Get Insights July 2015 Agent | Donald L Seipke
Donald Seipke

Licensed in MN (Agent)
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Don Seipke


July 2015


Eight ways first-time buyers can make their best offer

by Marge Kane

If our low inventory market continues through this summer, sellers may have a slight edge over buyers. Still, our strong local economy and low interest rates are driving first-time buyers into the market. To stand out as a first-time buyer this summer, follow these eight tips from Edina Realty senior vice president and regional manager Marge Kane.

1. Understand and clean up your credit

Your financial status, which includes your savings, debt and credit, is arguably the most important variable in the home buying equation. As a first-time buyer, you should fiercely protect your finances and credit in the months leading up to buying a home.

The Federal Trade Commission mandates that the three nationwide credit reporting companies offer you a full, free credit report every 12 months. Get started here, and then work to dispute any inaccuracies you find in your reports.

Remember, the easiest way to maintain a high credit score is to pay your bills on time, so set up a recurring schedule or calendar alerts to ensure you don’t have any late payments.

2. Improve your debt-to-income ratio

Cleaning up your credit is one way to improve your status in the eyes of mortgage lenders. When you apply for a loan, your mortgage loan officer will take into account your debt-to-income ratio, which measures your ability to pay off monthly debt obligations.

The back-end ratio adds together your housing expenses—comprised of mortgage principal and interest, taxes and insurance—as well as all your other monthly debt obligations like credit card bills, student loans and car payments. In general, lenders prefer that your back-end ratio be between 36-42 percent of your gross monthly income.*

Remember, financial institutions look favorably on those who have demonstrated they are able to repay expenses. For financial advice on how to cut down your debt-to-income ratio or achieve your home buying goals, speak with your mortgage loan officer, who is always there to guide you.

3. Determine what you have for a down payment

It can be tempting to clean out your entire savings account for your down payment, as a higher down payment can increase your buying power. However, it’s important that you strike a healthy balance when putting money down on your house.

Financial experts recommend that you have six months of living expenses put aside in case of emergency, and you’ll also want a small nest egg for the expenses that come with being a homeowner (think: a lawnmower and small furniture upgrades).

Don’t forget that you can get creative with down payments, too. Some loans may have down payment assistance available and family members are also allowed to gift you funds that can be used for a down payment. Your mortgage loan officer will be able to help you determine how to document gift funds.

4. Get pre-approved for the best rate possible

Once your credit, debts and down payment are in order, it’s time to get pre-approved for a mortgage. Together with your mortgage loan officer, you can determine the loan type and the amount you qualify for.

A mortgage pre-approval is critical for navigating today’s low inventory market, as it shows sellers that you are a serious buyer who will be backed by a credible lender at the closing table.

The pre-approval is also when you’ll see how credit score and payment history has impacted your interest rate. A lower mortgage interest rate means more buying power and of course, less interest paid over time. This recent infographic shows that saving a half percentage point on a $200,000 mortgage can mean a total savings of $23,000 over the life of the loan.

5. Offer earnest money

As part of your offer, you will submit an earnest money deposit. This deposit is generally put into an escrow account of the listing broker, where it is held until closing. The deposit is then applied to the closing costs. Earnest money is an indication to the seller that you are committed to buying their home and a more significant deposit can indicate a higher level commitment. Earnest money deposits include a contingency clause, and if the deal falls through due to a failed contingency, you’ll get your deposit back. Talk with your REALTOR to create the best possible contingency statement for your bid.

6. Offer to expedite your inspection

Historically, buyers have promised an inspection within three days, and have taken a few more days to mull over the results or request repairs. As such, one way buyers can stand out without offering any extra money is to promise an expedited inspection timeline.

When you submit your offer, promise a next-day inspection that you will personally attend, and then promise to return your feedback to the seller that day. The seller will have peace of mind knowing that even in the deals fall apart, they could still have other offers to consider. We have seen many local Edina Realty agents and homebuyers use this strategy to win bids in this summer’s low inventory market.

7. Promise an optimum closing date

As a first time homebuyer, you may have more flexible timelines than the buyers you are competing against. Take advantage of this by offering a closing date that matches the sellers’ best interest. It may be tempting to offer the fastest closing date possible but some sellers—like those moving cross-country, or those waiting on their new construction home to be finished—may have a longer timeline in mind. Your REALTOR can help you match the timing that is most beneficial to the home seller, which is a great negotiation strategy.

8. Write a “love” letter to the seller

Sellers aren’t only motivated by money. In many cases, selling a home is an emotional experience, so homeowners may be more motivated by your circumstances than they are your pocketbook. Consider writing a “love letter” to the seller, detailing why you are making an offer on the home. Include what you love about the neighborhood and the home itself—and don’t be afraid to get specific.

For example, if the sellers have owned the home for 30 years and are now selling after becoming empty nesters, discuss how you have similar plans for your growing family. Talk about how excited you are to send your own kids to area schools, and your plans for becoming a part of the community.

In today’s fast-paced market, sellers are often facing multiple bids that look similar on paper. By showing the homeowner a bit of your history and your plans for their beloved home, you may just stand out enough to land your dream home.

How to take the first step

As you can see, there are many ways—both financial and personal—to put your best foot forward making an offer on your first home in Minnesota or western Wisconsin. Reach out today to get started, and we’ll be with you throughout the entire process.Reach out today to get started, and we’ll be with you throughout the entire process.

*DISCLAIMER: There is NO WARRANTY, expressed or implied, for the accuracy of this information or its applicability to your financial situation. Please consult your own financial advisor or Mortgage Loan Officer to determine your individual buying power.


Lakeshore dreaming: 16 amazing lake homes everyone is talking about

As the market continues to heat up this summer, plenty of buyers are finding themselves looking at homes near lakes, rivers and creeks. Whether you’re in the market for your own waterfront property or just like to keep an eye on what’s out there, check out this slideshow of 16 of the top lake homes and cabins for sale in Minnesota and western Wisconsin this summer.

Looking for a waterfront home on a certain lake or in a specific area? We’re proud to list every active, available waterfront home in Minnesota and western Wisconsin. Search lakeshore homes here.Search lakeshore homes here.


How to stage your home to sell this summer

With our local market’s low inventory, you shouldn’t have a hard time selling your Minnesota or western Wisconsin home this summer. However, today’s buyers are savvy, and they’ll expect a home with both web appeal and curb appeal. Below, we offer summer staging tips so you can hook them online and then get the bid in person.

For even more #SellerInsights follow Edina Realty on Facebook and Twitter, YouTube and Instagram.

Front yard and exterior tips

The first thing buyers see online or in person is the front of your home, so it’s important that this view is flawless. In the summer, this means mowing the lawn frequently, edging around your sidewalks and the driveway and trimming your hedges. If you don’t have in-ground plants to add natural color, add some planters with bright flowers to your front step.

If your front door is older, consider replacing it with a brightly painted steel door. A new front door is one of the home improvements with the highest ROI in the Minneapolis-St. Paul area, so your investment could pay for itself while also helping you stand out to buyers online and in person.

Next, think about the other fixtures and features of your home’s exterior. Be sure to clean gutters, shingles and window wells so they are free of dirt and debris. Wash every window, preferably with a power washer, so they sparkle and aren’t streaky. Remember that if you don’t feel comfortable getting up high on ladders, you can always hire out a professional for these tasks. Test each outdoor light to be sure that your home is well-lit at night, and consider adding in-ground lighting along walkways so nighttime visitors can easily make their way to the front door.

The finishing touch? Be sure that the address numbers on your home are easy to read from the street, and that they are also well-lit at night. It may seem minor, but there’s a big difference in attitude between buyers who drive up and down the street five times, and those who pull up and immediately think, "This could be my home."

Backyard tips

Summer may be short in Minnesota and Wisconsin, but the right backyard set up can still go a long way when it comes to selling a home.

If you have a deck or patio, arrange the furniture and tables to create a secondary living room. Add bright pops of color with new chair cushions, table umbrellas and potted plants or flowers. Check to make sure this outdoor area is well-lit at night, and consider adding table lanterns for additional ambiance. Power wash the area to make sure that it’s bright and free of any stubborn winter dirt and debris.

If you have a pool, schedule regular cleanings or commit to a regimented pool-cleaning schedule before you leave for work in the morning. Pool chairs can remain out, but floating devices, pool "noodles" and other water toys should be stored so the area remains uncluttered while buyers walk around. Remember to check the pool for nighttime lighting, as well.

The backyard isn’t only about dining and being in the pool, though. Many homeowners have elaborate gardens, bird feeders and other outdoor hobbies that can attract or distract buyers. Together, we’ll work to determine if you should show off or downplay your potting station, bocce ball court or homemade treehouse.

Interior staging

The process of staging a home for summer is fun, because it is a lot like taking off your winter layers once the warm weather arries.

We’ll start with what a buyer sees right when they walk in the door. If your welcome mat shows traces of our cold winter and wet spring, replace it with a new, cheery version. Remove heavy coats, hats, mittens and boots from the front entryway and any closets and consider putting them in storage while you sell. (Your closets will look much more appealing without a wall of down jackets trying to break free from inside.) Be sure to open up your windows and doors to get fresh air circulating, and to get rid of musty smells and pet odors.

Next, move into the living room and family rooms. The framed family photos and personal knick-knacks in these rooms are priceless to you, but buyers prefer to see a clean slate with room for their own memories. Box up most framed photos and the items decorating shelves, and replace them with neutral items like bright plants or color-coordinated stacks of books. Remove any thick fleece or flannel blankets that kept you warm during the winter, and replace them with lighter throw pillows and blankets that match the season.

If possible, keep all rooms a neutral palette — white, beige or gray — and then add bright accent colors like orange, salmon, teal or turquoise. Your real estate agent will help you determine the best way to stage on a budget, or they may recommend a professional stager to help your space really shine.

Last, remember that while you have been using your home and rooms in a certain way, buyers fall for the homes that give them the most options. We can help you determine if you need to turn your office back into a guest bedroom with a desk, or if your "mancave" basement would have more appeal as a general lounge area. Together, you can strike a balance that will draw in buyers online and grant you some freedom as you sell your Minnesota or Wisconsin home.


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