Home Buying · Home equity · home selling · Uncategorized

What is an “appraisal gap”? and why does my agent keep talking about covering it?!?!

Does the phrase “appraisal gap” strike terror in your heart? Or leave you scratching your head? What about hearing tales of “appraisal guarantees” that are often needed when you’re a buyer in this seller’s market?  If you’re a buyer or seller and you’re not spending every waking (and sleeping!) moment thinking about the real estate market, you may be confused about what these terms mean for you, and they may feel a little scary. Knowledge is power, so let’s talk about what an “appraisal gap” is and what an “appraisal guarantee” means for a buyer or a seller. 

If you’ve watched any of my market update videos you’ve heard one thing reiterated and that is that we are in a historically strong sellers market.  We have a lot of buyers competing for every home and that means that we nearly always have multiple offers and those offers are often for well over list price as buyers do whatever they can to beat the competition. 

On the surface you may wonder “how can that be a problem”? if you’re paying with CASH it’s not a problem, you can pay any price you choose to pay for something as long as you can show that you have the funds available to do it. This is a big reason why cash buyers have an advantage right now, the price is the price and the seller doesn’t have to worry about the bank’s appraised value. 

However 80+% of people are NOT cash buyers, they have to get a mortgage for their home purchase and as part of that loan the bank will hire an independent appraiser to look at the property and determine if it’s worth the amount they are loaning you for it. They don’t want to be stuck with worthless collateral to sell if you default on your loan. This evaluation of value is called an “appraisal”.

Sometimes your mortgage lender’s appraiser says the house IS worth less than you agreed to pay. This is known as an appraisal gap or a low appraisal.

I sometimes hear buyers with high loan approval amounts suggest that it might be a good strategy to buy a lower priced home and just throw a large amount of money at it because they can qualify for a loan of that size, but that still doesn’t eliminate the issues around homes appraising for the value of the loan.  And really, appraisals exist for this very reason.

Options as a buyer

What are your options as the buyer if you’re worried that the appraisal will come in lower than what you have offered? after all – Sellers want to get the price you’ve offered in the contract whether or not the appraiser says it’s worth that amount as loan collateral. 

The option that has been most successful with sellers is writing appraisal gap coverage or an appraisal guarantee into the contract for the purchase of the house.  We are seeing this happen about 45% of the time now and it is getting to be more common as the market continues to be tight.  

What this essentially means is that you will put a larger down payment on the home which bridges the gap between what you’ve offered and what the bank is willing to loan and preserves your ability to finance the purchase and close on the home. 

A typical home purchase contract has an appraisal contingency: wording that says the buyer can call off the deal if the property appraises for lower than the buyer offered. But in hot real estate markets, where buyers outnumber sellers, some buyers waive the appraisal contingency. These buyers either pay cash for the home or gamble that they have money to pay the difference between the appraised value and the price, however much that may be.

rather than waiving the Appraisal contingency entirely, offering to cover the gap on a low appriasal is the middle path. You’re offering some amount that you will make up via a larger down payment.

Take the example of the $120,000 offer on the $100,000 home that has a $10,000 difference between the purchase price and the appraised value:

  • If you had offered to cover an appraisal gap up to $10,000, you would proceed with the purchase, bringing that extra $10,000 as a larger down payment.
  • If you had offered to cover an appraisal gap up to $5,000, you would be entitled to withdraw your offer and get your earnest money deposit back. That’s because the difference between the offered price and the appraised value is greater than the $5,000 appraisal gap coverage.

At this point, the seller may wish to negotiate with you to keep the transaction in tact and they may agree to lower the price by the remaining $5000.00 difference, or they may choose to go to the next buyer.

You’re more likely to succeed when offering appraisal gap coverage if you include proof of funds to do this as well.

If you’re lucky, you may not have to worry about appraisal at all. The bank may waive the required appraisal if they can see market conditions support it and that the buyer is bringing 20% or more as the down payment.  This means that they look at the market data and determine that the property is likely worth the purchase price, but you will not know this until you’re closer to closing. 

Things to think about

A couple of things to add as you consider whether or not to do this on your next purchase agreement:

Think about the home you’re buying, it’s condition, price, and location and what you’re willing to do to purchase that home. You want to be doing this for a home that will hold or appreciate in value.

Because of the market conditions, home prices nationally increased over 14% year over year. Median home prices in Minneapolis and the Twin cities went up 10.9% year over year according to the Minneapolis Area Association of Realtors.

Put that into perspective with your purchase.

If you are buying a home priced at $100,000 today and prices continue on their current path, that home would be valued at $111,000 a year from now.

If you’ve agreed to make up $5000, or $10,000 in low appraisal, the likelihood that you will be “whole” in a short period of time is there.

Another consideration is whether or not you will be able to afford a home in a year or two if this continues and if interest rates continue to rise.

So, it’s a math problem. Never been a big fan of math problems, but looking at it this way really adds some clarity and perspective. 

Reach out with questions! I’m always happy to help.

Home Buying · home selling · market updates

Minneapolis Real Estate Market Update Feb 2022

A month goes by in a hurry it seems, so here we are! Did a month make a difference with the real estate market? YES. It is notably busier!

Click here to watch. ūüôā

I don’t think I’m telling you anything you don’t already know, but the real estate market is on fire.¬† Someone hit the gas pedal on the housing market in February and they have a lead foot. What does this mean specifically?¬† Let’s look at the twin cities housing market as of Feb 18 2022.¬†¬†

signages for real property selling
Photo by RODNAE Productions on Pexels.com

If you are a seller – LIST NOW and you’ll be partying all the way to the bank.¬†

Just about every listing is getting multiple offers in the first couple of days. The supply of buyers is so great and the supply of homes is so low right now Р15% fewer listings on the market than last year at this point! 

Why are sellers hesitating? I assume that it’s because they are worried about finding THEIR next home.¬† As an agent that represents a lot of buyers, I can tell you that sellers can not only command great prices for their homes they¬†can still get a closing date that suits their needs. For example, if a seller is considering putting their home on the market, but are worried it will be gone in a blink, there is a great likelihood¬†that the seller can ask for and receive a 60 close, flexible closing, or recently I’ve seen them asking for a seller’s home purchase contingency or lastly a rent back situation after closing remembering that most conventional¬†loans require the transaction to close in 60 days on the buy side so no long term rentals this way! but this way the seller will have cash in hand and be able to buy while also have a roof over their heads while they wait for their next home to be available.¬†¬†

One of the things that I really like about real estate is that EVERYTHING is negotiable – as long as the parties work it out (within the law!) and get it in a signed contract, the parties can work together to find a solution that works for everyone. Do you have a creative way to structure a contract that lets everyone get what they need?  Bring it up and there may be a way to make it work out!

This past week we had offer acceptance rates at 15%, which means that sellers are receiving 6-7 offers on average. But the average for the month is hovering around 35% according to Home Free Transaction Coordinators. I’ll give you more info on what they see in a successful offer after I take you through current market conditions.¬†

Absorption rate

It’s a seller’s market, but to what degree? In the past I’ve explained that the way that we determine this is based on the absorption rate or how many months worth of housing inventory we have at a given time if nothing new were added to the market.¬† 5-6 months is considered balanced, more than that is a buyer’s market and less is a seller’s market. Obviously the more extreme the number the¬†more it favors one or the other. That obviously varies by housing type.¬†¬†

Single family homes have a .56 months (about 17 days) supply now as compared to one year ago when they were at .62 (about 19 days).  We have started this year off with available inventory down by 21% year over year. New listings this month are down by 15% from last year.  

I was looking for a bright spot and looked at new construction. Builders are responding to the need for houses and have started increasing their production too.

This image shows the big dip and now the increase starting in single family new builds between $400 & $600K. Its not dramatic, but any amount helps – if you have 50 more houses that’s 50 buyers that have found something.

If you have been thinking about selling and are curious about what your home is worth today, let me know. I’ll give you a free estimate of what your home is worth today – absolutely no obligation, just for your information if you want to know – just send me an email. We need homes and now is definitely the time to get the maximum amount of money out of your sale! mschumann@kw.com if you’re curious. I’m happy to do it.

Townhouse/ Condo properties are at .97 months (29 days) vs 1.13 a year ago (34 days). Prices on Townhouses are at a median of $267,000 which is UP 12.2%.  Average days on market for a townhouse is down 26% to 14. 

Condo prices are at a median of $195,000 up 6.6% from last year and are on the market for about 30 days. If you are a first time buyer or someone that likes condo living, this is the softest spot in the market today and your biggest opportunity. 

Single family homes in the 14 county metro area have a median price of $370,000, a gain of 12.1% year over year. They are on the market for NINE DAYS. Only about half of what we saw a year ago. And don’t fool yourself thinking you have 9 days to think about it, this is a listing going live on a Thursday, showing through the weekend, closing offers on Sunday and allowing a 5 day inspection period before heading to pending.¬†

The combined absorption rate (all property types) is at .67 months or 20 days of inventory as opposed to one year ago when we had a whopping .75 months or 22 days of inventory. 

What can you do if you’re a buyer?  

Here are my suggestions and strategies:

1.my office posts properties to agents internally that are off market and that sellers are willing to part with before going onto the MLS, so having that network available helps a lot!  

2. make sure you see what is available in “coming soon” and get in there quickly¬†

3. even better if you have the nerve-  offer “sight unseen” while in this status. if the seller will do it, you can usually negotiate an inspection this way and if there is something wrong with the property get out of the contract without losing your earnest money, this does require a good offer out the gate. It’s not a way to get a bargain, but is a way to quit losing in multiples.

4. make your offer more appealing are to offer appraisal gap coverage. This means that if you are financing you are stating that you have the ability to make a larger downpayment¬†in order to cover the gap between your offer and what the bank is willing to loan you, having cash is a very important piece of the puzzle in this environment.¬† You can offer any amount of appraisal gap coverage – it doesn’t have to be 100% of the difference!

5 Look at “wallflowers” these¬†are properties that have been on the market for longer than 4 days. This means they have made it through a weekend without getting an offer and may be more willing to negotiate or look at a reasonable but not extreme offer. These can be homes that a buyer got cold feet on, that their financing fell through or other scenarios.¬†

6. Don’t ignore properties that need work!  You can get a home loan that rolls a remodel into it. Not everyone can look past a dirty unfinished basement but it’s rarely a bad investment to add finished square footage to a house – especially in an in demand neighborhood. 

7. Do you have time? Offer on new construction. You eliminate multiple offers and choose your finishes.  Just be aware that contracts allow builders to cancel your contract if the price of materials goes up and you can’t cover the increase. Don’t get yourself in too deep. 

8. There aren’t a ton of these available but spec houses are a good option. They may be completed new builds OR they may be nearly completed with an estimated move in date already.  

9. my last option coming to¬†mind to look at loans that allow you to offer as if you’re offering CASH – without a financing contingency. This seems like a HUH??! moment, but in my video next week I’ll interview a lender with a program like this that may give you a leg up and I’ll post it here, of course!

Accepted offers

OK – lets look at what’s been going on with offers per HFTC: 

Buyers are waiving inspection 46% of the time, this is a lot, but that also means that 54% of the time they are getting an inspection. 

Off market sales are at 12% – this is the “private listing network” that I mentioned where agents that have upcoming listings market them internally first.

Sales Contingent on the sale of the buyer’s home is down to 5% of the time. 

Average sale to list price is 103.2%. I don’t know where these are happening because my buyers have been offering at 15% over and losing… We would be happy with 103%!

Cash is at 17% of offers, Conventional at 69%, FHA has ticked up to 5%, VA is at 0. 

Hey! I would love to hear from you in a comment or an email or a smoke signal … reach out if you have questions! 

Home Buying · home selling · market updates · Uncategorized

Minneapolis Housing Market 2022 Forecast

Hi and happy new year! Who wants to start the year off with some DATA and a look at what the real estate market is doing PLUS what I believe will happen with the housing market in 2022? I actually LOVE data – it tells a very clear story, so let’s dive in and take a look at what that data is telling us. 

Prefer to watch rather than read this? ūüėČ


I wish I had a crystal ball to tell you what is going to happen to the real estate market in 2022, I don’t, but I will make some educated guesses! In addition to that I’m going to share with you what the offers that have been accepted have looked like in the past month.

I like that info because it is ALSO a gauge for how strong the market is – what are sellers wanting to see and what are buyers willing to do to win?

Sisyphus at work


in 2021, being a buyer (or a buyer’s agent!) could feel like pushing a boulder up hill. It was hard, tiring, a little stressful but it was ultimately satisfying if everyone hung in there (I’m stubborn – I don’t quit). 

It’s me. I’m stubborn like a mule.

The market was really rough for buyers because demand for homes here is HIGH and supply is LOW.  I think many of us went into this winter hoping for a bit of a break on the horizon, but the numbers are not making it look like that will be the case. 


Inventory of homes was really low LAST January first – historically low! and as of the first week of january this year we have 15% fewer listings on the market to choose from than we did then.¬† We are still in a ridiculously strong seller’s market.¬†

Fun fact – the last time the market was considered “balanced” in the twin cities was 10 years ago. It has favored¬†sellers¬†ever since and doesn’t seem to be lightening up at all.¬†

As a colleague said today, there is a lot of national press saying that the market is loosening up but the numbers tell a different story. 

It’s important to look at DATA for the market you’re in and understand what that means for your situation. So let’s look at the data for the twin cities – you know that price is a function of supply and demand, and we have already established that supply is low. It has been consistently low for years and the recent challenges with supply chain and lumber prices are not helping supply to correct that quickly.¬† It’s going to be a long term process.¬†

Absorption Rate

Realtors look at how many months supply we have of homes available to sell if NO OTHER HOMES ARE LISTED in order to determine what kind of market we are in – 5-6 months is considered a balanced market, fewer months worth of inventory favor sellers and the smaller the number of months the more strongly it favors them, and vice versa for buyers.


Currently, the total months supply we have now including ALL property types is 8/10 of one month.  .8 months is WAAAAAY less than 5-6 months.

If you break this down further you see that single family homes are at .7 months supply this year (one year ago we had 9/10’s of a month), Condos have been the softer spot and currently have a 1.6mo supply down significantly from a year ago when we had 2.8 months, and townhomes are just like single family homes with .7 now vs .9 a year ago.¬†

An interesting thing to me is that high end homes are seeing the market tighten up a lot now too. That area had more wiggle room last year, but it looks like that is no longer the case.

Broken down by price point

Median price by property type


If we take a look at prices we see what this high demand has done over the course of a year, single family homes are at a median price of $360,000 UP 10% year over year from $326,300 (emphasizing that this is a MEDIAN price for the entire metro area, obviously prices range widely!)

Townhomes show a similar increase of 8% from $240,000 a year ago to $259,900 now.

Condos despite being the soft spot ALSO rose in price Рthey are at $191,000 up 11.6% from $171,000 a year ago. 

Demand side of the equation

The other side of the equation is DEMAND. What leads to this high demand? 

A couple of things that I can think of the first of which are the low interest rates. The Fed is talking about raising them this year but even if they do, these changes are typically incremental as they test to see the effect on the markets for everything Рnot JUST homes.

If the rates rise a bit – even to 4%? will that tamp down the demand for homes?

I personally don’t think it will have an enormous effect, the demand is so high, and even 4% or 5% are STILL low interest rates. In the past I have paid interest at 8.25% for my first home, 6.5% for my second, we paid 4% and thought we had a steal when we moved to MN! Yes, we refinanced when the rates dipped again, but you get my point. It’s relative, and people want a place to live that¬†belongs to THEM and gives them essentially rent control and a predictable¬†expense PLUS the joys of having your own home.

The second factor in demand is the fact that a very large bubble of millenials is aging into a time when they want to do the things that people do in early adulthood Рget married, have a family, BUY A HOUSE.  This bubble, or boom, is driving demand for homes.

Tips for BUYERS

If you are thinking of selling, your property will likely get scooped up VERY quickly this year. If you are thinking of jumping into the pool to BUY, I have some advice:  

1. Understand that you are going to be in a difficult situation, you aren’t the only one looking at a house and if you decide to offer on it you will be competing with many other people.¬† Do your best.¬†

2.) steal yourself for the process. If you don’t get the first home you offer on, it will likely hurt a bit, get back in the saddle and try again.¬† SOMEONE wins every one of those multiple offer situations – that someone CAN be you. You just need to have the chops to hang in there and keep swinging. If I’m working with you, I’m going to have your back every step of the way and help you present your offer in a way that makes the seller say – YES – that one!¬†

3.) very important! Look at homes listed UNDER your max price.  Almost NOTHING goes for list price right now, so you need to put yourself in a position of being able to offer over list.  

4.) A corollary to #3 is that you should save as much cash as possible so that you have that wiggle room to cover appraisal gaps or increase a budget and put a smaller percentage down if you need to. 

5.) lastly, don’t stop looking at the times when everyone else has stopped looking! If it’s a holiday or WINTER, now is a good time to look because you are competing with fewer buyers even if the supply is lower, too.¬† I love to look on holiday weekends – sign me up for Memorial Day!¬† I’ve not really had a break over the Christmas season this year because listings are selling now as well as buyers getting homes while everyone else is hung over from too much egg nog. STAY IN THE GAME. Take advantage of the situation.¬†

Offers that are getting accepted NOW

Let’s look at what types of offers are getting accepted right now according to Home Free Transaction Coordinators – what are sellers looking for and buyers offering in the effort to get a home?¬†

Offer Acceptance Rate: 52% this indicates multiple offers to me. We have been quite low on this in the recent past Рunder 30%

Inspections were Waived 30% of the time – summer was over 50%, now seems like a good time to buy if you REALLY want an inspection

Pre-MLS Sales: 4.4%, these are sales that happen off market, private network of agents marketing them to each other.

Average Purchase to List Price is the lowest I’ve seen this year at 100.87%, this was up around 105% in summer!

Financing Types: 

Cash 19% – this is the highest I’ve seen and I can say that it reflects my own personal experience recently.

Conventional loans 73% – still the big daddy, and always will be.

FHA 2% still tough¬†to get these accepted and that kind of stinks, but when you’re going up against cash, I can’t blame a seller.

VA 4% this is the highest I have seen in a year at least.

USDA 1%, 

Other 1%

Seller contribution to Closing Costs: 37.8%, this can be in lieu of fixing something.

Home Warranties included in the sale 5.6%

Offers Contingent Upon the Sale of the Buyer’s Property are at 6.7% – this is actually DOWN quite a bit, I believe not too long ago it was around 10-12%. Try to avoid this of possible. It’s really tough to get accepted.

If you’re exploring communities, check out my neighborhoods and suburbs playlist on YouTube to take a look at different areas of the metro.¬†

Let me know if you have questions or comments – love to hear from you!

Home Buying · home selling · market updates

Twin Cities Real Estate Market Update – Fall 2021

Let’s talk about the Real Estate Market in the twin cities! It’s been a little bit since I’ve done one of these updates, and typically there is some seasonality to the real estate market, with a big slow down in the fall as holidays approach and things picking up in the early spring.¬† Is that the case this year? Let’s find out!¬†


So, how’s the market? If there is one question every agent hears all the time, this is IT! And I think everyone knows the market has been¬†GREAT for sellers and really rough for buyers, so the question is has that changed? The information I’ll give¬†you here applies to the 7 county metro area, but you should know that every neighborhood has its own micro market and behaves a bit independently from the whole, this information is just a snapshot of the general market behavior right now, if you’re curious about your own little niche – let me know and I get you more specific #’s that apply to your specific area in the metro – just send me an email about that and I’m happy to help.¬†


I was able to get a look at some¬†historical data comparing this year to 10 years ago and one of the things that stood out were that the #¬† of active listings that are available to be sold has continually decreased to nearly HALF of what we had then – we had 10,229 homes to choose from in 2016 and now have only 5,692. This isn’t sudden, it’s a distinct trend line going down over the past 10 years.¬†The inventory issue did not sneak up on us and it isn’t going anywhere.

 
If it’s prices that are freaking you out they peaked in summer and we are now seeing the fall dip. So this could be the time to get a better deal on a home than getting into the scrum with everyone else during peak season.¬†


If you remember from other updates, I like to reference the “absorption rate” how many months would it take for the market to sell or absorb all the homes for sale¬†on the¬†market if no others were listed?¬†

5-7 months worth of housing inventory is considered “balanced” and any number of months less than that indicates a sellers market and a number HIGHER than that is a buyers market.¬†

Right now we have 1.03 mo supply of single family homes, 1.34 mo supply or condos and townhomes, and 1.12 combined mo supply of homes total.  A very distinct sellers market!  STILL! but better in some degree than earlier this summer when it was less than one month  Рsomewhere around 2-3 weeks, and that takes into consideration days on market and active contingencies like inspection. Reality was that things were sold in a couple of days. And that is STILL the reality depending the price point, condition and the location of the home.

Median Price for Single Family Homes
Median Townhome Price
Median Condo Price


Let’s look at¬† what¬† sellers are deeming a good¬†offer¬†right now:

  • Offer Acceptance Rate: 62%¬†-this has been as low as about 33% this year
  • Inspections Waived: 31%¬†which is down from the highs over 50%.¬† I am still seeing this come up a lot in multiple offer situations, and if people are bidding on a competitive house getting an inspection can still be a sticking point.¬†
  • Pre-MLS Sales: 2.74%¬†–¬†this is lower than it’s been for most of this year – we have seen these off market properties make up around 5% of sales over most of the summer
  • Average Purchase to List Price:¬†sellers are getting of their¬†asking price¬†100.67%¬†– great news for buyers and not awful news for sellers. You’ll probably¬†get your asking price.¬†

I will say that this is much MORE likely if it is a single family home as condos and townhomes are still soft spots. 

The most recent 3 transactions that I have had have ALL had multiple offers, (7-9 offers), one had an accepted offer at 10% over list price, one at¬† nearly 6% over list and the last I don’t know the outcome because we didn’t get it but we offered (and lost) at 10% over list and were told¬† they accepted a cash offer with NO contingencies (no inspection!).

All of these homes were in the tightest price bracket of $300-$500K.  No matter what the statistics say this continues to be an area of really fierce competition when it comes to homes that are in high demand areas and in good condition. 


Financing Types:

  • Cash 14%,¬†– if you have the means to make this kind of offer it can really give you an edge. I am aware of some mortgage products that allow you to make a cash offer so if you’re in a competitive price point, and feel like this might be the answer, know that there are options out there and I give help you find out about this.
  • Conventional¬†loans are still the big dog at¬†74%¬†of loans.
  • FHA¬†represented¬†10%¬†of the accepted offers which is a nice bump up!¬†This is great to see for people that may be first time buyers and need the extra room that an FHA loan grants them.¬† It’s just been difficult to get an FHA loan accepted in this market when you’re being outbid by people that can guarantee appraisal gaps or provide other financial incentives (like cash purchases!).
  • VA 1%¬†still a tough spot to be in , if you’re not familiar with VA loans, they¬† are a zero down loan. This is a really tough spot¬† when appraisal¬† gap coverage is needed, so if you’re in a position to take any other type of loan, that would probably be beneficial to your offer.¬†
  • USDA 0%¬†– these are typically on land or rural purchases, seeing a low number here for a metro area is not surprising.
  • Other = 1%.
  • Seller Paid Closing Costs: 31%¬†– this keeps going up!
  • Home Warranties:¬†were included¬†9.6%¬†–¬†another statistic on the rise – so these indicators all show a very slight softening from the harsh days of early summer for buyers
  • Contingent Upon the Sale of the Buyer’s Property:¬†7.5%¬† A little lower than we’ve seen in other months, but present!


Thanks for stopping by! If you’re interested in learning more about the different neighborhoods and suburbs around the twin cities, check out some of my videos highlighting those! I have a playlist dedicated to this with lots of good information if you’re thinking about making a move.¬†

home selling

Curb appeal for pennies.

You’ve heard that saying that “you don’t get a second chance to make a first impression”? It’s true. You’ve gotta get them in the front door! And you really don’t want buyers coming in with reservations about the house before they actually walk into your home!¬†


Today I’m going to give you easy and¬†inexpensive¬†(or FREE!!) ideas for making your house look super inviting and keeping buyers from making their showing a “drive by”.¬†

If you’re thinking of selling your home, download my “7 Tips to a Fast Sale” – It’s free in the description box below the video or you can email me and I’ll send you a copy. mschumann@kw.com

Here are some cheap and easy ways to make your curb appeal top notch!

Often when we live somewhere for a long time we stop seeing things that are minor and might need some spiffing up, but buyers won’t miss them, and may think that this reflects on the quality of the home overall and the PRICE.¬†

I spend a lot of time with buyers and I hear the things that come to their attention as they look at a home and how they perceive them Рlittle changes can go a LONG way toward making buyers excited about coming into your home and it will PAY OFF when offers come in. When people perceive the value to be high they WANT to win the bid.  Obviously curb appeal is just one aspect of that, and it is often a quick and inexpensive fix.

I’ll start with the most expensive of the things I’ll mention (and it’s not expensive!) – updating an exterior light fixture.¬† This isn’t something we spend a lot of time looking at on our own homes, but I think of them like the jewelry on a home.

LIGHT

Take a hard look at yours – are the light fixtures dated, faded, dirty and crusty looking? Maybe it just needs a good cleaning, or if you are great with spray paint and want to take it down and tape off everything and give it a fresh coat of paint to freshen up the metal, awesome! But if you think it could use an update and make your home appear more modern or current, you can get a new light and install it within an¬†hour¬†for less than $100.¬† No lie. I’ve installed MANY light fixtures over the years and if I’m still standing, it means you can do it too.¬†


Speaking of jewelry on the home – while you’re looking at the light fixture, check the house numbers. Our house had tiny squiggly super cheap house number when we bought it, I replaced them with larger, clean lined, fresh ones and was stunned at the difference.¬† So many times I’m out walking my dog through the neighborhood and I love looking at homes (of course) and one of the things I’ll notice is a great set of house numbers. Some of these can be quite expensive, but they don’t have to be! You can really show your attention to details with a set you pick up from the local Home Depot or another hardware store.¬†

Make it fresh and HAPPY

Photo by Georgia de Lotz on Unsplash


Still focusing on the entryway (the place where the buyers will stand examining everything while they wait for the agent to get the door open!) look at your front door. Is it faded, dirty, scuffed up or the does the color lack punch? You should consider painting the front door.¬† It’s less than a quart of paint and an hour of your time to have a fresh clean happy looking entry way.¬† Maybe $15?¬† Then add a pretty wreath if you want – to me a wreath¬†says WELCOME. If you’re in a condo – this can be your curb appeal! easy.¬†


Now make the rest of the entry shine by making sure you’ve swept down any cobwebs, replace lightbulbs¬†so that the porch or entry has a bright welcome, and replace the welcome mat if it’s not new. Sweep the surface of the stairs, and if your sidewalk or steps aren’t looking very fresh, borrow a power washer and give them a good cleaning.¬† I know I’m not the only one that loves before and after videos of power washing… so satisfying! Also free and worth doing – clean any glass on the door or windows nearby. ūüôā¬†

Set the stage

Photo by Ian MacDonald on Unsplash


If you are lucky enough to have a porch, put out a chair with a bright pillow that picks up your door color, add a side table to¬†show that it’s a great place to sit with coffee, greet neighbors, or watch the kids play. People want to imagine how¬†they¬†would live in the spaces and making it inviting right from the moment people approach is important.¬†

Details… Look at your landscaping

Now focus on your landscaping a bit.  Make sure your grass has been mowed, and go the extra step and edge around sidewalks. This looks really sharp and gives the impression of care. 

Photo by I Do Nothing But Love on Unsplash


Make sure you pull weeds! I have seen more than one house with weeds coming up through entry steps or sidewalk cracks. I wince because details matter and this is EASY and FREE. 

Make sure to trim back bushes and trees so that they are easy to walk past, that they are not allowed to obscure the house, which is a double no no Рit makes the house look creepy and overgrown from the outside and often blocks a precious FREE resource INSIDE Рnatural light! Nearly everyone wants a home filled with natural light.  Especially if you live in the north! 
Add a fresh layer of mulch to garden beds and clip back or pull out anything that isn’t looking fresh.¬†

Adding fresh flowers to a pot or two as you approach the house really adds a welcoming touch but if you aren’t much of a gardener, you can find fake plants easily and for not a lot of money at home stores.¬† I honestly can’t believe the deals I’ve found on them lately when I’ve been out shopping for staging materials for my listings.

Photo by Alisa Anton on Unsplash

If you’re selling in winter use evergreen branches as your “potted plants” to add life and warmth to the front of the home. I’ve picked up premade bundles from greenhouses and they last forever out in the cold and really make a good first impression.¬† This is not 100% curb appeal, but if you are selling in winter, do not neglect to keep your sidewalk absolutely clear of snow and ice. Falling on ice or wading through snow isn’t the best first impression.¬†

Let me know if you have questions, feel free to download or request those tips for selling, they address things to consider for the house as a whole. 

Home Buying · home selling · Living in Minneapolis

March Real Estate Market Update

My last post & video about this were pretty well received, so even though numbers aren’t flashy, I’m going to try to make this a monthly feature as we navigate through this crazy market. This post has some good little nuggets in it if you’re in certain segments of the market, so stick with me.

A bright spot for buyers?!!

Last time I posted about the market I gave an overview of “absorption rates”, this is going to be a recurring theme, so if you want to check that out you can find that post here: https://twin-cities-living.com/2021/02/26/i-had-other-plans-for-this-weeks-post/

There is an obvious lag in the data because we need to look after homes close and that shows up in the MLS, but I do get some data relatively quickly thanks to Minnesota Transaction Coordinators, a company that helps many of us with processing our transactions.

Let’s start there with their analysis of terms that they see in contracts.

Inspections

In the past couple of months we’ve seen quite a few buyers deciding to waive the inspection in order to release one more contingency ahead of everyone else. By “a lot” I mean 38% of buyers were waiving inspection in the first 2.5 weeks of the month, but when they looked at the first through the 26th the rate went to 31%. That means that enough people have STOPPED waiving them to lower this percentage by 7%. Buyers are insisting on protecting themselves and sellers are acquiescing to that.

Offer acceptance rates

Even better, offer acceptance has gone from 31% for the month last week, to 39% for the month over all as of the 26th. YAY!!!! Sellers are accepting offers! I represent a lot of buyers and it has just been TOUGH. So this is great news.

Homes listed on the open market vs witheld

In an office as large as mine, we often hold listings off market and only market to agents within the office. This shrinks the pool of who looks at the house which is desirable for a lot of reasons – from Covid, to privacy, to simply wanting to not have to deal with the preparation and hassle of selling on the open market. Sellers can name their terms and if another agent has a buyer that can meet those, there is a happy meeting of the minds without all of the associated prep work, exposure, etc and everyone feels satisfied. The number of sales that they have worked on in this status is down to 5.6%. This is good because more homes are hitting the market than have been.

Percentage of list price received

Current purchase price to list price ratio is “down to” 104% from 105% last week. It has been hovering between 103% and 105% in the past couple of months. It’s good to have that number in mind, even though it’s not a fixed price, it’s an idea of what you should think about when offering on a property that has a lot of interest. Price is not the entirety of a an offer, there are a lot of other terms that need to be in line as well, but this is good info for this metric.

Seller paid closing costs

26% of deals include some seller paid closing costs. I have to assume in this market that the offer price was increased to account for these, but I like that we are seeing it because it means sellers are accepting these terms.

Forms of financing

76% of loans are conventional (you do NOT need 20% down for a conventional loan! These are viewed as more favorable and if you can get a conventional loan it’s one more check mark on the list of terms).

FHA loans represent 10% of the offers, CASH 10%, and VA & USDA loans are at 4%.

Traditionally, inventory really increases around this time of year (inventory = homes being listed and available for sale). We currently have less than HALF of the listings we had 6 months ago.

Good news for downtown condo buyers!

Downtown condos are in a balanced market right now! If you are looking for a condo in the central city including neighborhoods like Loring Park, Downtown, University, Dinkytown, Elliot Park etc… now is the time. We believe that this is caused by the pandemic and people wanting to live in less dense housing + fewer people needing to be downtown for work, but don’t expect it to last with the speedy rollout of vaccine and life returning to somewhat new normal.

Days on Market are up to 41 (only from 38), but these are the kinds of indicators that let buyers know that they will not likely have to pay more than list, that sellers will be willing to negotiate because they know you can find another condo to buy and someone will play ball with you.

So that is what is happening! Sellers are still mostly in control of things, but if you’re a downtown condo buyer you’re in the sweet spot!

Let me know if you have questions.

Home Buying · home selling · Uncategorized

I had other plans for this week’s post…

Next week I’ll give you another neighborhood profile – I’m excited about my small town series, and I have one I love and plan to talk about, but this week I’m going to beat a dead horse a bit and talk some more about what is happening in the real estate market in the Twin Cities metro area. I don’t usually do “market update” posts or videos on my YouTube channel, but the fact of the matter is that right now I’m actively helping 6 buyers try to navigate this market and I want to share a bit of how we look at the market and measure it and then also show you what that means for the Twin Cities right now.

I swear … it was this big!

I feel like anecdotal evidence about how many offers a listing gets, how fast something sells or how far over list price the offers are is shocking at times or maybe sounds like a fish tale that we like to tell – “the big one that got away” kind of thing. Stories are great and interesting, but in this post I want to talk about DATA. Weee! Exciting!

Not exciting? Well, I disagree. I think this tells a very clear story and because it looks at the entire market and then breaks it down by price it might tell the story in a way that makes sense in a different way to more people. This is the WHY behind the HOW that I’ve talked about before when I’ve done videos/posts about making the best offer.

How DATA tells you if it is a buyer or a seller’s market: Meet the “Absorption Rate”

These are my words, not something from a real estate dictionary somewhere.

When we look at a market and try to decide who it favors we look at the number of active listings available in a 30 day period and then look at the sales. It’s a ratio. But the way that I think is easiest to visualize this ratio is as the “absorption rate”. This rate shows us how long it would take for ALL houses actively listed to be sold if NO OTHER homes were put on the market during that time.

We are measuring time in months for this exercise, and the magic number of months where REALTORS feel that the market is in balance is 5 (not set in stone, some argue for 6 months etc). This means that when it would take 5 months for every home to be sold should no other homes be listed, the market does not favor either a buyer OR a seller.

Any number smaller than 5 indicates a sellers market. The smaller the number the more it favors sellers. This works in the converse as well, the LARGER the number over 5 the more the market favors buyers.

What is the Twin Cities absorption rate today?

Emphasis on TODAY because this rate changes seasonally and with market forces – I’ll talk a bit about what those are too.

The current absorption rate for the Twin Cities metro is 0.86. LESS than one month’s supply of homes. Very much in the favor of the seller. And it is not getting better – in the past 6 weeks the rate has consistently decreased from 1.32 the first week of January to where we are today.

The last half of 2020 was a crazy market, due to Covid hitting in spring and the uncertainty that brought with it there was a lull in what would typically be the busy spring market, but once everyone got their bearings it was off to the races and it never really slowed, even during the holidays. Add extremely low interest rates into the mix (under 3% for a pretty extended stretch), and a bubble of Gen Y aging into home ownership and bumping up what was already high demand from buyers, and things have just not cooled at all. All of this to say we sold a LOT of homes last year and possibly ate into what would have been inventory for this year. January 2021 started with 38% FEWER listings than we had in January 2020.

Supply continues to drop, particularly in the under $300K price range where new listings are down 15% YTD. The over all market YTD has 6.9% fewer listings. If you’ve taken any economics classes at all you’ll know that price is a function of supply and demand. We have low supply and high demand and that is pushing prices higher as people bid against each other for homes.

Absorption rate by price point

The best way to show this is to give you a screen shot of the table that we looked at in our data meeting this week. I love this table because it breaks it out by general price points and you can see the trend over the past 9-10 months for each. You’ll notice that higher price points have slightly looser markets because there are fewer buyers that can manage those budgets. I do think that the $500-$1M may need to be broken up a bit because at $500K there is still a quite a large bubble of buyers that are able to enter the market and compete for homes at that price. There may be a break closer to the mid $600’s where the ratio gets closer to 1.4, but I think $500 is still quite competitive.

credit to Tim Sipprell who pulled this together for our office
baby data geek

So, that is the data geek light version of the market at this point in time in the Twin Cities. An opportunity again for me to encourage you to be as prepared as you possibly can be before you enter the fray. You really need to be in the best position possible if you want to land at the top of the heap when you get into this market.

Let me know if you have questions… ūüôā

home selling · Uncategorized

Selling your home FAST during the holidays (or hey, how about just in WINTER!)

Believe it or not people here in these northern climes still buy and sell real estate even when Christmas is coming or we are in the depths of a bitterly cold winter. People have to move. I’m one of those people – 4 out of the last 5 moves that I have made have been in either the end of December or the beginning of January.

Summer sales have the benefit of showing your home at its lovely best – flowers in the pots, green grass, leafy trees, birds chirping… no ice, no black snow, no howling wind. But in the winter? Well, you have the benefit of less competition both on the sell and the buy side. People who are serious are looking and those who have a hobby of looking at homes without pulling the trigger may actually decide to stay home.

So how do you attract buyers to your home like a moth to a flame? Here are 6 strategies to use when you’re selling your home in what you might not think is the “ideal” time.

Make your online presence shine

Photo by Ryutaro Tsukata on Pexels.com

Most people shop online first! So the number one thing you can do to make sure that your home stands out is have a really beautiful online presence. Your realtor should be hiring a professional real estate photographer – NOT snapping pics on their iPhone, even if it’s the latest and greatest. Professional real estate photographers know how to make a home shine online.

Do the prep work to get the home “staged” before pictures too. You don’t have to hire someone to come in, and you can use your own things, but take a critical look at the quantity (less is more to a point) and then make it look cozy with appropriate art, accessories and pillows. You’re creating an ideal for someone. You want to make it look like a space that they can imagine themselves living in.

Play up the holidays!

Photo by Any Lane on Pexels.com

If you have a sweeping staircase or a mantel, put greenery and twinkle lights on them, set up some candles – faux are great because they don’t have a scent, no fire risk, and they can be on during open houses or showings. If you have a gas fireplace, have it lit for photos, or turn it on before showings if you’ll be right back. If you don’t need to worry about little ones, I would even say to have your table set as if you’re about to have a party.

But, keep it simple and understated, not over the top. You’re creating a mood, and you don’t want that mood to be “I just stepped into Santa’s workshop”.

Make sure that the home has every light on, and that none are burned out, it gets dark in MN at 4:30 in the winter, people want to feel like they are being welcomed into a comforting space. Lighting goes a long way.

Be flexible with showings.

We all have a lot going on during the holidays, people are visiting, they may be entertaining (or at least in normal times) and not want to have showings that interrupt. It probably won’t feel that convenient to be letting people in to see the home in the midst of this, but, try your best to have the home show ready at a moment’s notice. People need to see it to decide if they want to buy, the more open, available & flexible you can be the better.

Make Curb Appeal a TOP Priority!

Photo by Lina Kivaka on Pexels.com

People will literally slow their roll – and then speed it right back up again if the house looks less than appealing on the exterior.

Make sure gutters are clean, sidewalks are shoveled and ice free, paint on doors etc is in top shape – maybe a fresh coat to the front door to make it pop?

Hang a pretty wreath, put down a cute new welcome mat, put evergreen boughs in your planters and highlight features that get use year ’round like fire pits or hot tubs.

Incentives!

If homes in your market aren’t moving very quickly or if you have a home that has a negative feature that is a challenge to overcome, especially with good competition, think about offering an incentive. If there is an appliance that you can replace, a home warranty to offer, a TV, or some closing costs that could be picked up if an offer comes in by a certain date – consider that as a carrot to entice a buyer to get off the fence and get that bit of extra incentive.

Do a themed open house!

Photo by Pavel Danilyuk on Pexels.com

Use the holiday to create a fun open house! Offer some holiday themed treats, have appropriate music, and make the buyers really envision spending their next holiday in the home.

Have questions about living in Minneapolis or the Twin Cities? Let me know!

home selling · Uncategorized

Selling your home? Do yourself a favor…

Right now – inventory is low, interest rates are low and it’s still a seller’s market, but that doesn’t mean you can be sloppy if you are selling your home. Houses get the most traffic in the first week or so, and right now most are under contract in that time. If yours sits there it will quickly raise suspicion – I think of it as having a “bad smell” to buyers – they wonder WHY it hasn’t gone and may avoid it. Don’t miss this golden window of opportunity by turning buyers off when they walk into your home. Especially because in this market they will likely be paying premium prices.

I also have a checklist that you can download (for FREE) of things to do to make sure your home gets sold QUICKLY and for the best possible price and did a video on this topic as well.

Click here! http://bit.ly/MSPMaryHomePrepChecklist

In this post I want to give you guys a list of 8 related things that you should take care of before you let the first buyer in the door.

ODOR

This one I can’t emphasize enough! Even as an agent previewing for someone, smells can drive me right back out the door. We’re talking about pets, moisture / mustiness, food odors like fried foods and strong spices, old food in the fridge, cigarettes (!!), and even air fresheners.

I’ve developed migraines in minutes when walking into a home that was hosed down with air freshener. Artificial scents can make people feel quite sick (even scented candles) and they also lead you to wonder what is being covered up?

Cigarette smoke is another one – I don’t see this all that often anymore, but I did go into a home that had obviously been owned by a heavy smoker. Even with all of the windows open it felt like we were in an ash tray. Depending on the severity of this, the walls should be painted with an oder killing primer and then paint, carpets & drapery removed etc. There isn’t a big market for homes that need to be remediated in order to live in them.

Check your fridge – people open refrigerators when they are looking at homes. We did and we regretted it. The seller had left fish in there for well past the time when it should have been cooked or thrown away and the smell nearly knocked us out. We didn’t make it past the kitchen.

Taxidermy

I don’t think this is just a MN thing… If you hunt or fish (and a LOT of people here do), take the dead animals off your wall when you go to sell. You can rehang them in your new home, but keep in mind that you are trying to appeal to the largest possible audience and you want to refrain from alienating people.

Actual Pets

I love dogs but not everyone does. Not everyone enjoys having a dog nose pushed into their nether regions, and many don’t enjoy “kisses” either. Your pet may also have some territorial feelings that surprise you and they may nip, bark or jump on people who are there to see the home.

Cats are usually easier – but they can be sneaky and slip out of an open door. NO ONE wants to be responsible for your pet escaping. If you have a cat, make sure that the litter box is sparkling clean. See “odors”. I’ve also looked at home with people that have kids who do not know what a litter box is… that’s fun when they think its a little sandbox! yuck.

Other animals – snakes, lizards, rodents etc. Remove them if you can, and if you can’t make sure the cage is secure and very clean.

Pests

Do you have an inkling that there might be a mouse? Seen a roach a time or two? Ants in the kitchen? Does Fido have fleas? Please make sure that ALL of these are handled before a potential buyer gets an unwelcome surprise.

Carpet

I’m going to say specifically in the BATHROOM. If you have carpet in the bathroom or the KITCHEN (I’ve seen it!), remove it and have a hard floor installed. That just screams DIRT. No one wants to buy someone else’s dirt. They don’t.

And if you have wall to wall carpet elsewhere, have it professionally cleaned before showing the home. This will help with any potential odors as well. (It’s a theme).

Ceilings

If you have acoustic tile ceilings in any room, it would be worth your while to have them replaced with drywall. This also applies to popcorn ceilings, people are very turned off by this. If the drywall underneath is good, it may be possible to just scrape this and paint.

Locked Rooms

Limited access to the building while you have a buyer looking at it will raise some questions. No one’s mind jumps to “that’s where they have their jewelry” – it’s usually more like “is that where they are keeping the bodies?”. Always lead with transparency and don’t introduce doubt or assume that someone will come back to take another look.

Mismatch

People don’t always replace all of their appliances at once, but if you’ve got avocado green & stainless steel it can be a glaring change and reinforce exactly how old the green appliance is. Some things (like refrigerators and dishwashers) can be inexpensively updated to match new ones with either a panel or appliance paint to give a cohesive look to a kitchen. It can be worth it to do this if the older items are in a good condition, if not, it is definitely a selling point to have new appliances in a home and knocks down an objection right off the bat.

Home Buying · home selling

Buying and selling homes and Corona Virus…

I wanted to talk a bit about how to navigate buying or selling a home now that we have to contend with corona virus. It’s an uncertain time and we all want to remain safe, and fortunately people have been buying and selling properties at a distance for a long time and we are equipped to adjust our business to minimize close contact and reduce the possibility of contracting it for ourselves and others.

Some recommended steps:

  1. If you are selling your home – you can list it in a ‘withheld” status. This limits marketing to only agents within a broker’s offices, NOT the general public. My broker has 800 agents, and any buyers that they represent would then be able to match their clients with your home. So, it’s not AS many people, but they are qualified people.
  2. As a withheld listing you would not be able to hold open houses (general public), but when you want to avoid contact with people, open houses aren’t recommended. Consider having a virtual open house if you want one, with the use of a 360 camera you can allow buyers to navigate on their own virtually, and it can exist for viewing longer than the hours of an open would.
  3. Virtual showings… if you don’t want to see every property in person, your agent can video the property and see if there are odors, defects that aren’t evident in the photos, a view of the neighborhood, etc. It cuts down on seeing quite as many properties in person.
  4. I ask sellers to leave ALL doors open, ALL lights on to minimize the surfaces that would have to be touched in the home.
  5. I bring Lysol wipes to all showings – and I wipe down the key box, kets, door handle, light switches, railings, etc so that surfaces are clean.
  6. Continuing with sanitation – hand sanitizer on the way IN to a house and hand sanitizer on the way OUT of the house.
  7. Screen buyers with health and travel questions.
  8. Use a virtual broker like Keller Mortgage… they do great work and they save you money! no loan origination fee, low rate, $1000 credit at closing for loans over $150K
  9. About the “market” – the one you sell in is also likely the one that you will buy in. If your home loses a little on price, the house you are buying likely will as well.
  10. Finally – people stay in their homes for 7-10 years on average. Home prices trend UP over TIME, the daily market conditions are only relevant if you’re buying and selling daily!
  11. You don’t have to be present for MOST things – even closings can often be done remotely. We use e-signatures on documents regularly – it’s a standard way of doing business already.

Thinking about buying or selling and have questions? Let me know your thoughts!