Aug. 11(Source: By Gita Sitaramiah, Pioneer Press, St. Paul, Minn.) – Tim Lindquist said he didn’t have high expectations when he listed his St. Paul house for sale in March.Lindquist had heard enough about the real estate market to be realistic, despite the home’s floor-to-ceiling rear windows with a view of the Mississippi River and its central location in Desnoyer Park. “It’s a very unique house, great views, beautiful yard,” Lindquist said.
He set the two-bedroom’s price at $250,000, motivated to make a sale and move to Chicago for a relationship.
After a few weeks of showings but no offers, things swiftly changed.
Apparently the price was right, quite right, in fact.
One offer came in. Then, another, and then a couple more. One was a low-ball he rejected. Another was close to what he wanted. Then, another prospective buyer offered more.
In the end, Lindquist sold the house for $266,000 and felt fortunate. He bought the house for $230,000 in 2003.
“I think it ended up working in my favor that there were multiple offers,” Lindquist said.
Multiple offers are back.
This year, real estate observers are seeing more of those bidding wars that were a hallmark of the high-flying days of the housing market as the price peaked in 2006.
But it’s hardly a sign that the housing market is heating up.
Rock-bottom prices are behind the competition among serious buyers.
“Even on traditional sales, prices are down somewhat, not nearly as bad as the distressed (home prices), but people are looking at this as
an opportunity to move into a nice neighborhood and get a house at a historically low-level price,” said Herb Tousley, director of real estate programs at the University of St. Thomas.
Many real estate observers believe today’s prices are at or near bottom, motivating buyers to take advantage of the opportunity. “We have a long way to go to stabilize, of course, but I’m hopeful that we’ve seen the bottom,” said Jennifer Snyder, a Woodbury agent and president of the St. Paul Area Association of Realtors.
That people are pricing better is demonstrated by these numbers from the Minneapolis Area Association of Realtors: In June, the most recent month for which data are available, homes were selling for 91.4 percent of their original asking price. It had been about 89 percent. During the 2004 through 2006 boom years, it was normally above 95 percent.
The Twin Cities median home price peaked at $237,500 in June 2006 and has declined about 30 percent to $165,00 in June, according to the Minneapolis Area Association of Realtors. But there are fewer houses for sale this year and fewer foreclosures and short sales on the market than a year earlier.
Real estate observers say they’re seeing multiple offers on bargain foreclosure properties as well as traditional sales at historically low prices in desirable neighborhoods such as Highland, Macalester-Groveland and some South Minneapolis neighborhoods as well as in the suburbs.
Sellers willing to price correctly can help.
“We’re seeing fewer sellers but those sellers who are jumping into the selling market, they’re much more realistic about expectations and pricing,” said Brad Palecek, an Edina Realty agent who helped Lindquist sell his house.
The higher prices that can come from bidding situations are rewards to the seller.
“A lot of times you get more money if you price it aggressively, than if you overprice it and it lags on the market,” said Warren Wessel, a Coldwell Banker Burnet agent in Woodbury.
Sara Trembath and her husband, Travis, took the advice of their agents, Mary and Jim Sommerfield, and shopped the competition before listing their Southwest Minneapolis house in Linden Hills at $349,900 on July 26. In less than a week, they had two offers and signed a purchase agreement on Monday.
They bought the house a few years ago for $328,500, and the final offer is for several thousand more. Their agents asked that the exact offer price be withheld since the deal won’t close until September.
“The second offer came in on Monday night and we were, honest to God, sitting at the kitchen table signing the paperwork and the first offer called back,” Sara Trembath said. “They came up but didn’t come up as high as the second offer.”
The Trembaths won’t break even given home improvements they’ve made but are happy with the speedy outcome since they had their second child last week and are planning a move to Jacksonville, Fla., for a job he’s taking.
In another boon to some of today’s sellers, some of the deals are closed when cash buyers make offers.
Most years, Mary Sommerfield has worked on one cash transaction at the most. Last year, she had 12 cash deals and has seen six so far this year.
“What’s interesting is that I’ve actually had four of my listings that have closed since July 21 and two of the closings were multiple offers and they were both cash,” Sommerfield said.
Those cash buyers have an advantage in multiple offer situations because a seller may choose their offer over waiting to see if another buyer’s bank will agree to a loan, she said.
Investors sometimes find it easier to pay in cash, particularly on challenged foreclosure properties, than to get a loan faced with banks that have tightened lending standards.”My personal thought on it is that some people have taken money out of the stock market and it’s sitting in the bank or CDs earning less than 1 percent interest,” Sommerfield said.
For buyers going after foreclosures, that makes the competition more intense.
First-time buyer Jacob Higgins saw more than 100 foreclosed houses with agent Sean Ecklin this year and made offers on eight of them. Half involved multiple offers. He lost out bidding for a four-bedroom Stillwater house listed at $152,000, which had more than a dozen other offers. The house went for $199,000.
“I think a lot of has to do with the price points,” Ecklin said. “When you’re dealing with lender-owned properties, when the prices are aggressive, you see multiple offers.”
Last week, Higgins closed on a four-bedroom split-level in Centerville after competing with a few other offers. It was listed for $125,000. He bid $45,000 less and had to raise his offer to nearly $120,000 to get the house.
“Regarding some of the foreclosures, nobody tells you what anybody’s offering. It’s almost a stab in the dark,” he said. “You have to come up with what you’re comfortable paying for the house.”
The 26-year-old civil engineer, who did take out a mortgage, plans to spend the next few years remodeling.
Was the foreclosure hunt worth it?
Higgins is confident in his purchase.
“In my eyes, it was the best house for the money,” he said. “Also, because I consider myself fairly handy, I’m able to get equity quick by doing easy or inexpensive repairs.”
Gita Sitaramiah can be reached at 651-228-5472.
Source: By Gita Sitaramiah, Pioneer Press, St. Paul, Minn.
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A service of YellowBrix, Inc. Publication date: 2011-08-11