Curb Appeal Still Matters!

Many sellers ask if curb appeal really makes that much of a difference with a hot housing market. After all, if multiple buyers want to see your home as soon as possible, why should it matter if the lawn is perfect or if the recycling bins are tucked away? The truth is the outside of the house is the first and last thing your buyer sees. Curb appeal can be so strong; some buyers fall in love with a house before they even set foot in it. No matter the market, getting top dollar for your home means prioritizing how the house looks from the outside and improving your house’s curb appeal.

Why is Curb Appeal Important?

When you sell your home, you’re usually looking to get the most money possible. But, according to the National Association of Realtors, strong curb appeal can add 7% or more to your home’s value. So, if adding a little polish to the front yard nets you extra cash, why leave the money sitting there? It only takes a few minor fixes to make the house inviting and memorable.

How Much Work Does Curb Appeal Take?

The amount of work really depends on the current state of the yard, but this doesn’t have to be an expensive undertaking. Simply tidying up will create a great first impression. Here are a few things to consider:

No Christmas in July

Are your Christmas lights still up? Is it the middle of summer? If it is, the lights need to come down. The same goes for any out-of-season décor. Leftover decorations create the impression you haven’t kept the house up to date.

It’s a Jungle Out There

Do your walkway plants grab your buyer’s ankles as they stroll by? Then, trim them back for the illusion of a bigger path.

Are there scraggly hedges blocking the view of the front window? Not only do overgrown trees and plants look messy, but they also hide great selling features—like that big, beautiful window! Cleaning the window after trimming is also a good idea.

Keep Things Lively

Keep the grass trimmed and leaves raked or mulched. If it’s fall, remove all the dead and dying potted plants and replace a few with some cheery fall mums. Keep trimming down perennials as they finish up for the year. A fresh layer of mulch will keep everything neat.

One Man’s Trash is Another Man’s Trash

You may not think your trash bins sitting at the side door are a big deal. But if you’re selling, you’re probably also looking to buy a new home. Do you want to be greeted by someone else’s garbage? If you can’t store them out of sight, put the bins out of the way, and make sure the outsides are clean.

Selling a home is a big undertaking full of little details. Voila flat-fee realtors in Minneapolis can help you get the best price possible. Contact us today to schedule an appointment.

Are you Ready to Buy a Home?

Buying a new home is an exciting milestone in a person’s life. But, unless you are well prepared, it can also be a scary one. There are several things to take into account when considering homeownership. The most important are the financial considerations. 

What Can You Afford?

The house you desire and the house you can comfortably afford may differ depending on your financial situation. You will need to look at several factors to determine how much you can afford to spend on a home. One major factor is your debt-to-income ratio or DTI. 

Determining the amount of mortgage you can afford is done by figuring out your DTI. The standard rule is a 43% DTI ratio. This is the amount used by the Federal Housing Administration (FHA) for mortgage approval. The ratio is used to assess the borrower’s ability to make monthly mortgage payments. Real estate markets and current economic conditions can impact whether a lender will be more rigid or lenient when approving a loan.

The DTI ratio means that your housing expenses, including mortgage, mortgage insurance, property taxes, homeowners’ insurance, and other housing-related expenses, should not equal more than 43% of your gross monthly income.

Your mortgage is a long-term commitment, so the lender needs to be sure that you can make your payments. However, lenders understand that unexpected things can happen that may affect your ability to pay your mortgage. For this reason, your mortgage lender will consider your front-end DTI. This calculation considers the income you have with just the housing expenses alone. This ratio is ideally no more than 28%. This front-end DTI is considered because there may come a time when you may run into a financial crisis, and you would have no wiggle room to manage those unexpected expenses.

The Down Payment

Another major consideration in getting ready to buy a home is the down payment. Ideally, you want to be able to put down 20% of the price of the home. This will allow you to avoid private mortgage insurance (PMI), which is usually added to the mortgage payments. 

You can buy a home without putting down 20%. Some people decide that they will not be in their home that long, or they may not want to put down that much money, to begin with. The larger down payment has its advantages, though. Your mortgage payments may be smaller, and you may have a better choice of lenders with a larger down payment.

Buying a new home is a big investment and knowing how to prepare for this milestone is helpful. At Voila Real Estate, we can help you decide if this is the right time for you to buy, and we can help you find the home you want. Contact us today to schedule an appointment.

Bedrooms don’t need closets

Everyone knows that you need a closet in a bedroom to call it a bedroom, right? While this is a universally accepted de facto standard, good luck finding any type of authority that will back this up. At least not here in Minnesota. As a home inspector, this isn’t something that concerns me, but I get asked about this frequently. Thankfully, it’s pretty simple: you don’t need a closet.

Minnesota Requirements

There’s nothing in the Minnesota State Building Code that requires a closet. I’m not aware of a single municipality that requires a closet. There’s also nothing in the Minneapolis Housing Maintenance Code that requires a closet. In fact, they go so far as to say this in the Minneapolis Truth-In-Sale of Housing Evaluator Guidelines:

NOTE: Sleeping rooms do not need a closet to be considered a sleeping room, per MHMC, although lenders may require that sleeping rooms have closets.

So where does this so-called ‘requirement’ come from? I don’t know. It had to be a standard somewhere, at some point, or it wouldn’t have so much traction today. But still, that’s a good point that the city of Minneapolis brings up about lenders possibly requiring a closet. I’ve heard that this used to be a requirement for FHA loans. Lenders can ask for whatever they want, and as a home inspector, I don’t attempt to guess at what lenders will want.

I’ve also heard through the grapevine that real estate agents weren’t supposed to list rooms without closets as bedrooms. Apparently, that requirement went away a very long time ago, but people have long memories.

So what if you’re buying or selling a home and someone gets hung up on the closet thing? How do you get around that? Let’s start by defining what a closet really is.

Closet Definition

The term ‘closet’ is defined by the building code as “A small room or chamber used for storage.” A chamber is “a natural or artificial enclosed space or cavity”.  This means a 6″ box with a door that’s installed on the wall could be called a closet. Right?

Ok, maybe that’s silly. How about an armoire or a wardrobe?  I’ve seen plenty of houses with only wardrobes in the bedrooms, and nobody had a problem with that. I’d argue that the cabinets, er… chambers shown below could be considered closets.

Closet 1
Closet 2

If someone insists that a room needs a closet to be called a bedroom, throw one of these in there. If someone argues that it’s not permanently installed, put a screw through it into the wall. There. Now it’s permanently installed.

Here at Structure Tech, we try to make a big deal about the big stuff and a little deal about the little stuff. This is little stuff.

The bottom line

Bedrooms do not need closets to be called bedrooms; at least not here in Minnesota. The next time someone tells you a bedroom needs a closet, ask for proof. If you find an authoritative reference that says a bedroom needs a closet anywhere in Minnesota, please share it with me.

AUTHOR: Reuben SaltzmanStructure Tech Home Inspections

New Construction vs. a Renovated Home: What’s the Better Value?

The current seller’s market means homes aren’t hard to find but are difficult to land. This brings up a question we often hear: is a new construction home a better value than an existing home? The truth is that there are benefits and risks to each. So, let’s break it down. 

New Construction

With more and more millennial demand in the housing market, there simply won’t be enough existing homes on the market. Coupled with the current demand for homes, this opens big business for new development. While there are some advantages to choosing a newly constructed home, let’s first look at what you can realistically expect.

  • Supply & demand: With such high demands for housing in general, new construction costs have increased 15-20% on average
  • Escalation Clauses: Many developers are including clauses that make the home buyer responsible for rising costs of construction materials
  • Labor Shortages: Homes purchased pre-construction may be delayed in completion due to current labor shortages

Even though you can expect some hiccups in the home buying process, purchasing a new construction home does have some pluses. For example, they are often more sustainable, constructed with more environmentally friendly materials, designed with better insulation and windows, and equipped with more energy-efficient appliances. 

One of the most significant factors driving the interest in newly constructed homes is that it’s much easier to find one to purchase. So, if you’re ready to buy, this might be the easiest option!

A Renovated Home

Just as with new construction, purchasing a renovated home does have its share of drawbacks as well. But there are benefits to choosing this route if you’re in the market for a new home.

  • Very Little Inventory: Newly listed homes are under contract almost as quickly as they are listed, giving home buyers very little time to shop for the home they truly love
  • Quick Decisions are Costly: The pressure to submit an offer the seller can’t pass up is intense, leading some to forgo the appraisal or inspection that can cause trouble later
  • May Need to Invest in Repairs: Renovated homes typically need more maintenance and repairs than new construction, and owners usually spend 5-7% of the home’s value annually

While you can expect this seller’s market to make finding the right home a challenge, there are some significant benefits once you do find the right one. For one, it’s typically move-in ready. As a result, you won’t have to wait for construction to finish so you can enjoy your new home. 

Bottom Line

If you’re ready to buy a house, which is the better value for you? The truth is that it depends on what you ultimately want in your new home and what you want out of the buying process. Either way, you can save some cash by choosing a flat rate realtor like Voila! to handle the paperwork for you. 

Top Factors That Influence the Worth of Your Real Estate Property

Determining the actual value of your property can be difficult. Potential buyers can vary in their perceptions of what they are willing to pay for. Here are the top factors that influence the worth of your real estate property.

Surrounding Community 

Your real estate property location is one of the biggest factors that influence the worth of your real estate property. The prices of other homes in your neighborhood can indicate what potential buyers will pay for your property. Quality schools and proximity to work and shopping opportunities can create a significant boost to overall value. 

Square Footage 

The bigger your real estate property is, the higher the value. The worth of your real estate property is typically estimated by dividing the sales prices by the total square footage. Usable space is crucial when determining square footage. Areas such as garages and unfinished basements do not add value to usable square footage. Bedrooms and bathrooms are highly valuable living spaces to boost the square footage value for your real estate property. 

Upgrades and Open Spaces

Making upgrades to your real estate property can significantly boost its overall worth. The best returns on investments when it comes to updates will depend on your location. Pools can be great for expensive homes, while kitchen remodels may be best for cheaper homes.  Adding open spaces and bonus spaces to your real estate property can add value to your real estate property. A few great bonus spaces include home offices, decks, wine cellars and hot tubs. 

Need Help Selling Your Real Estate Property?

Mistakes can easily be made when trying to calculate the worth of your real estate property. At Voila, we strive to make the home selling process as simple as possible. Our agents can assist you in taking charge and getting the best price possible. Work with the flat fee realtors at Voila in Minneapolis – St. Paul for a home selling process that benefits the seller. You call the shots! Schedule an appointment with Voila today.

Should I Move or Refinance?

Should I Move or Refinance? | Simplifying The Market

The level of equity homeowners have is at an all-time high. According to the U.S. Census, over 38% of owner-occupied homes are owned free and clear, meaning they don’t have a mortgage. Those with a mortgage are seeing their equity skyrocket too. Every time real estate values increase, homeowners get a dollar-for-dollar gain in their home equity.

According to the first-quarter 2021 U.S. Home Equity Report from ATTOM Data Solutions:

“17.8 million residential properties in the United States were considered equity-rich, meaning that the combined estimated amount of loans secured by those properties was 50 percent or less of their estimated market value.

The count of equity-rich properties in the first quarter of 2021 represented 31.9 percent, or about one in three, of the 55.8 million mortgaged homes in the United States. That was up from 30.2 percent in the fourth quarter of 2020, 28.3 percent in the third quarter and 26.5 percent in the first quarter of 2020.”

This surge in home equity has given most homeowners the opportunity to use that equity in one of two ways:

  1. Refinance to cash out some of the equity or lower their current payment
  2. Move to a home that better fits their current needs

Let’s break down the possibilities.

1. Refinance

An abundance of equity and record-low mortgage rates can make refinancing a home very easy. Some homeowners choose to refinance so they can lower their payments. Others convert a portion of the equity to cash while keeping their monthly payment the same.

There are many homeowners who could take advantage of lower rates and higher levels of equity, but they haven’t yet. According to an Economic & Housing Research Note from earlier this month, there were over five million homeowners with a loan funded by Freddie Mac who would benefit by refinancing their loan. As of January 2021, there were:

  • 452,122 loans with an average mortgage rate of 6.17%
  • 1,027,834 loans with an average mortgage rate of 4.39%
  • 3,687,780 loans with an average mortgage rate of 4.21%

With mortgage rates currently hovering around 3%, any of these homeowners would benefit from refinancing. They could lower their payments by hundreds of dollars per month or cash out large sums of equity while keeping their monthly payment the same.

Example:

If a homeowner has a $200,000 fixed-rate mortgage with a 6% interest rate and refinances that loan to a 3% interest rate, their monthly mortgage payment (principal and interest) will go from $1,199 per month to $843 per month – a savings of $356 a month, or $4,272 each year.

On the other hand, if they keep their mortgage payment the same, they could cash out a significant amount of their equity.

2. Move into your dream home

The past year prompted many households to redefine what a dream home really means, and it’s something different to everyone. Those who have a high mortgage rate could use their equity as a down payment and perhaps buy their next home without significantly raising their mortgage payment.

Example:

Suppose a person bought a house for $216,000 at the height of the market in 2006. (The median home price in May of 2006). If they put 10% down and took out a mortgage of $194,400 at 6.41% (the average rate in 2006), the monthly mortgage payment (principal and interest) would have been $1,217.

According to the National Association of Realtors (NAR), a typical single-family home has grown in value by approximately $150,000 over the last fifteen years. That means the $216,000 house would be worth about $366,000 today.

After deducting selling expenses, they would be left with about $130,000 ($150,000 minus approximately $20,000 in selling expenses).

A seller could take that equity and use it as a down payment on a new house. Let’s assume they purchased a home for $450,000 (roughly $80,000 more than the value of their current home). If they put the $130,000 down, they could take out a mortgage of $320,000 with a 3% interest rate. The monthly mortgage payment (principal and interest) would be $1,349. Therefore, they could buy a home worth $80,000 more than the one they have today and only spend an extra $132 per month.

Bottom Line

Whether you’re refinancing your house or moving to a new home, your current mortgage rate and your level of equity are crucial in your decision-making process. Look at your mortgage documentation to find out your interest rate, and then let’s connect to determine the potential equity in your home. You may be surprised by the opportunities you have.

Sellers Are Ready To Enter the Housing Market

Sellers Are Ready To Enter the Housing Market | Simplifying The Market

One of the biggest questions in real estate today is, “When will sellers return to the housing market?” An ongoing shortage of home supply has created a hyper-competitive environment for hopeful buyers, leading to the ultimate sellers’ market. However, as the economy continues to improve and more people get vaccinated, more sellers may finally be in sight.

The Home Purchase Sentiment Index (HPSI) by Fannie Mae recently noted the percentage of consumer respondents who say it’s a good time to sell a home increased from 61% to 67%. Doug Duncan, Senior Vice President and Chief Economist at Fannie Mae, indicates:

Consumer positivity regarding home-selling conditions nearly matched its all-time high.” (See graph below):

Sellers Are Ready To Enter the Housing Market | Simplifying The MarketFannie Mae isn’t the only expert group noticing a rise in the percentage of people thinking about selling. George Ratiu, Senior Economist at realtor.com, shares:

“The results of a realtor.com survey . . . showed that one-in-ten homeowners plans to sell this year, with 63 percent of those, looking to list in the next 6 months. Just as encouragingly, close to two-thirds of sellers plan to sell their homes at prices under $350,000, which would offer a tremendous boost to affordable housing for first-time buyers.”

Bottom Line

If you’re considering selling your house, don’t wait for more competition to pop up in your neighborhood. Let’s connect today to explore the benefits of selling your house now before more homes come to the market.

Americans See Real Estate as a Better Investment Than Stocks or Gold

Americans See Real Estate as a Better Investment Than Stocks or Gold | Simplifying The Market

Last month, in a post on the Liberty Street Economics blog, the Federal Reserve Bank of New York noted that Americans believe buying a home is definitely or probably a better investment than buying stocks. Last week, a Gallup Poll reaffirmed those findings.

In an article on the current real estate market, Gallup reports:

“Gallup usually finds that Americans regard real estate as the best long-term investment among several options — seeing it as superior to stocks, gold, savings accounts and bonds. This year, 41% choose real estate as the best investment, up from 35% a year ago, with stocks a distant second.”

Here’s the breakdown:Americans See Real Estate as a Better Investment Than Stocks or Gold | Simplifying The MarketThe article goes on to say:

“The 41% choosing real estate is the highest selecting any of the five investment options in the 11 years Gallup has asked this question.”

Is real estate really a secure investment right now?

Some question American confidence in real estate as a good long-term investment right now. They fear that the build-up in home values may be mirroring what happened right before the housing crash a little more than a decade ago. However, according to Merrill Lynch, J.P. Morgan, Morgan Stanley, and Goldman Sachs, the current real estate market is strong and sustainable.

As Morgan Stanley explains to their clients in a recent Thoughts on the Market podcast:

“Unlike 15 years ago, the euphoria in today’s home prices comes down to the simple logic of supply and demand. And we at Morgan Stanley conclude that this time the sector is on a sustainably, sturdy foundation . . . . This robust demand and highly challenged supply, along with tight mortgage lending standards, may continue to bode well for home prices. Higher interest rates and post pandemic moves could likely slow the pace of appreciation, but the upward trajectory remains very much on course.”

Bottom Line

America’s belief in the long-term investment value of homeownership has been, is, and will always be, very strong.

What All First-Time Home Buyers Should Know

Buying your first home can be fraught with trouble and expenses that could be avoided if you learn what other first-time homebuyers wish they knew going in. Here is a list to help you prepare. 

Get Mortgage Pre-approval Before Looking for a Home 

Don’t get attached to a particular home to buy before you are preapproved. Getting pre-approval for a mortgage tells you what you can afford. It also speeds up the offer and purchase process and helps sellers take you seriously over other offers that still require approval. You could lose out on a home if you must wait to get approved.

Monthly Payments Are as Important as the Total Home Price

When assessing the affordability of a home, even if the price fits your approved mortgage amount, it’s important to figure out the monthly payments with the taxes, interest, and insurance added. First-time buyers often underestimate this and then struggle after the sale to afford their new home. 

Be Choosey About Your Lender

Make sure your mortgage lender works with and for you in a timely manner. Don’t just settle on the first one you talk to without ensuring their promptness. Compare rates and be aware that a lender who doesn’t take your needs seriously could sabotage your negotiations with a seller.

Inspections Aren’t Just a Legal Technicality

Don’t be in such a hurry for your selected home to pass inspection just so your mortgage company gives the green light. You want to dig deeper than the surface in an inspection to be sure there are no major costly issues with the house and property that you will regret later. Get a well-respected inspector to go over the home, top to bottom. Finding issues may not deter you from buying, but it may help you negotiate a better price that will mitigate the expense of getting extra repair work done after the sale.

Don’t Compromise What You Want to Save a Few Thousand Dollars

Whether you get a 15 or 30-year mortgage, a few extra grand won’t necessarily add that much hardship to the practical cost for a home that provides the size, features and value you need over time. Remember, it’s also about what you can pay monthly, which can be lessened with a higher down payment, better interest rates, lower closing costs, property taxes, and insurance. Don’t skimp on important needs, or you may grow out of the house and end up paying for another move too soon.

Be Prepared for a Wild Emotional Ride

Buying a home is a wonderful step into your independent financial goals, along with finally being a homeowner. You should also realize that many things can go wrong. Sellers can make your life difficult. Mortgage rules and paperwork is exhausting. Offers can look promising and then fall through at the last minute. Buying a home can be extremely stressful. The bottom line is to keep a check on your emotions and don’t get discouraged when circumstances change. 

Using Voila! real estate services can help you make good early decisions in this crazy seller’s market. Don’t go it alone, especially in your first time buying. Let us help you walk through the process with confidence. Remember, you don’t pay for the services of a buyer’s agent since all fees are paid by the seller. Contact us today!

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Don’t Forget to Budget for Closing Costs

Don’t Forget to Budget for Closing Costs | Simplifying The Market

When buying a home, it’s important to have a budget and make sure you plan ahead for certain homebuying expenses. Saving for a down payment is the main cost that comes to mind for many, but budgeting for the closing costs required to get a mortgage is just as important.

What Are Closing Costs?

According to Trulia:

When you close on a home, a number of fees are due. They typically range from 2% to 5% of the total cost of the home, and can include title insurance, origination fees, underwriting fees, document preparation fees, and more.”

For example, for someone buying a $300,000 home, they could potentially have between $6,000 and $15,000 in closing fees. If you’re in the market for a home above this price range, your closing costs could be greater. As mentioned above, closing costs are typically between 2% and 5% of your purchase price. 

Trulia gives more great advice, explaining:

“There will be lots of paperwork in front of you on closing day, and not enough time to read them all. Work closely with your real estate agent, lender, and attorney, if you have one, to get all the documents you need ahead of time.

The most important thing to read is the closing disclosure, which shows your loan terms, final closing costs, and any outstanding fees. You’ll get this form about three days before closing since, once you (the borrower) sign it, there’s a three-day waiting period before you can sign the mortgage loan docs. If you have any questions about the numbers or what any of the mortgage terms mean, this is the time to ask—your real estate agent is a great resource for getting you all the answers you need.”

Bottom Line

As home prices are rising and more buyers are finding themselves competing in bidding wars, it’s more important than ever to make sure your plan includes budgeting for closing costs. Let’s connect to be sure you have everything you need to land your dream home.