Jennifer Kirby, the Luxury Agent

Single Family Homes for sale in the Twin Cities are at record levels, with the average sales price dipping just below 2005 levels. Will they keep going down? Honestly, I don't know, but there are signs across the region that prices might be leveling off.

The quick market analysis so far this year is that listings are up, sales are down. But you knew that already, didn't you?

As some of you know who might read my other blog, we recently moved into our new home we had built. We were lucky to buy one of the last lots, so the builder was giving away some great incentives to close out the subdivision.

This past week, two homes have gone up for sale in the neighborhood, and both are priced differently. The neighborhood is only two years old, so these are two of the first homes to be resold.

• the first home is on a flat lot and was bought for $280,000 a year ago. They are now asking $300,000 for the home, but have also finished the basement. I viewed the home two weekends ago with a client, and thought that the asking price was very fair to the current market.
• the second home just went active a couple days ago at a price of $380,000, which is the exact same price they paid for it two years ago, during the height of the market. It is a walkout lot and has a finished basement. However, I knew right away that in this current market, it was way overpriced.

Of course my husband teased me, saying that I wasn't a very good real estate agent, not getting my name out to the neighborhood already. According to him, we have been here a month and a half and I should have already canvased the area with promotional materials. At these times, I just have to roll my eyes and ignore his "sarcasm".

Then a funny thing happened on Monday. I received a phone call from an appraiser representing the relocation company taking care of the owners of the second home. The appraiser wanted to speak with me about our house, as it seemed to her to be a very close comparable to the home. I told her about all our upgrades, as we had many due to the huge incentives, that we had a finished walkout basement, and that our lot was far superior to the second home. Ours sits on a cul-de-sac with woods and a natural area behind it, but theirs backs up to other homes and has a smaller lot.

Of course during the conversation I told her I was a real estate agent, and we talked for about half an hour about other homes in the neighborhood that had recently closed with the builder. She then asked me the question that I knew was coming:

"In this market, what do you feel is the market value of this home?"

I told her, that "I hate to throw the agent and the owner under the bus"...but the home is not worth the money they paid for it. Looking at the current solds in the neighborhood, the house is probably worth $350,000, which is $30,000 less than they paid for it in 2006. Surprisingly, the appraiser agreed with me and stated the other comparable homes she was coming up with were not supporting the current list price either.

You can't pull the wool over the market's eyes. The truth will always come out, and buyer's, with so much information at their finger tips, can easily judge for themselves what current market value is. It is sad that so many homeowners are faced with a similar situation, but they will be thrown under the bus if they over-price their homes. What's a real estate agent to do in a market like this, but present the real picture to sellers and buyers. Unfortunately, not everyone wants to listen.

If you have ever been to a Motley Crue concert in the last few years, you would know that their stage theme is absolutely fantastic. The reason? They create an environment that not only tells a story, but they evoke emotion and engage the fans. I attended a concert a couple years back, and while not a raving fan, had a fantastic time. How could you not with all the fire works, dancers, music, and fun?

In the soft real estate market today, homes are taking longer to sell, and many times, home owners are reducing their price to get someone, anyone, to take the home off their hands. Sadly, many probably wouldn't have to undercut themselves if they looked to Motley Crue for inspiration.

Excuse me? Motley Crue?

Yep and for obvious reasons. Buyers want to walk into a home and immediately feel like it is theirs. They want to be inspired...they want to see fireworks.

The best way to do this is to "stage" your home. While many of us might think our home is decorated just fine, nothing could be further from the truth. Those walls that are painted a deep purple...gotta go. The 1980s wallpaper with Paisleys...gotta go. The little figurines you collect which are scattered throughout the home...gotta go.

Why? Because a home looks better when it is depersonalized and neutral. If you want to see some great before and after shots of staged spaces, and get an idea of the difference staging your home can make, please visit this site. (He just happens to be an Active Rain member) The effect staging has on a home that is for sale is obvious once you see these photos. What emotions come over you? Would you want to buy these homes if you saw them in the "after" state?

I would have to say yes. Staging a home will not only make your home show BETTER, it most likely will help your home sell FASTER, and for MORE money. Here is an idea I want to leave you with. Instead of reducing your home $5000 or more, why not look into a consultation with a professional home stager? With the little money you spend on staging your home, you could actually net more in the end and walk away with a great story on how you sold your home in a market when so many other sellers are failing.

Readers would love to know what staging a home costs. If any of our AR stagers are reading, could you let us know some averages that you have come across?

Oops! Looks like I forgot to do the market analysis for February. But have no fear, with the market slow down, we didn't' miss out on too much!

$1 Million -2 Million - The "cheap" homes have tons of competition, what with 117, which is almost the same amount as in January. Thirteen homes are pending, which compared to March 2007, is a three homes short. Closed sales totaled six, which blows last year out of the water.

$2 Million - $3 Million : 41 homes are competing against each other, especially with almost 10 homes for sale more than in January. Selling seems a little difficult in this price range as there is only 1 pending sale and 1 closed sale for March.
$3 Million - $5 Million : There are 22 homes currently for sale on Lake Minnetonka in this price bracket. Looking back to March 2007, there were only 9! Makes me wonder if some affluent home owners are also finding themselves in a financial pickle with the housing downturn.

$5 Million + : The premier homes in the price range are the cream of the crop. Nothing is new except maybe a few photos. Only eight homes can boast this price range, and the highest priced home tops the scale at $53 Million. The higher a listing is, the longer it takes to sell.

If you would like to search the current luxury home inventory in Minneapolis, Saint Paul, and the surrounding areas, view my price by price analysis at Fine Homes of Minneapolis.

I get a call at least once a week from an upset home owner asking if I could let them know what their home is worth. Frightened of this upside-down real estate market, home owners this last week have been receiving their 2008 tax bills in the mail. They don't like what they see.

For many, their tax assessment is valued for more than the house could sell for if it became available for sale. Some are even $100,000 less than the assessed value. So what is to be done?

For now, nothing.

Counties like Dakota County, understand that home owners are upset, but there is little they can do right now. With budgets sky rocketing over the last five years, cities have been enjoying the financial wind fall brought to them through higher property taxes. Now that property values are declining, cities have to awaken to the fact their annual budgets are going to decrease over the next few years. Of course, they can't raise property taxes to find the revenue, right?

(Just so you know, Minnesota has recently raised the state sales tax another 25 cents, to 6.75%, and also added a new tax to gasoline sales)

We all know that once a government gets our money, they don't just give it back freely, or without a fight. Minnesota law requires that county assessors only take into account the previous 12 months of sales when looking at real estate values. So as time moves on, the declining value indicated by sales will eventually be shown though property taxes. However it could take two years before anyone sees relief.

Homeowners can appeal their local assessor and ask for a revaluation. I have known some people who have successfully got their property taxes down because they asked. So if you find yourself having a heart attack after opening up your tax bill, either call the tax assessor, or wait a year or two for the counties to get around to recalculating your bill. Either way, it won't be an easy task.