Wondering how the COVID-19 pandemic is affecting the Twin Cities real estate market? In this video, I discuss the current state of the market and how COVID-19 might affect buyers and sellers over the course of the upcoming year.
Winning Multiple Offers in St. Louis Park – Information that Will Help
2017 was a busy year for multiple offers in Saint Louis Park, and so far, it appears that trend is continuing into 2018.
If you’ve been through a multiple offer situation on a home you’ve tried to purchase, or if you’ve heard from someone who has – you know it can be a frustrating experience. Determining an offering price on a home is challenging enough when you’re the only buyer. When you’re competing against other buyers, it can be downright nerve-wracking. You’re stuck trying to guess how much above list price you’ll need to pay to get the house, while at the same time worrying that you’ll pay more than necessary.
To help shed some light on what homes actually sell for in multiple offer situations, I put together a search of the fastest selling homes in Saint Louis Park over the past year and analyzed the results to provide some straightforward data. The results are listed below.
[* NOTE: MLS listings are not identified as, and therefore cannot be searched as, “multiple offer sales.” As a substitute for this criterion, this search followed homes that were on the market for five or fewer days, which indicates a likely multiple-offer sale.]
For single-family homes in Saint Louis Park sold over the past year that were priced between $200,000 and $350,000, and sold within five days, the statistics are:
- Average Amount Paid Above List Price: $6,858.00 / 2.53%
- Median Amount Paid Above List Price: $5,050.00 / 2.23%
- Maximum Amount Paid Above List Price: $41.800.00 / 13.9%
- Maximum Amount Paid Below List Price: -$17,900.00 / -7.16%
So, on average, you can expect to pay around 2.5% above list price to win a multiple offer in Saint Louis Park in 2018.
Of course, a review of the full report adds some additional details beyond the basic statistics abovce, including the list prices, final selling prices, and total days-on-market for each of the 100 homes that were used in this analysis.
If you’d like a copy of the full report, you can download it through the following link: (No login or e-mail address is required.)
If you’d like to receive the complete sold MLS reports for each of the 100 homes used in this analysis, or if you’d like me to send you a custom sold report, just send an e-mail to Kevin@MNRealEstateGuy.com with the subject line, “Saint Louis Park Solds” or “Custom MLS Search.” If you’d like a custom search, simply include the details in the body of your message.
I hope that this information helps add some insight into what to expect when dealing with multiple offers in the Saint Louis Park home market. Good luck, and as always, please let me know if there’s any additional information I can provide!
After the Storm: Dealing with Insurance and Contractors
Hey, North Metro Neighbors!
I was sorry to watch the recent bad weather roll in! Snow plows for hail? That’s crazy! At least you’ve now got a great weather story to tell your grandkids about.
As I mentioned in the video, I went through a hail storm at our own house just a few years back. The extent of the damage required a whole new roof and siding job. Having not been through this process prior to our 2014 storm, there were some lessons I learned along the way. I’m hoping I can pass along my experience and use it to help make your experience a little less stressful.
Starting this morning, (Sunday, June 11th), you’ve probably begun to receive knocks at your door from roofing and siding contractors and their salespeople trying to get you to quickly sign up for their services. Don’t get fooled by these people into feeling any pressure. Do your research up front, talk with your insurance company, and choose the best company for the job, based on solid criteria – not hype. Here are some tips and links that should be helpful to you as you get started in the repair process:
- Begin by Contacting Your Insurance Company: These folks have been through this plenty of times before, and they are genuinely interested in helping you get your house and life back together quickly. Call on the phone, talk to a human being, and find out what your policy will cover and what your deductible/s will be. They will set up a time for an adjuster to come out and survey the damage. Whatever you do – don’t sign with a contractor until you’ve received your insurance estimate back. (See #10 below.)
- Beware of Storm Chasers: Beginning this week – (probably today) – your neighborhood will be flooded with people knocking on your door asking if you would like an estimate for your damages. These people will likely be clean-cut, friendly, and possibly even wearing a nice polo shirt with a professional looking logo. Beware – many, if not most, of these folks are not employed by the contracting companies themselves, but are actually independent salespeople who are out to quickly sign up customers, who they then refer out to one (or more than one) contracting company, many of which are from out of state. I recommend that you politely decline their invitation for consultation, and instead . . . .
-
Choose a Local Contractor: Ask for referrals from friends, or look into reviews on trusted sources such as Angie’s List or Yelp.com. Choose a company with solid reviews that is based in or near the Twin Cities area. Not only will a company with an established reputation in the community be more likely to provide good service, it will be much easier to obtain warranty repairs if they become necessary. Look for a business website, a local business address and a local business telephone number.
- Interview Multiple Providers: Even if you don’t want to have multiple appointments set up at your house, take the time to talk to at least three companies over the phone to determine which company seems to be the most competent and professional. Do they return your phone calls promptly and respond to your requests for documentation? But don’t stop with just your gut feeling . . .
- Verify your Preferred Company’s Licensure: Use the License Lookup Tool on the website of the Minnesota Department of Labor and Industry. Simply plug in the company’s name in the search box, click ‘search,’ and a list of matching companies will come up. Click on your company’s name from the search results and a page will pop up which shows that company’s current license status, along with their date of origin, address, and telephone number.
- Research your Preferred Company’s Better Business Bureau Rating: Go to BBB.org. Simply enter the business name in the first box, type, “Minnesota” into the second box and hit ‘search.’ Select your chosen company from the list that appears and you’ll be brought to their ‘BBB Accredited Business Profile’ where you can see that company’s business profile and current BBB rating.
-
Request a Written Estimate: Before you move forward with anyone, be sure and get a detailed proposal in writing. Make sure you understand the costs, material options, timeline, and who’s doing the work. Professional contracting companies will have various crews who they hire to do the work. Check to see how long these crews have been with the company and how long they’ve been working together. The closer the relationship between the crew and the contractor – the more consistent results you can expect.
- Verify Insurance Coverage: When you meet with your contractor, they should be able to show you current proof of insurance for their team. Make sure they have both worker’s compensation and liability insurance. Ask to see the insurance certificates, and feel free to call the insurance carrier yourself to verify that they are valid.
- Avoid Companies that Offer to Cover Your Deductible: Any contractor who offers to do the work without you needing to pay your insurance deductible is committing insurance fraud and putting you at risk. Don’t do business with dishonest people. If they’re willing to defraud the insurance company – how can you trust they won’t do the same to you?
- Don’t Sign Anything Until Your Insurance Company Has Estimated the Damages: Some contractors will say they can work with whatever amount your insurance company comes back with. However, you want to make sure that you’re getting the full and proper repairs done – as it’s possible your insurance adjuster may inadvertently overlook something. A good contractor will perform their own examination and make sure that the insurance adjuster didn’t miss anything. Oftentimes, the contractor can provide sufficient evidence of damage to your insurance company to obtain an adjustment on your claim value.
I hope this information helps make your home repair process a little more smooth and a little less stressful. If you have any specific questions I may be able to help with, feel free to call or text me at 612-860-4082, or enter your request on my ‘Contact Me‘ page.
Best regards,
Kevin Huntington
Broker, Attorney, Owner
Metro Home Connection Realty
A Money-Saving Contract Provision for Home Sellers
Did you know that there’s a simple provision you can add to your real estate listing agreement, that will not only serve to better align your agent’s interests with your own – but could also save you thousands of dollars on your selling commission?
Well, there is such a provision – and while most agents will agree to it if requested – very few will suggest it to you on their own. This little-known contract provision is called a Variable Rate Commission Clause, and, no matter what your home is priced at, using this provision could save you thousands of dollars in commission fees.
In this article, I will explain exactly what a Variable Rate Commission Clause is and how you can use it to potentially save thousands on your home sale – but first, it’s necessary to understand exactly how real estate commissions are paid out in the typical real estate transaction.
How Are Buyer’s and Seller’s Agents Paid?
Most sales transactions in theTwin Cities market involve two agents: the listing agent, who represents the seller in listing and marketing the home for sale, and the buyer’s agent, who represents the buyer in the offer and purchase of the home.
In a normal transaction, a portion of the total commission collected by the listing agent is paid out to a buyer’s agent who represents the buyer in the transaction. This offer of payment is known as the cooperating broker compensation, and in our market, it’s typically 2.5% to 2.7% of the home’s selling price.
As an example: If the total commission charged by the listing agent is 6% – the buyer’s agent will be paid 2.7% of the sales price, and the listing agent will keep 3.3%. On a $250,000 home, this calculates into $6,750.00 paid out to the buyer’s agent and $8,250.00 retained by the listing agent.
What Happens if the Buyer Isn’t Working with an Agent?
But, what happens if the buyer is not working with an agent? In this situation, it seems reasonable that the seller would be able to save some money on the commission since that extra 2.7% isn’t being paid out to a second agent, right? Well, unfortunately for home sellers, this is typically not what happens.
Not surprisingly, the standard contract terms used by the vast majority of real estate agents make no mention of the variable rate commission option. When it comes to fees, the language in the standard listing agreement obligates the seller to pay the full commission, even in cases where the listing agent does not have to pay anything out to a buyer’s agent.
The industry has some colorful names to describe the act of collecting both seller and buyer sides of the sales commission. These situations are referred to by agents as, “hoggers,” or, “double-ending the deal,” because of the windfall of commission money that is earned.
Going back to our $250,000 example above – instead of collecting [just] $8,250.00, the listing agent will now be keeping the entire $15,000.00 commission for himself, all for doing essentially the same amount of work! Something doesn’t seem quite fair to the home seller who’s stuck paying compensation for two agents when only one is involved in the sale.
So, how can you, as a home seller, capture some of these commission savings for yourself? The answer is easy – just make sure to ask that a Variable Rate Commission Clause is added into your listing agreement.
The Variable Rate Commission Clause
A Variable Rate Commission Clause is a simple sentence added into your listing contract which states that in the event that no buyer’s agent commission is paid out, the total commission charged to the seller will be reduced by a certain percentage – for example, 2%. Therefore, if the original commission is 6%, your variable rate commission would be reduced to 4%. In the event that your home sold to a buyer who was not working with a separate agent, you would save 2% in commission fees, which could be a lot of money. For instance, in our $250,000 example above, this Variable Rate Commission Clause would save our seller $5,000.00 in commissions, (2% of $250,000), while the listing agent would still earn an additional 0.7% of $250,000, which adds up to $1,750!
Note, that by discounting the commission by only 2%, rather than the full buyer’s agent payout of 2.7%, the listing agent earns more money than he would have in a typical two-agent transaction, thus providing a fair and reasonable incentive to work with unrepresented buyers. As you can see, the wise use of a Variable Rate Commission Clause can result in a win-win situation for both home seller and agent.
A Variable Rate Commission Clause Aligns Your Agent’s Interests with Your Own
An additional benefit of using a Variable Rate Commission Clause is that it reduces the incentive for your listing agent to push for your acceptance of one offer over another because of your agent’s own financial interest in earning more in fees. This factor is especially important in the current market, with so many homes selling in multiple offers. For instance…
Imagine a selling situation in which you receive multiple purchase agreements, all with similar offering prices. If your agent stands to earn thousands of dollars more from an unrepresented buyer, (or worse – a dual agency buyer), he may end up advocating for your acceptance of one offer over another, even if the other terms of that offer are less desirable for you, the seller.
By using a Variable Rate Commission Clause, the seller and the listing agent both stand to come out ahead in situations where no buyer’s agent is involved. In this way, your agent’s interests and your own remain aligned, which is the way it should be!
Your Listing Agent Will Probably Not Suggest This Option Voluntarily
Not surprisingly, most agents will not voluntarily bring up the option of a Variable Rate Commission Clause, so you need to make sure that you ask for it specifically. Don’t be surprised if the agents you speak with don’t understand the concept at first – it’s likely that their brokerages are not training them to offer their sellers the benefit of lower commission rates.
So, What Is the Exact Language of a Variable Rate Commission Clause?
The language of a Variable Rate Commission Clause can be very basic. It just needs to state that the total commission charged to the seller will be reduced by a certain amount if no cooperating broker compensation is paid out.
Here is the exact language that I include in all of my listing agreements with sellers, “In the event that no cooperating broker compensation is paid out, then the total listing commission charged to seller shall be reduced by 2%.” This language can easily be added in on any blank line of the standard listing contract.
Where to Find an Agent Who Focuses on Client-Centered Representation
A request for a Variable Rate Commission Clause is totally reasonable and more than fair. If, after explaining the concept to your potential listing agent, he refuses to agree – just find a different agent who will. If you’re looking for an agent who’s more than happy to offer this seller to protection to his clients, you’ve come to the right place.
The Variable Rate Commission Clause is just one of the many client protections and benefits enjoyed by sellers who list their homes with me and my company, Metro Home Connection Realty. There are many other client-focused benefits, which most agents don’t dare offer. To learn more, just click here to see a list of Ten Special Client Protections and Benefits that My Competitors Can’t Touch.
Written by: Kevin Huntington, Attorney and Managing Broker of Metro Home Connection Realty
Minnesota Homes Matter: A Coalition to Strengthen Home Ownership
For over 80 years, the Minnesota mortgage interest deduction has encouraged Minnesotans to purchase a home. How? By allowing homeowners to deduct mortgage interest each year. This common sense policy provides potential homebuyers the flexibility they need to enter the market and sustain highs and lows. And the benefits of the state mortgage interest deduction continue to pay back families for years after their purchase.
Given the importance of the MID, a coalition has been created by the Minnesota Homeowners Alliance. Known as Minnesota Home Matters the coalition engages lawmakers and urges them to remember the thousands of Minnesota homeowners across the state. Specifically, Minnesota Home Matters educates Minnesota lawmakers and the public on the importance of the Minnesota mortgage interest deduction.
It has been known for years that homeownership is strongly associated with greater levels of civic involvement, charitable participation and better outcomes in school. Earlier this year the Minnesota Homeownership Center confirmed those long held beliefs with new data. Compared to non-homeowners, homeowners feel 73% safer, report high levels of financial security and economic well-being, report higher scores in math and English and report feeling over 60 percent more mentally and physically healthy than non-homeowners.
Today, 9 in 10 renters aspire to own a home, and data like the above shows the effects smart, successful policy can have on our communities. Keeping our communities vibrant relies on policies like the state mortgage interest deduction and our state leaders need to keep the dream of homeownership alive for years to come.
To learn more or join the coalition, please visit: http://mnhomesmatter.com/coalition