West Metro Minnesota Real Estate Blog

June 12, 2018

2018 Guide to Summer Family Fun in the West Metro

The kids are off of school and summer 2018 is finally upon us. Finding activities to keep your family engaged need not break the bank. Make it the best summer yet with some free outdoor entertainment options in the west metro.

 

Plymouth Entertainment in the Parks 
Today – August 14th

The city of Plymouth summer calendar of events features many diverse entertainment options centered around one of the most picturesque outdoor venues in area. The Hilde Performance Center features both a large amphitheater and small stage which combine to offer a flexible setting for live music, drama, outdoor movies and much more.

A full schedule is here, but highlights include:

  • June 19th Plymouth Rockers
  • June 28th Plymouth Concert Band
  • July 20th and 21st Prairie Fire Children’s Theatre
  • July 27th Annette Fragale Magic Show
  • August 2nd Kids Fest- ZooMobile/ Jolly Pops / Dazzling Dave
  • August 7th Dirty Shorts Jazz Band

And of course, no summer would be complete without a trip to Parker’s Lake Playfield to view the Shockwaves water ski show, set this year for July 17th.

 

Minnetonka Summer Fest
June 23rd

Minnetonka has laid claim to the weekend prior to the fourth of July on the city festival calendar, packing it with activities and surprises as a part of Summer Fest. The result is the hidden gem of west metro city celebrations complete with games, live music, an ice cream social and of course, fireworks. Additional activities include a tot trot, climbing wall, K9 police demonstration and much more.

Most activities take place at the Civic Center Grounds (14600 Minnetonka Blvd.) or the Burwell House (13209 E. McGinty Rd.) and the city offers an extensive PDF event schedule to ensure you don’t miss a moment of the fun.

 

Maple Grove Days
July 11- 15th

Celebrating its 30th year, Maple Grove Days offers a chance to showcase the northwest suburb over a packed five-day festival. Events include an art fair, fishing clinic, corn feed, tennis tournament and live entertainment. The focus is on outdoor activities throughout the city with fireworks capping things off on the 14th. Those seeking an early start to the fun (and $$$) can even participate in the medallion hunt going on now with clues on Facebook through July 12th.

 

Eden Prairie Movies in the Park
Friday’s in August
Staring Lake Park Amphitheatre 14800 Pioneer Trail

Eden Prairie offers an extensive calendar of events including theater productions, live music and much more, but a favorite end of summer tradition is their family-friendly outdoor movie nights. These take place at Staring Lake Park on Friday nights and always kick off with live music.

Local Farmers Markets

In addition to special community events, local farmers markets offer a weekly entertainment option that can get your kids off of their electronic devices and outdoors. While the herbivore in you will appreciate the produce, it’s really not about the vegetables anymore. Most  markets have expanded into true events that feature food trucks, music and much more.

Excelsior Farmers Market
Tuesdays 2pm -6pm
Water Street, Downtown Excelsior

Minnetonka Farmers Market
Tuesdays 3–7 p.m.
Minnetonka Civic Center Campus 14600 Minnetonka Blvd.

Plymouth Farmers Market
Wednesdays 2:30-6:30 p.m.,
Parkers Lake Playfield- 15500 County Road 6

Maple Grove Farmers Market
Thursdays 3-7 p.m.
Maple Grove Community Center- 12951 Weaver Lake Road

 

Posted in Market Update
May 29, 2018

Ask A Pro: Rising Rates, Inventory Shortage & Downsizing

May/June 2018 Real Estate Q & A 

This summer has brought transition to the housing market.  Rising rates, soaring values and low inventory have left many with questions.

Zach Adams has answers about today’s real estate market:

  • Rising Rates Impact on Buying Power
  • Housing Inventory Shortage
  • Downsizing

The economy is roaring and interest rates have risen, how serious an issue is this for a buyer looking to upgrade? – Rao in Wayzata

You are right Rao. Rates have risen fairly consistently throughout 2018. According to the Federal Home Loan Mortgage Corporation (Freddie Mac) 15 of the first 21 weeks of this year have seen an increase. This has carried average rates over 4.6% for a 30-year fixed mortgage (up about 0.7% in a year).

How big an impact this will have on you depends on a variety of factors. It is worth noting first however that the news is not all negative. While rates are rising they remain low historically. In addition, along with the increase in rates has come a general uptick in the value of most homes in our area. As we looked at last month, West Metro homes have appreciated well over the past year. So buyers like you who are looking to upgrade are likely well-positioned to find a new home and still attain a manageable payment.

Clarity depends on your exact situation and next steps require that we run a few scenarios. Rates are an important consideration, but property taxes, moving expenses and other factors also play into the equation. A Comparative Market Analysis can help you quantify things as it relates to your current home value and can inform your new home budget.

In addition, remember that finding the right home also means selecting the best mortgage. The median length of time a family stays in a home is 10 years. If your timeline is similar, it is doubtful that a 30-year mortgage makes sense. This opens up a variety of options to finance your purchase, each with tradeoffs of their own.

The only way to set a course is to run the numbers and consider your options. A consultation is a great first step

My wife and I have been searching for a home, but are getting discouraged. Why aren’t there more listings in our price range? – Brett J., Maple Grove

Thanks for your question Brett. I can tell you are frustrated, but encourage you to stay the course. You are not alone in lamenting a shortage of listings. While we’ve seen an active season, inventory remains challenging at certain price points (notably $300k - $500k). Compounding matters, when compelling listings do show up at that price point they often elicit multiple offers.

This makes buyer preparation crucial. Getting the home of your dreams in a tough market requires the ability to recognize contenders quickly and be ready to act.

Several items can help:

 

  1. Engage a Full Time Local Agent
    By working with an agent who knows your search area well and has the wisdom of experience, you can ensure speed in setting up a showing, prompt submission of an offer and a proactive relationship with the listing agent. Agent availability and experience are crucial to staying nimble and acting fast.

  2. Develop a Highly-customized Search
    Spending time to refine exactly what you are looking for in a home can help you and your agent collaborate to build a custom search and significantly cut the time from initial listing to showing to offer.

  3. Obtain a Mortgage Pre approval
    A mortgage preapproval can help make your offer more attractive to sellers in a competitive bid environment and offer better budgetary guidance to increase your speed to respond to contending listings.

The bottom line is that although it may not seem like it, inventory is increasing. Finding and buying your new home requires increased diligence in preparation along with a little patience.

 

My kids are grown and my husband and I need to downsize. Do we need to update things in order to sell?—Mary Anne, Minnetonka  

The scenario you describe is a common one, Mary Anne. You are not alone.  Baby boomers are retiring at a fast rate and many are looking at housing options that better fit their changing lifestyle and goals. The good news is that there are likely many buyers anxious to purchase your existing home.

In many cases simple carpet and paint can do wonders to prepare a home for sale. For others a few additional updates may be needed. While every home is different, some of the more common upgrades are listed in the article Crucial Updates When Listing the Family Home.

As to your home in particular, a walkthrough with an experienced agent should provide all of the info you’ll need.  An experienced agent will be able to assess your home and answer any questions you may have about updates and their impact.  In addition, if you choose to work with Zachary Adams and Associates, our walkthrough will also include a home valuation and net proceeds report.  These will spell out the financial side of any potential sale including not only a bottom line number but all of the information that went into arriving at that final number.  This includes comparable listings that have sold recently and an assessment of the overall market in your area.   

 

 

  

April 26, 2018

West Metro Home Valuations: How much can I sell for?

Home values may be up nationally but what does that mean in the west metro?  More importantly, how does that impact your situation?

 

Recent headlines paint a rosy picture for home valuations:

Home prices are on an epic run - CNN Money 4/24

Home Prices in 20 US Cities Rise by Most Since Mid-2014 - Bloomberg.com 4/24

And yet these national surveys are driven by a data set that is focused on major cities-- noting large upticks for San Francisco, Seattle and Las Vegas. This begs the question, where are values here at home?  More importantly, what does that mean for your personal situation? 

The answer to the first question is positive news.  In general, west metro values are faring well. While supply at some price points remains subdued, an active market is pushing valuations higher. These factors have combined with a late start to spring and low interest rates (for now) to drive continued price momentum.

 

West Metro Average Sales Prices

 

 

 March 2017

 March 2018

 Change

 Plymouth  $368,713   $402,086    +9.1%
 Minnetonka   $380,512   $409,065   +7.5%
 Maple Grove   $303,290  $319,543  +5.4%

 

These numbers taken at face value indicate trends that approximate or in some cases exceed the national trends.

Your Personal Situation

The answer to question two regarding how your personal situation looks is the often less-than-satisfying, "it depends".

The best way to help understand what your home might sell for is via a walk through, review and discussion with an agent who can provide a Comparative Market Analysis. Zachary Adams specializes in providing these for his prospective clients. His report can spell out a proposed listing price along with the metrics that led him to that number along with actions you can take to increase it.

Major factors include:

  1. Similar homes listed for sale
  2. Recent sales of comparable homes 
  3. A review of listings that failed to sell

The report will not only offer guidance for next steps, it also delivers a chance for Zach to share the various components that went into the analysis.  In this manner he can “show his work” and how he arrived at the valuation.

Perhaps even more valuable, Zach will also provide a companion piece called a Net Proceeds Report that will spell out how a proposed sales price might work out with your mortgage balance, potential closing costs and other factors included.

This delivers the bottom line of all bottom lines-- the amount you would net on a sale. This can help you define a clear path forward, make a decision on how to proceed and begin to vet new homes using realistic numbers and scenarios.

Getting Started

A first step to begin this process is to apply for an instant valuation on the Zachary Adams and Associates website. This is an online process that takes less than five minutes and can offer a quick snapshot value for your home.

Following the instant valuation, Zach will contact you to do a deeper analysis on your property and complete a Comparative Market Evaluation along with a Net Proceeds Report.  When he assesses your home he'll also be on hand to answer any questions you have about the process.   His extensive experience can help give you not only answers to questions but the confidence to define a clear path forward. 

For more information contact Zach directly at 612.656.9647, or simply click through and request an online instant valuation

Your new home is out there, making it a reality can be easier than you think.  Defining your starting point is an important first step.

 

 

 

March 21, 2018

First-time Homebuyer Resource Guide

Recent headlines paint a challenging picture for first-time homebuyers nationally. Yet in the west metro inventory is actually growing.  This makes spring a prime opportunity for first-timers to get in the game.

 

A look at financial headlines can be discouraging for potential homebuyers.

U.S. Starter Homes Are Scarcer, Pricier, Smaller and More Run-Down - Bloomberg.com 3/20/2018

Nationwide inventory is down and prices are up, creating the appearance of a real barrier to entry for new buyers. Yet as with all things real estate related, location matters and the west metro appears to be bucking the trend.

New listings Feb. 2018 -vs- Feb. 2017

Minnetonka                                  +8.6%

Plymouth                                      +7.9% 

Eden Prairie                                 +1.8%

Maple Grove                                -6.8%

 

Inventory strength in three of the four major markets versus last year indicates the west metro is faring better than many communities and the tight market may be easing.  When coupled with moderate mortgage rates this points to the fact that right here, right now may be precisely the time for newbies to get in the game.

Want to learn more about what exactly that means?  

A few resources can help answer some common questions:

 

Over 30 and Renting: How to know if it’s time to buy

  • How can I tell I am ready to buy a new home?
  • What factors should I consider?

 

Home Search Essentials: Finding the Best Realtor

  • What makes a good real estate agent?
  • What should I expect of them?

 

Decoding Online Property Listings

  • How can I begin to window shop and understand what’s available?
  • Are there best practices when searching the internet for a home?

 

Spring 2018 Buying Guide

  • What are the current market trends for spring 2018?
  • What do I need to know?

 

Home Financing 101

  • How do I qualify for mortgage financing?
  • Which mortgage type may be a fit for me?

 

First Time Homebuyers: Four Pitfalls to Avoid

  • How can I leverage the wisdom of other first-time homebuyers?
  • What would surprise?

The Bottom Line

While we have created a library of invaluable resources to aid the new homebuyer, they are no substitute for customized solutions. These require a consultation with an expert to listen, answer questions, understand your current situation and help you build a plan for the future.   

Zach Adams  has helped 100s of clients navigate the selection, financing and purchase of new homes in the west metro. He knows that every client is different and would love to meet you where you are in the process-- all on your timeline with your goals front and center. The home of your dreams is waiting for you. Contact Zach today to get started navigating from dream to reality.

Feb. 26, 2018

Empty Nest Resources: Rightsizing for What’s Next

Your empty nest represents a new opportunity. Finding the right home to support your new lifestyle requires a plan, but need not seem daunting. Five steps can help you get it right.

Many life stage changes lend themselves to a discussion about how your home can continue to support your family as your needs, priorities and lifestyle evolve over time. Perhaps none of these is more dramatic than the empty nest. Once your children are grown and (mostly) self-sufficient, the demand on your home can change significantly.

Several common issues include:

  • Too much home. Cleaning, maintenance and other issues can be more complex as you age and you may find yourself supporting more home than you need.
  • Misconfiguration. You may have the right square footage but the configuration of it is challenging. Stairs are tougher to manage and space for daily living is more spread out than you’d like.
  • Expenses. Perhaps you are helping fund education expenses or settle into retirement and wish to devote more resources to travel, hobbies and other pursuits rather than mortgage payments.
  • Health considerations. Acute or chronic, health issues can be complicated by some of the other examples like cost concerns or a poorly configured home.  Additionally other factors come into play like a poor location or simply a desire to prepare for the future.

Regardless of the reasons, a shift to downsize can create anxiety as you feel compelled to plan, but may lack an understanding of how best to accomplish a transition. Several steps can help you take control of the situation, understand where you are, where you are heading and how best to get there.

Understand the Value of Your Home

Selling a Home Contingent

The first step when building a plan is to understand your financial situation. This begins with a valuation of your current home. This will tell you how much you can expect to net in a sales transaction, how to maximize this amount and how closing costs and other expenses may impact your bottom line. A comparative market analysis from a knowledgeable agent who specializes in your specific geographic area can help immensely.

Define the Action Items to Maximize Sale Proceeds

The right agent will not only be able to put a number on your home, he or she will also be able to list the updates that might move that number. Frequently there are small changes to consider that may more than pay for themselves in final sales price. This requires an agent who knows the competitive landscape of your area and how your home stacks up.

Build Search Parameters for your New Home and Walk through some Contenders

Armed with a market analysis and an understanding of your budget, you are now ready to see what is out there in terms of inventory. An agent should work with you to set up a customized search to email you potential properties. Many find the home search to be the most satisfying step along the way as they envision their lives in a new home.

 

While that properly configured internet search can help you make the most of your time, there is no substitute for walking through several listed homes you think may be close. Do this with your agent who will ask questions to clarify what works and doesn’t, and can take those discussions to heart as he or she sources additional properties. This hands-on approach can prove invaluable as a professional will look at a home much differently than an eager buyer may. They see 100s of homes and can use the wisdom gained over time to make sure you are carefully considering multiple angles.

Contingent Sale Home

Get the Order Right

Perhaps the most important portion of buying and selling homes is coordinating timing. From the updates to your current home to staging and listing it and finding your new home, this is a delicate dance full of nuance. A knowledgeable agent can help lay out a timeline as well as understand if it makes more sense to list first, or find your next home. Market conditions, inventory and seasonal concerns can all impact this and coordination is key.

A Custom Plan

The bottom line is that there are so many variables, getting it right requires collaboration with the right partner. That is the through line to the entire process. Every situation is different and while the basics likely apply to many, a successful plan must be carefully constructed and adapted to your needs.

 

Zach Adams has experience in the west metro of Minneapolis that is unmatched. He has 100s of transactions under his belt and decades of experience. He is constantly monitoring market conditions that shift weekly and has the insight and drive to deliver a successful outcome for you. A consultation is always free and begins with listening to what matters to you and adapting any plan to put you at ease and empower you to direct the many resources at his disposal.

 

Zach would love to earn your trust and begin a long term collaborative relationship. Contact Zach directly to get started 612.845.7890, or complete the form below.

 

 

Posted in Buying, Selling
Feb. 6, 2018

Market Update: 2018 Real Estate Trends in the West Metro

February is a transition month in Minnesota.  While brutal weather still pounds our state, thoughts of spring have invaded our minds, as evidenced by home improvement fairs and boat shows around the state. 

Hearty Minnesotans are planners, and despite the brutal cold, your preparations for spring begin now.  Those plans can be greatly aided by understanding the current real estate trends in Minnetonka, Eden Prairie, Plymouth and Maple Grove along with their potential impact to you.

 

Trend 1- Inventory Still Tight (with one asterisk) as Price Appreciation Continues 

While it is accurate to say that inventory continues to be low in the West Metro, this is only partially true.  Statistically inventory in Eden Prairie, Plymouth and Minnetonka is down significantly versus this same time last year and consistent with the longer term trend. 

However Maple Grove is bucking this trend as total listings are up slightly versus a year ago.  The nuance supporting this outlier is an inventory of new construction homes.  While the land-locked and  mature suburbs aren’t seeing as much new construction, it is significant enough to buoy inventory to the North.

 

 

Inventory of Homes for Sale
Dec ’16 – Dec ‘17

 

Eden Prairie

-31%

Maple Grove

+0.7%

Minnetonka

-25.5%

Plymouth

-22%

 

In terms of price trends, inventory woes and the higher price tag associated with new construction have combined to push both median and average prices higher across each of the major west metro suburbs (Minnetonka, Eden Prairie, Maple Grove and Plymouth).  This marks the continuation of a longer term trend.

 

Median Sales Price Changes
Dec ’16 – Dec ‘17

 

Eden Prairie

+16%

Maple Grove

+19%

Minnetonka

+16%

Plymouth

+3.2%

 

 

Trend 2: Tight Inventory to Remain but Seasonally Adjust

Reduced inventories combining with increased sales prices seem to indicate a reluctance among potential sellers to list homes and transition. Many of these are family homes inhabited by aging baby boomers. They likely represent the bulk of the inventory gap in the $300k - $600k range. The reluctance of sellers to list their homes and move on is driven at least in part on a desire to maximize value and “catch the top of the market” combined with little urgency.

Seasonal relief should arrive soon as spring typically provides a large influx of new homes, perhaps even enough to finally signal to reluctant boomers that it is time to get off the sidelines.  Though a more likely scenario is some temporary relief for weary buyers, and more of the same.  Regardless this seasonal uptick should help those buyers who know what they want and are ready to act when they see it.

Trend 3: Rate Changes Looming- May Disproportionately Impact First Time Homebuyers

 

 

Source: Federal Home Loan Mortgage Corporation http://www.freddiemac.com/pmms/pmms30.html

While mortgage rates are still low in a relative sense (December 2017 at 3.95%), the overall strength of the economy and longer trendiness seem to point to rising rates in the near term.  This could have a muted effect on move-up buyers by slightly impacting total housing budget.  Much more likely to feel the squeeze are first-time home buyers (many millennials) who may be seeing rising prices combine with rising rates to move the barrier for home entry even higher. 

While rising rates are something to keep an eye on, the markers of a true real estate bubble do not appear to be forming.  A roaring economy shows no signs of slowing down and inventory is still near historic lows.  This tends to point to the fact that a rise in rates can likely be absorbed by the market in the near term with minimal impact to the underlying fundamentals.

Three clear trends, but what does it mean for buyers and sellers this spring?

For those seeking homes, these numbers mean more of the same. A tight competitive market will stay that way with spring promising some seasonal relief that will lift inventory and offer options.  Successfully capitalizing means several key action items:

  • Engage an expert- a pro with extensive knowledge of your primary search area is crucial to getting the right home at the right price.
  • Build your search criteria carefully and be ready to act (or have a delegate ready) the moment a property that fits shows up in results.
  • If you make an offer, show up well with a preapproval in hand and a clean offer as free from contingencies as possible.

If you have a home to sell

  • Obtain a home appraisal from a local agent to help you to understand any updates you need and how you might price your home. Even if you have a fairly recent appraisal, it won't hurt to revisit it as the market has changed.
  • Ask how you can maximize your sale price by investing in home improvements.
  • Armed with a list of to-dos, begin to make your updates now and be ready in March.  The spring rush is largely weather-related and in Minnesota predicting the first warm weekend is a crap shoot.
  • Discuss with your agent timing of transactions.  It may make sense to buy or sell first and every situation is different based on properties and goals.

The Bottom Line

Zachary Adams has been turning real estate searches into house warming parties for two decades.  His laser focus on the west metro of Minneapolis means he's got the inside track on every pocket neighborhood, valuation nuance and property pitfall from West Bloomington to Maple Grove.  He'd love to help you understand your options and define your next steps. 

If you are ready to make a change or even just considering options, Zach and his team are ready to work hard to identify next steps and serve as subject matter experts to help you along the way.  A no cost consultation is a great first step.

 

Posted in Market Update
Nov. 27, 2017

Millionaire Mansions of 2017: Life on the Lake

Lake Minnetonka is a unique west metro landmark featuring 125 miles of picturesque shoreline and scores of luxury homes.  Our annual look at the most expensive real estate transactions in the state begins and ends on this familiar waterway for 2017. 

While the top five transactions were prohibitively priced over $5 million, the window shopping remains 100% free.  

Takeaways:

  • The West Metro is the place to be in Twin Cities residential real estate

  • 2017 saw five homes fetch over $5 million each

  • With the “sold search” function on westmetrohomesearch.com you can explore each of them, as well understand the market for homes that may better fit your budget

 

Minnesota's Millionaire Mansions 2017

#5- 2750 Gale Road, Woodland

$5.4 Million
12,600+ sq. ft, 2.5 acres
5 bedrooms 9 baths
Sold 09/27/17

If you want amenities, this 12,600 square foot home has them in spades.  How about nine bathrooms, tennis courts, and a separate tea house spread across 2 1/2 acres?  Nine bathrooms!!  While the home is more than impressive, it is notable that it sat on the market for over 400 days prior to sale and carried the ominous "sold in as-is condition" in the property description.  If it were haunted, they'd have to disclose that, right?   

 

#4- 475 Oxford Road, Orono

$6.2 Million 
9,300+ sq. ft, 2 acres
5 bedrooms 6 baths
Sold 06/05/17

If outdoor entertaining is your thing, it is tough to beat this two-acre property on Oxford Road.  An immaculate yard is trimmed by a stunning garden, landscaping and stone work that is truly a site to behold.  The scene is complemented by massive home that looks like a cross between a luxury hunting lodge and a Bass Pro Shop.  Better yet, 17-foot vaulted ceilings promise that when you aren't outside, you can be in the entryway working on your hoops game.

#3- 2209 Huntington Point Road, Minnetonka Beach

$7.25 Million 
8,400+ sq. ft, 1.35 acres
5 bedrooms 8 baths
Sold 04/19/17

If old money is the vibe you are going for, this Minnetonka Beach home offers a colonial look, complete with English Gardens and patio.  Potential buyers would be smart to invest in a smoking jacket and consider faking an accent for maximum effect.

 

#2- 20350 Lakeview Avenue, Deephaven

$7.65 Million 
6,890+ sq. ft, 3.9 acres
3 bedrooms 6 baths
Sold 08/31/17

At just under 6,900 square feet this Deephaven find is by far the smallest home on our list. Yet potential buyers didn't seem to mind the modest size as the ultimate sales price ended at $750k above the list price.  This would seem to imply that a bidding war may have broken out.   No doubt the buyers were drawn in by the location on Swift Point near Big Island and the stunning details of what looks to be an immaculate recent rebuild.  Though the real headscratcher is that for an investment of seven and a half million, the buyer only netted three bedrooms and two garage stalls.  Is that third Bentley destined to sit out in the elements?

 

#1- 1725 Bohns Point Road, Orono

$8.27 Million 
12,700+ sq. ft, 2.5 acres
6 bedrooms 7 baths
Sold 11/15/17

When your new address has 2 1/2 acres, over 380 feet of lakeshore, an in ground pool, expansive gardens and a 12,000 square foot Hampton's style home, you seemingly have everything.  This beautiful estate also comes with the crown for the most expensive real estate transaction of 2017.  The sale closed earlier this month, just in time for the holidays!  Though Christmas shopping may have to be toned down this year as this opulent home also comes with a six-figure annual property tax bill. Tighten those belts!

 

 

Interested in joining the club?

If this look at how the other half lives has you dreaming of a new home, we’d love to help you investigate options.  If you are a recent Powerball winner, there is one listing in Orono sitting at $11.9 million that features a three hole golf course and cigar smoking room.  If your price range is south of that considerably, we'd still love to help you find a right-sized home for your family.  It doesn’t take multi-millions to find a home that is a fit and can significantly improve your quality of life.

A free consultation is a great way to define a budget and explore your family's "what's next". Contact us today to get started.

 

 

Oct. 23, 2017

The Contingent Offer: What you Need to Know

Understanding the basics of contingent offers can help you approach your home search with confidence.

A contingent offer simply refers to the existence of a contingency clause in a purchase agreement that helps define the terms under which that contract will be executed. It means an agreement has been reached, but for the sale to go through certain criteria must be met within an agreed upon timeline.

These clauses are typically put in place to protect the buyer and seller and outline the terms that would allow the offer to be rescinded without the surrender of the deposit (also called earnest money).

Contingencies are simply contract clauses and therefore can take many forms, but three are much more common than others:

Inspection Contingency

Selling a Home Contingent

An inspection contingency allows the potential buyer to place an offer on a home while retaining the right have a licensed home inspector review the property. The time allowed for the inspection is spelled out in the purchase agreement but generally is within 7-10 days after the offer is accepted.

Following the inspection, small repair items may become a point of negotiation, while larger items could merit the buyer voiding the contract. Almost all single family residential real estate transactions include an inspection contingency. Sometimes a buyer will not include an inspection contingency if they are comfortable with the home condition and want to strengthen their offer.

Appraisal and Financing Contingency

Equally popular as an inspection contingency is an appraisal and financing contingency. This protects the buyer and seller by spelling out the dates and terms that financing must be in place and supported by an appraisal. It ensures that the buyer is approved for a loan and that the property valuation supports that loan in line with the lender’s underwriting requirements. Terms and timing vary, but most financing and appraisal contingencies must be met at least two weeks prior to the agreed upon closing date.

Home Sale Contingency

The third common type of contingency is a home sale contingency which is designed to protect the new home buyer by tying the sale of another property to the transaction. These types of contingencies are more complex and frequently also the least understood. With a home sale contingency, the buyer is interested in purchasing a new home, but only if they can sell their existing property in time.

 

Terms vary based on a variety of factors, but the following typically apply:

  • Seller retains the ability to market their home in an attempt to locate a buyer willing to purchase without a contingency

  • If the seller finds a new buyer, the buyer from the original contract has a pre-defined period of time to remove the contingency (typically 24-48 hours)

  • If the original buyer fails to meet the terms, the contract terminates

  • Alternatively, if the buyer is able to sell their home, the contract is executed

A home sale contingency introduces additional variables to a home sale contract. These have implications for both the prospective buyer and seller.

Contingent Sale Home

Considerations for buyer 

  • Costs- Contingent offers are not free and require similar out-of-pocket expenses to non-contingent offers (appraisal, inspection, bank fees, etc)

  • Emotions- Along with financial concerns come emotional burdens as you proceed in a process without clarity of outcomes

  • Leverage- Your negotiating power for a contingent offer will be reduced because your offer is less attractive. This can lead to less favorable terms in price and others

Considerations for seller

  • Marketing- A home under contract is harder to market as buyers and agents may prefer the clarity that comes with a clearer path to a purchase

  • Timing- With no guarantees that your buyer will sell their existing home, you could miss out on other opportunities or even an entire buying season

  • Third Wheel- A contingent sale means you are bound by the buyer’s situation without the control to impact decision-making

  • Situational Clarity- To proceed you must understand your buyer’s situation well (is the home priced correctly, what is the average time on market for similar homes etc)

 

Home sale contingencies can be tricky, but may be worth it in the long run in order to avoid paying two mortgages (buyer) or to obtain favorable terms on a sale (seller). Every situation is different and a clear picture of all the pertinent facts can inform your approach.

 

 

At Zachary Adams and Associates we have extensive experience with contingencies, their benefits and drawbacks. We have facilitated 100s of transactions in the west metro of Minneapolis and would love to earn your trust and add you to our list of satisfied clients. For a fast and free consultation, contact us today at 612.656.9647 or find us online at westmetrohomesearch.com.

Sept. 6, 2017

Homebuyer’s Secret Weapon: Autumn

If you ask most Real Estate Agents when the best time to buy a home is, the answer will generally be “now”. Ask one that knows their market in autumn and they just might share one of their homebuyer secrets.

Spring and early summer get all the press as the “hot” time in residential real estate, and for the most part this is true. As inventory soars, activity levels hit a fever pitch during summer months. However you may be surprised to learn that the best deals for buyers generally don’t happen during the summer season at all.

Studies repeatedly show that September and October are the months when sale price trails list price the most. This means the best house at the best price generally comes in fall-- the waning daylight of autumn offering buyers a chance to shine.  

Three reasons to consider a fall home search:

1. Fall Sellers are Serious

Generally there are two types of sellers in the fall.

First are the “leftover homes” from the summer market that may have been on the market for some time and may be deeply discounted. Second are motivated sellers who need to move their home for another reason. Perhaps they built a new house, bought during the summer or are relocating. Either way, both scenarios work in the buyer’s favor.

While spring and summer may have many speculative listings, fall sellers are typically serious and motivated. This means increased leverage for you.

2. Inventory is typically High

Generally fall offers the second best inventory of the real estate year and this year is no exception. While we are still in a bit of a housing shortage in the $300k - $500k range, autumn looks like it is shaping up to be closer to the norm for fall inventory. That means many homes are available, including some that may have started above that magical $500k number and have slowly fallen-- down in price and potentially off other buyers’ radar.

3. The Pressure is Off

Bidding wars, open houses that result in 10 offers and other hazards of an overheated market tend to be a spring/summer phenomenon. While the fall market is active, it isn’t overheated. This allows you a chance to take a breath and review your options carefully. While it is still a good idea to know exactly what you are after so you can act quickly, this time of year allows more time for contemplation and brings significantly less pressure.

Ready to get started? A free consultation with our team can help you understand the market, refine your search and take action this fall.

 

No one understands the west metro market better and we’d love to help you find the home of your dreams. If you are dreaming of hosting Thanksgiving Dinner in a new home, we’d love to be a resource to help make that dream a reality.

 

Contact us today at 612-656-9647 to get started.

June 29, 2017

75% of Homeowners Think Now is a Good Time to Sell!

The National Association of Realtors (NAR) recently released the findings of their Q2 Homeownership Opportunities and Market Experience (HOME) Survey. The report covers core topics like, “if now is a good time to buy or sell a home, the perception of home price changes, perceived ability to qualify for a mortgage, and [an] outlook on the U.S. economy.”

The survey revealed that 75% of homeowners think now is a good time to sell, compared to 70% last quarter. This is a considerable increase from more than a year ago when 66% agreed.

Even though homeowners believe that now is a good time to sell, many have not taken the step to list their homes, as inventory shortages still exist across the country. Lawrence Yun, NAR’s Chief Economist, had this to say:

"There are just not enough homeowners deciding to sell because they’re either content where they are, holding off until they build more equity, or hesitant seeing as it will be difficult to find an affordable home to buy...

As a result, inventory conditions have worsened and are restricting sales from breaking out while contributing to price appreciation that remains far above income growth.”

Bottom Line

If you are wondering if now is a good time to sell your house, let’s get together to discuss the opportunities available in our market.

Posted in Selling