.

Same thing is happening to Realtors. We are losing Realtors. There are lots of Realtors that do one or two transactions per year -- which isn't enough to cover the costs of the required continuing ed and the annual dues to the local Realtor's Association (which is required to do the job -- it gives access to the MLS).

Doing one or two transactions per year just does not allow a Realtor to stay up to date on all of the latest laws and trends in real estate.

So when the annual Realtor's Association board dues came around in November -- $398 -- about 400 Realtors decided not to renew their license.

It's just going to be harder. Harder for mortgage people and Realtors that used to make lots of "easy money" in the boom years. Clients are taking more time, and spending less, than they used to. Realtors and mortgage people will feel this in the pocketbook. And many of them will quit. Or sell their homes and Lexuses.

There are also rumors of entire real estate offices closing. I don't have good information on this yet, but you will hear it here when I know for sure.

(For the record I am still going gangbusters and am currently shirking a thousand responsibilites by writing this post.)

Fixing the Unfixable

2007-12-12T09:12:00.000-06:00

Earlier this week the Bush "adminstration" gathered all of the nation's largest morgage providers to try to get this mess worked out. What they have come up with is to freeze SOME of the adjustable rates for SOME of the borrowers. I've read a lot of articles on this, but there is no sincle source that is showing what "the rules" of this program will be. The mortgage guy in our office read Well's Fargo's policy on it and it had some verbiage about "case to case basis."

Here's what I can gather about the program:
- You must have an ARM loan (Our Wells Fargo statement said it would only affect 3/27 and 2/23(?) loans. Most people with ARMS have the 3/1, 5/1, 7/1, etc. So you need to not just have the ARM, you need the unusual kind of ARM. The 3/27 is fixed for 3 years and then adjusts for 27 months...? I missed the exact definition at the meeting yesterday, sorry.)

- You must be able to prove you CANNOT afford the loan if it adjusts. (Sorry to all those out there that can pretty much afford the giant adjusted price! They're only giving breaks to those that are headed for Foreclosure City!!)

- You must always make your payments on time. (Even if you can barely afford the loan, if you have missed a payment, you won't get this program. You, again, are going straight to Foreclosure City!)

So, how many people will this program provide help to?
Not so many. The loan type that Wells Fargo is offering help on was sold to, I think, 1% or less of all of their loans. (I really need to take notes in our meetings. Then I would have these stats down cold!)
On top of that, of this 1% of homeowners, they must NOT have missed a payment. And, they must basically re-apply for the mortgage to prove they cannot afford the new payment. If the mortgage banker/broker was doing a good job, all of the holders of these loans should be able to afford the new adjusted payment because the mortgage broker should have checked for that. And the only people that would actually qualify are those that have much lower incomes now than they did when they applied for the loans.

So, tell me again, who does this program help?
Uh, the bank.
And, indirectly, the average consumer.

Keep in mind that the bank is only offering this re-adjustment to homeowners that are on the fast train to foreclosure. The bank is trying to avoid going through the foreclosure process with consumers that do pay their bills but are likely to default if the payment goes up.

You may think --well, jeez, wouldn't the bank rather take the property than lose all that interest money?
I would argue that they aren't losing any interest money. If the person gets foreclosed on, the bank sure as shit isn't getting a dime from the homeowner.

And-- the costs of foreclosure are high for the banks, very high. I've been showing lots of foreclosures lately and I estimate the bank loses $50k-$70k on every foreclosure....
They loaned out $200k, they spent $10k in legal fees, and sold the property for $150.

So I think this fixing the rate stuff is CYA BS.

I do sincerely hope that someone in one of these loans is helped. But it's not going to be many.

This time it's real

2007-11-29T11:14:00.001-06:00

We now have data showing prices nationwide dipping 0.4%.
The Office of Federal Housing Enterprise Oversight has published these numbers. The 0.4% price drop is a comparison of prices in July-September 2007 vs. July-September 2008.
There's a story on the front of the Star Tribune if you want the down and dirty.

Yun, the big economist for NAR (National Association of Realtors) remains optimistic. He anticipates no more "major" price drops. Remember, he's the one that kept saying "Slow market? What slow market? The market is great!" Marketwatch has a nice article ripping Yun on this one.

But, all real estate is local.
I am seeing sellers begin to give up. Lots and lots and lots of foreclosures and pre-foreclosures. Lots of sellers will be taking their houses of the market in the next few weeks before Christmas, because it's so slow and showing your house is a hassle.
The houses that remain on the market are great bargains, for the most part. Anyone trying to sell their house this month are dead serious about selling. I think my current buyers will be getting great deals.

The condo market is pretty much desperate.
Certain neighborhoods have a lot of foreclosures, which is pushing down prices. Those that need to sell have slashed prices back to 2002 and still aren't selling.

How do we come back out of this?
Incomes needs to rise, and home prices need to remain steady.

How are you guys finding me?

2007-09-24T15:50:00.000-05:00

Seriously, I was just trying to self-Google.
I can just barely find the blog on Google.

When I try to find the blog on Yahoo, it suggests I cure my herpes.

And what's strange is people ARE finding me through the blog -- I got two emails on it over the weekend.

I'm just not ready to turn the reigns over to Little Tommy C, so I'll just have to live with the current results.

I'm not obessed with readership, that's for sure, but I am curious to see how the search engines are going to deal with this blog.

Any of you that found my blog because of the Pirate of Selby Avenue, I take no responsibility for any of that mess.

South Minneapolis is a bargain

2007-09-18T14:24:00.000-05:00

I've got some buyers that have been taking me all over South Minneapolis.

I have to say, there are a lot of really freaking good bargains there. We are talking houses with views of Nokomis, houses with $40k kitchens, houses with the most incredible gardens. All for under $300k, and many, many under $270k.

It's not often I see houses that I love, but on the Realtor Tour today, I did see a great Summit Avenue mansion that has my name on it. The listing agent, a friend of mine, actually said, "Amy, you look terrific at the top of that staircase." I think if I sell 20 times as many houses next year as I did this year, I can afford it. And, if I sell 20 times as many houses next year as I did this year, I will also be dead from exhaustion. A girl can dream.

The 80/20 gets 86'ed

2007-09-18T14:16:00.000-05:00

Word on the street is that Wells Fargo is no longer offering the 80/20 loans that many first time buyers use.
(For those of you that don't know what an 80/20 is: It is a first mortgage that pays for 80% of the house and a second mortgage that pays for the other 20% of the hosue. It is used to avoid paying the pesky mortgage insurance.)

That's not such good news. Getting a mortgage is getting harder. Other lenders are still offering 80/20s, so that's still a possibility, but options are drying up.

I think one of the reasons Wells Fargo stopped offering this is that it is actually a pretty risky kind of loan. They are financing the house 100%.
If the buyer goes into foreclosure, the first mortgage gets paid off first and the second mortgage gets extinguished. So all banks that do second mortgages take a risk-- the loan is tied to the property, but if the first mortgage goes bad, they take the house and the second mortgage is left with nothing.

How did we get here? Well, they started doing 80/20s in the past 5-10 years. They started doing them because who in the heck can save up $40,000 as a downpayment on a $200,000 house? No one.

It just gets worse

2007-09-05T17:50:00.000-05:00

After all of the reading and thinking I have been doing on this real estate market over the past few months, I really believe the strong buyers' market (=crappy sellers' market) will be with us for the next few years, at least 2 years.
Our bigboss manager Barb came by today and was in a meeting with Warren Buffet, the one the ultimately owns Edina Realty. I am proud to say Warren is of the same mind I am - we're going to be in this mud for at least 2 more years.

Today marketwatch.com had another good article. Some excerpts:
The index hit its lowest level since September 2001, and pending sales were 16.1% below their year-earlier level. The July data reflect trends before August's mortgage meltdown.

House prices are down 3.2% in the past year, the biggest decline ever recorded in the 20-year history of the Case-Shiller home price index. See full story. A year ago, home prices were rising at a 7.5% pace nationally. At the Federal Reserve meeting in Jackson Hole, Wyo., Robert Shiller, chief economist at MacroMarkets LLC, said 50% declines in home prices in some regions were entirely possible.

See entire article here:
http://www.marketwatch.com/news/story/july-pending-home-sales-index/story.aspx?guid=%7B0C7A07E0%2DD437%2D4B42%2D8FE2%2D45570D5F1145%7D

I mean, I know that prices are dropping -- I can see that happen --but 50%!?!
Fifty-freakin' percent???

I do know that some areas are really hard hit by foreclosures -- see the Star Tribune's foreclosure map -- and in those areas, real, normal people sellers need to compete with the "everything must go" mentality of banks holding real estate. But will those areas drop 50%?!?!

All I can tell you is if you've got the change in your pocket, and the guts to do some real estate investing, step up to the plate buddy, because you're up to the plate and the pitcher isn't so hot. There are lots of ridiculously well-priced properties to be had, all conditions, all areas. And rental prices are coming up. All of the foreclosed subprime borrowers need to live somewhere, and it's gonna be in a rental.

So, I really think we have about 2 more years of a rocky ride. I know I am busy, and I am going to be hanging in there. But I think we will see a lot of realtors just getting out of the business.

Recession?

2007-09-04T10:30:00.000-05:00

Today, Chris Farrel of Minnesota Public Radio was talking "recession" because housing is tough right now and a drag on the larger economy.

He also mentioned "bail-out" --- a bail out of the housing problem, and the bail out would also affect the larger ecomony more.

I am sure you can hear this segment by searching MPR, but I was listening to this as I was half-asleep this morning.

Interesting times!

Foreclosure bail-out

2007-09-04T10:00:00.000-05:00

You may recall a few posts ago when I wrote that the government and the banks need to get together to solve this foreclosure problem.

The government listened. I love it when the government listens to me!

The government is working out a deal that will help subprime lenders refinance. These are homeowners that have mortgages that are going to adjust -- the rate will rise from, say, 6% to, maybe, 8% or 10% and really crank up the monthly payment.

But, of course, there is a hitch. I think the program will only be available to homeowners that are current with their payments. I must say that most people don't really realize they are in trouble until they have missed a payment or two. I don't think that a lot of people will go and search out this program before they are in trouble. Keep in mind -- these are people with bad credit and probably don't understand a lot about how the financial world works. Not to mention whenever most of us are in financial trouble we hit the denial stage first. When you're in denial, you're not looking for a bail-out program.

I read a really nice article that McClatchy put out on this topic.
The article says this program will help, at most, 21% of the subprime borrowers that will need help. The article estimates about 480,000 homeowners could be helped by the program, but 2.2 million homeowners will be affected by the subprime meltdown.

Read that again: 2.2 million homeowners affected.

Here's the article:
http://www.startribune.com/535/story/1395756.html

While I think this is a good start, I also think it is a case of good intentions by the government that won't seriously help.

I think the psychology of the homeowners affected -- people with bad credit, people that probably don't have a good understanding about how credit and loans work, people that have been burned by loans before -- these are not people that tend to be organized and proactive in their financial lives. They're not people with financial advisors, or even good family role models.

If the program excludes anyone that has missed a payment -- that's too bad. I think many homeowners will be in denial about the problems they face until they start missing payments.

I would like to see the government work directly with the lenders to refinance the mortgages. Have the lenders and the government work out a deal to OFFER the homeowners a refinance option BEFORE the mortgage adjusts. But -- I really don't think that will happen.

Now featuring: Fewer annoying banner ads

2007-09-04T09:58:00.000-05:00

Ameriquest, one of the companies resposible for some of those super-annoying ads that try to get you to refinance, has closed down. They stopped taking mortgage applications on August 1, and the rest of the company was sold to Citigroup. Ameriquest was mostly a sub-prime (bad credit) lender, so no one is very surprised.

Viewers of the internet thank you.

"Full-Blown Recession"

2007-08-27T11:56:00.000-05:00

Dude, that is a huge statement.

Mark Zandi, chief economist at Moody's Economy.com, says that housing is in a "full-blown recession."

Listen to this interview at Marketwatch.com:
http://www.marketwatch.com/tvradio/player.asp?guid={7AE3CA10-3E79-4840-87A0-6FDC5F3862FA}

Zandi is reacting to the National Assn of Realtor's report, which came out today.
The report's overall message is that sales are very slow and prices are down. You can read about it in the Star Trib:
http://www.startribune.com/535/story/1384888.html

Zandi has some good points, but I don't agree with him on everything.
He says on of the reasons we have such a big backlog of homes on the market is because of the number of foreclosures (agreed). But, here's where we disagree: he believes that the number of foreclosures will slow down, and the market will catch up. I actually believe we will see more foreclosures in the next year or two. If the market picks up, it will have to be in spite of high numbers of foreclosed properties on the market.

I believe foreclosures are because of the ARM financing and refinancing, and I don't think all of the ARMs that were sold have kicked in at the high rates yet. We've got a couple more years.

In the Zandi interview they say foreclosures represent about 7% of the market. I will tell you that some neighborhoods have more than than. St. Paul's North End is hit hard, North Minneapolis, St. Paul's East Side....
The Strib has a very well done map of foreclosures you can access from the front page of the Strib site.

I also published a post a while back about how foreclosures weren't such a great deal. The Strib did a story on another angle of that -- it takes eons for the banks to respond to your offers on foreclosed properties.
http://www.startribune.com/417/story/1384058.html

The foreclosures are throwing this market for a real loop.
If you are an owner of a 3 bed, 1 bath, 1500 square feet, and you think your house is worth about $250,000, but the foreclosed 3 bed, 1 bath, 1500 square feet with no appliances and smashed walls goes for $180,000 --- well, your $250,000 price will get close scrutiny.

The good news that everyone keeps missing in all of this is that it is a fabulous time to buy property. There are tons of options out there, and prices are amazing.

But to stop the bleeding in the foreclosed properties, both the government and the banks are going to have to step up. People got sold into products that were inappropriate for their financial situation (ARMs, etc.). The bank should be willing to refinance these mortgages and spare everyone the work and money that a foreclosure costs everyone. Certainly, there are some people who are actual deadbeats that aren't paying the bills -- but there are others that got suckered into a mortgage product they don't understand. Like 78 year old ladies and Hmong single moms that don't speak very good English. Those are the people that need a bail-out -- they were sold inappropriate products. I wish the damn mortgage brokers that sold them the products were held accountable and were required to fix those situations.

A concerted effort between banks and government could do a world of good -- but I don't think that will happen.

In the mean time, happy shopping.

Mortgage Meltdown Explained

2007-08-17T09:11:00.000-05:00

There is a fabulous, fabulous article on Salon.com today that pulls back the curtain to show us exactly what's going on in the investment world with mortgages.
http://www.salon.com/tech/feature/2007/08/17/wall_street_panic/index.html

How to Respond to the Market

2007-08-16T14:31:00.000-05:00

What to do if you are in the real estate market today?

Well, I am always a backer of the downtrodden, and always a cheerleader of my industry, and I honestly bought stock in a lender at a bargain price. I didn't buy much -- even if I lose it all that's okay.

If you are considering buying a house, get on it. There are really wonderful bargains out there, not just last year's prices but 4 years ago prices. And especially shop very carefully for your mortgage broker/banker and lender. A strong reputation backed by a strong lending institution is what you need today.

If you need to sell your house, don't mess around. Just get it done.

If you want to sell your house but don't have to, think twice. One one hand, it's an amazing opportunity to buy something really really fabulous at rock-bottom prices. But remember, you will also be selling at a rock-bottom price. But think of it this way: someone coming down 5% on a $400k house is a lot bigger chunk than coming down 5% on a $200k house.

Don't Call It a Comeback

2007-08-16T14:08:00.000-05:00

I'm really fascinated by the financial news today.
Countrywide, the biggest lender in the country, is struggling. They've borrowed $11 billion to cover their butts. The analysts are not happy and are downgrading Countrywide's credit rating, and investment-worthiness ratings.

Earlier this week, Yun, the guy that does all of the commenting for the National Association of Realtors, says this is the bottom.
I think we've heard that one before.

All of the mortgage guys I work with are sending out "all clear" type emails to let us know the local firms are doing fine. One called me yesterday, just to chat about it all. I think everyone's a little scared.

One of my mortgage guys sent out an email talking about his take on "the bottom." Here's what Todd wrote:
From my perspective or explanation for the volatility is that we are bottoming out. One major key component or characteristic of a bottom is bouncing off of the floor. In this case I am talking about the bottom of the real estate slump. It is pubic knowledge and all over the newspapers and internet of the collapse of the secondary market for certain types of mortgage products such as sub prime which is no longer around. If this is the bottom now we must start the long climb upward. Granted there is a lot of foreclosures taking place and that will be a lengthy process to filter out. The climb could and should be shortened with some help from the FED regarding rates. This past weeks meeting showed that the FED is starting to take notice of the risk of the credit crunch and they followed quickly by adding liquidity to the markets almost $20 million worth. Many economists now believe that the stage is set for the FED to lower rates more quickly than they thought.

I really hope Todd is right, I really do. However, I just wonder if all of the flailing about is really about uncertainty -- will some of the biggest lenders in the nation topple? Thornburg? Countrywide? Countrywide, really??

Interest rates have also been steady, and some in the mortgage industry think Bernanke is holding rates to pacify the larger market to the peril of the mortgage and real estate industry. (Where does the middle class hold wealth? Real estate.) If the Fed pulls down rates, it may trigger a small, and probably short-lived, rally in buyers of real estate.

How did the mortgage industry get into this pickle? Some say they are a victim of their own success. They sold anyone and everyone a mortgage, in the name of the "American Dream."

I am a Realtor, and bought my first house at 22, and really believe in that "American Dream." However, I once heard someone say, "He's just not cut out to be a homeowner." And I think that's really true. Not everyone has the dedication and financial stability and responsibility to do it.

But in the go-go times of recent years, anyone and everyone could get a mortgage. People with bad credit, people just out of (and probably in) bankruptcy, people with eyes bigger than their stomachs got into big mortgages. Too big. And now they can't pay, and the banks end up getting the properties back.

Much of that property was bought at the height of the market, and the bank now holds a house that isn't worth what it was when it was purchased.

Todd is right -- it's going to take a long time to sell of the foreclosure inventory, and for the banks to tally up the losses they took on those properties. It's going to be huge. And on top of that, the banks have a terrible liquidity problem right now that goes beyond the mortgage industry and into the whole economy.

TheStreet.com has a great article about the lenders today:
http://www.thestreet.com/_mktwrm/s/why-mortgages-blew-up/newsanalysis/realestate/10374658.html

Trouble in MortgageLand

2007-08-15T09:53:00.000-05:00

There has been a lot of press in recent months (heck, years) about the stagnating (heck, dropping) prices of residential real estate.

Well, that was bad but not as bad as the current state of the mortgage industry, in my opinion.
Here's a snip from a story on Marketwatch.com:
Several lenders such as American Home Mortgage Investment Corp. and New Century Financial Corp. have already filed for bankruptcy after facing margin calls. Now, other mortgage REITs such as Thornburg Mortgage Inc. and NovaStar Financial Inc. are struggling to survive.

Struggling to survive???? Some big, publicly-traded, reputable mortgage companies are "struggling to survive"? These companies don't do just the sub-prime loans, either.

This shakedown could get bad, and could affect all of us in a really dramatic way. If the bigger mortgage companies start to go under, or if it becomes more risky for investors to buy mortgages, it becomes more expensive for banks and brokers to sell mortgages. That means rates and fees could increase for everyone.

All I can say is if you are a buyer on the fence, not sure if you should buy or not, I will tell you that rates aren't going to get any better.

There's also a good story on this topic at WSJ:
http://online.wsj.com/article/SB118713766031197962.html

And Bankrate.com always has great articles. They have one about a tough situation: if you were preapproved and the lender goes bankrupt. Yikes!!
http://www.bankrate.com/brm/news/mtg/20070607_pre-approval_lender_bankrupt_a1.asp

I think this is going to be a major, major story this fall.

Mayor Coleman Proclaims: Sheila Connolly Day, Friday August 17, 2007

2007-08-15T09:39:00.000-05:00

My boss, Sheila Connolly, is retiring on Friday.

Mayor Chris Coleman stopped by the Edina Realty Grand office Tuesday to let us all know that Friday, August 17, 2007 has been proclaimed Sheila Connolly Day in the City of Saint Paul.

I have really enjoyed Sheila. I've learned a lot from her. She's one of the best no-B.S. people I have ever met. She's good at identifing what is the issue and what is ego.

We don't yet know who will be the new manager of the Edina Realty Grand Avenue office, but word is there are a lot of people that want the job.

Our office is one the best in Edina Realty, with agents that are all really strong. That's credit to Sheila -- she has recruited and attracted the best talent. I am very lucky that she chose me, and I am very lucky to have the support of Sheila and all of the other fabulous agents in my office that help me out when I need it.

One of the first questions I had for Sheila was if the office was more collaborative or competitive. She told me it was certainly collaborative -- and that was true. It's kind of amazing, because in a lot of ways we are all in competition with each other. But Sheila has set the tone so we can all work with each other instead of against each other. Again, cutting the B.S. so we can get some work done.

Thanks Sheila!

What Realtors do in August

2007-08-13T18:05:00.000-05:00

It's hot. Lots of people are on vacation. People with kids in school aren't looking to move right when school starts. August dog days.

I'm just waiting for a few closings, and I really have just one kind-of active buyer client and I'm keeping my fingers crossed that the last showing is going to sell my listing.

It's a real contrast from April, the month of unending showings and stagings and signings.

So what do I do? I clean, something I did not do much of in March, April and May.

I attacked my house's clawfoot today. I have a medium to large size tub, not as big or grand as the old place's tub, but still a luxury. I always struggle with finding the perfect thing to clean the tub with, and yesterday I bought my mom's old standby: Comet, with bleach.

The tub came out so shiny and beautiful, but had old a few stains left in the areas that have lost it's finish and is now porous. I don't think Comet is a very good solution for a tub in good shape, but mine's on it's last legs and I figure what the heck. It's over 100 years old and has been losing finish to the previous owner's tough cleaning methods for many years.

I am always sad to see what I call the "hotel tub"in so many homes. New places, mostly. And when you remodel the bathroom, really, spend a little more to get a really great tub. It's worth it. The clawfoot is the best tub you can have -- deep, smooth, and keeps the heat of the water for a long time. I could almost lay down in a foot of water in the tub in the old house.

My favorite bathrooms are the old Ramsey Hill mansions with marble walls (sometimes creating a marble-walled shower stall) or subway tile walls, small octagonal tiles on the floor, and Carrera marble sink tops with giant clawfoots. Sometimes you even run into a great original toilet.

My bathroom's overdue for a remodel. It's gonna be a classic, to match my 1905 house.

In the mean time, I'll be buying Mr Bubble and steaming the house up, making good use of the simple luxury that is a claw foot.

Foreclosures

2007-08-08T09:23:00.000-05:00

A lot of people ask me about foreclosures. They want a "good deal."

From today's Strib article about Invest St Paul:

The city experienced more than 1,100 foreclosures from January through July and currently has 1,200 vacant buildings.

There have been so many foreclosures that the Sheriff has had to hire extra staff to complete all of the paperwork. (Yes, the Sheriff is actually the one that "sells" the property back to the bank.)

Here's the interesting thing about the foreclosures out there today: many of them are priced above market value, because the previous owner bought the home when the market was high and supported the price. Prices have fallen in some neighborhoods. Also, when people are foreclosed, they don't leave the property in a very good condition. That affects the sale price.

I did see one foreclosure that had the tub, toilet, tile, switchplates, lighting fixtures and other pieces removed from the house. It was pretty ridiculous -- the switchplates?? Those babies are 30 cents each at Home Depot.

I've also watched a foreclosure listing in my neighborhood drop the price by over 38 percent. The previous owner paid over 50 percent more than the property is currently listed at. And the thing won't sell. It's not a high-priced house, either -- 38 percent is more than $100,000 in this case. And it is still priced too high for the market to absorb it -- no one will buy it for almost half off of what someone paid for it a few years ago.

So, no, not all foreclosures are a "good deal."

It can also be difficult to purchase a foreclosure, which I will talk about later. If you really were getting a good deal it might be worth the work it would take to purchase the property, but so many of them are overpriced right now. You're better off to look at other things that don't require negotiation with a bank.

Invest St Paul

2007-08-08T08:16:00.000-05:00

Yesterday the budget for the City of St Paul was announced. Mayor Coleman is working up a program called Invest St Paul, and it looks as if he is targeting the city's toughest neighborhoods to do a little clean-up. From the Strib:
If the mayor's plan, called Invest St. Paul, is approved, the city will put those funds into beautification, demolition and rehab projects in four neighborhoods -- Dayton's Bluff, Lower East Side, Frogtown and North End. Those neighborhoods would receive most of the funding connected to the initiative.

Strib says a special half cent tax will generate up to $25 million. Sounds like the heart of the plan is to buy up vacant buildings, beautify streets and sidewalks, and create more neighborhood programs.

For the sake of those neighborhoods, I hope the program works.

My first condo was at Laurel and Dale ... when we first moved in, Selby and Dale was a really cool place to sell rugs featuring tigers, lions and Tupac as well as off-brand athletic shoes. Pretty likely it was a place to pick up your favorite flavor of illegal substance, as well. The city started pouring money into Selby between Dale and the Cathedral. Then Mississippi Market came in, and suddenly it wasn't so fun to sell crack in front of the organic food store.

Do I think the North End is the next Selby Dale? No. I don't. Selby had been a city project and community project since the mid to late 70's. It takes a LOOONG time. And, the Historic District (the neighborhood East of Dale) is a very wealthy neighborhood that attracted business.

But I do think City investment in these communities is important.

But I also have another angle on all of this. I do know that it's not the buildings or the sidewalks or the businesses that make a neighborhood, it's the people. And if there are people in those neighborhoods that are not good neighbors (criminals, drug dealers, gang members) all of the money in the City budget won't change that. So it is possible we will spend a lot of money on some neighborhoods that could be great (Dayton't Bluff, I'm talking about you) but until the absentee landlords and criminals are driven out, the place won't change.

Another phenomenon I have been interested is something the St Paul Police told one of my neighbors. I mentioned the development of Selby ... some call it "gentrification" but I prefer development. As the area improves, housing costs increase. Most of the riff-raff has been moved from the area east of Dale, but we still get some riff-raff north of Selby between Dale and Lexington. The St Paul Police told a neighbor that neighborhood is improving and the worst of the tenants are being removed, and are finding housing in new neighborhoods (like mine).

The bad tenants are having a hard time fitting in here in my neighborhood, and have a very short time left before the eviction is final. But -- it leads to the bigger question --- where do the bad people go when a neighborhood improves and they are pushed out due to higher costs, sale of buildings to landlords that care, etc.?

You could house the bad tenants in a perfectly designed house, with perfect sidewalks and perfect streetlights. But that won't change the behavior.

The Twin Cities experiences a migration of these bad seeds every once in a while. From Selby to the East Side. From the East Side to Brooklyn Center. You never really know which neighborhood will succeed in getting rid of the bad landlords that keep bad tenants and which neighborhoods will suddenly get an influx of the bad tenants.

Criminals, drug dealers, gang members, and the sociopaths do live somewhere. They're in every neighborhood, really, just to different levels. I think absentee landlords have a lot to do with accepting renters that no one else would want living near them (the criminals, gang members, drug dealers). I don't think this $25 million from the City will change that.
Every neighborhood crosses its fingers -- "Maybe this is the program that will shove all of our bad seeds to the other side of the freeway!"

We just move them around....

Fiduciary Duties

2007-08-07T18:14:00.000-05:00

Realtors in Minnesota have fiduciary duties to clients. Kind of like attorney-client privilege or the secrets that your doctor keeps about those bumps you have.

I actually enjoy this aspect of my job a lot. The client really has a lot of control of the agent, because it is the client that needs to make the decisions, not the agent. The agent should advise, and educate, but not make the decision.

Here are the fiduciary duties every agent in the State of Minnesota owes clients, from the Agendy Disclosure Form:
Loyalty - broker/salesperson will act only in client(s)’ best interest.
Obedience - broker/salesperson will carry out all client(s)’ lawful instructions.
Disclosure - broker/salesperson will disclose to client(s) all material facts of which broker/salesperson has knowledge which might reasonably affect the client(s)’ use and enjoyment of the property.
Confidentiality - broker/salesperson will keep client(s)’ confidences unless required by law to disclose specific information (such as disclosure of material facts to Buyers).
Reasonable Care - broker/salesperson will use reasonable care in performing duties as an agent.
Accounting - broker/salesperson will account to client(s) for all client(s)’ money and property received as agent.

Every agent has a time when one of these factors is tested. There are times when loyalties get split, when proper disclosure becomes difficult, when you just accidentally screw up and you didn't show reasonable care. I hope never to have a problem with the accounting requirement. I am very cautious with my clients' earnest checks and property.

I could write all day on this topic. More to come.

What's a Realtor(r)?

2007-08-07T18:02:00.000-05:00

I recently ran across an article in Realtor magazine (yes, I read it, and yes, it's super-dorky) about the difference between a Realtor(r) and a real estate agent. I didn't know this until recently.

Here the thing: Realtors (r) are members of the National Association of Relators (NAR). I keep putting that (r) after the word Relator(r) because it is a registered trademark of NAR.

I guess there are some real estate agents that are not Realtors(r). It's a small minority nationwide.
How it works in the Twin Cities is that you must have a broker hold your real estate license (essentially you need to get recruited into an existing real estate office) and then you must become a member of a local real estate board (such as the St Paul Area Association of Relators or Minneapolis Association of Realtors). The local real estate boards are also members of NAR, so it's a group affiliation thing. Kind of like a union. So, if you become a real estate agent in the Twin Cities, you must join the local board that hooks you into NAR and their members are called Realtors(r).

The State of Minnesota's Department of Commerce regulates and licenses real estate agents and brokers.

If a Realtor(r) does something bad/unethical, they are taken to Realtor Court at one of the local boards. If they do something really naughty, the Department of Commerce will come down on you. If you really screw up and take money or embezzle, the Feds will come calling. It's serious. You can go to jail for the really bad stuff, and recently, people from Minnesota have gone to jail.

The beginning of the end....

2007-08-07T17:42:00.000-05:00

So I used to work in the web world. I built giant websites for giant corporations, and then I managed the clients of those giant websites owned by the giant corporations. And some smaller corporations. And after over 10 years in technology, my number finally came up and I got laid off. It's quite a miracle I survived the boom and bust and everything in between without a layoff until late in 2005. I guess they just liked me ... or more likely, I was low on the payscale and never caught the eye of HR.

I had been an amateur real estate agent for many many years, carefully tracking my neighborhood market (Cathedral Hill, back then). I knew everything on the market and obsessively tracked it all.
When I got laid off, I sent off the resume, did the interviews, half-heartedly thought about shackling myself to a desk again. I had been told that a layoff has a way of changing your life, and I found that to be true.

One morning, I woke up, and went straight to the computer to check the new listings on www.edinarealty.com.
There was something fabulous with a great price in my neighborhood. I knew it would go fast. I put on my pants and drove over there, cell phone in hand. I called through my list -- which of my friends would want to buy this house? It's going to be gone soon! Other real estate agents were swarming around it in their Lexuses, on their cells, calling their clients to come see it.

And that's when I realized I was acting like a real estate agent and I should probably just commit to it.

My husband was in law school at the time. All in all, it's about a 4 and a half year process from LSAT to Bar Exam.

It took me 3 and a half weeks to become a Realtor (r). A few days of waiting for the training class to start and 3 weeks of training.

When I decided to change my career, it took 3 weeks. When Luke decided to change careers, it took 3 years.
Heh!

So this blog is the beginning of the end. When I left the web world, I was pretty burned out and thought I would never again work with the web.