If it snows today, it’s my fault.

That’s what passer-bys said to me as they watched me tidy up my yard yesterday. I know it’s really too early to be doing the big spring clean-up, but it’s my goal to put my house on the MLS in less than two weeks so I’m doing all I can to cute it up. I feel like I’m getting my home ready for the royal housing ball and I’m its over-worked fairy godmother. “Decaying leaves, thatch and faded mulch will never do,” I hum to myself.

So while I’ve been waiting for paint to dry, grout to cure and filling up the compost bin this weekend, I’ve been thinking about prices. I’ve talked to my agent, Tom, about a price. It’s a neat and tidy round number and, given the comps in my neighborhood, I think it’s a good price point. However, while listening to public radio this week I heard this short story about the power of the imprecise number.

http://www.npr.org/templates/story/story.php?storyId=89140729

(This link is being picky, so if it doesn’t work you can find the story by searching -real estate price “precise” npr - and it is the first hit on Goggle.)

The gist of it is that researchers at Cornell University have conducted tests that support seller’s setting odd prices like, $233,875, instead of just $230,000. Apparently, these odd numbers are perceived as smaller than round numbers. Big box retailers do it all the time – pretzels at Walmart are never $2.50, but more often prices like $2.63, which studies suggest we consumers feel are a better deal despite the 13-cent hike.

I’m pretty sure that my Webdig’s agent Tom will restrain from rolling his patient eyes at me. But I’m trying to come up with the perfect odd number that will sell my house. I feel like safe cracker breaking a code.

I’m pretty sure the raking, tiling and grout will have a larger impact on the sale of my house than this off-pricing idea, but in this market creativity counts.

When mortgage rates change rapidly, it’s a fiscal challenge to shop for a home and/or home loan.  Lately, mortgage rates have been especially volatile, mirroring the wild moves of the stock market. 

Here’s how up-and-down stock markets have been in 2008: Through last week, the S&P 500 Index changed more than 1 percent per day on 28 separate days. 

This represents 52 percent of all trading days and is the most volatile measurement since 1938.

Mortgage financing is impacted by stock market changes because when money flows into stocks, it tends to come from bond markets.  And, when money leaves stocks, it tends to “gets parked” in bond markets.

Because mortgage bonds set mortgage rates, you can understand how stock market volatility can make it difficult to predict what home loan payments might look like.

Volatility is expected to continue for the next several quarters so if you see a mortgage rate you like today, consider locking it right away — it probably won’t last long.

Source
U.S. Stock Volatility Climbs to Highest in 70 Years, S&P Says
Jeff Kearns
Bloomberg, March 20, 2008
http://www.bloomberg.com/apps/news?pid=20601213&sid=av840GLwE4UA&refer=home

It’s hard to believe my house will be open for public consumption soon.

Right now the entire contents of my entryway/laundry room are in the living room – located directly next to everything from our sun porch.

At the suggestion of our real estate stager, we’re tiling both locations. The idea is that given these room are “special” by nature, we’d benefit from truly showing them off. We hope that by drawing attention to a light-filled sun porch and a first-floor laundry will give our house wings in what I’ll politely call a “difficult” market.

I’d love to just whine my heart out about the state of home sales these days, but honestly - it’s the only market I have. I can only try to make my house as irresistible as possible. (If this sounds like a mantra, you may be on to something.)

So now we’re giving the house all the little perks we’d been denying ourselves for 5 years– for someone else to enjoy. Let me be a cautionary tale to you – pretend you’re going to sell this year and do some improvements for your family to enjoy. I have heard this advice before, but now that I’m living it I can tell you first hand that regret bites.

Watch for the dramatic “reveal” early next week.

Earlier this month, Fannie Mae and Freddie Mac made a deal with New York Attorney General Andrew Cuomo that significantly changes how home appraisals are to be conducted beginning in 2009. Cuomo, who had been investigating Fannie and Freddie since November 2007, agreed to drop his inquiry if Fannie and Freddie agreed to implement Cuomo’s Home Valuation Code of Conduct. And while this agreement is not legislative and Cuomo has no authority to implement or enforce it, it could easily change industry standards since Fannie and Freddie purchase more than 60% of today’s mortgages.

On March 14, a Fannie Mae press release confirmed the agreement and announced a comment period to help shape the way the agreement is to be implemented in 2009. Industry participants are encouraged to share opinions from now until the end on April. If you are an industry professional, let your voice be heard on this important issue.  If you are a consumer who has been impacted in some way, shape or form, we encourage you to comment as well.

I am a supporter of this proposed code of conduct.  I have been in the real estate and mortgage industry for over five years now and can say that I have seen mortgage brokers and real estate agents who have pushed the envelope far too many times with appraisers, applying pressure to deliver values that just weren’t there, just to “get the deal done.”  The changing landscape of the mortgage industry is certainly a move in the right direction to curb this behavior, but it could be too little, too late.  The damage has already been done and we are living through the implications. 

The ever increasing foreclosure and short sale inventory is a major contributor to falling home prices.  This has a ripple effect on the entire economy.  Now that many lenders are doing away with 100% financing options, this prevents many first time home buyers from acting now.  They are ones who get the market going and enable move up buyers to get into their next home. 

When people are not moving, then it has an impact on everything else.  They don’t go to Target or Wal-Mart to buy the typical things one needs after a move.  They stop shopping at Home Depot and Lowes.  Best Buy may sell fewer flat screen tv’s, or appliances, such as refrigerators, washers and dryers, which are common purchases when people buy a new home. 

So, I realize that this is a dramatic portrayal of how unethical appraisal practices of the past have impacted our economy…but think about it for minute.  That is where the mess began.  Some broker somewhere applied pressure to an appraiser, to get them the value they needed in order to make a deal work.  The borrower can afford the payment for a period of time until the rate adjusts.  Then the day comes when their payment(s) go up.  They can no longer afford the home and they can’t sell it either.  Foreclose, or short sale.  Pick your poison, right?  So, this behavior, or poor business practice, set in motion a chain of events that had resulted in the situation we are in today.  Mostly, so people could buy more stuff.  And what does the government do?  “Hey, let’s put out a stimulus package where we give people a tax rebate of $600 (that the government can’t afford to do) and encourage them to go spend it on more stuff.” 

I’m putting mine in my kid’s college savings plan.

Hey – who’s the new kid? I’m not a Realtor. I don’t play one on TV, but I’m in house lust as much as the next gal.

House Lust isn’t just a condition; it’s the title of a new book by Newsweek’s Daniel McGinn outlining America’s obsession with homes. Minnesota Public Radio hosted an interesting hour with McGinn on their Midmorning Show back in early February. You can listen to it http://minnesota.publicradio.org/display/web/2008/02/06/midmorning2/

The author is a lot like me and I’m guessing, like a lot of us. He bought property in the 90’s and saw its value rise at a heart palpitating pace. And along with much of America, McGinn became hooked on the housing market. This interest, which for many has bordered on a creepy fascination, has translated into a national pastime of watching HGTV shows and playing market value guesstimation – made easier by the anonymous state of the Internet. Heck, even webdigs can help you scratch that http://www.webdigs.com/do/Whats+My+Home+Worth

In some ways, I’ve probably contributed to the hankering – at least in a local sense. When we were all surfing the upper crests of the housing bubble, I spent a year profiling communities and real estate markets for the HOMES section of the Star Tribune. I’d learn about a neighborhood, usually from a Realtor, talk to some residents and then I’d stand on the street and photograph recently sold homes. The paper would list the property’s stats, disclosing what it listed for, days on the market and the actual selling price. It’s truly a miracle I never got accosted or at least shooed away by police. (At one point, I unknowingly “featured” the home of a work associate – “um… sorry?”)

While I’ve done some more noble shelter writing as a contributing editor to the respected Reader’s Digest publication, The Family Handyman, I’ve also written my share of “promotional articles.” These typically have been advertorials for high-end luxury homes tours. And I’ll admit, it’s a real treat to have the architect and design team walk you through a nearly magical vision of domestic living. Looking through back issues of magazines though, I can’t believe I wrote the sentence “…heated travertine tiles warmly greet wet toes emerging from the bath spa…” It’s pure pornography, no bones about it.

To my defense, I started young. My parents are retired custom homebuilders and I have vivid memories of my father pulling over the wood-paneled Oldsmobile station wagon to sketch the façade of a particularly inspiring building. I also remember crying women falling apart in his home office simply overwhelmed by the vast selection of draw pulls from which she must select the perfect draw pull. (I have never been tempted to custom build.)

So now, I’ll be chatting it up here. There will be community profiles with featured listings, commentary on current on real estate happenings, home maintenance advice– and, just like reality television, I’ll be taking you through the selling of my very own home in the near future. What a girl won’t do to score her own blog.

Here is something to be proud of; my neighborhood (Lynnhurst) made the top 10 list of Southwest Minneapolis neighborhoods to answer the challenge to conserve energy.

“The conservation initiative, developed by local nonprofit the Center for Energy and Environment, encourages individuals and organizations to pledge to conserve energy at www.mnenergychallenge.org . Challengers promise to take any number of actions to shrink their carbon footprints, from replacing light bulbs with compact fluorescent bulbs and turning off appliances when they’re not in use to washing laundry in cold water and carpooling to work.”  - Mary O’Regan, Southwest Journal

Over 126 neighborhoods across the metro participated and we made the top 10.  It has inspired me to try and do my part.  So, here is my pledge:  I am going to trade in my gas guzzling Chevy Tahoe - which I love - for a Toyota Prius Hybrid.  I am going to miss my truck…seriously, it’s like driving a lazy-boy recliner down the road.  Awesome baby.  But honestly, I put around $60 worth of gas every four days into that beast.  So, it’s time to grow up, be responsible and do my part.  I will post again, when the trade is done.  To read the full article from the Southwest Journal about the MN Energy Challenge…. (more…)

In an article from the Washington Post Writers Group  posted on the Minneapolis Star Tribune website, many home owners are facing what Robert Whittaker of Sykesville, MD is facing in his attempt to refinance; second mortgage lenders who are not willing to resubordinate an existing second loan.  This basically can stop a refinance transaction dead in its tracks.  So what does all this mean?  If you bought a home within the past 5 to 7 years with no money down, chances are you did an 80/20 loan in order to avoid paying PMI (Private Mortgage Insurance).  An 80/20 means that one would actually take out two mortgages to purchase a home.  These loans, being of higher levels of risk to lenders, often came with higher rates.  The second mortgages (20%) would have rates anywhere from 7% to 10% based on a borrowers credit score and profile.   The first mortgages (80%) would also have a higher rate because of the high LTV (Loan-to-value) Ratio.

So, what many people did in order to get into a home zero money down, was take out an 80/20 mortgage where the first mortgage was and ARM Product.  The thought process was that the home would appreciate over the 3, 5 or 7 year term and then the home owner could refinance and lock into a 30 Year Fixed loan.  Only here is the problem:  with what we have seen over the past two years this strategy is proving to be a bad one. 

Many lenders in second lien posistion are telling borrowers that they will not resubordinate, which can ruin one’s chances of refinancing into a new product that could lower your rate, as is the case with man featured in the article.  So, what can you do if this happens to you?  Contact your lender and explain that this is better for you, and them, in that decreases the risk profile by lowering your payment.  If they won’t make an exception for you, contact another second mortgage provider and find out what your options are.  If that doesn’t work, and your rate on the first mortgage is set to adjust to a point where your payment is no longer affordable, then consider selling your home.  If that is not an option, you can talk to your lender that holds your first mortgage and ask them if they will provide you with a rate freeze in order to prevent you from going into a foreclosure situation.  To learn more about that, contact ACORN, which is a non-profit organization founded to help those in these kinds of situations.  Whatever you do, try your best to keep performing on your loan as late payments, or failure to make payments can have an incredibly adverse impact on your personal credit score.

To downloand the article, click here: Star Tribune Refi Article

For the week of March 3rd, 2008 the top 10 most viewed listings on webdigs can be viewed in the attached report. Check out the list: Top 10 Most Viewed Listings.

Interestingly enough, the home in Woodbury is one of my listings. It sold in less than a week, even in this difficult market. The listing in West St. Paul located at 130 Bernard Street E was recently purchased by one of our clients, Tony Morgan.

For all those interested first-time home buyers out there, Tony was able to buy this home with no money down and the seller paid his closing costs. He qualified for an unbelievable financing program with a great interest through the MHFA (Minnesota Housing Finance Agency). To learn more about how you may qualify for this program, give us a call at 888-WEB-DIGS (932-3447) and ask for one of our agents or loan consultants. We can provide a no-obligation consultation that will get you going in the right direction.

If you’ve been looking at houses recently, you might be aware of what I’m calling “dangerously fresh” homes on the market. These are places where you open the door and know that aromatherapy has clearly reached un-therapeutic levels.

It’s no secret that most Realtors will advise sellers to bake up some bread dough or cookies before a showing to give their properties a “homey” feel. That seller tip is even featured on our site because it can set the stage for buyers to visualize themselves in the home.

But it seems that rushed homeowners are “plugging-in” their scent staging - and if one electric Glade air freshener will sell my house faster, how about two, three, more? This may be more of an issue for houses that are vacant. Folks “scent and dash” leaving no one to monitor the perfume levels until it requires a brave Realtor in a HAZMAT suit to enter the premises.

Some clients of mine even labeled a place we saw this weekend as the “stink pretty house,” as in “How many bathrooms did the ‘Stink Pretty’ house have again?” Of course, sellers want their home to be a standout, but not necessarily in an olfactory sense. While it was a joke for this couple, it could be a real problem for people with respiratory sensitivities. Who wants to tour (much less buy) a house that makes them cough and wheeze?

After running through twelve houses, I hit the shower. That fako-flower smell had even permeated my clothes and I got hit with a fresh wave just taking off my shirt. And it reminded me how good it was to be home.

 PS:  Thanks Lucie!