5 biggest mistakes by Sellers that cost them money

Here are 5 mistakes I have noticed that Sellers make in the process of selling their home that causes them to sell their house for less than they could have gotten:

1. Clean and Declutter. This one seems obvious but I see it all the time. Your house should be spotless when you put it on the market. Hire a cleaner for half a day. Often times when a house sits on the market for a few weeks, the sellers get tired of preparing the house and leave the house in less than perfect showing condition. I know its tough, but you should prepare for every showing like its a buyer that is going to offer on your home. The second part is to declutter and remove excess furniture. Especially if you have lived in your house for a while, you will tend to acquire excess furniture and “stuff”. If you are selling, you are moving and you should take the opportunity before you go on the market to get rid of any unwanted items and if possible remove furniture that makes the home feel tight. This may not be the way you are going to live in the home, but you want to create a feeling of spaciousnesss.

2. Price their house “way too high”. Everybody wants to price your house as high as you possibly can to get the most money for it. That is what you should do. But their is a fine line between a high price, that will push buyers to most a house is worth and a price that is “overpriced” and not draw an offer. If a house is priced too high, everyone knows it and the house will sit on the market and become shop worn. Do your homework, know your market and competition, and price your home high…but not too high.

3. They pick the wrong agent. I think there are many agents who will do a great job selling your home but there are some that won’t. An agent that is way out of their market won’t know the particulars of a local market when selling. The specifics around school districts that give a house value, how to deal with septic systems and well tests and how agents handle showings are just a few examples of local idiosyncracies that if an agent isn’t familiar with can lead to a lower price and a botched transaction. There can also be an agent that was the best in an area but now they have lost their motivation and work ethic and aren’t as professional in handling a transaction as they should be. They aren’t on top off all the details and timing of a transaction and dropping the ball can cost a seller time and money.

4. Not allowing sufficient access to Buyers. This one is more important than you might think. Many times I will try to book a showing for a buyer and the seller will not allow us access to the time requested. Sometimes the seller works from home and can’t be disturbed or maybe they have small children that cause the house not to be in show condition. Other times there are dogs that a Seller can’t get out of the house. Regardless, if a Seller makes it too difficult for a Buyer to get access to the home, the Buyer’s will move on. I know its tough to have your house on the market, but do your best to put up with the incovenience for a short time and allow as many Buyers through as possible, even on short notice if possible. You never know which Buyer is the one that will submit an offer

5. Not knowing your competition. In a hot market, it is very easy to sell a home. Just pick a price and put it on the market and it will sell. However, in a changing market, you need to know your competition and how well your home is priced. Lets say you price your house at $425,000 and it doesn’t sell in the first 3 weeks. You have had 6 showings. Should you reduce the price?

   Well that depends. If we look at the market this fall, there has been a shortage of buyers. Do your homework and know how many Buyers are in your market and price point in a two week period. A good agent can figure this out. It could be 1. or it could be 5. Lets say it is 1, that means in the next two weeks, one house of the available inventory is going to sell. So that means in your price point ($400k-$450k or so) your house needs to be the best….not better than 3 out 5, the best house so that the one Buyer that comes around will choose your houses to write an offer. If you are the “best” house than hold your price and don’t reduce. You just need to wait for the Buyer. If you are not the best house, then there is a good chance that you do need to reduce your price until you reach the price point where you are the “best” house. In order to know this information you really need to know your competition.

Mortgage rate forecast for next 3 years

30 year rates are 7.6% today. Here are the Mortgage Bankers Association forecast for the next 3 years. A slower decrease than they had been projecting but at least still decreasing. As you can see its into the first quarter of 2024 before rates start to come down.

Property review: 7416 132nd St Hugo

Here is an old farmhouse property currently listed for $995k. It was just reduced from $1.2M. In my opinion they have another at least $300-$400k to go before the property sells.

There is an old house on the property and several outbuildings. The house is a tear down with a non-functional floor plan. The outbuildings are in rough shape. The one hay barn has some character and may be of some value but its not heated or finished. Otherwise the property is just the value of the land. 30 acres in the Mahtomedi School District is tough to come by and there haven’t been too many large parcels to compare but $30k-$40k/acre is usually reserved for lakeshore or the best or parcels.

One of the last large parcel sales I recall in #832 ISD was in Grant - 30 acres sold for $410k in 2021 - 11425 Julianne Ave N. This was a great lot. There’s been some appreciation since then but not almost triple the value. If you look at Washington County, large 10+ acre parcels in excellent rural locations are getting close to $20k an acre. This parcel has a good location, but thats mainly driven by the fact that its in the Mahtomedi School District, otherwise it would be a fair location.

So, I think this one will struggle to sell…lets see what happens.

Whats going on with the Hugo housing market?

Despite the more than doubling of interest rates (3% in 2020 to 7.50% today), the housing market has been on solid footing in Hugo. However, I think that is about to change….at least for the rest of this year. I’ll explain what I see.

Buyers have definitely pulled back because of those rate increases from 1 year ago (288 sales last year to 177 this year). See the chart below of the last 10 years of closed sales in Hugo. A big pullback from 1 year ago but still historically a solid buyer market.

What is keeping the market functioning is the pullback in Seller’s as well. The chart below is the number of non-new construction homes for sale in Hugo in the last 10 years. As you can see there is a slight uptick in the past year but inventory levels are still historically extremely low.

So, its a low Buyer and low Seller market. Which for a market, is just fine. Instead of 10 Sellers and 5 Buyers, its 2 Sellers and 1 Buyer. And until we get more inventory, the market dynamic isn’t going to change much.

But what about new construction you say….The below chart shows the closed new construction sales in the past 10 years. Despite a decrease from last year, sales are still historically very high.

Right now 17 of the 25 pending sales in Hugo are new construction. About half of the homes for sale on the market are new construction. So, the takeaway for a seller is that new construction is your biggest competition. Some of it is good, some of its very cheap. There is not a lot of inventory(competition) in the existing home market - the least expensive home for sale in Hugo right now is about $400k. If your sale price is below that, I would still expect a strong Seller’s market. If its over that, you need to be competitive with new construction.

Now for the bad news from a Seller’s standpoint. As I write this, there are 46 single family homes on the market. Its actually more than that because new construction has extra homes for sale but lets just say for sale on the MLS. There are only 2 of those sales that have a contingent offer on them (either contingent inspection or some other contingency). That is very, very low buyer activity. By looking at contingent sales, that is a more up to date way to look at the current market than even pending sales. So, in the past 2 weeks, buyers have basically disappeared. Would you want to be one of 45 houses on the marekt and have only 2 sell in 2 weeks?

7.5% or higher interest rates together with prices that have continued to rise have put a big damper on Buyer activity. So, inventory should continue to rise this fall and into the winter and a more balanced, if not Buyer market may begin to take shape. Obviously a lot is driven by what happens with interest rates. Projections are for a slight decline next year but nothing drastic so I think the Buyer pullback will continue.

This fall and winter for sure and maybe next spring could be a different market than what we have seen in quite a few years….

Apple Top Acres - Riding lessons for everyone!

Looking for a place for your kids to get some riding lessons this summer? Apple Top Acres is a small, mom and pop riding ranch that loves teaching about horses!!

Navy seal joins dad in the Roofing business!

12 year navy seal moves back to Hugo to join his father in the family business. He still gives back to the local law enforcement communities in the winter with SWAT team training. Precise Exteriors is a local roofing, siding, windows and gutter contractor. They are donating their services free of charge to renovate the Hopkins School House in Hugo and are very involved in the local community.

The Outing Lodge!

I had always heard about this event center or hotel back in the Stillwater countryside but had never come across it. One day I came across it while I was out cross country skiing at Pine Point Park. I decided to pay them a visit and here is what I found….

for more information visit outinglodge.com

Save the Schoolhouse!!

Unless significant funds are raised by the end of the year to support the restoration of the Hopkins Schoolhouse, the schoolhouse could be torn down.

The Hugo and Forest Lake Historical Societies are trying to raise awareness and funds for the schoolhouse. They envision the restored schoolhouse being used as a meeting place for the community and a place to display the historical artifacts of the area. There aren’t a lot of historical structures from the early area and this would be a way to preserve some of that history.

Local businesses are helping donate time and free services to the restoration. Precise Exteriors out of Hugo is donating a free roof installation to save this piece of Hugo real estate.

To donate go to www.hopkinsschoolhouse.org.

Two Silo Farmhouse Winery

I stopped by a new winery located on the Hugo/Grant border that is scheduled to open next year. They have been growing grapes for 3 years…it takes a while to get their production up. Nice folks, they currently own Tally’s Dockside on White Bear Lake so they know a little bit about the beverage industry.

Here’s a link to a tour and interview with the winemaker and the group. Looks like fun!