St. Cloud, MN - Real Estate Blog

For those of you in the St Cloud area who were planning on purchasing a home with 0% down, your loan options are disappearing fast.  It sounds like as of April 7th, 2008 Freddie Mac will follow Fannie Mae's lead in declaring the majority of the areas covered by the St Cloud MLS declining markets.  This means that as a minimum for a conventional loan in these areas buyers will need 5% of the sales price.  Gone are the 80/20 conventional loans that were so prevalent just last year.

So what does a home buyer with no money do? 

How can you get into a home with 0% down?

The answer: Get creative.

I know the most common program being used today is theFederal Housing Administration's (FHA) loan with 6% seller paid closing costs and down payment.  As long as the home appraises, a buyer can ask the seller to pay the minimum 3% required down payment and up to 3% in closing costs.  I have seen about 12 local lenders in the St Cloud area utilizing this new product.

What does this mean to you as a buyer?

Answer:  You are basically pulling out the equity on a home purchase (assuming that you purchase a home with some instant equity) to pay for your closing costs and down payment.  This will make it so that it takes a few years before you can even think about re-selling a home.  It's perfect if you plan on staying in the area for many years to come, but not if you aren't sure.

Numbers for reference:

List Price = $141,000

Offer = $150,000

Seller Pays = $9000 ($4500 for minimum 3% down, 3% for closing costs)

Effect = Seller gets $141,000   /   Buyer mortgages $150,000

As long as the home appraises for at least $150,000 this deal works.

If you have heard of some other creative financing options, and you are afraid about their implications, post them here for everyone to see.  If they are good, I would love to be able to tell my buyers about them.

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud MN

http://jptangen.featuredblog.com - Blog postings on www.REALTOR.com

Posted by Jason Tangen at 08:17 AM | Permalink | Comments (0)

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I'm all for the Central Minnesota method of haggling.  I think it comes from the fact that most of us are only a couple generations removed from the true hagglers and wheelers and dealers of the past: the farmers. 

One of the biggest problems facing some of the sellers of real estate in St Cloud, MN is that they feel like they are being taken by the buyers in today's market.  While it is true that your home is not selling for what it did two short years ago, you have to remember your true goal: selling your home.

Here are some tips to help sellers as they analyze offers coming in from potential buyers:

1) Try to take your heart out of the deal.  The home that you will be leaving was perfect to raise your two kids back in the 80's, but it might not be perfect for the new couple raising kids in the 10's (that sounds funny).  Only negotiate with market facts and up to date market values.

2) If you have a fish on the line, reel them in.  You may or may not be having a second offer come in.  Even real estate agents with the best of intentions cannot deliver the purchase agreements that they say they will bring tomorrow.

3) Take all offers seriously.  This is tough when there is that one yahoo out there who wants to offer $90K on your brand new two story home worth at least $250K.  Even though you want to just say go away (with some anger in it), it is best to just politely counter back at full price.  Find out if they are interested in coming to the "dance floor" of negotiations.  Who knows, they might just want to buy the house at full price.

4) Look at the bottom line, not the sales price.  You might actually make more money at a lower sales price depending on what the buyers are asking you to pay.

5) If you decide to not take an offer, you are saying that you would rather stay in your home than sell it for that price.  That could prove costly if you have somewhere else that you need to live.

I will hear a story about once a year that rehashes the philosophy that the first offer is always the best offer.  In this case the sellers had an offer in the Spring of 2007 for $200,000.  They wanted just a little bit more because their original listing agent priced them a tad too high and now they are feeling gypped.  The sellers decide to counter offer back at $204,000 and the buyers decide to leave.  The desire to feel like you are the winner in negotiations can make you the loser.  Fast forward to the Spring of 2008.  With no other offers and the market slowing down over the winter months the sellers price reductions to create activity now have them priced at $175,000.  Here is where they get another offer.  Disgusted but needing to sell, the sellers take the offer.  Ouch.

Before you even look at the offer someone has written to purchase your home, take some time to look at your true goals.  In most situations, selling the home is the most important goal.  Making a specified amount of equity is usually lower on the list.  From there, arm yourself with the market data you need to make the best decision for you.

Jason Tangen - Real Estate Broker Associate with Edina Realty in St Cloud MN

www.jasontangen.com - Search Real Estate in St Cloud, MN and surrounding areas

www.jasontangen.point2agent.com

Posted by Jason Tangen at 07:25 AM | Permalink | Comments (0)

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Sometimes a property doesn't look good on paper (or in person for that matter) and it works perfectly as an investment vehicle.  Other times, you run the numbers and it looks safe, but you just can't seem to cash flow.

I wish I could package a perfect product that would work for every scenario, but they are all different.  What works for me in my rental properties, may not work within your scheme of investing.  If I could do that, I probably wouldn't be blogging here today.

Instead I recommend a simpler approach to investment real estate.

1) Clearly define your goals.  - Are you looking to achieve long term wealth or quick money?  Do you want to have an active hand in your investment?  Are tax savings as important to you as cash at the end of each month?

2) Run the numbers and compare the results to your goals.  - What my numbers look like and what yours will look like will be similar, but what we base our decisions on will probably be different.  I am investing for the long term and cash on cash isn't as important as many investors.  Don't get me wrong, I need to not go back wards every month.  But, if I can clear $2 a month and have some great depreciation schedules, I might be interested.

3) Go for it.  - If this is your first investment property purchase, just jump.  You will never know until you try.  As long as the numbers work for you, the rest will come together.

There are problems with renting properties that will definitely come into play.  Believe me, I know.  From trashed properties to no-paying tenants, there are tons of potential headaches.  But, on the flip side, how much will that property be worth in 30 years?  $500,000?  That's better than any 401k I've ever heard of.

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud

www.jasontangen.point2agent.com - A new website for you to see for St Cloud real estate

www.jasontangen.com - Tried and true.  Search homes for sale, get foreclosures, and find out what your property is worth.

Posted by Jason Tangen at 11:20 AM | Permalink | Comments (0)

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I have a lot of people ask me if it is ok to pull the equity out of their homes.

I tell everyone the same thing - Don't pull the equity out of your home unless you are going to do one of the following three things with it:

1) Buy another home.

2) Start a business.  I know it's risky, but it is also part of the American Dream.  If you think you have a good idea and you are willing to take the risk, go for it.

3) Invest in other opportunities that you are well versed (stocks, mutual funds, etc.).  PLEASE NOTE - there are inherent risks in all forms of investing.  I only recommend this one for people who are professionals or have professionals working on their behalf.  The costs involved in these investments sometimes outweigh any monetary gain.

Did you notice what I didn't put on this list?  Paying off credit cards.  Why?  Because it isn't worth it in my opinion.  First off, budget yourself properly and you won't need to worry about credit card debt.  Second, your equity in your homestead is safeguarded against many creditors.  Everything on your credit card is free game.  Say for example you cannot pay some unexpected medical expenses.  Medical companies cannot put a lien against your property and take your equity in your house (see homestead law post).  They can however take the other stuff.

Got some other reasons to pull your equity?  I'd love to hear them.  Post them here for everyone to review.

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud MN

www.JasonTangen.EdinaRealty.com - Search Open Houses in Minnesota

Edina Realty's New Lakeshore & Outdoors Property Search - 10,000 Lakes, Only 1 Place to Search Real Estate.  Find all of your lake properties, hunting and recreational land, and more.

Posted by Jason Tangen at 09:21 PM | Permalink | Comments (0)

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With the end of the first quarter fast approaching, I am a little curious to find out how the numbers are going to stack up for real estate sales in '08 vs. '07.  I've heard that the number crunchers nationally and statewide are seeing a 2% increase in residential sales over the same time frame last year.

My hunch is that we will see an increase in the total number of homes sold but a decrease in the average and median prices in the St Cloud market.  My reasoning for this is the broken chain in home purchases that is caused by the increased number of foreclosed properties available on the St Cloud MLS. 

As a region in whole, we are selling through the foreclosure inventory at a very good pace.  The problem is that these distressed sales are generally of homes that are not in "Grade A" condition.  Therefore, these home price averages will reflect these smaller values. 

The positive turn on this topic is that in selling these foreclosures at a good pace, the end of this lull in the real estate market comes closer into view.  I wouldn't be surprised if by early next year we don't see some appreciation in the real estate market once again (around Central Minnesota).  It won't be anything like what we saw in the past five years, but 1-1.5% isn't out of the question (*Hint, if you are waiting for the bottom, it's probably coming if it isn't already here).

Be sure to keep an eye out for the Tangen Report which will come out in the St Cloud Area Chamber of Commerce's Chamber Pack in early May and will also be posted here by mid April.  Every quarter I break down the sales statistics for each local region on the St Cloud MLS (West St Cloud, North St Cloud, East St Cloud, South St Cloud, Waite Park, Sartell, and Sauk Rapids).  If you would like to see the past reports, click on the Tangen Report link on this website.

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud

www.StCloudEdina.com - Home of the e-Market Analysis (Free Home Value Estimator)

www.StCloudEdina.com/blog - REAL ANSWERS for REAL ESTATE in St Cloud MN

Posted by Jason Tangen at 12:31 PM | Permalink | Comments (0)

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Let's ponder this for a second.

2-3 years ago, all of the headlines in newspapers and on television told the general public it was a great time to buy.  Interest rates were still historically low and properties were appreciating at a great pace.

Fast forward to today.  Now all of the headlines in the newspapers and on television tell us about the horrible state of the real estate market.  Home prices are depreciating and nothing is selling (according to the media).

Now I want you to decide when you would have preferred to purchase a home.  Would you prefer to have bought when the home prices were inflated and the media was telling you it was great?  Or would prefer to purchase a property when home prices are lower, interest rates are roughly the same, and the media is telling you that the real estate market is horrible?

Something to think about.

"When everyone else is walking, run.  When everyone else is running, walk" - I can't find who said this first, but I know it wasn't me.

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty in St Cloud

www.StCloudEdina.com - Search Real Estate in and Around St Cloud MN

www.JasonTangen.EdinaRealty.com - Search for Open Houses in and Around St Cloud MN

Posted by Jason Tangen at 09:34 PM | Permalink | Comments (0)

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My Sister (Jodi Bartley) and her Husband (Caleb Bartley) are leaving to start their Appalachian Trail walk this afternoon.  They are going to drive down to Georgia and start to walk North on the trail from there.  They have decided to try and make this little trek worth something a little bigger by deciding to try and raise some money for breast cancer research and treatment while on their hike.  Please visit Jodi's blog and more specifically her entry regarding how to join her Google Group to follow her trials and tribulations along the trail and more importantly, donate to a worthy cause.

The link to her blog with directions to join Jodi Bartley's Google Group is: http://wrinklednotes.blogspot.com/2008/03/our-google-group.html

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud MN

www.StCloudEdina.com - Search real estate for sale in central MN.

Posted by Jason Tangen at 05:20 PM | Permalink | Comments (0)

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There is one defining thing that always comes into play when someone says they are a REALTOR and not just a real estate agent.  That is the Code of Ethics that every REALTOR is to follow.  What I would like to touch base on in this post is Article #1:

"Article 1
When representing a buyer, seller, landlord, tenant, or other client as an agent, REALTORS^® pledge themselves to protect and promote the interests of their client. This obligation to the client is primary, but it does not relieve REALTORS^® of their obligation to treat all parties honestly. When serving a buyer, seller, landlord, tenant or other party in a non-agency capacity, REALTORS^® remain obligated to treat all parties honestly. (Amended 1/01)" - Copied directly from link above.

What I like the best is in the first line: "... protect and promote the interests of their client"

I have been given some grief about asking for more than just a pre-approval letter from a couple of lending institutions recently.  They don't want to divulge the buyer's loan package (30 year fixed, ARM, etc.) or what my buyer's good faith estimate reads.  I feel that this is a necessity if you are looking out for your client's best interests.  Am I wrong?

How would you feel as a REALTOR, bound by the code of ethics, if you got to a closing and found out there that your buyer was using a negatively amortized loan on a home they plan on living in for an extended period of time?  It would raise a red flag in my head that these people probably cannot afford this home.

Think of how many foreclosed properties could have been staved off if the real estate professional had learned the ins and outs of their client's loan package in advance.

The other aspect of this, how can you tell if your client is being gouged on their loan application with "fluff" fees if you don't look at their good faith estimate?  As REALTORS, we have the duty to tell our clients if their banks are charging exorbitant amounts for appraisals or whatever.

A plea to REALTORS:  Please re-look over the Code of Ethics and take the time to analyze your business practices.  Are you in violation?

A plea to banks:  Lets work together to get our clients the best loan, best home, and best service possible.

A plea to buyers:  Be honest with us about your comfortable range for house payments.  I realize that an extra $20,000 can go a long way in what amenities you can get in a home.  But you really want to be able to keep the home right?

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty in St Cloud

http://JasonTangen.EdinaRealty.com - Search real estate for sale, open houses, etc. in Central MN

www.StCloudEdina.com/blog - REAL ANSWERS for REAL ESTATE in St Cloud, MN

Posted by Jason Tangen at 11:24 AM | Permalink | Comments (0)

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I am astounded every time I see the new stats regarding what real estate buyers are using to find the homes they purchase.  I'm not astounded about what technologies they are using; I'm astounded by what real estate professionals prefer to use in spite of these results.

I've seen stats to show that anywhere from 80-90% of home buyers are starting their search for a new home on the Internet.  This doesn't surprise me in the least.  I know that from my own website's traffic there are a ton of people search homes for sale on-line.  It seems that they like to do it on their lunch hour as well.  I suppose it's because they have high speed Internet at work and not at home.

What surprises me is that less than 15% of people say the frequently used a newspaper, open houses, or real estate magazines (combined) as a way to find a home to purchase.

Consequently, if your real estate professional is utilizing the newspaper and local real estate magazines as a primary way of advertising your home, they are missing out on the vast majority of real estate buyers out there.

I've also seen a stat stating that dollars spent on Internet marketing of real estate will surpass that of print media within a few years.  That is a far cry from the statistics provided in surveys like the one Realty U Group has posted from 2006.  To read their article go to http://www.realblogging.com/effective-blog-marketing/print-vs-internet-marketing-and-blogging.

Hopefully some of the "powers that be" in the real estate community will take note of these stats and utilize more of their marketing dollars on the Internet.  One good example is Edina Realty's new ad campaign that is meant to be more a "Viral" campaign.  Like the great ads on YouTube or other e-mail blasts that you have received in the past, Edina Realty is taking a chance on the Internet bandwagon.  If you'd like to see their new "Red Couch" campaign, try Edina Realty's new website dedicated to this effort.

www.wefoundeachother.com - Edina Realty's "Red Couch" Campaign Website.

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty in St Cloud MN

www.StCloudEdina.com - Search Real Estate in St Cloud MN

www.StCloudEdina.com/blog - REAL ANSWERS for REAL ESTATE in St Cloud MN

Posted by Jason Tangen at 12:24 PM | Permalink | Comments (0)

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I would love it if everyone could do me a big favor.  My sister is an aspiring writer looking to get her first publishing deal.  She has told me that it would help her chances if she could get a large number of people to visit her blog and post comments.  With that being said, I would like to get her at least 100+ or so comments for her within the next month or less.  Please take the time to help this "starving artist."  She is what I would like to describe as the new age Andy Rooney with her random thoughts.

Jodi Bartley's blog is located at www.wrinklednotes.blogspot.com

If you want to read my favorite post of hers read the one about the her walking through cement and trying to escape (if only in her mind).  My personal thought is that it is going to be tough to cover up cement covered footprints leaving the scene of the crime.  The link to this article is http://wrinklednotes.blogspot.com/2008/02/cement.html

Thank you for helping,

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty in St Cloud

Posted by Jason Tangen at 06:38 PM | Permalink | Comments (0)

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Is there a billboard (Franklin Outdoor Advertising or Lamar Advertising Company) somewhere near St Cloud MN that has this statistic printed on it?  I have heard this exact number recently from at least 10 different home buyers that are thinking about writing an offers on foreclosed properties.

Below are the statistics.  Nowhere in my research did I find that foreclosed properties are selling on average for 85% of their asking price. 

*Please note that these are average numbers.  Each real estate transaction is unique and a home's price needs to be evaluated on an individual basis to show what is (or isn't) a good deal.

Under 30 Days on Market: Foreclosed properties are being sold at an average of 98.3% of their original asking prices.

30-60 Days on Market: Foreclosed properties have had price reductions on average of just over 7%.  Homes in this range are selling at 97.8% of their new asking prices (90.9% of original asking prices).

60-100 Days on Market:  Foreclosed properties have had price reductions on average of just over 11%.  Homes in this range are selling at 96.8% of their new asking prices (85.9% of original prices)

100+ Days on Market:  Foreclosed properties on the market more than 100 days have had price reductions on average equaling more than 17% of their original list prices.  These homes are selling at 93.4% of their new listing prices (which equates to 77.4% of the original list price).

So what can you take from these stats?  If you offer 85% of the asking price on a foreclosed property that has been listed for more than 100 days and the bank counters back right in the middle, you are doing an OK job of negotiating.  I'll give you a "C".  You can also guesstimate that if you offer 85% on a foreclosed home that has been listed less than 60 days, the bank won't budge much from their asking price.

Want more information?  Are you curious what the average sales price is for a new construction home in Sartell?  Or how about what percentage of the homes sold on the St Cloud MLS are foreclosures?  Post your questions here and I can pull you just about any stat from the St Cloud MLS.

Jason Tangen, GRI - Real Estate Broker Associate with Edina Realty St Cloud

The 192,326th Best REALTOR in the US. - This is a joke.  I have no way of knowing (or proving) where I would rank in a nationwide "Best REALTOR" contest.  I know that I don't sell as many homes as some of the top producers in the country so I'm not #1.  But I also know that my clients love my services.  Funny enough, this stat would put me in the top 15% of REALTORS nationwide.

Posted by Jason Tangen at 08:41 AM | Permalink | Comments (0)

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They say you are only as old as you feel.  That makes me either 62 or 5 depending on when the aspirin kicks in.

I threw out my back today trying to help my youngest daughter (Vivian) learn how to walk.  Her big sister (Abbie) and myself were working pretty hard to get the littlest Tangen member to become a biped today.  As it turns out, it worked.  With just a little encouragement from her big sister, Vivian cleared the whole living room floor without falling.  This was repeated several times (we had to verify that it wasn't a fluke).

It is with this information that I am putting my stamp of approval on it.  With Abigail's help, Vivian Ruby Tangen took her first steps (without falling) and accurately maneuvered around a room at just under 11 months of age.  I am such a proud Dad.

Either the aspirin is kicking in or the thoughts are making me feel better already.

Posted by Jason Tangen at 04:27 PM | Permalink | Comments (0)

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I was listening to the news yesterday and a strange fact hit me.  I was told that the Clinton and Obama campaigns had raised a combined 80 million dollars last month.  Granted, February was a leap year this year, but doesn't that seem like a ton of money to you?  We'll break it down

$2.759 million/day

$114943/hour

$1916/minute

Wow, at that rate, we as a country could theoretically raise over 1 billion dollars every year without raising our taxes a dime.

I realize that it takes money to run a campaign for president, but we should ask ourselves, is this really what we should be spending our hard earned money on?

Posted by Jason Tangen at 07:55 AM | Permalink | Comments (0)

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