Blog For Minnesota Home Owners

Saving money with Solar Power

2008-05-06T06:42:00.005-05:00

There has been a lot of talk about energy lately. Most recently I heard a story about the residents of Juno Alaska who had their electric bills increase by 500% this summer.

I have a solar panel cost about $300 in 2005, and the specialized purpose I bought it for no longer exists. Why not put it into service and take a chunk of my electric bill?

There are technical problems to overcome. I won't spend much time on that except to say that to use my solar panel I also need deep cycle batteries, a charge controller, an inverter and some wiring at a minimum. The cost of all these items together is in the neighborhood of $1,000.

The good news is that I just need buy some wire, I already have the other stuff. In fact, I'm thinking maybe I should by some more solar panels to go with the one I already have.

I dug out the electricity bill. On the last bill we spent about ten cents per kilowatt hour. A 100 watt light bulb burning for ten hours will use about a kilowatt hour. A computer in use might use the same or slightly more electricty than the 100 watt bulb. If its sleeping, My Dell only uses a small percentage of this.

An energy pig is writing this . Our household uses 23 kilowatt hours per day, last month we used about 800 kilowatt hours for a bill of about $80.

Now comes the fun part. How much will I save?

On a clear Minnesota day in the summer I think my solar cell will run for 8 hours producing 64 watts of electricity. In a day that amounts to about half a kilowatt of electricity generated by my solar cell or five cents savings per day. In twenty days I'll save a buck, in twenty thousand days this setup will generate enough power to pay for itself. By my calculations thats about 54 years.

If I ship my solar equipment to Juno, Alaska where power is temporarily at fifty cents per kilowatt hour it will generate twenty five cents of power per day -- in the summer.

Another way to look at it is that I need 46 solar cells like the one I have and some really big batteries to take care of my energy needs.

Here is what I think it would take to make solar cells economically interesting to me. Electricity costs similar to those in Juno this summer, solar panels at one quarter the cost they are today. If an aditional solar panel cost $75 and could save me twenty five cents a day it would pay itself back in about a year. Batteries are expensive, they require mainteneance and they wear out. Fuel cells would provide strorage using hydrogen allowing energy to be stored more efficently.

While I wait for these things to happen conservation seems to be the best course of action. In fact, it seems that the secret of living off the grid depends more on conservation than cool energy technology. The technology provides a certain amount of energy, but most of the savings comes from limmiting the use of power to start with.

How Many Houses Should I Look At?

2008-04-09T13:33:00.000-05:00

What are the chances the first house you look at is going to be the one you want? There is always a chance that could happen. No matter how many houses you look at, how do you know the next one is not going to be just a little better? You don't know.
If you really like the first house you see, go see some more as soon as possible. If the first one is still your favorite arrange to see it again. There are always new things you notice the second time around.

Make a list of questions and get them answered. If you are ready to buy don't delay just because you found something good right away. Among the motivated buyers I work with, people who are ready to go right now, it's very common for them to see fewer than eight houses before they make an offer. In some markets there aren't even eight homes of a particular type and price range to look at.

Foreclosures & Multiple Offers

2008-03-18T16:40:00.001-05:00

I've seen this twice in the last month and I'm sure there are at least a couple of people out there who could have used this little note before they started negotiating on a foreclosed property.
Here's what I'm talking about. Buyers go looking for a good deal on a house. They decide they really like a foreclosed property. The home is listed at a very reasonable price. Knowing that the mortgage company is anxious to sell they throw a low offer. The mortgage company won't drop that much, but the buyer still likes the house and doesn't move on to something else. Thinking they are the only game in town they sit tight.
While the buyer plays tough and sticks to their guns another buyer swoops in. The mortgage company requests competitive offers and the house ends up selling for thousands more than the mortgage company's last counter offer to the original buyer.
The original buyer may or may not end up with the house.
If you like a house and you would feel bad if someone else bought it, don't ever delay in signing papers unless you must. This holds true with any real estate transaction. The larger the time frame involved, the larger the chance something can come along to make it fall apart. Get the papers signed, sealed delivered, earnest money deposited and inspections done and the house off MLS and off the market.
Close on it as soon as you can.
I'm not suggesting you plunge forward willy nilly. Understanding what you are getting into and having an inspection are important, but when there is a delay, ask yourself why and whether it is to your advantage. Introducing delays is introducing unknowns. Gambling on those unknowns is more risky than the casino.

Foreclosures & Multiple Offers

2008-03-14T15:33:00.001-05:00

I've seen this twice in the last month and I'm sure there are at least a couple of people out there who could have used this little note before they started negotiating on a foreclosed property.
Here's what I'm talking about. Buyers go looking for a good deal on a house. They decide they really like a foreclosed property. The home is listed at a very good price. Knowing that the mortgage company is anxious to sell they throw a very low offer. The mortgage company won't drop that much, but the buyer still likes the house and doesn't move on. Thinking they are the only game in town they sit tight.
While the buyer plays tough and sticks to their guns another buyer swoops in. The mortgage company requests competitive offers and the house ends up selling for thousands more than the mortgage companies last counter.
The original buyer may or may not end up with the house.
If you like a house and you would feel bad if someone else bought it, don't ever delay in signing papers unless you must. This holds true with any real estate transaction. The larger the time frame involved, the larger the chance something can come along to make it fall apart. Get the papers signed, sealed delivered, earnest money deposited and inspections done and the house off MLS and off the market.
Close on it as soon as you can.
I'm not suggesting you plunge forward willy nilly. Understanding what you are getting into and having an inspection are important, but when there is a delay, ask yourself why and if it is to your advantage. Introducing delays is introducing unknowns and gambling on those unknowns is more risky than the casino.

Wet Basements

2008-03-10T19:08:00.002-05:00

The days have gotten longer and Spring can't be far away. With Spring there is running water. With all of that running water around some of it is going to end up in people's basements. A wet basement is not the end of the world, but it would be a good idea to know how wet and where its wet before you purchase a house that has had water in the basement.
With all of the disclosure laws these days it seems that we have fewer water in the basement disputes. As a buyer water in the basement still could still cause a problem for you. When the little box on the Seller's disclosure next to "wet basement" is checked, yes, you should look carefully and ask a few extra questions. Where exactly did the water come in? What exactly was done to correct the problem? Did water come in after corrections where made? Did the previous owner disclose water probelms to the current owners when they purchased the house?
Many wet basements can be dried out with simple landscaping changes, some can not. I once sold a commercial building that had an access panel in the basement floor. Under the panel there was a constant flow of water. A few blocks south there was a home that always had water in the basement. I've learned that both the commercial building and the house were built over a creek that was filled in way back in the 1800's. The creek is still there, it's just underground. Those basements will never be dry.
Homes built on clay soil or in areas with a high water table are more likely to have wet basements. If you ask around you will find people from the area are generally aware of these situations. Somone in the city engineering department should certainly know about problem areas in town.
I have been in old homes with seemingly dry basements, but when it rains a rivlet of water runs in and harmlessly down the drain. Harmless as long as the basement isn't finished or as long as no one stores anything in the path of the water.
When you are looking at homes pay attention to things like mops and buckets in the basement, boxes stored on pallets or areas where nothing is stored. Look for powdery white "efforvesence" on the walls or stains on the floors.
Outside look for plants growing out of gutters, downspouts that are off or that empty inside of landscape edging. Take note of if the ground slopes away from the house. If there is concrete near the house does it slope away? Has somebody caulked cracks in the concrete near the foundation?
These situations are all common in older homes, but they are flags to be on the lookout for a basement with water problems. Asking a few extra questions so that you know what you are getting could save you a lot of future grief.

Water Bills

2008-03-02T20:42:00.000-06:00

Unpaid water bills are an issue that is coming up more frequently because of the number of foreclosure homes that are being sold. Water bills are different from other utility bills. Water is typically provided by the city rather than a utility company. The city always collects water bills, they never get "stuck". This is because the city has a tool that other utilities don't have. They can assess outstanding water bills against the property just like taxes. If you refuse to pay a water bill it will eventually be assessed to the taxes for the property. If you don't pay your real estate taxes you lose your house. The city doesn't care who used the water, they just want payment.
When you purchase a foreclosure, the bank should have paid the water bill, but it doesn't always happen that way. If the previous owner had their water shut off for non-payment and no one ever turned the water back on it's likely there is a water bill out there somewhere.
The title company might find it when they do a title search if its been attached to the taxes, but it could easily be missed. The only way to know for sure is to talk to the water department and verify all water bills have been paid for the property before closing.

You Walk Away?

2008-02-26T07:44:00.003-06:00

I have heard a couple of news stories about a web site called YouWalkAway.com.

The aim of the website and the subject matter do not make me feel warm and fuzzy. The subject is walking away from your mortgage and minimizing the damage.

After listening on MPR I had to visit the site. I feel anyone who walks away from an obligation or anyone who encourgages others to do so had better check their moral compass.

I went to the web site and it was not quite as sleasy as I expected. You see the thing is what the web site seems to be offering is information on legal rights of those being foreclosed.

Before the whole foreclosure situation was recoginized by anyone I had a single guy come to me asking for help selling his house. He had lost his job and could not make payments or get a loan.

He said the mortgage company was making harrassing calls and played one on his answering machine for me. He had equity in his house, but no way to access it. We knew there was a six month redemption period and thought it was reasonable we could get the home sold in that time.

He borrowed a little money from a relative and did some minor fixup to the house and we put it on the market. He was offered a job out of town, which for survival, he had to accept. He turned off the utilities in the house and notified the mortgage company he was working on getting the property sold even though he was just living in it on weekends.

The mortage company immediatly filed for an acceleration of the redemption period because of "abandonment" which they proved by showing the utilities had been shut off.

They changed the locks, listed the property and sold it, taking the owners equity.

This is a case where the mortgage company knew the law and their rights and exercised them fully, Maybe even a little more than fully. No one from the mortgage company expressed remorse or bad feeling about what they did.

If this is the attitude taken by the mortgage company, should it be any great suprise that individuals would want to use the law to do the best they can? The Lending industry has set the tone.

I do not think it is right to "just walk away" from an obligation. On the other hand it doesn't surprise me even a little bit that people who are facing foreclosure might take steps to minimize the financial damage.

Open Houses

2008-02-08T05:57:00.001-06:00

An open house is a way for you to see the inside of a home without a formal appointment. You can also meet different Realtors and get an idea of what they are like. If the open house is not too busy you can chat with the Realtor and get questions answered face to face.
In any given area there is usually a time most open houses are held. When I worked in Saint Paul and Minneapolis most open houses were held on Sunday afternoon. Usually I would do two open house of about two hours each.
Occasionally I would do open houses on Thursday evening.
In Red Wing most open houses are held on Saturday afternoons. In Saint Paul and Minneapolis open Houses are advertised in the Sunday paper while in the Red Wing area you'll need to look at the real estate insert in the Thursday Red Wing paper to see open house advertisements. Sometimes the only advertisement for an open house is the signs with arrows at the time of the open house.
Here is why a Realtor does an open house. The obvious reason is to try and sell the house, but few homes actually sell as a result of the open house. The more productive reason for a Realtor to do an open house is the potential of finding new customers.
Most Realtors will have a guest register for you to sign. Some people are not anxious to sign a guest register because they don't know what it is for. I request that everyone through an open house signs in. Of course, I like to have the names of those I meet especially if it turns out there is some reason to contact them, but just as important is the need to know who has been in a person's home.
You are a stranger entering someone's private home. If they are letting people off the street walk into their home, it is reasonable there should be some record of who these people are.
If you are working with a Realtor already they may have told you not to go through any open houses. Sometimes visiting an open house can cause confusion between Realtors regarding who you are working with. Avoiding all open houses is the easiest scenario for your Realtor, but may be an unreasonable request if you like going to them.
Sometimes another Realtor will call me before an open house and ask if its okay to send a customer through. I always say yes. More frequently someone will mention that they are working with another Realtor by saying something or just making a note on the guest register.
The confusion could come if the Realtor holding the open house doesn't know that you are working with another agent and you show interest in that property or ask for information on other properties.
Just as its a professional courtesy for the Realtor in the open house to welcome customers of another Realtor, it is a courtesy to inform the Realtor if you are working with another agent.
In general, open houses are a low key, informal way to get a look at the inside of a house. Its a good way to gather information on homes and Realtors. The Realtor will be happy to see you come through the door.

One way Mn Real Estate Taxes have Changed

2008-01-31T09:39:00.000-06:00

I got into real estate shortly after getting out of school. Bright eyed and bushy tailed, I wanted to get started investing.

I bought a duplex near Macalester College on Ashland Avenue in Merriam Park, Saint Paul. I paid $86,000, assumed a mortgage used my commission for a downpayment,financed the balance with a contract for deed with no interest for a year.

It was a big investment for me. One reason I could finance essentially 100% of the purchase and still bring in enough rent to make the payments was that I had a financial advantage.

I was going to live there. For that reason my taxes would be homestead, one third of what a non owner occupant would pay. That financial break allowed me to repaint inside and out, refinish floors and do some minor renovation in the first couple of years.

I enjoyed the fact that I had that break and used that same scenario to sell run-down homes to owner occupants who would fix them up.

Through the years the Realtor Association, of which I am a member, has sucessfully lobbied against the homestead/non-homstead system arguing that it discourages investors from buying single family homes. Today the difference between homestead and non-homestead taxes is so minor it hardly even matters.

I beleive that single family homes and duplexes are not well suited to absentee ownership. The maintenance is high and they can become run-down very quickly. Some people do a very good job renting single family homes, but its not an easy gig.

The event of a home switching from homestead to non-homestead status used to be feared by the owner of a home who had moved out. Owners would say, "If we can't sell it we'll just rent it." Upon finding out what would happen to the taxes that plan would change and the house would get sold.

Non-homestead taxes were an easy thing to hate, but they helped to keep the quality of all neighborhoods up. Think of the social costs of neighborhoods full of run-down rentals verses the advantages of having a part of the rental market being duplex, triplex and fourplex owners who live in their property and manage it.

It's hard to imagine that system ever coming back.

Housing Bubble Burst? I think not.

2008-01-28T17:23:00.000-06:00

We've heard all about the housing "bubble", how homes were over priced and prices were bound to fall. It certainly seems something has popped.

Its not a housing bubble, homes were not over-priced. At least not in the long term. While the cost of buying a house has dropped the cost of what is in a house has not. Talk to a builder, electrician or plumber. They will tell you material prices have gone through the roof. The cost of replacing your existing home has not dropped and existing homes are certainly less expensive than new.

Our current situation has been caused by loose lending practice, not over priced homes. People who could not reasonably expect to repay loans bought homes. Most of those homes are on the low end of the market and the banks have to take them back. Now the market is temporarily flooded with them. Until that huge inventory of homes is sold, the market will be depressed.

There are many people out there in the middle and upper segments of the market who would like to move or build, but they are sitting out because they need to sell their homes before they can do anything. When we finally sell the current inventory of foreclosure homes the market will start to heat up.

Material prices are up, fuel prices are up. Builders will not be able to offer homes that compete with the existing home market.

There will be a housing market with multiple offers and rising home prices. The effect of higher oil prices will have worked its way into the economy and there will be high inflation. Home owners will have instant equity. Real Estate will be the best hedge against inflation which will add to the escaltion of home prices.

I have heard it said that, suprisingly, we haven't seen much inflation as a result of the increase in oil prices.

If oil prices are up and not coming down, then the inflation has already happened. We just haven't measured it yet. It hasen't made its way through the system yet.

If everyone who drives a car or truck or airplane is paying $50 for a fill when they used to pay $30, how can there not be inflation? If rubber and plastic use petrolium in their manufacture, if steel uses energy in its manufacture, how can there not be inflation? If countries like China are growing, as they are, and consuming natural resources, how can there not be inflation? Lots of it.

If you run all of your credit cards to the limit, you might not see the bill for a month, but you know it is coming. Similarly, we should know that big inflation is lurking out there somewhere.

I'm not suggesting everyone should run out and buy a house. And I'm not rubbing my hands with glee at the prospect of a hot real estate market.

The housing market won't swing tomorrow, but I feel strongly that it will happen. The point of this post, that the real estate market is going to bounce hard, seems obvious, but no one is talking about it.

I wonder what others think. It would be interesting to get a comment on this.

J.T.

Phantom Smells Part B

2008-01-25T08:44:00.000-06:00

Here's one I haven't seen discussed anywhere. We bought a nice area rug on sale. It looked really good on the hardwood floor in our living room. Over time I noticed a sulpher-ish smell in the livng room. I unfairly began to suspect our dogs.
Eventually I got down on my hands and knees and sniffed the rug. Sure enough, the oder was in our new rug - Gosh darned dogs!
We rented a rug cleaner and gave it the once over. The rug was certainly clean. It still smelled. We suspected something in the manufacture of our rug, perhaps a dye? We thought as time went on maybe it would go away.
Getting impatient, we sent the rugh of to a rug cleaner in Saint Paul. When we went to pick it up he gave us a little nugget of information. Heat is used in the manufacture of some rugs. If the rug gets too hot synthetic materials in the rug backing actually get burnt. You can't see it, but you can smell it. He told us we could never wash the smell out. Sometimes, that's the price you pay for a bargain.

Whats that Smell? Part A

2008-01-25T07:52:00.000-06:00

Someone could write an entire blog about smells. Here's one that comes up now and again when I'm showing houses. It came up for me the other day and had me stumped until I thought about it.
The smell is sewer gas. All drains in your home should have a trap. A trap is a curve in the drain that collects water. Gas from the sewer or your septic system is prevented from coming up through the drain into your house.
If you smell a bad smell in a strange place and you can't locate its source, think sewer gas. The smell might come and go and it could be worse on a windy day.
It may be coming from an uncapped pipe without a trap, but its usually from a drain that doesn't get much use. In time the water in the trap dries out and the gas finds its way into your home. Its an easy fix. Just pour a few cups of water down the suspected drain.
Worst offenders are basement drains. Do you have one covered by a rug? Having a water softener or furnace condensate line in a basement drain assures the trap never dries out.
Here's something related that has appeared several times on inspection reports for older homes. In an older home floor drains sometimes have a clean out plug in the throat of the drain. The clean out hole bypasses the trap so that a plumber can run a plumbing snake down it.
If the plug has been removed or lost sewer gas can come out of the drain even if there is water in the trap.
Old drains rust and sometimes you can't get a replacement plug to fit. Your local hardware store will have a metal and rubber expansion plug, similar to the drain plug in a boat, that will do the trick.
I can think of other sources of phantom smells. I'll save that for another Post.

J.T.

Memories of Old Blue

2008-01-24T08:03:00.000-06:00

In this short life there are mundane tasks that we do on a daily basis without even thinking. And sometimes we build relationships not even knowing it. I have come to realize we should acknowledge these relationships while they are in full bloom rather than waiting until the blossom shrivels and falls from the flower.

There is one that has been in my life for a long time. Always there with unwavering loyalty. The one I speak of is often present at family gatherings and I shamefully admit to excluding her from photos even cropping those in which she might unexpectedly appear. I admit to being embarrassed at times when seen in public with her.

She is not outwardly beautiful, the years have not been kind to her. I sense that her end may be drawing near so I must get this out while I still have the chance. By admitting my shortcomings and acknowledging her importance in this post, perhaps I can begin to undo some of the injustice the years have heaped upon her. To this point she has not had a proper name.

On this day I name her "Old Blue". With temperatures at 14 below outside I will not ask her to rise to duty. She has in past similar circumstances heeded my call without question and for that she deserves respect.

To my knowledge, since her birth in 1985 she has not spent a single night inside. She has been loaded to the gills time and again with plaster, lath and nails. She has pulled stumps and hauled firewood. Now she is rarely on the roads, but trundles through the fields. She still keeps our driveway clear of snow.

She taught my children what a crank window is and just recently, she managed to teach my eldest to appreciate the cost of gas in less than a week.

Old blue, I fear the years weigh too heavily upon you. I can replace your aged battery, but the signs of a possible leaking head gasket could be the last blow. This winter, in the autumn of your life, I will treat you kindly so that perhaps you will make it to spring.

I hope that once more I may drive with you down field roads and that at least one more time you may feel the caress of the long field grasses across your under carriage and summer breeze in your grill.

Your Custodian,

J.T.

Frozen Pipes

2008-01-24T06:24:00.000-06:00

It's another cold day. My faith in winter has been restored. It's refreshing to have a real winter where there is snow and cold. I was beginning to worry my kids would grow up knowing winter as something old folks tell stories about.

Yesterday one of my agents got a call that water was gushing from a foreclosed house. As I tried hard to ignore the conversation that was none of my business... yet, I wondered how he could have overlooked something as important as winterizing an empty house.

I showed a house once where the water was knee deep in the basement from a broken pipe. Another house as the story goes had comnpletely filled with water to the point that when the agent opened the front door to do the walk through before closing, water came gushing out the front door and ran into the street. That closing didn't happen.

I became familiar with that property upon selling it after the renovation.

If you have a vacant house, regardless of the season, shut the water off. If you don't fully winterise the house, at least open the highest faucet and the lowest faucet to let most of the water run out of the pipes. Its cheap and easy to pour some RV antifeeze into the toilets.

This won't save you if the heat goes out and you don't discover it for a while. Companies that winterize homes have a check list and sometimes even they screw up. If you have a pipe burst with lots of water, you will probably have to tear out any wet area down to the studs.

Through the years I have owned several older rental properties. It's in a cold snap like this that you learn things. Like the house with the crawl space and the access cover removed. It's summer when you replace it. It might not occur to you that all of the pipes will freeze when the temperature drops.

Once I stuffed insulation around a pipe in a bathroom to keep cold air from coming into the vanity not appreciating I was causing the pipe in the wall to freeze.

Don't ever use a torch or paint burner to thaw frozen pipes. Presented with a frozen pipe and having a plumbing torch you might be tempted. The wood in an old house is very dry and can light up quicker than you imagine. Hair dryers work or even better just a fan directed to the area of freeze up will do the trick.

I should say the frozen foreclosure with the gushing water turned out not to be ours. Maybe a bank lost track of one.

Looking at Houses

2008-01-24T05:37:00.000-06:00

Since the beginning of the new year there has been an uptick in activity. The web site is showing more hits, we are getting more phone calls and most importantly, showings and offers.

For me, as a Realtor, there are different "modes" for showing homes. There are the buyers that are out there, calling occasionally when they see something of interest. There is the buyer "out of the blue" who calls and just wants to see one listing and there are the folks who have decided they are seriously looking. We go out and see everything that could fit their needs.

Occasionally there are those, usually transferring from another town, who want to see everything at once, 10, 15 maybe even twenty homes in a day. This is not the best approach unless you are forced by circumstances.

More commonly I set up five or six homes at a time. Sometimes people prefer to see fewer. If we are starting at 10 am I set the first showing for 10 am to 11 am, the second is set to overlap for 10:15 am to 11:15 am and so on. I adjust the overlap depending on drive times. This way we can spend more or less time at any given house. If one house cancels it doesn't screw up the whole schedule.

Everyone is different. Some folks will spend a lot of time in every house while others breeze through almost like they aren't even looking. Its just a personality thing.

There is a question that often comes up, regardless of the type of buyer. How do I keep track of these? After a while it might be hard to remember which house had the new roof or which kitchen didn't have a dishwasher.

Here's a helpful idea that you might like even if you are the type who takes written notes on every house.

As you leave each house give it a rank in your head. Compare everything to your favorite. Always have a favorite even if you don't like the first house, call it your favorite. If you don't like the second house, still choose a "favorite" between the two you don't like.

I think you will find if you consciously decide which is the best when you walk out the door of every house you look at, you will remember more details about all of them. You will certainly remember the top two or three in more detail.

J. T.

Financing Letters - Pre approval

2008-01-22T12:08:00.000-06:00

In the old days we Realtors sat down with our customers and calculated how much mortgage they could afford. The Realtor asked about credit, Income, job history, debt, credit cards.

We would take a little worksheet and figure out what our buyer could afford. When the offer was written and accepted the buyer would apply for financing. Usually this would be "our" loan officer.

I'm not sure when the change occurred, but I remember concern that banks wanted to become the origination point of the real estate transaction. The idea was that buyers would go to the banker first and banks would tell the customer which Realtor to use. Banks would control the real estate market. Realtors didn't like that idea.

Some buyers now go to the bank before looking at homes. Sometimes they use a bank suggested by the Realtor and sometimes they have a bank they are comfortable with before they meet the Realtor. As far as I can tell, the banks have not taken over the real estate market.

An old friend once told me. "Hire painters to paint and bankers to bank and don't take stock tips from your painter." Your financing is a little bit like that. Your Realtor can set you on the right financing path. We have good general financing information, but in our specialized world it is the lenders job to tell you what you can afford.

What the Realtors used to do was called "pre-qualifying". There were no guarantees connected with it but it gave a pretty good approximation of what you could afford. Today lenders may prequalify you and even give you a prequalifying letter to present with an offer.

Now a days there is another step that comes after qualifying called pre-approval. Pre approval means your request for financing is submitted to the "underwriter" and approved. The underwriter is the person at the bank who looks over all of the information on the application and says "yes" or "no". They make sure that the loan request falls within certain guidelines.

Mere mortals like Realtors and buyers don't get to speak with underwriters. Like the all powerful OZ they can make the wishes of buyers and Realtors come true. Like the Wizard I am sure they are just normal people, could be the fellow next to you in the check out line at the grocery.

Sellers consider a pre approval letter to better than a qualifying letter. If you are truly pre approved, the only steps remaining are to find the house and for the appraisal to be done. The appraisal must show the home has a high enough value and is in good enough condition.

It should be noted here that we are in the middle of a change. I would guess that underwriters are under immense pressure to filter out potential bad loans, also some markets are declining in price. We may start seeing underwriters requiring increased down payments after the loan has been submitted.

It used to be common practice for lenders to request letters from buyers explaining details about their specific financial situation before approval. I wouldn't be surprised to see this come back.

If you don't have a pre approval letter yet, but you have some idea what you can afford, its okay to get started looking. Your Realtor can point you to a good lender. I would not delay on the financing however, most sellers expect some kind of financing letter to be presented with an offer.

When you find the house you want, everything can happen fast. You will be much more comfortable if you know your finances are in order.

Moisture on Windows

2008-01-20T19:02:00.000-06:00

Condensation on windows is a special cold climate problem. Cold air can't hold as much water as warm air. When warm air gets cooled, water is the result. If you ignore water on the inside of your windows, they will start to mold and eventually rot.

In our old house with single pane glass and storm windows this wasn't a problem. The old house had enough natural ari exchange that water never pooled on our windows. With our new home there is some learning going on.

New homes are tight and air flow is regulated. Our house is very good about retaining heat, it also retains moisture from breathing, cooking, showers, plants etc. During this recent cold snap water and ice formed around the edges of our windows. Our windows are wood on the inside. Water and wood is not a good combination.

Here is what I have learned. In a modern home with double pane windows when the temperature gets to 15 degrees your humidity should be kept 35% or lower. When it hits twenty below you may need to keep the humidity lower than 20%.

If water forms around the edges of your windows the humidity in your house probably exceeds the numbers mentioned above. If you commonly have humidity on your windows you need to get it out. It is healthy to have some humidity in your house.

Someone in a slightly older home told me they turn down their humidfier when it gets cold and that works for them. Our house stays humid without a humidifier so we need to run our air exchanger more when it gets cold.

The meaning of the little dial on the air exchanger control became clear to me this weekend. It's a humidistadt that runs the air exchanger until the humidity is at the level set on the dial. I never have been good about reading directions.

I should ad a note to this information. If you have moisture between the panes of your double pane windows this is different. Your window has a broken seal and the glass needs to be replaced. Check with the window manufacturer, it may be under warranty for longer than you think.

J.T.

Teens Below

2008-01-20T10:36:00.000-06:00

It's in the teens below zero this morning in Red Wing. I noticed another real estate blogger has posted pictures of the city in the cold. I thought, in the interest of balance, we should have a cold photo of the country.

Well I have to act fast before it goes away.

This photo was taken from our bedroom window this morning just before sunrise. There is a certain stillness the cold brings that's nice -- if you're not a wild animal that has to live in it.

Myself, I just go out to visit occasionally. I enjoy the winter and the cold. I'm not the only one, our husky mutt, Luka rolls around and buries her head in the snow. She seems to smile as she bounds through the snow.

Low Offer and the Spin Doctor

2008-01-19T08:25:00.000-06:00

You have found that perfect home and it's time to write an offer. You can't get to this stage of the game in our market without some mention of a low offer. Are low offers a good idea? Is it foolish not to make a low offer? How low is low? Let's get some perspective.

From your point of view, the real estate buyer, this is an important investment. You wouldn't want to pay too much, especially on an investment as big as a house. Everyone is talking about the market and slow home sales. Seems like a no brainer. Offer low and see what happens.

What if you are in love with the property? What if its one of a kind? What if it's already priced low? I'm going to skip the part about figuring out what the house is worth. Valuation is not what I am writing about. What goes on in the minds of the Buyers and Sellers is what this is about.

As the Buyer you will start to figure the price you should offer in your mind. You will think about the cost of things you will have to do. Replacing the furnace or the roof, or ripping out carpet or painting or anything you can think of. You may attach a dollar value to these items and subtract it from the price. You should be thinking, even if you feel it unlikely, about how it would be if someone else came along and bought the house out from under you. Somehow you will weigh these factors when formulating an offer.

It is fair enough, a buyer has to have some way to compare. Buyers come to me with lists showing everything that is wrong with the house they want and the know cost of each correction. As the offering price gets lower, the list gets longer as the Buyer tries to justify what they hope they can get the house for. Some will say "Give this list to the sellers so they know why our offer is low so they understand we are reasonable people."

I say this list is for you, not the seller and don't forget to think about if the items on your list are already factored into the listing price.

If seller has lived in this house they are in a good position to know about the condition. They are going to have their own ideas about price.

Don't burn valuable energy telling someone what's wrong with their stuff. Right or wrong, you are likely to start an adversarial relationship. In fact, a good Realtor will present everything you think is good about the property, what wonderful, well qualified buyers you are, present the price and sit quietly and watch the seller make the list of problems themselves.

Low offers don't always get accepted and they are not always a good idea. They cause pain and sometimes damage a negotiation beyond repair. The stages that a seller goes through when accepting a low offer may seem familiar.

Stage one, anger. "What do they think they are doing, this is crazy, we won't consider this". An agent who hasn't been through this might just say okay and walk away - what a huge mistake. (even if the seller is right)

Stage two: Denial. "Our home is worth more than this, if we wait long enough a better offer will come. (keep in mind the seller could be right)

Stage Three: Depression. I can't believe this is the offer we have to look at. Is it possible our house is only worth this much.

Stage Four: Acceptance: If this is what we have to do lets get it over with, where do I sign?"

As a buyer you need to remember this process can break down at any time for a number of reasons: Financial inability to accept the offer, continued confidence that someone else will come along. Another buyer might actually come along while you are haggling. What a wonderful feeling for the seller to accept a reasonable, clean offer when someone else has been raking them over the coals.

You don't want the reason for the break down to be because of something you can manage - your image. Be pleasant and respectful in your attitude

If the seller is a bank rather than an, there is no telling what they will do. A general rule is that the lower the offer, the greater the possibility of rejection or a counter near the asking price. If you can think like the seller and present an offer that is near their bottom line, you are much more likely to meet with success.

We've also had very low offers accepted on foreclosures only to find that the investor who holds the mortgage cancels the deal before final signing, buys back the property and the house disappears from the market all together.

As the listing agent we get an email that says something like: "Sorry, the original investor has decided to repurchase the mortgage. Cease all marketing activity and let the buyer know the agreement is cancelled." Everybody hates this situation.

The bottom line is that you will have a lot more success negotiating if you manage the seller's first impression of you(which should not be solely someone who throws in a low ball offer). Also pay attention to the Seller's point of view.

Good Luck!

J. T.

Heating your House

2008-01-18T05:36:00.000-06:00

This is Minnesota and everyone seems to talk about the weather. We are in for a cold stretch.. I thought I would talk about furnaces. Here's our boiler. It hangs on the wall. You can see the blue hot water storage tank next to it. The storage tank is about the size of a water heater. More about that later.

The most popular kind of furnace around here is the forced air furnace. They are the least expensive and they provide air flow which, among other things, allows you to have air conditioning. A home inspector will tell you that a forced air furnace has a life expectancy of about 20 years.

In an older furnace the heat exchanger could develop a crack. This is bad because carbon monoxide from the burning of natural gas or propane can enter your home through the crack. Every year when there is a cold spell there are carbon monoxide deaths in the news.

You should have a carbon monoxide detector in your home and have your furnace checked before each heating season. I recently sold a home with a 50 year old forced air furnace, which did actually looked old. I'm sure it was not very efficient.

A twenty year old forced air furnace can look like new, they haven't changed much in that time. High efficiency furnaces are becoming more common. A standard furnace may be 85% efficient whereas the newer high efficiency models may be more than 95% efficient.

Higher Efficiency models are more expensive, but they pay for themselves over time.. High efficiency models capture so much heat from the burning process that very little goes out with the exhaust.. You can identify a high efficiency furnace because instead of a metal pipe going up and out the chimney, they have a white PVC pipe that vents out the side of your house.

Believe it or not, water is one of the byproducts of burning natural gas. In older furnaces the water vapor escapes out the chimney. In high efficiency furnaces there is a condensate tube that drains the water from the furnace. If the tube clogs the bottom of your furnace could fill with water if the furnace is working hard.

Another common type of furnace is the boiler. Residential boilers are hot water systems, not steam. In older systems the radiators are used to distribute the heat. Starting in the 1950's or 1960's they started to use baseboard units which don't take up as much space. More recently, in floor heat has become popular.

Boilers are more expensive than forced air furnaces and they should last longer. There are advantages to hot water heat. Instead of blowing dry winter air around your house warmth radiates from a warm radiator or floor. I've been told this type of heat feels warmer and you can keep your thermostat lower. I'm not sure how to judge that.

In floor radiant heat is very nice, especially in a tile bathroom or basement floor. We put a new cement floor in the basement of our previous old house. The plumber talked us into putting radiant heat in the floor. He told us it was okay to run water from our water heater through the pipes instead of putting in a boiler. It worked fine that way. Our whole home felt warmer and our basement family room with warm floors became a favorite spot for everybody.

When we built our new house we put in both in-floor radiant heat and forced air. The boiler hangs on the wall in the utility room. The high efficiency boiler supplies both domestic hot water and heats the water that keeps us warm. Unlike our old system, the water that heats our home is in a closed system and is different than our water for showers etc.We also planned for an outdoor wood boiler which circulates water in the same way as the main boiler but the heat source is outside.

We envisioned saving lots of money by burning wood. We haven't put in the wood boiler yet because it is expensive and we have discovered that our house is very easy to heat. It would take a long tome for the wood boiler to pay for itself. That's all for now.

J. T.

Real Estate and the Web

2008-01-17T09:04:00.000-06:00

We recently moved to the country. It's all I can talk about. I enjoy nature and animals. We regularly see deer, racoon , possum, coyotes. We even had a black bear visit us. We have a Red Tailed hawk that occasionally flies by with a snake dangling from its talons.

The mice are everywhere out here. I've got an old Ford Pickup truck I use to plow our driveway. They, the mice get into the truck and make nests in the glove compartment. They also made nests in the heater and at least one crawled down the defroster vent and died.

Sometimes I feel like I'd like to get rid of all the mice. But if I could ever manage to do that, I'd lose my hawk, the coyotes and who knows what else. Everyone knows about the food chain. Everything depends on the smallest creatures at the bottom. Though it is not quite as simple as a chain, its more like a web of living things all dependant on each other.

The real estate market is like a food chain. The first time buyer is at the base. They buy an existing home and the owners of that home buy another, probably more expensive, home and so on. The builder who builds expensive new homes is dependat on the first time buyer even if they never meet.

Our real estate market is not suffering from a lack of buyers. At this point they are still out there. In Red Wing, where I work, the low end is almost normal in terms of number of homes sold. First time buyers are purchasing homes and getting deals like you've never seen before.

Let's define the low end of our market as $150,000 and under. Right now there are around 60 homes in that price range. That's a lot more than normal. More than half of those are vacant foreclosures. In any give quarter you can expect 20 to thirty homes in that price range to sell.

Today in our real estate crisis that remains true. The problem is that when a vacant house sells, no one moves up. The "move up" or second time buyer has been removed from the food chain. It's hard for them to sell their homes when they are competing with banks who have to sell at any price.

Our market will not get better until first time buyers are buying mostly occupied homes. As long as foreclosures continue to flood the market, we are stuck. Mortgage rates don't matter as long as the inventory is all vacant homes.

With the current market conditions we can sell our inventory of foreclosures in three months. The problem is that they just keep coming.

The price of new construction can not drop in the same way as existing homes. Steel, copper and petrolium have all increased in price. Builders are scaling back and going out of business.

What happens when we reach the end of the vacant house inventory? Rates will be low, builders will not have the capacity to fill demand. All of the move up buyers who have been defering their move because of the market will find ready buyers. The market will take off in an unhealthy way.

There will be competitive offers and prices will sky rocket. The quality bulding we see today will be left in the past as builders jump to fill demand and make quick money. We have seen this before in the 70's and 80's. Maybe we will see inflation and recession at the same time again.

Low interest rates should not be the reaction to our current situation. If there is anything to be done it would be steps to stall coming foreclosures so there is a softer bounce as we come out of this.

This is Real Estate and the Web, the food chain and we are in for a ride, no matter what happens.

J.T.

Kind of Busy

2008-01-14T21:28:00.000-06:00

Now that we're through the Holidays real estate is picking up a little.

I'll write later. Until then, here's a website with some nice barns. I know at least some are in Minnesota because I recognize them.

Barns

BTW I recognize the artist as well, Nice stuff Lori.
Looks like you can go here to buy it. Pottery Place Art

John T.

How to Make a New House "Old"

2008-01-10T09:05:00.000-06:00

They say "write what you know" so today I will stick with today.

We just built a home and very much enjoyed doing it. The only reason, aside from money, we didn't do it earlier was that we like old homes and neighborhoods so much and didn't want to move.

Here's how it played out:
Our building site is in the country. It seemed to cry out for something in the spirit of an old farm house with a front porch. Well, we didn't do that. We chose a practical modern plan from a magazine that had the space we needed. But we didn't want an attached garage, so we pulled it off the plan.

We added both a sun room and a three season porch that were not in the plan. As a real estate agent, I've shown a bunch of country homes in the last dozen years. A country scene I wanted to avoid sticks out in my mind. It's a front door without a sidewalk or steps. Lots of folks in the country simply don't use the formal front entry. It's wasted space.

We got rid of the formal entry and the front hall.

We used a steeper roof pitch and increased the overhang to make the house look older. We used painted siding and we put in lots of big windows. The contractor would have been happy to nail the siding on at this point, but he wasn't fast enough.

We asked him to put wide trim around the windows mimicking the dimensions of our old foursquare in town. Since we were into custom trim we added shingle siding in the gables and clapboard on the body of the house and accented them with a skirt board on the bottom and freeze boards where the siding meets the eaves.

Window trim on the inside is like the old stuff as well. Window sills are not standard so we had to copy them from our old house.

Pergo, the flooring material, is amazing stuff. It looks just like wood and wears like iron, that was our original choice.

We settled on quartersawn white oak floors instead. I saw them in a renovated home and liked them a lot. We also did a window seat with built-in bookcases out of quartersawn red oak.

You can see where this leads. An upgrade here, a slight change of plane there. Few of your ideas remain unchanged and changes increase your cost.

Kitchen cabinets - we know a guy who does beautiful work. We chose doors exactly like those in the pantry of our Saint Paul duplex and used a simple shaker crown mould. We used cherry wood harvested from our land.

At the last minute we changed the orientation of the house to face almost due south. The wide eaves shade windows from sun in the summer, but in the winter when the sun is lower, our windows completely heat the house on a sunny day. It was worth the extra push to make that happen.

We had to stick to a small size so our rooms aren't big and the only bedroom on the main floor is the master. There is no dining room, but we have a large eat-in kitchen - The dining room in our old house was used for everything except dining.

We are in now & we plan to be here forever.

Imagine About 100 years ago

2008-01-09T22:22:00.000-06:00

Now I'm making things up, but here's what I imagine. To get you in the spirit here is a video slide show of appliances that go with the era.

Plaster is great stuff for walls, but it has its drawbacks. You don't want it to get wet when you are mopping those wood floors. I imagine this is why some still call base boards "mop boards". Those big wide boards protect the plaster from wet mops.

If you had a little extra money and you wanted to dress things up a bit you'd ad a "cap" moulding to that mopboard. The cap moulding by its self probably has more wood in it than the entire baseboard of some new homes.

If you have a little more money you have a servant stair from your kitchen to a room upstairs in the back of the house. The floors in that room were probably maple instead of oak. You may have gotten away with clear fir for the floors and trim for the servant's room. Definitly no cap moulding.

You don't want to pound nails into plaster or you might start a crack so you hang art from wires on hooks that attach to wood picture rails that run around every room near the ceiling.

If you want to display plates or other nick nacks in your dining room, then you have a plate rail. Since air conditioning hasn't been invented by the guy in Minneapolis yet and you have radiator heat, you might have transom windows above the door that crank open and closed to control air circulation.

The radiators have decorative covers and little pans hanging from them that you put water into for humidity in winter.

There are lots of big windows with wide trim "ganged" together sometimes in twos or threes or maybe a bay window with a window seat. Every window has a window sill. When did window sills become extras?

Little ropes go up from the window sash and over pulleys into the window casement. The pulley's squeak and you can hear the window weights clunk around when you open the window. If the rope breaks and the weight falls off you can remove the brass screws in the wood that holds the window sashes in. Then you can open the casement and reach in to replace the rope.

There is a room in the basement that is full of coal and in the winter someone has go to go down there and stoke the furnace.

They say folks were shorter back then and places were harder to heat. So I'd like someone to explain to me why more than a few homes had nine and ten foot ceilings.

Stairways railings and newel posts were catalog items back then, probably on the next page from the built in buffets and book cases. The beveled mirrors had thicker glass and wider bevels than the mirrors you buy today.

In late afternoon the sun sparkles through a leaded glass window in the living room.

Imagine, the front door had a window, maybe curved, full length with beveled glass with decorative, machine carved designs in the wood. In the middle of the heavy oak front door or perhaps in the wall next to the door is a brass door bell. A real bell with little clappers in it that spin round and round when a guest pushes on it.

You live in a new developement, you have indoor plumbing and a model "T" parked in the garage. Natural gas is piped in by the city for your lights and stove.

What will they think of next? -Try electricity for one.

Your refrigerator uses ice blocks and you get meat from the meat market right before you cook it. The butcher knows you're having a big roast this Sunday so he has it on hand. Everyone is taking the street car out to White Bear Lake this weekend.

I'm not a history guy, and I just figure things out I can imagine the technology. Telephones must have happened around then, airplanes? Imagine the machines and factories, new jobs.

This was a high tech world and people were amazed at themselves for living in it. This home was designed for beauty and comfort. This imaginary old home is still comfortable and pleasing.

OOps, sorry I've got to get off of the old house theme.

Beadboard

2008-01-09T21:56:00.000-06:00

More interior wood features.

Beadboard. You still see original beadboard on the cielings of old porches. I think around the turn of the century(1900) they used it if they didn't want to plaster. Old beadboard was 3/4 of an inch thick and several inches wide. The peices fit together with a tongue and groove. The "bead" helps to hide the joint between peices.

All of the walls and ceiling of the kitchen in one of our homes had beadboard under sheetrock. I have recently seen a renovated home from the early 1900's that still has beadboard on every ceiling and wall in the house.

Sometimes beadboard was used on the lower portion of the wall with a cap moulding as wainscoating. You can buy paneling to mimic this look, but its somehow not quite the same.

You can still get beadboard that looks just like the old stuff. You'll find the clear pine which they used on everything seemingly without a thought in the old days to be prohibitively expensive though. We used some of the less than perfect grade for the ceiling of the porch on our new home and it looks pretty good.

Sometimes people call beadboard "car siding", but that is something different. Car siding is about the same dimension as beadboard and it is toung and groove but it has just two bevels instead of "beads".

I think of it as being on slightly newer homes(1940s) and more likely to be used as exterior siding. I picture an old garage in South Minneapolis when I think of car siding. Some of the newer no maintenance siding is made to look like car siding.

It seems logical to note here that fewer homes were built between the late 1920s and early 1940's. Quite often you'll find houses of that era built of different materials, like fiber board on the walls instead of plaster.

J.T.