March 2011

Live by Lake Harriet!

by Ross Kaplan on March 31, 2011

Fun, Character-filled Duplex 8 Doors to Lake Harriet

Where:  4310-4312 Colfax Avenue South in Minneapolis’ East Harriet neighborhood.
What:  Up/down duplex with 2 Bedrooms and one Bath per unit, with almost 2,300 finished square feet.
When:  on market since Monday (3/28)
How much:  $329,900
Who:   listed by Ross Kaplan, Edina Realty

You won’t find a nicer duplex this close to Lake Harriet for less!

Both units features hardwood floors, built-in buffets, a porch (lower unit) and Sun Room (upper), and generous lower level storage.

You’ll benefit from over $40k in recent improvements, including a new, over-sized garage; new roof; and many new appliances.   

Location, Location

You’ll also love the terrific location:  just blocks to Lake Harriet, the Rose Garden, and numerous neighborhood coffee shops and eateries (in between this duplex and Lake Harriet: some of Minneapolis’ most impressive upper bracket homes). 

The Lake Harriet Bandshell is less than one mile to the northwest; Linden Hills shopping is just beyond.

Easy to rent, or perfect for an owner-occupant!

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Waiting (and Waiting) to Break Even

by Ross Kaplan on March 30, 2011

Daunting Math for Homeowners Down ≥ 30%

One of the most powerful psychological barriers to selling a home these days is owners’ insistence on breaking even.

Unfortunately, after a 30% drop in prices nationally since 2006 (more in some locales), the math for many homeowners who bought near the market peak is daunting.

So, even if you assume that home prices suddenly started appreciating at a torrid 10% a year — something no one is currently predicting — someone who bought a $200k home in 2006 that is now worth $140k would have to wait until 2015 to break even. 

And that’s before factoring in average selling costs of around 7%.

If instead homes appreciate at a more modest 5% annually, the same homeowner doesn’t break even until . . . 2019.

And what if the “new normal” of a sluggish housing market persists, and annual long-term appreciation only averages 2%?

The break even date push out almost two decades, to 2029.

Moving On/Moving Up(?)

It’s a very patient homeowner indeed who can sit tight that long.

Which is why an increasing number of homeowners seem to be biting the (financial) bullet, and moving on.

Once they do, they discover that, unless they’re exiting the housing market entirely, the same plunge in home prices socking them as Sellers suddenly becomes a boon if they’re Buying.

That’s especially the case if they’re move-up Buyers.

So, instead of paying $500k for their next, bigger home, move-up Buyers will discover that they can now buy the same house for $350k (30% off $500k).

In fact, they may do even better than that, because more expensive homes have declined disproportionately, while (still) rock-bottom interest rates make the associated payments lower.

To be sure, not every homeowner who bought at the peak and is down significantly can afford to move on.

However, for many others, the barrier is clearly not financial, but psychological.

P.S.:  Thanks to City Lakes Manager Matt Loskota for many of the foregoing insight(s) — and math!

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The “my-client-didn’t-like-it stop-bugging-me” Showing Feedback

by Ross Kaplan on March 29, 2011

Q:  How Seriously Did the Buyer’s Agent Take the Feedback Form?  Answer:  ‘No Response’

I call the following feedback form, received by the listing agent from the buyer’s agent after a showing, the “my-client-didn’t-like-it stop-bugging-me” feedback:

Interior — General Condition? Fair
Exterior — General Condition? Fair
Curb appeal (lot/landscaping)? Fair
Staging (cosmetics, updating)?  No Response
Appropriately Priced?  No Reponse
If no, what would be appropriate? No Response
This buyer is considering another showing of this property? No Response
General comments/suggestions:  No comments

Unbeknownst to non-Realtors, any time you show a home, the listing agent’s broker emails a feedback form asking for the Buyer’s impression(s).

And keeps re-sending the form until you respond (yup, Edina Realty does this, too).

Like Pulling Teeth

Normally, it’s not a big deal to give the listing agent (and owner) 2-3 sentences of constructive feedback, click “submit,” and move on.

However, there are times when busy agents just don’t have the time — or even remember the home they showed (which can happen if you just showed 8-10 in a row).

I don’t condone it, but I know when I receive a sparsely filled-in form (like the one above) what’s going on.

And as a listing agent, I don’t chase such Buyers’ agents to the ends of the earth to elicit something more substantive.

As my selling clients hear me say (often), “the only feedback I really care about is a full-price offer from a well-qualified Buyer.”

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“Why Didn’t It Sell?”

by Ross Kaplan on March 29, 2011

Quarter Half-Hearted Marketing Campaign

Given that something like 30% of all MLS listings are cancelled or simply expire, unsold, it seems fair to ask, “why didn’t it sell?”

My Realtor’s answer is that, it’s usually never just one thing.

So, poor (or no) staging; a quarter half-hearted marketing campaign; too few and/or unflattering photos; too many updates — or worse, repairs — for Buyers to tackle; an incoherent floor plan; underwhelming curb appeal, etc., can all be Buyer turn-off’s.

However, ultimately all those negatives can be cured by a price that’s sufficiently discounted (see, “The Serenity Prayer – Realtor’s Version“). 

The catch for would-be Sellers is that, if you subtract all the things that a good Realtor does to prep a home for market, and then attract the broadest possible range of Buyers, the discount needs to be far greater than would otherwise be necessary.  

Political Parallels

While it’s never too late to address Buyer objections (including price), the best time to do so is early in the listing — or even better, before a home hits the market.  Correcting negatives later on, after Buyers have effectively spoken, is much more expensive.

Politicians (and their strategists) know this phenomenon all too well.

Namely, it’s much easier to define yourself to voters before they have formed an impression, than to redefine yourself after your opponent has succeeded in defining you negatively.

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Professional Painter? [Carpenter, Plumber, Electrician] Look It!

March 28, 2011

Dressing the Part In my post, “Contractor Etiquette,”  I discuss all the substantive qualities that characterize a good contractor. While substance counts, so do appearances. In fact, at least initially, when the client is forming their first impression — or deciding who to hire! — the importance of dressing professionally can hardly be understated. So, in [...]

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Biggest Names in U.S. Philanthropy: ‘Gates,’ ‘Rockefeller,’ ‘Anonymous’

March 28, 2011

Charity Benefit Brainstorm I was at a charity benefit last night where I got the following brainstorm: If you wanted to cultivate a reputation for philanthropy and good works, you could commit a sizable chunk of your time and money to those things. Or . . . you could just change your last name to [...]

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Confusing Predator, Prey

March 27, 2011

This Weekend’s Hot Story While it’s still free, check out this article in The New York Times:  ‘In Prison for Taking a Liar Loan.’ It recounts the utterly fantastic tale of a how a small-time Countrywide borrower came to serve a 21 month sentence for mortgage fraud, while the bank’s senior executives literally walked away with [...]

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Defending the Mortgage Interest Deduction (or not)

March 27, 2011

Fewer Realtors = Less Lobbying Clout Want to know another reason why the mortgage interest deduction for homeowners is in jeopardy as never before? It’s not just because the budget deficit is ballooning, prompting policymakers to look for novel ways to raise revenue (although that’s certainly true). And it’s not because the philosophical case for the deduction — [...]

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