Real Estate Vocabulary #101

At least when it comes to residential real estate, when is a positive a negative, and a negative a positive?

plusAnswer:  when it comes to doing a Comparative Market Analysis (“CMA”), the tool Realtors — as well as appraisers — use to estimate a property’s fair market value.

CMA Math

So, paradoxically, if a Comp (“Comparable Sold Property”) has a nicer kitchen than the subject property (the home you’re trying to value), the appropriate adjustment is to subtract anywhere from $20k to $50k from the Comp (note:  by convention, adjustments are always made to the Comp, not the subject property).

Alternatively, if a Comp has one fewer Bathroom than the subject property, the appropriate adjustment is to add $10k – $20k to the Comp.

Ditto for differences in curb appeal, condition, garage size, updates (or lack thereof), and lot and backyard features.

Done correctly — and with enough recent, nearby market activity to price off of — doing adjustments on 3-4 Comp’s generates a likely price range for the subject home.

Plus or minus 5% or so . . .  🙂


Campaign Finance Flaw Fix: Ban Outside Money

by Ross Kaplan on October 21, 2016


Star Tribune: Outside Cash Floods Rematch of Rick Nolan & Stewart Mills

“Residents in Duluth, Brainerd and the Iron Range: Get ready for a sustained bombardment of political advertising.

The Eighth Congressional District race between Democratic Rep. Rick Nolan and GOP challenger Stewart Mills has now drawn the largest flood of outside cash in the country.

As of Thursday, more than $9.6 million had poured into television advertisements and mailers in the northern Minnesota district, which has seen congressional representation swing back and fourth** between parties over the past decade.”

Star Tribune, “Millions Pouring Into Stewart Mills, Rick Nolan Race in Northern Minnesota” (Oct. 21, 2016).

I don’t have a preference (honestly) in the rematch between incumbent Rick Nolan and challenger Stewart Mills in Minnesota’s sprawling 8th Congressional district.

But, I do think the decision should be made by their constituents, not influenced by outsiders — and their money.

Exhibit A that both campaigns are awash in outside-the-district cash:  the superficial, posturing and very expensive TV ads flooding the Twin Cities airwaves the last 6-8 weeks.

What makes those ads especially idiotic and wasteful is that Twin Cities TV stations only reach a small slice of the 8th District, which runs from the north ‘burbs past Duluth, all the way to the Canadian border.

One Person (Corporation?), Many Votes

So, in addition to repealing Citizens United and its “campaign cash = free speech” mantra, how about a ban on outside-the-district campaign contributions?

At all levels of government.

Practically, that means if you live in, say, Duluth, MN, you can donate all the money you want to candidates for the 8th District, Minnesota Governor, and the state’s two U.S. Senators — plus anyone running for Duluth city and (St. Louis) county offices.

But, you’d have no business giving to candidates for office outside the district, let alone state, with the exception of President.

After all, the expression is, “one person, one vote” — not, “one person, many votes” . . .

P.S.:  I don’t believe Donald Trump’s assertion that the system is rigged.  But, I do think the so-called mainstream media — who sell all those lucrative ads every election cycle — are complicit in not challenging the very flawed status quo.

**Note to Star Trib proofreaders:  it’s spelled “back and forth,” not “back and fourth.”


Not Getting — or Wanting(!) — Every Listing

by Ross Kaplan on October 20, 2016


Setting the Bar (Way) Too High

One of my favorite Op-Ed page cartoons shows an unconscious patient being operated on by a team of doctors.

Suddenly, there’s a spike in the patient’s vital signs, whereupon he bolts upright, and loudly announces to the laboring surgeons:  “You should know that I’m the most successful personal injury lawyer in town.  If you screw up, I’ll have all your licenses — and your houses, too!”

Then, he lies back down.

The last panel of the cartoon shows a light bulb simultaneously going off in the heads of the doctors . . . whereupon the patient’s vital signs suddenly go flat.

Home Seller Hubris (make that, “Would-be Home Seller Hubris”)

What recalled all that was a would-be Minnetonka home seller I encountered the other week.

In the course of a two-hour meeting to discuss listing their home, the prospective client announced that they wanted to list for more than 25% over my recommended price range; “didn’t believe” in staging — or any other prep, for that matter — and therefore wouldn’t be doing any; and informed me that they wouldn’t sign any piece of paper, at any point in the process, unless/until it had been reviewed by their estate attorney, financial planner, and out-of-state lawyer son.


What did I do?

I, um . . . decided to pull the plug.

P.S.:  In Realtors’ parlance, the foregoing attitude/behavior is known as lack of cooperation.

See also, “The Serenity Prayer — Realtor’s Version“; “Perils of Overpricing Even (Especially) in a Rising Market”; “Perils of Overpricing”; and “If I Can’t Be Your First Realtor . . . Maybe I Can Be Your Last.


More than WHAT?

My short answer to the question, “can I get more for my house if I put on a new roof?” is, “yes, you can.”

roofThat is, if by “more,” you mean, “more than what you could have gotten for the home without a new roof — especially if the current one is leaking.”

Unfortunately, what most homeowners (and would-be Sellers) are really asking is, “If I spend $10k (or $15k) on a new roof, can I add at least that much to the selling price?”

My answer to that is an unqualified “no.”

Avoiding Discount ≠ Premium

That’s because home Buyers expect to buy a home with a functioning roof, that has at least some remaining useful life.

If instead the roof is demonstrably failing, Buyers will deduct not just the cost of a new roof, but another 20% to 30% for the related hassle and risk (there’s ALWAYS a surprise or two).

Of course, that’s assuming:  1) prospective Buyers are still interested in the home; and 2) their lender will let them close on a home with a worn-out roof (many won’t, in which case the Seller has no choice but to replace the roof prior to sale).

P.S.:  The same analysis applies to any material defect in a “For Sale” home (foundation issue, malfunctioning furnace, etc.).


Mpls St Paul Magazine Announces 2016 “Super Real Estate Agents”

October 16, 2016

I’m (very) pleased to report that I’m on Mpls St Paul Magazine’s list of 2016 “Super Real Estate Agents.” For the ninth straight year! The list — in the current (November) issue — identifies the top 2% to 3% of area Realtors based on detailed surveys of magazine readers, as well as recent Twin Cities home […]

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California Closets & Florida Ceilings

October 16, 2016

“You Say To-may-toe, I Say To-mah-toe” (sort of) If there’s such as thing as “California closets” (there is), why can’t there be “Florida ceilings?” At least, that’s what my now-12 year old daughter used to think. Geographic Adjectives; “Do-I-Haf-Ta?!?” It turns out that what she mistook for “Florida” was actually “floor to, presumably as in “floor-to-ceiling windows,” “floor-to-ceiling […]

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Fall = Fall Off in Home Sales? Not for Upper Bracket

October 13, 2016

4th Quarter Spike in Relocation Sales Yes, eventually the leaves will all be down, truly cold weather will arrive . . . and the seasonal Holiday slow-down will be upon us. But, not yet. In the meantime, the Twin Cities housing market continues to be characterized by a shortage of inventory and brisk activity. In […]

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Customer (Dis)Service: “Thank You For Your Patience. Your Expected Wait Time is . . . Forever”

October 12, 2016

How to Get Out of “Customer Service Purgatory” Want less of something bad? Tax it. Or fine it. So, aggressive phone solicitations have been dramatically slashed by federal legislation establishing “Do Not Call Lists,” and fining transgressions. Of course, if you truly want zero of something . . . make it illegal (prostitution, meth, etc.). […]

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