Year-End Spike in Activity?

Like most Realtors, I set up what are (or used to be) called "hot sheets" on MLS to track activity in areas of specific interest to my clients.

So, just by clicking "Update," I can see everything that's changed on the market -- across multiple neighborhoods, price ranges, etc. -- since the last time I logged on.

Normally, the waning days of December are quite slow -- which is why a flurry of December 31 MLS changes caught my eye.

Pended Sales? New listings?

Try, "Expireds."

You'd guess that the vast majority of these will likely pop back up as "Active" today or tomorrow.

What's Selling: Hopkins

Days on Market: 12

Where: 301 13th Ave. North, near downtown Hopkins

What: 3 BR/2 Bath stucco bungalow with over 1,800 finished square feet; nicely updated.

When: listed 10/29; off market yesterday (11/10)

How much: asking $250k

Who: listing agents -- Stacy and Christina Cranbrook (Edina Realty); selling agent -- Nancy Bourland (Edina Realty)

"We must all hang together, or assuredly we shall all hang separately."

--Benjamin Franklin

The secret to this sale?

The price, location, condition, and curb appeal all helped.

But my educated guess is that the key was the "mini-Broker tour" on Nov. 2 (a week ago Tuesday).

That's when 20 agents with "Active" Hopkins listings -- myself included -- collaborated to all hold our listings open between 11 a.m. and 1 p.m., complete with drawings and catered lunches at many locations.

All that publicity generated lots of traffic, which raised everyone's exposure and resulted in at least two other deals that I'm aware of.

The home is officially "Pending" until it is scheduled to close Dec. 10.

What's Selling . . . Fern Hill

Where: 2537 Joppa, in St. Louis Park's Fern Hill neighborhood, 2 blocks west of Cedar Lake.

What: 1 1/2 story home built in 1950 with almost 2,000 finished square feet.

How (much): listed for $285,000

When: market time = 2 weeks (listed August 27); scheduled to close Oct. 15 (currently "Pending" on MLS)

Who: sold by Ross Kaplan, Edina Realty City Lakes; co-listed by Linda Platt and Jonathan Spar, Edina Realty

How did this 1950, 1 1/2 story two blocks from Cedar Lake sell in two weeks?

For starters, it helped that it was . . . two blocks from Cedar Lake.

So did an attractive list price, $285,000, that discounted for needed updating -- and then some.

Plus nice curb appeal, a .24 acre lot, and an especially open Living and Dining Room with huge picture windows (pictured above).

Other Factors

So what about the tax assessed value, $404,400?

That certainly didn't hurt the Buyer's perception of value.

However, as I've blogged previously ("Selling Price as % of Tax Assessed Value"), the tax value can be artificially high, especially when it's been years -- or decades -- since the home has changed hands (as was the case here -- the Seller bought the home in 1975 . . . for $46,000!).

Spiking the Ball . . . on the 2 Yard Line

Q: When Doesn't "Sold" Mean "Sold?"

Answer: when it means "Pending" (as, when it's in front of a home that's for sale).

Huh?

At least in Minnesota, once the Buyer's Inspection has been removed, the convention is to switch a home's status from "Active" to "Pending" on MLS, and to put a "Sold" rider on top of the "For Sale" sign in front of the home.

That's the case even though the home hasn't closed yet -- and the Buyer's loan most likely hasn't been finally underwritten (or even successfully appraised!).

Of course, that's in addition to any title work still to be done, as well as any other outstanding conditions that the Buyer and Seller may have contractually agreed -- or be subject -- to (repairs, obtaining a municipal inspection certificate, etc.).

Isn't declaring such a home "Sold" like spiking the ball on the 2 yard line?

Explanation/Rationale

It can be.

However, once any Inspection issues have been resolved, the odds of a deal closing go up dramatically; from experience, I'd peg the odds at anywhere from 80% to 98%.

Why the range?

If it's a cash deal and the Buyer is richer than Croesus . . . it's virtually a done deal.

However, especially if the Comp's are thin and the sales price lacks recent, nearby precedent, the risk of an appraisal issue goes up.

Too, if the Buyer works for a company that's been hit by the recession, or is otherwise vulnerable to layoffs, there's the added risk that the Buyer will lose their job before closing (or otherwise suffer a major hit to their "creditworthiness").

Less likely, but still within the realm of possibility, are such things as Buyer health issues, an unexpected job relocation, major damage to the home (fire or weather-related) -- or even a simple change of heart (and mind).

"Pending" vs. "Closed"

So, to repeat, why not put up a sign that says "Pending" rather than "Closed" -- or remove the "For Sale" sign altogether?

My take is that it's a mix of the following reasons:

--Psychologically, putting up "Sold" helps cement the Buyer's commitment (see, "change of heart").

--"Sold" better tells prospective Buyers that the house is spoken for, and not to bother the homeowner.

--Marketing exigencies. Whereas "Pending" sounds equivocal and gray, "Sold" is strong and declarative.

Too, because there is a risk that the house won't close, it's premature to remove the sign.

However, once the risk of not closing is effectively zero, i.e., the Seller has been paid, title has transferred to the new owner, and the "For Sale" is removed . . . there's nothing to attach "Sold" to.