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What Real Estate Agents Wish You Knew About Their Job, Part 1.

from Rob Hahn @ AOL and  www.housingwatch.com

The first and most important thing that real estate agents wish you knew about their job is how hard you make it on them.

Otherwise rational, highly intelligent, highly educated people can lose their minds when it comes to their homes. I’ve heard more than one story of how a Wall Street investment banker, whose day job is to take cold hard looks at companies and put values on them, simply can’t accept that his home isn’t worth what he thinks it ought to be worth. Why hire an expert, paying them extraordinary amounts of money (5 or 6 percent of a house sale is rather a lot), then ignore their professional advice?

More fundamentally, you don’t pay for their time. Real estate may be the last pure commission job left in America — even retail sales has notions of draw-against-commission. An agent could spend three months and a few hundred hours working for you, showing you house after house, negotiating contracts, working through difficulties, and a hundred other things besides, only to have you change your mind at the last minute and decide to buy somewhere else. The agent made exactly zero dollars from that work. (Someone is going to point out that lawyers work on contingency all the time. True, and they also take 30 percent to 40 percent of the award.)

Real estate is the only “profession” in which the professional owes a fiduciary duty to a client who isn’t paying him. All the liability, all the risk, and a relatively small reward (compared to other success-based endeavors) are the hallmarks of real estate. So like venture capital (another high-risk endeavor), real estate agents practice a form of portfolio management: They expect that the vast majority of their deals will fall through, and hope that the one that hits will pay enough to cover the costs of all those that did not. And that, my friends, is why your real estate commissions are so freakin’ high: You, the successful buyer or seller, are subsidizing all of those flaky buyers and sellers who had a change of heart, couldn’t qualify for financing, had unrealistic expectations, and so on.

To be fair, agents share some blame, too. If they refused to work for free, chances are the industry would have evolved in a different direction. But we are where we are. As we will see in future columns, this particular structure of the industry creates all sorts of interesting effects that real estate agents wish you knew about their job.

But for now: Next time you’re in the market to buy or sell a house, and you’re thinking about hiring a real estate agent, ask yourself just how serious you are about it. Are you just testing the market to see where your house would sell for? Please try not to waste an agent’s time. Are you a buyer, but don’t have a clue in which of the 17 nearby towns you might be interested, or what you could actually afford to buy? Try not to think too badly of the real estate agent to whom you represent a whole lot of risk. And when it comes time to pay the piper, understand that you’re paying not just for you, but for every buyer and seller who flaked out on that agent.

Home Prices Show Strongest Sign of Stability Yet:

Minneapolis, Minnesota (March 10, 2010) –For the second consecutive month, home prices in the Twin Cities 13-county metropolitan area showed a year-over-year increase. We haven’t seen back-to-back year-over-year increases since 2006.

The February median sales price of $159,000 was a 6.0 percent increase from last February’s mark of $150,000. That’s the strongest year-over-year increase since 2005. Part of the reason for the stronger upward movement is that fewer foreclosure homes are selling now than did during last February.

“The market share of traditional, non-foreclosure homes has really grown in the last year,” said Brad Fisher, President of the Minneapolis Area Association of REALTORS® (MAAR). “That’s tilting prices upward and stabilizing the market.”

The median sales price of traditional homes (excluding foreclosures and short sales) in February was $204,900, down only $100 from last February’s mark of $205,000.

Foreclosures posted a 0.8 percent increase to $120,000, while short sale properties posted a 6.7 percent decline to $145,000.

There were 3,527 signed purchase agreements in February, an increase of 6.4 percent from a year ago. As spring springs and we encroach upon the April 30 deadline for the federal home buyer tax credit, expect home sales to tick up as buyers move to take advantage of the incentive.

Due to the continuation of extremely low mortgage rates and the drop in prices seen in recent years, affordability is off-the-charts. The current Housing Affordability Index of 213 is the fourth-highest mark ever recorded. Along with the tax credit, conditions are attractive for home buyers.

Buyer activity has brought inventory down, so there are far fewer homes for buyers to choose from. The March Supply-Demand Ratio of 5.39 means that there are 5.39 homes available per buyer in the month. In March 2008 the mark was 8.16.

“No one can predict what the market will look like six months from now,” said MAAR President-Elect, Pat Paulson. “But right now the combination of low rates, good affordability and the tax credit have set a nice table for buyers.”

All information is according to the Minneapolis Area Association of REALTORS® (MAAR) based on data from the Regional Multiple Listing Service of Minnesota, Inc. MAAR is the leading regional advocate and provider of information services and research on the real estate industry for brokers, real estate professionals and the public. MAAR serves the Twin Cities 13-county metro area and western Wisconsin.

Would you like $6,500, or $8,000?  It all depends on your situation, but I can help you achieve some free money like that.  Unless of course, you don’t like money…..

Take some time during this “Month of Love” to evaluate your real estate situation.  With interest rates and home prices in the basement, this tax credit should have you seeing stars and feeling that special “something” in your stomach.

The Federal Government has put out some important and helpful information about this tax credit.  Some of the highlights include:

• Must have an accepted and executed Purchase Agreement on a home by April 30th, 2010
• Must close on that home by no later than June 30th, 2010
• Eligible parties are granted $1,000 per $10,000 purchased up to a credit of $8,000 (basically you need to buy a home worth more than $80,000)
• Credit varies depending on if you are a first time buyer, or a previous home owner (both are eligible for a tax credit)

Shoot me a call or an email if you have specific questions on the tax credit, interest rates or home prices in your area.

CNNMoney.com Votes:

Chanhassen #2 on 2009′s 100 Best Places to Live

-from money.cnn.com-

Apparently Chanhassen never got the memo that it’s supposed to be in a recession. Unemployment here was more than three percentage points below the national average in May, thanks to a broad jobs base in the Twin Cities area.

Property taxes have dropped every year in the past five, even as median home prices have crept up. And the town still boasts a per fect triple-A bond rating.

But Chanhassen has much more going for it than terrific numbers. “There’s a genuine small-town feel,” says Sarah Pinamonti, 41, who moved here with her husband, Rick, 43, in 2002. They’ve never regret ted it. “We rarely have to leave town to have fun,” says Rick.

No wonder: The town has 11 lakes, 34 parks, and the 1,047-acre Minnesota Landscape Arboretum. Come winter there’s a carnival, ice-fishing contests on Lake Ann, and skating and hockey everywhere (town officials flood grassy areas to create outdoor rinks). Wimps beware: Those activi ties require braving temps that often dip into single digits.

For a list of homes for sale in Chanhassen, email me at gbray@fazhomes.com

According the the National Association of Realtors:

The average size of a new home in 2009 was 2,480 square feet, down from 2,520 square feet in 2008.

“The era of easy money is over. You really have to think before you go out and decide you need that five-bedroom, five-bath home,” said Rose Quint, the organization’s assistant vice president for survey research.

Despite smaller home sizes and tightening credits, there are still some features that are expected in new houses. Builders say the following are most likely to be standard in homes built in 2010:

• Walk-in closets in the master bedroom.
• Laundry rooms.
• Insulated front doors.
• Great rooms.
• Energy-efficient windows.
• Linen closets.
• Programmable thermostats.
• Energy-efficient appliances and lighting.
• Separate shower and tub in master bathrooms.
• Nine-foot ceilings on the first floor.

What couldn’t you live without?

Mortgage interest rate drops again last week

According to Realtytimes.com, a 30-year fixed-rate mortgage averaged 5.06 percent for the week ending January 14, 2010.  This is down from last week when it averaged 5.09 percent.

*In Minnesota, a 30 year fixed FHA mortgage is near 4.75% while a Conventional mortgage finds rates around 4.875%.  FYI: These rates can change by the minute.

These are based on Month to Month statistics ending in December of 2009

• 11% drop in new listings
• 16% increase in sales
• 14.5% drop in average sales price ($199,407)

In summary: Homes are selling for less, but there is less on the market (decrease in competition), and an increase in new sales.  In the simple rules of supply and demand, it appears as though the bottom of the market is behind us.

*To see statistics specific to your town/suburb, click on the stat sheet.