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.
It doesn’t get much better than this three bedroom, three bathroom lake house on North Long Lake in Brainerd. Whether you’re expecting visitors or just like having some privacy, the guest house is an incredible addition to an already impressive property. It doesn’t hurt that the price is right -- for just $640,000, this stunner could be yoursLearn more about this property
If your dreams of living near the water include a healthy dose of privacy, look no further than this gated five bedroom luxury home on a private peninsula on Cross Lake. Catch every sunrise and sunset, as this lake property boasts more than 300 total feet of lakeshore on the front and back of the property. Asking price for this Whitefish Chain knockout is $1,475,000.Learn more about this property
Whether you love cozying up to a bonfire or hosting big outdoor brunches on the deck, this cabin in Hackensack, Minnesota has you covered. With modern interior updates, three large bedrooms and a newly replaced roof, this great home on Woman Lake is move-in ready. Buy it now for $399,900 to enjoy the last half of this gorgeous summer. (We’ll bring the s’mores fixings).Learn more about this property
One sneaky way to save money on the cost of a cabin “Up North” is to buy a property with lake access, rather than one situated on the lake itself. This charming two-bedroom lake access townhome is located in Alexandria and features a pool, fish cleaning station and a boat slip so you can easily enjoy Lake Ida’s incredible fishing. List price is just $139,000.Learn more about this property
This private lake estate on more than 13 acres in Hayward, Wisconsin oozes luxury appeal. With picture-perfect views of Round Lake, two private master suites and an open kitchen and dining area that’s ideal for large gatherings, the future owner of this lakefront property won’t be disappointed. If the entertaining ever gets overwhelming, take some time away on the many trails that are found on the sprawling property grounds. Asking price for this Wisconsin lake home is $1,990,000.Learn more about this property
The perfect weekend getaway is now available on Crooked Lake in Siren, Wisconsin. This fantastic lake home features three bedrooms and two bathrooms in the main property, with additional guest quarters—including a kitchen!—above the garage for when you need extra accommodations. Built in 1980, the property features knotty pine and log ceilings, while still being modern and bright. Don’t miss out on this gorgeous Wisconsin lake home, now offered at $425,000.Learn more about this property
This four bedroom, four bathroom lake home situated on Wells Lake in Faribault is a fantastic place to reside year-round. With nearly 3,700 finished square feet on a half-acre, there’s plenty of room for outdoor entertaining and fun. Priced at $495,000, this home right off I-35 won’t last long in today’s sellers’ market!Learn more about this property
Head due west to fast-growing Willmar for this fantastic four bedroom, two bathroom lake home priced at just $155,000. With an incredible deck overlooking Willmar Lake and a private dock to drop a line in the water, this year-round home is the perfect fit for an active family.Learn more about this property
Looking for a lake home near St. Cloud? This charmer in Clear Lake features two bedrooms, two bathrooms and… wait for it… two fireplaces as well! The home boasts a gorgeous view of Briggs Lake, which is known for its sandy beach bottoms. The lakefront home is priced at $249,500.Learn more about this property
Many lake homes have a log cabin exterior and Northwoods interior design, but this Cold Spring home, built in 1994, takes a more modern approach. With three bedrooms, four bathrooms and a spectacular view of Bolfing Lake, a lucky buyer can take this lakefront home for just $350,000. Buy now to enjoy a summer on the water and evenings filled with casual bonfires.Learn more about this property
Doubles, anyone? When you tire of driving your boat to Maynard’s for happy hour, fire up your racquets for an impromptu tennis match on your own private court. This five bedroom, five bathroom home on Lake Minnetonka’s Gold Coast leaves nothing out -- and will draw plenty of gawker traffic on boats driving through Brown’s Bay. This estate is yours for a cool $4,850,000.Learn more about this property
Private doesn’t begin to describe this 133-acre property that features a farmhouse, bunkhouse and… wait for it… two separate residences. Whether your dreams include hosting events in a gorgeous old barn, enjoying your morning coffee over panoramic views or simply saying, “No, I’m in the OTHER house,” this fantastic and updated property near Detroit Lakes could be right for you. It’s listed at $2,100,000, and if you don’t make a bid, we’ll consider going in on it with a few of our closest friends.Learn more about this property
Life on the river doesn’t get much better than this. This three bedroom, three bathroom Hudson home features a full-length deck overlooking the property’s 105’ of private waterfrontage, but the views from the inside might be even better. With vaulted ceilings, abundant windows, a gourmet kitchen (with custom wine storage!) and a sauna, this property exudes waterfront luxury at a reasonable price point. The listing price is $740,000.Learn more about this property
Even the renderings of this picture-perfect model home will leave you speechless and ready to make an offer. Located on the north side of Prior Lake, this stunner features four bedrooms, three bathrooms and an incredible view of the lake from both the interior dinette and deck. The “bonus room” above the garage is the dream of every homeowner who’s ever wished for an on-site getaway. Additional lots in this development are available if you’d like to build your lake home from scratch. Get it for just $549,900.Learn more about this property
Whether you’re looking for a starter home on the lake or want to move to a downsized rambler as you coast into retirement, this charmer in Mahtomedi fits the bill. Located on White Bear Lake, the lake home features two bedrooms, two bathrooms and a private beach and dock for a price of $252,000. Don’t miss out on a home that’s move in-ready (and beach-ready, too!)Learn more about this property
Waterfront homes aren’t always on the lake, of course. If you’re looking for a home on a river, check out this four bedroom, three bathroom property on the Mississippi River in St. Cloud. Enjoy peak privacy, as the home is on a dead end road, and peak views—the dinette overlooks the home’s 89 feet of waterfrontage. The most impressive feature of this property may be its price. This home is listed at $239,000.Learn more about this property
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.
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."
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.
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.