On one positive note, new listings were down by 30% year over year and total inventory levels shrunk by a hopeful 4.5%.  This inventory level is the lowest in 6 years.  We are currently at just over 24,000 homes in inventory.  Most experts agree that the number needs to be under 20,000 for our housing market to function properly and stop the free fall of prices.  Sadly I don’t see that happening soon.

Pending sales of foreclosures (typically the anchor dragging down the market prices of homes), grew by almost 32% in March.  They now account for 40% of the pendings and 43% of the closings today.  Throw in the short sale numbers and it makes it nearly impossible to compete as a retail buyer in this market.  Homes are taking on average 152 days to sell and are selling for less than 89% of their asking price (down from almost 94% in March 2010).

Something needs to change.  It is not another Federal Government bailout, stimulus, or tax incentive.  We need the economy to be stronger with more people at work.  Plus, I believe that if the banks simply loosened up their regulations to investors with good credit, good income, and solid assets, we could reduce the inventory by letting them snap up the cheap junk REOs, spend money on rehabs, and use competition to drive up prices.  By letting the investors eat the cheap REOs and eliminate that inventory, it will allow the retail seller to sell his home at a proper price without price pressure from the foreclosure houses around him.

Owning your own home certainly does have its benefits. It provides more privacy than apartments, more storage space, and the advantages of yard space, with the capabilities for landscaping and gardening. It is however a long term commitment, so be sure that is what you want before you go home buying.

What if you are selling your home? There are some things you can do to make home selling a little easier. First, make sure your home is in good condition. It should be clean, inside and out. A clean home looks much nicer and a buyer is much more likely to be interested in it. Avoid clutter and try and organize your furniture so that it looks neat and presentable. A few new coats of paint can really do wonders to freshen up otherwise lackluster rooms.  Especially after the snow melts in Minnesota, a house can really use a heavier exterior cleaning.

Be familiar with how much your house is worth. Is it in a nice location? Does it have any structural issues? How does it compare with other houses of similar size? Knowing this information can help you to set an appropriate market value for your home. Obviously, you do not want to have a value so high nobody will bid on it, but nor do you want to sell short the value of your house.  Use the MN MLS to search for comparable homes in your area.

Typically a house is the largest financial investment a person will ever make. Always take your time to make any decision. No matter where your potential new home is, Minnesota, New York, or California, do research. Find out how much houses are generally worth, and be sure to get a home inspected before buying it. Never be afraid to ask your lender questions if you do not understand something. It is your money, and your home, and you have the right and responsibility to gather as much information as you can.

During that time of depression hundreds or perhaps millions of people lost their homes. This was a bad time for homeowners, lenders, and banks. Everyone seemed to have lost during that time. Home buying was down a great deal, and there was a great need for home selling, especially for the real estate industry. Today that is not the case individuals are looking to purchase new homes, or replace the one they lost. Banks are back to lending money, and first time home buyer programs are stronger than ever. Now is an excellent time to be in the housing business has a buyer or as a seller.

Home buying can be done online from home via the Minnesota MLS. Many banks are now allowing individuals to bid on houses from the auction website. Houses that have been foreclosed by the banks or houses that have been awarded to the court in cases of abandonment are the ones that can be brought for dirt cheap. The nice thing is that you can see this from the comfort of your own home, even when it is snowing like crazy in February!  Just open the MN MLS and search away with many of the same tools that real estate agents have.

A large number of private home owners sit at home selling property every day. They sell homes to public auctions and other individuals who are looking for a nice house to move into. The thought that some companies are into home buying is great, especially for people who are looking for their own home to purchase. Real estate agents put their houses and lands online for easier viewing. They find that more and more people are turning to the internet for all of their housing needs. Whether people are looking to rent, buy or sell, the internet is the best source for information.

Regardless of the name of the article, it is a great post.  Read it here.

I’m seeing the following status on the MLS listings.  It would be interesting to have an explanation of why one is chosen vs another.  Some are obvious but some are murky.

Lender Owned – Obvious

Potential Short Sale – Does this mean the owner “might” be underwater?

Another says “In Foreclosure” Potential Short Sale – Does this  mean the Sheriff sale was done and we’re in redemption?

I thought there were a couple more variations on the “short sale” that I’ve seen and was curious if there was a way to tell if someone has maybe just stopped paying their payment vs they have a sheriff sale scheduled etc.

Great question!  I guess we in the business just assume that everyone knows what we are talking about.  Here is my best attempt to try and decipher and explain what is going on.

• Lender owned, REO, HUD property all mean the same thing.  These are homes that have already gone through the entire foreclosure process and are now owned by the bank.
• Potential short sale is a situation where the seller may be right on the edge of being in short sale territory, depending upon what the house sells for. Let’s say that a seller owes $100,000 on the property.  Add in $6000 for commissions and maybe another $3000 for closing costs and misc taxes and assessments.  That totals $109,000 the seller needs to walk away without taking any money out of his pocket to make the house go away.  Maybe the home is priced at $112,000 right now.  You may see “potential short sale” on the MLS listing, because if the buyer asks for a price decrease or even $3000 in seller paid closing costs, the seller will be upside down.  Now truthfully, as a CDPE, I would never go through the process of a short sale for a couple thousand dollars so the gap would need to be wider.
• In foreclosure/potential short sale is again the potential of a short sale if the offer is low enough, but here they are telling you that the seller is already in foreclosure.  Typically this means that the sheriff sale has been scheduled or has occurred (most likely occurred).  This gives the buyer more information that time is running out to get this deal done.  It also serves to disclose to any potential buyer that this deal may not close if time runs out (thereby reducing the risk that the buyer is upset if/when it does not close).
• Subject to 3rd party approval is another code term for short sale.

Where this mostly affect you as the buyer is how and what you are going to offer for the property.  If a home is in foreclosure and a potential short sale, you need to work fast and hard to get your offer in, but the bank may simply refuse to accept anything but a full priced offer (or may refuse all offers after the sheriff sale).

There are not many other short sale variations that you see on the MN MLS.  When in doubt you should ask your agent or the listing agent to clarify.

Additionally, by using this number, any changes at the State, Local, or National level will instantly be reflected because there is one database that drives all these systems, versus paperwork floating around and eventually getting updated to the various levels.

Are the data share outstate listings available for all property types?
Currently, they are available for Single Family Residential only.  The other property types will be added over the next couple months.  We will make announcements here as they become available.

How do I find these listings?
Search just as you would for any other listings.  For example, if you want to find listings in Duluth, search by Municipality for Duluth, search the Duluth ZIP Codes, or use Map Search to draw the exact area you want to search.  Listings from the data share will be in your results. (Note: If you want to see data share listings, do not search by County or MLS Area as we currently do not receive data for those fields through the data share.)

How do I know a listing is from the state-wide data sharing?
Listings imported from the outstate Associations can be identified by a three to four letter code at the start of their MLS numbers.  For example, MLS# DAAR153802 is from the Duluth MLS.  MLS# ALX10-1835 is from the Alexandria MLS.  Listings entered into NorthstarMLS through Home Base will continue to have the current MLS numbering scheme without a letter code.

BMJ = Bemidji Area
DAAR = Duluth Area
ALX = Greater Alexandria Area
GLAR = Greater Lakes (Brainerd Area)
ICBR = Itasca County
LKSR = Lakes Region (Fergus Falls Area)
MAM = Minnesota Arrowhead
RASM = Southern Minnesota (Mankato Area)
SEMN = Southeast Minnesota (Rochester, Owatonna, Albert Lea, Winona)
WCMN = West Central (Willmar Area)

Will the data share listings be included in my Auto-Emails to Clients?
If your search criteria covers areas where the outstate Associations have listings, then yes, they will be included.

Why are there duplicate listings?
Many brokers in the outstate areas subscribe to NorthstarMLS through a special Allied Participant Program and enter their listings into NorthstarMLS.  Because of this new data sharing program, the Allied Participation program will end as of December 31. Until then, Allied Participant brokers’ listings may be in NorthstarMLS twice–one as entered in NorthstarMLS, and one as imported from their local outstate MLS.  After their Allied Participation expires, their listings entered into NorthstarMLS will be removed, leaving just the listings imported from their local MLS.

How often are the data share listings updated?
We refresh the data share listings with updates from the vendor every four hours.

What if I want to exclude data share listings from my search?
On any of the Single Family Search screens, click the link “Click here to add or remove other search fields.”  Add the field “MLS Source.”  There are two selections for this field: RMLS and SASI.  RMLS is for the regular NorthstarMLS listings entered through Home Base.  SASI is for the data share listings imported from the outstate Associations.  Click to select “RMLS.” This will ensure that the data share listings are not included in your search results.

How do I report problems with data share listings, such as missing data?
You may notice some fields missing data for the listings of some outstate Associations.  This is usually an issue between that outstate Association and the data share vendor that only they can resolve.  We expect any problems with missing data to improve over time as the vendor improves the import process.  For any other questions or problems, contact the NorthstarMLS Help Desk at 651-251-5456 or help [at] northstarmls [dot] com.

How does this affect the MLS Co-op?
This data sharing replaces the MLS Co-op. The MLS Co-op will be discontinued effective December 31st.

How does this affect the NorthstarMLS Rules & Regulations?
All data sharing participants, including NorthstarMLS, have agreed to a common set of MLS rules. There will be several minor changes to our rules that will be outlined soon in a separate announcement.  NorthstarMLS and each of the outstate Associations will continue to handle their own rules enforcement.

Pending sales are down a whopping 37.8% over September 2009 and closed sales were down 33.5%.  When  compared year to date versus 2008, the Twin Cities market shows just a 1.4 decline in closed sales.

Inventory drew by almost 14%, which in my opinion is the leading edge of the wave 2 foreclosure inventory.  We are also seeing buyers becoming much more choosy than in the past.  Most are in no hurry to make a decision and will consider dozens of houses before making an offer.  Then that offer is typically well below list price as the buyer is convinced that everyone, including retail sellers, can take huge price discounts.

The Minnesota MLS showed a listing decline of 10.7% for the entire metro area since September 2009.  Most of that (11.2%) was made up of traditional sellers not putting their homes on the market.  Banks put 5.8% fewer REOs on the market and 11.5% fewer short sales were added.

As of October 1, there are 8.6 months of inventory for the entire Twin Cities Market.  We need to see this number closer to 4 months to be in a more stable market.  We jumped up from 6.6% this time last year.  Just like above, the increased inventory is pushing this number higher.

Like you would expect, we are not out of the wood yet.  No great glimmer of hope has even begun to shine in this real estate market.

• Several new sites allow the user to actually place furniture in the picture so that you can see if your type or style or even color of furniture will work in this room.  Seems harmless enough.  You are not changing the room or property or misrepresenting anything about the home.
• Other tools allow you to brighten them image, remove the car parked in the front driveway or add some blue sky to the background.  Again, this seems like marketing fluff and nothing has changed about the house.  No bid deal.
• What about if the listing agent retouched the photos on the front of the house to remove the electrical tower in the background?  What if made the grass greener or added flowers in the front of the yard?  Boy, that is a tough one.  I think he is misrepresenting the house as the tower is really there, the grass is not that green (lesser issue) and there are no flowers that the buyer will have when they buy the home.
• Here are the really sneaky examples that have occurred on the Minnesota MLS:  A listing agent used a photo editing software to edit out missing shingles on the roof.  Another agent “repainted” the house digitally to remove the peeling paint.  Uh Oh.  Those are not good and clearly misrepresenting the home.

Article 2 of the Realtor Code of Ethics requires that an agent does “not exaggerate, misrepresent or conceal pertinent factors relating to the property. Article 12 obligates a REALTOR^® to use truthful, accurate advertising in all representations to the public.”  While aggressively marketing your listings are one thing, committing fraud it another.

Now I am making a leap by saying that inventory alone is the indicator of the speed of the market, but I think it is an interesting gauge.  Back in 2008, we were trying to consume all that we could get our hands on.  If something hit the Minnesota MLS, we jumped on it.  It seems like now the buyers in the home market that I am working with are much more reserved.  Many of them still want great deals, in fact some are looking for deals that would have not been possible even in the bottom of the market, let alone today.

With the 2nd wave of foreclosures already hitting our shores and the MLS, plus more people choosing to get out of their homes using short sales and then most buyers not in a hurry to buy, it is going to be a rough next 6 months.  Sellers are going to be frustrated at the lack of showings.  Buyer are going to be frustrated that they can’t get the deals they think they should be able to.

I ran a report today that showed how many showings many of our 250+ listings on the MN Real Estate Team had in August.  I was shocked that in the $100-200k price range, many of them had 1 showing for the entire month of August.  Others had 4-5, but not that many.  Ouch.  If you are selling your home, be prepared to price your house aggressively, and then wait.