I showed a house last weekend that was in a high demand neighborhood in Minneapolis near Uptown that was listed at $300,000 which seemed to be a decent price for the size of the home, number of bedrooms, baths, location, etc…UNTIL we walked in and the painter was there working, the kitchen cabinets were not completed, the trim work was not done and the “master bath” upstairs was still a framed out shell.  It was a nice touch to have a paper sign posted that said “build to suit your tastes.”  

Personally, if I want to buy new construction, I will buy new construction but I am certainly hesitant of buying and spending $300,000 on a home that first of all is not finished and second is not finished carefully or with great skill.   Personally, I’d want to hire my own contractor to finish the job and offer them $50,000 less for the house.

In my opinion, if you are rehabbing or “flipping” a house, PLEASE have it finished before you list it OR at least fill us in on how far along you are with the construction so we know what we are walking into.

Looking to buy in the Twin Cities?  Give me a call!

Jen McKinnon
Realtor / Investor
MN Real Estate Team – #1 Team in MN!

612.384.1073
jen[at]mnrealestateteam[dot]com

I knew that Short Sales were frustrating but just had a recent scenario to share….

A client and I put in an offer on a short sale property recently. The listing agent does ALOT of short sales and as usual, forwarned us that it would probably be at least 30-60 days until we got a final accepted offer. Just this week – about 30 days in he tells me that the offer is dead because the bank will no longer take anything less than the full amount owed by the seller. This amount is approximately $50,000 more than our offer so, NO, we were not going to resubmit a new offer.

To make a long story short, the bank conveniently waited for the sherrif sale to go through so that now they no longer have to accept the short sale.
Essentially, they are forcing the seller into foreclosure which means 7-8 years of not being able to buy a new home versus being able to try for a new loan in a couple of years. PLUS, my client lost the option to buy this home for the nice low price that he wanted to buy it for.

In the end, no big deal for us because we can go find another house but I feel bad for the seller who is now in a bigger mess and will have a foreclosure on his record.
Gotta love the banks. Bottom line, stay away from short sales or make sure the listing agent has full information on what the bank is planning to do. I do believe that the agent I was working with had everyone’s best interest in mind but the bank did not communicate correctly with him.

Jen McKinnon
Realtor / Investor
612.384.1073
jen[at]mnrealestateteam[dot]com

So, I get alot of questions about the new $8000 tax credit and what is involved.

Here are the VERY basics and of course, you should always contact a tax professional if you have any questions specific to your situation.

1. $8000 can be yours if you are a FIRST TIME HOME BUYER
2. Who does the Government consider a First Time Home Buyer? Anyone who has not owned a principal residence for the last 3 years.
3. This tax refund DOES NOT have to be paid back IF you hold the residence for at least 3 years.
4. This tax credit is available for homes purchased January 1 2009 to November 30 2009

Here is how you can take advantage of the tax credit for your 2008 tax year:
1. The tax credit can be applied against your 2008 tax return that is generally filed on or before April 15, 2009.
2. If you have already filed your 2008 tax return, you can immediately amend your return once you purchase a home and you should receive a refund in 30 to 60 days.
3. If your home is scheduled to close after April 15, 2009, you can file an extension until October 15, 2009 to file your 2008 tax return to take advantage of the tax credit and receive your refund.

If you are looking to buy in the Twin Cities please give me a call!
Jen McKinnon
Realtor/Investor

612.384.1073
jen[at]mnrealestateteam[dot]com

Real Estate Investing 201 Seminar – Saturday, March 21st, 12:00PM-?
North Minneapolis Bus Tour
I am frequently asked where the best deals are for investors in the Twin Cities area. Right now North Minneapolis has the largest concentration of amazing investment property opportunities. For several years now, the majority of North Minneapolis has been going through a transformation. North Minneapolis Crime is down, rental demand is strong, foreclosures are running rampant, and good deals are everywhere. Nice properties in nice parts of North Minneapolis are selling for $49,900, $39,900 and even $19,900.

We have put together a program for new and seasoned investors to capitalize on this perfect storm of investing and buy up properties that sold for up to $200,000 just years ago. Our team has assembled real estate agents, a general contractor, leasing agents, property managers, and the financing to make this a rare turn-key investment.

If you have ever been interested in the great opportunities in North Minneapolis, let us show you around. This is a rare bus tour where we will drive you around the areas, show you both rehabbed houses and for sale properties. The tour will leave at noon on Saturday, March 21, from nearby Robbinsdale and will take approximately 2-3 hours. We handle parking, finding the properties, and logistics. You simply sit back and listen and see how so many investors are taking advantage of these great deals. Because of limited seating, a reservation is required. Contact us now!

Future Seminar Dates: April 28, May 26
Please call me at 612.384.1073 or email at jen [at] mnrealestateteam [dot] com

Jen McKinnon
Realtor / Investor
MN Real Estate Team

Ok, now I am definately not advocating any funny business or any faulty appraisals here. An appraisal with fudged numbers and unrealistic comparables does not do anyone any good. And, it won’t make it through underwriting and then the deal is dead anyway. Plus, we don’t need anymore bad deals out there – this is part of the reason the housing market took a dive to begin with.

What I am saying is that if you get one appraisal that is not where you’d like it to be it does not hurt to get a second opinion (or 3rd or 4th). You would get a 2nd opinion from a doctor if you were not sure about the original diagnosis, right?! So, why not get a few opinions for what is probably the largest purchase you will make?

I bring this up because I just had clients who had an accepted offer on a home in Richfield, MN that they absolutely loved and 2 weeks prior to closing the appraisal came back $75,000 UNDER their offer price! Nothing against the appraiser that did the appraisal or the lender who ordered it – they did a great job but we wanted to see what other appraisers would have to say.
So, what happened?
This house in Richfield was somewhat overdeveloped for the neighborhood it is in (I have to say it is gorgeous!) so there were no accurate comparables to choose from. Going into the offer, we knew this but to my clients, the house was worth the offer price (and the seller’s were firm on their pricing). The appraiser did a very thorough job but bottom line, if this house had been in Edina or Minneapolis it would have hit the offer price NO PROBLEM!! Unfortunately, Richfield does not have as many high priced homes. So, instead of just walking away from their dream home, we went to 2 other lenders and 3 other appraisers to get their opinion.

What did we find out about this house in Richfield? 2 of our new appraisals came in $25,000 better and our final one came in $45,000 better than the original appraisal. How does this happen? These different lenders have underwriting with different guidelines on what comparables can be used. Again, these were legitimate appraisals! Sometimes there can be more leniency with local lenders.

Bottom line, we never did get an appraisal at the original offer price which is OK because now we know what the more realistic value of this house is and we were able to negotiate the offer down to the new appraisal. In this market, the seller’s now know that they would not get a higher price for their home and that if they wanted to sell it, they would have to come down to match the appraisal.

In the end, my clients got their dream home at a fair market price!

Now, you ask, what happens if the home appraisal comes in under the offer price and you can’t renegotiate the offer? What happens?

1. Home buyer can walk away due to financing
2. Home buyer can pay the difference between the appraisal and the offer price in cash at closing because the lender will not loan on the difference
3. Home buyer can get more opinions from other lenders and appraisers and potentially renegotiate again

Bottom line, it will depend on how badly you as a buyer want a house and how badly the sellers want to sell. Make it happen!

Looking to buy a home?
Give me a call!

Jen McKinnon
Realtor / Investor
MN Real Estate Team

612.384.1073
jen[at]mnrealestateteam[dot]com

Before you start reading…please note that I am not a lender, an appraiser or an inspector.
So, today I ran into a client who was hoping to purchase a bank owned property that needs quite a bit of work done to it. This home north of the Twin Cities needs a new furnace, the gas line is not hooked up to the house, it is missing smoke detectors and it is missing quite a bit of copper. So, you ask, where does the problem come in? The problem is this…
1. With FHA financing the lender will not lend or insure a property that has issues like what I have listed above. They would require some of these things (and each house is it’s own case by case situation….) to be repaired PRIOR to closing.
2. When a property is bank owned it is typically sold “as is” which means the bank will not make any of these repairs for you in advance of the closing. If the property was still owned by a private citizen, you could ask them to make the repairs first.
3. Also, the bank will not let you, as a potential buyer, come in and do any repairs on your own. They do not want the insurance risk and ultimately, are not “general contractors” to oversee your handy work. Also, it would not make sense for you to spend the time and money doing any repairs on your own either because the bank could change their mind and end up NOT letting you purchase the property and of course, the bank will not pay you back but they will gladly take advantage of the work you have done.

This is not to say that you can’t buy a bank owned property with FHA financing, you certainly can, but you will probably want to look at something that does not need alot of major fixes like furnace, plumbing or gas.
Again, each property will be assessed individually by an FHA inspector but my advice would be to stick to buying something that only needs some cosmetic updates unless you are buying with a conventional loan, cash or a rehab program like 203K.
For more information about 203K take a look at HUD’s website. As always, for lending information you should contact a reputable lender in your area. I recommend Cornerstone Mortgage located in Burnsville MN.

Jen McKinnon
Realtor/Investor
612.384.1073
jen[at]mnrealestateteam[dot]com

So, I was reading an article the other day that talked about the possibility of home owners becoming renters in lieu of getting kicked out of their homes when foreclosure happens.

It was an interesting concept to me and I thought I’d write about it.

So, right now, we all know there are too many foreclosed houses on the market and the Twin Cities market is no different. Even the best neighborhoods like Crocus Hill, Highland Park, Macalester Groveland, Lake Calhoun and Lake Harriet are not immune to it.

If you have a foreclosed home in your neighborhood, you know it is not usually a pretty picture. Typically, a homeowner who gets foreclosed on is not a happy camper and in their mind, why take care of a house that is only going to be taken away from them? So, what happens is that the house becomes run down, the yard turns into a weed bed and in general it becomes an eye sore to the entire neighborhood. Once the owners move out, it gets even worse because signs get posted about vacancy and water shut off, etc…
Bottom line, NO ONE wants their home to be foreclosed on and neither do any of the neighbors.

SO…..what would happen if the bank gave up on the entire LONG process of foreclosure and simply made an agreement with the current owners that they could stay living in the house as tenants paying rent?
Maybe the bank would negotiate with the owners to come up with a “rent” amount that would be affordable for them and still work out for the bank as well. Then, hopefully, the “owners” turned tenants would stay in the home, continue to care for the home as though they owned it and we’d end up with less vacant, run down homes.

Of course, that is the ideal scenario.

The issues that could arise are many:
- The bank is not in the business of being a landlord so who will take over these duties that go along with owning rental properties? Would a new bank owned property management department get set up?
- Who will pay the utility bills and what happens if any of these go unpaid?
- What happens if the rent does not get paid?
- Could the bank set up a sort of Contract For Deed or Rent To Own situation?
- What happens if repairs need to be made – new roof, furnace, broken window, light bulb, etc.?
-
These are just a few questions and I am sure there are many more. I don’t have all the answers but I’m sure this topic could spur some interesting conversation.

Need a Realtor or have real estate questions?
Give me a call!

Jen McKinnon
Realtor/Investor
MN Real Estate Team

612.384.1073
jen[at]mnrealestateteam[dot]com

Not all Title and Closing companies are created equal. I have dealt with many and by far, my favorite is Trademark Title Company.

Here are a few things to keep in mind:

1. In the state of Minnesota the BUYER has the right to chose the title and closing company for a residential real estate transaction. The MN statute states the following:
7.45 RESIDENTIAL REAL ESTATE CLOSINGS
Subd 4. Choice of Closer; notice
(a) No real estate salesperson, broker, attorney, auctioneer, builder, title company, financial institution, or other person making a mortgage loan may require a person to use any particular licensed attorney, real estate broker, real estate salesperson, or real estate closing agent in connection with a residential real estate closing.

2. Sometimes, especially with foreclosure or REO properties, the selling bank will tell you that they will only accept your offer if you use their title and closing company or to further entice you, they say they will pay for your title insurance if you use their title and closer of choice. As you can clearly see from the MN statute, this is not allowed. True, they may not pay for the title insurance or any of your closing costs if you don’t use their title / closing company but you, the buyer, has the right to chose whatever title / closing company you want to use.
Typically, when the seller is a bank and they offer to pay your title insurance if you use a company of their choice, the insurance that they provide is not as comprehensive of a policy as what you would get on your own.
Title insurance is very important since what you are actually buying is title to a property – the right to occupy and use the land. So, you want to make sure this right is protected, correct? Even with the most careful title review conducted something could get missed and the last thing you want is someone coming back to you with a “right” to your property. Also, many of the policies that the seller or bank say they will provide to you if you use their title / closing company do not include coverage of the time between closing and when the paperwork is actually filed. Yet another reason to get your own title insurance policy.

3. In my opinion, one of the BEST reasons to chose your own title / closing company is that it gives you your own representation at the closing table and someone who has your best interest in mind and isn’t just trying to get the transaction pushed through. This is a good thing for a major purchase like a house! You have your own Realtor – you should have your own title / closing company.

Like I mentioned above, I really enjoy working with Trademark Title Company for a few reasons:
1. They are very professional and great communicators.
2. Their prices are competitive and they will usually beat any prices if you give them the chance.
3. They get the closing done on time and done correctly.
4. They have multiple closing locations around the Twin Cities and work with you, the buyer on what location is convenient for you. Many other companies will not do this.
5. They get all paperwork recorded in a timely manner. Again, many other companies are not concientious about this.

Feel free to contact me for more information!

Jen McKinnon
Realtor / Investor
MN Real Estate Team

612.384.1073
jen[at]mnrealestateteam[dot]com

So, I was just out this past weekend with clients looking at condos in downtown Minneapolis in areas like the North Loop and along Washington Avenue near the Guthrie Theater.

I have to tell you….now is the time to buy a condo if that’s what you are looking for. There is alot of inventory and for the most part, they are in pretty good condition, selling at great prices and they are desperate to sell which means there is some room to negotiate.

Because there was a building boom over the last few years in Downtown Minneapolis, there are a large number of condos available at reasonable prices.
You will see alot of foreclosures or short sales or REO’s (Real Estate Owned) because, back when the building boom was going on and real estate prices in the Twin Cities were growing like crazy, you had people who at the time were very smart and bought these condos at market rate even before the building was finished. Their plan at the time was to buy the condo in Downtown Minneapolis and as soon as it was finished, they would sell it at an amazing profit because the market was growing so rapidly. Unfortunately, for many who invested in condos in Downtown Minneapolis, the market stopped growing and there was such large inventory of condos that the market values started to decline and those who bought were stuck. Some people moved into the units and some decided to sell are still being sold on the open market – AT BIG DISCOUNTS!

All of the units that I saw this past weekend ranged in price from low $200,000′s – $350,000 and when I looked at the taxable market values on these for 2009 – ALL of them had dropped substantially from 2008 – some close to 40%. What does this mean? It means that you get to buy a condo in Downtown Minneapolis at a great price, pay lower taxes and if you plan to stay in the property for a couple of years you will most likely see it rise back to the levels we saw a few years ago. The market is cyclical and the Twin Cities Real Estate Market is no different.

IT WILL COME BACK. NOW IS THE TIME TO BUY.

Take advantage of low interest rates, first time buyer tax credits and buying at / near the bottom Another benefit to living Downtown Minneapolis is proximity to shopping, nightlife and sporting events (think about that new Minnesota Twins Stadium being built…..)

One thing to watch out for when buying a condo is the health of the condo association. I recently showed a condo near the U of MN and my buyers decided against it only because the association was in such bad shape. The builder had gone into foreclosure and now because all of the units have not sold (which means very few people paying association dues….) the bank has had to pick up the tab on running the building. So, anyone who now purchases one of these Minneapolis condos will have to pay association dues that go directly to pay off the bank.
What this means is that this particular association does not have any money in reserves to pay for anything that may go wrong with the building. So, if your window breaks or washing machine dies or anything else….tough luck….you will have to pay out of pocket. Although this building had great units, you do not want to get into a bad situation like this because your association dues will be going to pay for others bad mistakes instead of maintaining your property. Just something to think about when buying ANY property that is part of an association but especially now with all of the foreclosures.

If you do make an offer on a condo, you will get to review the condo associations documents and have 10 days to read them (have an attorney look at them…..) and still have the chance to back out and retain your earnest money if you choose. Now, I don’t recommend making a bunch of offers unless you really like a property but it is nice to know that you have an out if you don’t like what you read in that particular condo’s association paperwork.

Anyway….there are great deals to be had so weather you want to buy your first home in Downtown Minneapolis or a Second Home in the City, now is a great time to look.

Please contact me to start your search!

Jen McKinnon
Realtor / Investor
MN Real Estate Team

612.384.1073
jen[at]mnrealestateteam[dot]com

I know I am a bit biased since I live in St Paul’s Macalester-Groveland neighborhood but it is very evident that the residents here are proud to live in this highly desired area of St Paul, MN.
You have to love a community that has a “Beautification Committee”.
This committee conducts a competition annually in spring and fall (my 2 favorite seasons by the way….) Alley Garden Awards in addition to other “beautification” projects throughout the Macalester-Groveland neighborhood. The Alley Garden Awards, in my opinion, provide a benefit to everyone because, if you have ever driven through the alleys of St Paul (or most cities for that matter) you probably noticed that they are typically not all that attractive. But, this competition gets neighbors to at least think about what their alley looks like and maybe plant a few extra flowers or pull a few extra weeds.
The committe also hosts an annual plant exchange which is great because not only can you drop off your unused flowers and plants for “recycling” but you can also pick up some great items in return. And, this is a great way to get to know some of your neighbors which is also good for safety and crime fighting.
If you are interested in being a part of the beautification of St Paul’s Macalester-Groveland, the meetings are held on the 4th Monday of each month from March – October.

For more information about the Macalester-Groveland Neighborhood check out www.macgrove.org or call 651.695.4000

Interested in moving to Macalester-Groveland? Give me a call!
Jen McKinnon
Realtor/Investor
MN Real Estate Team
612.384.1073
jen[at]mnrealestateteam[dot]com