Holmes Group Magazine - March 2020

HOLMES GROUP MAGAZINE

ISSUE 14

WHAT EFFECTS WILL COVID-19 HAVE ON REAL ESTATE?

iBuyer

What exactly is an iBuyer?

TH S SSUE 3-4 5-8 9-10 11-12 13-14 15-16 17

Holmes on Homes - Covid-State Featured Home - Beautiful home in Cottage Grove What is an iBuyer?

Home and Style - Gothic Revival Homes Listings Q&A Crossword & Sudoku

HOLMES on HOMES REAL ESTATE DURING A PANDEMIC To preface this article –It’s 3pm on Friday, March 20th as I write this from the home office. A lot has happened in the last 2 weeks and assume it will be about 10 days before you get this magazine. That said, a lot can change by the time you get this.

Feel free to call me anytime for updates.

I wanted to address changes in our real estate world, how we’re adapting and what that means moving forward. I’ll categorize things and put out bullet points as there’s a lot of information. These are meant to be a guide, things to simply think about or use conceptually for how it fits your needs.

As it relates to the value of your home, the health of the market, it’s potential decline and future rebound – there are so many variables and quite frankly, nobody knows.

But I’ll give you some concepts to watch for. Without further ado: REAL ESTATE MARKET & HOME PRICES -Interest rates in the low 3%’s = more buying power and more buyers entering the market.

This is something to consider after we’re back to normal. Rates are CRAZY low and will stay that way for a while. Covid won’t last as long as low rates.. so there will be an increase in buyers on this eventually.

-Unemployment, deferred employment, reduction in hours, missed bonuses and so on are all very real. As that happens – it will decrease buyers and therefor decrease demand. This is short-term in the general scope of life. This will offset demand but that will obviously bounce back.

-The stock market just got beat up pretty

badly with a 30% drop in just a few weeks.

However, it will rebound too and the question is how quickly? Will we see a “V” curve back or a “U” curve – more extended timeframe to recover?

-How does all that affect your home value?

I assume luxury markets will be the hardest hit. Luxury & upper-bracket pricing was the softest portion of our market and this will no doubt increase that. Mid-price bracket may see leveling off.. possible dip in pricing. Expect that it may take a bit longer to sell than what you anticipated.

As for our averaged priced homes, it’s hard to say really. This is a great opportunity for a buyer to actually not have to fight so hard to get a home. Multiple offers are less likely but don’t tell that to Patrick & Christina – this week we offered over list price on a home & day 1 on the market and we lost. Go figure!!!

-There’s been a sharp drop in showings, however, when we’re able to get kids back to schools, restaurants & social places open to some degree or normality – this will bounce back quickly.

BUYERS & SHOWINGS -Showing systems, real estate offices & sellers are asking that we limit showings to buyers that are ready, willing and able to buy.

-As of today, there’s been about a 50% drop in showings in comparison to where we were a few weeks ago. For buyers that means less competition. For sellers that means less selling power.

-We’re using technology to assist! We can do remote showings with FaceTime or other video options.

-There will no doubt be far more virtual tours and other ways to see a home without being there!

-Best practices include bringing hand sanitizer, disinfecting wipes, gloves & masks as you see fit.

We’ll bring them when we have supplies but ask that you do as well.

SELLERS & LISTING DETAILS -It’s not all doom and gloom. There’s still a huge demand for homes and we’re listing 2 homes this next week. We expect them to sell quickly as well.

-Technology is here to help! If you want to sell but don’t want showings – we can do that. Virtual tours, drone videos, virtual open houses, FaceTime videos are all ways to work around this.

-As supplies are available, we’ll provide gloves, wipes, hand sanitizer & masks at your front door.

You should also be prepared for these supplies as we’re not always in stock -We’ll be restricting overlapping showings for safety purposes. So only one buyer/buyer’s agent in your home at any given time.

-We can change your listing to “Temporarily Not Available for Showing” (TNAS) at anytime for any reason. In doing so – your home does NOT incur marketing time or Days on Market as we call it.

-The MLS has relaxed it’s policy on TNAS rules and we’re now able to really customize access to your home. For example if you want showings only on certain days of the week or at certain times, we can do that. Really think about this as it relates to customizing timing that fits for you!

longer. Super low interest rates = more refi’s = more appraisals. Less people working + restricted access + it’s straight weird right now = longer appraisal turn times. The industry in general may be a tick slower than usual due to extra procedures. Not a big deal but plan an extra week to get a loan done these days.

-Video Conferencing and other technology is booming! Less in-person meetings = more virtual meetings. If we have a video meeting and my camera isn’t working – I may actually still be in my pajamas. As this issue winds down, in its wake is technology and other adaptations that will stick around. Quite frankly.. some of that stuff will be fun to watch & implement.

As we continue to adapt, we’ll keep you posted on changes in our industry. As always, we’re here for questions, calls and conversations of all kind.

I’m not predicting too much doom and gloom in the real estate industry. We’re certainly going to see a slower spring than expected but we’ll be somewhat normal again once we’re all able to hang out again. I just saw a post on social media that I think is fitting: I know this - when this ends AND it will – every game will be sold out, every restaurant will have a 2-hour wait, every kid will be glad to be in school, everyone will love their job, the stock market will skyrocket, every other house will get TP’d and we’ll embrace and shake hands. That’s going to be a pretty good day!

GENERAL PROCEDURES -Title companies are restricting closings to ONLY people that have to be there to sign. Most are shifting to remote closings or pre-closings. This means you’re pre-signing documents and don’t actually have to be there!

-Appraisals turn times are getting longer and turn-times on other procedures is getting a bit

OLMES ROUP Real Estate Solutions

our

FEATURED HOME 11433 Kingsborough Trail Cottage Grove, MN 55116 Welcome to 11433 Kingsborough Trail located on the Mississippi river in beautiful Cottage Grove! Architecturally designed & exquisite detail in this one-story masterpiece. Enjoy the golf course setting & river views from any room. All rooms are generously sized with attention to detail. Large master suite with private deck & hot tub off the master bath, home theater, cherry wet bar with full kitchen, cellar, 6+ car garage, private next-gen quarters in lower-level, executive office, smart home technology, 2400 sq ft garage, extensive landscaping & outdoor spaces.

5,112 Sq Ft

$860,000

Golf Course Living - located on the 2nd Fairway of the River Oaks Golf Course in ‘rural’ Cottage Grove Minnesota. This is the prime lot on the golf course!

The layout allows plenty of space to be utilized no matter what your needs are.

The kitchen boasts gorgeous counter-tops, with walkout directly to porch.

If you enjoy cooking at home, this kitchen is perfect with you, and great for spending time with your family and friends!

‘Next Gen’ Quarters - private bedroom / bathroom ‘lock-off’ with private access and garage for a nanny or personal caregiver.

Home Theater - integrated into the whole house A/V system.

Wet Bar - entertain with the cherry wood & granite, fully functional bar, complete with all kitchen utilities, to include: dishwasher, garbage disposal, refrigerator, freezer with ice maker and electric cooktop. ‘Smart Home’/ Security System - web accessible access to security cameras (4), system records ‘motion’ – integrated with a whole house A/V system, includes speakers and controls in: each main floor room, both upper and lower garages, and 3 outside porches.

Wine Cellar - stone façade walls with modular bottle storage and setup for wine refrigerators.

Call us at 651-379-1581

OLMES ROUP Real Estate Solutions

WHAT IS AN

iBuyer iBuyers are quickly growing and changing the face of Real Estate.

However Open Door and Zillow Offers have now suspended all offers and closings.

What now?

by Joe Holmes So just to recap – an iBuyer is a company that will buy your home directly. No showings, no cleaning, no staging, no repairs, easier inspections, no appraisals… no fuss. Just sell your home and pick the date you want to close. Take the convenience and remove the uncertainty. The goal of these companies is to provide a different option rather than listing your home and going through the usual process. In doing so, they give you an offer that we’ve seen pretty close to market value and their charges range from 9%-11%

in service charges.

You already know them and hear the commercials –you know the guy on the

billboards, right??

That’s Zillow Offers and you probably recognize Open Door, Homestead Road and so on. So what happens when Zillow Offers and Open Door suspend all offers and start to cancel closings? A lot happens!!

It’s no surprise the big companies aren’t handling this market well and who could blame them. You have to take into consideration market price adjustments, procedures to buy & sell homes are changing, staffing challenges on all levels, showing homes, repairing homes and so on. Now do that across 20 market

centers in our country with Covid-19 locking it all down. Keep in mind they’re backed by Wall Street and the stock market tank of 30% in the last month. Yeah right! Of course they suspended activity.

So what’s next on this? Well, it will certainly delay operations for these large national companies and quite frankly not sure when they’ll be up and running again. The uncertainty of our current social systems, economy, housing market and so on creates an environment that they simply can’t handle. However, looking local we can find solutions and I’d venture to guess this a great time to look local for all types of

solutions – not just in real estate.

Welcome to MarketPass! MarketPass is a local iBuyer that’s in the launch stage. It’s built by Realtors for Realtors and for direct consumer access as well. The company is built and run by local realtors that know the current market trends and can adjust quickly to consumer needs. It’s a company that will be able to step in and take the place of larger companies that need to pause because they’re too big to figure things out. This will be something to look for by the way in all types of industry. We’re at a point in our country where supporting small local businesses is going to be more important than ever and we look forward to getting MarkePass up and running as soon as possible.

We’ll keep you posted on the launch of MarketPass over the weeks and months to come. For more direct sale options – please reach out to us anytime as there will be local pop-ups and versions of this to come. Thank you and be safe out there!!

HOME & STYLE Gothic Revival Homes There’s a romantic decadence to Gothic Revival architecture that answers a deep Victorian longing but also can leave a Brothers Grimm aftertaste. It’s like a gingerbread house that’s just lovely — until it helps ensnare Hansel and Gretel.

Like that fairy tale, the original Gothic architecture dates to medieval times.

“It’s very much a religious architecture,” said Richard Guy Wilson, a chair in architectural history at the University of Virginia.

and because its emphasis on tall gables and wide porches did not lend itself to narrow urban lots, McAlester writes.

Because of its ties to Catholicism, the style’s pointed arches and flying buttresses fell spectacularly out of favor during the Renaissance, only to reemerge decades later as Gothic Revival.

There were exceptions, particularly with mixed-use and multi-family structures. Many are on college campuses. For example, this 1886 Gothic Revival building in Pennsylvania started as classrooms for Yale University’s field-based forestry school. It now has two apartments, eight retail shops, a large auditorium and lecture hall.

In the United States, Alexander Jackson Davis championed the style in books and in famous estates such as Lyndhurst in Tarrytown, NY. That home is made of stone, but most Gothic Revival homes in the United States are built of wood.

Typically, a Gothic Revival roof is steeply pitched with decorative gables that often come to a point. A one-story porch over the door or across the entire front of the home is often supported by flattened Gothic arches.

The style was seldom used for urban houses, because pattern books stressed how suitable the Gothic Revival look was for rural settings

Around the time of the Civil War, the Gothic Revival design faded but was soon replaced by similar styles such as Tudor and Chateauesque, the latter of which Wilson describes as “a French version” of Gothic Revival. It’s reserved mostly for country estates but can be found in Minnesota as well as all over the country. A really exquisite style of home!

Single Family Homes 11433 Kingsborough Trail Cottage Grove, MN 55016 Architecturally designed & exquisite detail in this one-story masterpiece. Enjoy the private golf course setting & river views from any room.

All rooms are generously sized with attention to detail. Large master suite with private deck & hot tub off the master bath, home theater, cherry wet bar with full kitchen, cellar, 6+ car garage, private next-gen quarters in lowerlevel, executive office, smart home technology, 2400 sq ft garage, extensive landscaping & outdoor spaces.

$860,000 11661 7th Street NE Blaine, MN 55434 Fantastic 4 bedroom home that’s been well maintained with updates all around. Enjoy the open floor plan, upper level deck with sliding glass doors off your living room, private back yard and more. This home is turn key and ready for any buyer. The roof is one year, furnace & mechanicals are relatively new and in good working condition with a one-year home warranty provided on any purchase. Conveniently located near parks and all retail needs - this home is a must see.

$240,000 5131 Winchester Lane Brooklyn Center, MN 55429 Well maintained and updated 3 bedroom/1 bathroom, 2-car garage home. Beautiful yard, 3-season porch, new shingles and gutters this year. Stop in and see what this home has to offer!

$230,000

742 Lake Ridge Drive Shoreview, MN 55126 Lovely 4 bedroom, 2 story home with all bedrooms on one level.

Spacious master bedroom, large eat-in kitchen and formal and informal dining spaces, open concept main floor with gas fireplace and unfished basement waiting for your finishes. Enjoy summertime on the deck or around the beautiful firepit. This home won’t last long!

$389,000 Joe Holmes joeholmes@kw.com www.holmesgroupmn.com Office: 651.379.1581 | Cell: 651.491.2151

Bob Adamson radamson@kw.com www.holmesgroupmn.com Office: 651.209.9856 | Cell: 651.387.6262

5620 Pillsbury Ave S Minneapolis, MN 55419 Wonderfully updated craftsman style home in the highdemand Windom neighborhood. This home has so many amenities inside & out and truly a must see! Enjoy the gourmet kitchen with a Wolf range and hood, stainless appliances, granite tops, custom fixtures & drop-in sink.

This is a must see!

$439,000 107 Arcwood Road Mahtomedi, MN 55115 Absolutely stunning remodel with endless detail. Truly one of a kind modern contemporary custom design and finishes. The open layout provides fantastic options for entertaining and quiet nights at home.

Enjoy the mudroom from the garage with storage & laundry, custom built-ins & stone surround fireplaces, custom in-beam & under-mount lighting throughout, thoughtfully designed kitchen with open shelving, high-end appliances, ample storage and walk out to your patio & private rear views.

$569,000

1116 Lois Court Shoreview, MN 55126

Fantastic one level living with amenities inside and out! This home has so much to offer and features an open layout, remodeled kitchen & baths, private rear views & more. Enjoy the remodeled kitchen with granite tops, stainless appliances, center island, backsplash & pull out drawers. The open layout and vaulted ceilings are accented with transom windows & provide tons of natural light with plenty of options for both entertaining & quiet days at home. Come by and see!

$354,000 11260 Zest Court NE Blaine, MN 55449 Beautiful 4 bedroom, 3 bathroom, 2-car garage home in Sanctuary Preserve. Laundry on upper level close to bathrooms, Mercer floor plan with open main level with a large mudroom. Easy access to 35W and close to all the Blaine amenities and shopping. Don’t miss this one! .

$425,000

Heather Pederson hlpederson@kw.com www.heatherpederson.com Office: 651.379.6315 | Cell: 612.964.2524

Jay Mangine jaymangine@kw.com http://jaymangine.kw.com Office: 651.379.6362 | Cell: 612.865.0400

Q&

Joe answers questions

he received from clients. Feel free to submit your own questions. Tweet us @HolmesGroupMN

Follow us on Twitter! https://twitter.com/HolmesGroupMN

Do you think we’ll see home prices drop and a recession in real estate due to what’s going on?

Great question and quite frankly nobody has an answer as there isn’t a playbook to read from. Factors to watch are unemployment rates, social activity & ability to move around as usual, interest rates, listing inventory or supply will certainly lower. When you look at those factors, you’ll be able to gauge

A pricing trends. I certainly think we’ll see prices flatten and move lower but will bounce back quickly.

Are people still showing homes?

What other options are there?

Yes.. we’re still showing homes but have protocols in place if we’re going to do them. We’ll adjust based on the suggestions of our state and local governments, real estate associations and so on. This is a great opportunity for technology

though!! We’ll see a boom in virtual showings & alternative options than being in-person.

How Do I prepare for buying a home?

I tell people all the time that you can’t be overprepared for a purchase. So if you’re thinking about it.. simply start by looking at homes and getting familiar with what’s out there at a price point that’s comfortable for you. If you need financing like most of us do, you should start with a loan application with a lender. That will give you an idea of what you’ll need for a down payment & what to expect for monthly payments. From there we can set up an MLS search for homes that match your criteria and we’re off and running.

Check with Thomas Jussila at Finance of America for update to date rate info for your purchases and refi’s.

So what are you doing with the kids at home?

HA! I’m running out of things to do!! Yesterday I made Tanner run around the block by himself. We made a competition out of it.. his lowest time was 3:38. He was a bit upset when I decided he was the winner without running it myself!! BWAHAHA! Besides that, a nightly ritual has been a bonfire in the back yard – as long as it’s not wet or rainy. And you know what that means – S’mores!

I see Zillow & Open Door have suspended activity. When will they be up and running again?

Great question and no answer on that. They are big bulky companies that need predictability to succeed.

Right now they have massive instability with prices, procedures, cash backing, local governments and so on and not to mention doing that in 20 different markets. I laugh when I think about it! This makes the local iBuyer options all that more important. Smaller companies with less overhead and more expertise will be the route to go.

Did interest go down when the Fed cut rates?

No.. actually rates bottomed out around 3% and back up to 3.125%-3.25%. The Fed’s rate cut doesn’t have an exact correlation to your mortgage rate. There are so many things that go into mortgage rates –

OLMES ROUP Real Estate Solutions

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651-379-1581

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OLMES ROUP Real Estate Solutions

Easy. Simple. Real Estate.