Jim Scheller - ABR, SRS, e-Pro, GRI

I was listening to NPR this morning and a financial person of one kind or another was expressing his idea that lowering the interbank rate was a bad thing, as that would encourage the kind of bad loans that got us into this credit mess in the first place.

I know a few lenders, and they are now, at least here in Minnesota, MUCH more careful about qualifying buyers. Underwriting has undergone a sea-change, and lenders know enough to be careful.

Me? I'm glad rates may go even lower. There are plenty of buyers for whom a lower rate will be enough to get them to buy a new home (with a FIXED rate mortgage, thank you very much), and the more of them we get to buy, the fewer homes we have cluttering the marketplace. There is still a glut, no?

Okay, normally I'm not much of a fan of the overuse of question marks, but in this case I'll make an exception. Here's why: I'm working with a client and a few days ago we submitted an offer. It turns out there were thirteen offers on this house. Yes, you read that right. Thirteen. In a buyer's market.

All right, now the full disclosure: this was a bank-owned (REO) property and the bank cleverly listed the property, probably worth about $40-45,000, at $25,000. So of course everyone and their brother in the market to buy and flip houses (and some, like my client, who wanted to live there for a couple of years before selling) were there in the first couple of days submitting offers. I've seen this work identically for another REO property where the final selling price was $42,000 on a house originally priced at $25,000.

Underpricing big-time is a very good strategy for a very low priced home, by the way. And you know, this may work for a regular home seller too, as long as it's clear any offers will be presented at the same time about a week after the house is listed. It basically becomes a week-long auction.

I may have a chance to suggest this to a client. If I do, I'll let you know how it works.

Meanwhile, don't forget to check out my site: MankatoHomesOnline.com. Thanks!

Good People,

Rather than have this space empty, let me just say I'm getting ready to do some regular updating on the status of the Mankato area real estate marketplace. Saint Peter, too.

It will be monthly, and I'll provide lots of data for you. But since it's only two days from the beginning of a new month, I want to wait for April so I can give you figures through the end of March. Be patient.

What I can say is that lots of buyers are calling me, and that my business is picking up, big time. Thank you for that. From what I'm seeing and hearing from other Realtors in the area, the same is true for them. Hopefully the numbers will corroborate that, but I'm confident things are picking up.

Tune in again next week: Same Bat-Time, same Bat-Channel!

Let's talk timing.

A buyer's market like the one we are in now is perfect for two kinds of buyers: renters and buyers who are buying up.

Renters for obvious reasons: mortgage rates are low, and so are house prices. If you're renting it doesn't get much better than this.

That makes sense, but why is a buyer's market perfect for people who are buying up?

The NAR (National Association of Realtors) keeps very good records of this kind of thing, and they say the average homeowner who buys a new home buys a new one worth about 50% more than their old home's value. If you're one of those people who are looking to buy up to a bigger or fancier home, you might be thinking "Right. They say home values have declined 10% (to use a round number), and I'm supposed to be happy about that? How can I buy a new house when I'm getting 10% less for my house than I thought I was going to get?"

Sounds good, but there's one thing you have to remember: while your house was losing value, everyone else's house was losing value too.

Here's how it works: Let's say a year ago your house was worth $200,000. Let's also say that for the last year you've had your eye on that nice $300,000 number on the other side of town. Now, with values down 10%, your house is only worth $180,000. You basically lost $20,000. But the good news is that the house you've been drooling over for a year has also lost 10% of its value, or $30,000, and you can pick it up for just $270,000. When you add that into the equation, you end up making $10,000 on the transaction! (The $30,000 you made on the buy minus the $20,000 you lost on the sell.)

It's like all the economic forces went into creating this buyer's market just for you!

Nice, no?

Of course you'll want to get the most dollar you can when you sell your $200,000 house, and with my marketing efforts you can, but just remember it's better for your pocketbook to price your house right and get it sold quickly so you can get into that new, pricier home before the market changes.

Contact me and we can talk further: 507-317-0177 or jim@MankatoHomesOnline.com.

DOLLARS-IN-POCKET ALERT!

If you bought a house and you are paying PMI insurance, pay attention:

New for 2007, the PMI insurance you paid may be tax deductible.

For families with an adjusted gross income for the tax year 2007 of $100,000 or less, every last dollar you paid for your PMI insurance is deductible. Every one.

For families with an adjusted gross income between $100,000 and $109,000, a reduced benefit is available to you.

The average family will see about $350 more in their pocket if they take advantage. So take advantage!

(I'm not a tax guy, but if you have questions, contact me and we can find someone who can help: jim@MankatoHomesOnline.com or 507-317-0177. Check out my site at http://www.mankatohomesonline.com/ )