Robert Guthridge's Blog

The Late, (Un)Lamented Split-Level & Rambler Want to know the latest trends in Twin Cities new construction? Check out upper bracket Edina. That’s where the folks who can afford the latest bells & whistles — inside and out — are building the most new construction. Ergo , that’s where to look to see the most — and least — popular new home styles. Of the last 50 new “spec” homes sold in Edina over $1.2 million since 2014, here’s the style scorecard: Two-story:  47 One-story:  3 Split-level:  0 (Note:  all homes are single-family/detached; data is from MLS.  “Spec” refers to a home built by a developer to sell on the open market, vs. commissioned by an existing client). Finance #101 Why style preferences certainly factor in, my guess is that 2-stories predominate — at least with “spec” homes — because that’s how builders maximize their profit. Which is kinda too bad (at least in IMHO), because splits and one-stories (known as “rambler...

How Sellers Can Avoid Wear & Tear From Buyer Showings, or, “The 96 Hour Listing” Not every new-to-market home seller has such an accommodating schedule — or a home positioned to sell so fast. But, for those who do, the following timetable is next to ideal: Thursday a.m .:  debut house on MLS. Thursday afternoon :  leave town for long weekend. Thursday evening to Monday afternoon :  Buyer showings while gone. Monday pm :  return home. Monday night :  review offer(s) with listing agent. I’m showing an hours-on-the-market Edina home to Buyers tonight where the listing agent informed me that he’s already received one written offer; has more than a dozen showings scheduled through the weekend; and will be presenting offers to his client this coming Monday night (April 3). Showing times tonight are flexible because the owner is leaving town this afternoon. Nice . . . (for the Seller!).  See also , “(More) Signs of a Hot Twin Cities Housi...

Two Minutes vs. Two Hours to Set Up Showings Here’s how a Buyer’s agent — at least in the Twin Cities — gets their client into an MLS-listed home: step #1 :  logon to MLS. step #2 :  enter the home’s address to find listing, then . . . . step #3 :  use online form to request showing (typically one hour window) later that day. step #4 :  receive confirmation & access instructions via email (usually within the hour). step #5 :  meet client at home, gain access via lockbox. Elapsed time:  < 2 minutes. Longer Lead Time; “Chaperoned Showings” Now, compare that to what can be involved getting the same client into a home, pre-list: step #1a :  scan Pre-list database for ideas; contact listing agent for more info. step #1b :  circulate “Buyer Need” email with Buyer’s search criteria (price range, preferred area(s), home size and features, etc.). step #2 :  qualify/screen responses (note:...

Realtor to Clients:  “Is There Anyone Else You’d Like to Be Involved in the Process?” When Baby Boomers are in their 50’s and their kids are in their 20’s, it’s the kids relying on their parents’ advice (and often, financial help) when it comes to making housing decisions. Fifteen years later? It’s now the parents soliciting the kids’ advice. Good agents make room for that input (and try to involve all decision-makers early on). from RSSMix.com Mix ID 8230700 http://ift.tt/2ocWNkN via IFTTT

Bedroom Sizes:  “Small,” “Medium,” and “(Extra) Extra Large” You certainly can call a 36′ x 13′ room in the basement of a home a “Bedroom,” as a certain listed Golden Valley home does now. But, that doesn’t make it so. That’s true even if the room technically meets the criteria for a legal Bedroom:  it has a minimum average ceiling height > 7′; finished walls, ceiling, and flooring; a heat source; a closet; an egress window (pictured at right); and is more than 75 square feet. Instead, most Buyers are likely to see — and use — such a large, lower level room as an Amusement Room or Family Room. “The Duck Test” Exact specifications aside, the true test of whether a basement bedroom is likely to pass muster with Buyers is more amorphous, and subjective. Call it a variation of “the duck test”:  that is , if it walks, paddles and quacks like a duck . . . it’s probably a duck. Likewise, if a basement room looks and feels like a Bedroom . . . it is (or could be). ...

Publicly Financed, $1 Billion Buildings . . . in Use 4 Hours a Week, Less Than Half the Year Building football stadiums with public dollars is in fact a mug’s game. With eight regular-season games, pro football rarely if ever pays for itself, no matter how many fictional economic impact reports the league’s captive economists and chamber-of-commerce sorts churn out. “I’ve studied the economic impact, and it doesn’t warrant a public investment because it doesn’t pay off,” Oakland Mayor Libby Schaaf said of football. –“ The N.F.L. and the Business of Ripping Out the Heart of Oakland “; The New York Times (3/27/2017). Clever furniture designers figured out a long time ago how to repurpose scarce real estate for multiple uses:  a Murphy bed, which allows the same room to do double-duty as both a Bedroom and a Den or Office. Too bad there’s no equivalent for NFL stadiums, which take up acres of valuable land — typically public — then mostly sit idle . . . P.S.:  U...

Putting Clients at Ease (Just Not Too Much) My guess is, if you’ve worked with a Realtor (or any salesperson) lately, what you were ultimately asked to sign wasn’t referred to as a “legal contract.” It was called “paperwork” (sample agent-to-client dialogue: “if you’re comfortable with everything we discussed, let’s get the paperwork taken care of, OK?”). Wanna guess why the euphemism? “Contract” sounds intimidating to many people; “paperwork” doesn’t. Doc’s, Doc’s & (Still) More Doc’s In fact, at least in residential real estate as practiced in Minnesota, there are  six  different kinds of documents that Buyers and Sellers are asked to sign by their agent:  1) state-mandated acknowledgements (example: “Agency Relationships”); 2) Seller property disclosures (acknowledged by Buyer); 3) the contract to hire a Buyer’s agent or Listing Agent (representing the Seller); 4) Broker disclosures (example:  related parties); 5) the Purchase Agreement and Addenda...

List Price Multiple Choice This is a two-parter. Question #1:  The list price for this Twin Cities 4 BR/2 Bath 1950’s rambler — new on the market last Friday (3/24) — is . . . A. $219,900k B. $299,900 C. $425,000 D. $619,900 Answer:   “D.” Question #2:  the reason it’s likely to get that amount (or very close) is . . . A. It’s located one block south of Lake Calhoun near super-hot Linden Hills in Southwest Minneapolis. B. Builders will covet the home’s 75′ lot — and its potential to hold a big, new Upper Bracket home. C. There’s nothing for sale in good, close-in neighborhoods that’s decent-sized for < $500k. D. All of the above. Answer:  “D.” Welcome to the Spring, 2017 Twin Cities housing market! from RSSMix.com Mix ID 8230700 http://ift.tt/2o2mO6f via IFTTT

High Washout Rate [ Editor’s Note :  The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.] One of the last things that can come up before would-be home sellers officially hire an agent is what Realtors call an exclusion (or sometimes protected) list. In plain English, it’s an agreed-upon list of prospects whom the Owner can sell to, without being obliged to pay a commission. As one might imagine, agents frown upon that practice — and are careful not to invest their time or marketing $$$ until the Seller fully commits (which is only fair). However, as long as the time period is limited and the list kept short, exclusions are usually not a problem for most Realtors. That’s because agents know that the vast majority of Seller leads don’t pan out, for one (or more) of these four reasons: Four Reasons One . Far and away the most common reason is that the prospective Buyer(s)...

Letting Buyers Off the Hook Sometimes, the smartest thing a good Buyer’s agent can do is let their client off the hook — and give them permission to pass on something. That can be because the client just started their home search, and doesn’t know the market yet; a home they really like is in multiple offers, and it feels too pressured; or — at least this time of year — even because they’re waiting on their CPA to tell them what their 2016 tax liability/refund is going to be, and they’re not sure how much cash they’ll have for a down payment. Short vs. Long Game While making such a big financial decision is inherently stressful, veteran agents know that if it’s too stressful, Buyers have a way of backing out of deals later on, when it can be messy if not expensive. Too, established agents don’t need the commission from any one deal to stay afloat: a transaction later this Summer (or next Fall) is just as good as one now. In the long run, agents who don’t pressure their clients w...

Labor + Capital + Raw Materials = Finished Goods I spent four years learning economics at Stanford. I’ve spent (going on) the last forty years unlearning it. It’s not that Stanford failed me. It turns out that the entire field of modern economics was built upon not one but two outmoded ideas, if not conceptual San Andreas faults. It’s All Software Now Fundamental flaw #1 was economists’ presumption that people are utility-maximizing, rational actors. Unh-unh. As demonstrated by psychologists like Daniel Kahneman and Amos Tversky (in the latter case, literally across the Stanford quad from the Econ department), people are nothing of the sort. They’re frequently irrational, unpredictable actors who contradict themselves and behave inconsistently all the time ( OK , maybe not engineers). See , “ Flushing Two Centuries of Economic Theory, or, Never Mind About Human Rationality .” Forget “Marginal Cost” Which leads to misconception #2:  the nature of capitalism’s tradi...

“Good,” “Better,” and “Best” One of the key services performed by Realtors for clients is analyzing a home’s fair market value. Buyers’ agents do that analysis — called a CMA, or “Comparative Market Analysis” — to help clients determine how much to offer for a home; listing agents go through the same process to help would-be Sellers choose an asking price. In both cases, fair market value is determined by reviewing historical data. Specifically, by scrutinizing the 3-4 most similar homes that have recently sold nearby, known as “Comp’s” (“Comparable Sold Properties”) (Note:  why not price off of “Active’s?” Because their value isn’t established until they’ve actually closed.  However, conscientious listing agents still preview relevant Actives, because they represent the competition). “Inside Job”:  Realtor’s Market Knowledge When it comes to doing CMA’s, however, not all Realtors are created equal. On the contrary, experienced, local agents have a BIG leg up, b...

The Late, (Un)Lamented Split-Level & Rambler What to know the latest trends in Twin Cities new construction? Take a look at upper bracket Edina. That’s where the folks who can afford the latest bells & whistles — inside and out — are building the most new construction. Ergo , that’s where to look to see the most — and least — popular new home styles. Of the last 50 new “spec” homes built in Edina over $1.2 million since 2014, here’s the style scorecard (notes:  “spec” refers to a home built by a builder for sale on the open market; all homes are single-family/detached; data is from MLS): Two-story:  97 One-story:  3 Split-level:  0 The takeaway from the above? I may be the last fan of split-levels and one-stories (known as “ramblers” in the Midwest, “ranches” elsewhere). Which is kinda too bad (at least in IMHO). They’re invariably well-built homes — typically in the 1950’s — on larger lots in close-in neighborhoods. And thei...

Virtual reality and real estate go together like beans and rice. A San Francisco real estate listing is a tremendously competitive, high-risk-high-reward prospect, whether selling or buying, and virtual reality for Realtors is an indispensable tool that should not be ignored. Any Realtor will tell you that deals can be made or broken on the back of a strong open house. The same basic philosophy, albeit on a much smaller scale, governs most purchasing habits. Once a prospective buyer has held an item, made a connection, or projected himself onto a place, the odds of a purchase or a deal skyrocket. Virtual reality, when it’s done properly, is perceived by the brain as being akin to reality in a meaningful, and perceptually impactful way. Virtual Reality for Realtors If you aren’t already familiar with it, virtual reality is a technology that allows a person to explore and interact with a computer-generated environment in an all-encompassing way, usually by means of a wrap-around head...

How to Avoid Showing Wear-and-Tear, or, “The 96 Hour Listing” Not every new-to-market home seller has a schedule than can accommodate this. But, for those who can, it’s pretty sweet: Thursday a.m.:  debut house on MLS. Thursday afternoon:  leave town for long weekend. Thursday evening to Monday afternoon:  Buyer showings while gone. Monday am:  return home. Monday night:  review offer(s) with listing agent. I’m showing one Golden Valley home tonight where the listing agent informed me that he’s already received one written offer; has more than 10 showings scheduled the next 3 days; and will be presenting offers to their client this coming Monday night. from RSSMix.com Mix ID 8230700 http://ift.tt/2odRmCf via IFTTT

One Minute vs. One Hour to Set up Showings Here’s how a Buyer’s agent — at least in the Twin Cities — gets their client into an MLS-listed home: step #1 :  logon to MLS. step #2 :  enter the home’s address to find listing, then . . . . step #3 :  use online form to request showing (typically one hour window) 4-8 hours later; wait for confirmation & access instructions via email. step #4 :  meet client at home, gain access via lockbox. Elapsed time:  < 1 minute. Longer Lead Time; “Chaperoned Showings” Now, compare that to what can be involved getting the same client into a home, pre-list: step #1a :  scan Pre-list database for ideas; contact listing agent for more info. step #1b :  circulate “Buyer Need” email with Buyer’s search criteria (price range, preferred area(s), home size and features, etc.). step #2 :  qualify/screen responses (note:  pre-listed homes usually have minimal st...

On today’s episode of the InvestFourMore Real Estate Podcast I talk with Peter Vekselman. Peter was in the franchise business when he decided to sell out and get involved with real estate. Peter started investing in mobile homes, but eventually got into fix and flipping houses, and then wholesaling properties. Peter has built a business that does up to 10 wholesale deals a week in three different states. He has a unique approach to wholesaling that allows him to maximize the money he makes. How did Peter get started in real estate? Peter owned 15 franchises, but decided the business Source from RSSMix.com Mix ID 8230700 http://ift.tt/2nE5DHi via IFTTT

Realtor to Clients:  “Is There Anyone Else You’d Like to Be Involved in the Process?” When Baby Boomers are in their 50’s and their kids are in their 20’s, it’s the kids relying on their parents’ advice (and often, financial help) when it comes to housing decisions. Fifteen years later? It’s now the parents soliciting the kids’ advice. Good agents make room for that input (and try to involve all decision-makers early on). from RSSMix.com Mix ID 8230700 http://ift.tt/2ocWNkN via IFTTT

Bedroom Sizes:  “Small,” “Medium,” and “(Extra) Extra Large” You certainly can call a 36′ x 13′ room in the basement of a home a “Bedroom,” as a certain listed Golden Valley home does now. But, that doesn’t make it so. That’s true even if the room technically meets the criteria for a legal Bedroom:  it has a minimum average ceiling height > 7′; finished walls, ceiling, and flooring; a heat source; a closet; and is more than 75 square feet. Instead, most Buyers are likely to see — and use — such a large, lower level room as an Amusement Room or Family Room. “The Duck Test” Exact specifications aside, the true test of whether a Basement Bedroom is likely to pass muster with Buyers is more amorphous, and subjective. Call it a variation of “the duck test”:   that is , if it walks, paddles and quacks like a duck . . . it’s probably a duck. Likewise, if a basement room looks and feels like a Bedroom . . . it is (or could be). That’s especially if there’s a n...

It is now official that the United States has turned into a renter’s paradise.  Think that is hyperbole?  Fifty-two of the 100 largest cities in the U.S. are now majority renter in terms of household composition.  And there is no clear pattern here.  You have places with incredibly affordable housing like Detroit tipping over into […] from RSSMix.com Mix ID 8230700 http://ift.tt/2ntVZFp via IFTTT

$1 Billion Buildings . . . in Use 4 Hours a Week Building football stadiums with public dollars is in fact a mug’s game. With eight regular-season games, pro football rarely if ever pays for itself, no matter how many fictional economic impact reports the league’s captive economists and chamber-of-commerce sorts churn out. “I’ve studied the economic impact, and it doesn’t warrant a public investment because it doesn’t pay off,” Oakland Mayor Libby Schaaf said of football. –“ The N.F.L. and the Business of Ripping Out the Heart of Oakland “; The New York Times (3/27/2017). Clever furniture designers figured out a long time ago how to conserve scarce real estate for multiple uses:  a Murphy bed, which allows the same room to do double-duty as both a Bedroom and a Den or Office. Too bad there’s no equivalent for NFL stadiums, which take up acres of valuable land — typically public — that then mostly sits idle . . . P.S.:  Unlike some notoriously bad name transpl...

Putting Clients at Ease (Just Not Too Much) My guess is, if you’ve worked with a Realtor (or any salesperson) lately, what you were ultimately asked to sign wasn’t referred to as a “legal contract.” It was called “paperwork” (sample agent-to-client dialogue: “if you’re comfortable with everything we discussed, let’s get the paperwork taken care of, OK?”). Wanna guess why the euphemism? “Contract” sounds intimidating to many people; “paperwork” doesn’t. Explain Things Now . . . or Explain Things Later In fact, at least in residential real estate as practiced in Minnesota, there are  six specific kinds of documents that Buyers and Sellers are asked to sign by their agent:  1) state-mandated acknowledgements (example:  “Agency Relationships”); 2) Seller property disclosures (acknowledged by Buyer); 3) the contract to hire a Buyer’s agent or Listing Agent (representing the Seller); 4) Broker disclosures (example:  related parties); 5) the Purchase Agreement and A...

List Price Multiple Choice This is a two-parter. Question #1:  The list price for this Twin Cities 4 BR/2 Bath 1950’s rambler — new on the market last Friday (3/24) — is . . . A. $219,900k B. $299,900 C. $425,000 D. $619,900 Answer:   “D.” Question #2:  the reason it’s likely to get that amount (or very close) is . . . A. It’s located one block south of Lake Calhoun near super-hot Linden Hills. B. Builders will covet the home’s 75′ lot — and its potential for a big, new Upper Bracket home. C. There’s nothing for sale in good, close-in neighborhoods that’s decent-sized for < $500k. D. All of the above. Answer:  “D.” (all of the above). Welcome to the Spring, 2017 Twin Cities housing market! from RSSMix.com Mix ID 8230700 http://ift.tt/2o2mO6f via IFTTT

High Washout Rate [ Editor’s Note :  The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.] One of the last things that can come up before would-be home sellers officially hire an agent is what Realtors call an exclusion (or sometimes protected) list. In plain English, it’s an agreed-upon list of prospects whom the Owner can sell to, without being obliged to pay a commission. As one might imagine, agents frown upon that practice — and are careful not to invest their time or marketing $$$ until the Seller fully commits (which is only fair). However, as long as the time period is limited and the list kept short, exclusion lists are usually not a problem for most Realtors. That’s because agents know that the vast majority of Seller leads don’t pan out, for one (or more) of these four reasons: Four Reasons One .  Far and away the most common reason is that the prospective Buyer(...

Today I am selling a fix and flip property that should have made me a lot of money. I bought the house for $140,250 and had it under contract to sell for $222,500. Even though this houses was the cheapest property for sale in the town it was located it, the appraisal came in at $208,000. We did our best to help the appraiser come in at value, and we challenged the appraisal with the lender, but none of it did any good. Not only did the appraiser cost me over $14,000, but we found out during the buyer’s inspection Source from RSSMix.com Mix ID 8230700 http://ift.tt/2na8Bk8 via IFTTT

Letting Buyers Off the Hook Sometimes, the smartest thing a good Buyer’s agent can do is let their client off the hook — and give them permission to pass on something. That can be because the client just started their home search, and doesn’t know the market yet; a home they really like is in multiple offers, and it feels too pressured; or — at least this time of year — even because they’re waiting on their CPA to tell them what their 2016 tax liability/refund is going to be, and they don’t know yet how much cash they’ll have for a down payment. Short vs. Long Game While making such a big financial decision is inherently stressful, veteran agents know that if it’s too stressful, Buyers have a way of backing out of deals later on, when it can be messy if not expensive. Too, established agents don’t need the commission from any one deal to stay afloat: a transaction later this Summer (or next Fall) is just as good as one now. In the long run, agents who don’t pressure their client...

Labor + Capital + Raw Materials = Finished Goods I spent four years learning economics at Stanford. I’ve spent (going on) the last forty years unlearning it. It’s not that Stanford failed me. It turns out that the entire field of modern economics was built upon not one but two outmoded ideas, if not “conceptual” San Andreas faults. It’s All Software Now Fundamental flaw #1 was economists’ presumption that people were utility-maximizing, rational actors. Unh-unh. As demonstrated by psychologists like Daniel Kahneman and Amos Tversky (in the latter case, literally across the Stanford quad from the Econ dept.), people are nothing of the sort. They’re frequently irrational, unpredictable actors who contradict themselves and behave inconsistently all the time (OK, maybe not engineers). See , “ Flushing Two Centuries of Economic Theory, or, Never Mind About Human Rationality .” Forget “Marginal Cost” Which leads to misconception #2:  the nature of capitalism’s tradition...

“Good,” “Better,” and “Best” One of the key services performed by Realtors for clients is analyzing a home’s fair market value. Buyers’ agents do that analysis — called a CMA, or “Comparative Market Analysis” — to help clients determine how much to offer for a home; listing agents (representing Sellers) go through the same process to help would-be Sellers choose an asking price. In both cases, fair market value is determined by reviewing historical data. Specifically, by scrutinizing the 3-4 most similar homes that have recently sold nearby, known as “Comp’s” (“Comparable Sold Properties”) (Note:  why not price off of “Active’s?” Because their value isn’t established until they’ve actually closed). Realtor Market Knowledge When it comes to doing CMA’s, then, not all agents are created equal. On the contrary, experienced, local agents have a BIG leg up, because they know the relevant housing stock best. Here’s how I’d characterize an agent’s credentials to do an intellige...

(The following figures and data are taken from the 2015 US Census unless otherwise stated) When gold was discovered in San Francisco in 1848 (though it wouldn’t be incorporated as a city as such until 1850), the population of what had been Yerba Buena (translating to “Good Herb” due to the ubiquitous mint growing in the region) jumped to around 10,000 people, something on the order of a 2,400% increase. The Diversity of San Francisco’s Population The population has grown steadily ever since. Despite minor regressions in the latter half of the twentieth century, the tech boom of the 90s brought the population soaring upward again. As of 2016, the population of the city proper is usually given as 864,816, with a metropolitan area population of a little over 4.6 million. Extending to the whole of the San Jose-San Francisco-Oakland metropolitan area, the total population figures clock in a little less than 9 million. (8.7 as of 2016.) San Francisco is the 13th most populous city in the...

“Highest & Best,” Defined One of the more anguished — and totally fruitless — laments Buyers utter in response to the news that they just lost in multiple offers is this one:  “ But , I would’ve gone higher!” Then, they should have. The way “highest & best” works is . . . pretty much how you’d think. One round, highest and best vs., say , an auction, where the bidding keeps rising until only one Buyer is left standing (or solvent). Different Than an Auction While a Seller adhering to “highest & best” rules may ultimately negotiate improvements to the most attractive of the proffered offers, significantly, they’ll pick just one offer to work with — and reject the rest. No round #2, no chance to up your bid. Which means Buyers truly need to come in with their best number, first. Which in turn is why Sellers (at least in Minnesota) very much like this format. See also , “ Prospective Home Buyer:  ‘The House I Want is in Multiples; What S...